EXHIBIT 10(z)
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LOAN AND SECURITY AGREEMENT
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FLEET RETAIL GROUP, INC.
ADMINISTRATIVE AGENT FOR
THE REVOLVING CREDIT LENDERS REFERENCED HEREIN
FLEET NATIONAL BANK
AS ISSUER
CLAIRE'S STORES, INC.
AS LEAD BORROWER FOR
BMS DISTRIBUTING CORP.,
CLAIRE'S BOUTIQUES, INC.,
CBI DISTRIBUTING CORP.,
CLAIRE'S PUERTO RICO CORP.,
THE BORROWERS
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March 31, 2004
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS:........................................................................................ 1
ARTICLE 2 - THE REVOLVING CREDIT:............................................................................... 28
2-1. ESTABLISHMENT OF REVOLVING CREDIT...................................................................... 28
2-2. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS)....................................................... 29
2-3. RISKS OF VALUE OF COLLATERAL........................................................................... 29
2-4. COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF CREDIT................................ 29
2-5. REVOLVING CREDIT LOAN REQUESTS......................................................................... 30
2-6 MAKING OF REVOLVING CREDIT LOANS....................................................................... 31
2-7. THE LOAN ACCOUNT....................................................................................... 32
2-8. THE REVOLVING CREDIT NOTES............................................................................. 33
2-9. PAYMENT (AND PREPAYMENTS) OF THE LOAN ACCOUNT.......................................................... 33
2-10. INTEREST ON REVOLVING CREDIT LOANS................................................................. 35
2-11. VOLUNTARY REDUCTION OF COMMITMENT AND REVOLVING CREDIT CEILING..................................... 36
2-12. REVOLVING CREDIT COMMITMENT FEE.................................................................... 37
2-13. ADMINISTRATIVE AGENT'S FEE......................................................................... 37
2-14. UNUSED FEE......................................................................................... 37
2-15. PROCEDURES FOR ISSUANCE OF L/Cs.................................................................... 37
2-16. FEES FOR L/Cs...................................................................................... 38
2-17. CONCERNING L/Cs.................................................................................... 39
2-18. CHANGED CIRCUMSTANCES.............................................................................. 41
2-19. DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT................................................... 42
2-20. LENDERS' COMMITMENTS............................................................................... 43
2-21. REPLACEMENT OF REVOLVING CREDIT LENDER............................................................. 44
ARTICLE 3 - CONDITIONS PRECEDENT:............................................................................... 45
3-1. CORPORATE DUE DILIGENCE................................................................................ 45
3-2. OPINION. 45
3-3. ADDITIONAL DOCUMENTS................................................................................... 45
3-4. OFFICERS' CERTIFICATES................................................................................. 45
3-5. DUE DILIGENCE.......................................................................................... 45
3-6. REPRESENTATIONS AND WARRANTIES......................................................................... 46
3-7. ALL FEES AND EXPENSES PAID............................................................................. 46
3-8. NO DEFAULT............................................................................................. 46
3-9. NO MATERIAL ADVERSE CHANGE............................................................................. 46
3-10. PERFECTION OF ENCUMBRANCES......................................................................... 46
3-11. CONSENTS AND APPROVALS............................................................................. 46
3-12. NO DEFAULTS UNDER APPLICABLE LAW OR MATERIAL AGREEMENTS............................................ 46
3-13. NO LITIGATION...................................................................................... 47
3-14. BUDGETS............................................................................................ 47
3-15. NO MATERIAL ADVERSE CHANGE IN GOVERNMENTAL REGULATIONS............................................. 47
3-16. BENEFIT OF CONDITIONS PRECEDENT.................................................................... 47
ARTICLE 4 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:.................................................. 47
4-1. PAYMENT AND PERFORMANCE OF LIABILITIES................................................................. 47
4-2. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS........................................................ 48
4-3. TRADE NAMES............................................................................................ 49
4-4. INTELLECTUAL PROPERTY.................................................................................. 49
4-5. LOCATIONS.............................................................................................. 50
4-6. TITLE TO ASSETS........................................................................................ 51
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4-7. INDEBTEDNESS........................................................................................... 51
4-8. INSURANCE.............................................................................................. 52
4-9. LICENSES............................................................................................... 53
4-10. LEASES............................................................................................. 53
4-11. REQUIREMENTS OF LAW................................................................................ 54
4-12. LABOR RELATIONS.................................................................................... 54
4-13. MAINTAIN PROPERTIES................................................................................ 55
4-14. TAXES.............................................................................................. 56
4-15. NO MARGIN STOCK.................................................................................... 56
4-16. ERISA.............................................................................................. 57
4-17. HAZARDOUS MATERIALS................................................................................ 58
4-18. LITIGATION......................................................................................... 58
4-19. DIVIDENDS. INVESTMENTS. CORPORATE ACTION........................................................... 58
4-20. LOANS.............................................................................................. 60
4-21. PROTECTION OF ASSETS............................................................................... 60
4-22. LINE OF BUSINESS................................................................................... 61
4-23. AFFILIATE TRANSACTIONS............................................................................. 61
4-24. FURTHER ASSURANCES................................................................................. 61
4-25. ADEQUACY OF DISCLOSURE............................................................................. 61
4-26. NO RESTRICTIONS ON LIABILITIES..................................................................... 62
4-27. OTHER COVENANTS.................................................................................... 62
4-28. SOLVENCY........................................................................................... 62
4-29. OTHER LIENS........................................................................................ 63
4-30. PEMBROKE PINES, FLORIDA LOCATION................................................................... 63
ARTICLE 5 - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:...................................................... 63
5-1. MAINTAIN RECORDS....................................................................................... 63
5-2. ACCESS TO RECORDS...................................................................................... 64
5-3. NOTICE TO ADMINISTRATIVE AGENT......................................................................... 64
5-4. BORROWING BASE CERTIFICATE............................................................................. 66
5-5. MONTHLY REPORTS........................................................................................ 67
5-6. QUARTERLY REPORTS...................................................................................... 67
5-7. ANNUAL REPORTS......................................................................................... 67
5-8. OFFICERS' CERTIFICATES................................................................................. 68
5-9. ADDITIONAL FINANCIAL INFORMATION....................................................................... 68
ARTICLE 6 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:............................................................ 69
6-1. DEPOSITORY ACCOUNTS.................................................................................... 69
6-2. CREDIT CARD RECEIPTS................................................................................... 71
6-3. THE CONCENTRATION AND BLOCKED ACCOUNTS................................................................. 71
6-4. PROCEEDS AND COLLECTIONS............................................................................... 72
6-5. PAYMENT OF LIABILITIES................................................................................. 73
ARTICLE 7 - GRANT OF SECURITY INTEREST; COLLATERAL:............................................................. 74
7-1. GRANT OF SECURITY INTEREST............................................................................. 74
7-2. EXTENT AND DURATION OF SECURITY INTEREST............................................................... 75
7-3. PERFECTION OF COLLATERAL INTEREST...................................................................... 75
7-4. PRESERVATION OF COLLATERAL............................................................................. 77
7-5. OWNERSHIP OF COLLATERAL................................................................................ 77
7-6. DEFENSE OF ADMINISTRATIVE AGENT'S AND REVOLVING CREDIT LENDERS' INTERESTS.............................. 77
7-7. FINANCING STATEMENTS................................................................................... 78
7-8. REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING LEGAL STATUS AND COLLATERAL....................... 78
7-9. INVENTORIES, APPRAISALS AND AUDITS..................................................................... 78
7-10. USE OF COLLATERAL.................................................................................. 79
7-11. MARSHALLING........................................................................................ 81
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7.12 NOTICE OF TERMINATION................................................................................. 81
ARTICLE 8 - ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT:................................................ 81
8-1. APPOINTMENT AS ATTORNEY-IN-FACT........................................................................ 81
8-2. NO OBLIGATION TO ACT................................................................................... 82
ARTICLE 9 - EVENTS OF DEFAULT:.................................................................................. 82
9-1. FAILURE TO PAY THE REVOLVING CREDIT.................................................................... 83
9-2. FAILURE TO MAKE OTHER PAYMENTS......................................................................... 83
9-3. FAILURE TO PERFORM CERTAIN COVENANTS OR LIABILITIES.................................................... 83
9.4 FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD)................................................ 83
9-5. MISREPRESENTATION...................................................................................... 84
9.6. ACCELERATION OF OTHER DEBT. BREACH OF LEASE............................................................ 84
9-7. UNINSURED CASUALTY LOSS................................................................................ 84
9-8. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS............................................................ 84
9-9. BUSINESS FAILURE....................................................................................... 85
9-10. BANKRUPTCY......................................................................................... 85
9-11. INDICTMENT - FORFEITURE............................................................................ 85
9-12. CHALLENGE TO LOAN DOCUMENTS........................................................................ 85
9-13. CHANGE IN CONTROL.................................................................................. 86
ARTICLE 10 - RIGHTS AND REMEDIES UPON DEFAULT:.................................................................. 86
10-1 ACCELERATION.......................................................................................... 86
10-2. RIGHTS OF ENFORCEMENT.............................................................................. 87
10-3. SALE OF COLLATERAL AFTER EVENT OF DEFAULT.......................................................... 88
10-4. OCCUPATION OF BUSINESS LOCATION.................................................................... 89
10-5. GRANT OF NONEXCLUSIVE LICENSE...................................................................... 89
10-6. ASSEMBLY OF COLLATERAL............................................................................. 89
10-7. RIGHTS AND REMEDIES................................................................................ 90
ARTICLE 11 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:....................................................... 90
11-1. REVOLVING CREDIT FUNDING PROCEDURES................................................................ 90
11-2. ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:....................................................... 90
11-3. ORDINARY COURSE DISTRIBUTIONS...................................................................... 93
ARTICLE 12 - ACCELERATION AND LIQUIDATION:...................................................................... 94
12.1 ACCELERATION NOTICES.................................................................................. 94
12.2 ACCELERATION.......................................................................................... 94
12-3. INITIATION OF LIQUIDATION.......................................................................... 94
12-4. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION................................................. 94
12-5. ADMINISTRATIVE AGENT'S CONDUCT OF LIQUIDATION...................................................... 94
12-6. DISTRIBUTION OF LIQUIDATION PROCEEDS............................................................... 95
12-7. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION..................................................... 95
ARTICLE 13 - THE ADMINISTRATIVE AGENT:.......................................................................... 96
13-1. APPOINTMENT OF THE ADMINISTRATIVE AGENT............................................................ 96
13-2. RESPONSIBILITIES OF ADMINISTRATIVE AGENT; OTHER AGENTS............................................. 96
13-3. CONCERNING DISTRIBUTIONS BY THE ADMINISTRATIVE AGENT............................................... 97
13-4. DISPUTE RESOLUTION:................................................................................ 98
13-5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS.......................................................... 98
13-6. CONFIDENTIAL INFORMATION........................................................................... 99
13-7. RELIANCE BY ADMINISTRATIVE AGENT................................................................... 99
13-8. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER REVOLVING CREDIT LENDERS............................ 99
13-9. INDEMNIFICATION.................................................................................... 100
13-10. RESIGNATION OF ADMINISTRATIVE AGENT................................................................ 101
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ARTICLE 14 - ACTION BY ADMINISTRATIVE AGENT - CONSENTS - AMENDMENTS - WAIVERS:.................................. 101
14-1. ADMINISTRATION OF CREDIT FACILITIES................................................................ 101
14-2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS.............................................. 102
14-3. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT................................................. 102
14-4. ACTIONS REQUIRING ISSUER CONSENT................................................................... 104
14-5. ACTIONS REQUIRING ADMINISTRATIVE AGENT'S CONSENT................................................... 104
14-6. MISCELLANEOUS ACTIONS.............................................................................. 104
14-7. ACTIONS REQUIRING LEAD BORROWER'S CONSENT.......................................................... 104
14-8. NONCONSENTING REVOLVING CREDIT LENDER.............................................................. 105
ARTICLE 15 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:........................................................... 106
15-1. ASSIGNMENTS AND ASSUMPTIONS........................................................................ 106
15-2. ASSIGNMENT PROCEDURES.............................................................................. 107
15-3. EFFECT OF ASSIGNMENT............................................................................... 108
ARTICLE 16 - NOTICES:........................................................................................... 108
16-1. NOTICE ADDRESSES................................................................................... 108
16-2. NOTICE GIVEN....................................................................................... 109
ARTICLE 17 - TERM:.............................................................................................. 110
17-1. TERMINATION OF REVOLVING CREDIT.................................................................... 110
17-2. ACTIONS ON TERMINATION............................................................................. 110
ARTICLE 18 - GENERAL:........................................................................................... 111
18-1. PROTECTION OF COLLATERAL........................................................................... 111
18-2. PUBLICITY.......................................................................................... 111
18-3. SUCCESSORS AND ASSIGNS............................................................................. 111
18-4. SEVERABILITY....................................................................................... 111
18-5. AMENDMENTS. COURSE OF DEALING...................................................................... 111
18-6. POWER OF ATTORNEY.................................................................................. 112
18-7. APPLICATION OF PROCEEDS............................................................................ 112
18-8. INCREASED COSTS.................................................................................... 112
18-9. COSTS AND EXPENSES OF THE ADMINISTRATIVE AGENT..................................................... 113
18-10. COPIES AND FACSIMILES.............................................................................. 114
18-11. MASSACHUSETTS LAW.................................................................................. 114
18-12. CONSENT TO JURISDICTION............................................................................ 114
18-13. INDEMNIFICATION.................................................................................... 115
18-14. RULES OF CONSTRUCTION.............................................................................. 115
18-15. INTENT............................................................................................. 116
18-16. PARTICIPATIONS:.................................................................................... 117
18-17. RIGHT OF SET-OFF................................................................................... 117
18-18. PLEDGES TO FEDERAL RESERVE BANKS................................................................... 117
18-19. MAXIMUM INTEREST RATE.............................................................................. 118
18-20. WAIVERS............................................................................................ 118
18-21 ADDITIONAL WAIVERS................................................................................. 119
18-22. CONFIDENTIALITY.................................................................................... 120
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EXHIBITS
1-1 Realty Sales; Leases with respect to landlord liens
2-5 Notice of Borrowing/Conversion
2-8 Revolving Credit Note
2-20 Revolving Credit Lenders' Commitments
3-3 Additional Documents
4-2 Corporate Information
4-3 Trade Names
4-6 Encumbrances; Unrestricted trusts
4-7 Indebtedness
4-8 Insurance Policies
4-12 Collective Bargaining Agreements/Labor Relations
4-14 Taxes
4-18 Litigation
4-19 Existing Investments
4-19(f) Joinder Agreement
4-23 Affiliate Transactions
5-4 Borrowing Base Certificate
5-5 Financial Reporting Requirements
5-8 Officer's Compliance Certificate
6-1 DDA's
6-2 Credit Card Arrangements
6-3 Blocked Account Banks
15-2 Assignment / Acceptance
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LOAN AND SECURITY AGREEMENT
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March 31, 2004
THIS AGREEMENT is made between
Fleet Retail Group, Inc. (in such capacity, herein the "ADMINISTRATIVE
AGENT"), a Delaware corporation with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent for the ratable benefit of the "REVOLVING CREDIT
LENDERS", who are, at present, those financial institutions identified on the
signature pages of this Agreement and who in the future are those Persons (if
any) who become "Revolving Credit Lenders" in accordance with the provisions of
Section 2-20, below;
and
The Revolving Credit Lenders (as of the Closing Date, the only
Revolving Credit Lender is Fleet Retail Group, Inc.);
Fleet National Bank ("FLEET"), a bank organized under the laws of the
United States of America, having an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
and
Claire's Stores, Inc. (in such capacity, the "LEAD BORROWER"), a
Florida corporation with its principal executive offices at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent for the following (individually,
a "BORROWER" and collectively, the "BORROWERS"): BMS Distributing Corp., a
Delaware corporation, Claire's Boutiques, Inc., a Delaware corporation, CBI
Distributing Corp., a Delaware corporation, and Claire's Puerto Rico Corp., a
Delaware corporation,
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
ARTICLE 1 - DEFINITIONS:
As used herein, the following terms have the following meanings or are defined
in the section of this Agreement so indicated:
"ACCOUNT DEBTOR": Has the meaning given that term in the UCC.
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"ACCOUNTS" and "ACCOUNTS RECEIVABLE" include, without limitation, "accounts" as
defined in the UCC, and also all: accounts, accounts receivable, receivables,
and rights to payment (whether or not earned by performance): for Inventory that
has been or is to be sold, leased, licensed, assigned, or otherwise disposed of
and/or arising out of the use of a credit or charge card or information
contained on or used with that card, and also all reclaimed, returned, rejected
or repossessed Inventory (if any) the sale of which gave rise to any Account.
"ACH": Automated clearing house.
"ACQUISITION": The purchase or acquisition of all or substantially all of the
assets of, or a division of, any Person, the purchase of a controlling equity
interest in any Person, or the merger or consolidation of any Person with any
other Person, in any transaction or group of transactions which are part of a
common plan.
"ADJUSTED EXCESS LIQUIDITY": At any date of determination, the sum of (i)
Availability on such date plus (ii) Cash and Cash Equivalents on such date.
"ADMINISTRATIVE AGENT": Is referred to in the Preamble.
" ADMINISTRATIVE AGENT'S COVER": Defined in Section 11-2(c)(i).
"ADMINISTRATIVE AGENT'S FEE": Is defined in Section 2-13.
"ADMINISTRATIVE AGENT'S RIGHTS AND REMEDIES": Is defined in Section 10-7.
"AFFILIATE": For purposes of this Agreement and the other Loan Documents only
and for no other purpose, the following: With respect to any specified Person,
any other Person that (i) holds, directly or indirectly, ten percent (10%) or
more of the capital stock, beneficial interests, partnership interests, or other
equity interests of the other; or (ii) has, directly or indirectly, the power,
under ordinary circumstances, to elect a majority of the directors (or other
body or Person who has those powers customarily vested in a board of directors
of a corporation); or (iii) directly or indirectly controls or is controlled by,
or is under common control with, the Person specified, whether through a
management agreement, voting agreement, other contract or otherwise.
Notwithstanding the foregoing, an institutional investor in the Lead Borrower
shall not be considered an Affiliate solely by reason of its ownership of ten
percent (10%) or more of the equity interests identified in clause (i) above.
"AGREEMENT": This Loan and Security Agreement, as such may hereafter be
modified, amended, restated, or supplemented from time to time.
"APPLICABLE LAW": As to any Person: (i) All statutes, rules, regulations,
orders, or other requirements having the force of law and (ii) all court orders
and injunctions, arbitrator's decisions, and/or similar rulings, in each
instance ((i) and (ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other body which has or
claims jurisdiction over such Person, or any property of such Person.
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"APPLICABLE MARGIN": The rates for Base Margin Loans and Libor Loans based upon
the following criteria:
BASE MARGIN APPLICABLE
LEVEL ADJUSTED EXCESS LIQUIDITY MARGIN LIBOR APPLICABLE MARGIN
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1 Greater than $150,000,000 0% 0.75%
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2 Less than or equal to 0% 0.875%
$150,000,000, but greater
than $100,000,000
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3 Less than or equal to 0% 1.00%
$100,000,000, but greater
than $75,000,000
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4 Less than or equal to 0% 1.25%
$75,000,000, but greater
than or equal to
$50,000,000
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5 Less than $50,000,000 0% 1.50%
The Applicable Margin shall initially be set based upon Adjusted Excess
Liquidity on the Closing Date (after giving effect to any Revolving Credit Loans
to be made or L/Cs issued on the Closing Date) and shall be adjusted quarterly
as of the first day of each fiscal quarter, commencing May 3, 2004, based upon
the Adjusted Excess Liquidity at the end of the most recently completed fiscal
quarter. During the existence of an Event of Default, interest shall accrue at
the rate set forth in Section 2-10(f).
"APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) the Cost of Eligible
Inventory (net of Inventory Reserves) multiplied by (b) that percentage,
determined from the then most recent appraisal of the Borrowers' Inventory
undertaken at the request of the Administrative Agent by an independent
appraiser reasonably acceptable to the Lead Borrower, to reflect the appraiser's
estimate of the net recovery on the Borrowers' Inventory in the event of an
in-store liquidation of that Inventory. As of the Closing Date, the percentage
referred to in clause (b) of this definition is equal to 118%.
"ASSIGNING REVOLVING CREDIT LENDER": Defined in Section 15-1(a).
"ASSIGNMENT AND ACCEPTANCE": Defined in Section 15-2.
"AVAILABILITY": The lesser of (a) or (b), where:
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
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(ii) The aggregate unpaid balance of the Loan
Account
Minus
(iii) The aggregate undrawn Stated Amount of all
then outstanding L/Cs.
and
(b) is the result of
(i) The Borrowing Base (it being acknowledged
that if Inventory Reserves are deducted in determining the Borrowing Base, they
will not be deducted again pursuant to clause (iv) below)
Minus
(ii) The aggregate unpaid balance of the Loan
Account
Minus
(iii) The aggregate undrawn Stated Amount of all
then outstanding L/Cs.
Minus
(iv) The aggregate of the Availability Reserves
and the Inventory Reserves.
"AVAILABILITY RESERVES": As of the Closing Date, the aggregate amount of
availability reserves imposed based on the following matters listed in clauses
(i) through (iv) below (the "Initial Reserve Categories") (equal to $5,652,000
on the Closing Date) and thereafter, in addition to availability reserves based
on such Initial Reserve Categories (as such reserves under clauses (ii), (iii)
and (iv) below may be adjusted higher or lower in amount), at any time that a
Reserve Event has occurred or exists, such other categories of availability
reserves as the Administrative Agent from time to time determines in the
Administrative Agent's discretion, exercised in a commercially reasonable manner
(after consultation with the Lead Borrower (whose consent to any Availability
Reserve shall not be required)) as being appropriate to reflect the impediments
to the Administrative Agent's ability to realize upon the Collateral, but only
to the extent not already considered in calculating Availability. Availability
Reserves shall be established and calculated in a manner and methodology
consistent with the Administrative Agent's practices with other similarly
situated borrowers.
(i) as of the Closing Date, $2,000,000, and thereafter at
any time that a Reserve Event has occurred or exists,
the amount determined by the Administrative Agent,
acting in a commercially reasonable manner, based on
an amount equal to two months base rent for all
leases in Landlord's Lien States, except that no such
Reserve shall be established for locations
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for which the Borrowers have obtained a landlord's
waiver reasonably acceptable in form and substance to
the Administrative Agent), plus (b) two months base
rent for any warehouses utilized by any Borrower
(except no such Reserve shall be established for
warehouses for which the Borrowers have obtained a
warehouseman's waiver reasonably acceptable in form
and substance to the Administrative Agent), plus (c)
all past due rent and warehouse charges for any of
the Borrowers' locations, wherever located.
(ii) an amount equal to 50% of outstanding Customer Credit
Liabilities.
(iii) Past due taxes and other governmental charges,
including, ad valorem, personal property, and other
taxes which have priority over the Collateral
Interests of the Administrative Agent in the
Collateral.
(iv) Payables more than forty-five (45) days beyond normal
terms with respect to which the Borrowers have no
defense for non-payment.
(v) as of the Closing Date, $500,000.00, which amount
reflects a reserve for the rental obligations owing
to the landlords under the leases described on and
each with the respective lease term as set forth on
EXHIBIT 1-1, provided that (i) should the rental
obligations set forth on EXHIBIT 1-1 be increased
after the Closing Date, the Administrative Agent
shall have the right to increase such amount by a
corresponding amount, and (ii) should the security
interests granted to such landlords pursuant to the
leases described on EXHIBIT 1-1 and the corresponding
UCC financing statements be amended to the reasonable
satisfaction of the Administrative Agent or
terminated after the Closing Date, the Administrative
Agent shall ratably decrease such amount.
"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.
"BASE": For any day, (a) the Prime Rate announced from time to time by Fleet
National Bank (or any successor in interest to Fleet National Bank) as its
"Prime Rate" or (b) if no such Prime Rate is announced by Fleet National Bank,
the Federal Funds Effective Rate in effect on such day plus one-half of one
percent (0.50%) per annum. The "Prime Rate" is a reference rate and does not
necessarily represent the lowest or best rate being charged to any customer. Any
change in the Prime Rate due to a change in Fleet National Bank's Prime Rate or
the Federal Funds Effective Rate shall be effective on the effective date of
such change in Fleet National Bank's Prime Rate or the Federal Funds Effective
Rate, respectively.
"BASE MARGIN LOAN": Each Revolving Credit Loan while bearing interest at the
Base Margin Rate.
"BASE MARGIN RATE": The aggregate of Base plus the Applicable Margin for Base
Margin Loans.
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"BLOCKED ACCOUNT": (i) Any DDA into which the contents of any other DDA, or any
cash receipts or collections of the Borrowers, are transferred which is the
subject of a Blocked Account Agreement and (ii) any securities account or
commodities account which is the subject of a Blocked Account Agreement. As of
the Closing Date, the only Blocked Accounts are listed and designated as such on
EXHIBIT 6-1, including the Primary Blocked Account.
"BLOCKED ACCOUNT AGREEMENT": An Agreement, in form satisfactory to the
Administrative Agent, which Agreement recognizes the Administrative Agent's
Collateral Interest in the contents of the Blocked Account which is the subject
of such Agreement and agrees that, after and during the continuance of a Cash
Control Event, such contents shall be transferred only to the Concentration
Account or as otherwise instructed by the Administrative Agent.
"BORROWER" AND "BORROWERS": Is defined in the Preamble. Additional Subsidiaries
of the Lead Borrower may become a Borrower hereunder from time to time in
accordance with the terms of this Agreement.
"BORROWING BASE": The aggregate of the following:
The lesser of (a) the Cost of Eligible Inventory multiplied by the
Inventory Advance Rate or (b) 80% of the Appraised Inventory Liquidation Value,
provided that any reduction in the amounts available to be borrowed under this
paragraph as a result of a change in the Appraised Inventory Liquidation Value
shall not take place until five (5) days after the date that the Lead Borrower
is advised by the Administrative Agent of such change in the Appraised Inventory
Liquidation Value.
"BORROWING BASE CERTIFICATE": Is defined in Section 5-4.
"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b) any day on
which banks in Boston, Massachusetts, and when involving any DDA or Blocked
Account, the office of the financial institution at which that DDA or Blocked
Account, as the case may be, is maintained, generally are not open to the
general public for the purpose of conducting commercial banking business; or (c)
a day on which the principal office of the Administrative Agent is not open to
the general public to conduct business.
"CAPITAL EVENT": Except for such events which individually or in the aggregate
in a series of related transactions are for an amount not in excess of
$5,000,000, the issuance by any Borrower on or after the Closing Date (a) of
Indebtedness for borrowed money in an underwritten public offering or private
placement with institutional investors or (b) of any equity interest for cash,
excluding any sale or issuance to management, employees or directors pursuant to
stock option or similar plans of proceeds received from and after the Closing
Date. Nothing contained in this definition or in any provision relating to
Capital Events shall permit or be deemed to permit the Borrowers to effectuate a
Capital Event which is otherwise prohibited hereunder.
"CAPITAL EXPENDITURES": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
-6-
"CAPITAL LEASE": Any lease which is, or is required to be, capitalized by the
Borrowers in accordance with GAAP.
"CASH AND CASH EQUIVALENTS": As of any date of determination, the sum of (a) the
aggregate amount of unrestricted cash (including, in any event, up to $5,000,000
maintained in Unrestricted Trusts) of the Borrowers and their respective
Subsidiaries (on a Consolidated basis), and (b) the aggregate Permitted
Investments of the Borrowers and their respective Subsidiaries (on a
Consolidated basis) listed in clauses (a) through (i) of that definition (valued
at the lesser of par value or fair market value). As used in this definition,
"unrestricted" means the specified asset is not subject to any Encumbrances in
favor of any Person other than the Lenders. Notwithstanding anything contained
herein to the contrary, the term Cash and Cash Equivalents shall not include the
Revolving Credit Commitments of the Lenders to make Revolving Credit Loans under
this Agreement.
"CASH CONTROL EVENT": Either (a) the occurrence and continuance of any Event of
Default (other than (i) a Specified Event of Default, unless the Agent and the
Lenders have commenced any enforcement action or are otherwise exercising
remedies against the Borrowers with respect to such Specified Event of Default,
or (ii) an Excess Liquidity Default for which a Hold Period is in effect) and
such Event of Default has not been waived in writing by the required Lenders, or
(b) Excess Liquidity at any time is less than $10,000,000 for at least three (3)
consecutive Business Days. For purposes hereof, the occurrence of a Cash Control
Event under clause (b) hereof shall be deemed continuing notwithstanding that
Excess Liquidity may thereafter exceed the amounts set forth in such clause
unless and until Excess Liquidity exceeds such amounts for thirty (30)
consecutive days, in which case a Cash Control Event shall no longer be deemed
to be continuing for purposes hereof; provided that a Cash Control Event under
clause (b) hereof shall be deemed continuing for six (6) months (even if Excess
Liquidity exceeds the required amounts for thirty (30) consecutive days) if a
Cash Control Event has occurred and been discontinued on two occasions in any
twelve month period.
"CHANGE IN CONTROL": The occurrence of any of the following:
(a) The acquisition, by any group of persons (within the meaning
of the Securities Exchange Act of 1934, as amended) or by any Person, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission) of shares of the issued and outstanding capital stock of
the Lead Borrower having the right, under ordinary circumstances, to cast 40% or
more of the vote for the election of directors of the Lead Borrower, provided
that such 40% shall be increased to 49% solely for the Family Individuals (as
such term is defined in part (d) of EXHIBIT 4-2).
(b) More than half of the persons who were directors of the Lead
Borrower on the first day of any period consisting of twelve (12) consecutive
calendar months (the first of which twelve (12) month periods commencing with
the first day of the month during which this Agreement was executed), cease to
be directors of the Lead Borrower, and their respective replacements are not
nominated or appointed by a majority of the Persons who were directors on
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the first day of such twelve (12) consecutive calendar months or who were
nominated or appointed by directors so nominated or appointed.
(c) Any failure of the Lead Borrower to own, directly or
indirectly, beneficially and of record, 100% of the capital stock of all other
Borrowers, except as expressly permitted pursuant to Section 4-19.
"CHATTEL PAPER": Has the meaning given that term in the UCC.
"CHICAGO DISTRIBUTION CENTER": The distribution center of the Borrowers located
at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"CLOSING DATE": The date upon which the conditions precedent set forth in
Article 3 hereof have been satisfied or waived.
"COLLATERAL": Is defined in Section 7-1.
"COLLATERAL INTEREST": Any interest in property to secure an obligation,
including, without limitation, a security interest, mortgage, and deed of trust.
"COMMERCIAL TORT CLAIMS": Has the meaning given that term in the UCC.
"CONCENTRATION ACCOUNT": Is defined in Section 6-3.
"CONSENT": Actual consent given by the Lender from whom such consent is sought;
or the passage of seven (7) Business Days from receipt of written notice to a
Revolving Credit Lender from the Administrative Agent of a proposed course of
action to be followed by the Administrative Agent without such Revolving Credit
Lender's giving the Administrative Agent written notice of that Revolving Credit
Lender's objection to such course of action, provided that the Administrative
Agent may rely on such passage of time as consent by a Revolving Credit Lender
only if such written notice states that consent will be deemed effective if no
objection is received within such time period.
"CONSOLIDATED": When used to modify a financial term, test, statement, or
report, refers to the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial condition or operating results of the Lead Borrower and its
Subsidiaries.
"COST": The lower of (a) or (b), where:
(a) is the calculated cost of purchases, based upon the Borrowers'
accounting practices in effect on the date on which this Agreement was executed
as such calculated cost is determined from: invoices received by the Borrowers;
the Borrowers' purchase journal; or the Borrowers' perpetual inventory system.
(b) is, without duplication of any Inventory Reserves for markdowns,
the lowest ticketed or promoted price at which the subject Inventory is offered
to the public by the Borrowers, after
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all ▇▇▇▇-▇▇▇▇▇ (whether or not such price is then reflected on the Borrowers'
accounting system).
"Cost" does not include inventory capitalization costs or other
non-purchase price charges (other than freight) used in the Borrowers'
calculation of cost of goods sold.
"COSTS OF COLLECTION": Includes, without limitation, all reasonable attorneys'
fees and reasonable out-of-pocket expenses incurred by the Administrative
Agent's attorneys, and all out-of-pocket costs incurred by the Administrative
Agent in the administration of the Liabilities and/or the Loan Documents,
including, without limitation, costs and expenses associated with travel on
behalf of the Administrative Agent, where such costs and expenses are directly
or indirectly related to or in respect of the Administrative Agent's
administration and management of the Liabilities; negotiation, documentation,
and amendment of any Loan Document; or efforts to preserve, protect, collect, or
enforce the Collateral, the Liabilities, and/or the Administrative Agent's
Rights and Remedies and/or any of the rights and remedies of the Administrative
Agent against or in respect of any guarantor or other person liable in respect
of the Liabilities (whether or not suit is instituted in connection with such
efforts). "Costs of Collection" shall also include the reasonable fees and
expenses of Lenders' Special Counsel. The Costs of Collection are Liabilities,
and at the Administrative Agent's option may bear interest at the then effective
Base Margin Rate.
"CUSTOMER CREDIT LIABILITY": .Gift certificates, merchandise credits, layaway
obligations, frequent shopping programs, and similar liabilities of any Borrower
to its retail customers and prospective customers.
"DDA": Any checking or other demand daily depository account maintained by any
Borrower in which proceeds of the Borrowers' Inventory and Accounts are
deposited.
"DEFAULT": Any occurrence, circumstance, or state of facts with respect to a
Borrower which (a) is an Event of Default; or (b) would become an Event of
Default if any requisite notice were given and/or any requisite period of time
were to run and such occurrence, circumstance, or state of facts were not cured
(with such cure having been accepted) or waived in writing within any applicable
grace period.
"DELINQUENT REVOLVING CREDIT LENDER": Defined in Section 11-2(c).
"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC.
"DOCUMENTARY L/CS": L/Cs issued pursuant to this Agreement to support any
Borrower's purchases in the ordinary course of business of Inventory for use in
its business (as permitted by Section 4-22), the drawing under which requires
the delivery of bills of lading, airway bills or other similar types of
documents of title.
"DOCUMENTS": Has the meaning given that term in the UCC.
"EBITDA": For any period, an amount equal to Consolidated net income of the Lead
Borrower and its Subsidiaries for such period, as determined in accordance with
GAAP, plus the following to
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the extent deducted in computing such Consolidated net income for such period:
(i) Interest Charges for such period, (ii) taxes on income for such period,
(iii) depreciation for such period, and (iv) amortization for such period.
Notwithstanding the foregoing, for purposes of determining EBITDA, the Lead
Borrower and its Subsidiaries shall not be required to deduct retirement
compensation accrued for or made to the Chairman Emeritus of the Lead Borrower
in the two fiscal quarters ending on or before May 1, 2004, provided such
retirement payments not deducted from EBITDA do not exceed $10,000,000 in the
aggregate.
"ELIGIBLE ASSIGNEE": A bank, insurance company, finance company or other
financial institution or fund engaged in the business of making or investing in
commercial loans in the ordinary course of its business having a combined
capital and surplus in excess of $500,000,000 or any Affiliate of any Revolving
Credit Lender, or any Person to whom a Revolving Credit Lender assigns its
rights and obligations under this Agreement as part of a programmed assignment
and transfer of such Revolving Credit Lender's rights in and to a material
portion of such Revolving Credit Lender's portfolio of asset based credit
facilities.
"ELIGIBLE IN-TRANSIT INVENTORY": Without duplication of other Eligible
Inventory, Inventory (a) which has been shipped from a foreign location for
receipt by the Borrower within sixty (60) days of the date of determination, but
which has not yet been delivered to a Borrower, (b) for which title has passed
to a Borrower (and such title is not subject to reversion) and there are no
claims (other than for payment under normal terms not yet due) of the sellers of
such Inventory against the applicable Borrower, and (c) which otherwise would
constitute Eligible Inventory.
"ELIGIBLE INVENTORY": Inventory which is Eligible In-Transit Inventory or which
are finished goods, merchantable and readily saleable to the public in the
ordinary course deemed by the Administrative Agent in its discretion, exercised
in a commercially reasonable manner, to be eligible for inclusion in the
calculation of the Borrowing Base. Without limiting the foregoing, 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 (as defined in Section 9-102 of the
Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts) or the Borrowers do not have good and valid title
thereto;
(b) Inventory (including any portion thereof in transit
from vendors, other than Eligible In-Transit Inventory) that is not
located at a warehouse facility used by a Borrower in the ordinary
course (and for which the Administrative Agent has received a
satisfactory warehouseman waiver), at a property that is owned or
leased by a Borrower or in transit between any property, including
distribution centers, warehouses and stores owned, leased or used by a
Borrower;
(c) Inventory that represents (i) goods damaged,
defective or otherwise unmerchantable, (ii) goods that do not conform
in all material respects to the representations and warranties
contained in this Agreement or any of the Loan Documents, or (iii)
goods to be returned to the vendor;
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(d) Inventory that is not located in the United States of
America (excluding territories and possessions thereof) other than
Eligible In-Transit Inventory;
(e) Inventory that is not subject to a perfected
first-priority security interest in favor of the Administrative Agent
for the benefit of the Lenders, except to the extent that such
Inventory is subject to Permitted Encumbrances;
(f) Inventory which consists of salesman's samples,
labels, bags, packaging, installation inventory, and other similar
non-merchandise categories;
(g) Inventory as to which insurance in compliance with
the provisions of Section 4-8 hereof is not in effect; and
(h) Inventory which is acquired in a Permitted
Acquisition unless and until the Administrative Agent has completed an
appraisal of such Inventory, established an Inventory Advance Rate and
Inventory Reserves (if applicable) therefor, and otherwise agreed that
such Inventory shall be deemed Eligible Inventory.
"EMPLOYEE BENEFIT PLAN": As defined in ERISA.
"ENCUMBRANCE": Each of the following:
(a) A Collateral Interest or agreement to create or grant a
Collateral Interest; the interest of a lessor under a Capital Lease; conditional
sale or other title retention agreement; sale of accounts receivable or chattel
paper; or other arrangement pursuant to which any Person is entitled to any
preference or priority with respect to the property or assets of another Person
or the income or profits of such other Person; each of the foregoing whether
consensual or non-consensual and whether arising by way of agreement, operation
of law, legal process or otherwise.
(b) The filing of any financing statement under the UCC or
comparable law of any jurisdiction.
"END DATE": The date upon which both (a) all Liabilities (excluding any
contingent Liabilities not then due and payable) have been paid in full and (b)
all obligations of any Revolving Credit Lender to make loans and advances and to
provide other financial accommodations to the Borrowers hereunder shall have
been irrevocably terminated.
"ENVIRONMENTAL LAWS": All of the following:
(a) Applicable Law which regulates or relates to, or imposes any
standard of conduct or liability on account of or in respect to environmental
protection matters, including, without limitation, Hazardous Materials, as are
now or hereafter in effect.
(b) The common law relating to damage to Persons or property from
Hazardous Materials.
-11-
"EQUIPMENT": Has the meaning given that term in the UCC.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA AFFILIATE": Any Person which is under common control with a Borrower
within the meaning of Section 4001 of ERISA or is part of a group which includes
any Borrower and which would be treated as a single employer under Section 414
of the Internal Revenue Code of 1986, as amended.
"EVENTS OF DEFAULT": Is defined in Article 9.
"EXCESS LIQUIDITY": At any date of determination, the sum of (i) Availability on
such date plus (ii) Cash and Cash Equivalents maintained in a Blocked Account
subject to a Blocked Account Agreement in favor of the Administrative Agent on
such date.
"EXCLUDED REAL ESTATE": Is defined in Section 4-5.
"EXEMPT DDA": A depository account maintained by any Borrower, the only contents
of which are (i) for ▇▇▇▇▇ cash purposes (and maintaining a balance not in
excess of $15,000 at any time); (ii) for payroll; and (iii) individual store
level receipts to the extent that the balances maintained therein are
transferred or swept daily to a corporate level concentration account (and then
to the Primary Blocked Account) or to the Primary Blocked Account.
"FEDERAL FUNDS EFFECTIVE RATE". For any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal fund
brokers, as published for such day (or, if such day is not a Business Day, for
the next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for such day on such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by the
Administrative Agent.
"FEE LETTER": That letter dated March 31, 2004 and styled "Fee Letter" between
the Lead Borrower and the Administrative Agent, as amended and supplemented as
of the date hereof, and as such letter may from time to time hereafter be
amended.
"FISCAL": When followed by "month" or "quarter", the relevant fiscal period
based on the Borrowers' fiscal year and accounting conventions.
"FLEET": Is defined in the Preamble hereto.
"FOREIGN LENDER": Any Revolving Credit 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.
"FRG": Fleet Retail Group, Inc.
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"GAAP": Principles which are consistent with those promulgated or adopted by the
Financial Accounting Standards Board and its predecessors (or successors) in
effect and applicable to that accounting period in respect of which reference to
GAAP is being made.
"GENERAL INTANGIBLES": Has the meaning given that term in the UCC.
"GOODS": Has the meaning given that term in the UCC.
"HAZARDOUS MATERIALS": Any (a) substance which is defined or regulated as a
hazardous material in or under any Environmental Law and (b) oil in any physical
state.
"HEDGE AGREEMENTS": All obligations of any Person in respect of interest rate
swap agreements, currency swap agreements and other similar agreements designed
to hedge against fluctuations in interest rates or foreign exchange rates.
"INCREASED REPORTING EVENT": ..Either (a) the occurrence and continuance of any
Event of Default, or (b) Excess Liquidity at any time is less than $10,000,000
for three (3) or more Business Days. For purposes hereof, the occurrence of an
Increased Reporting Event under clause (b) above shall be deemed continuing
notwithstanding that Excess Liquidity may thereafter exceed the amounts set
forth in the preceding sentence unless and until Excess Liquidity exceeds such
amounts for thirty (30) consecutive days, in which case a Increased Reporting
Event shall no longer be deemed to be continuing for purposes hereof.
"INDEBTEDNESS": All indebtedness and obligations of or assumed by any Person on
account of or in respect to any of the following:
(a) In respect of money borrowed (including any indebtedness which
is non-recourse to the credit of such Person but which is secured by an
Encumbrance on any asset of such Person) whether or not evidenced by a
promissory note, bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or acceptance
transaction (including, without limitation, the face amount of all letters of
credit and acceptances issued for the account of such Person or reimbursement on
account of which such Person would be obligated).
(c) In connection with the sale or discount of accounts receivable
or chattel paper of such Person.
(d) On account of deposits or advances.
(e) As lessee under Capital Leases.
(f) On account of Hedge Agreements.
(g) In connection with any sale and leaseback transaction.
"Indebtedness" also includes:
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(1) Indebtedness of others secured by an Encumbrance on any asset
of such Person, whether or not such Indebtedness is assumed by such Person.
(2) Any guaranty, endorsement, suretyship or other undertaking
pursuant to which that Person may be liable on account of any obligation of any
third party.
(3) The Indebtedness of a partnership or joint venture for which
such Person is liable as a general partner or joint venturer.
Indebtedness and obligations of or assumed by any Subsidiary of the
Lead Borrower that is not a Borrower, including Claire's Nippon, Ltd., shall not
constitute Indebtedness for purposes of this Agreement except to the extent that
any Borrower is directly or indirectly liable for the payment for all or any
portion thereof, whether as a guarantor, by contract, by operation of law or
otherwise.
"INDEMNIFIED PERSON": Is defined in Section 18-13.
"INFORMATION": Is defined in Section 18-22.
"INSTRUMENTS": Has the meaning given that term in the UCC.
"INTEREST CHARGES" For any period, means, without duplication, all interest,
both expensed and capitalized, and all amortization of debt discount and expense
(including commitment fees, L/C fees, balance deficiency fees and similar
expenses) on any particular Indebtedness (including outstanding L/C's) for which
such calculations are being made, all as determined in accordance with GAAP.
Computations of Interest Charges on a pro forma basis for Indebtedness having a
variable interest rate shall be calculated at the rate in effect on the date of
any determination.
"INTEREST PAYMENT DATE": With reference to:
Each Libor Loan: The last day of the Interest Period relating thereto
(provided that if the Interest Period is six months in length, the Interest
Payment Date shall be the last day of the third month of such Interest Period
and the last day of the Interest Period); the Termination Date; and the End
Date.
Each Base Margin Loan: The first day of each month; the Termination
Date; and the End Date.
"INTEREST PERIOD": The following:
(a) With respect to each Libor Loan: Subject to Subsection (c),
below, the period commencing on the date of the making or continuation of, or
conversion to, the subject Libor Loan and ending seven days, or one, two, three,
or six months thereafter, as the Lead Borrower may elect by notice (pursuant to
Section 2-5) to the Administrative Agent
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(b) With respect to each Base Margin Loan: Subject to Subsection
(c), below, the period commencing on the date of the making or continuation of
or conversion to such Base Margin Loan and ending on that date (i) as of which
the subject Base Margin Loan is converted to a Libor Loan, as the Lead Borrower
may elect by notice (pursuant to Section 2-5) to the Administrative Agent, or
(ii) on which the subject Base Margin Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all instances subject to
the following:
(i) Any Interest Period for a Base Margin Loan which
would otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day.
(ii) Any Interest Period for a Libor Loan which would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day, unless that succeeding Business Day is in the next
calendar month, in which event such Interest Period shall end on the last
Business Day of the month during which the Interest Period ends.
(iii) Subject to Subsection (iv) below, any Interest Period
applicable to a Libor Loan, which Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month during which
such Interest Period ends, shall end on the last Business Day of the month
during which that Interest Period ends.
(iv) Any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date.
(v) The number of Interest Periods in effect at any one
time is subject to Section 2-10(d) hereof.
"INVENTORY": Includes, without limitation, "inventory" as defined in the UCC and
also all: (a) Inventory in transit; (b) Inventory which is returned, repossessed
or rejected; (c) packaging, advertising, and shipping materials related to any
of the foregoing; and (d) Documents which represent any of the foregoing.
"INVENTORY ADVANCE RATE": 94%.
"INVENTORY RESERVES": As of the Closing Date, an aggregate amount equal to $0.
At any time after the Closing Date during which a Reserve Event has occurred or
exists, such inventory reserves as may be established from time to time by the
Administrative Agent, without duplication and only to the extent not already
deducted in determining Eligible Inventory, in the Administrative Agent's
discretion, acting in a commercially reasonable manner (after consultation with
the Lead Borrower (whose consent to any Inventory Reserve shall not be
required)) with respect to the determination of the saleability, at retail, of
the Eligible Inventory or which reflect such other factors as affect the market
value of the Eligible Inventory, which Reserves may be established with respect
to the following matters listed in clauses (i) through (ix) below. Inventory
Reserves shall be established and calculated in a manner and methodology
consistent with the Administrative Agent's practices with other similarly
situated borrowers.
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(i) Obsolescence (based upon Inventory on hand beyond a
given number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character except as permitted
pursuant to Section 4-22 hereof.
(vi) Change in Inventory composition.
(vii) Change in Inventory mix.
(viii) Markdowns (both permanent and point of sale).
(ix) Retail markons and markups inconsistent with prior
period practice and performance; or advertising
calendar and planned advertising events.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"ISSUER": The Issuer shall be Fleet.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower and any acceptance made on
account of such letter of credit.
"LANDLORD'S LIEN STATES": Collectively, Pennsylvania, Washington, Virginia,
Arizona, Georgia, New Jersey, Oregon, Texas, Utah, and with respect to stores
opened after June 29, 2001, Alabama and Florida, and each other state, if any,
in which Applicable Law grants a landlord a priority lien for amounts due or to
become due under a Lease after the date hereof.
"LEAD BORROWER": Is defined in the Preamble hereto.
"LEASE": Any lease or other agreement, no matter how styled or structured,
pursuant to which a Borrower is entitled to the use or occupancy of any space.
"LENDERS' SPECIAL COUNSEL": Up to two legal counsel (one representing the
Agent and, if required, one representing the Lenders), plus any local legal
counsel deemed necessary by the Agent or the Lenders to deal with local legal
matters, selected by the Agent or the Lenders to represent their interests in
connection with the enforcement, attempted enforcement, or preservation of any
rights and remedies under this Agreement or any other Loan Document, as well as
in connection with any "workout", forbearance, or restructuring of the credit
facility contemplated hereby.
-16-
"LETTER-OF-CREDIT RIGHT": Has the meaning given that term in the UCC and also
refers to any right to payment or performance under an L/C, whether or not the
beneficiary has demanded or is at the time entitled to demand payment or
performance.
"LIABILITIES": Collectively, the following:
(a) All and each of the following, whether now existing or
hereafter arising, under this Agreement or under any of the other Loan
Documents:
(i) Any and all direct and indirect liabilities, debts,
and obligations of each Borrower to the Administrative Agent or any Revolving
Credit Lender, each of every kind, nature, and description, including under
Hedge Agreements.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or hereafter owing by
any Borrower to the Administrative Agent or any Revolving Credit Lender
(including all future advances whether or not made pursuant to a commitment by
the Administrative Agent or any Revolving Credit Lender), whether or not any of
such are liquidated, unliquidated, primary, secondary, secured, unsecured,
direct, indirect, absolute, contingent, or of any other type, nature, or
description, or by reason of any cause of action which the Administrative Agent
or any Revolving Credit Lender may hold against any Borrower.
(iii) All notes and other obligations of each Borrower now
or hereafter assigned to or held by the Administrative Agent or any Revolving
Credit Lender, each of every kind, nature, and description.
(iv) All interest, fees, and charges and other amounts
which may be charged by the Administrative Agent or any Revolving Credit Lender
to any Borrower and/or which may be due from any Borrower to the Administrative
Agent or any Revolving Credit Lender from time to time.
(v) All reasonable costs and expenses incurred or paid by
the Administrative Agent or any Revolving Credit Lender in respect of any
agreement between any Borrower and the Administrative Agent or any Revolving
Credit Lender or instrument furnished by any Borrower to the Administrative
Agent or any Revolving Credit Lender (including, without limitation, Costs of
Collection, reasonable attorneys' fees, and all reasonable court and litigation
costs and expenses).
(vi) Any and all covenants of each Borrower to or with the
Administrative Agent or any Revolving Credit Lender and any and all obligations
of each Borrower to act or to refrain from acting in accordance with any
agreement between that Borrower and the Administrative Agent or any Revolving
Credit Lender or instrument furnished by that Borrower to the Administrative
Agent or any Revolving Credit Lender.
(vii) Each of the foregoing as if each reference to the
"the Administrative Agent or any Revolving Credit Lender" were to each Affiliate
of the Administrative Agent.
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(b) Any and all direct or indirect liabilities, debts, and
obligations of each Borrower to the Administrative Agent or any Affiliate of the
Administrative Agent, each of every kind, nature, and description owing on
account of any service or accommodation provided to, or for the account of any
Borrower pursuant to this or any other Loan Document, including cash management
services and the issuances of L/Cs.
"LIBOR BUSINESS DAY": Any day which is both a Business Day and a day on which
the principal market in Libor funds in which Fleet National Bank participates is
open for dealings in United States Dollar deposits.
"LIBOR LOAN": Any Revolving Credit Loan which bears interest at a Libor Rate.
"LIBOR OFFER RATE": That rate of interest (rounded upwards, if necessary, to the
next 1/100 of 1%) determined by the Administrative Agent to be the highest
prevailing rate per annum at which deposits in U.S. Dollars are offered to Fleet
National Bank, by first-class banks in the Libor market in which Fleet National
Bank participates at or about 10:00 AM (Boston Time) two (2) Libor Business Days
before the first day of the Interest Period for the subject Libor Loan, for a
deposit approximately in the amount of the subject loan for a period of time
approximately equal to such Interest Period.
"LIBOR RATE": That per annum rate which is the aggregate of the Libor Offer Rate
plus the Applicable Margin for Libor Loans, except that, in the event that the
Administrative Agent determines that any Revolving Credit Lender may be subject
to the Reserve Percentage, the "Libor Rate" shall mean, with respect to any
Libor Loans then outstanding (from the date on which that Reserve Percentage
first became applicable to such Libor Loans), and with respect to all Libor
Loans thereafter made, an interest rate per annum equal the sum of (a) plus (b),
where:
(a) is the decimal equivalent of the following
fraction:
Libor Offer Rate
1 minus Reserve Percentage
(b) is the Applicable Margin for Libor Loans.
"LIQUIDATION": The exercise, by the Administrative Agent, of those rights
accorded to the Administrative Agent under the Loan Documents as a creditor of
the Borrowers during the existence of an Event of Default looking towards the
realization on the Collateral. Derivations of the word "Liquidation" (such as
"Liquidate") are used with like meaning in this Agreement.
"LOAN ACCOUNT": Is defined in Section 2-7.
"LOAN DOCUMENTS": This Agreement, the Pledge Agreement, each instrument and
document executed and/or delivered as contemplated by Article 3, below, and each
other instrument or document from time to time executed and/or delivered in
connection with the arrangements contemplated hereby or in connection with any
transaction with the Administrative Agent or any Affiliate of the Administrative
Agent, including, without limitation, any transaction which
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arises out of any cash management, depository, investment, letter of credit,
interest rate protection, or equipment leasing services provided by the
Administrative Agent or any Affiliate of the Administrative Agent, as each may
be amended from time to time.
"MAJORITY LENDERS": Prior to termination of the Revolving Credit Commitments,
Revolving Credit Lenders (other than Delinquent Revolving Credit Lenders)
holding more than 50% of the Revolving Credit Commitments (other than any
Revolving Credit Commitments held by Delinquent Revolving Credit Lenders). After
termination of the Revolving Credit Commitments, Revolving Credit Lenders (other
than Delinquent Revolving Credit Lenders) holding more than 50% of the
Liabilities (other than any Liabilities held by Delinquent Revolving Credit
Lenders).
"MATERIAL SUBSIDIARIES": Collectively, (i) BMS Distributing Corp., a Delaware
corporation, (ii) CBI Distributing Corp., a Delaware corporation, (iii) Claire's
Boutiques, Inc., a Delaware corporation, and (iv) each other direct and indirect
domestic Subsidiary of the Lead Borrower which has assets in excess of
$5,000,000 and/or has revenue in excess of $10,000,000 in any fiscal year
(excluding intercompany revenue and assets, in each case as determined in
accordance with GAAP) or is otherwise a domestic Subsidiary which holds title to
or has possession of Inventory, Accounts (excluding intercompany Accounts) or
Collateral (excluding intercompany Accounts) or is utilized in the distribution
of Inventory, Accounts (excluding intercompany Accounts) or Collateral
(excluding intercompany Accounts), provided that any such Subsidiary that has
Inventory or Accounts (excluding intercompany Accounts) having an aggregate
value not in excess of $1,000,000 shall not constitute a Material Subsidiary
until such time as the aggregate value of the assets (excluding intercompany
Accounts) of such non-Material Subsidiaries exceeds $10,000,000 (at which point
the Administrative Agent may deem one or more of such Subsidiaries to be
Material Subsidiaries for purposes hereof so that the aggregate value of assets
(excluding intercompany Accounts) of non-Material Subsidiaries does not exceed
$10,000,000).
"MATURITY DATE": March 31, 2009.
"NEW YORK APARTMENT": The apartment owned by the Lead Borrower in Manhattan, New
York.
"NOMINEE": A business entity (such as a corporation or limited partnership)
formed by the Administrative Agent to own or manage any Post Foreclosure Asset.
"NOTICE OF ACCELERATION": Written notice as follows:
(a) From the Administrative Agent to the Revolving Credit Lenders,
as provided in Section 12-1(a).
(b) From the Majority Lenders to the Administrative Agent, as
provided in Section 12-1(b).
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"OVERLOAN": A loan, advance, or providing of credit support (such as the
issuance of any L/C) to the extent that, immediately after its having been made,
Availability is less than zero.
"PARTICIPANT": Is defined in Section 18-16, hereof.
"PAYMENT INTANGIBLE": Has the meaning given that term in the UCC and also refers
to any General Intangible under which the Account Debtor's primary obligation is
a monetary obligation.
"PERMISSIBLE OVERLOANS": Revolving Credit Loans which are OverLoans, but as to
which each of the following conditions is satisfied: (a) the Revolving Credit
Ceiling is not exceeded; and (b) when aggregated with all other Permissible
OverLoans, such Revolving Credit Loans do not aggregate more than ten percent
(10%) of the aggregate of the Borrowing Base; (c) the Permissible Overloans
shall not remain outstanding for more than thirty (30) consecutive days, and (d)
such Revolving Credit Loans are made or undertaken in the Administrative Agent's
discretion to protect and preserve the interests of the Revolving Credit
Lenders.
"PERMITTED ACQUISITIONS": An Acquisition in which each of the following
conditions are satisfied:
(i) No Default then exists or would arise from the consummation of
such Acquisition.
(ii) Such Acquisition shall have been approved by the Board of
Directors of the Person (if such Person is a corporation) which is the subject
of such Acquisition and such Person shall not have announced that it will oppose
such Acquisition or shall not have commenced any action which alleges that such
Acquisition will violate applicable law.
(iii) At any time at which the Borrowers have made, in the most
recent twelve month period (including the month in which the Acquisition is
proposed to be made), more than $30,000,000 in Acquisitions (taking into account
the entire purchase price of any such Acquisition, including, without
limitation, cash, equity and assumed liabilities (excluding accounts payable and
normal, ordinary course operating accrued liabilities)), the Lead Borrower shall
have furnished the Administrative Agent with at least ten (10) days prior notice
of such intended Acquisition and shall have furnished the Administrative Agent,
at the request of the Administrative Agent, with a current draft of the
acquisition agreement, summary of any due diligence undertaken by the Borrowers
in connection with such Acquisition, appropriate financial statements of the
Person which is the subject of such Acquisition, pro forma financial statements
for the twelve month period following such Acquisition after giving effect to
such Acquisition, and such other information as the Administrative Agent may
reasonably require.
(iv) After consummation of the Acquisition, a Borrower shall own
directly or indirectly a majority of the equity interests in the Person being
acquired and shall control a
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majority of any voting interests, and/or shall otherwise control the governance
of the Person being acquired.
(v) If the Acquisition involves a merger, consolidation or stock
acquisition, the Person which is the subject of such Acquisition shall be
engaged in a line of business related to that of the Lead Borrower as conducted
in accordance with Section 4-22 hereof (provided that, notwithstanding the
provisions of Section 4-22, in connection with an Acquisition, the Lead Borrower
may during the term of the Agreement make investments of up to $7,500,000
individually and in the aggregate (provided that such amount shall be
$50,000,000 individually and in the aggregate (but no additional investments) so
long as at the time any such investment is made after investments of $7,500,000
individually and in the aggregate have already been made, Excess Liquidity is at
least $100,000,000) in Persons which are not engaged in a line of business
related to that of the Lead Borrower as conducted in accordance with Section
4-22 hereof), and a Borrower shall be the surviving entity in any such merger or
consolidation.
(vi) If the Person which is the subject of such Acquisition will be
maintained as a domestic Subsidiary of the Borrower and is a Material
Subsidiary, such Person shall have entered into a joinder agreement (in the form
of EXHIBIT 4-19(F)) pursuant to which it becomes a Borrower hereunder, to be
effective upon the consummation of the Acquisition, and shall have granted a
security interest in such Person's Inventory, Accounts and other property of the
same nature as constitutes Collateral in order to secure the Liabilities, and
shall have entered such other documents, instruments and agreements and provided
such due diligence information and certificates as are required by the
Administrative Agent.
(vii) As of the date of such Acquisition, Excess Liquidity has been
at least $20,000,000 for the prior thirty (30) days and Excess Liquidity is
projected on a pro forma basis to be at least $20,000,000 for the thirty (30)
day period immediately following the consummation of such Acquisition.
(viii) Any Indebtedness incurred or assumed by a Borrower in
connection with such Acquisition shall be in compliance with the provisions of
Section 4-7.
Notwithstanding the foregoing, but subject in any event to the
limitations set forth in clauses (v) and (vii) above and the other provisions of
this Agreement, any Acquisition by a Person that is not a Borrower (or a
Subsidiary that would be required to become a Borrower after giving effect to
the Acquisition by virtue of becoming a Material Subsidiary), including any
foreign direct or indirect Subsidiary of the Lead Borrower, shall be a Permitted
Acquisition.
"PERMITTED ENCUMBRANCES": Any of the following:
(a) Encumbrances for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Borrowers in
accordance with GAAP, and provided further that, no notice of tax lien has been
filed with respect thereto.
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(b) Carrier's, warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or similar Encumbrances arising in the ordinary course
of business which are not overdue or that are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrowers in accordance with GAAP.
(c) Pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation.
(d) Deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature in the
ordinary course of business.
(e) Easements, rights of way, leases, restrictions and other
similar encumbrances incurred in the ordinary course of business that in the
aggregate are not substantial in amount and which do not in any case materially
detract from the value of the real estate subject thereto or materially
interfere with the conduct of the business of the Borrowers.
(f) Judgment liens in respect of judgments not in excess of
$3,000,000 in the aggregate so long as such liens do not attach to any
Collateral.
The inclusion of the foregoing as "Permitted Encumbrances" shall not
limit or impair the right of the Administrative Agent to impose Reserves on
account thereof in accordance with the provisions of this Agreement.
"PERMITTED EXISTING LITIGATION AMOUNT": In connection with the litigation
disclosed in writing to the Administrative Agent pursuant to a letter from the
Lead Borrower dated March 31, 2004 (the "Existing Litigation"), an amount not to
exceed the amount set forth in such letter in connection with a judgment
rendered or a settlement in connection with the Existing Litigation.
"PERMITTED INVESTMENTS": Each of the following:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America);
(b) investments in commercial paper maturing not more than one
year from the date of acquisition thereof and having, at such date of
acquisition, a credit rating of not less than prime-one from Standard & Poors or
A-1 from ▇▇▇▇▇'▇ Investment Services, Inc.;
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing not more than one year from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof
that has a combined capital and surplus and undivided profits of not less than
$500,000,000;
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(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above (without regard
to the limitation on maturity contained in such clause) and entered into with a
financial institution satisfying the criteria described in clause (c) above;
(e) marketable direct obligations issued by any U.S. corporation,
state of the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year from the
date of acquisition thereof and, at the time of acquisition, having a rating of
no lower than single A from either Standard & Poors or from ▇▇▇▇▇'▇ Investment
Services, Inc.;
(f) auction rate preferred stocks, whether taxable, tax-exempt or
DRD, issued by a domestic or foreign corporation, a domestic or foreign bank, or
closed-end municipal or taxable bond fund, maturing within one year from the
date of acquisition thereof and, at the time of acquisition, having a rating of
no lower than single A from either Standard & Poors or from ▇▇▇▇▇'▇ Investment
Services, Inc.;
(g) floating rate, variable rate and auction rate bonds, whether
taxable or tax-exempt, issued by municipalities, states, state agencies,
political subdivision of states or any public instrumentality thereof, maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having a rating of no lower than single A from either Standard &
Poors or from ▇▇▇▇▇'▇ Investment Services, Inc.;
(h) investments in money market funds, substantially all the
assets of which are comprised of securities of the types described in clauses
(a) through (e) above;
(i) investments of up to $1,000,000 in bonds issued by the State of Israel;
(j) subject to the provisions of Section 4-19, investments in
Subsidiaries that are not Borrowers as long as no Default exists or would arise
therefrom and as long as, for each of the thirty (30) days prior to, and after
giving effect to, the making of such investments, Excess Liquidity is at least
$20,000,000.00 and Excess Liquidity is projected on a pro forma basis to be at
least $20,000,000.00 for the thirty (30) day period immediately following the
making of such investments (it being acknowledged that existing investments in
non-Borrower Subsidiaries will not be required to be divested); and
(k) investments in direct and indirect wholly-owned Subsidiaries
that are Borrowers.
"PERSON": Any natural person, and any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise or entity.
"PLEDGE AGREEMENT": The Pledge Agreement entered into by the Borrowers in favor
of the Administrative Agent and the Revolving Credit Lenders, pursuant to which
the equity of each Borrower (other than the Lead Borrower) is pledged.
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"POST FORECLOSURE ASSET": All or any part of the Collateral, ownership of which
is acquired by the Administrative Agent or a Nominee on account of the "bidding
in" at a disposition as part of a Liquidation or by reason of a "deed in lieu"
type of transaction.
"PRIMARY BLOCKED ACCOUNT": The concentration account maintained by the Lead
Borrower with LaSalle Bank which is subject to the Blocked Account Agreement as
of the date hereof, or such other account as the Borrower may so designate and
the Administrative Agent shall approve. The Primary Blocked Account shall be
deemed a Blocked Account for all purposes of this Agreement and shall be subject
to a Blocked Account Agreement.
"PROCEEDS": Includes, without limitation, "Proceeds" as defined in the UCC and
each type of property described in Section 7-1 hereof.
"REALTY SALE": Any sale, lease, conveyance, transfer, financing, or other
disposition by any Borrower (including by way of merger, consolidation or a
sale-leaseback transaction) in any transaction or group of transactions that are
part of a common plan, of any real estate described on EXHIBIT 1-1 hereto.
"RECEIPTS": All cash, cash equivalents, money, checks, credit card slips,
receipts and other Proceeds from any sale of the Collateral.
"RECEIVABLES COLLATERAL": That portion of the Collateral which consists of (i)
Accounts, (ii) Instruments arising from, relating to, or constituting proceeds
of, the Borrowers' Accounts and Inventory, (iii) Documents relating to the
Borrowers' Inventory, (iv) Payment Intangibles arising from, relating to, or
constituting proceeds of, the Borrowers' Accounts and Inventory, and (v)
Letter-of-Credit Rights, bankers' acceptances, and all other rights to payment
arising from, or relating to, or constituting proceeds of, the Borrowers'
Accounts and Inventory.
"REGISTER": Is defined in Section 15-2(c).
"RELATED ENTITY": Any Person in which a Borrower is a partner, joint venturer,
stockholder, or member or in which a Borrower holds an equity or other ownership
interest, and which Person does not constitute a Subsidiary of any Borrower.
"REQUIREMENTS OF LAW": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
(c) That Person's by-laws and/or other instruments which deal with
corporate or similar governance, as applicable.
"RESERVE EVENT": Any of the following: (i) a Cash Control Event, (ii) for any 12
consecutive months, EBITDA, as evidenced by a monthly compliance certificate (as
required by Section 5-5(b)) of the Lead Borrower satisfactory to the
Administrative Agent, is less than $100,000,000,
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or (iii) the outstanding Revolving Credit Loans and L/Cs at any time exceed 80%
of the Appraised Inventory Liquidation Value.
"RESERVE PERCENTAGE": The decimal equivalent of that rate applicable to a
Revolving Credit Lender under regulations issued from time to time by the Board
of Governors of the Federal Reserve System for determining the maximum reserve
requirement of that Revolving Credit Lender with respect to "Eurocurrency
liabilities" as defined in such regulations. The Reserve Percentage applicable
to a particular Libor Loan shall be based upon that in effect during the subject
Interest Period, with changes in the Reserve Percentage which take effect during
such Interest Period to take effect (and to consequently change any interest
rate determined with reference to the Reserve Percentage) if and when such
change is applicable to such loans.
"RESERVES": The following: Availability Reserves and Inventory Reserves.
Notwithstanding any provisions of this Agreement to the contrary, (a) the
imposition of a new Reserve or a change to a then existing Reserve may be made
only with not less than ten (10) Business Days prior notice to the Lead Borrower
and only as permitted for Availability Reserves and Inventory Reserves, except
that an increase or decrease in the amount of a then existing Reserve, which
increase or decrease is calculated in accordance with the same methodology as
was utilized to establish the existing Reserve and merely reflects the results
of mathematical computations of the items already in the category to which such
Reserve applies (such as a change in the aggregate of Customer Credit
Liabilities or leases in jurisdictions pursuant to which a priority landlord's
lien may exist), may be made without such notice, (b) a new Reserve or change a
Reserve may be established only utilizing the same criteria as utilized for
other of its similar borrowers, subject to the limitations on establishing
additional Availability Reserves and Inventory Reserves, and (c) Availability
Reserves imposed for Rent shall at no time exceed the sum of (i) two months base
rent for any locations in Landlord's Lien States (except no such Reserve shall
be established for locations for which the Borrowers have obtained a landlord's
waiver reasonably acceptable in form and substance to the Administrative Agent),
plus (ii) subject to the provisions of Section 4-5(d) hereof, two months base
rent for any warehouses utilized by any Borrower (except no such Reserve shall
be established for warehouses for which the Borrowers have obtained a
warehouseman's waiver reasonably acceptable in form and substance to the
Administrative Agent), plus (iii) an amount equal to all past due rent and
warehouse charges for any of the Borrowers' locations, wherever located .
"REVOLVING CREDIT": Is defined in Section 2-1.
"REVOLVING CREDIT CEILING": $60,000,000.00, less any permanent reduction in the
Revolving Credit Ceiling pursuant to Section 2-11.
"REVOLVING CREDIT COMMITMENT": With respect to each Revolving Credit Lender,
that amount set forth on EXHIBIT 2-20, annexed hereto (as such amounts may
change in accordance with the provisions of this Agreement).
"REVOLVING CREDIT COMMITMENT FEE": Is defined in Section 2-12.
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"REVOLVING CREDIT COMMITMENT PERCENTAGE": With respect to each Revolving Credit
Lender, that percentage set forth on EXHIBIT 2-20, annexed hereto (as such
percentages may change in accordance with the provisions of this Agreement).
"REVOLVING CREDIT LENDERS": Each Person who is or becomes a "Revolving Credit
Lender" in accordance with the provisions of this Agreement.
"REVOLVING CREDIT LOANS": Loans made under the Revolving Credit, except that
where the term "Revolving Credit Loan" is used with reference to available
interest rates applicable to the loans under the Revolving Credit, it refers to
so much of the unpaid principal balance of the Loan Account as bears the same
rate of interest for the same Interest Period. (See Section 2-10(c)).
"REVOLVING CREDIT NOTE": Is defined in Section 2-8.
"SEC": The Securities and Exchange Commission.
"SOLVENT": 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 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.
"SPECIFIED EVENT OF DEFAULT": .Any Event of Default under Section 9-4(b) (except
with respect to Events of Default relating to Sections 5-2, 5-3, 5-4 and 5-8(c))
and Section 9-4(c) (except with respect to Events of Default under Sections 6-1,
7-5, 7-9 and 7-10).
"STANDBY L/CS": L/Cs issued pursuant to this Agreement, the drawing under which
does not require the delivery of bills of lading, airway bills or other similar
types of documents of title, or which are customarily referred to as standby
letters of credit.
"STATED AMOUNT": The maximum amount for which an L/C may be honored.
"SUBSIDIARY": Any corporation, association, partnership, limited liability
company, trust, or other business entity of which the designated parent shall at
any time own directly or indirectly through a Subsidiary or Subsidiaries at
least a majority (by number of votes or controlling interests) of the
outstanding voting interests.
"SUPPORTING OBLIGATION": Has the meaning given that term in the UCC and also
refers to a Letter-of-Credit Right or secondary obligation which supports the
payment or performance of an Account, a Document, or an Instrument.
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"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the occurrence
of any event described in Section 9-10 below; or (c) the Administrative Agent's
notice to the Lead Borrower setting the Termination Date on account of the
occurrence and continuance of any Event of Default other than as described in
Section 9-10 below. An Event of Default shall be deemed to be continuing unless
it is waived in writing by the Administrative Agent and the Lenders or unless it
has been cured by the Borrowers and such cure has been accepted in writing by
the Administrative Agent and the Lenders, in each case in accordance with
Section 14 hereof.
"TRANSFER": Wire transfer pursuant to the wire transfer system maintained by the
Board of Governors of the Federal Reserve Board, or as otherwise may be agreed
to from time to time by the Administrative Agent making such Transfer and the
subject Revolving Credit Lender. Wire instructions may be changed in the same
manner that Notice Addresses may be changed (Section 16-1), except that no
change of the wire instructions for Transfers to any Revolving Credit Lender
shall be effective without the consent of the Administrative Agent.
"UCC": The Uniform Commercial Code as in effect from time to time in
Massachusetts.
"UNANIMOUS CONSENT": Prior to termination of the Revolving Credit Commitments,
Consent of Revolving Credit Lenders (other than Delinquent Revolving Credit
Lenders) holding 100% of the Revolving Credit Commitments (other than Revolving
Credit Commitments held by a Delinquent Revolving Credit Lender). After
termination of the Revolving Credit Commitments, Revolving Credit Lenders (other
than Delinquent Revolving Credit Lenders) holding 100% of the Liabilities (other
than any Liabilities held by Delinquent Revolving Credit Lenders).
"UNRESTRICTED TRUSTS": The one or more so-called "rabbi" trusts maintained by
the Lead Borrower in connection with deferred compensation benefits for
employees, each of which is an asset of the Lead Borrower and is available to
the creditors of the Lead Borrower in the event of the Lead Borrower's
bankruptcy or insolvency.
"UNUSED FEE": A fee equal to the applicable percentage per annum of the average
difference, during the quarter just ended (or relevant period with respect to
the payment being made on the Termination Date) between the Revolving Credit
Ceiling and the sum of (a) the aggregate of the unpaid principal balance of the
Revolving Credit Loans and (b) the undrawn Stated Amount of L/Cs outstanding
during the relevant period, as determined based on the following criteria:
LEVEL ADJUSTED EXCESS LIQUIDITY UNUSED FEE
-----------------------------------------------------------------------
1 Greater than $100,000,000 0.20%
-----------------------------------------------------------------------
2 Less than or equal to 0.25%
$100,000,000, but greater
than
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$75,000,000
-----------------------------------------------------------------------
3 Less than or equal to 0.30%
$75,000,000, but greater
than or equal to
$50,000,000
-----------------------------------------------------------------------
4 Less than $50,000,000 0.375%
ARTICLE 2 - THE REVOLVING CREDIT:
2-1. ESTABLISHMENT OF REVOLVING CREDIT.
(a) Subject to Section 2-20, the Revolving Credit Lenders hereby
establish a revolving line of credit (the "REVOLVING CREDIT") in the Borrowers'
favor and each Revolving Credit Lender severally and not jointly agrees, subject
to, and in accordance with, this Agreement, acting through the Administrative
Agent, to extend credit to the Borrowers on a revolving basis, in the form of
Revolving Credit Loans and participations in L/Cs and otherwise provide
financial accommodations to and for the account of the Borrowers as provided
herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be made with reference to the Borrowing Base and shall be
subject to Availability.
The Borrowing Base and Availability shall be determined by the
Administrative Agent (in accordance with the respective definitions thereof and
of Availability Reserves and Inventory Reserves) by reference to Borrowing Base
Certificates furnished as provided in Section 5-4, below. Such determination
shall take into account those Reserves as may be applicable thereto.
(c) The commitment of each Revolving Credit Lender to provide such
loans, advances, and financial accommodations is subject to Section 2-20 and to
the following clause (d).
(d) The proceeds of borrowings under the Revolving Credit shall be
used solely to refinance existing Indebtedness of the Borrowers and for general
corporate purposes, including to fund stock repurchases and dividends, for the
Borrowers' working capital and Capital Expenditures, and for Permitted
Acquisitions, all solely to the extent permitted by this Agreement.
Notwithstanding the foregoing, in the event that the Borrowers intend to use the
proceeds of any Revolving Credit Loan for the purpose of funding a stock
repurchase or paying dividends or distributions to shareholders, the Borrowers
shall notify the Administrative Agent thereof in the applicable Revolving Credit
Loan request pursuant to Section 2-5, and shall provide the Administrative Agent
with a solvency certificate, and with such other evidence of solvency (including
financial calculations) as the Administrative Agent may request, prior to the
funding by the Lenders of any such requested Revolving Credit Loan (provided
that no such solvency certificate shall be required if the dividend or
distribution is being made solely from one Borrower to another Borrower).
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2-2. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any
Revolving Credit Loan, or otherwise to provide any credit to or for the benefit
of the Borrowers where the result of such Revolving Credit Loan or credit is an
OverLoan.
(b) The Revolving Credit Lenders' obligations, among themselves,
are subject to Section 11-2(a) (which relates to each Revolving Credit Lender's
making amounts available to the Administrative Agent) and to Section 14-3(i)
(which relates to Permissible OverLoans).
(c) The Revolving Credit Lenders' providing of an OverLoan on any
one occasion does not affect the obligations of each Borrower hereunder
(including each Borrower's obligation to immediately repay any amount which
otherwise constitutes an OverLoan) nor obligate the Revolving Credit Lenders to
do so on any other occasion.
2-3. RISKS OF VALUE OF COLLATERAL. The Administrative Agent's reference
to a given asset in connection with the making of Revolving Credit Loans and the
providing of financial accommodations under the Revolving Credit and/or the
monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Administrative Agent or any Revolving Credit Lender
relative to the actual value of the asset in question. All risks concerning the
value of the Collateral are and remain upon the Borrowers. All Collateral
secures the prompt, punctual, and faithful performance of the Liabilities
whether or not relied upon by the Administrative Agent in connection with the
making of Revolving Credit Loans and the providing of financial accommodations
under the Revolving Credit.
2-4. COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT. Subject to the provisions of this Agreement, including Article 3 hereof,
the Revolving Credit Lenders shall make a loan or advance under the Revolving
Credit and the Issuer shall issue an L/C for the account of any Borrower, in
each instance if duly and timely requested by the Lead Borrower as provided
herein provided that:
(a) Availability will not be exceeded.
(b) No Default has occurred and is continuing.
(c) 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
each 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.
(d) 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.
(e) The Administrative Agent shall have received the timely
delivery of the most recently required Borrowing Base Certificate, with
each such Borrowing Base Certificate including schedules as required by
the Administrative Agent.
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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 2-4 have
been satisfied at that time and that after giving effect to such extension of
credit the Borrowers shall continue to be in compliance with the Borrowing Base.
The conditions set forth in this Section 2-4 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.
2-5. REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for Revolving Credit Loans or for the continuance or
conversion of an interest rate applicable to a Revolving Credit Loan
may be requested by the Lead Borrower in such manner as may from time
to time be reasonably acceptable to the Administrative Agent.
(b) Subject to the provisions of this Agreement, the Lead Borrower
may request a Revolving Credit Loan and elect an interest rate and
Interest Period to be applicable to that Revolving Credit Loan by
giving notice to the Administrative Agent by no later than the
following:
(i) If such Revolving Credit Loan is to be or is to be
converted to a Base Margin Loan: By 12:00 noon on the
Business Day on which the subject Revolving Credit
Loan is to be made or is to be so converted. Base
Margin Loans requested by the Lead Borrower, other
than those resulting from the conversion of a Libor
Loan, shall not be less than $10,000.00.
(ii) If such Revolving Credit Loan is to be, or is to be
continued as, or converted to, a Libor Loan: By
l:00PM three (3) Libor Business Days before the
commencement of any new Interest Period or the end of
the then applicable Interest Period. Libor Loans and
conversions to Libor Loans shall each be not less
than $1,000,000 and in increments of $1,000,000 in
excess of such minimum.
(iii) Any Libor Loan which matures while an Event of
Default exists shall be converted to a Base Margin
Loan notwithstanding any notice from the Lead
Borrower that such Loan is to be continued as a Libor
Loan.
(c) Any request for a Revolving Credit Loan or for the continuance
or conversion of an interest rate applicable to a Revolving Credit Loan which is
made after the applicable deadline therefor, as set forth above, shall be deemed
to have been made at the opening of business on the then next Business Day or
Libor Business Day, as applicable.
(d) The Lead Borrower may request that the Administrative Agent
cause the issuance by the Issuer of L/Cs for the account of the Borrowers as
provided in Section 2-15.
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(e) The Administrative Agent may rely on any request for a
Revolving Credit Loan or other financial accommodation under the Revolving
Credit which the Administrative Agent, in good faith, believes to have been made
by a Person duly authorized to act on behalf of the Lead Borrower and may, in
good faith, decline to make any such requested loan or advance, or issuance, or
to provide any such financial accommodation pending the Administrative Agent's
being furnished with such documentation concerning that Person's authority to
act as may be satisfactory to the Administrative Agent.
(f) A request by the Lead Borrower for loan or advance, or other
financial accommodation under the Revolving Credit shall be irrevocable and
shall constitute certification by each Borrower that as of the date of such
request, each of the following is true and correct:
(i) Each representation which is made herein or in any of
the Loan Documents is then true and complete in all
material respects as of and as if made on the date of
such request (except for representations that relate
to an earlier date, in which case that representation
shall have been true on such earlier date).
(ii) No Default then exists.
(g) If, at any time or from time to time, any Default exists:
(i) The Administrative Agent may, or at the request of
the Majority Lenders shall, suspend the Revolving
Credit immediately.
(ii) Neither the Administrative Agent nor any Revolving
Credit Lender shall be obligated, during such
suspension, to make any Revolving Credit Loans or to
provide any financial accommodation hereunder nor
shall the Administrative Agent, any Revolving Credit
Lender or the Issuer be obligated, during such
suspension, to issue, or cause to be issued, any L/C.
(iii) The right of the Lead Borrower to request any Libor
Loan or to convert any Base Margin Loan to a Libor
Loan shall be suspended.
2-6 MAKING OF REVOLVING CREDIT LOANS.
(a) A Revolving Credit Loan shall be made by the transfer of the
proceeds of such Revolving Credit Loan to the Primary Blocked Account or as
otherwise instructed by the Lead Borrower.
(b) A Revolving Credit Loan shall be deemed to have been made
under the Revolving Credit (and the Borrowers shall be indebted to the
Administrative Agent and the Revolving Credit Lenders for the amount thereof
immediately) at the following:
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(i) The Administrative Agent's transfer of the proceeds
of such Revolving Credit Loan in accordance with the
Lead Borrower's instructions on thus Agreement (if
such Revolving Credit Loan is of funds requested by
the Lead Borrower).
(ii) The charging of the amount of such Revolving Credit
Loan to the Loan Account in accordance with the terms
hereof (in all other circumstances).
(c) There shall not be any recourse to or liability of the
Administrative Agent or any Revolving Credit Lender, on account of:
(i) Any delay in the making of any Revolving Credit Loan
requested under the Revolving Credit.
(ii) Any delay by any bank or other depository institution
in treating the proceeds of any such Revolving Credit
Loan as collected funds.
(iii) Any delay in the receipt, and/or any loss, of funds
which constitute a Revolving Credit Loan under the
Revolving Credit, the wire transfer of which was
properly initiated by the Administrative Agent in
accordance with wire instructions provided to the
Administrative Agent by the Lead Borrower.
2-7. THE LOAN ACCOUNT.
a) An account ("LOAN ACCOUNT") shall be opened on the books of
the Administrative Agent in which a record shall be kept of all Revolving Credit
Loans made and L/Cs issued under the Revolving Credit.
(b) The Administrative Agent shall also keep a record (either in
the Loan Account or elsewhere, as the Administrative Agent may from time to time
elect) of all interest, fees, service charges, costs, expenses, and other debits
owed to the Administrative Agent and each Revolving Credit Lender on account of
the Liabilities and of all credits against such amounts so owed.
(c) All credits against the Liabilities shall be conditional upon
final payment to the Administrative Agent for the account of each Revolving
Credit Lender of the items giving rise to such credits. The amount of any item
credited against the Liabilities which is charged back against the
Administrative Agent or any Revolving Credit Lender for any reason or is not so
paid shall be a Liability and shall be added to the Loan Account, whether or not
the item so charged back or not so paid is returned.
(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which any Borrower is obligated hereunder are
payable on demand. In the determination of Availability, the Administrative
Agent may deem fees, service charges, accrued interest, and other payments which
will be due and payable between the date of such
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determination and the first day of the then next succeeding month as having been
advanced under the Revolving Credit whether or not such amounts are then due and
payable.
(e) The Administrative Agent, without the request of the Lead
Borrower, may advance under the Revolving Credit any interest, fee, service
charge, or other payment to which the Administrative Agent or any Revolving
Credit Lender is entitled from any Borrower pursuant hereto and may charge the
same to the Loan Account notwithstanding that such amount so advanced may result
in the Borrowing Base being exceeded. Such action on the part of the
Administrative Agent shall not constitute a waiver of the Administrative Agent's
rights and each Borrower's obligations under Section 2-9(b). Any amount which is
added to the principal balance of the Loan Account as provided in this Section
2-7(e) shall bear interest at the interest rate then and thereafter applicable
to Base Margin Loans.
(f) Any statement rendered by the Administrative Agent or any
Revolving Credit Lender to the Lead Borrower concerning the Liabilities shall be
considered correct and accepted by each Borrower and shall be conclusively
binding upon each Borrower unless the Lead Borrower provides the Administrative
Agent with written objection thereto within sixty (60) days from the mailing of
such statement, which written objection shall indicate, with particularity, the
reason for such objection. The Loan Account and the Administrative Agent's books
and records concerning the loan arrangement contemplated herein and the
Liabilities shall be prima facie evidence and proof of the items described
therein.
2-8. THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by Notes (each, a "REVOLVING CREDIT NOTE") in the form of
EXHIBIT 2-8, annexed hereto, executed by each Borrower, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, however, to establish or prove any Liability. Upon a
Revolving Lender's request and, if applicable, the delivery of an appropriate
lost instrument indemnity, each Borrower shall execute a replacement thereof and
deliver such replacement to the Administrative Agent in the event that any
Revolving Credit Note is ever lost, mutilated, or destroyed.
2-9. PAYMENT (AND PREPAYMENTS) OF THE LOAN ACCOUNT.
(a) Subject to the provisions of Section 2-9(f), the Borrowers may
prepay all or any portion of the principal balance of the Loan Account from time
to time until the Termination Date, provided that any partial prepayment of the
Loan Account shall be in a minimum amount equal to $10,000.
(b) Subject to the provisions of Section 2-9(f), the Borrowers,
without notice or demand from the Administrative Agent or any Revolving Credit
Lender, shall pay the Administrative Agent that amount, from time to time, which
is necessary so that there is no OverLoan outstanding.
(c) Subject to the provisions of Section 2-9(f) and without
limiting any of the Administrative Agent's rights during the continuance of an
Event of Default,
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during the continuance of a Cash Control Event, the Borrowers shall prepay the
Revolving Credit
(i) in an amount equal to the proceeds realized from the
sale or other disposition of, or realization upon,
any Collateral;
(ii) in an amount equal to the proceeds realized from any
Realty Sale, Capital Event and/or condemnation and
casualty insurance proceeds received by any Borrower
to the extent that such proceeds are not reinvested
in replacement assets within 180 days after the date
of receipt of such proceeds; and
(iii) in accordance with the provisions of Article 6
hereof.
All amounts prepaid under this Section 2-9(c) may be reborrowed under the
Revolving Credit, subject to and in accordance with, the terms of this
Agreement.
(d) The Borrowers shall repay, and hereby jointly and severally
promise to pay, the then entire unpaid balance of the Loan Account and all other
Liabilities, and all other amounts owing hereunder, on the Termination Date.
(e) No payment of Libor Loans shall be permitted hereunder other
than on the last day of an Interest Period applicable thereto, unless the
Borrowers simultaneously reimburse the Revolving Credit Lenders for all amounts
described in Section 2-9(f) below associated therewith. In order to avoid
payment of the amounts described in Section 2-9(f) below, as long as no Event of
Default has occurred and is continuing, at the request of the Lead Borrower, the
Administrative Agent shall hold all amounts required to be applied to Libor
Loans in a non-interest bearing 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 Administrative Agent's rights upon the subsequent occurrence of an Event of
Default).
(f) The Borrowers shall indemnify the Administrative Agent and
each Revolving Credit Lender and hold the Administrative Agent and each
Revolving Credit Lender harmless from and against any loss, cost or expense
(including loss of anticipated profits and amounts payable by the Administrative
Agent or such Revolving Credit Lender on account of "breakage fees" (so-called))
which the Administrative Agent or such Revolving Credit Lender may sustain or
incur (including, without limitation, by virtue of acceleration after the
occurrence of any Event of Default) as a consequence of the following:
(i) Default by any Borrower in payment of the principal
amount of or any interest on any Libor Loan as and
when due and payable, including any such loss or
expense arising from interest or fees payable by such
Revolving Credit Lender in order to maintain its
Libor Loans.
(ii) Default by any Borrower in making a borrowing or
conversion after the Lead Borrower has given (or is
deemed to have given) a request for a
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Revolving Credit Loan or a request to convert a
Revolving Credit Loan from one applicable interest
rate to another.
(iii) The making of any payment on a Libor Loan or the
making of any conversion of any such Loan to a Base
Margin Loan on a day that is not the last day of the
applicable Interest Period with respect thereto.
(g) At least 5 Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of America
or a state thereof (herein, a "Foreign Lender") agrees that it will deliver to
each of the Borrower and the Administrative Agent two duly completed copies of
either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI (or any
subsequent versions thereof or successors thereof), or, in the case of a Foreign
Lender claiming exemption from U.S. federal withholding tax under Section 871(h)
or 881(c) of the Code with respect to payments of "portfolio interest", a
statement substantially in the form of Exhibit I (any such certificate an
"Exemption Certificate") and a Form W-8BEN (or any subsequent versions thereof
or successors thereto), certifying in either case that such Foreign Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Foreign
Lender which so delivers a Form W-8BEN or Form W-8ECI further undertakes to
deliver to each of the Borrower and the Administrative Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Administrative Agent, in each case certifying that such Foreign Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Foreign Lender from duly completing and delivering any such form with respect to
it and such Foreign Lender advises the Borrower and the Administrative Agent
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
2-10. INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the Base
Margin Rate unless timely notice is given (as provided in Section 2-5) that the
subject Revolving Credit Loan (or a portion thereof) is, or is to be converted
to, a Libor Loan.
(b) Each Revolving Credit Loan which consists of a Libor Loan
shall bear interest at the applicable Libor Rate.
(c) Subject to, and in accordance with, the provisions of this
Agreement, the Lead Borrower may cause all or a part of the unpaid principal
balance of the Loan Account to bear interest at the Base Margin Rate or the
Libor Rate as specified from time to time by the Lead Borrower.
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(d) The Lead Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that, in addition to interest at
the Base Margin Rate, there are more than six (6) Libor Rates applicable to the
Revolving Credit Loans at any one time.
(e) The Borrowers shall pay accrued and unpaid interest on each
Revolving Credit Loan in arrears as follows:
(i) On the applicable Interest Payment Date for that
Revolving Credit Loan.
(ii) On the Termination Date and on the End Date.
(iii) During the existence of any Event of Default, with
such frequency as may be determined by the
Administrative Agent.
(f) During the existence of any Event of Default (and whether or
not the Administrative Agent exercises the Administrative Agent's rights on
account thereof), all Revolving Credit Loans shall bear interest, at the option
of the Administrative Agent or at the instruction of the Majority Lenders, at a
rate which is the aggregate of the rate otherwise in effect plus two percent
(2%) per annum.
(g) Interest shall be calculated (i) with respect to Base Margin
Loans, on the basis of a 365 day year and for actual days elapsed, and (ii) with
respect to Libor Loans, on the basis of a 360 day year and for actual days
elapsed. L/C Fees and Unused Fees shall be calculated on the basis of a 360 day
year and for actual days elapsed.
2-11. VOLUNTARY REDUCTION OF COMMITMENT AND REVOLVING CREDIT CEILING.
The Lead Borrower may reduce, or terminate, the Revolving Credit Commitments and
the Revolving Credit Ceiling, in whole or in part from time to time, by
furnishing three (3) Business Days' written notice to the Administrative Agent,
whereupon the Revolving Credit Commitments of the Revolving Credit Lenders shall
be reduced pro rata in accordance with their respective Revolving Credit
Commitment Percentages. Upon the effective date of any such reduction, (a) the
Borrowers shall pay to the Administrative Agent for the benefit of the Revolving
Credit Lenders the accrued Unused Fee as of the date of such reduction or
termination, and (b) the Borrowers shall pay to the Administrative Agent for the
benefit of the Revolving Credit Lenders any amounts required under Section
2-9(b) and Section 2-9(f) hereof. Any partial reduction of the Revolving Credit
Commitments or the Revolving Credit Ceiling shall be in a minimum amount equal
to $1,000,000.00. No reduction or termination of the Revolving Credit
Commitments or the Revolving Credit Ceiling may be reinstated. If the Revolving
Credit Commitments have been terminated in full by the Borrowers and all
Liabilities (excluding any contingent Liabilities not then due and payable) have
been paid in full in cash (or, in connection with outstanding L/Cs, cash
collateral therefor has been provided to the Administrative Agent in an amount
determined by the Administrative Agent to be equal to 105% of the aggregate
amount thereof), as determined by the Administrative Agent acting in a
commercially reasonable manner, then the Borrower shall have the right to
terminate this Agreement and such termination date shall constitute the End
Date.
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2-12. REVOLVING CREDIT COMMITMENT FEE. In consideration of the
commitment to make loans and advances to the Borrowers under the Revolving
Credit, and to maintain sufficient funds available for such purpose, there has
been earned and the Borrowers shall pay the "REVOLVING CREDIT COMMITMENT FEE"
(so referred to herein) in the amount and payable as provided in the Fee Letter.
2-13. ADMINISTRATIVE AGENT'S FEE. In addition to any other fee or
expense to be paid by the Borrowers on account of the Revolving Credit, the Lead
Borrower and the Administrative Agent shall negotiate in good faith an
Administrative Agent's fee (the "ADMINISTRATIVE AGENT'S FEE") at such time as
there is more than one Revolving Credit Lender hereunder. As of the Closing
Date, the Administrative Agent's Fee is zero.
2-14. UNUSED FEE. The Unused Fee shall be paid in arrears, on the first
day of each quarter after the execution of this Agreement and on the Termination
Date or, if earlier or on the same date, the End Date.
2-15. PROCEDURES FOR ISSUANCE OF L/CS.
(a) The Lead Borrower may request that the Administrative Agent
cause the issuance by the Issuer of L/Cs for the account of any Borrower. Each
such request shall be in such manner as may from time to time be acceptable to
the Administrative Agent.
(b) The Issuer shall issue any L/C so requested by the Lead
Borrower, provided that, at the time that the request is made, the Revolving
Credit has not been suspended as provided in Section 2-5(g) and if so issued:
(i) The aggregate Stated Amount of all L/Cs then
outstanding, does not exceed Fifteen Million Dollars
and No Cents ($15,000,000.00).
(ii) The expiry of the L/C is not later than the
following:
(A) Standbys: One (1) year from initial issuance
(subject to annual renewal in the sole
discretion of the Issuer, so long as the
conditions to issuance are then met).
(B) Documentaries: One hundred eighty (180) days
from issuance;
and if the expiry of any L/C is later than the
Maturity Date, the Borrowers shall be required to
place cash collateral with the Issuer equal to 105%
of the face amount of such L/C or provide to the
Issuer a backing letter of credit satisfactory to the
Issuer on or before the Maturity Date.
(iii) An OverLoan will not result from the issuance of the
subject L/C.
(c) Each Borrower shall execute such documentation to apply for
and support the issuance of an L/C as may be required by the Issuer.
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(d) There shall not be any recourse to, nor liability of, the
Administrative Agent or any Revolving Credit Lender on account of
(i) Any delay or refusal by an Issuer to issue an L/C;
(ii) Any action or inaction of an Issuer on account of or
in respect to, any L/C.
(e) The Borrowers shall reimburse the Issuer for the amount of any
honoring of a drawing under an L/C no later than the date following the date on
which the Issuer notifies the Lead Borrower that such honoring will take place
(or if later, the date on which such honoring takes place, unless the Issuer has
not notified the Lead Borrower thereof until the date of such honoring, in which
event such reimbursement shall be made no later than the date following the date
of such honoring). The Lead Borrower may determine, subject to the conditions to
borrowing set forth herein, that such payment be financed with a Revolving Loan,
and if the Borrowers do not reimburse the Issuer for such amount on the due date
thereof, the Administrative Agent, without the request of any Borrower, may
advance under the Revolving Credit (and charge to the Loan Account) the amount
of any honoring of any L/C and other amount for which any Borrower, the Issuer,
or the Revolving Credit Lenders become obligated on account of, or in respect
to, any L/C. Such advance shall be made whether or not any Default exists or
such advance would result in an OverLoan. Such action shall not constitute a
waiver of the Administrative Agent's rights under Section 2-9(b) hereof.
2-16. FEES FOR L/CS.
(a) The Borrowers shall pay to the Administrative Agent (for the
benefit of the Revolving Credit Lenders) a fee, on account of L/Cs, the issuance
of which had been procured by the Administrative Agent, quarterly in arrears,
and on the Termination Date and on the End Date, equal to the following
(i) With respect to Standby L/Cs at a rate per annum
equal to the Applicable Margin for Libor Loans at the
time of calculation of such fees multiplied by the
weighted average Stated Amount of all such Standby
L/Cs outstanding during the period in respect of
which such fee is being paid; and
(ii) With respect to all Documentary L/Cs: At a rate per
annum equal to the Applicable Margin for Libor Loans
at the time of calculation of such fees multiplied by
the weighted average Stated Amount of all such
Documentary L/Cs outstanding during the period in
respect of which such fee is being paid;
provided that, during the existence of any Event of Default, such fees shall be
increased by two percent (2%) per annum.
(b) In addition to the fees to be paid as provided in Subsection
2-16(a), above, the Borrowers shall pay to the Administrative Agent (or to the
Issuer, if so requested by Administrative Agent), on demand, all usual and
customary fronting, issuance, processing,
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negotiation, amendment, and administrative fees and other amounts customarily
charged by the Issuer on account of, or in respect to, any L/C. Fronting fees
shall be payable quarterly in arrears on the first day of each fiscal quarter in
which an L/C is outstanding.
(c) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against
letters of credit heretofore or hereafter issued by
any Issuer or with respect to which any Revolving
Credit Lender or any Issuer has an obligation to lend
to fund drawings under any L/C; or
(ii) impose on any Issuer any other condition or
requirements relating to any such L/Cs;
and the result of any event referred to in Section 2-16(c)(i) or 2-16(c)(ii),
above, shall be to increase the cost to any Revolving Credit Lender or to any
Issuer of issuing or maintaining any L/C (which increase in cost shall be the
result of such Issuer's reasonable allocation among that Revolving Credit
Lender's or Issuer's letter of credit customers of the aggregate of such cost
increases resulting from such events), then, within then (10) Business Days of
receipt from the Administrative Agent and delivery by the Administrative Agent
to the Lead Borrower of a certificate of an officer of the subject Revolving
Credit Lender or the subject Issuer describing such change in law, executive
order, regulation, directive, or interpretation thereof, its effect on such
Revolving Credit Lender or such Issuer, and the basis for determining such
increased costs and their allocation, the Borrowers shall, upon demand therefor,
pay to the Administrative Agent, from time to time as specified by the
Administrative Agent, such amounts as shall be sufficient to compensate the
subject Revolving Credit Lender or the subject Issuer for such increased cost
relating to the applicable L/Cs. Any Revolving Credit Lender's or any Issuer's
determination of costs incurred under Section 2-16(c)(i) or 2-16(c)(ii) above,
and the allocation, if any, of such costs among the Borrowers and other letter
of credit customers of such Revolving Credit Lender or such Issuer, if done in
good faith and made on an equitable basis and in accordance with such officer's
certificate, shall be conclusive and binding on the Borrowers absent manifest
error. Failure or delay on the part of the Administrative Agent or any Lender to
demand compensation pursuant to this Section 2-16(c) within three (3) months of
the increased cost or reduction in return shall constitute a waiver of the
applicable Lender's right to demand such compensation.
2-17. CONCERNING L/CS.
(a) None of the Issuer, the Issuer's correspondents, any Revolving
Credit Lender, the Administrative Agent, or any advising, negotiating, or paying
bank with respect to any L/C shall be responsible in any way for:
(i) The performance by any beneficiary under any L/C of
that beneficiary's obligations to any Borrower.
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(ii) The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or
the legal effect of; any documents called for under
any L/C if (with respect to the foregoing) such
documents on their face appear to be in order, unless
a final judicial determination has been or is made
(in a proceeding in which the Administrative Agent
has had an opportunity to be heard) that the
Administrative Agent had acted in a grossly negligent
manner or in willful misconduct.
(b) The Issuer may honor, as complying with the terms of any L/C
and of any drawing thereunder, any drafts or other documents otherwise in order,
but signed or issued by an administrator, executor, conservator, trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver, or other legal representative of the party authorized
under such L/C to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance, each
Borrower hereby authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(d) All directions, correspondence, and funds transfers relating
to any L/C are at the risk of the Borrowers, unless and to the extent a final
judicial determination has been or is made (in a proceeding in which the
Administrative Agent has had an opportunity to be heard) that the Administrative
Agent had acted in a grossly negligent manner or in willful misconduct. The
Issuer shall have discharged the Issuer's obligations under any L/C which, or
the drawing under which, includes payment instructions, by the initiation of the
method of payment called for in, and in accordance with, such instructions (or
by any other commercially reasonable and comparable method). None of the
Administrative Agent, any Revolving Credit Lender, or the Issuer shall have any
responsibility for any inaccuracy, interruption, error, or delay in transmission
or delivery by post, telegraph or cable, or for any inaccuracy of translation.
(e) The Administrative Agent's, each Revolving Credit Lender's,
and the Issuer's rights, powers, privileges and immunities specified in or
arising under this Agreement are in addition to any heretofore or at any time
hereafter otherwise created or arising, whether by statute or rule of law or
contract.
(f) Except to the extent otherwise expressly provided hereunder or
agreed to in writing by the Issuer and the Lead Borrower, documentary L/Cs will
be governed by the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and standby L/Cs will be
governed by International Standby Practices ISP98 (adopted by the International
Chamber of Commerce on April 6, 1998) and any respective subsequent revisions
thereof.
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(g) The obligations of the Borrowers under this Agreement with
respect to L/Cs are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all circumstances,
whatsoever including, without limitation, the following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of
this Agreement, any L/C, or any other agreement or
instrument relating thereto.
(ii) Any Borrower's consent to any amendment or waiver of,
or consent to the departure from, any L/C.
(iii) The existence of any claim, set-off, defense, or
other right which any Borrower may have at any time
against the beneficiary of any L/C.
(iv) Any honoring of a drawing under any L/C, which
drawing possibly could have been dishonored due to a
non-material technicality based upon a strict
construction of the terms of the L/C, unless a final
judicial determination has been or is made (in a
proceeding in which the Administrative Agent has had
an opportunity to be heard) that the Administrative
Agent had acted in a grossly negligent manner or in
willful misconduct.
2-18. CHANGED CIRCUMSTANCES.
(a) The Administrative Agent may advise the Lead Borrower that the
Administrative Agent has made the good faith determination (which determination
shall be final and conclusive) of any of the following:
(i) Adequate and fair means do not exist for ascertaining
the rate for Libor Loans.
(ii) The continuation of or conversion of any Revolving
Credit Loan to a Libor Loan has been made
impracticable or unlawful by the occurrence of a
contingency that materially and adversely affects the
applicable market or the compliance by the
Administrative Agent or any Revolving Credit Lender
in good faith with any Applicable Law.
(iii) The indices on which the interest rates for Libor
Loans are based shall no longer represent the
effective cost to the Administrative Agent or any
Revolving Credit Lender for U.S. dollar deposits in
the interbank market for deposits in which it
regularly participates.
(b) In the event that the Administrative Agent advises the Lead
Borrower of an occurrence described in Section 2-18(a), then, until the
Administrative Agent notifies the Lead Borrower that the circumstances giving
rise to such notice no longer apply:
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(i) The obligation of the Administrative Agent or each
Revolving Credit Lender to make loans of the type
affected by such changed circumstances or to permit
the Lead Borrower to select the affected interest
rate as otherwise applicable to any Revolving Credit
Loans shall be suspended.
(ii) Any notice which the Lead Borrower had given the
Administrative Agent with respect to any Libor Loan,
the time for action with respect to which has not
occurred prior to the Administrative Agent's having
given notice pursuant to Section 2-18(a), shall be
deemed at the option of the Administrative Agent to
not having been given.
2-19. DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.
(a) Each Borrower hereby irrevocably designates and appoints the
Lead Borrower as that Borrower's agent to obtain Revolving Credit Loans and L/Cs
under the Revolving Credit, the proceeds of which shall be available to each
Borrower for those uses as those set forth in Section 2-1(d). As the disclosed
principal for its agent, each Borrower shall be obligated to the Administrative
Agent and each Revolving Credit Lender on account of Revolving Credit Loans so
made and L/Cs so issued under the Revolving Credit as if made directly by the
Revolving Credit Lenders to that Borrower, notwithstanding the manner by which
such Revolving Credit Loans and L/Cs are recorded on the books and records of
the Lead Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it under the
Revolving Credit is in excess of and on better terms than it otherwise could
obtain on and for its own account and that one of the reasons therefor is its
joining in the credit facility contemplated herein with all other Borrowers.
Consequently, each Borrower hereby assumes and agrees to discharge all
Liabilities of all other Borrowers as if the Borrower so assuming were each
other Borrower.
(c) The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a "Borrower") on whose behalf the Lead Borrower has
requested a Revolving Credit Loan.
(d) The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Lead Borrower shall be deposited into
the Primary Blocked Account or as otherwise indicated by the Lead Borrower. The
Lead Borrower shall cause the transfer of the proceeds thereof to the (those)
Borrower(s) on whose behalf such loan and advance was obtained. Neither the
Administrative Agent nor any Revolving Credit Lender shall have any obligation
to see to the application of such proceeds.
(e) [Reserved.]
(f) In the event that the Administrative Agent is entitled to
forgo the procedures included herein pursuant to which Revolving Credit Loans
and L/Cs are to be channeled through the Lead Borrower and determines to do so,
then the Administrative Agent may designate one or more of the Borrowers to
fulfill the financial and other reporting requirements otherwise imposed herein
upon the Lead Borrower.
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(g) Each of the Borrowers shall remain liable to the
Administrative Agent and the Revolving Credit Lenders for the payment and
performance of all Liabilities (which payment and performance shall continue to
be secured by all Collateral granted by each of the Borrowers) notwithstanding
any determination by the Administrative Agent to cease making Revolving Credit
Loans or L/Cs to or for the benefit of any Borrower.
(h) The authority of the Lead Borrower to request loans on behalf
of, and to bind, the Borrowers, shall continue during the term of this
Agreement.
2-20. LENDERS' COMMITMENTS
(a) Subject to Section 15-1 (which provides for assignments and
assumptions of commitments), each Revolving Credit Lender's "REVOLVING CREDIT
COMMITMENT PERCENTAGE", and "REVOLVING CREDIT COMMITMENT" (respectively so
referred to herein) is set forth on EXHIBIT 2-20, annexed hereto.
(b) The obligations of each Revolving Credit Lender are several
and not joint. No Revolving Credit Lender shall have any obligation to make any
loan or advance under the Revolving Credit in excess of the lesser of the
following:
(i) That Revolving Credit Lender's Revolving Credit
Commitment Percentage of the subject loan or advance
or of Availability.
(ii) that Revolving Credit Lender's Revolving Credit
Commitment.
(c) No Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
(d) The Revolving Credit Commitments, Revolving Credit Commitment
Percentages, and identities of the Revolving Credit Lenders may be changed, from
time to time by the reallocation or assignment of Revolving Credit Commitments
and Revolving Credit Commitment Percentages amongst the Revolving Credit Lenders
or with other Persons who determine to become "Revolving Credit Lenders" in
accordance with the provisions of Article 15 hereof.
(e) Upon written notice given the Lead Borrower from time to time
by the Administrative Agent, of any assignment or allocation referenced in
Section 2-20(d):
(i) Each Borrower shall execute one or more replacement
Revolving Credit Notes to reflect such changed
Revolving Credit Commitments, Revolving Credit
Commitment Percentages, and identities and shall
deliver such replacement Revolving Credit Notes to
the Administrative Agent (which promptly thereafter
shall deliver to the Lead Borrower the Revolving
Credit Notes so replaced) provided, however, in the
event
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that a Revolving Credit Note is to be exchanged
following its acceleration or the entry of an order
for relief under the Bankruptcy Code with respect to
any Borrower, the Administrative Agent, in lieu of
causing the Borrowers to execute one or more new
Revolving Credit Notes, may issue the Administrative
Agent's Certificate confirming the resulting
Revolving Credit Commitments and Revolving Credit
Commitment Percentages.
(ii) Such change shall be effective from the effective
date specified in such written notice and any Person
added as a Revolving Credit Lender shall have all
rights and privileges of a Revolving Credit Lender
hereunder thereafter as if such Person had been a
signatory to this Agreement and any other Loan
Document to which a Revolving Credit Lender is a
signatory and any Person removed as a Revolving
Credit Lender shall be relieved of any obligations or
responsibilities of a Revolving Credit Lender
hereunder thereafter.
2-21. REPLACEMENT OF REVOLVING CREDIT LENDER
(a) If any Revolving Credit Lender requests compensation under
Sections 2-16(c) or 18-8, then such Revolving Credit Lender shall use its
reasonable best efforts to designate a different lending office for funding or
booking L/Cs hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Revolving Credit Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Sections 2-16(c) or 18-8, in the future and
(ii) would not subject such Revolving Credit Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Revolving Credit
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Revolving Credit Lender in connection with any such designation
or assignment.
(b) If any Revolving Credit Lender requests compensation under
Sections 2-16(c) or 18-8, then the Borrowers may, at their sole expense and
effort, upon notice to such Revolving Credit Lender and the Administrative
Agent, require such Revolving Credit Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Article 15), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Revolving Credit Lender, if a Revolving Credit Lender accepts such assignment),
provided that (i) if such assignee is not an existing Revolving Credit Lender,
the Borrowers shall have received the prior written consent of the
Administrative Agent and the Issuer, which consent shall not unreasonably be
delayed or withheld, (ii) such Revolving Credit Lender shall have received
payment of an amount equal to the outstanding principal of its Revolving Credit
Loans and participations in unreimbursed drawings under L/Cs, 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 (iii) such
assignment will result in a reduction in such compensation, payments or costs. A
Revolving Credit Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by
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such Revolving Credit Lender or otherwise, the circumstances entitling the
Borrowers to require such assignment and delegation cease to apply.
ARTICLE 3 - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, each of the
documents respectively described in Sections 3-1 through and including 3-5,
(each in form and substance satisfactory to the Administrative Agent) shall have
been delivered to the Administrative Agent, and the conditions respectively
described in Sections 3-6 through and including 3-18, shall have been satisfied:
3-1. CORPORATE DUE DILIGENCE.
(a) Certificates of corporate good standing for each Borrower,
respectively issued by the Secretary of State for the state in which that
Borrower is incorporated.
(b) A certificate of due qualification, in good standing, issued
by the Secretary of State of Alabama for Claire's Boutiques, Inc.
(c) Certificates of each Borrower's Secretary of the due adoption,
continued effectiveness, and setting forth the texts of, each corporate
resolution adopted in connection with the establishment of the loan arrangement
contemplated by the Loan Documents and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.
3-2. OPINION. An opinion of counsel to the Borrowers in form and
substance reasonably satisfactory to the Administrative Agent.
3-3. ADDITIONAL DOCUMENTS. Such additional instruments and documents as
the Administrative Agent or its counsel may reasonably require or request
including, without limitation, the documents described on EXHIBIT 3-3 hereto.
3-4. OFFICERS' CERTIFICATES. Certificates executed by one of the
Co-Chief Executive Officers or the Chief Financial Officer of the Lead Borrower
and stating, among other things, that to his or her knowledge, the
representations and warranties made by the Borrowers to the Administrative Agent
and the Revolving Credit Lenders in the Loan Documents are true and complete as
of the date of such Certificate, and that no Event of Default exists 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.
3-5. DUE DILIGENCE. The Administrative Agent shall have completed its
due diligence to its reasonable satisfaction. Without limiting the foregoing,
the Administrative Agent shall have received such information (financial or
otherwise) as the Administrative Agent may reasonably request, and such
examinations, appraisals and information shall be reasonably satisfactory to the
Administrative Agent. The Administrative Agent acknowledges that it has received
a satisfactory appraisal and has conducted a satisfactory field examination.
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3-6. REPRESENTATIONS AND WARRANTIES. Each of the representations made
by or on behalf of each Borrower in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by or
on behalf of each Borrower shall be true and complete as of the date as of which
such representation or warranty was made.
3-7. ALL FEES AND EXPENSES PAID. (a) The Borrowers shall have paid to
the Administrative Agent a Revolving Credit Commitment Fee as set forth in the
Fee Letter. Such Revolving Credit Commitment Fee shall be fully earned upon the
execution hereof and shall not be subject to refund or rebate under any
circumstances.
(b) All other fees due at or immediately after the effectiveness
of this Agreement and all costs and expenses incurred by the Administrative
Agent in connection with the credit facility contemplated hereby (including the
fees and expenses of counsel to the Administrative Agent) shall have been paid
in full.
3-8. NO DEFAULT No. Default shall then exist.
3-9. NO MATERIAL ADVERSE CHANGE. No event shall have occurred or failed
to occur, which occurrence or failure has had or could reasonably be expected to
have a materially adverse effect upon any Borrower's condition (financial or
otherwise), business, operations, assets or income when compared with such at
the Fiscal quarter ending on or about November 1, 2003.
3-10. PERFECTION OF ENCUMBRANCES. The Administrative Agent shall have
received all documents and instruments, including Uniform Commercial Code
financing statements in the applicable jurisdiction of organization, required by
law or reasonably requested by the Administrative Agent to be filed, registered
or recorded to create or perfect the first priority Encumbrances intended to be
created under the Loan Documents and all such documents and instruments shall
have been so filed, registered or recorded to the satisfaction of the
Administrative Agent.
3-11. CONSENTS AND APPROVALS. All necessary consents and approvals to
the transactions contemplated hereby shall have been obtained and shall be
reasonably satisfactory to the Administrative Agent.
3-12. NO DEFAULTS UNDER APPLICABLE LAW OR MATERIAL AGREEMENTS. The
consummation of the transactions contemplated hereby shall not (a) violate any
Requirement of Law or (b) conflict with, or result in a default or event of
default under, any material agreement (including any synthetic lease) of any
Borrower. 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 agreement which is
material to the Borrowers taken as a whole.
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3-13. NO LITIGATION.There shall not exist any litigation or other
proceedings the result of which could reasonably be expected to have a material
adverse effect upon the Borrowers' condition (financial or otherwise), business,
operations, assets or income, taken as a whole.
3-14. BUDGETS. The Administrative Agent shall have received the
quarterly business budget of the Borrowers for fiscal year 2005, such budget to
be satisfactory to the Administrative Agent, as determined by the Administrative
Agent acting in a commercially reasonable manner.
3-15. NO MATERIAL ADVERSE CHANGE IN GOVERNMENTAL REGULATIONS. No
material changes shall have occurred in governmental regulations or policies
affecting the Borrowers, the Administrative Agent or the Revolving Credit
Lenders prior to the Closing Date.
3-16. BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this
Article 3 are for the sole benefit of the Administrative Agent and each
Revolving Credit Lender and may be waived by the Administrative Agent in whole
or in part without prejudice to the Administrative Agent or any Revolving Credit
Lender.
No document shall be deemed delivered to the Administrative Agent or any
Revolving Credit Lender until received and accepted by the Administrative Agent
at its offices in Boston, Massachusetts. Under no circumstances shall this
Agreement take effect until executed and accepted by the Administrative Agent at
said offices.
ARTICLE 4 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Revolving Credit Lender and the Issuer to establish the
credit facility contemplated herein and to induce the Revolving Credit Lenders
to provide Revolving Credit Loans and the Issuer to issue L/Cs under the
Revolving Credit (each of which Revolving Credit Loans shall be deemed to have
been made, and L/Cs to have been issued, in reliance thereupon) each of the
Borrowers makes the representations, warranties, and covenants included in this
Agreement, but (notwithstanding the express language of any of the subsequent
provisions of this Article 4) only for itself and on behalf of its Subsidiaries
which are Borrowers (it being acknowledged and agreed that any breach by any one
Borrower shall constitute a Default in accordance with the terms hereof as to
this Agreement in its entirety and all Borrowers hereunder) and, in any event,
the Lead Borrower makes such representations, warranties and covenants on a
joint and several basis for all Borrowers.
4-1. PAYMENT AND PERFORMANCE OF LIABILITIES.
Each of the Borrowers shall pay each payment Liability when due (or
when demanded, if payable on demand) and shall promptly, punctually, and
faithfully perform each other Liability.
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4-2. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Borrower presently is and hereafter shall remain in good
standing as a corporation under the laws of the State in which it is organized,
as set forth in the Preamble to this Agreement and is and shall hereafter remain
duly qualified and in good standing in every other State in which, by reason of
the nature or location of each Borrower's assets or operation of each Borrower's
business, such qualification may be necessary, except where the failure to so
qualify could not reasonably be expected to have a material adverse effect upon
the Borrowers' condition (financial or otherwise), business, operations, assets
or income, taken as a whole.
(b) As of the Closing Date, each Borrower's respective
organizational identification number assigned to it by the State of its
incorporation, if any, and its respective federal employer identification number
is stated on EXHIBIT 4-2, annexed hereto. Each Borrower's exact legal name is as
set forth on the signature pages hereof.
(c) No Borrower shall change its State of organization, type of
organization or other legal structure; any organizational identification number
assigned to that Borrower by that State; or that Borrowers federal taxpayer
identification number without at least fifteen (15) Business Days advance
written notice to the Administrative Agent. If any Borrower does not have an
organizational identification number and later obtains one, such Borrower will
forthwith notify the Administrative Agent of such organizational identification
number.
(d) Each Affiliate, as of the Closing Date, is listed on EXHIBIT
4-2. Promptly upon its knowledge thereof, the Lead Borrower shall provide the
Administrative Agent with prompt written notice of any entity's becoming or
ceasing to be an Affiliate.
(e) Each Borrower has all requisite corporate power and authority
to execute and deliver all Loan Documents to which that Borrower is a party and
has and will hereafter retain all requisite corporate power to perform all
Liabilities.
(f) The execution and delivery by each Borrower of each Loan
Document to which it is a party; each Borrower's consummation of the
transactions contemplated by such Loan Documents (including, without limitation,
the creation of Collateral Interests by that Borrower to secure the
Liabilities); each Borrower's performance under those of the Loan Documents to
which it is a party; the borrowings hereunder; and the use of the proceeds
thereof:
(i) Have been duly authorized by all necessary corporate
action.
(ii) Do not, and will not, contravene in any material
respect any provision of any Requirement of Law or
obligation of that Borrower.
(iii) Will not result in the creation or imposition of, or
the obligation to create or impose, any Encumbrance
upon any assets of that Borrower pursuant to any
Requirement of Law or obligation, except pursuant to
the Loan Documents.
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(g) The Loan Documents have been duly executed and
delivered by each Borrower and are the legal, valid and binding obligations of
each Borrower, enforceable against each Borrower in accordance with their
respective terms, except as enforceability is limited by bankruptcy, insolvency,
or other laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that the availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
4-3. TRADE NAMES.
(a) EXHIBIT 4-3, annexed hereto, is a listing, as of the Closing
Date, of:
(i) All names under which any Borrower ever conducted its
business during the preceding five (5) years.
(ii) All Persons who have been consolidated into or merged
with any Borrower, or from whom any Borrower ever
acquired in a single transaction or in a series of
related transactions substantially all of such
Person's assets, in each case within the preceding
five (5) years.
(b) The Lead Borrower will provide the Administrative Agent with
(i) not less than thirty (30) days prior written notice (with reasonable
particularity) of any change to any Borrower's name (other than with respect to
transactions expressly permitted under Sections 4-19(d)(i) and (e) hereof) from
that under which that Borrower is conducting its business at the execution of
this Agreement and will not effect such change unless each Borrower is then in
compliance with all provisions of this Agreement and (ii) in connection with
transactions expressly permitted under Sections 4-19(d)(i) and (e) hereof,
written notice (with reasonable particularity) of any change to any Borrower's
name from that under which that Borrower is conducting its business at the
execution of this Agreement within ten (10) days of the consummation of such
transaction.
4-4. INTELLECTUAL PROPERTY.
(a) Each Borrower owns and possesses, or has the right to use (and
will hereafter own, possess, or have such right to use) all patents, industrial
designs, trademarks, trade names, trade styles, brand names, service marks,
logos, copyrights, trade secrets, know-how, confidential information, and other
intellectual or proprietary property of any third Person reasonably necessary
for that Borrower's conduct of that Borrower's business.
(b) The conduct by each Borrower of that Borrower's business does
not presently infringe (nor will any Borrower conduct its business in the future
so as to infringe) the patents, industrial designs, trademarks, trade names,
trade styles, brand names, service marks, logos, copyrights, trade secrets,
know-how, confidential information, or other intellectual or proprietary
property of any third Person in any manner that could reasonably be expected to
have a material adverse effect upon the Borrowers' condition (financial or
otherwise), business, operations, assets or income, taken as a whole.
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4-5. LOCATIONS.
(a) The Collateral, other than Collateral which is in-transit, and
the books, records, and papers of each Borrower pertaining thereto, are kept and
maintained solely at the following locations:
(i) The Lead Borrower's chief executive offices which, as
of the Closing Date, are at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(ii) As of the Closing Date, (x) the Chicago Distribution
Center and (y) those locations which have been
disclosed to the Administrative Agent in writing
prior to the Closing Date in the form of the store
listing of the Borrowers, and after the Closing Date,
at such disclosed locations and each other location
at which the Borrowers open a store in the ordinary
course of the operation of their respective
businesses or at any new distribution center
maintained by the Borrowers. As of the Closing Date,
the Borrowers also lease office space at the Empire
State Building in New York, at which no books or
records or Collateral are located.
As of the Closing Date, no Borrower has any other place of business other than
those locations set forth in this Section 4-5(a) and the only owned real
property of the Borrowers is disclosed on EXHIBIT 1-1. Neither the New York
Apartment nor the building owned by the Lead Borrower located at Commercial
Center of Miami #2 (units D9 and D10), Miami, Florida is utilized in the
Borrowers' business (such New York Apartment and Miami property being referred
to herein as the "Excluded Real Estate"). At least 15 Business Days prior to
opening any additional distribution center where Collateral will be maintained
or moving the distribution center from the Chicago Distribution Center to
another location where Collateral will be maintained, the Lead Borrower shall
notify the Administrative Agent thereof in writing. The Lead Borrower shall
permit the Administrative Agent (or its agents and field auditors) to obtain or
access information allowing them to ascertain all store locations in connection
with examinations and audits otherwise contemplated herein.
(b) No Borrower shall remove any of the Collateral from said chief
executive office or any of the other locations owned, leased or used by any of
the Borrowers (other than in-transit Inventory) except for the following
purposes:
(i) To accomplish sales of Inventory in the ordinary
course of business.
(ii) To move Inventory from one such location to another
such location.
(iii) To utilize such of the Collateral as is removed from
such locations in the ordinary course of business.
(iv) To open or, to the extent permitted hereunder, close
stores or to move the chief executive office.
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(v) To sell equipment no longer used or useful in the
Borrowers' businesses.
4-6. TITLE TO ASSETS.
(a) The Borrowers are, and except as sold to the extent permitted
hereby shall hereafter remain, the owners of all Collateral, in each case free
and clear of all Encumbrances with the exceptions of the following:
(i) Encumbrances in favor of the Administrative Agent.
(ii) Those Encumbrances (if any) listed on EXHIBIT 4-6,
annexed hereto and any renewals or refinancings
thereof that does not increase the amount of
Indebtedness of the Borrowers secured thereby.
(iii) Permitted Encumbrances.
(iv) Encumbrances granted to secure Indebtedness permitted
pursuant to Section 4-7(h) hereof, provided that such
Encumbrance shall not attach to any Collateral (other
than Equipment being financed) and shall attach only
to the asset so acquired by the Borrowers with the
proceeds of such Indebtedness of the Borrowers and
shall not extend to any other assets of the
Borrowers.
(v) Judgment liens with respect to judgments that do not
constitute an Event of Default under Section 9-8
hereof.
(b) No Borrower has, and none shall have, possession of any
property on consignment to that Borrower the prior written
consent of the Administrative Agent (and any additional
security documentation required by the Administrative Agent in
connection with perfection matters).
(c) The Unrestricted Trusts of the Borrowers are set forth on
EXHIBIT 4-6 and each of such Unrestricted Trusts and the Cash and Cash
Equivalents maintained therein is, and will at all times remain, (i)
owned by the Lead Borrower and (ii) available to the creditors of the
Lead Borrower in the event of a bankruptcy or insolvency of the Lead
Borrower.
4-7. INDEBTEDNESS The Borrowers do not and shall not hereafter have any
Indebtedness with the exceptions of:
(a) Indebtedness on account of the Revolving Credit.
(b) The Indebtedness (if any) listed on EXHIBIT 4-7, annexed
hereto and any renewals or refinancings thereof that do not increase the
principal amount thereof or result in an earlier maturity date or decreased
weighted average life thereof.
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(c) Indebtedness due to any Borrower by any other Borrower, so
long as such Indebtedness is unsecured, incurred in the ordinary course of
business and, at the request of the Administrative Agent, collaterally assigned
to the Administrative Agent as security for the Liabilities; and other
intercompany Indebtedness due to or from Subsidiaries of the Lead Borrower who
are not Borrowers, so long as such Indebtedness is unsecured, incurred in the
ordinary course of business, and otherwise constitutes a Permitted Investment if
advanced by a Borrower.
(d) Guaranties of Indebtedness of a Borrower so long as such
Indebtedness is permitted hereunder.
(e) Indebtedness on account of Hedge Agreements with Fleet
National Bank on terms and in such amounts as may be reasonably acceptable to
the Administrative Agent.
(f) Indebtedness to Fleet, FRG or any of their Affiliates in such
amounts, on such terms, and subject to such intercreditor provisions as may be
reasonably acceptable to the Majority Lenders;
(g) Unsecured Indebtedness not to exceed $50,000,000 in the
aggregate outstanding at any time, provided that (i) the maturity date, interest
rate, fees, prepayment penalties and financial covenants contained therein or
payable in connection therewith are reasonably acceptable to the Administrative
Agent, and (ii) the terms of such Indebtedness do not directly or indirectly
provide that such Indebtedness shall be senior in any respect to the Liabilities
(it being acknowledged that if the Borrowers provide a permitted unsecured
guaranty of secured Indebtedness of a non-Borrower, it will not constitute
secured Indebtedness of the Borrowers so long as the guaranty is not secured by
any assets of the Borrowers);
(h) Indebtedness incurred by the Borrowers after the Closing Date
to finance the acquisition of fixed or capital assets in an aggregate amount
outstanding at any time not in excess of $50,000,000; and
(i) Indebtedness incurred in connection with financing the real
property constituting (x) the Chicago Distribution Center, provided that (i) the
lender(s) providing such financing, prior to the effectiveness thereof, have
entered into with the Administrative Agent such landlord waiver, consent and
estoppel agreements as may be reasonably requested by the Administrative Agent,
(ii) the maturity date, interest rate, fees, prepayment penalties and financial
covenants contained therein or payable in connection therewith are reasonably
acceptable to the Administrative Agent, and (iii) the terms of such Indebtedness
do not directly or indirectly provide that such Indebtedness shall be senior in
any respect to the Liabilities, and (y) the Excluded Real Estate.
4-8. INSURANCE.
(a) EXHIBIT 4-8, annexed hereto, is a schedule of all insurance
policies owned by the Borrowers or under which any Borrower is the named insured
as of the Closing Date. Each of such material policies is in full force and
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effect and the Borrowers shall maintain such insurance (or insurance which is
substantially identical to such insurance) in full force and effect during the
term of this Agreement. Neither the issuer of any such policy nor any Borrower
is in default or violation of any such policy in any material respect. In any
event, the Borrowers shall at all times maintain insurance with respect to any
distribution center and the Collateral contained therein as is customarily
maintained by prudent companies in the Borrowers' industry, such insurance to be
reasonably satisfactory to the Administrative Agent.
(b) All such insurance shall name the Administrative Agent as
additional insured and loss payee, as their interest may appear.
(c) All insurance carried by the Borrowers shall provide for a
minimum of thirty (30) days' written notice of cancellation to the
Administrative Agent and all such insurance which covers the Collateral shall
include an endorsement in favor of the Administrative Agent, which endorsement
shall provide that the insurance, to the extent of the Administrative Agent's
interest therein, shall not be impaired or invalidated, in whole or in part, by
reason of any act or neglect of any Borrower or by the failure of any Borrower
to comply with any warranty or condition of the policy.
(d) The Lead Borrower shall furnish the Administrative Agent from
time to time with certificates or other evidence satisfactory to the
Administrative Agent regarding compliance by the Borrowers with the foregoing
requirements.
(e) In the event of the failure by the Borrowers to maintain
insurance as required herein, the Administrative Agent, at its option, may
obtain such insurance, provided, however, the Administrative Agent's obtaining
of such insurance shall not constitute a cure or waiver of any Event of Default
occasioned by the Borrowers' failure to have maintained such insurance.
4-9. LICENSES. Each material license, distributorship, franchise, and
similar agreement issued to, or to which any Borrower is a party is in full
force and effect, except where the failure to be in full force and effect could
not reasonably be expected to have a material adverse effect upon the Borrowers'
condition (financial or otherwise), business, operations, assets or income,
taken as a whole. No party to any such license or agreement is in default or
violation thereof, where such default or violation could not reasonably be
expected to have a material adverse effect upon the Borrowers' condition
(financial or otherwise), business, operations, assets or income, taken as a
whole. As of the Closing Date, no Borrower has received any notice or threat of
cancellation of any such license or agreement. The Lead Borrower shall promptly
furnish the Administrative Agent with copies of any notice or threat of
cancellation of any such license or agreement which could not reasonably be
expected to have a material adverse effect upon the Borrowers' condition
(financial or otherwise), business, operations, assets or income, taken as a
whole.
4-10. LEASES. As of the Closing Date, no Borrower is a party to or a
guarantor of any indebtedness under a Capital Lease. (The Borrowers have
provided the Administrative Agent with a list of all other locations where they
have effective Leases (including any synthetic leases) as of the Closing Date).
Each of such Leases is and, if entered into after the Closing Date, each Capital
Lease will be, in full force and effect, except where the failure to be in full
force and effect could not reasonably be expected to have a material adverse
effect upon the Borrowers' condition (financial or otherwise), business,
operations, assets or income, taken
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as a whole. No party to any such Lease or Capital Lease is in default or
violation of any such Lease or Capital Lease where such default or violation
could not reasonably be expected to have a material adverse effect upon the
Borrowers' condition (financial or otherwise), business, operations, assets or
income, taken as a whole. As of the Closing Date, no Borrower has received any
notice or threat of cancellation of any such Lease or Capital Lease, except for
cancellations which could not reasonably be expected to have a material adverse
effect upon the Borrowers' condition (financial or otherwise), business,
operations, assets or income, taken as a whole. Each Borrower hereby authorizes
the Administrative Agent from time to time during the existence of an Event of
Default to contact any of the Borrowers' respective landlords in order to
confirm the Borrowers' continued compliance with the terms and conditions of the
Lease(s) between the subject Borrower and that landlord and to discuss such
issues, concerning the subject Borrower's occupancy under such Lease(s), as the
Administrative Agent may reasonably determine. The Borrowers will not enter into
any synthetic lease on or after the Closing Date without the prior written
consent of the Administrative Agent.
4-11. REQUIREMENTS OF LAW. Each Borrower is in compliance with, and
shall hereafter comply with and use its assets in compliance with, Applicable
Law, except where the failure to so comply could not reasonably be expected to
have a material adverse effect upon the Borrowers' condition (financial or
otherwise), business, operations, assets or income, taken as a whole. No
Borrower has received any notice of any violation of Applicable Law which
violation has not been cured or otherwise remedied, if such violation could
reasonably be expected to have a material adverse effect upon the Borrowers'
condition (financial or otherwise), business, operations, assets or income,
taken as a whole. With respect to Requirements of Law other than Applicable Law,
each Borrower is in compliance with, and shall hereafter comply with and use its
assets in compliance with, such other Requirements of Law and no Borrower has
received any notice of any violation of such other Requirements of Law which
violation has not been cured or otherwise remedied.
4-12. LABOR RELATIONS.
(a) As of the Closing Date, no Borrower is a party to any
collective bargaining or other labor contract.
(b) Except as set forth in EXHIBIT 4-12, there is not presently
pending and, to any Borrower's knowledge, there is not threatened any of the
following which could reasonably be expected to have a material adverse effect
upon the Borrowers' condition (financial or otherwise), business, operations,
assets or income, taken as a whole:
(i) Any strike, slowdown, picketing, work stoppage, or
employee grievance process.
(ii) Any proceeding against or affecting any Borrower
relating to the alleged violation of any Applicable
Law pertaining to labor relations or before National
Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable
governmental body, organizational activity, or other
labor or employment dispute against or affecting any
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Borrower, which could reasonably be expected to have
a material adverse effect upon the Borrowers'
condition (financial or otherwise), business,
operations, assets or income, taken as a whole.
(iii) Any lockout of any employees by any Borrower (and no
such action is contemplated by any Borrower).
(iv) Any application for the certification of a collective
bargaining agent.
(c) Except as set forth on EXHIBIT 4-12, each Borrower:
(i) Has complied with all Applicable Law relating to
employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of
social security and similar taxes, occupational
safety and health, and plant closing, except where
the failure to so comply could not reasonably be
expected to have a material adverse effect upon the
Borrowers' condition (financial or otherwise),
business, operations, assets or income, taken as a
whole.
(ii) Is not liable for the payment of more than any amount
of compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for that
Borrower's failure to comply with any Applicable Law
referenced in Section 4-12(c)(i), which would have a
material adverse effect upon the Borrowers' condition
(financial or otherwise), business, operations,
assets or income, taken as a whole.
(d) The Lead Borrower shall furnish prompt notice to the
Administrative Agent of the occurrence of any event described in subparagraphs
4-12(a) through and including 4-12(c) which would have been disclosed to the
Administrative Agent had such occurrence existed as of the Closing Date.
4-13. MAINTAIN PROPERTIES. The Borrowers shall:
(a) Safeguard and protect all of the Collateral for the
Administrative Agent's general account.
(b) Keep the Collateral in good order and repair (ordinary wear
and tear and insured casualty excepted).
(c) Not suffer or cause the waste or destruction of any of the
Collateral.
(d) Not use any of the Collateral in violation of any policy of
insurance thereon.
(e) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The sale of Collateral in compliance with this
Agreement.
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(ii) The turning over to the Administrative Agent of all
Receipts during the existence of a Cash Control Event
as provided herein.
4-14. TAXES.
(a) With respect to the Borrowers' federal, state, and local tax
liability and obligations:
(i) The Lead Borrower, in material compliance with all
Applicable Law, has properly filed all returns due to
be filed up to the date of this Agreement.
(ii) As of the Closing Date, except as described on
EXHIBIT 4-14:
(A) During the past six years, no Borrower has
received from any taxing authority any request to perform any
examination of or with respect to any Borrower nor any other
written or verbal notice in any way relating to any claimed
failure by any Borrower to comply with all Applicable Law
concerning payment of any taxes or other amounts in the nature
of taxes.
(B) No agreement exists which waives or extends
any statute of limitations applicable to the right of any
taxing authority to assert a deficiency or make any other
claim for or in respect to federal income taxes.
(C) No issue has been raised in any tax
examination of any Borrower which, by application of similar
principles, reasonably would be expected to result in the
assertion of a deficiency for any fiscal year open for
examination, assessment, or claim by any taxing authority.
(b) The Borrowers have, and hereafter shall: pay, as they become
due and payable, all taxes and unemployment contributions and other charges of
any kind or nature levied, assessed or claimed against any Borrower or the
Collateral by any person or entity whose claim could result in an Encumbrance
upon any Collateral or any other material asset of any Borrower or by any
governmental authority (provided that the Borrowers shall not be required to pay
any such taxes or claims as long as such tax or claim is being disputed by the
Borrowers in good faith, the Borrowers have established adequate reserves
therefor in accordance with GAAP, and no notice of tax lien has been filed with
respect thereto); properly exercise any trust responsibilities imposed upon any
Borrower by reason of withholding from employees' pay or by reason of any
Borrower's receipt of sales tax or other funds for the account of any third
party; timely make all contributions and other payments as may be required
pursuant to any Employee Benefit Plan now or hereafter established by any
Borrower; and timely file all tax and other returns and other reports with each
governmental authority to whom any Borrower is obligated to so file.
4-15. NO MARGIN STOCK. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇). Except as set forth in the following sentence, no part of the
proceeds of any borrowing hereunder will be used at any time to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock. Subject to the provisions of
Section 2-1(d), the Lead Borrower will be permitted to use Revolving Credit Loan
proceeds to purchase "margin security" or "margin stock" as such term is used
Regulations U, T or X of the Board of Governors of the Federal Reserve System
("Regulations U, T or X") in connection solely with the repurchase by the Lead
Borrower of its capital stock, so long as (i) immediately upon giving effect to
the purchase of such "margin security" or "margin stock", there are no
violations of any of the so-called margin stock regulations set forth in
Regulations U, T or X, and (ii) the Borrower shall complete in all respects any
required forms (including, without limitation, Form FR U-1 and amendments
thereto), with all attachments thereto (including a then current list of
collateral which adequately supports all credit extended hereunder) pursuant to
Regulations U, T, or X and deliver such forms in a timely manner to the
Administrative Agent.
4-16. ERISA.
(a) Neither any Borrower nor any ERISA Affiliate has ever taken
any of the following actions that could reasonably be expected to result in a
liability to any Borrower in excess of $5,000,000:
(i) Violated or failed to be in compliance with any
Borrower's Employee Benefit Plan.
(ii) Failed timely to file all reports and filings
required by ERISA to be filed by any Borrower.
(iii) Engaged in any nonexempt "prohibited transactions" or
"reportable events" (respectively as described in
ERISA).
(iv) Engaged in, or committed, any act such that a tax or
penalty reasonably could be imposed upon any Borrower
on account thereof pursuant to ERISA.
(v) Accumulated any material cumulative funding
deficiency within the meaning of ERISA.
(vi) Terminated any Employee Benefit Plan such that a lien
could be asserted against any assets of any Borrower
on account thereof pursuant to ERISA.
(vii) Have any obligation under any Employee Benefit Plan
which is a multiemployer plan within the meaning of
Section 4001(a) of ERISA for withdrawal liability.
(b) Neither any Borrower nor any ERISA Affiliate shall ever engage
in any action of the type described in Section 4-16(a) to the extent that any of
the foregoing could
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reasonably be expected to have a material adverse effect upon the Borrowers'
condition (financial or otherwise), business, operations, assets or income,
taken as a whole.
4-17. HAZARDOUS MATERIALS.(a) No Borrower: (i) is legally responsible
for any release or threat of release of any Hazardous Material or (ii) has
received notification of the incurrence of any expense in connection with the
assessment, containment, or removal of any Hazardous Material for which that
Borrower would be responsible, except where such release or threat of release or
incurrence of such expense could not reasonably be expected to result in a
liability in excess of $5,000,000.
(b) Each Borrower shall: (i) dispose of any Hazardous Material
only in compliance in all material respects with all Environmental Laws and (ii)
have possession of any Hazardous Material only in the ordinary course of that
Borrower's business and in compliance in all material respects with all
Environmental Laws.
4-18. LITIGATION .As of the Closing Date, except as described in
EXHIBIT 4-18, annexed hereto, there is not presently pending or threatened by or
against any Borrower any suit, action, proceeding, or investigation which, if
determined adversely to any Borrower, could reasonably be expected to have a
material adverse effect upon the Borrowers' condition (financial or otherwise),
business, operations or assets, income, taken as a whole, or such Borrower's
ability to conduct its business as such business is presently conducted.
4-19. DIVIDENDS. INVESTMENTS. CORPORATE ACTION. No Borrower shall:
(a) Pay any cash dividend in respect of any class of that
Borrower's capital stock or make any other distribution in respect of any class
of that Borrower's capital stock, except that (i) the Subsidiaries of any
Borrower may pay such dividends or make such distributions to the Borrower
parent without any limitation, and (ii) as long as no Default exists or would
arise therefrom, the Lead Borrower may pay cash dividends to its stockholders so
long as for each of the thirty (30) days prior to, and after giving effect to,
the payment of such dividends Excess Liquidity is at least $20,000,000.00 and
Excess Liquidity is projected on a pro forma basis to be at least $20,000,000.00
for the thirty (30) day period immediately following the payment of such
dividends.
(b) Redeem, retire, purchase, or acquire any of the Lead
Borrower's capital stock, provided that, as long as no Default exists or would
arise therefrom, the Lead Borrower may redeem, purchase, retire or acquire any
of its capital stock so long as for each of the thirty (30) days prior to, and
after giving effect to, such repurchase Excess Liquidity is at least
$20,000,000.00 and Excess Liquidity is projected on a pro forma basis to be at
least $20,000,000.00 for the thirty (30) day period immediately following such
redemption, purchase, retirement or acquisition.
(c) Make any Acquisition or invest in or purchase any stock or
securities or rights to purchase any such stock or securities, of any Person,
except for (i) investments existing as of the Closing Date and described in
EXHIBIT 4-19, (ii) Permitted Investments, (iii) investments representing stock
or obligations issued to a Borrower in settlement of claims against any other
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Person by reason of a composition or adjustment of debt or a reorganization of
any debtor of a Borrower, (iv) investments in a Related Entity in an aggregate
amount not to exceed $10,000,000 so long as such investments meet the
requirements of Permitted Acquisitions other than clause (iv) thereof, and (v)
Permitted Acquisitions, as long as, in each case under clauses (ii) through (v),
no Default exists or would arise therefrom. Of the investments (whether as
equity, intercompany loan or otherwise) permitted under this clause (c), up to
$7,500,000 individually and in the aggregate (provided that such amount shall be
$50,000,000 individually and in the aggregate (but no additional investments) so
long as at the time any such investment is made after investments of $7,500,000
individually and in the aggregate have already been made, Excess Liquidity is at
least $100,000,000) of such investments by the Borrowers may be invested in
Persons that are not engaged in a line of business related to that of the Lead
Borrower as conducted in accordance with Section 4-22 hereof, and a Borrower
shall be the surviving entity in any such merger or consolidation.
(d) Merge or consolidate or be merged or consolidated with or into
any other Person, except (i) that any directly or indirectly wholly-owned
Subsidiary of a Borrower may merge with or into the Lead Borrower, any other
Borrower or any other directly or indirectly wholly-owned Subsidiary of any
Borrower (so long as the applicable Borrower is the surviving entity), and (ii)
in connection with (and subject to the provisions of) Permitted Acquisitions, as
long as, in each case under clauses (i) and (ii), no Default exists or would
arise therefrom.
(e) Consolidate any of that Borrower's operations with those of
any other Person, except that any directly or indirectly wholly-owned Subsidiary
of a Borrower may consolidate its operations with or into the Lead Borrower or
any other directly or indirectly wholly owned Subsidiary of the Lead Borrower.
(f) Organize or create any non-Borrower Subsidiary, Affiliate or
Related Entity to the extent that the Borrowers' investments in all such
non-Borrower Subsidiaries, Affiliates and Related Entities made after the
Closing Date (whether as equity, intercompany loan or otherwise and whether such
Subsidiary, Affiliate or Related Entity is organized or created after the
Closing Date) exceeds (when aggregated with the loans or advances made pursuant
to Section 4-20(d)) $20,000,000 in the aggregate, provided that no such
investment shall be made during the existence of a Cash Control Event.
(g) Subordinate any debts or obligations owed to that Borrower by
any third party (not including any other Borrower) to any other debts owed by
such third party to any other Person.
(h) Acquire any assets other than in the ordinary course and
conduct of that Borrower's business as conducted at the execution of this
Agreement (except for Permitted Acquisitions and as expressly permitted pursuant
to this Section 4-19), as long as no Default exists or would arise therefrom.
In addition, the Borrowers represent and covenant that (i) any domestic
Subsidiary of a Borrower created, organized or acquired after the Closing Date
that is a Material Subsidiary shall become a Borrower hereunder pursuant to a
joinder agreement in form and substance satisfactory to the Administrative Agent
(in the form of EXHIBIT 4-19) and shall have
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granted a security interest in such Person's inventory, accounts and other
property of the same nature as constitutes Collateral in order to secure the
Liabilities, and entered such other documents, instruments and agreements and
provided such due diligence information and certificates as are required by the
Administrative Agent, and (ii) Afterthoughts Merchandising Corp., a Delaware
corporation, is utilized in connection with product development and market
research for the Borrowers and does not and will not conduct any other material
business; Claire's Canada Corp., a Delaware corporation, owns the equity of
certain Canadian Subsidiaries of the Lead Borrower and does not and will not
conduct any other material business.
4-20. LOANS. No Borrower shall make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the foregoing does
not prohibit any of the following:
(a) Advance payments made to that Borrower's suppliers in the
ordinary course and deposits described in the definition of Permitted
Encumbrances to the extent constituting advances.
(b) Advances to that Borrower's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of that Borrower, which
expenses are properly substantiated by the Person seeking such advance and
properly reimbursable by that Borrower.
(c) Intercompany loans amongst the Borrowers in the ordinary
course of business.
(d) Loans to non-Borrower Subsidiaries, Affiliates and Related
Entities of the Borrowers after the Closing Date, provided that the Borrowers'
investments in all such Subsidiaries, Affiliates and Related Entities made after
the Closing Date (whether as equity, intercompany loans or otherwise and whether
such Subsidiary, Affiliate or Related Entity is organized or created after the
Closing Date) shall not (when aggregated with the investments made pursuant to
Section 4-19(f)) exceed $20,000,000 in the aggregate, and provided, further,
that no such loans shall be made during the existence of a Cash Control Event.
(e) Loans to employees, officers and salespersons of the Borrowers
consistent with past practices provided that (i) any loans to any individual
shall not exceed $1,000,000 in the aggregate outstanding at any time, and (ii)
all such loans to employees, officers and salespersons of the Borrowers shall
not exceed $2,500,000 in the aggregate outstanding at any time.
4-21. PROTECTION OF ASSETS. The Administrative Agent, in the
Administrative Agent's discretion, acting in a commercially reasonable manner,
may discharge any tax or Encumbrance on any of the Collateral, or take any other
action which the Administrative Agent may in good ▇▇▇▇▇ ▇▇▇▇ necessary or
desirable to repair, insure, maintain, preserve, collect, or realize upon any of
the Collateral. The Administrative Agent shall not have any obligation to
undertake any of the foregoing and shall have no liability on account of any
action so undertaken except where there is a specific finding in a judicial
proceeding (in which the Administrative Agent has had an opportunity to be
heard), from which finding no further appeal is available, that the
Administrative Agent had acted in actual
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bad faith or in a grossly negligent manner. The Borrowers shall pay to the
Administrative Agent, on demand, or the Administrative Agent, in its discretion,
may add to the Loan Account, all amounts paid or incurred by the Administrative
Agent pursuant to this Section 4-21.
4-22. LINE OF BUSINESS..Subject to the parenthetical contained in
clause (v) of the definition of Permitted Acquisitions, no Borrower shall engage
in any business other than the business in which it is currently engaged or a
business reasonably related thereto.
4-23. AFFILIATE TRANSACTIONS. Except as described on EXHIBIT 4-23 or as
otherwise permitted under this Agreement, no Borrower shall make any payment,
nor give any value to any Affiliate that is not a Borrower except for goods and
services actually purchased by that Borrower from, or sold by that Borrower to,
such Affiliate for a price and on terms which shall be no less favorable to that
Borrower than those which would have been charged and imposed in an arms length
transaction.
4-24. FURTHER ASSURANCES. (a) Each Borrower shall execute and deliver
to the Administrative Agent such instruments, documents, and papers, and shall
do all such things from time to time hereafter as the Administrative Agent may
reasonably request to carry into effect the provisions and intent of this
Agreement; to protect and perfect the Administrative Agent's and the Lenders'
Collateral Interests in the Collateral; and to comply in all material respects
with all applicable statutes and laws, and facilitate the collection of the
Receivables Collateral. Each Borrower shall execute all such instruments as may
be reasonably required by the Administrative Agent with respect to the
recordation and/or perfection of the Collateral Interests created or
contemplated herein.
(b) Each Borrower hereby designates the Administrative Agent as
and for that Borrower's true and lawful attorney, with full power of
substitution, to file any financing statements in order to perfect or protect
the Administrative Agent's Collateral Interests in the Collateral.
(c) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section 4-24 shall be sufficient for filing to perfect the Collateral
Interests granted herein.
4-25. ADEQUACY OF DISCLOSURE. (a) All financial statements furnished to
the Administrative Agent and to each Revolving Credit Lender by the Lead
Borrower have been prepared in accordance with GAAP consistently applied and
present fairly in all material respects the condition of the Lead Borrower and
its Subsidiaries, on a Consolidated basis, at the date(s) thereof and the
results of operations and cash flows for the period(s) covered (provided
however, that unaudited financial statements are subject to normal year end
adjustments and to the absence of footnotes). There has been no change in the
Consolidated financial condition, results of operations, or cash flows of the
Borrowers since the date(s) of such financial statements, other than changes in
the ordinary course of business, and changes which have not been materially
adverse, either singularly or in the aggregate.
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(b) As of the Closing Date, no Borrower has any contingent
obligations or obligation under any Lease, excluding synthetic leases not
reported under GAAP, which is required to be reported in accordance with GAAP
and which is not noted in the Borrowers' Consolidated financial statements
furnished to the Administrative Agent and to each Revolving Credit Lender prior
to the execution of this Agreement. No Borrower is a party to, or a guarantor of
any obligations under, any synthetic lease, except as disclosed in writing to
the Administrative Agent on or prior to the Closing Date.
(c) No document, instrument, agreement, or paper now or hereafter
given to the Administrative Agent or to any Revolving Credit Lender by or on
behalf of each Borrower in connection with the execution of this Agreement by
the Administrative Agent and each Revolving Credit Lender (other than
projections and forecasts, which are and will be made in good faith using
reasonable assumptions) contains or will contain any known untrue statement of a
material fact or omits or will omit to state a known material fact necessary in
order to make the statements therein not misleading in light of the
circumstances under which they were made. There is no fact known to any Borrower
which has, or which, in the foreseeable future could reasonably be expected to
have, a material adverse effect on the condition (financial or otherwise),
business, assets, operations or income of the Borrowers, taken as a whole, which
has not been disclosed in writing to the Administrative Agent and to each
Revolving Credit Lender.
4-26. NO RESTRICTIONS ON LIABILITIES.
No Borrower shall enter into or directly or indirectly become subject
to any agreement which prohibits or restricts, in any manner, any Borrower's:
(a) Creation of, and granting of Collateral Interests in favor of
the Administrative Agent.
(b) Incurrence of Liabilities.
4-27. OTHER ▇▇▇▇▇▇▇▇▇.▇▇ Borrower shall indirectly do or cause to be
done any act which, if done directly by that Borrower, would breach any covenant
contained in this Agreement.
4-28. SOLVENCY.
The Borrowers, on a Consolidated basis, are Solvent (both before and
after giving effect to the making of any Revolving Credit Loan or issuance of
any L/C on or as of the date that such representation and warranty is being made
or deemed made). Without limitation of the foregoing, the Borrowers agree that
on and as of the date of any borrowing of any Revolving Credit Loan the proceeds
of which will be used for the purpose of funding stock repurchases or paying
dividends or distributions to shareholders, the Borrowers, on a Consolidated
basis, shall be Solvent (both before and after giving effect to the proposed
stock repurchases and/or payment of dividends or distributions to shareholders).
As of the Closing Date, no transfer of property is being made by any Borrower
and no obligation is being incurred by any Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
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intent to hinder, delay, or defraud either present or future creditors of any
Borrower. The Borrowers agree that on and as of the date of any borrowing of any
Revolving Credit Loan the proceeds of which are used for the purpose of funding
stock repurchases or paying dividends or distributions to shareholders, no
Borrower will transfer property or incur any obligation in connection with such
stock repurchases and/or payment of dividends or distributions to shareholders
with the intent to hinder, delay, or defraud either present or future creditors
of any Borrower.
4-29. OTHER LIENS.
None of the landlords listed on Exhibit 1-1 is a landlord on any other
lease which is cross-defaulted to any of the leases listed on Exhibit 1-1, nor
are the obligations under any such other leases cross-collateralized with the
obligations under the leases listed on Exhibit 1-1. The security interest
granted to the respective landlords listed on Exhibit 1-1 pursuant to the
respective leases listed on Exhibit 1-1 secures only the indebtedness arising
under the respective leases listed on Exhibit 1-1.
4-30. PEMBROKE PINES, FLORIDA LOCATION
No Inventory is now, nor hereafter shall be, located at or shipped to ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE 5 - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5-1. MAINTAIN RECORDS. The Borrowers shall:
(a) At all times, keep proper books of account, in which full,
true, and accurate entries shall be made in all material respects of all of the
Borrowers' financial transactions, and on a quarterly basis all such books and
records shall be reconciled so that the entries are in accordance with GAAP
applied consistently with prior periods to fairly reflect the Consolidated
financial condition of the Borrowers at the close of, and the Consolidated
results of operations for the Borrowers, the periods in question.
(b) Timely provide the Administrative Agent with those financial
reports, statements, and schedules required by this Article 5 or otherwise, each
of which reports, statements and schedules shall be prepared, to the extent
applicable, in accordance with GAAP applied consistently with prior periods to
fairly reflect in all material respects the Consolidated financial condition of
the Borrowers at the close of, and the Consolidated results of operations of the
Borrowers for, the period(s) covered therein.
(c) At all times, keep current records of the Collateral, which
are accurate in all material respects, including, without limitation, current
stock, cost, and sales records of its Inventory, itemizing and describing the
kinds, types, and quantities of Inventory and the cost and selling prices
thereof.
(d) At all times, retain independent certified public accountants
who are reasonably satisfactory to the Administrative Agent. The Borrowers shall
instruct such accountants to
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cooperate with, and be available to, the Administrative Agent to discuss the
Borrowers' financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such
accountants, as may be raised by the Administrative Agent upon reasonable
advance notice, at reasonable times.
(e) Not change any Borrower's fiscal year without furnishing the
Administrative Agent with at least sixty (60) days prior written notice thereof.
5-2. ACCESS TO RECORDS.
(a) Each Borrower shall accord the Administrative Agent with
access from time to time during normal business hours and, as long as no Default
exists, upon reasonable prior notice, as the Administrative Agent may reasonably
require to all properties owned by or over which any Borrower has control,
provided that prior to a Default, the business of the Borrowers shall not be
unreasonably disrupted. Subject to the provisions of Section 5-9(d) hereof, the
Administrative Agent shall have the right (as long as no Default exists, upon
reasonable prior notice), and each Borrower will permit the Administrative Agent
from time to time as Administrative Agent may reasonably request, to examine,
inspect, copy, and make extracts from any and all of the Borrowers' books,
records, electronically stored data, papers, and files and in connection
therewith, each Borrower shall make all of that Borrower's copying facilities
available to the Administrative Agent, provided that prior to a Default, the
business of the Borrowers shall not be unreasonably disrupted.
(b) Subject to the provisions of Section 5-2(a) hereof, each
Borrower hereby authorizes the Administrative Agent to:
(i) Inspect, copy, duplicate, review, cause to be reduced
to hard copy, run off, draw off, and otherwise use
any and all computer or electronically stored
information or data which relates to any Borrower, or
any service bureau, contractor, accountant, or other
person, and directs any such service bureau,
contractor, accountant, or other person fully to
cooperate with the Administrative Agent with respect
thereto.
(ii) Verify at any time the Collateral or any portion
thereof, including verification with Account Debtors,
and/or with each Borrower's computer billing
companies, collection agencies, and accountants and
to sign the name of each Borrower on any notice to
each Borrower's Account Debtors or verification of
the Collateral.
(c) The Administrative Agent from time to time may designate one
or more representatives to exercise the Administrative Agent's rights under this
Section 5-2 as fully as if the Administrative Agent were doing so.
5-3. NOTICE TO ADMINISTRATIVE AGENT.
(a) The Lead Borrower shall provide the Administrative Agent with
written notice as soon as practicable, but in any event, within three (3)
Business Days after the occurrence of any
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of the following events, which written notice shall be with reasonable
particularity as to the facts and circumstances in respect of which such notice
is being given:
(i) Any change in any Borrower's chief executive officer,
chief operating officer, or chief financial officer
(without regard to the title(s) actually given to the
Persons discharging the duties customarily discharged
by officers with those titles).
(ii) Except for such non-payments which do not exceed
$1,000,000 in the aggregate outstanding at any time,
any cessation of any Borrower's making of payment to
any of its non-landlord creditors, unless such
payment to a particular creditor is being disputed in
good faith by such Borrower in the ordinary course of
its business and adequate reserves therefor have been
established to the extent required by GAAP, and such
non-payment is not part of a general decision by such
Borrower to cease paying its non-landlord creditors
representing more than five percent (5%) of all of
such Borrower's obligations to non-landlord
creditors.
(iii) Except for such failures which do not exceed
$1,000,000 in the aggregate outstanding at any time,
any failure by any Borrower to pay rent at any of
that Borrower's locations, which failure continues
for more than three (3) days following the last day
on which such rent was payable, unless the payment of
such rent at a particular location is being disputed
in good faith by such Borrower in the ordinary course
of its business and adequate reserves therefor have
been established to the extent required by GAAP, and
such failure to pay rent is not part of a general
decision by such Borrower to cease paying rent at
more than five percent (5%) of its store locations.
(iv) Any event which has had or could reasonably be
expected to have a material adverse effect upon any
Borrower's condition (financial or otherwise),
business, operations, assets or income.
(v) The occurrence of any Default.
(vi) The discharge by the Lead Borrower of its present
independent accountants or any withdrawal or
resignation by such independent accountants from
their acting in such capacity (as to which, see
Subsection 5-1(d)).
(vii) Any litigation or commencement of any action which,
if determined adversely to any Borrower, could
reasonably be expected to have a material adverse
effect upon any Borrower's condition (financial or
otherwise), business, operations, assets or income.
(viii) Any potential liability under ERISA which could
reasonably be expected to exceed $3,000,000.
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(ix) The filing of any lien or encumbrance for unpaid
taxes against any Borrower.
(x) Any collective bargaining agreement or other labor
contract to which a Borrower becomes a party, or the
application for the certification of a collective
bargaining agent.
(b) The Lead Borrower shall:
(i) Provide the Administrative Agent, when so
distributed, with copies of any materials distributed
to the shareholders of the Lead Borrower.
(ii) Provide the Administrative Agent:
(A) When filed, copies of all filings with the
SEC.
(B) When received, (1) copies of all material
correspondence from the SEC relating to the
Lead Borrower, such as correspondence
relating to any formal investigation of the
Lead Borrower or any requirement to provide
the SEC with a material restatement of its
financial statements, and (2) copies of all
material correspondence from the New York
Stock Exchange relating to any proposed
delisting of the Lead Borrower.
(iii) Add the Administrative Agent as an addressee on all
investor mailing lists maintained by each Borrower.
(iv) Provide the Administrative Agent, when received by
any Borrower, with a copy of any management letter or
similar communications from any accountant of any
Borrower.
5-4. BORROWING BASE CERTIFICATE. The Lead Borrower shall provide the
Administrative Agent with a Borrowing Base Certificate (in the form of EXHIBIT
5-4 annexed hereto, as such form may be revised from time to time by the
Administrative Agent) monthly as soon as possible, but in any event no later
than the fifteenth Business Day after the last day of each fiscal month (as of
the close of business on the last day of each fiscal month), provided that,
subject to systems limitations, if any, if an Increased Reporting Event occurs,
the Lead Borrower shall furnish such Borrowing Base Certificate weekly on
Wednesday of each week (or if not a Business Day, the next succeeding Business
Day) as of the close of business on the immediately preceding Saturday (which
date for delivery of such reports shall thereafter not change until the
circumstances giving rise to the Increased Reporting Event are remedied as
provided in the definition of "Increased Reporting Event"). Such Certificate may
be sent to the Administrative Agent by facsimile transmission, provided that the
original thereof is forwarded to the Administrative Agent on the date of such
transmission.
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5-5. MONTHLY REPORTS. (a) At any time during which Excess Liquidity is
less than $20,000,000, monthly, the Lead Borrower shall provide the
Administrative Agent with original counterparts of the following (each in such
form as the Administrative Agent from time to time may specify):
(i) those reports described in EXHIBIT 5-5 hereto, at the
times set forth in such EXHIBIT;
(ii) Within thirty (30) days following the end of each
fiscal month (except for any month which corresponds
to the end of a fiscal quarter of the Borrowers), an
internally prepared financial statement of the
Borrowers' Consolidated financial condition and the
results of its operations for, the period ending with
the end of the subject month, which financial
statement shall include, at a minimum, a balance
sheet, income statement and cash flow.
(b) In any event, from and after the Closing Date, the Lead
Borrower shall provide the Administrative Agent with a compliance certificate
containing a calculation of Consolidated EBITDA as of the last day of each
consecutive 12 month period within thirty (30) days following the end of each
fiscal month for purposes of determining the authority of the Administrative
Agent to institute additional Availability Reserves. It is agreed that, with
respect to monthly EBITDA calculations for months other than those months which
are also fiscal quarter ends, such calculations shall not be required to be
certified as being prepared in accordance with GAAP consistently applied.
5-6. QUARTERLY REPORTS. Quarterly, within forty-five (45) days
following the end of each of the Borrowers' fiscal quarters, the Lead Borrower
shall provide the Administrative Agent with the following (provided that such 45
days may be extended by an additional 5 days if the Lead Borrower has duly filed
for an automatic extension with the SEC in accordance with Rule 12b-25 of the
Securities Exchange Act of 1934):
(a) An original counterpart of a management prepared Consolidated
financial statement of the Lead Borrower for the period from the beginning of
the Lead Borrower's then current fiscal year through the end of the subject
fiscal quarter, with comparative information for the same period of the previous
fiscal year, which statement shall include, at a minimum, a balance sheet,
income statement, statement of changes in shareholders' equity, and cash flows.
(b) The officer's compliance certificate described in Section 5-8.
(c) The Lead Borrower's 10Q report filed with the SEC.
5-7. ANNUAL REPORTS.
Annually, within ninety (90) days following the end of the Borrowers'
fiscal year, the Lead Borrower shall furnish the Administrative Agent with the
following (provided that such 90 days may be extended by an additional 15 days
if the Lead Borrower has duly filed for an
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automatic extension with the SEC in accordance with Rule 12b-25 of the
Securities Exchange Act of 1934):
(i) An original signed counterpart of the Lead Borrower's
Consolidated annual financial statement, which
statement shall have been prepared by, and bear the
unqualified opinion of, the Lead Borrower's
independent certified public accountants reasonably
acceptable to the Administrative Agent (i.e. said
statement shall be "certified" by such accountants)
and shall include, at a minimum (with comparative
information for the then prior fiscal year) a balance
sheet, income statement, statement of changes in
shareholders' equity, and cash flows.
(ii) The officer's compliance certificate described in
Section 5-8.
(iii) The Lead Borrower's 10K report filed with the SEC.
5-8. OFFICERS' CERTIFICATES. The Lead Borrower shall cause either of
the Lead Borrower's Co-Chief Executive Officers or its Chief Financial Officer,
in each instance, to provide such Person's Certificate (in the form of EXHIBIT
5-8) with those monthly, quarterly, and annual statements to be furnished
pursuant to this Agreement, which Certificate shall:
(a) Indicate, to such officer's knowledge, that the subject
statement was prepared in accordance with GAAP consistently applied and presents
fairly in all material respects the Consolidated financial condition of the Lead
Borrower at the close of, and the results of the Lead Borrower's Consolidated
operations and cash flows for, the period(s) covered, subject, however to usual
year end adjustments and the absence of footnotes (this exception shall not be
included in the Certificate which accompanies such annual statement), and
provided that, with respect to monthly statements for months other than those
months which are also fiscal quarter ends, such calculations shall not be
required to be certified as being prepared in accordance with GAAP consistently
applied.
(b) Indicate, to such officer's knowledge, either that (1) no
Default exists, or (ii) if such an event has occurred, its nature (in reasonable
detail) and the steps (if any) being taken or contemplated by the Borrowers to
be taken on account thereof.
(c) Include a certification, to such officer's knowledge, of the
Borrowers' Excess Liquidity, Adjusted Excess Liquidity and trailing 12-months
EBITDA, in each case as of the date of the subject statement.
5-9. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be provided
pursuant to this Agreement, the Lead Borrower shall provide the Administrative
Agent with such other and additional information concerning the Borrowers, the
Collateral, the operation of the Borrowers' business, and the Borrowers'
financial condition, including original counterparts of financial reports and
statements, as the Administrative Agent may from time to time reasonably request
from the Lead Borrower.
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(b) The Lead Borrower may provide the Administrative Agent, from
time to time, with updated forecasts of the Borrowers' anticipated performance
and operating results.
(c) The Lead Borrower, no later than thirty (30) days after the
end of each of the Borrowers' fiscal years, shall provide the Administrative
Agent with an updated and extended forecast which shall go out at least through
the end of that fiscal year and shall include, to the extent available through
the Borrowers' information systems, an income statement, balance sheet, and
statement of cash flow, by quarter, each Consolidated and each prepared
consistent with the Borrowers' then current practices.
(d) Each Borrower recognizes that all inventories, analysis,
financial information, and other materials which the Administrative Agent may
obtain, develop, or receive with respect to the Borrowers are confidential to
the Administrative Agent and that, except as otherwise provided herein, no
Borrower is entitled to receipt of any of such inventories, analysis, financial
information, and other materials, nor copies or extracts thereof or therefrom.
ARTICLE 6 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
6-1. DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT 6-1 is a Schedule, as of the Closing
Date, of all present DDAs of the Borrowers which are either the Primary Blocked
Account or corporate level depositary concentration accounts into which the
store level account balances are transferred, which Schedule includes, with
respect to each depository (i) the name and address of that depository; (ii) the
account number(s) of the account(s) maintained with such depository; and (iii) a
contact person at such depository. EXHIBIT 6-1 also includes a schedule of all
of the Borrowers' investment or securities accounts and commodities accounts
which the Borrowers have requested be subject to a Blocked Account Agreement as
of the Closing Date.
(b) The Lead Borrower shall deliver the following to the
Administrative Agent, as a condition to the effectiveness of this Agreement:
(i) Notification, executed on behalf of each Borrower, to
each depository institution with which any DDA is
maintained (other than any Exempt DDA and the Blocked
Accounts), in form satisfactory to the Administrative
Agent of the Administrative Agent's interest in such
DDA (it being acknowledged that the Administrative
Agent shall send such notifications to such
depositary institutions and the Borrowers shall not
be required to do so).
(ii) A Blocked Account Agreement with any depository
institution at which a Blocked Account (including the
Primary Blocked Account) is maintained.
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(iii) A Blocked Account Agreement with any institution at
which any securities or investment account or
commodities account is maintained with respect to
which the Borrowers have requested that such account
and the Investment Property contained therein
constitute Collateral if the Borrower is including
the assets maintained therein in the calculation of
Excess Liquidity.
(c) No Borrower will establish any DDA hereafter (other than an
Exempt DDA) or establish or maintain any securities, investment or commodities
account in which any Cash or Cash Equivalents are maintained which will be
included in the calculation of Excess Liquidity unless, contemporaneous with
such establishment (or with respect to such securities, investment and
commodities accounts, during such maintenance), the Lead Borrower delivers the
following to the Administrative Agent, along with the information specified in
Section 6-1(a) with respect to such account:
(i) Notification to the depository at which such DDA is
established if the same would have been required
pursuant to Section 6-1(b)(i) if the subject DDA were
open at the execution of this Agreement.
(ii) A Blocked Account Agreement executed on behalf of the
depository, securities intermediary or commodities
intermediary, as the case may be, at which such DDA
is established if the same would have been required
pursuant to Section 6-1(b)(ii) or 6-1(b)(iii) if the
subject DDA were open at the execution of this
Agreement or is a securities or investment account or
commodities account with respect to which the
Borrowers have requested that such account and the
Investment Property contained therein constitute
Collateral and the assets therein be permitted to be
included in the calculation of Excess Liquidity.
(d) (i) The notices referred to in Section 6-1(b)(i) and the
Blocked Account Agreements (other than those relating to the Primary Blocked
Account or the securities or investment accounts or commodities accounts) shall
require: (x) whether or not a Cash Control Event shall exist, and the Borrowers
agree to cause, the sweep on each Business Day of all available Receipts to the
Primary Blocked Account, and (y) during the existence of a Cash Control Event,
to the Concentration Account or to any other account designated from time to
time by the Administrative Agent by instruction to the depositary maintaining
the Primary Blocked Account. No Borrower shall change such direction or
designation except upon and with the prior written consent of the Administrative
Agent.
(ii) The Blocked Account Agreement relating to the Primary
Blocked Account shall require, and the Borrowers agree to cause, during the
existence of a Cash Control Event, the sweep on each Business Day of all
available Receipts to the Concentration Account or to any other account
designated from time to time by the Administrative Agent, provided that (1)
after application of the amount of such Receipts necessary to satisfy all
Liabilities in full (including to provide cash collateral as described in
Section 6-5(c)(ii)), the Administrative Agent shall return any excess amounts to
the Primary Blocked Account on the next succeeding Business Day, and (2) if no
Liabilities are then outstanding, the Administrative Agent shall
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return the full amount of such Receipts to the Primary Blocked Account on the
next succeeding Business Day. During the existence of a Cash Control Event, the
Administrative Agent shall have the right to direct the depositary maintaining
the Primary Blocked Account to transfer on each Business Day all available
Receipts to the Concentration Account, subject to the provisions of the
preceding sentence. No Borrower shall change such direction or designation
except upon and with the prior written consent of the Administrative Agent.
(iii) The Blocked Account Agreements relating to any
securities, investment or commodities account shall require, and the Borrowers
agree to cause, during the existence of a Cash Control Event, that the
Administrative Agent shall have the exclusive right to direct the investments
and to liquidate the account or transfer it to the name of the Administrative
Agent. No Borrower shall change such direction or designation except upon and
with the prior written consent of the Administrative Agent.
6-2. CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT 6-2, is a Schedule which describes
all arrangements to which any Borrower is a party as of the Closing Date with
respect to the payment to that Borrower of the proceeds of credit card charges
for sales by that Borrower.
(b) The Lead Borrower shall deliver to the Administrative Agent,
as a condition to the effectiveness of this Agreement, notifications, executed
on behalf of each Borrower, to each of each Borrower's credit card
clearinghouses and processors of notice (in form satisfactory to the
Administrative Agent), which notice provides that payment of all credit card
charges submitted by that Borrower to that clearinghouse or other processor and
any other amount payable to that Borrower by such clearinghouse or other
processor shall, (i) whether or not a Cash Control Event has occurred and is
continuing, be swept (through one or more zero balance accounts) to the Primary
Blocked Account, (ii) during the existence of a Cash Control Event, be directed
to the Primary Blocked Account, or, as directed by the Administrative Agent, to
the Concentration Account or any other account designated from time to time by
the Administrative Agent. No Borrower shall change such direction or designation
except upon and with the prior written consent of the Administrative Agent.
6-3. THE CONCENTRATION AND BLOCKED ACCOUNTS.
(a) The following checking accounts have been or will be
established (and are so referred to herein):
(i) The "CONCENTRATION ACCOUNT" (so referred to herein):
Established by the Administrative Agent with Fleet
National Bank.
(ii) The "BLOCKED ACCOUNTS" (so referred to herein):
Established by the Lead Borrower with those financial
institutions described on EXHIBIT 6-3, or with
respect to securities, investment or commodities
accounts, as notified in writing to the
Administrative Agent from time to time, so long as
such additional accounts are subject to a Blocked
Account Agreement prior to the utilization thereof.
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(iii) The PRIMARY BLOCKED ACCOUNT.
(b) The contents of each DDA and of the Blocked Accounts
constitutes Collateral and Proceeds of Collateral. The contents of the
Concentration Account constitutes the Administrative Agent's property and shall
be applied to the Liabilities in accordance with the provisions of Section 6-5
hereof.
(c) The Borrowers shall pay all fees and charges of, and maintain
such impressed balances as may be required by the depository in which any
account is opened as required hereby (even if such account is opened by and/or
is the property of the Administrative Agent).
(d) If, at any time after the Closing Date, the Borrowers notify
the Administrative Agent in writing that they wish to exclude from the
calculation of Excess Liquidity any securities, investment or commodities
account for which the Borrowers previously have delivered a Blocked Account
Agreement, so long as no Event of Default or Cash Control Event has occurred and
is continuing, the Administrative Agent shall terminate such Blocked Account
Agreement and such account shall thereafter be excluded from the calculation of
Excess Liquidity.
6-4. PROCEEDS AND COLLECTIONS.
(a) All Receipts and all cash proceeds of any sale or other
disposition of Inventory and Accounts of each Borrower:
(i) Constitute Collateral and proceeds of Collateral.
(ii) During the existence of a Cash Control Event, shall
be held in trust by the Borrowers for the
Administrative Agent.
(iii) During the existence of a Cash Control Event, shall
not be commingled with any of any Borrower's other
funds.
(iv) During the existence of a Cash Control Event, shall
be directed in accordance with Section 6-1(d)(i).
(b) During the existence of a Cash Control Event, the Lead
Borrower shall cause the ACH or wire transfer to the Primary Blocked Account, no
less frequently than daily (and whether or not there is then an outstanding
balance in the Loan Account) of the following:
(i) The then collected funds in each DDA (other than any
Exempt DDA described in clauses (i) and (ii) of the
definition thereof), each such transfer to be net of
any minimum balance, not to exceed $10,000.00, as may
be required to be maintained in the subject DDA by
the bank at which such DDA is maintained).
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(ii) The proceeds of all credit card charges not otherwise
provided for pursuant hereto.
Telephone advice (confirmed by written notice) shall be provided to the
Administrative Agent on each Business Day on which any such transfer is made.
(c) In accordance with Section 6-1(d)(ii) hereof, during the
existence of a Cash Control Event, the Lead Borrower shall cause the ACH or wire
transfer on each Business Day of all available Receipts in the Primary Blocked
Account to the Concentration Account or to any other account designated from
time to time by the Administrative Agent (net of such minimum balance, if any,
not to exceed $10,000.00, as may reasonably be required to be maintained in the
Primary Blocked Account by the depository with which the Primary Blocked Account
is maintained), provided that (1) after application of the amount of such
Receipts necessary to satisfy all Liabilities in full (including to provide cash
collateral as described in Section 6-5(c)(ii)), the Administrative Agent shall
return any excess amounts to the Primary Blocked Account on the next succeeding
Business Day, and (2) if no Liabilities are then outstanding, the Administrative
Agent shall return the full amount of such Receipts to the Primary Blocked
Account on the next succeeding Business Day
(d) In the event that, notwithstanding the provisions of this
Section 6-4, during the existence of a Cash Control Event, any Borrower receives
or otherwise has dominion and control of any Receipts, or any proceeds or
collections of any Collateral, such Receipts, proceeds, and collections shall be
held in trust by that Borrower for the Administrative Agent and shall not be
commingled with any of that Borrower's other funds or deposited in any account
of any Borrower other than as instructed by the Administrative Agent.
6-5. PAYMENT OF LIABILITIES.
(a) During the existence of a Cash Control Event, on each Business
Day, the Administrative Agent shall apply the then collected balance of the
Concentration Account (net of fees charged, and of such impressed balances as
may be required by the bank at which the Concentration Account is maintained),
as of the day immediately following receipt of such collected funds, towards the
unpaid balance of the Loan Account and all other Liabilities, subject to the
provisions of Section 2-9(e).
(b) All deposits to the Concentration Account and other payments
to the Administrative Agent are subject to clearance and collection.
(c) The Administrative Agent shall transfer to the Primary Blocked
Account any surplus in the Concentration Account remaining after the application
towards the Liabilities referred to in Section 6-5(a), above (less those amounts
which are to be netted out, as provided therein) provided, however, in the event
that
(i) any Default exists; and
(ii) one or more L/Cs are then outstanding, then the
Administrative Agent may establish a funded reserve
of up to 105% of the aggregate Stated
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Amounts of such L/Cs. Such funded reserve shall
either be (i) returned to the Lead Borrower provided
that no Default exists or (ii) applied towards the
Liabilities during the existence of any Event of
Default described in Section 9-10 or acceleration
during the existence of any other Event of Default.
ARTICLE 7 - GRANT OF SECURITY INTEREST; COLLATERAL:
7-1. GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual, and faithful payment and performance of all and each of the
Liabilities, each Borrower hereby grants and pledges to the Administrative
Agent, for the ratable benefit of the Revolving Credit Lenders, the Issuer and
the Administrative Agent, a continuing security interest in and to, and assigns
to the Administrative Agent, for the ratable benefit of the Revolving Credit
Lenders, the following, and each item thereof, whether now owned or now due or
existing, or in which that Borrower has an interest, or hereafter acquired,
arising, or to become due, or in which that Borrower obtains an interest, and
wherever located, and all Proceeds, products and substitutions of or to any of
the following (all of which, together with any other property in which the
Administrative Agent may in the future be granted a security interest, is
referred to herein as the "COLLATERAL"):
(a) All Accounts.
(b) All Inventory and other assets relating to such Inventory.
(c) All Letter-of-Credit Rights arising from or relating to the
Borrowers' Accounts and Inventory.
(d) All Payment Intangibles arising from, relating to, or
constituting proceeds of Accounts and Inventory.
(e) All Supporting Obligations arising from, relating to, or
constituting proceeds of Accounts and Inventory.
(f) All Instruments arising from, relating to, or constituting
proceeds of Account and Inventory.
(g) All Documents relating to the Borrowers' Inventory.
(h) All Deposit Accounts in which any monies deposited therein
arise from, relate to or constitute proceeds of Accounts and Inventory.
(i) All Goods and Equipment (other than those located at the
Excluded Real Estate unless utilized in the business of the Borrowers).
(j) All Chattel Paper.
(k) All Commercial Tort Claims.
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(l) Money, cash, policies and certificates of insurance, in each
case, arising from, relating to, or constituting proceeds of Accounts and
Inventory.
(m) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and credit insurance, arising
out of any of the foregoing (7-1(a) through 7-1(l)) or otherwise.
(n) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing (7-1(a) through 7-1(n)), including the right
of stoppage in transit.
(o) All books and records relating to any of the foregoing and all
claims and causes of action relating to any of the foregoing.
(p) All Investment Property (i) maintained in a Securities Account
or Commodity Account (as such terms are defined in the UCC) designated by the
Lead Borrower from time to time, so long as such Account is subject to a control
agreement in favor of the Administrative Agent, such control agreement to be in
form and substance satisfactory to the Administrative Agent; or (ii) that
constitutes equity or other ownership interests in any Borrower that is pledged
by another Borrower pursuant to a Pledge Agreement in form and substance
satisfactory to the Administrative Agent.
Each Borrower shall ▇▇▇▇ its books and records as may be necessary or
appropriate to evidence and perfect Agent's security interest and shall cause
its financial statements to reflect such security interest.
7-2. EXTENT AND DURATION OF SECURITY INTEREST.
(a) The security interest created and granted herein shall
continue in full force and effect applicable to all Liabilities until all
Liabilities have been paid and/or satisfied in full and the Revolving Credit
Commitment has been terminated.
(b) The Administrative Agent and the Revolving Credit Lenders
shall not be bound to inquire into the source of any funds deposited into a DDA,
a Blocked Account or the Concentration Account by the Borrowers. Any amounts so
deposited by the Borrowers shall conclusively be presumed to be proceeds of the
Collateral and the Administrative Agent and the Revolving Credit Lenders shall
not be under any liability or responsibility to determine whether the funds so
deposited constitute proceeds of the Collateral.
7-3. PERFECTION OF COLLATERAL INTEREST.
(a) In addition to the provisions set forth in Section 4-24
hereof, each Borrower shall take all action that may be necessary or desirable,
or that Administrative Agent may request, so as at all times to maintain the
validity, perfection, enforceability and priority of Agent's security interest
in the Collateral or to enable Administrative Agent to protect, exercise or
enforce its rights hereunder and in the Collateral, including, but not limited
to, (i) immediately discharging all Encumbrances other than Permitted
Encumbrances or other Encumbrances permitted under
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Section 4-6, (ii) delivering to Agent, endorsed or accompanied by such
instruments of assignment as Administrative Agent may specify, and stamping or
marking, in such manner as Administrative Agent may specify, any and all chattel
paper, instruments, letters of credits and advices thereof and documents, in
each case to the extent evidencing or forming a part of the Collateral, (iii)
entering into warehousing, lockbox, bailee and other custodial arrangements
reasonably satisfactory to Agent, and (iv) executing and delivering financing
statements, instruments of pledge, mortgages, notices and assignments, in each
case in form and substance reasonably satisfactory to Agent, relating to the
creation, validity, perfection, maintenance or continuation of Agent's security
interest under the UCC or other applicable law.
(b) Each of the Borrowers hereby irrevocably authorizes the
Administrative Agent, and the Administrative Agent may at any time and from time
to time file, without the signature of any Borrower in accordance with Section
9-509 of the UCC, any financing statements, continuation statements and
amendments thereto that describe the Collateral of the applicable Borrower,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC or the Uniform Commercial Code of any
applicable jurisdiction, or as being of an equal or lesser scope or with greater
detail, and which contain any other information required by the UCC for the
sufficiency or filing office acceptance of any financing statements,
continuation statements or amendments. Each Borrower agrees to furnish any such
information to Administrative Agent promptly upon request. Administrative Agent
shall endeavor to provide Borrower with written notice of the filing of
financing statements, but any failure by Administrative Agent to do so shall
affect the validity of such financing statement or result in no liability
whatsoever to Agent.
(c) Each Borrower shall, at any time and from time to time, take
such steps as Administrative Agent may reasonably request (i) to obtain
"control" of any letter-of-credit rights, deposit accounts or electronic chattel
paper (as such terms are defined in the UCC with corresponding provisions
thereof defining what constitutes "control" for such items of Collateral), with
any agreements establishing control to be in form and substance reasonably
satisfactory to Agent, and (ii) otherwise to insure the continued perfection and
priority of Agent's security interest in any of the Collateral for the benefit
of the Revolving Credit Lenders and of its rights therein. If any Borrower shall
at any time, acquire a "commercial tort claim" (as such term is defined in the
UCC) in excess of $5,000,000, such Borrower shall promptly notify Administrative
Agent thereof in writing, therein providing a reasonable description and summary
thereof, and upon delivery thereof to Agent, such Borrower shall be deemed to
thereby grant to Administrative Agent for the benefit of the Revolving Credit
Lenders (and each Borrower hereby grants to Agent, for the benefit of each
Revolving Credit Lender) a security interest and lien in and to such commercial
tort claim and all proceeds thereof, all upon the terms of and governed by this
Agreement.
(d) Each Borrower hereby confirms and ratifies all UCC financing
statements filed by Administrative Agent with respect to the Collateral and such
Borrower.
(e) All reasonable and actual charges, expenses and fees
Administrative Agent may incur in doing any of the foregoing, and any local
taxes relating thereto, shall be charged to the Loan Account as a Revolving
Credit Loan and added to the Liabilities, or, at Agent's option,
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shall be paid to Administrative Agent for the ratable benefit of Revolving
Credit Lenders immediately upon demand.
7-4. PRESERVATION OF COLLATERAL.
In addition to the rights and remedies set forth in Section 10 and
4-21, at any time after the occurrence and during the continuance of an Event of
Default, the Administrative Agent: (a) may at any time take such steps as
Administrative Agent deems necessary to protect the Administrative Agent's
interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as
Administrative Agent may deem appropriate; (b) may employ and maintain at any
Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect the Administrative Agent's interests in the Collateral; (c)
may lease warehouse facilities to which Administrative Agent may move all or
part of the Collateral; (d) may use, and is hereby granted a license to use, at
no cost or expense, all properties and assets of the Borrowers, including,
without limitation, any Borrower's owned or leased lifts, hoists, trucks and
other facilities or equipment for handling or removing the Collateral, trade
names, trademarks or other intellectual property, furniture, fixtures and other
equipment) in connection with the sale, lease or other disposition of the
Collateral or otherwise, further to Section 10-5 hereof; and (e) shall have, and
is hereby granted, a right of ingress and egress to the places where the
Collateral is located, and may proceed over and through any Borrower's owned or
leased property. Each Borrower shall cooperate fully with all of the
Administrative Agent's efforts to preserve the Collateral and will take such
actions to preserve the Collateral as Administrative Agent may direct. The
Borrowers shall pay to the Administrative Agent, on demand, or the
Administrative Agent, in its discretion, may add to the Loan Account, all
amounts paid or incurred by the Administrative Agent in preserving the
Collateral.
7-5. OWNERSHIP OF COLLATERAL.
With respect to the Collateral, at the time the Collateral becomes
subject to the Administrative Agent's Collateral Interest: (a) each Borrower
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first priority security interest in each and every item of
its respective Collateral to the Administrative Agent; and, except for those
Encumbrances as set forth in Section 4-6 hereof, the Collateral shall be free
and clear of all Encumbrances whatsoever; (b) each document and agreement
executed by each Borrower or delivered to the Administrative Agent or any
Revolving Credit Lender in connection with this Agreement shall be true and
correct in all material respects; and (c) all signatures and endorsements of
each Borrower that appear on such documents and agreements shall be genuine and
each Borrower shall have full capacity to execute same.
7-6. DEFENSE OF ADMINISTRATIVE AGENT'S AND REVOLVING CREDIT LENDERS'
INTERESTS.
During the term of this Agreement, no Borrower shall, without the
Administrative Agent's prior written consent, pledge, sell (except to the extent
permitted in this Agreement), assign, transfer, create or suffer to exist an
Encumbrance upon or encumber or allow or suffer to be encumbered in any way,
except as set forth in Section 4-6, any part of the Collateral. Each
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Borrower shall defend the Administrative Agent's interests in the Collateral
against any and all Persons whatsoever. After the occurrence of a Cash Control
Event, each Borrower shall, and the Administrative Agent may, at its option,
instruct all suppliers, carriers, forwarders, warehouses or others receiving or
holding cash, checks, Inventory, Documents or Instruments in which the
Administrative Agent holds a Collateral Interest to deliver same to the Primary
Blocked Account, to the extent applicable, and otherwise to the Administrative
Agent and/or subject to the Administrative Agent's order and, in any event, if
they shall come into any Borrower's possession, they, and each of them, shall be
held by such Borrower in trust as the Administrative Agent's trustee, and such
Borrower will immediately deliver them to the Administrative Agent in their
original form together with any necessary endorsement.
7-7. FINANCING STATEMENTS.
Except as respects the financing statements filed by the Administrative
Agent and the financing statements described on EXHIBIT 4-6, if any, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
7-8. REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING LEGAL STATUS
AND COLLATERAL.
Each of the Borrowers (other than the Lead Borrower) only as to itself
and on behalf of its Subsidiaries that are Borrowers represents and warrants,
and the Lead Borrower jointly and severally represents and warrants, to the
Administrative Agent and the Revolving Credit Lenders as follows (it being
acknowledged and agreed that any breach by any one Borrower shall constitute a
Default in accordance with the terms hereof as to this Agreement in its entirety
and all Borrowers hereunder): (a) none of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in Section 9-102(a)(34) of the UCC, (b)
none of the account debtors or other persons obligated on any of the Collateral
is a governmental authority covered by the Federal Assignment of Claims Act or
like federal, state or local statute or rule in respect of such Collateral, (c)
no Borrower holds any commercial tort claim except as indicated on the
perfection certificate delivered in connection with this Agreement (the
"PERFECTION CERTIFICATE"), (d) all information set forth on the Perfection
Certificate is accurate and complete in all material respects, and in any event
contains sufficient information to permit the Administrative Agent to perfect
its liens in the Collateral, and (e) there has been no material change in any of
such information since the date on which the Perfection Certificate was signed
by each Borrower.
7-9. INVENTORIES, APPRAISALS AND AUDITS.
(a) The Administrative Agent may participate in and/or observe
each physical count and/or inventory of so much of the Collateral as consists of
Inventory which is undertaken on behalf of any Borrower, provided that unless an
Event of Default shall exist, in which case the Administrative Agent may so
participate and/or observe at the Borrowers' expense, the Borrowers shall not be
responsible for the costs and expenses of such participation and/or observation
unless, at such time, Adjusted Excess Liquidity is less than $75,000,000.
(b) The Borrowers, at their own expense, shall cause not less than
one (1) physical inventory of each of their store locations and delivery centers
to be undertaken in each twelve
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(12) month period during which this Agreement is in effect. Each fiscal quarter,
each of the Borrowers shall conduct a full inventory count at approximately
twenty-five percent (25%) of its stores (so that all stores have been counted
once in every twelve (12) month period).
(i) The Lead Borrower shall make available to the
Administrative Agent the preliminary results of each such physical
inventory within thirty (30) days following the completion of such
inventory in accordance with current billing and tracking methods.
(ii) The Lead Borrower, within forty-five (45) days
following the completion of such physical inventory, shall make
available to the Administrative Agent a reconciliation of the results
of each such physical inventory and shall post such results to the
Borrowers' perpetual inventory system and, as applicable, to the
Borrowers' other financial books and records in accordance with current
billing and tracking methods.
(iii) The Administrative Agent, in its reasonable
discretion, if any Default exists, may cause such additional
inventories to be taken as the Administrative Agent reasonably
determines (each, at the expense of the Borrowers).
(c) The Administrative Agent may obtain appraisals of the
Collateral from time to time, provided that prior to Default, such appraisals
shall be made at reasonable times and upon reasonable notice, conducted by such
appraisers as are reasonably satisfactory to the Administrative Agent. Unless an
Event of Default shall exist, in which case the Administrative Agent may
undertake appraisals at the Borrowers' expense, the Borrowers shall not be
responsible for the costs and expenses of such appraisals unless, at the time
any such appraisal is undertaken, Adjusted Excess Liquidity is less than
$75,000,000.
(d) The Administrative Agent may conduct commercial finance field
examinations from time to time. Unless an Event of Default shall exist, in which
case the Administrative Agent may conduct commercial finance examinations at the
Borrowers' expense, the Borrowers shall not be responsible for the costs and
expenses of such commercial finance examinations unless, at the time any such
commercial finance examination is undertaken, Adjusted Excess Liquidity is less
than $75,000,000.
7-10. USE OF COLLATERAL.
(i) Use of Inventory Collateral.
(a) No Borrower shall engage:
(1) In any sale of the Inventory other than for fair
consideration in the conduct of the Borrowers' business in the ordinary
course or as permitted under this Agreement.
(2) Sales or other dispositions to creditors.
(3) Sales or other dispositions in bulk other than in
connection with any store closings, provided that in no event shall
Inventory sold in bulk as a result of store
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closings after the Closing Date exceed, in the aggregate, fifteen
percent (15%) of the Cost of the Borrowers' Inventory existing as of
the Closing Date.
(4) Sales of any Collateral in breach of any provision of
this Agreement.
(b) No sale of Inventory shall be on consignment, approval, or
under any other circumstances such that such Inventory may be returned to a
Borrower without the consent of the Administrative Agent (with the exception of
the Borrowers' customary return policy applicable to the return of Inventory
purchased by the Borrowers' retail customers in the ordinary course).
(ii) Inventory Quality. All Inventory now owned or hereafter acquired
by each Borrower and at the time included in the Borrowing Base is and will be
of good and merchantable quality and saleable in the ordinary course of business
without discount.
(iii) Adjustments and Allowances. Each Borrower may grant such
allowances or other adjustments to the Borrower's Account Debtors as that
Borrower may reasonably deem to accord with sound business practice, provided,
however, the authority granted the Borrowers pursuant to this Section 7-10 may
be limited or terminated by the Administrative Agent at any time during the
existence of an Event of Default in the Administrative Agent's reasonable
discretion.
(iv) Validity of Accounts.
(a) The amount of each Account shown on the books, records, and
invoices of the Borrowers represented as owing by each Account Debtor is and
will be the correct amount actually owing by such Account Debtor and shall have
been fully earned by the Borrowers.
(b) No Borrower has any knowledge of any impairment of the
validity or collectibility of any of the Accounts included in the Borrowing
Base. The Lead Borrower shall notify the Administrative Agent of any such
impairment immediately after any Borrower becomes aware of any such impairment.
(c) Except for Permitted Encumbrances, Standby L/Cs permitted
hereunder and, to the extent applicable, in connection with other Encumbrances
permitted under Section 4-6, no Borrower shall post any bond to secure any
Borrower's performance under any agreement to which any Borrower is a party nor
cause any surety, guarantor, or other third party obligee to become liable to
perform any obligation of any Borrower (other than to the Administrative Agent)
in the event of any Borrower's failure so to perform.
(v) Notification to Account Debtors. The Administrative Agent shall
have the right, during the existence of a Cash Control Event, to notify any of
the Borrowers' Account Debtors to make payment directly to the Concentration
Account if such arrangements are not already in effect in accordance with
Article 6 and to collect all amounts due on account of the Collateral. After the
giving of any such notification, such Borrowers shall hold any proceeds of
collection of any Collateral received by such Borrower as trustee for the
Administrative Agent, for the benefit of the Revolving Credit Lenders and the
Administrative Agent, without commingling the same with other funds of such
Borrower and shall turn the same over to the Administrative Agent in the
identical form received, together with any necessary endorsements or
assignments.
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7-11. MARSHALLING.
Neither the Administrative Administrative Agent nor any Lender shall be
required to marshal any present or future collateral security (including but not
limited to the Collateral) for, or other assurances of payment of, the
Liabilities or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights and
remedies of the Administrative Agent or any Lender hereunder and of the
Administrative Agent or any Lender in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that they
lawfully may, each Borrower hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of the Administrative Agent's rights and remedies under this
Agreement or under any other instrument creating or evidencing any of the
Liabilities or under which any of the Liabilities is outstanding or by which any
of the Liabilities is secured or payment thereof is otherwise assured, and, to
the extent that they lawfully may, each Borrower hereby irrevocably waives the
benefits of all such laws.
7.12 NOTICE OF TERMINATION.
Upon termination of this Agreement, the Collateral Interest and all
other Loan Documents, the Administrative Agent shall promptly deliver written
notice of termination to (i) any and all of the credit card processors
referenced in any and all credit card notifications sent by the Lead Borrower
pursuant to Section 6-2(b) of this Agreement, (ii) any and all banks referenced
in any and all DDA notifications sent by the Lead Borrower pursuant to Section
6-1(d)(i) of this Agreement, and (iii) any and all banks with which the Lead
Borrower and the Administrative Agent have entered into Blocked Account
Agreements pursuant to Section 6-1(d)(ii) and (iii) of this Agreement.
ARTICLE 8 - ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT:
8-1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Administrative Agent as that (acting through any of
its officers) Borrower's true and lawful attorney, with full power of
substitution, during the existence of an Event of Default, to convert the
Collateral into cash at the sole risk, cost, and expense of that Borrower, but
for the sole benefit of the Administrative Agent and the Revolving Credit
Lenders. The rights and powers granted the Administrative Agent by this
appointment include but are not limited to the right and power to:
(a) Prosecute, defend, compromise, or release any action relating
to the Collateral.
(b) Sign change of address forms to change the address to which
each Borrower's mail is to be sent to such address as the Administrative Agent
shall designate; receive and open each Borrower's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Lead Borrower or to any trustee in bankruptcy or
receiver of the Lead Borrower, or other legal representative of a Borrower
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whom the Administrative Agent determines to be the appropriate person to whom to
so turn over such mail.
(c) Endorse the name of the relevant Borrower in favor of the
Administrative Agent upon any and all checks, drafts, notes, acceptances, or
other items or instruments; sign and endorse the name of the relevant Borrower
on, and receive as secured party, any of the Collateral, any invoices, schedules
of Collateral, freight or express receipts, or bills of lading, storage
receipts, warehouse receipts, or other documents of title respectively relating
to the Collateral.
(d) Sign the name of the relevant Borrower on any notice to that
Borrower's Account Debtors or verification of the Receivables Collateral; sign
the relevant Borrower's name on any Proof of Claim in Bankruptcy against Account
Debtors, and on notices of lien, claims of mechanic's liens, or assignments or
releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the payment
of any letter of credit and/or banker's acceptance of which any Borrower is a
beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of each Borrower.
8-2. NO OBLIGATION TO ACT. The Administrative Agent shall not be
obligated to do any of the acts or to exercise any of the powers authorized by
Section 8-1 herein, but if the Administrative Agent elects to do any such act or
to exercise any of such powers, it shall not be accountable for more than it
actually receives as a result of such exercise of power, and shall not be
responsible to any Borrower for any act or omission to act except for any act or
omission to act as to which there is a final determination made in a judicial
proceeding (in which proceeding the Administrative Agent has had an opportunity
to be heard) which determination includes a specific finding that the subject
act or omission to act had been grossly negligent or in actual bad faith.
ARTICLE 9 - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 9 respectively
shall constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event
of Default described in Section 9-10, any and all Liabilities shall become due
and payable without any further act on the part of the Administrative Agent.
During the existence of any other Event of Default, the Administrative Agent
may, and on the instruction of the Majority Lenders as provided in Section
12-1(b) shall, declare any and all Liabilities shall become immediately due and
payable. The existence of any Event of Default shall also constitute, without
notice or demand, a default under all other agreements between the
Administrative Agent or any Revolving Credit Lender and any Borrower and
instruments and papers heretofore, now, or hereafter given the Administrative
Agent or any Revolving Credit Lender by any Borrower.
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9-1. FAILURE TO PAY THE REVOLVING CREDIT. The failure by any Borrower
to pay when due any principal of the Revolving Credit (including, without
limitation, any reimbursement for any drawing under any L/C).
9-2. FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower to pay
when due (or upon demand, if payable on demand) any interest on, or fees in
respect of, the Revolving Credit (including, without limitation, L/C fees) or
any other payment Liability (other than any payment liability on account of the
principal of the Revolving Credit), which failure continues for three (3)
Business Days.
9-3. FAILURE TO PERFORM CERTAIN COVENANTS OR LIABILITIES. The failure
by any Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability included in any of the
following provisions hereof.
Section Relates to:
---------------------------------------------
4-6 Encumbrances
4-7 Indebtedness (if such failure to comply exists for more than three
Business Days)
4-19 Dividends. Investments. Other Corporate Actions
6-4 Proceeds and Collections
9.4 FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD).
(a) The failure by the Borrowers to promptly, punctually,
faithfully and timely perform, discharge, or comply with the provisions of
Section 4-14, which failure continues for five (5) days after the Lead
Borrower's receipt of written notice from the Administrative Agent.
(b) The failure by the Borrowers to promptly, punctually,
faithfully and timely perform, discharge, or comply with the provisions of
Article 5, which failure continues for ten (10) days after the Lead Borrower's
receipt of written notice from the Administrative Agent, provided, however, the
foregoing grace period shall not apply to the following requirements; rather
such requirements shall have the benefit of only the following grace periods:
REPORT/STATEMENT REQUIRED BY SECTION GRACE PERIOD NUMBER OF GRACE PERIODS
----------------------------------------------------------------------------------------------------------------
Borrowing Base Certificates 5-4 Three Business Day Two in any 12 months
----------------------------------------------------------------------------------------------------------------
Monthly Reports 5-5 Five Business Days Two in any 12 months
----------------------------------------------------------------------------------------------------------------
Quarterly Reports 5-6 Five Business Days Two in any 12 months
----------------------------------------------------------------------------------------------------------------
Annual Reports 5-7 Five Business Days One in any 12 months
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(c) The failure by any Borrower to perform any covenants under any
Loan Document or any other Liabilities, in each case not described in any of
Sections 9-1, 9-2, 9-3, 9-4(a) or 9-4(b), which failure continues for thirty
(30) days following the Lead Borrower's receipt of written notice from the
Administrative Agent of the breach of any such covenants or Liabilities.
9-5. MISREPRESENTATION. The failure of any representation or warranty
at any time made by any Borrower to the Administrative Agent or any Revolving
Credit Lender to be true and complete in all material respects when given.
9.6. ACCELERATION OF OTHER DEBT. BREACH OF LEASE.
(a) The occurrence of any event such that any Indebtedness of any
Borrower in excess of $10,000,000.00 to any creditor other than the
Administrative Agent or any Revolving Credit Lender could be accelerated
(whether or not the subject creditor takes any action on account of such
occurrence).
(b) The termination of any Lease as the result of a default
thereunder, which termination individually or in the aggregate with all other
Lease terminations after the date hereof could reasonably be expected to have a
materially adverse effect on the Borrowers' business or financial condition,
taken as a whole.
9-7. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss,
theft, damage, or destruction of or to Collateral in excess of $10,000,000.00 in
any fiscal year of the Borrowers.
9-8. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
Except in connection with the Existing Litigation and only if and to
the extent that (x) the Permitted Existing Litigation Amount does not exceed the
amount disclosed to the Administrative Agent in writing, and (y) at the time any
judgment or settlement amount is rendered or agreed to and at the time any such
amount is required to be paid in connection with the Existing Litigation, and
after giving effect to the payment thereof, the Excess Liquidity of the
Borrowers is at least equal to $20,000,000:
(a) The service of process upon the Administrative Agent or any
Revolving Credit Lender or any Participant seeking to attach, by trustee or
other process, funds in the aggregate in excess of $10,000,000.00 of any one or
more Borrowers on deposit with, or assets of any Borrower in the possession of,
the Administrative Agent or that Revolving Credit Lender or such Participant
unless contested in good faith by the Borrower in appropriate proceedings.
(b) The entry of any judgment against any Borrower, which, when
aggregated with all other such judgments exceeds $10,000,000.00 (unless
adequately insured by a solvent unaffiliated insurance company that has
acknowledged coverage), and which judgment is not satisfied (if a money
judgment), bonded, or appealed from (with execution or similar process stayed)
within twenty (20) days of its entry.
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(c) The entry of any order or the imposition of any other process
having the force of law, the effect of which is to restrain in any material way
the conduct by any Borrower of its business in the ordinary course and which
has, or could reasonably be expected to have, a material adverse effect upon the
Borrowers' condition (financial or otherwise), business, operations, assets or
income, taken as a whole.
9-9. BUSINESS FAILURE. Any act by, against, or relating to any
Borrower, or its property or assets, which act constitutes the determination, by
any Borrower, to initiate a program of substantial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any part of any Borrower's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Borrower, or
the occurrence of any other voluntary or involuntary liquidation or extension of
debt agreement for any Borrower; the offering by or entering into by any
Borrower of any composition, extension, or any other arrangement seeking relief
from or extension of the debts of any Borrower; or the initiation of any
judicial or non judicial proceeding or agreement by, against, or including any
Borrower which seeks or intends to accomplish a reorganization or arrangement
with creditors; and/or the initiation by or on behalf of any Borrower of the
liquidation or winding up of all or any substantial part of any Borrower's
business or operations; provided that if any of the foregoing is commenced
against a Borrower, no Event of Default shall be deemed to have arisen hereunder
if such action is timely contested in good faith by that Borrower by appropriate
proceedings and is terminated or dismissed within sixty (60) days of when
commenced.
9-10. BANKRUPTCY . The failure by any Borrower to generally pay the
debts of that Borrower as they mature; adjudication of bankruptcy or insolvency
relative to any Borrower; the entry of an order for relief or similar order with
respect to any Borrower in any proceeding pursuant to the Bankruptcy Code or any
other federal bankruptcy law; the filing of any complaint, application, or
petition by any Borrower initiating any matter in which any Borrower is or may
be granted any relief from the debts of that Borrower pursuant to the Bankruptcy
Code or any other insolvency statute or procedure; the filing of any complaint,
application, or petition against any Borrower initiating any matter in which
that Borrower is or may be granted any relief from the debts of that Borrower
pursuant to the Bankruptcy Code or any other insolvency statute or procedure,
which complaint, application, or petition is not timely contested in good faith
by that Borrower by appropriate proceedings or, if so contested, is not
dismissed within sixty (60) days of when filed.
9-11. INDICTMENT - FORFEITURE. The indictment of, or institution of any
legal process or proceeding against, any Borrower, under any Applicable Law
where the relief, penalties, or remedies sought or available include the
forfeiture of any property of any Borrower and/or the imposition of any stay or
other order, the effect of which could reasonably be expected to have a material
adverse effect upon the Borrowers' condition (financial or otherwise), business,
operations, assets or income, taken as a whole.
9-12. CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of any Borrower of the
Liabilities to the validity of any Loan Document or the enforceability of any
Loan Document strictly in accordance with
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the subject Loan Document's material 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.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's material terms or which voids,
avoids, limits, or otherwise adversely affects any security interest created by
any Loan Document or any payment made pursuant thereto.
9-13. CHANGE IN CONTROL. Any Change in Control.
ARTICLE 10 - RIGHTS AND REMEDIES UPON DEFAULT:
▇▇-▇ ▇▇▇▇▇▇▇▇▇▇▇▇. During the existence of any Event of Default as
described in Section 9-10, the Revolving Credit Commitments shall be terminated
and all Liabilities of the Borrower to the Revolving Credit Lenders shall be
immediately due and payable. During the existence of any Event of Default other
than as described in Section 9-10, the Administrative Agent may (and on the
issuance of Notice(s) of Acceleration, the Administrative Agent shall) terminate
the Revolving Credit Commitments and declare all Liabilities of the Borrowers to
the Revolving Credit Lenders to be immediately due and payable and may exercise
all of the Administrative Agent's Rights and Remedies as the Administrative
Agent from time to time thereafter determines as appropriate.
Notwithstanding the foregoing or the provisions of Section 10-2, the
Administrative Agent and the Revolving Credit Lenders agree that in the event of
an Event of Default (1) as a result of the Lead Borrower's failure to deliver
the financial statements required to be delivered pursuant to Section 5-5, 5-6
or 5-7, or (2) under Section 9-3 (other than Sections 4-6 and 6-4) 9-6, 9-7 or
9-8 (the items set forth in subclauses (1) and (2) collectively referred to as
the "Excess Liquidity Defaults"), the Administrative Agent and the Lenders will
not exercise any remedies against the Borrowers as a result of such Excess
Liquidity Defaults so long as within one Business Day of the issuance of written
notice with respect to such Excess Liquidity Defaults, the Borrowers (x) have
deposited with the Administrative Agent, and shall maintain with the
Administrative Agent, cash collateral in an aggregate amount at least equal to
all outstanding Liabilities (including, in any event, 105% of the amount of any
outstanding L/Cs), (y) shall have provided evidence satisfactory to the
Administrative Agent that the Excess Liquidity is at least equal to $75,000,000,
and (z) shall be attempting in good faith to expediently resolve any issues that
are causing the delay in delivery of the financial statements or, with respect
to the other Excess Liquidity Defaults, is attempting in good faith to cure the
particular Excess Liquidity Default to the extent such Event of Default is
susceptible of cure (any period of time during which all such conditions are met
and continue to be met being referred to as the "Hold Period"). During any Hold
Period, the Borrowers acknowledge and agree that the Revolving Credit Lenders
shall be under no obligation to make Revolving Credit Loans hereunder, provided
that the Lenders and the Issuer agree that L/Cs will continue to be issued at
the request of the Borrowers in accordance with the terms hereof so long as
prior to the issuance thereof, the Borrowers have provided additional cash
collateral to the Administrative Agent equal to 105% of the face amount of any
new L/C.
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10-2. RIGHTS OF ENFORCEMENT. During the existence of any Event of
Default, the Administrative Agent shall have all of the rights and remedies of a
secured party upon default under the UCC, in addition to which the
Administrative Agent shall have all and each of the following rights and
remedies:
(a) To give notice to any bank at which any DDA or Blocked Account
is maintained and in which Proceeds of Collateral are deposited, to turn over
such Proceeds directly to the Administrative Agent.
(b) To give notice to any customs broker of any of the Borrowers
to follow the instructions of the Administrative Agent as provided in any
written agreement or undertaking of such broker in favor of the Administrative
Agent.
(c) To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.
(d) To take possession of all or any portion of the Collateral, or
any indicia of the Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Administrative Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(f) To conduct one or more going out of business sales which
include the sale or other disposition of the Collateral, subject to the rights
of lessors under any Leases and applicable law.
(g) To apply the Proceeds of the Collateral in reduction of the
Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
In connection with the taking of any enforcement action by the
Administrative Agent during the continuance of an Event of Default, to the
extent that applicable law imposes duties on the Administrative Agent to
exercise remedies in a commercially reasonable manner, each Borrower
acknowledges and agrees that it is not commercially unreasonable for the
Administrative Agent (a) to fail to incur expenses reasonably deemed significant
by the Administrative Agent to prepare Collateral for disposition or otherwise
to fail to complete raw material or work in process into finished goods or other
finished products for disposition, (b) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (c) to
fail to exercise collection remedies against account debtors or other persons
obligated on Collateral or to fail to remove liens or Encumbrances on or any
adverse claims against Collateral, (d) to exercise collection remedies against
account debtors and other persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a
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specialized nature, (f) to contact other persons, whether or not in the same
business as such Borrower, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative
Agent a guaranteed return from the collection or disposition of Collateral, or
(l) to the extent deemed appropriate by the Administrative Agent, to obtain the
services of brokers, investment bankers, consultants and other professionals to
assist the Administrative Agent in the collection or disposition of any of the
Collateral. Each Borrower acknowledges that the purpose of this Section 10-2 is
to provide non-exhaustive indications of what actions or omissions by the
Administrative Agent would fulfill the Administrative Agent 's duties under the
UCC or the Uniform Commercial Code of any other relevant jurisdiction in the
Administrative Agent 's exercise of remedies against the Collateral and that
other actions or omissions by the Administrative Agent shall not be deemed to
fail to fulfill such duties solely on account of not being indicated in this
Section 10-2. Without limitation upon the foregoing, nothing contained in this
Section 10-2 shall be construed to grant any rights to any Borrower or to impose
any duties on the Administrative Agent that would not have been granted or
imposed by this Agreement or by applicable law in the absence of this Section
10-2.
10-3. SALE OF COLLATERAL AFTER EVENT OF DEFAULT.
(a) Any sale or other disposition of the Collateral after an Event
of Default may be conducted at public or private sale upon such terms and in
such manner as the Administrative Agent deems advisable, having due regard to
compliance with any statute or regulation which might affect, limit, or apply to
the Administrative Agent's disposition of the Collateral.
(b) The Administrative Agent, in the exercise of the
Administrative Agent's rights and remedies during the existence of an Event of
Default, may conduct one or more going out of business sales, in the
Administrative Agent's own right or by one or more agents and contractors. Such
sale(s) may be conducted upon any premises owned, leased or occupied by any
Borrower, subject to the rights of lessors under any Leases and applicable law.
(c) Unless the Collateral is perishable or threatens to decline
speedily in value, or is of a type customarily sold on a recognized market (in
which event the Administrative Agent shall provide the Lead Borrower such notice
as may be practicable under the circumstances), the Administrative Agent shall
give the Lead Borrower at least ten (10) days' prior written notice of the date,
time, and place of any proposed public sale, and of the date after which any
private sale or other disposition of the Collateral may be made. Each Borrower
agrees that such written notice shall satisfy all requirements for notice to
that Borrower which are imposed under the UCC or other applicable law with
respect to the exercise of the Administrative Agent's rights and remedies upon
default.
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(d) The Administrative Agent and any Revolving Credit Lender may
purchase the Collateral, or any portion of it, at any sale held under this
Article.
(e) If any of the Collateral is sold, leased, or otherwise
disposed of by the Administrative Agent on credit, the Liabilities shall not be
deemed to have been reduced as a result thereof unless and until payment is
finally received thereon by the Administrative Agent.
(f) The Administrative Agent shall apply the proceeds of the
Administrative Agent's exercise of its rights and remedies upon default pursuant
to this Article 10 in accordance with Sections 12-6 and 12-7.
10-4. OCCUPATION OF BUSINESS LOCATION. In connection with the
Administrative Agent's exercise of the Administrative Agent's rights under this
Article 10, during the existence of an Event of Default, the Administrative
Agent may enter upon, occupy, and use any premises owned or occupied by any
Borrower (other than the Excluded Real Estate unless Collateral is maintained at
any such premises), subject to the rights of lessors under any Leases and
applicable law. The Administrative Agent shall not be required to remove any of
the Collateral from any such premises upon the Administrative Agent's taking
possession thereof. In no event shall the Administrative Agent be liable to any
Borrower for use or occupancy by the Administrative Agent of any premises
pursuant to this Article 10, nor for any charge (such as wages for any
Borrower's employees and utilities) incurred in connection with the
Administrative Agent's exercise of the Administrative Agent's Rights and
Remedies, unless a final judicial determination has been or is made (in a
proceeding in which the Administrative Agent has had an opportunity to be heard)
that the Administrative Agent had acted in a grossly negligent manner or in
willful misconduct.
10-5. GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants to the
Administrative Agent a royalty-free nonexclusive irrevocable license during the
existence of an Event of Default and subject to the rights of any third Person
(including, without limitation, any lessor under a Lease) and Applicable Law (a)
to use, apply, and affix any trademark, trade name, logo, or the like in which
any Borrower now or hereafter has rights, such license being with respect to the
Administrative Agent's exercise of the rights hereunder including, without
limitation, in connection with any completion of the sale or other disposition
of Inventory, and (b) to use any or all furniture, fixtures and equipment
located at any of the stores or other leased facilities of the Borrowers in
connection with any completion of the sale or other disposition of Inventory,
and (c) to use any or all intellectual property, general intangibles (including,
without limitation, the Borrowers' trade names), books, records, and information
relating to the Collateral and/or to the operation of each Borrower's business,
and all rights of access to such books, records, and information, and all
property in which such books, records, and information are stored, recorded, and
maintained, and other assets of each Borrower. No Borrower shall enter into any
agreement, license or contract with any Person the terms of which would be
inconsistent with this Section 10-5 or prohibit the Administrative Agent from
having the benefits of this Section 10-5.
10-6. ASSEMBLY OF COLLATERAL. The Administrative Agent may require any
Borrower to assemble the Collateral and make it available to the Administrative
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Agent at the Borrowers' sole risk and expense at a place or places which are
reasonably convenient to both the Administrative Agent and the Lead Borrower.
10-7. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
and discretions of the Administrative Agent hereunder (herein, the
"ADMINISTRATIVE AGENT'S RIGHTS AND REMEDIES") shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No delay or
omission by the Administrative Agent in exercising or enforcing any of the
Administrative Agent's Rights and Remedies shall operate as, or constitute, a
waiver thereof. No waiver by the Administrative Agent of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Administrative Agent's Rights or Remedies, and no express or implied
agreement or transaction of whatever nature entered into between the
Administrative Agent and any person, at any time, shall preclude the other or
further exercise of the Administrative Agent's Rights and Remedies. No waiver by
the Administrative Agent of any of the Administrative Agent's Rights and
Remedies on any one occasion shall be deemed a waiver on any subsequent
occasion, nor shall it be deemed a continuing waiver. The Administrative Agent's
Rights and Remedies may be exercised at such time or times and in such order of
preference as the Administrative Agent may determine. The Administrative Agent's
Rights and Remedies may be exercised without resort or regard to any other
source of satisfaction of the Liabilities.
ARTICLE 11 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
11-1. REVOLVING CREDIT FUNDING PROCEDURES.
(a) The Administrative Agent shall advise each Revolving Credit
Lender, no later than 1:30PM on a date on which any Revolving Credit Loan is to
be made on that date. Such advice, in each instance, may be by telephone or
facsimile transmission, provided that if such advice is by telephone, it shall
be confirmed in writing. Advice of a Revolving Credit Loan shall include the
amount of and interest rate applicable to the subject Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit
Commitment, each Revolving Credit Lender, by no later than the end of business
on the day on which the subject Revolving Credit Loan is to be made, shall
Transfer that Revolving Credit Lender's Revolving Credit Commitment Percentage
of the subject Revolving Credit Loan to the Administrative Agent.
11-2. ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:
(a) Each Revolving Credit Lender shall make available to the
Administrative Agent, as provided herein, that Revolving Credit Lender's
Revolving Credit Commitment Percentage of the following:
(i) Each Revolving Credit Loan, up to the maximum amount
of that Revolving Credit Lender's Revolving Credit
Commitment of the Revolving Credit Loans.
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(ii) Up to the maximum amount of that Revolving Credit
Lender's Revolving Credit Commitment of each L/C
Drawing (to the extent that such L/C Drawing is not
"covered" by a Revolving Credit Loan as provided
herein).
(b) In all circumstances, the Administrative Agent may:
(i) Assume that each Revolving Credit Lender, subject to
Section 11-2(a), timely shall make available to the
Administrative Agent that Revolving Credit Lender's
Revolving Credit Commitment Percentage of each
Revolving Credit Loan, notice of which is provided
pursuant to Section 11-1.
(ii) In reliance upon such assumption, make available the
corresponding amount to the Borrowers.
(iii) Assume that each Revolving Credit Lender timely shall
pay, and shall make available, to the Administrative
Agent all other amounts which that Revolving Credit
Lender is obligated to so pay and/or make available
hereunder or under any of the Loan Documents.
(c) In the event that, in reliance upon any of such assumptions,
the Administrative Agent makes available, a Revolving Credit Lenders Revolving
Credit Commitment Percentage of one or more Revolving Credit Loans, or any other
amount to be made available hereunder or under any of the Loan Documents, which
amount a Revolving Credit Lender (a "DELINQUENT REVOLVING CREDIT LENDER") fails
to provide to the Administrative Agent within one (1) Business Day of written
notice of such failure, then:
(i) The amount which had been made available by the
Administrative Agent is an "ADMINISTRATIVE AGENT'S
COVER" (and is so referred to herein).
(ii) All interest paid by the Borrowers on account of the
Revolving Credit Loan or coverage of the subject L/C
Drawing which consist of the Administrative Agent's
Cover shall be retained by the Administrative Agent
until the Administrative Agent's Cover, with
interest, has been paid.
(iii) The Delinquent Revolving Credit Lender shall pay to
the Administrative Agent, on demand, interest at a
rate equal to the prevailing federal funds rate on
any Administrative Agent's Cover in respect of that
Delinquent Revolving Credit Lender
(iv) The Administrative Agent shall have succeeded to all
rights to payment to which the Delinquent Revolving
Credit Lender otherwise would have been entitled
hereunder in respect of those amounts paid by or in
respect of the Borrowers on account of the
Administrative Agent's Cover together with interest
until it is repaid. Such payments shall be deemed
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made first towards the amounts in respect of which
the Administrative Agent's Cover was provided and
only then towards amounts in which the Delinquent
Revolving Credit Lender is then participating. For
purposes of distributions to be made pursuant to
Section 11-3(a) (which relates to ordinary course
distributions) or Section 12-6 (which relates to
distributions of proceeds of a Liquidation) below,
amounts shall be deemed distributable to a Delinquent
Revolving Credit Lender (and consequently, to the
Administrative Agent to the extent to which the
Administrative Agent is then entitled) at the highest
level of distribution (if applicable) at which the
Delinquent Revolving Credit Lender would otherwise
have been entitled to a distribution.
(v) Subject to Subsection 11-2(c)(iv), the Delinquent
Revolving Credit Lender shall be entitled to receive
any payments from the Borrowers to which the
Delinquent Revolving Credit Lender is then entitled,
provided however there shall be deducted from such
amount and retained by the Administrative Agent any
interest to which the Administrative Agent is then
entitled on account of Section 11-2(c)(ii), above.
(d) A Delinquent Revolving Credit Lender shall not be relieved of
any obligation of such Delinquent Revolving Credit Lender hereunder (all and
each of which shall constitute continuing obligations on the part of any
Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status as a
Delinquent Revolving Credit Lender by paying the Administrative Agent the
aggregate of the following:
(i) The Administrative Agent's Cover (to the extent not
previously repaid by the Borrowers and retained by
the Administrative Agent in accordance with
Subsection 11-2(c)(iv), above) with respect to that
Delinquent Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable under Subsection
11-2(c)(iii), above (which relates to interest to be
paid by that Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be incurred by the
Administrative Agent in the enforcement of the
Administrative Agent's rights against such Delinquent
Revolving Credit Lender.
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11-3. ORDINARY COURSE DISTRIBUTIONS. (This Section 11-3 applies, and
sets forth rights and obligations amongst the Lenders only, unless the
provisions of Section 12-6 (which relates to distributions in the event of a
Liquidation) becomes operative).
(a) Weekly, on such day as may be set from time to time by the
Administrative Agent (or more frequently at the Administrative Agent's option)
the Administrative Agent and each Revolving Credit Lender shall settle up on
amounts advanced under the Revolving Credit and collected funds received in the
Concentration Account or otherwise paid by the Borrowers.
(b) The Administrative Agent shall distribute to each Revolving
Credit Lender, such Person's respective pro-rata share of interest payments on
the Revolving Credit Loans when actually received and collected by the
Administrative Agent (excluding the one Business Day for settlement provided for
in Section 6-5(a), which shall be for the account of the Administrative Agent
only). For purposes of calculating interest due to a Revolving Credit Lender,
that Revolving Credit Lender shall be entitled to receive interest on the actual
amount contributed by that Revolving Credit Lender towards the principal balance
of the Revolving Credit Loans outstanding during the applicable period covered
by the interest payment made by the Borrowers. Any net principal reductions to
the Revolving Credit Loans received by the Administrative Agent in accordance
with the Loan Documents during such period shall not reduce such actual amount
so contributed, for purposes of calculation of interest due to that Revolving
Credit Lender, until the Administrative Agent has distributed to that Revolving
Credit Lender its pro-rata share thereof.
(c) The Administrative Agent shall distribute L/C fees and Unused
Fees paid on account of the Revolving Credit to the Revolving Credit Lenders pro
rata based upon their respective Revolving Credit Commitment Percentages.
(d) No Revolving Credit Lender shall have any interest in, or
right to receive any part of, the Revolving Credit Commitment Fee or the
Administrative Agent's Fee to be paid by the Borrowers to the Administrative
Agent pursuant to this Agreement. Each Revolving Credit Lender shall be paid
such fees upon becoming a Revolving Credit Lender hereunder as may be agreed
between such Revolving Credit Lender and the Arranger.
(e) Any amount received by the Administrative Agent as
reimbursement for any cost or expense (including without limitation, attorneys'
reasonable fees) shall be distributed by the Administrative Agent to that Person
which is entitled to such reimbursement as provided in this Agreement (and if
such Person(s) is (are) the Revolving Credit Lenders, pro-rata based upon their
respective Revolving Credit Commitment Percentages at the date on which the
expense, in respect of which such reimbursement is being made, was incurred).
(f) Each distribution pursuant to this Section 11-3 is subject to
Section 11-2(c), above.
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ARTICLE 12 - ACCELERATION AND LIQUIDATION:
12.1 ACCELERATION NOTICES.
(a) The Administrative Agent may give the Revolving Credit Lenders
a Notice of Acceleration at any time during the existence of an Event of
Default.
(b) The Majority Lenders may give the Administrative Agent a
Notice of Acceleration at any time during the existence of an Event of Default.
Such notice may be by multiple counterparts.
12.2 ACCELERATION. Unless stayed by judicial or statutory process, the
Administrative Agent shall accelerate the time for payment of the Liabilities
and declare the Liabilities immediately due and payable in full within a
commercially reasonable time following:
(a) The Administrative Agent's giving of a Notice of Acceleration
to the Revolving Credit Lenders as provided in Section 12-1(a).
(b) The Administrative Agent's receipt of a Notice of Acceleration
from the Majority Lenders, in compliance with Section 12-1(b) .
12-3. INITIATION OF LIQUIDATION.Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Administrative Agent within a
commercially reasonable time following acceleration of the Liabilities.
12-4. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION.
(a) At the initiation of a Liquidation, the Administrative Agent
and the Revolving Credit Lenders shall net out each Revolving Credit Lender's
respective contributions towards the Revolving Credit Loans, so that each
Revolving Credit Lender holds that Revolving Credit Lender's Revolving Credit
Commitment Percentage of the Revolving Credit Loans and advances.
(b) Following the initiation of a Liquidation, each Revolving
Credit Lender shall contribute, towards any L/C thereafter honored and not
immediately reimbursed by the Borrowers, that Revolving Credit Lender's
Revolving Credit Commitment Percentage of such honoring.
12-5. ADMINISTRATIVE AGENT'S CONDUCT OF LIQUIDATION.
(a) Any Liquidation shall be conducted by the Administrative
Agent, with the advice and assistance of the Revolving Credit Lenders.
(b) The Administrative Agent may establish one or more Nominees to
"bid in" or otherwise acquire ownership to any Post Foreclosure Asset, provided
that the Administrative
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Agent may "bid in" for any such assets only at such prices as may be directed by
the Majority Lenders.
(c) The Administrative Agent shall manage the Nominee and manage
and dispose of any Post Foreclosure Assets with a view towards the realization
of the economic benefits of the ownership of the Post Foreclosure Assets and in
such regard, the Administrative Agent and/or the Nominee may operate, repair,
manage, maintain, develop, and dispose of any Post Foreclosure Asset in such
manner as the Administrative Agent determines is appropriate under the
circumstances.
(d) The Administrative Agent may decline to undertake or to
continue taking a course of action or to execute an action plan (whether
proposed by the Administrative Agent or any Revolving Credit Lender) unless
indemnified to the Administrative Agent's satisfaction by the Revolving Credit
Lenders against any and all liability and expense which may be incurred by the
Administrative Agent by reason of taking or continuing to take that course of
action or action plan.
(e) Each Revolving Credit Lender shall execute all such
instruments and documents not inconsistent with the provisions of this Agreement
as the Administrative Agent and/or the Nominee reasonably may request with
respect to the creation and governance of any Nominee, the conduct of the
Liquidation, and the management and disposition of any Post Foreclosure Asset.
12-6. DISTRIBUTION OF LIQUIDATION PROCEEDS.
(a) During the existence of an Event of Default, the
Administrative Agent may establish one or more reasonably funded reserve
accounts into which proceeds of the conduct of any Liquidation may be deposited
in anticipation of future expenses which may be incurred by the Administrative
Agent in the exercise of rights as a secured creditor of the Borrowers and prior
claims which the Administrative Agent reasonably anticipates may need to be
paid.
(b) The Administrative Agent shall distribute the net proceeds of
Liquidation in accordance with the relative priorities set forth in Section
12-7.
(c) Each Revolving Credit Lender, on the written request of the
Administrative Agent and/or any Nominee, not more frequently than once each
month, shall reimburse the Administrative Agent and/or any Nominee, Pro-Rata,
for any cost or expense reasonably incurred by the Administrative Agent and/or
the Nominee in the conduct of a Liquidation, which amount is not covered out of
current proceeds of the Liquidation, which reimbursement shall be paid over to
and distributed by the Administrative Agent.
12-7. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION The relative
priorities to the proceeds of a Liquidation are as follows:
(a) To the Administrative Agent as reimbursement for all
reasonable third party costs and expenses incurred by the Administrative Agent
and to Lenders' Special Counsel and to any funded reserve established pursuant
to Section 12-6(a); and then
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(b) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to the unpaid principal balance of the
Revolving Credit; and then
(c) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to accrued interest on the Revolving Credit;
and then
(d) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to those fees distributable hereunder to the
Revolving Credit Lenders; and then
(e) To any Delinquent Revolving Credit Lenders, pro-rata, to
amounts to which such Revolving Credit Lenders otherwise would have been
entitled pursuant to Sections 12-7(c), 12-7(d), and 12-7(e); and then
(f) To any Liabilities in respect of Hedge Agreements; and then
(g) To any other Liabilities then outstanding (including, without
limitation on account of any claims then threatened or asserted against the
Administrative Agent, the Issuing Bank, or any Revolving Credit Lender for which
the Borrowers are obligated to provide an indemnity).
(h) To the Lead Borrower.
ARTICLE 13 - THE ADMINISTRATIVE AGENT:
13-1. APPOINTMENT OF THE ADMINISTRATIVE AGENT
(a) Each Revolving Credit Lender appoints and designates Fleet
Retail Group, Inc. as the "Administrative Agent" hereunder and under the Loan
Documents.
(b) Each Revolving Credit Lender authorizes the Administrative
Agent:
(i) To execute those of the Loan Documents and all other
instruments relating thereto to which the
Administrative Agent is a party.
(ii) To take such action on behalf of the Revolving Credit
Lenders and to exercise all such powers as are
expressly delegated to the Administrative Agent
hereunder and in the Loan Documents and all related
documents, together with such other powers as are
reasonably incident thereto.
13-2. RESPONSIBILITIES OF ADMINISTRATIVE AGENT; OTHER AGENTS
(a) The Administrative Agent shall not have any duties or
responsibilities to, or any fiduciary relationship with, any Revolving Credit
Lender except for those expressly set forth in this Agreement.
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(b) Neither the Administrative Agent nor any of its Affiliates
shall be responsible to any Revolving Credit Lender for any of the following:
(i) Any recitals, statements, representations or
warranties made by any Borrower or any other Person.
(ii) Any appraisals or other assessments of the assets of
any Borrower or of any other Person responsible for
or on account of the Liabilities.
(iii) The value, validity, effectiveness, genuineness,
enforceability, or sufficiency of the Loan Agreement,
the Loan Documents or any other document referred to
or provided for therein.
(iv) Any failure by any Borrower or any other Person
(other than the Administrative Agent) to perform its
obligations under the Loan Documents.
(c) The Administrative Agent may employ attorneys, accountants,
and other professionals and agents and attorneys-in-fact and shall not be
responsible to the Revolving Credit Lenders for the negligence or misconduct of
any such attorneys, accountants, and other professionals or agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care. No
such attorney, accountant, other professional, agent, or attorney-in-fact shall
be responsible for any action taken or omitted to be taken by any other such
Person.
(d) Neither the Administrative Agent, nor any of its directors,
officers, or employees, shall be responsible for any action taken or omitted to
be taken by any of them in connection herewith in reliance upon advice of its
counsel nor, in any other event except for any action taken or omitted to be
taken as to which a final judicial determination has been or is made (in a
proceeding in which such Person has had an opportunity to be heard) that such
Person had acted in a grossly negligent manner, in actual bad faith, or in
willful misconduct.
(e) The Administrative Agent shall not have any responsibility in
any event for more funds than the Administrative Agent actually receives and
collects.
(f) The Administrative Agent, in its separate capacity as a
Lender, shall have the same rights and powers hereunder as any other Lender.
13-3. CONCERNING DISTRIBUTIONS BY THE ADMINISTRATIVE AGENT
(a) The Administrative Agent in the Administrative Agent's
reasonable discretion based upon the Administrative Agent's determination of the
likelihood that additional payments will be received, expenses incurred, and/or
claims made by third parties to all or a portion of such proceeds, may delay the
distribution of any payment received on account of the Liabilities.
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(b) The Administrative Agent may disburse funds prior to
determining that the sums which the Administrative Agent expects to receive have
been finally and unconditionally paid to the Administrative Agent. If and to the
extent that the Administrative Agent does disburse funds and it later becomes
apparent that the Administrative Agent did not then receive a payment in an
amount equal to the sum paid out, then any Revolving Credit Lender to whom the
Administrative Agent made the funds available, on demand from the Administrative
Agent, shall refund to the Administrative Agent the sum paid to that person.
(c) If, in the opinion of the Administrative Agent, the
distribution of any amount received by the Administrative Agent might involve
the Administrative Agent in liability, or might be prohibited hereby, or might
be questioned by any Person, then the Administrative Agent may refrain from
making distribution until the Administrative Agent's right to make distribution
has been adjudicated by a court of competent jurisdiction.
(d) The proceeds of any Revolving Credit Lender's exercise of any
right of, or in the nature of, set-off shall be deemed, First, to the extent
that a Revolving Credit Lender is entitled to any distribution hereunder, to
constitute such distribution and Second, shall be shared with the other
Revolving Credit Lenders as if distributed pursuant to (and shall be deemed as
distributions under) Section 12-7.
(e) Each Revolving Credit Lender recognizes that the crediting of
the Borrowers with the "proceeds" of any transaction in which a Post Foreclosure
Asset is acquired is a non-cash transaction and that, in consequence, no
distribution of such "proceeds" will be made by the Administrative Agent to any
Lender.
(f) In the event that (x) a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Administrative Agent is
to be repaid or disgorged or (y) the Majority Lenders determine to effect such
repayment or disgorgement, then each Revolving Credit Lender to which any such
distribution shall have been made shall repay, to the Administrative Agent which
had made such distribution, that Revolving Credit Lender's Pro-Rata share of the
amount so adjudged or determined to be repaid or disgorged.
13-4. DISPUTE RESOLUTION: Any dispute among the Revolving Credit
Lenders and/or the Administrative Agent concerning the interpretation,
administration, or enforcement of the financing arrangements contemplated by
this or any other Loan Document or the interpretation or administration of this
or any other Loan Document which cannot be resolved amicably shall be resolved
in the United States District Court for the District of Massachusetts, sitting
in Boston or in the Superior Court of Suffolk County, Massachusetts, to the
jurisdiction of which courts each Revolving Credit Lender hereto hereby submits.
13-5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS. The Administrative
Agent will forward to each Revolving Credit Lender, promptly after the
Administrative Agent's receipt thereof, a copy of each notice or other document
furnished to the Administrative Agent pursuant to this Agreement, including
monthly, quarterly, and annual financial statements received from the Lead
Borrower pursuant to Article 5 of this Agreement, other than any of the
following:
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(a) Routine communications associated with requests for Revolving
Credit Loans and/or the issuance of L/Cs.
(b) Routine or nonmaterial communications.
(c) Any notice or document of which the Administrative Agent has
knowledge that such notice or document had been forwarded to the Revolving
Credit Lenders other than by the Administrative Agent.
13-6. CONFIDENTIAL INFORMATION
(a) Each Revolving Credit Lender will maintain, as confidential,
all of the following:
(i) Proprietary approaches, techniques, and methods of
analysis which are applied by the Administrative
Agent in the administration of the credit facility
contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the
Administrative Agent in providing reports to the
Revolving Credit Lenders pursuant hereto, which forms
or formats are not of general currency.
(b) Nothing included herein shall prohibit the disclosure of any
such information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this Agreement.
13-7. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely upon any certificate, notice or other document (including
any cable, telegram, telex, or facsimile) reasonably believed by the
Administrative Agent to be genuine and correct and to have been signed or sent
by or on behalf of the proper person or persons, and upon advice and statements
of attorneys, accountants and other experts selected by the Administrative
Agent. As to any matters not expressly provided for in this Agreement, any Loan
Document, or in any other document referred to therein, the Administrative Agent
shall in all events be fully protected in acting, or in refraining from acting,
in accordance with the applicable Consent required by this Agreement.
Instructions given with the requisite Consent shall be binding on all Revolving
Credit Lenders.
13-8. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER REVOLVING CREDIT
LENDERS
(a) Each Revolving Credit Lender represents to all other Revolving
Credit Lenders and to the Administrative Agent that such Revolving Credit
Lender:
(i) Independently and without reliance on any
representation or act by the Administrative Agent or
by any other Revolving Credit Lender, and based on
such documents and information as that Revolving
Credit Lender has deemed appropriate, has made such
Revolving Credit
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Lender's own appraisal of the financial condition and
affairs of the Borrowers and decision to enter into
this Agreement.
(ii) Has relied upon that Revolving Credit Lender's review
of the Loan Documents by that Revolving Credit Lender
and by counsel to that Revolving Credit Lender as
that Revolving Credit Lender deemed appropriate under
the circumstances.
(b) Each Revolving Credit Lender agrees that such Revolving Credit
Lender, independently and without reliance upon Administrative Agent or any
other Revolving Credit Lender, and based upon such documents and information as
such Revolving Credit Lender shall deem appropriate at the time, will continue
to make such Revolving Credit Lender's own appraisals of the financial condition
and affairs of the Borrowers when determining whether to take or not to take any
discretionary action under this Agreement.
(c) The Administrative Agent, in the discharge of the
Administrative Agent's duties hereunder, shall not be required to make inquiry
of, or to inspect the properties or books of, any Person.
(d) Except for notices, reports, and other documents and
information expressly required to be furnished to the Revolving Credit Lenders
by the Administrative Agent hereunder (as to which, see Section 13-5), the
Administrative Agent shall not have any affirmative duty or responsibility to
provide any Lender with any credit or other information concerning any Person,
which information may come into the possession of the Administrative Agent or
any Affiliate of the Administrative Agent.
(e) Each Revolving Credit Lender, at such Revolving Credit
Lender's request, shall have reasonable access to all nonprivileged documents in
the possession of the Administrative Agent, which documents relate to the
Administrative Agent's performance of its duties hereunder.
13-9. INDEMNIFICATION. Without limiting the liabilities of the
Borrowers under this or any of the other Loan Documents, each Revolving Credit
Lender shall indemnify the Administrative Agent, pro rata based upon their
respective Revolving Credit Commitment Percentages, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including reasonable
attorneys' fees and expenses and other out-of-pocket expenditures) which may at
any time be imposed on, incurred by, or asserted against the Administrative
Agent and in any way relating to or arising out of this Agreement or any other
Loan Document or any documents contemplated by or referred to therein or the
transactions contemplated thereby or the enforcement of any of terms hereof or
thereof or of any such other documents, provided, however, no Revolving Credit
Lender shall be liable for any of the foregoing to the extent that any of the
foregoing arises from any action taken or omitted to be taken by the
Administrative Agent as to which a final judicial determination has been or is
made (in a proceeding in which the Administrative Agent has had an opportunity
to be heard) that the Administrative Agent had acted in a grossly negligent
manner, in actual bad faith, or in willful misconduct.
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13-10. RESIGNATION OF ADMINISTRATIVE AGENT.
(a) The Administrative Agent may resign at any time by giving 60
days prior written notice thereof to the Revolving Credit Lenders and the Lead
Borrower. Upon receipt of any such notice of resignation, the Majority Lenders
shall have the right to appoint a successor to such Administrative Agent, which
shall be a Revolving Credit Lender (and if no Event of Default has occurred,
with the consent of the Lead Borrower, not to be unreasonably withheld and, in
any event, deemed given by the Lead Borrower if no written objection is provided
by the Lead Borrower to the (resigning) Administrative Agent within seven (7)
Business Days notice of such proposed appointment). If a successor
Administrative Agent shall not have been so appointed and accepted such
appointment within 30 days after the giving of notice by the resigning
Administrative Agent, then the resigning Administrative Agent may appoint a
successor Administrative Agent, which shall be a financial institution having a
combined capital and surplus in excess of $300,000,000. The consent of the Lead
Borrower otherwise required by this Section 13-10(a) shall not be required if an
Event of Default has occurred.
(b) Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor shall thereupon
succeed to, and become vested with, all the rights, powers, privileges, and
duties of the (resigning) Administrative Agent so replaced, and the (resigning)
Administrative Agent shall be discharged from the (resigning) Administrative
Agent's duties and obligations hereunder, other than on account of any
responsibility for any action taken or omitted to be taken by the (resigning)
Administrative Agent as to which a final judicial determination has been or is
made (in a proceeding in which the (resigning) Person has had an opportunity to
be heard) that such Person had acted in a grossly negligent manner or in bad
faith.
(c) After any resigning Administrative Agent's resignation, the
provisions of this Agreement and of all other Loan Documents shall continue in
effect for the resigning Person's benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent. The
Administrative Agent acknowledges that on the Closing Date, no Administrative
Agent's Fee will be payable by the Borrowers and will only be payable in
accordance with Section 2-13.
ARTICLE 14 - ACTION BY ADMINISTRATIVE AGENT - CONSENTS - AMENDMENTS - WAIVERS:
14-1. ADMINISTRATION OF CREDIT FACILITIES
(a) Except as otherwise specifically provided in this Agreement,
the Administrative Agent may take any action in accordance with applicable law
with respect to the credit facility contemplated by the Loan Documents as the
Administrative Agent determines to be appropriate, provided, however, the
Administrative Agent is not under any affirmative obligation to take any action
which it is not required by this Agreement or the Loan Documents specifically to
so take.
(b) Except as specifically provided in the following Sections of
this Agreement, whenever a Loan Document or this Agreement provides that action
may be taken or omitted to be taken in an Administrative Agent's discretion, the
Administrative Agent shall have the sole
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right, in accordance with the standards set forth herein to the extent
applicable, to take, or refrain from taking, such action without, and
notwithstanding, any vote of the Revolving Credit Lenders:
Actions Described in Section Type of Consent Required
--------------------------------------------------------------------
14-2 Majority Lenders
14-3 Unanimous Consent of Revolving Credit Lenders
14-4 Consent of Issuer
14-5 Consent of the Administrative Agent
(c) The rights granted to the Revolving Credit Lenders in those
sections referenced in Section l4-l (b) shall not otherwise limit or impair the
Administrative Agent's exercise of its discretion under the Loan Documents.
14-2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS. Except as
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver, or modification of any Loan
Document.
14-3. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT. None of the
following may take place except with the Consent of each Revolving Credit Lender
adversely affected thereby or with Unanimous Consent:
(a) Any increase in any Revolving Credit Lender's Revolving Credit
Commitment or Revolving Credit Commitment Percentage (other than by reason of
the application of Section 14-8 (which deals with NonConsenting Revolving Credit
Lenders) or Section 15-1 (which deals with assignments and participations)), or
the increase of the Revolving Credit Ceiling to an amount in excess of
$60,000,000.00.
(b) Any decrease in any interest rate or fee payable to the
Revolving Credit Lenders on account of the Revolving Credit Loans.
(c) Any extension of the Maturity Date.
(d) Any forgiveness of all or any portion of any payment
Liability.
(e) Any decrease in any interest rate or fee payable under any of
the Loan Documents (other than any Administrative Agent's Fee (for which the
consent of the Administrative Agent shall also be required) and of any fee
provided for by the Fee Letter (which may be amended by written agreement
between the Lead Borrower on the one hand, and the Administrative Agent on the
other)).
(f) Any release of a material portion of the Collateral not
otherwise required or provided for in the Loan Documents or to facilitate a
Liquidation.
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(g) Any amendment of the definition of the terms "Borrowing Base"
or of any definition of any component thereof, such that more credit would be
available to the Borrowers, based on the. same assets, as would have been
available to the Borrowers immediately prior to such amendment, it being
understood, however, that:
(i) The foregoing shall not limit the adjustment by the
Administrative Agent of any Reserve in the
Administrative Agent's administration of the
Revolving Credit as otherwise permitted by this
Agreement.
(ii) The foregoing shall not prevent the Administrative
Agent, in its administration of the Revolving Credit,
from restoring any component of Borrowing Base which
had been lowered by the Administrative Agent back to
the value of such component, as stated in this
Agreement or to an intermediate value.
(h) Any release of any Person obligated on account of the
Liabilities.
(i) The making of any Revolving Credit Loan which, when made,
exceeds Availability and is not a Permissible OverLoan, provided, however,
(i) no Consent shall be required in connection with the
making of any Revolving Credit Loan to "cover" any
honoring of a drawing under any L/C; and
(ii) each Lender recognizes that subsequent to the making
of a Revolving Credit Loan which does not constitute
a Permissible OverLoan, the unpaid principal balance
of the Loan Account may exceed Borrowing Base on
account of changed circumstances beyond the control
of the Administrative Agent (such as a drop in
collateral value).
(j) The waiver of the obligation of the Borrowers to reduce the
unpaid principal balance of loans under the Revolving Credit to an amount which
does not exceed a Permissible OverLoan or to eliminate an OverLoan.
(k) Any amendment of this Article 14.
(l) Amendment of any of the following Definitions:
"Appraised Inventory Liquidation Value"
"Appraised Inventory Percentage"
"Majority Lenders"
"Permissible OverLoan"
"Unanimous Consent"
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14-4. ACTIONS REQUIRING ISSUER CONSENT. No action, amendment, or waiver
of compliance with, any provision of the Loan Documents or of this Agreement
which affects the Issuer may be undertaken without the Consent of the Issuer.
14-5. ACTIONS REQUIRING ADMINISTRATIVE AGENT'S CONSENT.
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects the
Administrative Agent in its capacity as Administrative Agent may be undertaken
without the written consent of the Administrative Agent.
(b) No action referenced herein which affects the rights, duties,
obligations, or liabilities of the Administrative Agent shall be effective
without the written consent of the Administrative Agent.
14-6. MISCELLANEOUS ACTIONS.
(a) Notwithstanding any other provision of this Agreement, no
single Revolving Credit Lender independently may exercise any right of action or
enforcement against or with respect to any Borrower.
(b) The Administrative Agent shall be fully justified in failing
or refusing to take action under this Agreement or any Loan Document on behalf
of any Revolving Credit Lender unless the Administrative Agent shall first
(i) receive such clear, unambiguous, written instructions
as the Administrative Agent deems appropriate; and
(ii) be indemnified to the Administrative Agent's
satisfaction by the Revolving Credit Lenders against
any and all liability and expense which may be
incurred by the Administrative Agent by reason of
taking or continuing to take any such action, unless
such action had been grossly negligent, in willful
misconduct, or in bad faith.
(c) The Administrative Agent may establish reasonable procedures
for the providing of direction and instructions from the Revolving Credit
Lenders to the Administrative Agent, including its reliance on multiple
counterparts, facsimile transmissions, and time limits within which such
direction and instructions must be received in order to be included in a
determination of whether the requisite percentage of the Revolving Credit
Commitments has provided its direction, Consent, or instructions.
14-7. ACTIONS REQUIRING LEAD BORROWER'S CONSENT.
(a) The Lead Borrower's consent is required for any amendment of
this Agreement, except that each of the following Articles of this Agreement may
be amended without the consent of the Lead Borrower:
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Article Title of Article
11 Revolving Credit Fundings and Distributions
12 Acceleration and Liquidation
13-1 The Administrative Agent
14 Action By Administrative Agent - Consents - Amendments -
Waivers (other than Section 14-1 and this Section 14-7)
14-8. NONCONSENTING REVOLVING CREDIT LENDER.
(a) In the event that a Revolving Credit Lender (in this Section
14-8, a "NONCONSENTING REVOLVING CREDIT LENDER") does not provide its Consent to
a proposal by the Administrative Agent to take action which requires consent
under this Article 14, then subject to the prior consent of the Administrative
Agent, one or more Revolving Credit Lenders who provided Consent to such action
may require the assignment, without recourse and in accordance with the
procedures outlined in Section 15-1, below, of the NonConsenting Revolving
Credit Lender's commitment hereunder on fifteen (15) days written notice to the
Administrative Agent and to the NonConsenting Revolving Credit Lender.
(b) At the end of such fifteen (15) days, and provided that the
NonConsenting Revolving Credit Lender delivers the Revolving Credit Note held by
the NonConsenting Revolving Credit Lender to the Administrative Agent, the
Revolving Credit Lenders who have given such written notice shall Transfer the
following to the NonConsenting Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit Lender's Pro-Rata
share of the principal and interest of the Revolving
Credit Loans to the date of such assignment.
(ii) All fees distributable hereunder to the NonConsenting
Revolving Credit Lender to the date of such
assignment.
(iii) Any out-of-pocket costs and expenses for which the
NonConsenting Revolving Credit Lender is entitled to
reimbursement from the Borrowers.
(c) In the event that the NonConsenting Revolving Credit Lender
fails to deliver to the Administrative Agent the Revolving Credit Note held by
the NonConsenting Revolving Credit Lender as provided in Section 14-8(b), then:
(i) The amount otherwise to be Transferred to the
NonConsenting Revolving Credit Lender shall be
Transferred to the Administrative Agent and held by
the Administrative Agent, without interest, to be
turned over to the NonConsenting Revolving Credit
Lender upon
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delivery of the Revolving Credit Note held by that
NonConsenting Revolving Credit Lender.
(ii) The Revolving Credit Note held by the NonConsenting
Revolving Credit Lender shall have no force or effect
whatsoever.
(iii) The NonConsenting Revolving Credit Lender shall cease
to be a "Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have Transferred
the amount to the Administrative Agent as described
above shall have succeeded to all rights and become
subject to all of the obligations of the
NonConsenting Revolving Credit Lender as "Revolving
Credit Lender".
(d) In the event that more than one (1) Revolving Credit Lender
wishes to require such assignment, the NonConsenting Revolving Credit Lenders
commitment hereunder shall be divided among such Revolving Credit Lenders,
pro-rata based upon their respective Revolving Credit Commitment Percentages,
with the Administrative Agent coordinating such transaction.
(e) The Administrative Agent shall coordinate the retirement of
the Revolving Credit Note held by the NonConsenting Revolving Credit Lender and
the issuance of Revolving Credit Notes to those Revolving Credit Lenders which
"take-out" such NonConsenting Revolving Credit Lender, provided, however, no
processing fee otherwise to be paid as provided in Section 15-2(b) shall be due
under such circumstances.
ARTICLE 15 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
15-1. ASSIGNMENTS AND ASSUMPTIONS.
(a) Except as provided herein, each Revolving Credit Lender (in
this Section 15-1(a), an "ASSIGNING REVOLVING CREDIT LENDER") may assign to one
or more Eligible Assignees (in this Section 15-1(a), each an "ASSIGNEE REVOLVING
CREDIT LENDER") all or a portion of that Revolving Credit Lender's interests,
rights and obligations under this Agreement and the Loan Documents (including
all or a portion of its Commitment) and the same portion of the Revolving Credit
Loans at the time owing to it, and of the Revolving Credit Note held by the
Assigning Revolving Credit Lender, provided that:
(i) The Administrative Agent (and if no Event of Default
then exists, the Lead Borrower) shall have given its
prior written consent to such assignment, which
consent shall not be unreasonably withheld, provided
that any assignment complying with all other terms of
this Article 15 to a Person then a Revolving Credit
Lender shall not be subject to the prior consent of
the Administrative Agent or the Lead Borrower.
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(ii) Each such assignment shall be of a constant, and not
a varying, percentage of all the Assigning Revolving
Credit Lender's rights and obligations under this
Agreement.
(iii) Following the effectiveness of such assignment, the
Assigning Revolving Credit Lender's Dollar Commitment
(if not an assignment of all of the Assigning
Revolving Credit Lender's Commitment) shall not be
less than $5,000,000.
The parties acknowledge and agree that any consent right of the Borrowers under
this Section 15 shall not apply to any sale, assignment or other transfer by the
Administrative Agent or any Revolving Credit Lender of this Agreement and its
rights, powers, privileges, obligations and duties hereunder if such sale,
assignment or other transfer is in connection with the sale to, merger with or
other acquisition by a third party financial institution of such Administrative
Agent or Revolving Credit Lender.
15-2. ASSIGNMENT PROCEDURES. (This Section 15-2 describes the
procedures to be followed in connection with an assignment effected pursuant to
this Article 15 and permitted by Section 15-1).
(a) The parties to such an assignment shall execute and deliver to
the Administrative Agent, for recording in the Register, an Assignment and
Acceptance substantially in the form of EXHIBIT 15-2, annexed hereto.
(b) The Assigning Revolving Credit Lender shall deliver to the
Administrative Agent, with such Assignment and Acceptance, the Revolving Credit
Note held by the subject Assigning Revolving Credit Lender and the
Administrative Agent's processing fee of $3,500.00, provided, however, no such
processing fee shall be due where the Assigning Revolving Credit Lender is one
of the Revolving Credit Lenders at the initial execution of this Agreement.
(c) The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"REGISTER") for the recordation of the names and addresses of the Revolving
Credit Lenders and of the Revolving Credit Commitment Percentage and Revolving
Credit Commitment Percentage of each Revolving Credit Lender. The Register shall
be available for inspection by the Revolving Credit Lenders at any reasonable
time and from time to time upon reasonable prior notice. In the absence of
manifest error, the entries in the Register shall be conclusive and binding on
all Revolving Credit Lenders. The Administrative Agent and the Revolving Credit
Lenders may treat each Person whose name is recorded in the Register as a
"Revolving Credit Lender" hereunder for all purposes of this Agreement.
(d) The Assigning Revolving Credit Lender and Assignee Revolving
Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an Assignment
and Assumption.
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15-3. EFFECT OF ASSIGNMENT.
(a) From and after the effective date specified in an Assignment
and Acceptance which has been executed, delivered, and recorded (which effective
date the Administrative Agent may delay by up to five (5) Business Days after
the delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
(A) Shall be a party to this Agreement and the
Loan Documents (and to any amendments
thereof) as fully as if the Assignee
Revolving Credit Lender had executed each.
(B) Shall have the rights of a Revolving Credit
Lender hereunder to the extent of the
Revolving Credit Commitment Percentage and
Revolving Credit Commitment Percentage
assigned by such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be
released from the Assigning Revolving Credit Lenders
obligations under this Agreement and the Loan
Documents to the extent of the Commitment assigned by
such Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to obtain
and distribute replacement Revolving Credit Notes to
the subject Assigning Revolving Credit Lender and
Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance, the
parties thereto confirm to and agree with each other and with all parties to
this Agreement as to those matters which are set forth in the subject Assignment
and Acceptance.
ARTICLE 16 - NOTICES:
16-1. NOTICE ADDRESSES.
All notices, demands, and other communications made in respect of any
Loan Document (other than a request for a loan or advance or other financial
accommodation under the Revolving Credit) shall be made to the following
addresses, each of which may be changed upon seven (7) days written notice to
all others given by certified mail, return receipt requested:
If to the Administrative Agent:
Fleet Retail Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Goulston & Storrs, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lead Borrower
And All Borrowers:
Claire's Stores Inc.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax:: (▇▇▇) ▇▇▇-▇▇▇▇
16-2. NOTICE GIVEN.
(a) Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times being
local to the place of delivery or receipt):
(i) By mail: the sooner of when actually received or
three (3) days following deposit in the United States
mail, postage prepaid.
(ii) By recognized overnight express delivery: the
Business Day following the day when sent.
(iii) By Hand: If delivered on a Business Day after 9:00 AM
and no later than three (3) hours prior to the close
of customary business hours of the recipient, when
delivered. Otherwise, at the opening of the then next
Business Day.
(iv) By Facsimile transmission (which must include a
header on which the party sending such transmission
is indicated): If sent on a Business Day after 9:00
AM and no later than three (3) hours prior to the
close of
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customary business hours of the recipient, one (1)
hour after being sent. Otherwise, at the opening of
the then next Business Day.
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or facsimile number for which no due notice
was given shall each be deemed receipt of the notice sent.
ARTICLE 17 - TERM:
17-1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2-5(g) hereof)
until the Termination Date.
17-2. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrowers shall, and hereby
promise to, pay the Administrative Agent (whether or not then due), in
immediately available funds, all Liabilities then due and owing, including,
without limitation, the following:
(i) The entire balance of the Loan Account (including the
unpaid principal balance of the Revolving Credit
Loans).
(ii) Any then remaining installments of the Administrative
Agent's Fee.
(iii) Any payments due on account of the indemnification
obligations included in Section 2-9(f).
(iv) Any accrued and unpaid Unused Fee.
(v) All unreimbursed costs and expenses of the
Administrative Agent and of Lenders' Special Counsel
for which each Borrower is responsible.
(b) On the Termination Date, the Borrowers shall deposit with the
Administrative Agent cash in an amount equal to 105% of the amount of any L/Cs
then outstanding.
(c) Until such payment (Section 17-2(a)) and arrangements
concerning L/Cs (Section 17-2(b)), all provisions of this Agreement, other than
those included in Article 2 which place any obligation on the Administrative
Agent or any Revolving Credit Lender to make any loans or advances or to provide
any financial accommodations to any Borrower, shall remain in full force and
effect until all Liabilities shall have been paid in full.
(d) The release by the Administrative Agent of the Collateral
Interests granted the Administrative Agent by the Borrowers hereunder may be
upon such conditions and indemnifications as the Administrative Agent may
reasonably require.
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ARTICLE 18 - GENERAL:
18-1. PROTECTION OF COLLATERAL. The Administrative Agent has no duty as
to the collection or protection of the Collateral beyond the safe custody of
such of the Collateral as may come into the possession of the Administrative
Agent.
18-2. PUBLICITY. The Administrative Agent may issue a "tombstone"
notice of the establishment of the credit facility contemplated by this
Agreement and may make reference to the Lead Borrower (and may utilize any logo
or other distinctive symbol associated with each Borrower with the Borrower's
consent, which will not be unreasonably withheld) in connection with any
advertising, promotion, or marketing undertaken by the Administrative Agent. The
Administrative Agent will endeavor to provide to the Lead Borrower a copy of any
such advertising, promotion or marketing to the extent practicable, but shall
have no liability for the failure to do so.
18-3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrowers and their respective representatives, successors, and assigns and
shall inure to the benefit of the Administrative Agent and each Revolving Credit
Lender and their respective successors and permitted assigns, provided, however,
no trustee or other fiduciary appointed with respect to any Borrower shall have
any rights hereunder, and provided further that no Borrower may assign or
otherwise transfer any of its rights or obligations hereunder. In the event that
the Administrative Agent or any Revolving Credit Lender assigns or transfers its
rights under this Agreement, the assignee shall thereupon succeed to and become
vested with all rights, powers, privileges, and duties of such assignor
hereunder and such assignor shall thereupon be discharged and relieved from its
duties and obligations hereunder, provided that any such assignment shall be
made in accordance with Section 15-1.
18-4. SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
18-5. AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate all
discussions and negotiations between each Borrower and the Administrative Agent
and each Revolving Credit Lender, either express or implied, concerning the
matters included herein and in such other instruments, any custom, usage, or
course of dealings to the contrary notwithstanding. No such discussions,
negotiations, custom, usage, or course of dealings shall limit, modify, or
otherwise affect the provisions thereof. No failure by the Administrative Agent
or any Revolving Credit Lender to give notice to the Lead Borrower of any
Borrower's having failed to observe and comply with any warranty or covenant
included in any Loan Document shall constitute a waiver of such warranty or
covenant or the amendment of the subject Loan Document.
(b) Each Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Administrative Agent. Subject to
Article 14, no consent, modification,
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amendment, or waiver of any provision of any Loan Document shall be effective
unless executed in writing by or on behalf of the party to be charged with such
modification, amendment, or waiver (and if such party is the Administrative
Agent then by a duly authorized officer thereof). Any modification, amendment,
or waiver provided by the Administrative Agent shall be in reliance upon all
representations and warranties theretofore made to the Administrative Agent by
or on behalf of the Borrowers (and any guarantor, endorser, or surety of the
Liabilities) and consequently may be rescinded in the event that any of such
representations or warranties was not true and complete in all material respects
when given.
(c) Each reference in the Loan Documents to the exercise of
discretion or the like by the Administrative Agent or any Revolving Credit
Lender shall be to such Person's exercise of its judgment, in good faith, based
upon such Person's consideration of any such factors as the Administrative Agent
or that Revolving Credit Lender, determines, acting in a commercially reasonable
manner, as having a material bearing on credit risks associated with the
providing of Revolving Credit Loans and financial accommodations to the
Borrowers, taking into account information of which that Person then has actual
knowledge. The burden of establishing the failure of the Administrative Agent or
any Revolving Credit Lender to have acted in a commercially reasonable manner in
such Person's exercise of such discretion shall be the Borrowers'.
18-6. POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, each Borrower hereby grants unto the Administrative
Agent (acting through any of its officers) full power to do any and all things
necessary or appropriate in accordance with applicable law during the existence
of an Event of Default in connection with the exercise of such powers. All
powers conferred upon the Administrative Agent by this Agreement, being coupled
with an interest, shall be irrevocable until this Agreement is terminated by a
written instrument executed by a duly authorized officer of the Administrative
Agent.
18-7. APPLICATION OF PROCEEDS. In the event of an Event of Default, the
proceeds of any collection, sale, or disposition of the Collateral, or of any
other payments received hereunder, shall be applied towards the Liabilities in
such order and manner as the Administrative Agent determines in its sole
discretion, consistent, however, with Sections 12-6 and 12-7 and any other
applicable provisions of this Agreement. The Borrowers shall remain liable for
any deficiency remaining following such application.
18-8. INCREASED COSTS. In connection with the Loans and L/Cs, if, as a
result of any change in any Requirement of Law, or of the interpretation or
application thereof by any court or by any governmental or other authority or
entity charged with the administration thereof, whether or not having the force
of law, which:
(a) subjects any Revolving Credit Lender to any taxes or changes
the basis of taxation, or increases any existing taxes, on payments of
principal, interest or other amounts payable by any Borrower to the
Administrative Agent or any Revolving Credit Lender under this Agreement (except
for taxes on the Administrative Agent or any Revolving Credit Lender based on
net income or capital imposed by the jurisdiction in which the principal or
lending offices of the Administrative Agent or that Revolving Credit Lender are
located);
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(b) imposes, modifies or deems applicable, in connection with the
Loans and L/Cs, any reserve, cash margin, special deposit or similar
requirements against assets held by, or deposits in or for the account of or
loans by or any other acquisition of funds by the relevant funding office of any
Revolving Credit Lender;
(c) imposes on any Revolving Credit Lender any other condition
with respect to any Loan Document; or
(d) imposes on any Revolving Credit Lender a requirement to
maintain or allocate capital in relation to the Liabilities; and
(e) the result of any of the foregoing, in such Revolving Credit
Lender's reasonable opinion, is to increase the cost to that Revolving Credit
Lender of making or maintaining any loan, advance or financial accommodation or
to reduce the income receivable by that Revolving Credit Lender in respect of
any loan, advance or financial accommodation by an amount which that Revolving
Credit Lender deems to be material, then upon written notice from the
Administrative Agent, from time to time, to the Lead Borrower (such notice to
set out in reasonable detail the facts giving rise to and a summary calculation
of such increased cost or reduced income), the Borrowers shall forthwith pay to
the Administrative Agent, for the benefit of the subject Revolving Credit
Lender, within thirty (30) days after receipt of such notice, that amount which
shall compensate the subject Revolving Credit Lender for such additional cost or
reduction in income.
(f) Any such increased cost amounts described in this Section 8-8
shall, to the extent applicable, be apportioned among the applicable Revolving
Credit Lender's other similarly situated customers.
18-9. COSTS AND EXPENSES OF THE ADMINISTRATIVE AGENT.
(a) The Borrowers shall pay from time to time on demand all Costs
of Collection and all reasonable costs, expenses, and disbursements (including
reasonable attorneys' fees and expenses) which are incurred by the
Administrative Agent in connection with the preparation, negotiation, execution,
and delivery of this Agreement and of any other Loan Documents, and all other
reasonable costs, expenses, and disbursements which may be incurred in
connection with or in respect to the credit facility contemplated hereby or
which otherwise are incurred with respect to the Liabilities.
(b) The Borrowers shall pay from time to time on demand all
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) incurred, during the existence of any Event of Default, by the
Revolving Credit Lenders to Lenders' Special Counsel.
(c) Each Borrower authorizes the Administrative Agent to pay all
such fees and expenses and, in the Administrative Agent's discretion, to add
such fees and expenses to the Loan Account.
(d) The undertaking on the part of each Borrower in this Section
18-9 shall survive payment of the Liabilities and/or any termination, release,
or discharge executed by the
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Administrative Agent in favor of any Borrower, other than a termination,
release, or discharge which makes specific reference to this Section 18-9.
18-10. COPIES AND FACSIMILES. Each Loan Document and all documents and
papers which relate thereto which have been or may be hereinafter furnished the
Administrative Agent or any Revolving Credit Lender may be reproduced by that
Revolving Credit Lender or by the Administrative Agent by any photographic,
microfilm, xerographic, digital imaging, or other process, and such Person
making such reproduction may destroy any document so reproduced. Any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business). Any facsimile which bears proof of transmission shall be binding on
the party which or on whose behalf such transmission was initiated and likewise
shall be so admissible in evidence as if the original of such facsimile had been
delivered to the party which or on whose behalf such transmission was received.
18-11. MASSACHUSETTS LAW. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of The Commonwealth of Massachusetts.
18-12. CONSENT TO JURISDICTION.
(a) Each Borrower agrees that any legal action, proceeding, case,
or controversy against any Borrower with respect to any Loan Document may be
brought in the Superior Court of Suffolk County, Massachusetts or in the United
States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Administrative Agent may elect in the Administrative
Agent's sole discretion. By execution and delivery of this Agreement, each
Borrower, for itself and in respect of its property, accepts, submits, and
consents generally and unconditionally, to the jurisdiction of the aforesaid
courts.
(b) Each Borrower WAIVES personal service of any and all process
upon it, and irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the Lead Borrower at the Lead
Borrower's address for notices as specified herein, such service to become
effective five (5) Business Days after such mailing.
(c) Each Borrower WAIVES any objection based on forum non
conveniens and any objection to venue of any action or proceeding instituted
under any of the Loan Documents and consents to the granting of such legal or
equitable remedy as is deemed appropriate by the Court.
(d) Nothing herein shall affect the right of the Administrative
Agent to bring legal actions or proceedings in any other competent jurisdiction.
(e) Each Borrower agrees that any action commenced by any Borrower
asserting any claim arising under or in connection with this Agreement or any
other Loan Document shall be brought solely in the Superior Court of Suffolk
County, Massachusetts or in the United
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Massachusetts, sitting in Boston,
Massachusetts, and that such Courts shall have exclusive jurisdiction with
respect to any such action.
18-13. INDEMNIFICATION. Each Borrower shall indemnify, defend, and hold
the Administrative Agent and each Revolving Credit Lender and any Participant
and any of their respective employees, officers, or agents (each, an
"INDEMNIFIED PERSON") harmless of and from any claim brought or threatened
against any Indemnified Person by any Borrower, any guarantor or endorser, if
any, of the Liabilities, or any other Person on account of the relationship of
the Borrowers or of any other guarantor or endorser of the Liabilities,
including of and from all costs, expenses, liabilities, and damages (including,
without limitation, reasonable attorneys' fees, expenses, and disbursements in
connection therewith) as may be suffered by any Indemnified Person in connection
with (x) the Collateral; (y) the Loan Documents; or (z) the exercise of any
rights or remedies under any of the Loan Documents (each of which claims which
may be defended, compromised, settled, or pursued by the Indemnified Person with
counsel of the Administrative Agent's selection, but at the expense of the
Borrowers) other than any claim as to which a final determination is made in a
judicial proceeding (in which the Administrative Agent and any other Indemnified
Person has had an opportunity to be heard), which determination includes a
specific finding that the Indemnified Person seeking indemnification had acted
in a grossly negligent manner, in actual bad faith or in intentional breach of
its obligations under this Agreement. This indemnification shall survive payment
of the Liabilities and/or any termination, release, or discharge executed by the
Administrative Agent in favor of the Borrowers, other than a termination,
release, or discharge duly executed on behalf of the Administrative Agent which
makes specific reference to this Section 18-13.
18-14. RULES OF CONSTRUCTION. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
(a) Words in the singular include the plural and words in the
plural include the singular.
(b) Titles, headings (indicated by being underlined or shown in
ALL CAPITALS) and any Table of Contents are solely for convenience of reference;
do not constitute a part of the instrument in which included; and do not affect
such instrument's meaning, construction, or effect.
(c) The words "includes" and "including" are not limiting.
(d) Text which follows the words "including, without limitation"
(or similar words) is illustrative and not limiting.
(e) Text which is shown in italics (except for parenthesized
italicized text), shown in BOLD, shown IN ALL CAPITAL LETTERS, or in any
combination of the foregoing, shall be deemed to be conspicuous.
(f) The words "may not" are prohibitive and not permissive.
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(g) Any reference to a Person's "knowledge" (or words of similar
import) are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent investigation with respect to the subject of such
"knowledge" (whether or not such investigation has actually been undertaken).
(h) Terms which are defined in one section of any Loan Document
are used with such definition throughout the instrument in which so defined.
(i) The symbol "$" refers to United States Dollars.
(j) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(k) References to "this Agreement" or to any other Loan Document
is to the subject instrument as amended to the date on which application of such
reference is being made.
(l) Except as otherwise specifically provided, all references to
time are to Boston time.
(m) In the determination of any notice, grace, or other period of
time prescribed or allowed hereunder:
(i) Unless otherwise provided (A) the day of the act, event, or
default from which the designated period of time begins to run
shall not be included and the last day of the period so
computed shall be included unless such last day is not a
Business Day, in which event the last day of the relevant
period shall be the then next Business Day and (B) the period
so computed shall end at 5:00 PM on the relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but excluding".
(iv) The word "through" means "to and including".
(n) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section 18-15
hereof, provided, however, in the event of any inconsistency between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall govern and control.
18-15. INTENT.
It is intended that:
(a) This Agreement take effect as a sealed instrument.
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(b) The scope of all Collateral Interests created by any Borrower
to secure the Liabilities be broadly construed in favor of the Administrative
Agent.
(c) All Collateral Interests created in favor of the
Administrative Agent at any time and from time to time by any Borrower secure
all Liabilities, whether now existing or contemplated or hereafter arising.
(d) Except as expressly provided in Sections 7-9(a), (c) and (d),
all reasonable costs, expenses, and disbursements incurred by the Administrative
Agent and, to the extent provided in Section 18-9 each Revolving Credit Lender,
in connection with such Person's relationship(s) with any Borrower shall be
borne by the Borrowers.
(e) Unless otherwise explicitly provided herein, the
Administrative Agent's consent to any action of any Borrower which is prohibited
unless such consent is given may be given or refused by the Administrative Agent
in its sole discretion.
18-16. PARTICIPATIONS: Each Revolving Credit Lender may sell
participations to one or more financial institutions (each, a "PARTICIPANT") in
that Revolving Credit Lender's interests herein, provided that no such
participation shall include any provision which accords that Participant with
any rights, vis a vis the Administrative Agent, with respect to any requirement
herein for approval by a requisite number or proportion of the Revolving Credit
Lenders. No such sale of a participation shall relieve a Revolving Credit Lender
from that Revolving Credit Lender's obligations hereunder nor obligate the
Administrative Agent to any Person other than a Revolving Credit Lender.
18-17. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Borrower from the Administrative Agent or any
Revolving Credit Lender or any Participant or from any Affiliate of any of the
foregoing, and any cash, securities, instruments or other property of any
Borrower in the possession of any of the foregoing, whether for safekeeping or
otherwise (regardless of the reason such Person had received the same) shall at
all times constitute security for all Liabilities and for any and all
obligations of each Borrower to the Administrative Agent and such Revolving
Credit Lender or any Participant or such Affiliate and may be applied or set off
against the Liabilities and against such obligations at any time an Event of
Default exists, whether or not such are then due and whether or not other
collateral is then available to the Administrative Agent or that Revolving
Credit Lender.
18-18. PLEDGES TO FEDERAL RESERVE BANKS. Nothing included in this
Agreement shall prevent or limit any Revolving Credit Lender, to the extent that
such Revolving Credit Lender is subject to any of the twelve Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act (12 U.S.C. Section
341) from pledging all or any portion of that Lender's interest and rights under
this Agreement, provided, however, neither such pledge nor the enforcement
thereof shall release the pledging Revolving Credit Lender from any of its
obligations hereunder or under any of the Loan Documents.
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18-19. MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither the Administrative Agent nor any Revolving Credit Lender shall
be entitled to contract for, charge, receive, collect, or apply as interest on
any Liability, any amount in excess of the maximum rate imposed by Applicable
Law. Any payment which is made which, if treated as interest on a Liability
would result in such interest's exceeding such maximum rate shall be held, to
the extent of such excess, as additional collateral for the Liabilities as if
such excess were "Collateral."
18-20. WAIVERS.
(a) The Borrowers make each of the waivers included in Section
18-20(b), below, knowingly, voluntarily, and intentionally, and understand that
the Administrative Agent and each Revolving Credit Lender, in establishing the
facilities contemplated hereby and in providing loans and other financial
accommodations to or for the account of the Borrowers as provided herein,
whether not or in the future, is relying on such waivers.
(b) EACH BORROWER RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby or
by applicable law, notice of non-payment, demand,
presentment, protest and all forms of demand and
notice, both with respect to the Liabilities and the
Collateral.
(ii) Except as otherwise specifically required hereby or
by applicable law, the right to notice and/or hearing
prior to the Administrative Agent's exercising of the
Administrative Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE ADMINISTRATIVE AGENT OR ANY
REVOLVING CREDIT LENDER IS OR BECOMES A PARTY
(WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR
AGAINST THE ADMINISTRATIVE AGENT OR ANY REVOLVING
CREDIT LENDER OR IN WHICH THE ADMINISTRATIVE AGENT OR
ANY REVOLVING CREDIT LENDER IS JOINED AS A PARTY
LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR
IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN
ANY BORROWER OR ANY OTHER PERSON AND THE
ADMINISTRATIVE AGENT OR ANY REVOLVING CREDIT LENDER
(EACH OF WHOM LIKEWISE WAIVES THE RIGHT TO A JURY IN
ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY). THE
ADMINISTRATIVE AGENT AND THE REVOLVING CREDIT LENDERS
LIKEWISE WANE ANY SUCH RIGHT TO A JURY.
(iv) The benefits or availability of any stay, limitation,
hindrance, delay, or restriction (including, without
limitation, any automatic stay which otherwise might
be imposed pursuant to Section 362 of the Bankruptcy
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Code) with respect to any action which the
Administrative Agent may or may become entitled to
take hereunder.
(v) Any defense, counterclaim, set-off, recoupment, or
other basis on which the amount of any Liability, as
stated on the books and records of the Administrative
Agent, could be reduced or claimed to be paid
otherwise than in accordance with the tenor of and
written terms of such Liability.
(vi) Any claim to consequential, special, or punitive
damages.
18-21 ADDITIONAL WAIVERS.
(a) The Liabilities 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 the
Administrative Agent or any Revolving Credit Lender 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
Liabilities 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
Administrative Agent.
(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 Liabilities),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Liabilities, 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 Liabilities 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 the
Administrative Agent or any Revolving Credit Lender 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 Liabilities, 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 Liabilities).
(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 Liabilities 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 Liabilities. The
Administrative Agent may, at its election, foreclose on any security held by it
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
Liabilities, make any other accommodation with any other Borrower, or exercise
any other right or remedy available to
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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
Liabilities 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 Liabilities, 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 Liabilities. In addition, any
indebtedness of any Borrower now or hereafter held by any other Borrower is
hereby subordinated in right of payment to the prior payment in full of the
Liabilities. 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 Administrative Agent and
the Revolving Credit Lenders and shall forthwith be paid to the Administrative
Agent to be credited against the payment of the Liabilities, whether matured or
unmatured, in accordance with the terms of the Loan Documents.
18-22. CONFIDENTIALITY. The Administrative Agent and each of the
Revolving Credit Lenders agree to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
their and their Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the written
consent of the Borrowers or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent or any Revolving Credit Lender on
a nonconfidential basis from a source other than the Borrowers. For the purposes
of this Section, the term "Information" means all information received from the
Borrowers relating to their businesses, other than any such information that is
available to the Administrative Agent or any Revolving Credit Lender on a
nonconfidential basis prior to disclosure by the Borrowers. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
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CLAIRE'S STORES, INC.
("LEAD BORROWER")
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
"BORROWERS":
CLAIRE'S BOUTIQUES, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
BMS DISTRIBUTING CORP.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
CBI DISTRIBUTING CORP.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
CLAIRE'S PUERTO RICO CORP.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
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FLEET RETAIL GROUP, INC.
("ADMINISTRATIVE AGENT")
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
The "REVOLVING CREDIT LENDERS"
FLEET RETAIL GROUP, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
-122-