Exhibit 10.1
CREDIT AGREEMENT
dated as of May 21, 1997
among
GENESIS DIRECT, INC. AND ITS SUBSIDIARIES,
AS BORROWERS
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THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS LENDERS,
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and
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS ADMINISTRATIVE AGENT,
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$30,000,000
TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS: CONSTRUCTION..................................... 2
1.01. Certain Definitions........................................... 2
1.02. Construction.................................................. 21
1.03. Accounting Principles......................................... 22
ARTICLE II. THE CREDITS................................................... 22
2.01. Revolving Credit Loans and Term Loans......................... 22
2.02. Notes......................................................... 23
2.03. Notice of Borrowing; Making of Loans.......................... 23
2.04. Reduction of Revolving Credit Commitment;
Mandatory Prepayment; Optional Prepayment................ 27
2.05. Interest Rate................................................. 30
2.06. Interest Payment Dates........................................ 30
2.07. Amortization.................................................. 30
2.08. Payments...................................................... 30
2.09. Use of Proceeds............................................... 33
2.10. Eurodollar Rate Not Determinable; Illegality or Impropriety... 33
2.11. Reserve Requirements: Capital Adequacy Circumstances.......... 34
2.12. Indemnity..................................................... 36
2.13. Sharing of Setoffs............................................ 37
2.14. Continuation and Conversion of Loans.......................... 37
2.15. Taxes......................................................... 38
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ARTICLE III. LETTERS OF CREDIT............................................ 40
3.01. Letters of Credit............................................. 40
3.02. Participations................................................ 45
ARTICLE IV. BORROWING BASE; JOINT AND SEVERAL LIABILITY................... 46
4.01. Condition of Lending and Assisting in
Establishing or Opening Letters of Credit................. 46
4.02. Mandatory Prepayment.......................................... 46
4.03. Rights and Obligations Unconditional.......................... 46
4.04. Borrowing Base Certificate.................................... 47
4.05. General Provisions............................................ 47
4.06. Joint and Several Liability................................... 47
4.07. Additional Parties............................................ 48
ARTICLE V. CONDITIONS OF EFFECTIVENESS, LETTER OF CREDIT
ISSUANCE AND LENDING...................................... 48
5.01. Conditions Precedent to Effectiveness......................... 48
5.02. Conditions Precedent to Loans and Letters of Credit........... 53
ARTICLE VI. REPRESENTATIONS AND WARRANTIES................................ 54
6.01. Organization, Good Standing, etc.............................. 54
6.02. Authorization, etc............................................ 54
6.03. Governmental Approvals........................................ 55
6.04. Enforceability of Loan Documents.............................. 55
6.05. Subsidiaries.................................................. 55
6.06. Litigation.................................................... 55
6.07. Financial Condition........................................... 56
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6.08. Compliance with Law, etc. .................................... 56
6.09. ERISA......................................................... 56
6.10. Taxes, etc. .................................................. 57
6.11. Regulation G, T, U or X....................................... 57
6.12. Nature of Business............................................ 57
6.13. Adverse Agreements, etc. ..................................... 57
6.14. Holding Company and Investment Company Acts................... 58
6.15. Permits, etc. ................................................ 58
6.16. Priority, Title............................................... 58
6.17. Full Disclosure............................................... 58
6.18. Operating Lease Obligations................................... 59
6.19. Environmental Matters......................................... 59
6.20. Schedules..................................................... 59
6.21. Insurance..................................................... 59
6.22. Use of Proceeds............................................... 60
6.23. Security Documents............................................ 60
6.24. Financial Accounting Practices, etc. ......................... 60
6.25. No Material Adverse Effect.................................... 60
6.26. Real Property; Leases......................................... 60
6.27. Location of Bank Accounts..................................... 61
6.28. No Event of Default........................................... 62
6.29. Capitalized Leases............................................ 62
6.30. Tradenames.................................................... 62
6.31. Solvency...................................................... 62
6.32. Inventory..................................................... 62
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6.33. Intellectual Property......................................... 62
6.34. Material Contracts............................................ 62
6.35. Labor Relations; Collective Bargaining Agreements............. 63
6.36. Accounts...................................................... 63
ARTICLE VII. AFFIRMATIVE COVENANTS......................................... 63
7.01. Reporting Requirements........................................ 64
7.02. Compliance with Laws, etc..................................... 68
7.03. Preservation of Existence, etc................................ 68
7.04. Keeping of Records and Books of Account....................... 69
7.05. Inspection Rights............................................. 69
7.06. Maintenance of Properties, etc................................ 69
7.07. Maintenance of Insurance...................................... 69
7.08. Environmental................................................. 70
7.09. Further Assurances............................................ 71
7.10. Borrowing Base................................................ 71
7.11. Change in Collateral; Collateral Records...................... 71
7.12. Financial Accounting Practices, etc........................... 72
7.13. Cash Management System........................................ 72
7.14. Intentionally Omitted......................................... 73
7.15. Additional Subsidiaries....................................... 73
7.16. ERISA......................................................... 73
7.17. Maintenance of Equipment...................................... 74
ARTICLE VIII. NEGATIVE COVENANTS........................................... 74
8.01. Liens, etc.................................................... 74
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8.02. Indebtedness.................................................. 76
8.03. Guarantees, etc............................................... 77
8.04. Merger, Consolidation, Sale of Assets, etc.................... 77
8.05. Change in Nature of Business.................................. 78
8.06. Loans, Advances and Investments, etc.......................... 78
8.07. Dividends, Prepayments, etc................................... 79
8.08. Federal Reserve Regulations................................... 79
8.09. Transactions with Affiliates.................................. 79
8.10. Environmental................................................. 79
8.11. ERISA......................................................... 80
8.12. Minimum Consolidated Net Worth................................ 80
ARTICLE IX. DEFAULTS....................................................... 80
9.01. Events of Default............................................. 80
9.02. Consequences of an Event of Default........................... 83
9.03. Deposit for Letters of Credit................................. 84
9.04. Certain Remedies.............................................. 85
ARTICLE X. MISCELLANEOUS................................................... 85
10.01. Holidays...................................................... 85
10.02. Records....................................................... 85
10.03. Amendments and Waivers........................................ 85
10.04. No Implied Waiver; Cumulative Remedies........................ 86
10.05. Notices....................................................... 87
10.06. Expenses; Taxes; Attorneys' Fees; Indemnification............. 87
10.07. Application................................................... 89
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10.08. Severability.................................................. 89
10.09. Governing Law................................................. 89
10.10. Prior Understandings.......................................... 89
10.11. Duration; Survival............................................ 89
10.12. Counterparts.................................................. 90
10.13. Assignments; Participations................................... 90
10.14. Successors and Assigns........................................ 92
10.15. Confidentiality............................................... 93
10.16. Waiver of Jury Trial.......................................... 94
10.17. Right of Setoff............................................... 94
10.18. Headings...................................................... 94
10.19. Forum Selection and Consent to Jurisdiction................... 94
10.20. Termination................................................... 95
10.20A. Termination of this Agreement................................. 95
10.20B. Termination Upon an Event of Default.......................... 95
10.20C. Maturity of Obligations Upon Termination...................... 96
10.20D. Termination by Lenders........................................ 96
ARTICLE XI. THE ADMINISTRATIVE AGENT....................................... 96
11.01. Appointment................................................... 96
11.02. Nature of Duties.............................................. 97
11.03. Rights, Exculpation, etc...................................... 98
11.04. Reliance...................................................... 99
11.05. Indemnification............................................... 99
11.06 CIT Individually.............................................. 99
11.07. Successor Agent.............................................. 100
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11.08. Collateral Matters........................................... 100
ARTICLE XII. INCONSISTENCIES.............................................. 103
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EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Term Note
Exhibit B-1 - Form of Security Agreement
Exhibit B-2 - Form of Security Agreement and Mortgage - Trademarks
Exhibit C - Form of Letter of Credit Application
Exhibit D - Form of Borrowing Base Certificate
Exhibit E - Form of Assignment and Acceptance Agreement
Exhibit F - Form of Notice of Borrowing
Exhibit G - Form of Notice Letter
Exhibit H - Form of Joinder Agreement
Exhibit I-1 - Form of Leasehold Deed of Trust from Genesis Direct
Memphis Operations, LLC, Landlord Agreement, and Short
Form of Lease
Exhibit I-2 - Form of Subleasehold Mortgage from Genesis Direct
Secaucus Operations, LLC, Overlandlord Agreement,
Sublandlord Agreement, Memorandum of ▇▇▇▇▇▇▇▇▇, and
Memorandum of Sublease
Exhibit J Form of Warehouse Waiver
SCHEDULES
Schedule 1.01(A) - Inventory Locations
Schedule 1.01(B) - Revolving Credit Commitment and Term
Loan Commitment Amount
Schedule 6.05 - Description of Subsidiaries
Schedule 6.06 - Litigation
Schedule 6.07(a) Financial Statements
Schedule 6.09 - ERISA Plans
Schedule 6.10 - Taxes
Schedule 6.18 - Operating Lease Obligations
Schedule 6.19 - Environmental Matters
Schedule 6.21 - List of Insured Properties
Schedule 6.26 - Real Property Owned and Leased
Schedule 6.27 - Location of Bank Accounts
Schedule 6.29 - Capitalized Lease Obligations
Schedule 6.30 - Tradenames
Schedule 6.34 - Material Contracts
Schedule 6.35 - List of Collective Bargaining Agreements
Schedule 6.36 - Location of Books and Records; Credit Card
Agreement
Schedule 8.01 - Existing Liens
Schedule 8.02 - Indebtedness
Schedule 8.03 - Guarantees
Schedule 8.06 - Investments
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of May 21, 1997 among GENESIS DIRECT, INC.,
a Delaware corporation (the "Parent"), LITTLE GENESIS, INC., a Delaware
corporation, GIFTS FOR GRANDKIDS, LLC, a Delaware limited liability company, HOT
OFF THE ICE, LLC, a Delaware limited liability company, BEYOND THE HORIZON, LLC,
a Delaware limited liability company, THE VOYAGER'S COLLECTION, LLC, a Delaware
limited liability company, THE TRAINING CAMP, LLC, a Delaware limited liability
company, CHILDSWORK/CHILDSPLAY, LLC, a Delaware limited liability company,
COMPETITIVE EDGE GOLF, LLC, a Delaware limited liability company, FIRST STEP
DESIGNS, LLC, a Delaware limited liability company, LILLIPUT MOTOR COMPANY, LLC,
a Delaware limited liability company, ▇-▇▇▇-▇▇▇-▇▇▇▇, LLC, a Delaware limited
liability company, ATHLETIC SUPPLY OF DALLAS, LLC, a Delaware limited liability
company, NINOS, LLC, a Delaware limited liability company, GENESIS DIRECT
SECAUCUS OPERATIONS, LLC, a Delaware limited liability company, GENESIS DIRECT
MEMPHIS OPERATIONS, LLC, a Delaware limited liability company, GENESIS DIRECT
OPERATIONS, LLC, a New Jersey limited liability company, GENESIS DIRECT MEMPHIS
SERVICES, LLC, a Delaware limited liability company, and AFFINITY COLLEGE AND
UNIVERSITY CATALOGS, LLC, a Delaware limited liability company (all the
foregoing Persons, including the Parent, together with each additional Person
that becomes a Borrower pursuant to Section 4.07 hereof, a "Borrower" and
collectively, the "Borrowers"), the financial institutions from time to time
party hereto (collectively, the "Lenders" and individually, a "Lender"), and THE
CIT GROUP/BUSINESS CREDIT, INC. ("CIT"), a New York corporation, as
Administrative Agent for the Lenders (in such capacity the "Administrative
Agent").
BACKGROUND
WHEREAS, the Borrowers have requested the Administrative Agent and the
Lenders to provide the Borrowers on a joint and several basis with a $30 million
credit facility comprised of (i) a $25 million revolving credit facility,
including a $2 million subfacility for the issuance of letters of credit, and
(ii) a $5 million term loan, and, subject to the terms and conditions set forth
herein, the Lenders have agreed to provide such facility and term loan.
In consideration of the mutual covenants herein contained and intending to
be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS: CONSTRUCTION
1.01. Certain Definitions. In addition to other words and terms defined
elsewhere in this Agreement, as used herein the following words and terms shall
have the following meanings, respectively, unless the context hereof otherwise
clearly requires:
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"Accountant's Opinion" shall have the meaning given that term
in Section 7.01(a) hereof.
"Accounts" shall mean, with respect to any Borrower, all of
such Borrower's now existing and future: (a) accounts receivable (whether or not
specifically listed on schedules furnished to the Lenders), and any and all
instruments, documents, contract rights, chattel paper, general intangibles,
including, without limitation, all accounts created by or arising from any of
such Borrower's sales of goods or rendition of services to its customers, and
all accounts arising from sales or rendition of services made under any of such
Borrower's trade names or styles, whether or not presently in effect, or through
any of such Borrower's divisions; (b) unpaid seller's rights (including
rescission, replevin, reclamation and stoppage in transit) relating to the
foregoing or arising therefrom; (c) rights to any goods represented by any of
the foregoing, including rights to returned or repossessed goods; (d) reserves
and credit balances arising hereunder; (e) guarantees or collateral for any of
the foregoing; (f) insurance policies or rights relating to any of the
foregoing; and (g) cash and non-cash proceeds of any and all of the foregoing.
"Affiliate" of a Person shall mean any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly either
to (a) vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Agent Account" shall mean an account in the name of the
Administrative Agent designated by the Administrative Agent to the Parent from
time to time into which every Borrower shall make all payments to the
Administrative Agent, for the account of the Administrative Agent or the
Lenders, as the case may be, under this Agreement.
"Agent Advances" shall have the meaning given that term in
Section 11.08 hereof.
"Agreement" shall mean this Revolving Credit Agreement as
amended, modified, supplemented or restated from time to time.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by CIT and an assignee, and accepted by the
Administrative Agent, substantially in the form of Exhibit E hereto.
"Availability" shall mean, at any time, the difference
between (i) the Current Commitment and (ii) the sum of (A) the aggregate
outstanding principal amount of all Loans and (B) the Letter of Credit Exposure.
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"Bank" shall mean The Chase Manhattan Bank, N.A., its
successors or any other bank designated by the Administrative Agent to the
Parent from time to time that is reasonably acceptable to the Parent.
"Benefit Plan" shall mean a defined benefit plan as defined
in Section 3(35) of ERISA that is subject to Title IV of ERISA (other than a
Multiemployer Plan) and in respect of which any Borrower or any ERISA Affiliate
is or within the immediately preceding six (6) years was an "employer" as
defined in Section 3(5) of ERISA.
"Board" means the Board of Governors of the Federal Reserve
System of the United States.
"Book Value" shall mean as to any Inventory of any Borrower
in respect of which such amount is to be determined, the lower of (i) cost (as
reflected in the general ledgers of such Borrower) or (ii) market value (both
cost and market value being determined in accordance with GAAP calculated on the
first in, first out basis).
"Borrower" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Borrowing Base" shall mean an amount equal to the difference
between (i) the sum of (A) 85% of Eligible Receivables of all Borrowers and (B)
prior to the Consolidation Date, fifty percent (50%) of the Book Value of
Eligible Inventory of all Borrowers and on and after the Consolidation Date,
fifty-five percent (55%) of the Book Value of Eligible Inventory of all
Borrowers and (ii) such reserves as the Administrative Agent, in its sole
discretion, exercised reasonably, may deem appropriate.
"Borrowing Base Certificate" shall have the meaning given
that term in Section 4.04(a) hereof.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions are authorized or obligated to
close in New York, New York, provided, that with respect to the borrowing,
payment, conversion to or continuation of Eurodollar Loans, Business Day shall
also mean a day on which dealings in Dollars are carried on in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of the Bank's eurodollar loans are then being conducted.
"Capitalized Lease" shall mean any lease which is required
under GAAP to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligations" shall mean the aggregate
amount which is required under GAAP to be reported as a
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liability on the balance sheet of a Person as lessee under a Capitalized Lease.
"Cash Concentration Account" shall mean the deposit account
maintained by the Parent at the Cash Concentration Account Bank, which deposit
account shall be under the sole dominion and control of the Administrative
Agent, and from which all funds will be transferred to the Agent Account
pursuant to Section 7.13 hereof.
"Cash Concentration Account Agreement" shall mean an
agreement, in form and substance reasonably satisfactory to the Administrative
Agent, among the Cash Concentration Account Bank, the Parent and the
Administrative Agent delivered to the Administrative Agent pursuant to Section
7.13 hereof, as such Agreement may be modified and supplemented and in effect
from time to time.
"Cash Concentration Account Bank" shall mean The Chase
Manhattan Bank, N.A. or such other bank as the Parent may select with the
written approval of the Administrative Agent not to be unreasonably withheld.
"Change of Control" shall mean any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act) of a
majority or more of the voting power of the then outstanding common stock of the
Parent.
"CIT" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Closing Date" shall mean the date on which the conditions
set forth in Section 5.01 hereof shall be first satisfied.
"Collateral" shall mean all of the property (tangible and
intangible) of any Person purported to be subject to the Lien purported to be
created by any Security Document heretofore or hereafter executed by such Person
as security for all or any part of the Obligations.
"Collective Bargaining Agreements" shall have the meaning
assigned to that term in Section 5.01(d) (xvii) hereof.
"Consolidation Date" shall mean the date on which the Parent
provides evidence that the inventory and systems of the Borrowers have been
consolidated in a manner satisfactory to the Majority Lenders in their sole
discretion.
"Convertible Subordinated Debenture Note and Stock Purchase
Agreement" means the Note and Stock Purchase Agreement
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dated June 25, 1996, among the Parent and the institutions party thereto
providing for the purchase of various securities, including the Convertible
Subordinated Debentures, as such agreement is in effect on the date hereof but
after giving effect to the amendments required under Section 5.01 hereof.
"Convertible Subordinated Debentures" means the Parent's
$30,000,000 aggregate principal amount of Convertible Subordinated Debentures
Due June 1, 2003.
"Credit Extension" shall mean (a) the making of any Loan by a
Lender or the Administrative Agent on behalf of the Lenders or (b) the issuance,
increase in the Stated Amount, or extension of the expiration date of any Letter
of Credit which CIT or any Lender assists any Borrower in opening or
establishing.
"Current Commitment" shall have the meaning assigned to that
term in Section 2.01 hereof.
"Depository Accounts" shall mean the blocked depository
accounts maintained by any Borrower for the collection of the cash of such
Borrower and the proceeds from the sale of the Inventory, Equipment and other
assets of any Borrower.
"Depository Account Agreements" shall mean each agreement
(which may include a notice letter in the form attached hereto as Exhibit G if
the Depository Account Bank acknowledges receipt thereof and its agreement to be
bound thereby) among a Depository Bank, one or more Borrowers and the
Administrative Agent delivered to the Administrative Agent pursuant to Section
7.13 hereof, as each such Agreement may be modified and supplemented and in
effect from time to time.
"Depository Bank" shall mean each financial institution at
which a Depository Account is maintained.
"Designated Borrowing Officer" shall mean (a) the Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer of the
Parent or (b) such other officer of the Parent as shall be designated from time
to time in writing by any person specified in clause (a) of the Parent to the
Administrative Agent.
"Designated Financial Officer" of a Person shall mean the
individual designated from time to time by the Board of Directors or governing
body performing like functions of such Person to be the chief financial officer
or Treasurer of such Person (and individuals designated from time to time by the
Board of Directors or governing body performing like functions of such Person to
act in lieu of the chief financial officer or the Treasurer).
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"Disbursement Account" shall mean the blocked deposit account
maintained by the Parent at the Disbursement Account Bank into which there shall
be deposited proceeds of Loans and funds disbursed to the Borrowers by the
Administrative Agent.
"Disbursement Account Agreement" shall mean the agreement
among the Disbursement Account Bank, the Parent and the Administrative Agent
delivered to the Administrative Agent pursuant to Section 7.13 hereof, as each
such Agreement may be modified and supplemented and in effect from time to time.
"Disbursement Account Bank" shall mean The Chase Manhattan
Bank, N.A. or such other bank as the Parent may select with the written approval
of the Administrative Agent not to be unreasonably withheld.
"Dollar", "Dollars" and the symbol "$" shall mean lawful
money of the United States of America.
"Eligible Accounts Receivable" shall mean the gross amount of
the Borrowers' Accounts, that at all times continue to be acceptable to the
Administrative Agent in the exercise of its reasonable business judgment, less,
without duplication, the sum of the following items: (a) any returns, discounts,
claims, credits and allowances of any nature (whether issued, owing, granted or
outstanding) and (b) reserves for (i) sales to the United States of America or
to any agency, department or division thereof; (ii) foreign sales (which term
excludes sales to residents of the United States); (iii) accounts that remain
unpaid more than (a) in the case of Accounts owing from school districts and
other municipal entities, one hundred and twenty (120) days from the date of the
invoice and (b) in all other cases, ninety (90) days from the date of the
invoice; (iv) contras; (v) sales to any Borrower, any Subsidiary, or to any
company affiliated with any Borrower in any way; (vi) ▇▇▇▇ and hold (deferred
shipment) or consignment sales; (vii) sales to any customer which is (A)
insolvent, (B) the debtor in any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or state
law or (C) negotiating, or has called a meeting of its creditors for purposes of
negotiating, a compromise of its debts; (viii) all sales to any customer if
fifty percent (50%) or more of either (1) all outstanding invoices or (2) the
aggregate dollar amount of all outstanding invoices, are unpaid more than (a) in
the case of Accounts owing from school districts and other municipal entities,
one hundred and twenty (120) days from the date of the invoice and (b) in all
other cases, ninety (90) days from the date of the invoice; (ix) any other
reasons deemed necessary by the Administrative Agent or the Majority Lenders in
its or their reasonable business judgment and which are customary in scope and
application either in the commercial finance industry or in the lending
practices of the Administrative Agent or the Majority Lenders based upon the
assessment of the Administrative Agent or the Majority Lenders; and (x) an
amount representing, historically, returns, discounts, claims, credits and
allowances.
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"Eligible Inventory" shall mean with respect to any Borrower
finished goods Inventory of such Borrower which at the time of determination
meets all the following qualifications:
(i) it is lawfully owned by such Borrower and not subject to
any Lien, other than the Lien in favor of the Administrative Agent
that secures the payment of the Obligations and it is not held on
consignment and may be lawfully sold;
(ii) it is (A) located in a Borrower's distribution centers,
warehouses or store locations listed on Schedule 1.01(A) hereto or (B)
located in other locations in the continental United States as the
Administrative Agent shall have approved in writing from time to time,
which approval shall be given upon the Parent providing the
Administrative Agent with evidence, reasonably satisfactory to the
Administrative Agent, of (1) the Administrative Agent's perfected,
first priority Lien on all Inventory of such Borrower located in such
locations and (2) the absence of any other Liens on any Inventory of
such Borrower located in such locations, which evidence may include
the results of Uniform Commercial Code, tax and judgment lien searches
in such locations and acknowledgment copies of Uniform Commercial Code
financing statements naming such Borrower (and some or all other
Borrowers), as debtor, and the Administrative Agent, as secured party,
filed in such locations;
(iii) it is determined in the reasonable judgment of the
Administrative Agent to be, when taken as a whole, substantially
similar in quality and mix (having regard for seasonal variations) to
the Inventory maintained by such Borrower in recent historical
operations prior to the Closing Date; and
(iv) it is Inventory that has been valued after deducting
the aggregate amount of reserves for (1) shrinkage, (2) lay-a-ways,
(3) displays, (4) rejected, defective, damaged, aged or otherwise
unsalable Inventory, (5) Inventory to be returned to suppliers, (6)
Inventory in-transit to third parties (other than such Borrower's
agents or warehouses), (7) supplies, (8) consignment Inventory, (9)
monthly rent for each location for which the Administrative Agent has
not received an Overlandlord Agreement, a Sublandlord Agreement, a
Landlord Agreement or Warehouse Waiver, as the case may be
substantially in the form of Exhibit I-1, I-2, or J or in such other
form as is satisfactory to the Administrative Agent (in an amount
equal to two times the monthly rent), (10) slow moving or obsolete
Inventory, (11) the amount of all sales taxes collected by the
Borrower and not yet remitted to the authority to which such taxes are
owed,
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(12) markdowns and (13) other reserves required by the Administrative
Agent in the exercise of its reasonable business judgment.
"Environmental Actions" shall mean any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation,
proceeding, judgment, letter or other communication from any Governmental
Authority or any third party involving a Release (i) from or onto any of the
properties presently or formerly owned or leased by any Borrower or its
Subsidiaries or (ii) from or onto any facilities which received Hazardous
Materials from any Borrower or their respective Subsidiaries, or involving any
violation of any Environmental Law.
"Environmental Law" shall mean all federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect relating
to the regulation and protection of human health, safety, the environment and
natural resources. Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. (S) 9601 et seq. ) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. (S) 180 et seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. (S) 6901 et seq.) ("RCRA");
the Toxic Substance Control Act, as amended (15 U.S.C. (S) 2601 et seq.); the
Clean Air Act, as amended (42 U.S.C. (S) 7401 et seq.) the Federal Water
Pollution Control Act, as amended (33 U.S.C. (S) 1251 et seq.); and their state
and local counterparts or equivalents.
"Environmental Liabilities and Costs" shall mean all
liabilities, monetary obligations, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, expert and
consulting and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any Environmental
Action relating to any Environmental condition, violation of Environmental Law,
Remedial Actions or a Release of Hazardous Materials from or onto (i) any
property presently or formerly owned by any Borrower or any of its Subsidiaries
or (ii) any facility which received Hazardous Materials generated by any
Borrower or any of their respective Subsidiaries.
"Environmental Lien" shall mean any Lien securing
Environmental Liabilities and Costs incurred by a Governmental Authority.
"Equipment" shall have the meaning given that term by
Article 9 of the Uniform Commercial Code as presently in effect in the State of
New York, including, without limitation, all machinery, equipment, furnishings
and fixtures, wherever located and replacement thereof, wherever located and
whether any Borrower's interest in such Equipment is as owner or lessee or
conditional vendee, together with all attachments, components
- 9 -
parts, equipment and accessories installed thereon or affixed thereto and all
proceeds of whatever sort.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" shall mean any (i) corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the IRC Code) as any Borrower, (ii) partnership or other trade
or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Code) with any Borrower, or (iii) member of
the same affiliated service group (within the meaning of Section 414(m) of the
IRC Code) as any Borrower, any corporation described in clause (i) above or any
partnership or trade or business described in clause (ii) above.
"Eurodollar Base Rate" shall mean, with respect to a
Eurodollar Loan for the relevant Interest Period, the rate determined by the
Administrative Agent to be the rate at which deposits in Dollars are offered by
the Bank to first-class banks in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations in respect of its
eurodollar loans are then being conducted at approximately 11:00 a.m., New York
City time, three Business Days prior to the first day of such Interest Period,
in the approximate amount of the relevant Eurodollar Loan and having a maturity
equal to such Interest Period.
"Eurodollar Loan" shall mean a Loan bearing interest at the
Eurodollar Rate.
"Eurodollar Rate" means with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100 of 1%):
Eurodollar Base Rate
1.00 - Reserve Requirements
"Event of Default" shall mean any of the Events of Default
described in Section 9.01 hereof.
"GAAP" shall mean generally accepted accounting principles as
such principles shall be in effect in the United States at the relevant date.
"GDI Vista Account" shall mean the blocked investment account
maintained by the Parent at the GDI Vista Account Bank.
- 10 -
"GDI Vista Account Agreement" shall mean the agreement among
the GDI Vista Account Bank, the Parent and the Administrative Agent delivered to
the Administrative Agent pursuant to Section 7.13 hereof, as such Agreement may
be modified and supplemented and in effect from time to time.
"GDI Vista Account Bank" shall mean The Chase Manhattan Bank,
N.A. or such other bank as the Parent may select with the written approval of
the Administrative Agent not to be unreasonably withheld.
"Governmental Authority" shall mean any nation or government,
any federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee" of or by any Person shall mean any obligation of
such Person guaranteeing any Indebtedness of any other Person (the "primary
obligor"), directly or indirectly through an agreement (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness against
loss, or (iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness; provided, however, that the term
Guarantee shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Hazardous Materials" shall mean (i) any element, compound or
chemical that is defined, listed or otherwise classified as a solid waste,
contaminant, pollutant, toxic pollutant, hazardous substance, extremely
hazardous substance, toxic substance, hazardous waste, or special waste under
any Environmental Law; (ii) petroleum and its refined fractions, (iii) any
polychlorinated biphenyls, (iv) any flammable, explosive or radioactive
materials; and (v) any other raw materials used or stored by any Borrower,
building components (including but not limited to asbestos-containing materials)
and manufactured products containing Hazardous Materials.
"Indebtedness" shall mean as to any Person (i) indebtedness
for borrowed money; (ii) indebtedness for the deferred purchase price of
property or services (other than current trade payables incurred in the ordinary
course of business and payable in accordance with customary practices); (iii)
indebtedness evidenced by bonds, debentures, notes or other similar instruments
(other than performance, surety and appeal or other similar bonds arising in the
ordinary course of business); (iv) obligations and liabilities secured by a Lien
upon property
- 11 -
owned by such Person, whether or not owing by such Person and even though such
Person has not assumed or become liable for the payment thereof; (v) obligations
and liabilities directly or indirectly Guaranteed by such Person; (vi)
obligations or liabilities created or arising under any conditional sales
contract or other title retention agreement with respect to property used and/or
acquired by such Person, even though the rights and remedies of the lessor,
seller and/or lender thereunder are limited to repossession of such property;
(vii) Capitalized Lease Obligations; (viii) all liabilities in respect of
letters of credit, acceptances and similar obligations created for the account
of such Person, and (ix) net liabilities of such Person under interest rate cap
agreements, interest rate swap agreements, foreign currency exchange agreements
and other hedging agreements or arrangements calculated on a basis reasonably
satisfactory to the Administrative Agent and in accordance with accepted
practice.
"Indemnified Parties" shall have the meaning given that term
in Section 10.06 hereof.
"Initial Termination Date" shall have the meaning set forth
in Section 2.01 hereof.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, the period commencing on the borrowing date for, or the date of any
continuation of or conversion for such Eurodollar Loan, as the case may be, and
ending one, two or three months thereafter as the Parent may elect in the
applicable notice given to the Administrative Agent pursuant to Section 2.03 or
Section 2.14, as appropriate; provided that (i) any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day, unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day; (ii) any Interest Period that begins on the last Business Day of a
calendar month or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period shall end on the last
Business Day of the applicable calendar month; and (iii) no Interest Period for
any Loan shall end after the Termination Date. Interest shall accrue from and
include the first date of an Interest Period, but exclude the last day of such
Interest Period.
"Inventory" shall mean all goods and merchandise of the
Borrowers including, but not limited to, all finished goods, materials and
supplies of every nature used or usable in connection with the shipping,
storing, advertising or sale of such goods and merchandise, whether now owned or
hereafter acquired and all such property, the sale or disposition of which would
give rise to accounts receivable or cash.
"IRC Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time
- 12 -
to time. References to sections of the Code shall be construed also to refer to
any successor sections.
"L/C Notice" shall have the meaning given to that term in
Section 3.01(b).
"Lease" shall mean any lease of real property to which any
Borrower is a party as lessee or lessor.
"Leasehold Mortgages" means, collectively, (i) a Leasehold
Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture
Filing from Genesis Direct Memphis Operations, LLC, substantially in the form of
Exhibit I-1 hereto, and (ii) a Leasehold Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing from Genesis Direct Secaucus
Operations, LLC, substantially in the form of Exhibit I-2 hereto, each in favor
of the Administrative Agent.
"Lenders" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Letter of Credit" shall have the meaning given to that term
in Section 3.01(a).
"Letter of Credit Application" shall have the meaning given
to that term in Section 3.01(a) hereof.
"Letter of Credit Cash Collateral Account" shall mean the
deposit account maintained at the Bank or such other bank as the Administrative
Agent may select, which deposit account shall be under the sole dominion and
control of the Administrative Agent.
"Letter of Credit Exposure" shall mean, at any time, the sum
at such time of (a) the aggregate amount of all Unreimbursed Draws under Letters
of Credit (whether or not such Letters of Credit are then outstanding) and (b)
the aggregate Undrawn Letter of Credit Availability under all outstanding
Letters of Credit.
"Letter of Credit Fee" shall have the meaning given to that
term in Section 2.08(f) hereof.
"Letter of Credit Guaranty" shall mean the guaranty delivered
by CIT to the Letter of Credit Issuer, guaranteeing the Borrowers' reimbursement
obligations under a reimbursement agreement, Letter of Credit Application or
other like document.
"Letter of Credit Issuer" shall mean the issuer of the
Letters of Credit, which shall be the Bank or The Dai-Ichi Kangyo Bank, Limited,
New York Branch.
"Lien" shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security
- 13 -
arrangement of any nature whatsoever, including but not limited to any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.
"Loan" or "Loans" shall mean any and all Revolving Credit
Loans and Term Loans made by the Lenders or by the Administrative Agent on
behalf of the Lenders to the Borrowers or made as a result of charges made to
the Loan Account, in each case pursuant to the terms of this Agreement.
"Loan Account" shall have the meaning given that term in
Section 2.08(a) hereof.
"Loan Documents" shall have the meaning given to that term in
the definition of "Related Documents" set forth in this Section 1.01 hereof.
"Majority Lenders" shall mean, at any time, Lenders whose Pro
Rata Shares aggregate at least sixty-six and two-thirds percent (66-2/3%).
"Material Adverse Effect" shall mean, with respect to any
event, act, condition or occurrence of any nature whatsoever, a material adverse
effect (as determined in the reasonable judgment of the Majority Lenders) upon
(i) the business, operations, condition (financial or otherwise), or properties
of the Borrowers taken as a whole, (ii) the ability of the Borrowers to perform
their obligations hereunder or under any other Related Document, (iii) the Lien
arising under the Related Documents on any Collateral, (iv) the legality,
validity or enforceability of this Agreement or any Related Document or the Lien
arising under any Related Document or (v) the aggregate value of the property
included in the calculation of the Borrowing Base.
"Material Contract" means with respect to any Borrower each
contract or agreement to which such Borrower is a party which (in the reasonable
judgment of the Majority Lenders) is material to the business, operations,
condition (financial or otherwise), performance, or properties of the Borrowers
taken as a whole, including, without limitation, all agreements related to
credit card receivables.
"Minority Lenders" shall have the meaning given to that term
in Section 10.03(b) hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA and subject to Title IV of ERISA which
is, or within the immediately preceding six (6) years was, contributed to by any
Borrower or any ERISA Affiliate.
"Notes" shall mean the Revolving Credit Notes and the Term
Notes.
- 14 -
"Notice of Borrowing" shall have the meaning given to that
term in Section 2.03(a) hereof.
"Obligations" shall mean all indebtedness, obligations and
liabilities of one or more of the Borrowers to any Lender or the Administrative
Agent incurred under or related to this Agreement, the Notes or any other
Related Document, whether such indebtedness, obligations or liabilities are
direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising, including without limitation those which are
described in either of the following clauses (i) or (ii) :
(i) All indebtedness, obligations (including
Reimbursement Obligations) and liabilities of any nature
whatsoever, including amounts due under Section 10.06 and
Section 11.08 hereof and similar agreements contained in the
other Related Documents, from time to time arising under or
in connection with or evidenced or secured by this Agreement,
the Notes, the Letters of Credit or any other Related
Document, including but not limited to the principal amount
of Loans outstanding, together with interest thereon
(including, without limitation, all interest that accrues
after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or
reorganization of any Borrower), the amount of the Letter of
Credit Exposure, together with interest thereon and all
expenses, fees and indemnities hereunder or under any other
Related Document. Without limitation, such amounts include
all Loans and interest thereon and the amount of all Letter
of Credit Exposure whether or not such Loans were remade or
any Letters of Credit to which such Letter of Credit Exposure
relates were issued in compliance with the terms and
conditions hereof or in excess of any Lender's obligation to
lend and arrange for the issuance of Letters of Credit
hereunder or any Lender's obligation to participate therein.
If and to the extent any amounts in any account (including
the Agent Account, the Letter of Credit Cash Collateral
Account, the Depository Accounts, the Cash Concentration
Accounts or otherwise) constituting Collateral are applied to
Obligations hereunder, and any Lender or the Administrative
Agent is subsequently obligated to return or repay any such
amounts to any Person for any reason, the amount so returned
or repaid shall be deemed a Loan hereunder and shall
constitute an Obligation.
(ii) All indebtedness, obligations and liabilities
from time to time arising under or in connection with any
account from time to time maintained by any Borrower or by
any Lender or the Administrative Agent pursuant to the terms
of this
- 15 -
Agreement or any Related Document, including but not limited
to all reimbursement obligations, service charges and
interest in connection with any overdrafts or returned items
from time to time arising in connection with any such
account, or arising under or in connection with any cash
management services or other services from time to time
performed by any Lender or the Administrative Agent pursuant
to or in connection with this Agreement or any other Related
Document.
"Office" when used in connection with the Administrative
Agent shall mean its office located at 1211 Avenue of the Americas, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other office or offices of the Administrative Agent as
may be designated in writing from time to time by the Administrative Agent to
the Borrower and when used in connection with the Bank or the Letter of Credit
Issuer shall mean the office of such entity designated in writing from time to
time by the Administrative Agent to the Borrowers. In the event Chase shall be
the Bank or the Letter of Credit Issuer, the Office for such entity shall until
further written notice from the Administrative Agent to the Borrowers be its
office located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Operating Assets" shall with respect to a Borrower mean all
merchandise, inventories, furniture, fixtures and equipment (including all
transportation and warehousing equipment but excluding office equipment,
point-of-sale equipment, cash registers and data processing equipment) owned by
such Borrower or any Subsidiary.
"Operating Lease Obligations" shall mean all obligations and
indebtedness of the Borrowers and their Subsidiaries in respect of leases of
property (whether real, personal or mixed) other than Capitalized Lease
Obligations.
"Operating Property" shall mean all real property and
improvements thereon owned by any Borrower or its Subsidiary and constituting,
without limitation, any store, warehouse, service center or distribution center
wherever located, provided that such term shall not include any store,
warehouse, service center or distribution center which such Borrower's board of
directors declares by resolution not to be of material importance to the
business of the Borrower and its Subsidiaries, taken as a whole.
"Other Taxes" shall have the meaning given to that term in
Section 2.15.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America or of any agency thereof or obligations guaranteed
as to principal and interest by the United States of America or of any agency
thereof, in either
- 16 -
case maturing not more than ninety (90) days from the date of acquisition
thereof by such Person; (b) deposit accounts with or certificates of deposit and
bankers' acceptances issued by any bank or trust company organized under the
laws of the United States of America or any state thereof and having capital,
surplus and undivided profits of at least $500,000,000 maturing not more than 90
days from the date of acquisition thereof by such Person: (c) commercial paper
rated A-1 or better or P-1 or better by Standard & Poor's Corporation ("S&P") or
▇▇▇▇▇'▇ Investors Services, Inc. ("Moody's"), respectively maturing not more
than 90 days from the date of acquisition thereof by such Person; (d)
Investments in money market funds rated AAAm or AAAm-G by S&P and Aaa by Moody's
and; (e) repurchase agreements having maturities of not more than 90 days from
the date of acquisition which are entered into with a bank or trust company
described in clause (b) above and which are secured by readily available direct
obligations of the United States of America or any agency thereof.
"Permitted Liens" shall have the meaning given that term in
Section 8.01 hereof.
"Person" shall mean an individual, corporation, partnership,
limited liability company, limited liability partnership, trust, unincorporated
association, joint venture, joint-stock company, government (including political
subdivisions), Governmental Authority or agency, or any other entity.
"Plan" shall mean an employee benefit plan defined in Section
3(3) of ERISA in respect of which any Borrower or any ERISA Affiliate is, or
within the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"Potential Default" shall mean any event or condition which,
with notice or passage of time, or any combination of the foregoing, would
constitute an Event of Default.
"Prime Loan" shall mean a Loan bearing interest at the
Regular Rate.
"Prime Rate" shall mean the interest rate per annum publicly
announced from time to time by the Bank in New York, New York as its Prime Rate,
such interest rate to change automatically from time to time effective as of the
announced effective date of each change in the Prime Rate. The Prime Rate is not
intended to be the lowest rate of interest charged by the Bank to its borrower.
"Pro Rata Share" shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the amount
of such Lender's Revolving Credit Commitment and the denominator of which shall
be the aggregate amount of all of the Lenders' Revolving Credit Commitments, as
adjusted from time to time in accordance with the provisions of
- 17 -
Section 10.13 hereof, provided that, if the Revolving Credit Commitments have
been terminated, the numerator shall be the unpaid amount of such Lender's Loans
and its interest in the Letter of Credit Exposure and the denominator shall be
the aggregate amount of all unpaid Loans and Letter of Credit Exposure.
"Register" shall have the meaning given that term in Section
10.08(c) hereof.
"Regular Rate" shall mean, for any day, the Prime Rate.
"Reimbursement Obligation" shall mean the obligations of the
Borrowers to reimburse CIT or the Lenders for amounts payable by CIT or the
Lenders under a Letter of Credit Guaranty in respect of any payment made under
any Letter of Credit issued by the Letter of Credit Issuer, together with
interest thereon and all fees and expenses related thereto.
"Related Documents" or "Loan Documents" shall mean this
Agreement, the Notes, the Letters of Credit, each Letter of Credit Application,
the Letter of Credit Guaranty, the Leasehold Mortgages, the Depository Account
Agreements, and Cash Concentration Account Agreement, the Security Documents,
each notice letter delivered to a Depository Bank or other financial institution
pursuant to Section 7.13, the Assignment and Acceptance and the other documents,
instruments and agreements referred to in Section 5.01 hereof, and all other
instruments, agreements and documents from time to time delivered in connection
with or otherwise relating to any Related Document.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, injection, discharging, injecting, escaping, leaching,
dumping or disposing (including abandonment, or discarding of barrels,
containers and other closed receptacles containing any hazardous substance,
pollutant or contaminant) of a Hazardous Material into the indoor or outdoor
environment or onto or from any property presently or formerly owned or operated
by any Borrower or any of their respective Subsidiaries, or at any disposed
facility that received Hazardous Materials generated by the Borrowers or any of
their respective Subsidiaries.
"Remedial Action" shall mean all actions taken to (i)
monitor, assess, evaluate, investigate, clean up, remove, remedy, treat, contain
or in any other way address Hazardous Materials in the indoor or outdoor
environment; (ii) prevent or minimize a Release or threatened Release of
Hazardous Materials so that the Release or threatened Release does not migrate
or endanger or threaten to endanger public health or welfare or the environment;
or (iii) perform pre-remedial studies and investigations and post-remedial
operation and maintenance activities, or any other actions authorized by 42
U.S.C. 9601.
- 18 -
"Reportable Event" shall mean any of the events described in
Section 4043(b) of ERISA (other than events for which the notice requirements
have been waived).
"Reserve Requirements" shall mean, for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities
and to be subject to such reserve requirements without benefit of or credit for
proration, exceptions or offsets which may be available from time to time to any
Lender or the Affiliate of any Lender under Regulation D.
"Revolving Credit Commitment" shall mean, with respect to
each Lender the amount of revolving credit commitment set forth on Schedule
1.01(B) to this Agreement or assigned to such Lender in accordance with Section
10.13 hereof, as such amounts may be reduced from time to time pursuant to the
terms of this Agreement, and "Revolving Credit Commitments" shall, collectively,
mean the aggregate amount of the Revolving Credit Commitments of all the
Lenders, the maximum amount of which shall not exceed $25,000,000.
"Revolving Credit Loans" shall have the meaning given to it
in Section 2.01(a).
"Revolving Credit Notes" shall mean the revolving credit
promissory notes of the Borrowers executed and delivered to the Lenders under
this Agreement and substantially in the form of Exhibit A-1 hereto, as modified
or restated from time to time and any promissory note or notes issued in
exchange or replacement thereof, including all extensions, renewals,
refinancings or refundings thereof in whole or part.
"Security Agreements" shall mean the Security Agreements,
substantially in the form of Exhibit B-1 and Exhibit B-2 hereto, made by the
Borrowers in favor of the Administrative Agent, for the benefit of the Lenders,
as modified and supplemented and in effect from time to time.
"Security Documents" shall mean, collectively, the Security
Agreements and the Leasehold Mortgages executed and delivered by any Borrower,
and all Uniform Commercial Code financing statements required by this Agreement
and the Security Agreements to be filed with respect to the security interests
in personal property created pursuant to such agreements, and all other
documents and agreements executed and delivered by any
- 19 -
Borrower and/or its Subsidiaries in connection with any of the foregoing
documents.
"Settlement Period" shall have the meaning set forth in
Section 2.03 hereof.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is not
less than the total amount of its liabilities, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its existing debts as
they become absolute and matured, (c) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature and (e) such Person is not engaged in business or a transaction, and, is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Stated Amount" shall mean, with respect to a Letter of
Credit, the face amount thereof, drawn or undrawn, regardless of the existence
or satisfaction of any conditions or limitations on drawing.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, limited liability company, limited
liability partnership, trust, association or other business entity of which an
aggregate of 50% or more of the outstanding stock or other interests entitled to
vote in the election of the board of directors of such corporation (irrespective
of whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency), managers, trustees or other controlling persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned or controlled by such Person and/or one or more Subsidiaries
of such Person.
"Taxes" shall have the meaning given to that term in Section
2.15 hereof.
"Termination Date" shall have the meaning given that term in
Section 2.01 hereof.
"Termination Event" shall mean with respect to any Borrower
(i) a Reportable Event with respect to any Benefit Plan; (ii) the withdrawal of
such Borrower or any ERISA Affiliate from a Benefit Plan during a plan year in
which such Borrower or any ERISA Affiliate was a "substantial employer" as
defined in Section 4001 (a) (2) of ERISA; (iii) the imposition of an obligation
on such Borrower or any ERISA Affiliate under
- 20 -
Section 4041 of ERISA to provide affected parties written notice of intent to
terminate a Benefit Plan in a distress termination described in Section 4041 (c)
of ERISA; or (iv) the institution by the PBGC of proceedings to terminate a
Benefit Plan.
"Term Loans" shall have the meaning given to it in Section
2.01(b).
"Term Loan Commitment" shall mean, with respect to each
Lender the amount of term loan commitment set forth on Schedule 1.01(B) to this
Agreement or assigned to such Lender in accordance with Section 10.13 hereof, as
such amounts may be reduced from time to time pursuant to the terms of this
Agreement, and "Term Loan Commitments" shall, collectively, mean the aggregate
amount of the Term Loan Commitments of all the Lenders, the maximum amount of
which shall not exceed $5,000,000.
"Term Notes" shall mean the term promissory notes of the
Borrowers executed and delivered to the Lenders under this Agreement and
substantially in the form of Exhibit A-2 hereto, as modified or restated from
time to time and any promissory note or notes issued in exchange or replacement
thereof, including all extensions, renewals, refinancings or refundings thereof
in whole or part.
"Undrawn Letter of Credit Availability" shall mean with
respect to a Letter of Credit, at any time, the maximum amount available to be
drawn under such Letter of Credit at such time, regardless of the existence or
satisfaction of any conditions or limitations on drawing.
"Unreimbursed Draws" shall mean with respect to a Letter of
Credit, at any time, the aggregate amount at such time of all payments made by
the Letter of Credit Issuer or payments made by CIT or the Lenders under a
Letter of Credit Guaranty in respect of such payments under such Letter of
Credit, to the extent not repaid by the Borrower, provided that Unreimbursed
Draws shall not include any such payments that have been charged to the Loan
Account and constitute a Loan pursuant to the terms of this Agreement.
"Unused Line Fee" shall have the meaning given to that term
in Section 2.08(e) hereof.
1.02. Construction. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular,
the singular the plural and the part the whole and "or" has the inclusive
meaning represented by the phrase "and/or." References in this Agreement to
"determination" by the Administrative Agent include reasonable good faith
estimates by the Administrative Agent (in the case of quantitative
determinations) and reasonable good faith beliefs by the Administrative
Agent (in the case of qualitative determinations). The words "hereof",
"herein", "hereunder" and similar terms in this Agreement refer to this
Agreement as a
- 21 -
whole and not to any particular provision of this Agreement. The section and
other headings contained in this Agreement and the Table of Contents preceding
this Agreement are for reference purposes only and shall not control or affect
the construction of this Agreement or the interpretation thereof in any respect.
Section, subsection and exhibit references are to this Agreement unless
otherwise specified.
1.03. Accounting Principles. Except as otherwise provided in
this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP. Notwithstanding
the definition of GAAP contained in this Agreement, no change in GAAP that would
affect the method or calculation of any covenants, restrictions or standards or
definitions of terms used herein shall be given effect in such calculations
until such covenants, restrictions or standards or definitions are amended in a
manner satisfactory to the Parent and the Majority Lenders so as to reflect such
change in GAAP.
ARTICLE II.
THE CREDITS
2.01. Revolving Credit Loans and Term Loans. (a) Subject to
the terms and conditions and relying upon the representations and warranties
herein set forth, each Lender severally agrees to make loans ("Revolving Credit
Loans") to the Borrowers at any time and from time to time on or after the date
hereof and to but not including, the Termination Date, in an aggregate principal
amount for all Borrowers as a whole not exceeding at any one time its Pro Rata
Share of the Current Commitment at such time. The "Current Commitment" at any
time shall be equal to the lesser of (A) $25,000,000, as such amount may have
been reduced pursuant to the terms of this Agreement at such time, and (B) the
Borrowing Base. No Lender shall have an obligation to make Revolving Credit
Loans hereunder or arrange for the issuance of Letters of Credit on or after the
Termination Date or which, when added to the aggregate amount of all outstanding
and contemporaneous Revolving Credit Loans and the Letter of Credit Exposure at
such time, would cause the aggregate amount of all Revolving Credit Loans and
the Letter of Credit Exposure at any time to exceed the Current Commitment at
such time. The "Termination Date" means the date on which the Revolving Credit
Commitment of each Lender expires as it may be extended from time to time
pursuant to Section 10.20 hereof, which initially shall be May 21, 2002 (the
"Initial Termination Date"). Within the limits of time and amount set forth in
this Section 2.01, and subject to the provisions of this Agreement, the
Borrowers may borrow, repay and reborrow hereunder. For the convenience of the
parties, all notices (including, without limitation, Notices of Borrowing and
notices pursuant to Article IX hereof and Section 10.20 hereof) and statements
(including
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periodic statements pursuant to Section 2.08(b) hereof) to be given by or to any
Borrower shall be given by or to the Parent and all such notices and statements
so given shall be binding upon all Borrowers whether or not the Parent shall
have delivered a copy of such notice to any Borrower. Without limiting the
foregoing, notices under any Loan Document given by the Administrative Agent to
the Parent shall be deemed to have been given to all Borrowers (whether or not
the applicable provision of the Loan Document so states).
(b) Term Loans. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
severally agrees to make a term loan ("Term Loans") to the Borrowers on the
Closing Date in an aggregate principal amount for all Borrowers as a whole of
$5,000,000. No Lender shall have any obligation to make any Term Loan after the
Closing Date, and any amount of the Term Loan that is prepaid may not be
reborrowed.
2.02. Notes. The obligation of the Borrowers to repay the
unpaid principal amount of the Revolving Credit Loans and the Term Loans made to
it by each Lender and to pay interest thereon shall be evidenced in part by a
Revolving Credit Note and Term Note, respectively, dated the date of this
Agreement in the principal amount of such Lender's Revolving Credit Commitment
and Term Loan Commitment, respectively, with the blanks appropriately filled in.
An executed Revolving Credit Note and Term Note for each Lender shall be
delivered by the Borrowers to the Administrative Agent on the date of the
execution and delivery of this Agreement.
2.03. Notice of Borrowing; Making of Loans.
(a) Whenever a Borrower desires to borrow, the Parent on
behalf of the Borrower shall provide notice to the Administrative Agent of such
proposed borrowing (a "Notice of Borrowing"), each such notice, to be given (i)
not later than 12:00 noon (New York City time) on the date of such proposed
borrowing, in the case of a borrowing consisting of Prime Loans, or (ii) not
later than 12:00 noon (New York City time) on the third Business Day before the
date of such borrowing, in the case of a borrowing consisting of Eurodollar
Loans, setting forth: (a) the date, which shall be a Business Day, on which such
borrowing is to occur, (b) whether such Loan is requested to be a Prime Loan or
a Eurodollar Loan and, if a Eurodollar Loan, the Interest Period requested with
respect thereto (which may be one, two or three months), (c) the principal
amount of the Loan being borrowed and (d) the account information where such
Loan is to be received. Such notice shall be given by telephone or in writing by
a Designated Borrowing Officer, provided, that, if requested by the
Administrative Agent, any such telephonic notice shall be confirmed in writing
by delivery to the Administrative Agent, on or before the date on which such
Loan is to be made, of a written notice substantially in the form of Exhibit F
hereto containing the original or facsimile signature of a Designated Borrowing
- 23 -
Officer of the Parent. Except for a Notice of Borrowing when the Administrative
Agent will fund the related Loan pursuant to Section 2.03(e) hereof, the
Administrative Agent shall provide each Lender with prompt notice of each Notice
of Borrowing. Except as otherwise provided in Section 2.03(e), on the date
specified in such notice, each Lender shall, subject to the terms and conditions
of this Agreement, make its Pro Rata Share of such Loan in immediately available
funds by wire transfer to the Administrative Agent at its Office not later than
1:30 p.m. (New York City time). Unless the Administrative Agent determines that
any applicable conditions in Section 5.02 have not been satisfied, the
Administrative Agent shall make the funds so received from the Lenders available
to the Parent on behalf of the Borrower not later than 2:30 p.m. (New York City
time), on the date specified in such notice in immediately available funds by
(i) depositing such proceeds in the Disbursement Account of the Parent if such
Disbursement Account is located at the Bank and (ii) initiating a wire transfer
of same day funds to the Disbursement Account if such Disbursement Account is
not located at the Bank.
(b) The Administrative Agent and each Lender shall be
entitled to rely conclusively on each Designated Borrowing Officer's authority
to request a Loan on behalf of the Borrower until the Administrative Agent
receives written notice to the contrary. The Administrative Agent and the
Lenders shall have no duty to verify the authenticity of the signature appearing
on any written Notice of Borrowing and, with respect to an oral request for a
Loan, the Administrative Agent and the Lenders shall have no duty to verify the
identity of any Person representing himself as a Designated Borrowing Officer.
(c) The Administrative Agent and the Lenders shall not
incur any liability to any Borrower in acting upon any telephonic notice
referred to above which the Administrative Agent and the Lenders believe in good
faith to have been given by a Designated Borrowing Officer or for otherwise
acting in good faith under this Section 2.03 and, upon the funding of a Loan by
the Lenders (or by the Administrative Agent on behalf of the Lenders) in
accordance with this Agreement pursuant to any such telephonic notice, the
Borrowers shall have effected a Loan hereunder.
(d) Each Notice of Borrowing pursuant to this Section 2.03
shall be irrevocable and the Borrowers shall be bound to make a borrowing in
accordance therewith. Each Prime Loan shall be in a minimum amount of $100,000
and in multiples of $100,000 if in excess thereof, and each Eurodollar Loan
shall be in a minimum amount of $2,500,000 and in multiples of $100,000 if in
excess thereof, provided that the Borrowers shall not be entitled to request any
Loan that, if made, would result in an aggregate of more than four separate
Eurodollar Loans of any Lender being outstanding hereunder at any one time.
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(e) (i) Except as otherwise provided in this subsection
2.03(e), all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares, it being understood
that no Lender shall be responsible for any default by any other Lender in that
other Lender's obligation to make a Loan requested hereunder nor shall the
Revolving Credit Commitment of any Lender be increased or decreased as a result
of the default by any other Lender in that other Lender's obligation to make a
Loan requested hereunder.
(ii) Notwithstanding any other provision of this
Agreement, and in order to reduce the number of fund transfers among the
Borrowers, the Lenders and the Administrative Agent, the Borrowers, the Lenders
and the Administrative Agent agree that the Administrative Agent may (but shall
not be obligated to), and the Borrowers and the Lenders hereby irrevocably
authorize the Administrative Agent to, fund, on behalf of the Lenders, Loans
pursuant to Section 2.01 hereof, subject to the procedures for settlement set
forth in subsection 2.03(f) hereof; provided, however, that (a) the
Administrative Agent shall in no event fund such Loans if the Administrative
Agent shall have received written notice from the Majority Lenders on the
Business Day prior to the day of the proposed Loan that one or more of the
conditions precedent contained in Section 5.02 hereof will not be satisfied on
the day of the proposed Loan, and (b) the Administrative Agent shall not
otherwise be required to determine that, or take notice whether, the conditions
precedent in Section 5.02 hereof have been satisfied.
(iii) Unless (A) the Administrative Agent has notified
the Lenders that the Administrative Agent, on behalf of the Lenders, will fund a
particular Loan pursuant to subsection 2.03(e) (ii) hereof, or (B) the
Administrative Agent shall have been notified by any Lender on the Business Day
prior to the day of a proposed Loan that such Lender does not intend to make
available to the Administrative Agent such Lender's Pro Rata Share of the Loan
requested on such day, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on such day and the
Administrative Agent, in its sole discretion, may, but shall not be obligated
to, cause a corresponding amount to be made available to the Borrower on such
day. If the Administrative Agent makes such corresponding amount available to
the Parent on behalf of the Borrower and such corresponding amount is not in
fact made available to the Administrative Agent by such Lender, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from the
date such payment was due until the date such amount is paid to the
Administrative Agent, at the customary rate set by the Administrative Agent for
the correction of errors among banks for three Business Days and thereafter at
the Regular Rate. During the period in which such Lender has not paid such
corresponding amount to the Administrative Agent, notwithstanding anything to
the contrary contained in this Agreement or any other Related Document, the
amount so advanced by the Administrative
- 25 -
Agent to any Borrower shall, for all purposes hereof, be a Loan made by the
Administrative Agent for its own account. Upon any such failure by a Lender to
pay the Administrative Agent, the Administrative Agent shall promptly thereafter
notify the Parent of such failure and the Borrowers shall immediately pay such
corresponding amount to the Administrative Agent for its own account.
(iv) Nothing in this subsection 2.03(e) shall be deemed
to relieve any Lender from its obligation to fulfill its Revolving Credit
Commitment hereunder or to prejudice any rights that the Administrative Agent or
the Borrowers may have against any Lender as a result of any default by such
Lender hereunder.
(f) (i) With respect to all periods for which the
Administrative Agent has funded Loans pursuant to subsection 2.03(e) hereof,
within fifteen (15) days after the last day of each calendar month, or such
shorter period as it may from time to time select (any such month or shorter
period being herein called a "Settlement Period"), the Administrative Agent
shall notify each Lender of the average daily unpaid principal amount of the
Loans outstanding during such Settlement Period. In the event that such amount
is greater than the average daily unpaid principal amount of the Loans
outstanding during the Settlement Period immediately preceding such Settlement
Period (or, if there has been no preceding Settlement Period, the amount of the
Loans made on the date of such Lender's initial funding), each Lender shall
promptly make available to the Administrative Agent its Pro Rata Share of the
difference in immediately available funds. In the event that such amount is less
than such average daily unpaid principal amount, the Administrative Agent shall
promptly pay over to each other Lender its Pro Rata Share of the difference in
immediately available funds. In addition, if the Administrative Agent shall so
request at any time when a Potential Default or an Event of Default shall have
occurred and be continuing, or any other event shall have occurred as a result
of which the Administrative Agent shall determine that it is desirable to
present claims against the Borrowers for repayment, each Lender shall promptly
remit to the Administrative Agent or, as the case may be, the Administrative
Agent shall promptly remit to each Lender, sufficient funds to adjust the
interests of the Lenders in the then outstanding Loans to such an extent that,
after giving effect to such adjustment, each Lender's interest in the then
outstanding Loans will be equal to its Pro Rata Share thereof. The obligations
of each Lender under this subsection 2.03(f) shall be absolute and
unconditional. Each Lender shall only be entitled to receive interest on its Pro
Rata Share of the Loans which have been funded by such Lender.
(ii) In the event that any Lender fails to make any
payment required to be made by it pursuant to subsection 2.03(f) (i) hereof, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from the
date such
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payment was due until the date such amount is paid to the Administrative Agent,
at the customary rate set by the Administrative Agent for the correction of
errors among banks for three Business Days and thereafter at the Regular Rate.
During the period in which such Lender has not paid such corresponding amount to
the Administrative Agent, notwithstanding anything to the contrary contained in
this Agreement or any other Related Document, the amount so advanced by the
Administrative Agent to the Borrowers shall, for all purposes hereof, be a Loan
made by the Administrative Agent for its own account. Upon any such failure by a
Lender to pay the Administrative Agent, the Administrative Agent shall promptly
thereafter notify the Borrowers of such failure and the Borrowers shall
immediately pay such corresponding amount to the Administrative Agent for its
own account. Nothing in this subsection 2.03(f) (ii) shall be deemed to relieve
any Lender from its obligation to fulfill its Revolving Credit Commitment
hereunder or to prejudice any rights that the Borrowers or the Administrative
Agent may have against any Lender as a result of any default by such Lender
hereunder.
2.04. Reduction of Revolving Credit Commitment; Mandatory
Prepayment; Optional Prepayment.
(a) Optional Reduction of the Revolving Credit
Commitment. (i) Subject to Section 2.04(e) hereof, the Borrowers may at any time
or from time to time and without penalty or premium reduce the Revolving Credit
Commitments of the Lenders to an amount not less than the sum of the unpaid
principal amount of all Loans then outstanding plus the principal amount of all
Loans not yet made as to which notice has been given by the Parent under Section
2.03 hereof plus the Letter of Credit Exposure at such time plus the Stated
Amount of all Letters of Credit not yet issued as to which a request has been
made unless the request is withdrawn and the Letter of Credit is not issued by
the Letter of Credit Issuer under Section 3.01 hereof. Any reduction shall be in
an amount which is an integral multiple of $1,000,000. Reduction of the
Revolving Credit Commitments of the Lenders shall be made by providing not less
than two Business Days' written notice (which notice shall be irrevocable) to
such effect to the Administrative Agent (which notice the Administrative Agent
shall promptly transmit to each Lender) . Reductions of the Revolving Credit
Commitments of the Lenders are irrevocable and may not be reinstated. Each such
reduction shall reduce the Revolving Credit Commitment of each Lender
proportionately in accordance with its Pro Rata Share.
(ii) Mandatory Termination of Revolving Credit
Commitment. On the date which is ninety (90) days after the occurrence of a
Change of Control, the Revolving Credit Commitments of all Lenders shall
automatically terminate, provided that the Revolving Credit Commitments shall
not terminate if, before the 60th day after the occurrence of a Change of
Control, all Lenders notify the Administrative Agent that they have elected not
to terminate their Revolving Credit Commitments. Nothing contained in this
Section 2.04(a) (ii) shall
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affect the rights of the Administrative Agent and the Lenders in the event of a
failure by the Borrowers to comply with Section 8.04 hereof.
(b) Mandatory Prepayment.
(i) Exceeding Current Commitment. If at any time
the Current Commitment is less than the aggregate unpaid principal amount of the
Revolving Credit Loans then outstanding plus the Letter of Credit Exposure at
such time, the Borrowers shall prepay an amount of the Revolving Credit Loans
not less than the amount of such difference or, if the Revolving Credit Loans
then outstanding are less than the amount of such difference, provide cash
collateral, or other collateral acceptable to the Administrative Agent in its
sole discretion, to the Administrative Agent in an amount equal to 105% of such
excess, which cash collateral shall be deposited and held in the Letter of
Credit Cash Collateral Account until such time as such excess no longer exists.
Any such prepayment will not otherwise reduce the Revolving Credit Commitments
of the Lenders. Concurrently with any notice of reduction of the Revolving
Credit Commitments of the Lenders, the Borrowers shall give notice to the
Administrative Agent of any mandatory prepayment which notice shall specify a
prepayment date no later than the effective date of such reduction of the
Revolving Credit Commitments of the Lenders.
(ii) Required Amortization of Term Loans. The
Borrowers shall on May 21 of each year, commencing May 21, 1998, repay $800,000
of principal of the Term Loans, and shall repay the entire unpaid principal
amount of Term Loans on May 21, 2002. If the Parent or any Borrower shall
consummate an initial public offering (an "IPO") (as such term is defined in the
Convertible Subordinated Note and Stock Purchase Agreement as in effect but
without regard to the amount of such offering) of securities, the Borrowers
shall prepay the Term Loans (which prepayment shall be applied to the
installments thereof in the inverse order of maturity) by an amount equal to the
greater of (x) $2,000,000 and (y) the product of (i) the unpaid principal amount
of the Term Loans at the time of such prepayment times (ii) the percentage that
the amount of the Convertible Subordinated Debentures that is prepaid in
connection with such IPO is of the total amount of the Convertible Subordinated
Debentures outstanding (including that portion of the principal amount of any
Convertible Subordinated Debentures for which notice of conversion has been
given to the Parent pursuant to Section 9A(b) of the Convertible Subordinated
Note and Stock Purchase Agreement) prior to such prepayment, but in no event
shall the amount of the prepayment required by this second sentence exceed the
amount of the then outstanding Term Loans. Such prepayment shall be made on the
earlier of (i) the date of consummation of such IPO and (ii) the date of any
prepayment of the Convertible Subordinated Debentures pursuant to the last
sentence of clause (a) (ii) of Paragraph 10 of the Convertible Subordinated Note
and Stock Purchase Agreement.
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(iii) Other Mandatory Prepayments. The Administrative Agent
shall on each Business Day apply funds deposited in the Agent Account in
accordance with Section 7.13 hereof, to the payment, in whole or in part, of the
Obligations outstanding (except such funds shall not be applied to the payment
of the Term Loan unless there is an Event of Default and the Administrative
Agent elects to so apply the funds). To the extent that sale proceeds referred
to in Section 8.04 hereof are required to be a mandatory prepayment, such
prepayment shall be made under this subsection (iii). The amount and
circumstances under which funds are required to be swept into the Agent Account
is set forth in Section 7.13.
(c) Optional Prepayment. The Borrowers may at any time or
from time to time prepay, in whole or in part, any or all Loans then
outstanding. Any partial prepayment of a Eurodollar Loan shall not reduce the
aggregate principal amount of such Eurodollar Loan to less than $2,500,000.
(d) Prepayment Penalty and Termination Fee. All prepayments
of Loans under this Section 2.04 shall be without premium or penalty, except as
provided in this clause (d) and except that any prepayment of Eurodollar Loans
shall be subject to the provisions of Section 2.12 hereof. The Borrowers agree
that if the Revolving Credit Commitments are terminated in whole either (x) as a
result of an Event of Default of a type described in Sections 9.01(a), Section
9.01(c) (but solely with respect to a breach of Section 7.15), Section 9.01(g),
9.01(h) or Section 9.01(j) or (y) as a result of voluntary termination by the
Borrowers at any time prior to the third anniversary of the Closing Date, the
Borrowers shall pay to the Administrative Agent for the account of the Lenders,
on the date of termination (together with any payments of principal, interest,
fees or other amounts payable hereunder or any other Related Document on such
date) an early termination fee as follows: (i) one and three quarters percent
(1.75%) (one and one half percent (1.5%) if such payment is paid from the
proceeds of or in anticipation of a public offering of equity securities of any
of the Borrowers) from the Closing Date through the date one year from the
Closing Date, (ii) one percent (1.00%) (three quarters of one percent (0.75%) if
such payment is paid from the proceeds of or in anticipation of a public
offering of equity securities of any of the Borrowers) from the date which is
one year and one day after the Closing Date through the second anniversary of
the Closing Date, (iii) one half of one percent (0.5%) from the date which is
two years and one day after the Closing Date through the third anniversary of
the Closing Date, and (iv) 0% if such payment is made at any time after the
third anniversary of the Closing Date. The early termination fee shall be
calculated by multiplying the applicable percentage above by $25,000,000.
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2.05. Interest Rate.
(a) Each Prime Loan shall bear interest at a rate per
annum for each day until paid equal to the Regular Rate as of such day plus
.50%.
(b) Each Eurodollar Loan shall bear interest at a rate
per annum equal to the Eurodollar Rate plus 3% for the Interest Period in effect
for such Eurodollar Loan.
(c) The Term Loan shall bear interest at a rate per
annum for each day until paid equal to the Regular Rate for such day plus .50%.
2.06. Interest Payment Dates. The Borrowers shall pay
interest on the unpaid principal amount of each Loan from the date of such Loan
until such principal amount shall be paid in full, which interest shall be
payable (i) if such Loan is a Prime Loan, monthly in arrears on the first day of
each month, commencing June 1, 1997, and (ii) if such Loan is a Eurodollar Loan,
on the last day of the Interest Period of such Eurodollar Loan. After maturity
of any principal amount of any Loan (by acceleration, at scheduled maturity or
otherwise), interest on such amount shall be due and payable on demand.
2.07. Amortization. To the extent not due and payable
earlier pursuant to the terms of this Agreement, the entire unpaid principal
amount of each of the Loans shall be due and payable on the Termination Date.
2.08. Payments.
(a) Time, Place and Manner. All payments and
prepayments to be made in respect of principal, interest, fees or other amounts
due from the Borrowers hereunder or under any other Related Document shall be
payable at or before 12:00 Noon, New York City time, on the day when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived. Such payments shall be made to the Administrative Agent for
the account of the Administrative Agent, CIT or the Lenders, as the case may be,
at the Agent Account in Dollars in funds immediately available at the Bank's
Office without setoff, counterclaim or other deduction of any nature. The
Administrative Agent shall maintain a loan account (the "Loan Account") on its
books in the name of the Borrowers in which the Borrowers will be charged with
Loans made by the Administrative Agent or the Lenders to the Borrowers hereunder
and with any other Obligations. The Borrowers and the Lenders hereby authorize
the Administrative Agent to, and the Administrative Agent may, from time to time
charge the Loan Account with any interest, fees, expenses and other Obligations
that are due and payable under this Agreement or any Related Document. The
Borrowers and the Lenders confirm that any charges which the Administrative
Agent may so make to the Loan Account as herein provided will be made as an
accommodation to the Borrowers and
- 30 -
solely at the Administrative Agent's discretion and shall constitute a Loan to
the Borrowers funded by the Administrative Agent on behalf of the Lenders and
subject to subsections 2.03(e) and 2.03(f) of this Agreement. Each of the
Lenders and the Borrowers agree that the Administrative Agent shall have the
right to make such charges regardless of whether any Event of Default or
Potential Default shall have occurred and be continuing or whether any of the
conditions precedent in Section 5.02 have been satisfied. The Loan Account will
be credited upon receipt of "good funds" in the Agent Account with all amounts
actually received by the Administrative Agent from the Borrowers or others for
the account of the Borrowers. Interest on all Loans and all fees that accrue on
a per annum basis shall be computed on the basis of the actual number of days
elapsed in the period during which interest or such fee accrues and a year of
360 days. In computing interest on any Loan, the date of the making of such Loan
shall be included and the date of payment shall be excluded; provided, however,
that if a Loan is repaid on the same day in which it is made, one day's interest
shall be paid on such Loan.
(b) Periodic Statements. The Administrative Agent shall
provide the Lenders and the Parent promptly after the end of each calendar month
a summary statement (in the form from time to time used by the Administrative
Agent) of (A) the opening and closing daily balances in the Loan Account during
such month, (B) the amounts and dates of all Loans made during such month, (C)
the amounts and dates of all payments on account of the Loans made during such
month and each Lender's interest in the Loans, (D) the amount of interest
accrued on the Loans during such month, (E) any Letters of Credit issued by the
Letter of Credit Issuer during such month, specifying the Stated Amount thereof,
(F) the amount of charges to the Loan Account or Loans to be made during such
month to reimburse CIT, the Lenders or the Letter of Credit Issuer for drawings
made under Letters of Credit or payments made by CIT or the Lenders under the
Letter of Credit Guaranty, and (G) the amount and nature of any charges to the
Loan Account made during such month on account of interest, fees and expenses
and other Obligations. All entries on any such statement shall, 30 days after
the same is sent, be presumed to be correct and shall constitute prima facie
evidence of the information contained in such statement, subject to the
Borrower's and each Lender's express right to rebut such presumption by
conclusively demonstrating the existence of any error on the part of the
Administrative Agent.
(c) Apportionment of Payments. Except as otherwise
provided in this subsection, aggregate principal and interest payments shall be
apportioned among all outstanding Loans to which such payments relate and
payments of the fees required to be paid by the Borrowers under this Agreement
to the Administrative Agent (except as to amounts payable for the account of the
Administrative Agent) shall be apportioned ratably and to the extent separately
agreed to by the Administrative Agent and any Lender. All payments shall be
remitted to the Administrative Agent and all such payments and any other
amounts,
- 31 -
including, without limitation, proceeds of Collateral received by the
Administrative Agent from or as to the Borrowers shall be applied subject to the
provisions of this Agreement first, to pay principal of and interest on any
Loans funded by the Administrative Agent on behalf of the Lenders (including,
without limitation, under Section 11.08 hereof) and any fees, expense
reimbursements or indemnities then due to the Administrative Agent from the
Borrower; second, to pay any fees, expense reimbursements or indemnities then
due to the Lenders or the Letter of Credit Issuer hereunder; third, to pay
interest due in respect of Loans and Unreimbursed Draws under Letters of Credit;
and fourth, to pay, prepay or provide cash collateral, if then required, in
respect of principal of Loans and Letter of Credit Exposure. The Administrative
Agent shall promptly distribute to each Lender at its primary address set forth
on the appropriate signature page hereof, or at such other address as such
Lender may designate in writing, such funds as it may be entitled to receive.
The foregoing apportionment of payments is solely for the purpose of determining
the obligations of the Borrowers hereunder and, notwithstanding such
apportionment, any Lender may on its books and records allocate payments
received by it in a manner different from that contemplated hereby. No such
different allocation shall alter the rights and obligations of the Borrowers
under this Agreement determined in accordance with the apportionments
contemplated by this Section 2.08(c). To the extent that the Borrowers make a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or other amount, which payment(s) or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause
then, to the extent of such payment or proceeds received, the Obligations or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by the
Administrative Agent.
(d) Interest Upon Events of Default. To the extent permitted
by law, after there shall have occurred and so long as there is continuing an
Event of Default, all unpaid Obligations of the Borrowers hereunder or under any
Note or any other Related Document shall bear interest for each day until paid
(before and after judgment), payable on demand, at a rate per annum of 2.5%
above the Prime Rate for such day, such interest rate to change automatically
from time to time effective as of the announced effective date of each change in
the Prime Rate.
(e) Unused Line Fee. From and after the Closing Date until
the Termination Date, the Borrowers shall pay to the Administrative Agent, an
unused line fee (the "Unused Line Fee") accruing at the rate of one half of one
percent (1/2 of 1%) per annum, on the first $10,000,000 of any excess, if any,
of the aggregate Revolving Credit Commitments over the sum of the Loans and
Letter of Credit Exposure (computed on an average daily basis) outstanding from
time to time and one-quarter of one
- 32 -
percent (1/4 of 1%) on any remaining excess (so computed). All Unused Line Fees
shall be payable quarterly in arrears on the last day of each March, June,
September and December, commencing June 30, 1997.
(f) Letter of Credit Fees. From and after the Closing
Date until the Termination Date, the Borrowers shall pay to the Administrative
Agent, a letter of credit fee (the "Letter of Credit Fee") at the rate of one
and three-quarters (1.75%) on the face amount of each letter of credit payable
on the date of issuance. All Letter of Credit Fees shall be payable monthly in
arrears on the first day of each month commencing June 1, 1997. The Borrowers
shall also pay the customary letter of credit fees and charges of CIT and the
Letter of Credit Issuer for the administration, issuance, amendment and
processing of any Letters of Credit issued by the Letter of Credit Issuer.
Promptly following the Administrative Agent's receipt of any Letter of Credit
Fees described above, the Administrative Agent shall pay to each Lender its Pro
Rata Share of the amount of the Letter of Credit Fees received by the
Administrative Agent.
(g) Success Fee. On the date the Parent or any other
Borrower consummates an initial public offering of equity securities, the
Borrowers shall pay to the Administrative Agent for the account of the Lenders a
success fee of $250,000.
(h) Closing Fee and Collateral Management Fee. The
Borrowers shall pay to the Administrative Agent for its own account (i) on the
Closing Date a fee of $150,000 and (ii) on the Closing Date and upon each annual
anniversary thereof, a collateral management fee of $15,000, each of such fees
being fully earned when due. All fees under this Agreement and the other Related
Documents may be charged to the Borrower's Loan Account and are non-refundable
under all circumstances (except for a computational error agreed to by the
Borrowers and the Administrative Agent).
2.09. Use of Proceeds. Each Borrower hereby covenants,
represents and warrants that, the proceeds of the Loans will be used for working
capital and general corporate purposes. Each Borrower hereby covenants,
represents and warrants that the proceeds of the Letters of Credit will be used
(A) to import Inventory in the ordinary course of the Borrower's business and
(B) for general corporate purposes, including but not limited to workers'
compensation insurance and general liability insurance programs.
2.10. Eurodollar Rate Not Determinable; Illegality or
Impropriety.
(a) In the event and on each occasion, that on or before
the day on which the Eurodollar Rate is to be determined for a borrowing that is
to include Eurodollar Loans, the Administrative Agent has determined in good
faith that, or has been advised by the Bank that, the Eurodollar Rate cannot be
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determined for any reason or the Eurodollar Rate will not adequately and fairly
reflect the cost of maintaining Eurodollar Loans or Dollar deposits in the
principal amount of the applicable Eurodollar Loans are not available in the
interbank Eurodollar market where the Eurodollar and foreign currency and
exchange operations in respect of such Bank's Eurodollar Loans are then being
conducted, the Administrative Agent shall, as soon as practicable thereafter,
give written notice of such determination to the Parent and the other Lenders.
In the event of any such determination, any request by the Parent for a
Eurodollar Loan pursuant to Section 2.03 shall, until the Administrative Agent
shall have advised the Parent and the other Lenders that the circumstances
giving rise to such notice no longer exist, be deemed to be a request for a
Prime Loan. Each determination by the Administrative Agent hereunder shall be
conclusive and binding absent manifest error.
(b) In the event that it shall be unlawful or improper for
any Lender to make, maintain or fund any Eurodollar Loan as contemplated by this
Agreement, then such Lender shall forthwith give notice thereof to the
Administrative Agent and the Borrowers describing such illegality or impropriety
in reasonable detail. Effective immediately upon the giving of such notice, the
obligation of such Lender to make Eurodollar Loans shall be suspended for the
duration of such illegality or impropriety and, if and when such illegality or
impropriety ceases to exist, such suspension shall cease, and such Lender shall
notify the Administrative Agent and the Parent. If any such change shall make it
unlawful or improper for any Lender to maintain any outstanding Eurodollar Loan
as a Eurodollar Loan, such Lender shall, upon the happening of such event,
notify the Administrative Agent and the Parent, and the Borrowers shall
immediately, or if permitted by applicable law, rule, regulation, order, decree,
interpretation, request or directive, no later than the date permitted thereby,
convert each such Eurodollar Loan into a Prime Loan.
2.11. Reserve Requirements: Capital Adequacy Circumstances.
(a) Notwithstanding any other provision herein, if any
change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall impose any tax on or change the basis of taxation of payments to the
Letter of Credit Issuer or any Lender or any Affiliate of a Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or of any
amounts payable hereunder (other than taxes imposed on the overall net income of
the Letter of Credit Issuer or such Lender or such Affiliate by the jurisdiction
in which the Letter of Credit Issuer or such Lender or such Affiliate has its
principal office or by any political subdivision or taxing authority therein),
or shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against
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assets of, deposits with or for the account of or credit extended by the Letter
of Credit Issuer or such Lender or Affiliate of such Lender (except any such
reserve requirement that is reflected in Reserve Requirements) or shall impose
on the Letter of Credit Issuer or such Lender or such Affiliate any other
condition affecting this agreement or any Eurodollar Loans made by such Lender
or any Letter of Credit Issuer and the result of any of the foregoing shall be
to increase the cost to the Letter of Credit Issuer or such Lender of making or
maintaining any Eurodollar Loan or issuing any Letter of Credit or to reduce the
amount of any sum received or receivable by the Letter of Credit Issuer or such
Lender hereunder (whether of principal, interest or otherwise) in respect
thereof by an amount deemed by the Letter of Credit Issuer or such Lender to be
material then the Borrowers shall pay to the Letter of Credit Issuer or such
Lender such additional amount or amounts as will compensate the Letter of Credit
Issuer or such Lender for such additional costs incurred or reduction suffered.
Any amount or amounts payable by the Borrowers to the Letter of Credit Issuer or
any Lender in accordance with the provisions of this Section 2.11(a) shall be
paid by the Borrowers to the Letter of Credit Issuer or such Lender within ten
(10) days after receipt by the Parent from the Letter of Credit Issuer or such
Lender of a statement setting forth in reasonable detail the amount or amounts
due and the basis for the determination from time to time of such amount or
amounts, which statement shall be conclusive and binding absent manifest error.
(b) If the Letter of Credit Issuer or any Lender shall have
reasonably determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Letter of Credit Issuer or by such
Lender (or any lending office of such Lender) or by any Affiliate of such
Lender, as the case may be, with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has the effect of reducing the rate of return on the
Letter of Credit Issuer's or such Lender's capital or on the capital of such
Lender's Affiliate, as the case may be, as a consequence of the Letter of Credit
Issuer's obligations or such Lender's obligations under this Agreement and the
Related Documents to a level below that which the Letter of Credit Issuer or
such Lender or such Lender's Affiliate, as the case may be, could have achieved
but for such adoption, change or compliance (taking into consideration the
Letter of Credit Issuer's or such Lender's policies or such Lender's Affiliate's
policies, as the case may be, with respect to capital adequacy) by an amount
deemed by the Letter of Credit Issuer or such Lender to be material, then, from
time to time, the Borrowers shall reimburse the Letter of Credit Issuer or such
Lender for such reduction. Any amount or amounts payable by the Borrowers to the
Letter of Credit Issuer or any Lender in accordance with the provisions of this
Section 2.11 (b) shall be paid by the Borrowers to the
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Letter of Credit Issuer or such Lender within ten (10) days after receipt by the
Parent from the Letter of Credit Issuer or such Lender of a statement setting
forth (i) in reasonable detail the amount or amounts due, (ii) the basis for the
determination from time to time of such amount or amounts and (iii) that such
amount(s) have been determined in good faith, which statement shall be
conclusive and binding absent manifest error.
(c) The Letter of Credit Issuer or any Lender may demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period;
provided that the Letter of Credit Issuer or such Lender shall provide to the
Borrowers a certificate setting forth in reasonable detail the basis on which
such demand is made. The protection of this Section 2.11 shall be available to
the Letter of Credit Issuer or any Lender regardless of any possible contention
of the invalidity or inapplicability of the law, rule, regulations, guideline or
other change or condition which shall have occurred or been imposed.
2.12. Indemnity. The Borrowers shall indemnify each Lender
against any loss or expense that such Lender actually sustains or incurs as a
consequence of (a) any failure by the Borrowers to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article V, (b) any
failure by any Borrower to borrow any Eurodollar Loan hereunder or to convert
any Prime Loan into a Eurodollar Loan after notice of such borrowing or
conversion has been given pursuant to Section 2.03 or Section 2.14, as the case
may be, (c) any payment, prepayment (mandatory or optional) or conversion of a
Eurodollar Loan required by any provision of this Agreement or otherwise made on
a date other than the last day of the Interest Period applicable thereto, or (d)
the occurrence of any Event of Default, including, in each such case, any loss
(including, without limitation, loss of margin) or reasonable expense sustained
or incurred in liquidating or employing deposits from third parties acquired to
effect or maintain such Loan or any part thereof as a Eurodollar Loan. Such loss
or reasonable expense shall include but not be limited to an amount equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid or converted or not
borrowed or converted (based on the Eurodollar Rate applicable thereto) for the
period from the date of such payment, prepayment, conversion or failure to
borrow or convert on the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow or convert, the last day of the Interest Period
for such Loan that would have commenced on the date of such failure to borrow or
convert) over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in re-employing the funds so paid,
prepaid or converted or not borrowed or converted for such Interest Period. A
certificate of any Lender setting forth in reasonable detail any amount or
amounts that such Lender is entitled to receive pursuant to this Section 2.12
and the basis for the determination of such amount or amounts shall be
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delivered to the Borrowers and shall be conclusive and binding absent manifest
error.
2.13. Sharing of Setoffs.
Each Lender agrees that if it shall, through the exercise of
a right of banker's lien, setoff or counterclaim against the Borrowers or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, or by any other means, obtain payment (voluntary or involuntary)
in respect of any Obligation as a result of which the aggregate unpaid amount of
the Obligations owing to it shall be proportionately less than the aggregate
unpaid amount of the Obligations owing to any other Lender, it shall
simultaneously purchase from such other Lender at face value a participation in
the Obligations owing to such other Lender, so that the aggregate unpaid amount
of the Obligations and participations in Obligations held by each Lender shall
be in the same proportion to the aggregate unpaid amount of all Obligations
owing to such Lender prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the aggregate unpaid amount of all
Obligations outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.13 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustments restored without interest. Each Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in an Obligation deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys jointly and severally owing by such Borrower to
such Lender by reason thereof as fully as if such Lender had made a loan
directly to such Borrower in the amount of such participation.
2.14. Continuation and Conversion of Loans. Subject to
Section 2.03 and Section 2.10 hereof, the Borrowers shall have the right, at any
time, (i) on three (3) Business Days' prior irrevocable written or telecopy
notice given by the Parent to the Administrative Agent, to continue any
Eurodollar Loan or any portion thereof into a subsequent Interest Period or to
convert any Prime Loan or portion thereof into a Eurodollar Loan, or (ii) on one
(1) Business Day's prior irrevocable written or telecopy notice to the
Administrative Agent, to convert any Eurodollar Loan or portion thereof into a
Prime Loan, subject to the following:
(A) in the case of a continuation of a Eurodollar
Loan or portion thereof as such or a conversion of a Prime
Loan or portion thereof into a Eurodollar Loan, (1) no Event
of Default or Potential Default shall have occurred and be
continuing at the
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time of such continuation or conversion and (2) Eurodollar Loans
resulting from this Section 2.14 shall be limited in number as
provided in Section 2.03(d);
(B) in the case of a continuation or conversion of less than
all Revolving Credit Loans or Term Loans, as the case may be, the
aggregate principal amount of any Eurodollar Loan continued or
converted shall not be less than $5,000,000 and in multiples of
$1,000,000 if in excess thereof;
(C) each conversion shall be effected by the Lenders by
applying the proceeds of the new Loan to the Loan (or portion thereof)
being converted; and, in the case of a conversion from a Eurodollar
Loan to a Prime Loan, accrued interest on the Eurodollar Loan (or
portion thereof) being converted shall be jointly and severally paid
by the Borrowers at the time of conversion;
(D) if the new Loan made in respect of a conversion shall be
a Eurodollar Loan, the first Interest Period with respect thereto
shall commence on the date of conversion;
(E) no portion of any Loan shall be continued or converted to
a Eurodollar Loan with an Interest Period ending later than the
Termination Date; and
(F) if any conversion of a Eurodollar Loan shall be effected
on a day other than the last day of an Interest Period, the Borrowers
shall reimburse each Lender on demand for any loss incurred or to be
incurred by it in the reemployment of the funds released by such
conversion as provided in Section 2.12 hereof.
In the event that the Parent shall not give notice to continue any Eurodollar
Loan into a subsequent Interest Period, such Loan (unless repaid) shall
automatically become a Prime Loan at the expiration of the then current Interest
Period.
2.15. Taxes.
(a) All payments made by the Borrowers hereunder, under
the Notes or under any Loan Document will be made without setoff, counterclaim,
deduction or other defense. All such payments shall be made free and clear of
and without deduction for any present or future income, franchise, sales, use,
excise, stamp or other taxes, levies, imposts, deductions, charges, fees,
withholdings, restrictions or conditions of any nature now or hereafter imposed,
levied, collected, withheld or assessed by any jurisdiction (whether pursuant to
United States Federal, state, local or foreign law) or by any political
subdivision or taxing
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authority thereof or therein, and all interest, penalties or similar
liabilities, excluding taxes on the overall net income of the Lenders or the
Letter of Credit Issuer (such nonexcluded taxes are hereinafter collectively
referred to as the "Taxes"). If the Borrowers shall be required by law to deduct
or to withhold any Taxes from or in respect of any amount payable hereunder, (i)
the amount so payable shall be increased to the extent necessary so that after
making all required deductions and withholdings (including Taxes on amounts
payable to the Lenders or the Letter of Credit Issuer pursuant to this sentence)
the Lenders or the Letter of Credit Issuer receive an amount equal to the sum
they would have received had no such deductions or withholdings been made, (ii)
the Borrowers shall make such deductions or withholdings, and (iii) the
Borrowers shall pay the full amount deducted or withheld to the relevant
taxation authority in accordance with applicable law. Whenever any Taxes are
payable by any Borrower, as promptly as possible thereafter, the Borrowers and
the Parent shall send the Lenders, the Letter of Credit Issuer and the
Administrative Agent an official receipt showing payment. In addition, the
Borrowers agree to pay any present or future taxes, charges or similar levies
which arise from any payment made hereunder (other than related to the net
income of a Lender) or from the execution, delivery, performance, recordation or
filing of, or otherwise with respect to, this Agreement, the Notes, the Letters
of Credit or any other Loan Document (hereinafter referred to as "Other Taxes").
(b) The Borrowers will indemnify each Lender and the Letter
of Credit Issuer for the amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.15) paid by any Lender or the Letter of Credit
Issuer and any liability (including penalties, interest and expenses for
nonpayment, late payment or otherwise) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted (provided if such Taxes or Other Taxes were not correctly or legally
asserted, the Borrowers will be subrogated to the Lender's rights to recover
such amounts of Taxes or Other Taxes actually paid). This indemnification shall
be paid within 30 days from the date on which such Lender or such Letter of
Credit Issuer makes written demand.
(c) Each Lender which is a foreign person (i.e., a Person
other than a United States Person for United States Federal income tax purposes)
hereby agrees that:
(i) it shall, no later than the Closing Date (or, in
the case of a Lender which becomes a party hereto pursuant to
Section 10.13 hereof after the Closing Date, the date upon
which such Lender becomes a party hereto) deliver to the
Parent through the Administrative Agent:
(a) two accurate and complete signed originals of
Form 4224, or
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(b) two accurate and complete signed originals of
Form 1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
its lending installation under this Agreement free from withholding of United
States Federal income tax;
(ii) if at any time such Lender changes its lending
installation or installations or selects an additional
lending installation it shall, at the same time or reasonably
promptly thereafter, deliver to the Parent through the
Administrative Agent in replacement for, or in addition to,
the forms previously delivered by it hereunder:
(a) if such changed or additional lending
installation is located in the United States, two accurate
and complete signed originals of Form 4224, or
(b) otherwise, two accurate and complete signed
originals of Form 1001, in each case indicating that such
Lender is on the date of delivery thereof entitled to receive
payments of principal, interest and fees for the account of
such changed or additional lending installation under this
Agreement free from withholding of United States Federal
income tax; and
(iii) it shall, promptly upon the Parent's
reasonable request to that effect, deliver to the Parent such
other forms or similar documentation as may be required from
time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for
withholding purposes.
(d) If any Borrower fails to perform its obligations
under this Section 2.15, the Borrowers shall indemnify the Lenders and the
Letter of Credit Issuer for any incremental taxes, interest or penalties that
may become payable as a result of any such failure.
ARTICLE III.
LETTERS OF CREDIT
3.01. Letters of Credit.
(a) General. In order to assist the Borrowers in establishing or
opening documentary and standby letters of credit, which shall not have
expiration dates that exceed one year from the date of issuance (the "Letters of
Credit") with the Letter of Credit Issuer, the Borrowers have requested CIT to
join in the applications for such Letters of Credit, and/or guarantee
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payment or performance of such Letters of Credit and any drafts or acceptances
thereunder through the issuance of a Letter of Credit Guaranty, thereby lending
CIT's credit to that of the Borrowers, and CIT has agreed to do so. These
arrangements shall be handled by CIT subject to the terms and conditions set
forth below. CIT shall have no obligation to arrange for the issuance of Letters
of Credit on or after the Termination Date or which, when added to the aggregate
amount of all outstanding and contemporaneous Loans and the Letter of Credit
Exposure at such time, would cause the amount of all Loans and the Letter of
Credit Exposure at any time to exceed the Current Commitment at such time. In
addition, CIT shall not be required to be the issuer of any Letter of Credit.
The Borrowers will be the account party for any application for a Letter of
Credit, which shall be substantially in the form of Exhibit C hereto or on a
computer transmission system approved by CIT and the Letter of Credit Issuer or
such other written form or computer transmission system or such other form as
may from time to time be approved by the Letter of Credit Issuer and CIT, and
shall be duly completed in a manner acceptable to CIT, together with such other
certificates, agreements, documents and other papers and information as the
Letter of Credit Issuer or CIT may request (the "Letter of Credit Application").
In the event of any conflict between the terms of the Letter of Credit
Application and this Agreement, for purposes of this Agreement, the terms of
this Agreement shall control, except that CIT shall only be requested to join in
applications for Letters of Credit which provide that the credits issued
thereunder are governed by and subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision, International Chamber of Commerce
Publication No. 500) and any amendments thereto and revisions thereof (the
"UCP") and notwithstanding anything to the contrary herein contained, the
credits issued thereunder shall be so governed by the UCP except as otherwise
provided in the letters of application.
(i) The aggregate Letter of Credit Exposure shall not exceed
$2,000,000. In addition, changes or modifications of the Letters of
Credit by the Borrowers and/or the Letter of Credit Issuer of the
terms and conditions thereof shall in all respects be subject to the
prior approval of CIT in the exercise of its reasonable discretion,
provided, however, that (x) the expiration date of all Letters of
Credit shall be no later than 15 days prior to the Termination Date
unless on or prior to 15 days prior to the Termination Date such
Letters of Credit shall be cash collateralized in an amount equal to
at least 105% of the Stated Amount of such Letters of Credit, (y) the
Letters of Credit and all documentation in connection therewith shall
be in form and substance satisfactory to CIT and the Letter of Credit
Issuer, and (z) Letters of Credit shall not be issued for the benefit
of domestic trade creditors in connection with the purchase of
Inventory by the Borrower.
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(ii) The Administrative Agent shall have the right, without
notice to the Borrowers, to charge the Loan Account with the amount of
any and all indebtedness, liability or obligation of any kind
(including indemnification for breakage costs, capital adequacy and
reserve requirement charges) incurred by the Administrative Agent, CIT
or the Lenders under the Letter of Credit Guaranty at the earlier of
(x) payment by CIT or the Lenders under the Letter of Credit Guaranty,
or (y) with respect to any Letter of Credit which is not cash
collateralized as provided in this Agreement, the occurrence of an
Event of Default. Any amount charged to the Loan Account shall be
deemed a Loan hereunder made by the Lenders to the Borrower, funded by
the Administrative Agent on behalf of the Lenders and subject to
subsections 2.03(e) and (f). Any charges, fees, commissions, costs and
expenses charged to CIT for the account of the Borrowers by the Letter
of Credit Issuer in connection with or arising out of Letters of
Credit issued pursuant to this Agreement or out of transactions
relating thereto will be charged to the Loan Account in full when
charged to or paid by CIT and any such charges by CIT to the Loan
Account shall be conclusive and binding on the Borrowers and the
Lenders absent manifest error. Each of the Lenders and the Borrowers
agrees that the Administrative Agent shall have the right to make such
charges regardless of whether any Event of Default or Potential
Default shall have occurred and be continuing or whether any of the
conditions precedent in Section 5.02 have been satisfied.
(iii) The Borrowers agree to unconditionally indemnify the
Administrative Agent, CIT and each Lender and to hold the
Administrative Agent, CIT and each Lender harmless from any and all
loss, claim or liability incurred by the Administrative Agent, CIT or
any such Lender arising from any transactions or occurrences relating
to Letters of Credit established or opened for any Borrower's account
and any drafts or acceptances thereunder, and all Obligations
thereunder, including any such loss or claim due to any action taken
by the Letter of Credit Issuer, other than for (i) any such loss,
claim or liability arising out of the gross negligence or willful
misconduct of the Administrative Agent, CIT or any Lender as
determined by a final judgment of a court of competent jurisdiction or
(ii) any loss, claim or liability for which the Letter of Credit
Issuer would be responsible under the UCP unless the Administrative
Agent, CIT or any Lender is liable to the Letter of Credit Issuer in
respect thereof.
(iv) The Borrowers further agree to hold the Administrative
Agent, CIT and each Lender harmless from any errors or omission,
negligence or misconduct by the
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Letter of Credit Issuer. The Borrowers' unconditional obligation to
the Administrative Agent, CIT and each Lender hereunder shall not be
modified or diminished for any reason or in any manner whatsoever,
other than as a result of (i) the Administrative Agent's, CIT's or
such Lender's gross negligence or willful misconduct as determined by
a final judgment of a court of competent jurisdiction or (ii) any
loss, claim or liability for which the Letter of Credit Issuer would
be responsible under the UCP unless the Administrative Agent, CIT or
any Lender is liable to the Letter of Credit Issuer in respect
thereof. Neither the Administrative Agent, CIT nor any Lender shall be
responsible for any payment against presentation of drafts, claims, or
documents which do not strictly comply with the terms of any Letter of
Credit provided the Letter of Credit Issuer determines in good faith
that such drafts, claims or documents substantially comply with the
terms of the Letter of Credit, and the Letter of Credit Issuer shall
have sole discretion to decide whether to pay against drafts, claims
or documents which in such Letter of Credit Issuer's judgment
substantially comply with the terms of such Letter of Credit. The
Borrowers agree that any charges incurred by CIT for the Borrowers'
account by the Letter of Credit Issuer shall be conclusive and binding
on the Borrowers absent manifest error and may be charged to the Loan
Account.
(v) None of the Administrative Agent, CIT, the Letter of
Credit Issuer or any of the Lenders shall be responsible for (a) the
validity or genuineness of any documents or of any endorsements
thereof even if such documents should in fact prove to be in any or
all respects invalid, fraudulent or forged; or (b) fraud by the
shipper and/or anyone else in connection with any such goods or the
shipping thereof; or (c) any breach of contract between the shipper or
vendors and the Borrower.
(vi) Without CIT's express consent in writing or through a
computer transmission, each Borrower agrees after the occurrence of an
Event of Default which is not cured within any applicable grace
period, if any, or waived by the Administrative Agent, not to (A)
clear and resolve any questions of non-compliance of documents, or (B)
give any instructions as to acceptances or rejection of any documents
or goods.
(vii) Each Borrower agrees that any necessary and material
import, export or other license or certificates for the import or
handling of Inventory required to be obtained by the Borrowers will
have been promptly procured; all foreign and domestic governmental
laws and regulations applicable to the Borrower in regard to the
shipment and importation of
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Inventory or the financing thereof will have been timely and fully
complied with, and any certificates in that regard that CIT may at any
time reasonably request will be promptly furnished. In this
connection, the Borrowers represent and warrant that all shipments
made under any such Letters of Credit are in compliance with the laws
and regulations of the countries in which the shipments originate and
terminate except where all instances of such non-compliance taken
together will not have a Material Adverse Effect. As between the
Borrowers, on the one hand, and the Administrative Agent, CIT, the
Lenders and the Letter of Credit Issuer, on the other hand, the
Borrowers assumes all risk, liability and responsibility for, and
agree to pay and discharge, all present and future local, state,
federal or foreign taxes, duties, or levies. As between the Borrowers,
on the one hand, and the Administrative Agent, CIT, the Lenders and
the Letter of Credit Issuer, on the other hand, any embargo,
restriction, laws, customs or regulations of any country, state, city,
or other political subdivision, where such Inventory is or may be
located, or wherein payments are to be made, or herein drafts may be
drawn, negotiated, accepted, or paid, shall be solely the Borrower's
risk, liability and responsibility.
(viii) Upon any payments made to the Letter of
Credit Issuer under the Letter of Credit Guaranty, CIT or the Lenders,
as the case may be, shall, without prejudice to its rights under this
Agreement (including that such unreimbursed amounts shall constitute
Loans hereunder), acquire by subrogation any rights, remedies, duties
or obligations granted or undertaken by the Borrowers to the Letter of
Credit Issuer in any Letter of Credit Application, any standing
agreement relating to Letters of Credit or otherwise, all of which
shall be deemed to have been granted to the Administrative Agent and
apply in all respects to the Administrative Agent and shall be in
addition to any rights, remedies, duties or obligations contained
herein.
(ix) In the event that the Borrowers are required to
provide cash collateral for any Letter of Credit, the Borrowers shall
deposit such cash collateral in the Letter of Credit Cash Collateral
Account, which cash collateral shall be held in the Letter of Credit
Cash Collateral Account until either all Obligations have been paid in
full in cash or cash collateral is no longer required under the terms
of this Agreement.
(b) Request for Issuance. The Borrowers may from time to
time, upon notice (an "L/C Notice") given by the Parent not later than 12:00
noon, New York City time, at least three
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Business Days in advance, request CIT to assist the Borrowers in establishing or
opening a Letter of Credit by delivering to the Administrative Agent, with a
copy to the Letter of Credit Issuer, a Letter of Credit Application, together
with any necessary related documents. CIT shall not provide support, pursuant to
the Letter of Credit Guaranty, if the Administrative Agent shall have received
written notice from the Majority Lenders on the Business Day immediately
preceding the proposed issuance day for such Letter of Credit that one or more
of the conditions precedent in Section 5.02 will not have been satisfied on such
date, and neither CIT nor the Administrative Agent shall otherwise be required
to determine that, or take notice whether, the conditions precedent set forth in
Section 5.02 have been satisfied.
3.02. Participations.
(a) Purchase of Participations. Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit in accordance
with the procedures set forth in Section 3.01, each Lender (other than CIT)
shall be deemed to have irrevocably and unconditionally purchased and received
from CIT, without recourse or warranty, an undivided interest and participation,
to the extent of such Lender's Pro Rata Share, in all obligations of CIT with
respect to such Letter of Credit (including, without limitation, all Undrawn
Letter of Credit Availability and Reimbursement Obligations of the Borrowers
with respect, thereto pursuant to the Letter of Credit Guaranty or otherwise).
(b) Sharing of Letter of Credit Payments. In the event
that CIT makes any payment in respect of the Letter of Credit Guaranty and the
Borrowers shall not have repaid such amount to the Administrative Agent for the
account of CIT, the Administrative Agent shall charge the Loan Account in the
amount of the Reimbursement Obligation, in accordance with Section 3.01(a) (ii)
hereof.
(c) Obligations Irrevocable. The obligations of a
Lender to make payments to the Administrative Agent for the account of the
Administrative Agent or CIT with respect to a Letter of Credit shall be
irrevocable, not subject to any qualification or exception whatsoever and shall
be made in accordance with, but not subject to, the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Related Documents;
(ii) the existence of any claim, set off, defense
or other right which the Borrowers may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting),
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the Administrative Agent, Letter of Credit Issuer, any
Lender, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including
any underlying transactions between the Borrowers or any
other party and the beneficiary named in any Letter of
Credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any
of the Related Documents;
(y) any failure by the Administrative Agent to
provide any notices required pursuant to this Agreement
relating to Letters of Credit; or
(vi) the occurrence of any Event of Default or
Potential Default.
ARTICLE IV.
BORROWING BASE; JOINT AND SEVERAL LIABILITY
4.01. Condition of Lending and Assisting in Establishing or
Opening Letters of Credit. CIT and the other Lenders shall have no obligation to
make a Loan or assist in establishing or opening a Letter of Credit to the
extent that the aggregate unpaid principal amount of the Loans and the Letter of
Credit Exposure exceeds, or after giving effect to a requested Credit Extension
would exceed, the Current Commitment at such time.
4.02. Mandatory Prepayment. Concurrently with the delivery of
any Borrowing Base Certificate, the Parent shall give notice to the
Administrative Agent of any mandatory prepayment pursuant to Section 2.04(b)
(i), which notice shall specify a prepayment date no later than the earlier of
the date on which such Borrowing Base Certificate is given and the date on which
such Borrowing Base Certificate is required to be provided to the Lenders.
4.03. Rights and Obligations Unconditional. Without limitation
of any other provision of this Agreement, the rights of the Administrative
Agent, CIT and the Lenders and the obligations of the Borrowers under this
Article IV are absolute, unconditional and the Administrative Agent, CIT and the
Lenders shall not be deemed to have waived the condition set forth in Section
4.01 hereof or their right to payment in accordance with Section 4.02 hereof in
any circumstance whatever, including but not limited to circumstances wherein,
the Administrative Agent or
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the Lenders (knowingly or otherwise) make an advance hereunder in excess of the
Borrowing Base.
4.04. Borrowing Base Certificate.
(a) By 12:00 noon, New York City time five (5) Business
Days after the Saturday of each week (and on any other date on which the
Administrative Agent reasonably requests), the Parent shall furnish to the
Administrative Agent a certificate ("Borrowing Base Certificate") substantially
in the form attached hereto as Exhibit D, certified as true and correct by a
Designated Financial Officer, setting forth the Borrowing Base and the other
information required therein as of the Borrower's close of business on the
Saturday of the preceding week, together with such other information with
respect to the Accounts and Inventory of the Borrowers as the Administrative
Agent may reasonably request.
(b) In the event of any dispute about the eligibility
of any asset for inclusion in the Borrowing Base or the valuation thereof, the
Administrative Agent's good faith judgment shall control.
(c) The Borrowing Base set forth in a Borrowing Base
Certificate shall be effective from and including the date such Borrowing Base
Certificate is duly received by the Administrative Agent to but not including
the date on which a subsequent Borrowing Base Certificate is duly received by
the Administrative Agent, unless the Administrative Agent disputes the
eligibility of any asset for inclusion in the Borrowing Base or the valuation
thereof by notice of such dispute to the Borrower, in which case the value of
such asset shall, at the discretion of the Borrower, either not be included in
the Borrowing Base or be included in the Borrowing Base with a value reasonably
acceptable to the Administrative Agent.
(d) Each Borrowing Base Certificate shall be
accompanied by backup schedules showing the derivation thereof and containing
such detail and such other and further information as the Administrative Agent
may reasonably request from time to time.
4.05. General Provisions. Notwithstanding anything to the
contrary in this Article IV, in no event shall any single element of value or
asset be counted twice in determining the Borrowing Base.
4.06. Joint and Several Liability. The obligations of the
Borrowers under the Loan Documents are joint and several, whether or not so
stated to be so in any particular provision. To the extent applicable, each
Borrower waives any defense to payment based upon suretyship defenses. The
liability of a Person that becomes a Borrower pursuant to Section 4.07 hereof
shall include all liabilities incurred or based upon events which occurred prior
to the date such Person becoming a Borrower. Each
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Borrower agrees that all information, certificates, reports, financial
statements, warranties and statements made by the Parent to the Administrative
Agent or any of the Lenders under or pursuant to the Loan Documents shall also
be deemed to be made by such Borrower.
4.07. Additional Parties. The Borrowers shall not make or own
any investment in any Person (other than (i) Permitted Investments, (ii)
investments in a Subsidiary if the assets of such Subsidiary before and after
giving effect to such investment are less than $5,000 and (iii) investments in a
Subsidiary formed solely for the purpose of consummating an acquisition of a
majority of the securities or substantially all of the assets of a Person or a
division of such Person provided, in the case of an investment under this clause
(iii), before and as a result of giving effect to such Investment no Potential
Default or Event of Default shall have occurred and be continuing and such
Subsidiary complies with the provisions of this Section 4.07 within two (2)
Business Days after such investment is made) unless (a) such Person shall become
or be a Subsidiary on or prior to the date of such investment, (b) such Person
shall become a Borrower hereunder by the execution and delivery to the
Administrative Agent of a Joinder Agreement in the form attached hereto as
Exhibit H, (c) as a result of giving effect to such Investment, no Potential
Default or Event of Default shall have occurred and be continuing and (d) such
Person shall have delivered to the Administrative Agent such certificates,
documents, instruments and legal opinions as may be requested by the
Administrative Agent.
ARTICLE V.
CONDITIONS OF EFFECTIVENESS, LETTER OF CREDIT
ISSUANCE AND LENDING
5.01. Conditions Precedent to Effectiveness. This Agreement
shall become effective as of the Business Day when each of the following
conditions precedent shall have been satisfied and the obligation of any Lender
to make the initial Loan hereunder or the obligation of CIT or any Lender to
assist the Borrowers in obtaining the issuance of the initial Letter of Credit
hereunder shall be subject to the satisfaction of the following conditions
precedent:
(a) Payment of Fees. etc. The Borrowers shall have paid
all fees, costs, expenses and taxes then payable by any Borrower including,
without limitation, those due and payable pursuant to Sections 2.08 and l0.06
hereof. The Borrowers shall have paid to counsel to the Administrative Agent all
fees and other client charges due to such counsel on the Closing Date.
(b) Representations and Warranties; No Event of
Default. The representations and warranties contained in Article VI of this
Agreement and in each other Loan Document and certificate or other writing
delivered to the Administrative Agent, the Lenders or the Letter of Credit
Issuer pursuant hereto
- 48 -
or thereto or prior to the Closing Date shall be correct in all material
respects on and as of the Closing Date as though made on and as of such date;
and no Potential Default or Event of Default shall have occurred and be
continuing on the Closing Date or would result from this Agreement becoming
effective in accordance with its terms.
(c) Legality. The making of the initial Loans and the
issuance of the initial Letter of Credit shall not contravene any law, rule or
regulation applicable to CIT, the Lenders or the Letter of Credit Issuer.
(d) Delivery of Documents. The Administrative Agent
shall have received on or before the Closing Date the following, each in form
and substance satisfactory to the Administrative Agent and, unless indicated
otherwise, dated the Closing Date (it being understood that, in the case of
limited liability companies, references below to charter, bylaws and directors
shall refer to the equivalent documents or persons, including limited liability
company agreements, certificates of formation and members):
(i) a Revolving Credit Note and Term Note payable
to the order of each Lender, duly executed by the Borrowers;
(ii) the Security Agreements, duly executed by the
Borrowers;
(iii) appropriate financing statements on Form UCC-
1, duly executed by the Borrowers to be duly filed in such
office or offices as may be necessary or, in the opinion of
the Administrative Agent, desirable to perfect the security
interests purported to be created by the Security Documents;
(iv) certified copies of requests for copies or
information on Form UCC-l1, listing all effective financing
statements which name as debtor any Borrower, tax liens and
judgment liens and which are filed in the offices referred to
in paragraph (iii) above, together with copies of such
financing statements, none of which, except as otherwise
agreed to in writing by the Administrative Agent, shall cover
any of the Collateral;
(v) a copy of the resolutions adopted by the Board
of Directors of each Borrower, certified as of the Closing
Date by authorized officers thereof, authorizing (A) in the
case of a Borrower, the borrowings hereunder and the
transactions contemplated by the Loan Documents to which such
Borrower is or will be a party, and (B) the execution,
delivery and performance by such Borrower of each Loan
Document and
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the execution and delivery of the other documents to be
delivered by such Borrower in connection therewith;
(vi) a certificate of an authorized officer of each
Borrower, certifying the names and true signatures of the
officers of such Borrower authorized to sign each Loan
Document to which such Borrower is or will be a party and
the other documents to be executed and delivered by such
Borrower in connection therewith, together with evidence of
the incumbency of such authorized officers;
(vii) a certificate, dated as of a date not more than
10 Business Days prior to the Closing Date, of the
appropriate official(s) of the state of incorporation and
each state of foreign qualification of each Borrower,
certifying as to the subsistence in good standing of, and the
payment of taxes by, such Borrower in such states and listing
all charter documents of such Borrower on file with such
official(s), together with confirmation by telephone or
telegram (where available) on the Closing Date from such
official(s) as to such matters;
(viii) a copy of the charter of each Borrower certified
as of a date not more than 10 days prior to the Closing Date
by the appropriate official(s) of the state of incorporation
of such Borrower and as of the Closing Date by an authorized
officer of such Borrower;
(ix) a copy of the by-laws of each Borrower, certified
as of the Closing Date by an authorized officer of the
Borrower;
(x) opinions of (i) Loeb & Loeb LLP, (ii) Cole, Schotz,
Meisel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ (as to matters of New Jersey law)
and (iii) Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇ (as to matters
of Tennessee law) in form and substance satisfactory to the
Administrative Agent as to such matters as the Administrative
Agent may request;
(xi) a certificate of the Designated Financial Officer
of each Borrower certifying as to the matters set forth in
subsection (b) of this Section 5.01;
(xii) a copy of the financial statements and
projections of the Parent and its Subsidiaries referred to in
Section 6.07 hereof, certified by a Designated Financial
Officer, it being understood that the actual results may
differ from the projections;
(xiii) a Borrowing Base Certificate current as of the
close of business on a date not earlier than
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May __, 1997, certified by the Designated Financial
Officer of each Borrower;
(xiv) a certificate of an authorized officer of the
Parent certifying the names and true signatures of those
officers of the Parent that are authorized to provide Notices
of Borrowing and all other notices under this Agreement and
the Loan Documents;
(xv) if requested by the Administrative Agent, a copy
of each Material Contract certified as a true and correct copy
thereof by the Designated Financial Officer of the appropriate
Borrower;
(xvi) a copy of financial statement projections for
the fiscal year ending March 31, 1997 and the fiscal year
ending March 31, 1998;
(xvii) copies, certified as true and correct by a
Designated Financial Officer of the Parent, of any collective
bargaining agreements or any other similar agreement or
arrangements covering the employees of the Parent or any of
its Subsidiaries (collectively, the "Collective Bargaining
Agreements")
(xviii) a certificate of insurance evidencing
insurance on the property of the Borrowers as is required by
Section 7.07 of this Agreement, naming the Administrative
Agent as additional insured and loss payee, using a long form
loss payee endorsement, for all insurance maintenance by the
Borrowers; and
(xix) (a) the Leasehold Mortgages, each in
recordable form and duly executed and acknowledged by the
applicable Borrower that is a party thereto, and, if required
by the Administrative Agent, title reports showing the absence
of any Liens on the interests of such Borrower in the
respective leaseholds subject to the Leasehold Mortgages, (b)
such memoranda of lease, in recordable form and duly
acknowledged by the parties thereto, and (c) such Landlord
Agreements, duly executed by the applicable landlord, in the
form included as part of Exhibit I-1 or 1-2 or in such other
form as may be reasonably acceptable to the Administrative
Agent; and
(xx) such other agreements, instruments, approvals,
opinions and other documents as the Administrative Agent may reasonably request.
(e) Proceedings: Receipt of Documents. All proceedings
in connection with the transactions contemplated by this Agreement and the
Related Documents and all documents incidental thereto, shall be satisfactory to
the Administrative Agent and its special counsel, and the Administrative Agent
and
- 51 -
such special counsel shall have received all such information and such
counterpart originals or certified or other copies of such documents, in form
and substance reasonably satisfactory to the Administrative Agent, as the
Administrative Agent or such special counsel may reasonably request.
(f) Cash Management System. The cash management system
of the Borrowers shall be satisfactory to the Administrative Agent. In addition,
the Administrative Agent shall have received (1) an original notice letter for
each Depository Bank listed on Schedule 6.27 which will be sent to each such
Depository Bank, (2) a Cash Concentration Account Agreement executed by the
Parent and the Cash Concentration Account Bank, (3) a Disbursement Account
Agreement executed by the Parent and the Disbursement Account Bank, and (4) a
GDI Vista Account Agreement executed by the Parent and the GDI Vista Account
Bank.
(g) Audit. The Administrative Agent shall have
completed and shall be satisfied (in its sole discretion) with the results of an
audit of the Accounts, Inventory, assets and liabilities and books and records
of the Borrowers and the Borrowers shall have paid all fees and expenses payable
in connection with such audit.
(h) Appraisal. The Administrative Agent shall have
received a report on the Inventory of the Borrowers, prepared by Bauxbaum
▇▇▇▇▇▇▇▇ & Associates, which report shall be in form and substance satisfactory
to the Administrative Agent.
(i) Lien Priority. The Lien in favor of the
Administrative Agent pursuant to the Related Documents shall be a valid and
perfected first priority Lien on the Collateral, which shall be subject to no
other Liens except for Permitted Liens.
(j) Compliance. The Administrative Agent shall have
received evidence reasonably satisfactory to the Administrative Agent of the
Borrowers' compliance with all Environmental Laws, ERISA, tax and labor matters.
(k) Legal Restraints/Litigation. On the Closing Date,
there shall be no (1) litigation, investigation or proceeding (judicial or
administrative) pending or, to the knowledge of the Borrowers or threatened,
against any Borrower or its Subsidiaries, or their assets, by any agency,
division or department of any county, city, state or federal government relating
to the use of proceeds of the Loans or the Loan Documents, (2) injunction, writ
or restraining order restraining or prohibiting the transactions contemplated
pursuant to the transactions contemplated by the Loan Documents, or (3) suit,
action, investigation or proceeding (judicial or administrative) pending or, to
the knowledge of any Borrower, threatened against any Borrower or its
Subsidiaries, or its assets, which could have a Material Adverse Effect.
- 52 -
(l) Absence of Material Adverse Effect. The Administrative
Agent shall be satisfied in its reasonable judgment that there is an absence of
any Material Adverse Effect.
(m) Waivers. The Administrative Agent shall have
received such Landlord Agreements and warehouse waivers as it deems advisable.
(n) Amendment of Convertible Subordinated Note and
Stock Purchase Agreement. The subordination provisions of the Convertible
Subordinated Note and Stock Purchase Agreement shall have been amended in a
manner satisfactory to the Administrative Agent.
(o) The Administrative Agent shall have received
executed consents from third parties to any licensing agreements to which any
of the Borrowers are parties as may, in the judgment of the Administrative
Agent, be necessary or desirable for the Administrative Agent to exercise its
rights and remedies under the Security Documents.
5.02. Conditions Precedent to Loans and Letters of Credit. In
addition to the requirements of Section 5.01 hereof, the obligation of each
Lender to make any Loan and the obligation of CIT or any Lender to assist a
Borrower in obtaining the issuance of any Letter of Credit is subject to the
fulfillment, in a manner satisfactory to the Agent, of each of the following
conditions precedent:
(a) Payment of Fees, etc. The Borrowers shall have
paid all fees, costs, expenses and taxes then payable by the Borrowers pursuant
to Sections 2.08 and 10.06 hereof.
(b) Representations and Warranties; No Event of
Default. The following statements shall be true, and the submission by the
Parent to the Administrative Agent of a Notice of Borrowing with respect to a
Loan and a Borrower's acceptance of the proceeds of such Loan, or the submission
by the Parent to the Administrative Agent and the Letter of Credit Issuer of an
L/C Notice with respect to a Letter of Credit and the issuance of such Letter of
Credit shall be deemed to be a representation and warranty by the Borrowers on
the date of such Loan and the date of the issuance of such Letter of Credit
that, (i) the representations and warranties contained in Article VI of this
Agreement and in each other Loan Document and certificate or other writing
delivered to the Administrative Agent, the Lenders and the Letter of Credit
Issuer pursuant hereto on or prior to the date of such Loan or Letter of Credit
are correct in all material respects on and as of such date as though made on
and as of such date (except for representations and warranties which relate to a
specific date) and; (ii) no potential Default or Event of Default has occurred
and is continuing or would result from the making of the Loan to be made on such
date or the issuance of the Letter of Credit to be issued on such date.
- 53 -
(c) Legality. The making of such Loan or the issuance of such
Letter of Credit shall not contravene any law, rule or regulation applicable to
CIT, the Lenders or the Letter of Credit Issuer.
(d) Borrowing Notice. The Administrative Agent shall have
received a Notice of Borrowing pursuant to Section 2.03 hereof no later than
12:00 noon (New York City time) three (3) Business Days prior to the date of the
proposed borrowing with respect to a Eurodollar Loan or on the date of a
proposed borrowing of a Prime Loan or an L/C Notice and a Letter of Credit
Application pursuant to Section 3.01 hereof not later than 12:00 noon (New York
City time) three Business Days prior to the proposed date of issuance of a
Letter of Credit.
(e) All Subsidiaries are Borrowers. Each Subsidiary of the
Parent or any Borrower is a Borrower pursuant to the terms of this Agreement,
except any such Subsidiary that does not have assets in excess of $5,000 and
except as otherwise permitted by Section 4.07.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
The Borrowers hereby jointly and severally represent and warrant to
the Administrative Agent and the Lenders as follows:
6.01. Organization, Good Standing. etc. Each Borrower and
each of its Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its organization, (ii) has
all requisite power and authority to conduct its business as now conducted and
as presently contemplated and (in the case of the Borrower) to make the
borrowings hereunder and to consummate the transactions contemplated hereby and
(iii) is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary,
except, with respect to this clause (iii), where all instances of such failure
to qualify taken together will not have a Material Adverse Effect.
6.02. Authorization, etc. The execution, delivery and
performance by each Borrower of each Loan Document to which it is a party, (i)
has been duly authorized by all necessary corporate action, (ii) does not and
will not contravene its charter or bylaws, operating agreement or other
constituent document, (iii) does not and will not contravene any other
applicable law or any contractual restriction binding on or otherwise affecting
it or any of its properties or result in a default under any agreement or
instrument to which such Borrower is a party or by which such Borrower or its
properties may be subject which contravention is reasonably likely to have a
Material Adverse Effect, (iv) does not and will not result in or
- 54 -
require the creation of any Lien (other than pursuant to any such Loan Document)
upon with respect to any of its properties which is reasonably likely to have a
Material Adverse Effect, and (v) does not and will not result in any suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to its operations or any of its properties
which is reasonably likely to have a Material Adverse Effect.
6.03. Governmental Approvals. No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Governmental Authority is or will
be necessary in connection with the execution and delivery by each Borrower of
the Loan Document to which it is a party, consummation of the transactions
therein contemplated, performance of or compliance with the terms and conditions
thereof or to ensure the legality, validity, enforceability and admissibility in
evidence thereto, except for the filings and recordings in respect of the Liens
created pursuant to the Security Documents.
6.04. Enforceability of Loan Documents. This Agreement is, and
each other Loan Document to which each Borrower is or will be a party, when
delivered hereunder, will be, a legal, valid and binding joint and several
obligation of the Borrowers, enforceable against the Borrowers in accordance
with its terms, except as may be limited by applicable bankruptcy; insolvency,
moratorium and other laws affecting the rights of creditors generally and
general principles of equity.
6.05. Subsidiaries. Schedule 6.05 hereto is a complete and
correct description of the name, jurisdiction of incorporation and ownership of
the outstanding capital stock of each Subsidiary of each Borrower in existence
on the Closing Date. All shares of such stock owned by each Borrower or one or
more of its Subsidiaries, as indicated in such Schedule, are owned free and
clear of all Liens, except for the Liens in favor of the Administrative Agent
that secure payment of the Obligations and other Liens set forth on Schedule
8.01. There are no options, warrants or other rights to acquire shares of
capital stock of any Subsidiary of the Borrower.
6.06. Litigation. Except as set forth on Schedule 6.06 hereto,
there is no pending or, to the knowledge of the Borrowers, threatened action,
suit or proceeding requesting damages in an amount in excess of $1,000,000
affecting the Borrowers or any of their respective Subsidiaries before any court
or other Governmental Authority or any arbitrator in existence. There is no
pending or, to the knowledge of the Borrowers, threatened action, suit or
proceeding affecting the Borrowers or any of their respective Subsidiaries
before any court or other Governmental Authority or any arbitrator which may
have a Material Adverse Effect.
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6.07. Financial Condition.
(a) Historical Statements. The Borrowers have heretofore
furnished to the Lenders a consolidated balance sheet of the Parent and its
consolidated subsidiaries as of December 31, 1996 and the nine month period then
ended, as certified by a Designated Financial Officer of the Parent. Schedule
6.07(a) sets forth a list of audited financial statements for various Borrowers
heretofore furnished by the Borrowers to the Lenders, as examined and reported
on by the independent public accountants specified on Schedule 6.07(a). Such
audited and unaudited financial statements (including the notes, if any,
thereto) present fairly, in all material respects, the financial condition of
the Parent and its consolidated subsidiaries or such Borrower, as the case may
be, as of the nine month period ended December 31, 1996 or such fiscal year, as
the case may be, and the results of their respective operations for the such
nine month period or fiscal year, as the case may be, all in conformity with
GAAP applied on a basis consistent with that of the preceding fiscal period
except as disclosed therein. Except as disclosed in the Schedules hereto, the
Borrowers do not have any material contingent liabilities (including liabilities
for taxes), unusual forward or long term commitments or unrealized or
anticipated losses from unfavorable commitments.
(b) The Parent has heretofore furnished to the
Lenders projections of the Borrowers for the five years ended March 31, 2002,
and such projections have been prepared in accordance with the standard set
forth in the second sentence of Section 6.17 hereof.
6.08. Compliance with Law, etc. Each of the Borrowers and
their respective Subsidiaries is not in violation of its charter or by-laws, any
law (including but not limited to violations pertaining to the conduct of its
business or the use, maintenance or operation of the real and personal
properties owned or possessed by it) or any term of any material agreement or
instrument binding on or otherwise affecting it or any of its properties, except
where all such violations taken together will not have a Material Adverse
Effect.
6.09. ERISA. (i) Each Plan is in substantial compliance with
the applicable provisions of ERISA and the IRC Code, (ii) no Termination Event
has occurred nor is reasonably expected to occur with respect to any Benefit
Plan, (iii) the most recent annual report (Form 5500 Series) with respect to
each Plan, including Schedule B (Actuarial Information) thereto, copies of which
have been filed with the Internal Revenue Service, is complete and correct in
all material respects and fairly presents the funding status of such Benefit
Plan, and since the date of such report there has been no material adverse
change in such funding status, (iv) no Benefit Plan had an accumulation or
waived funding deficiency or permitted decreases which would create a deficiency
in its funding standard account within the meaning of Section 412 of the IRC
Code at any time
- 56 -
during the previous 60 months, and (v) no Lien imposed under the IRC Code or
ERISA exists or is likely to arise on account of any Benefit Plan within the
meaning of Section 412 of the IRC Code. None of the Borrowers nor any of their
respective ERISA Affiliates has incurred any withdrawal liability under ERISA
with respect to any Multiemployer Plan, and none of the Borrowers is aware of
any facts indicating that any Borrower or any of its ERISA Affiliates may in the
future incur any such withdrawal liability. Except as required by Section 4980B
of the IRC Code or as disclosed on Schedule 6.09, the Borrower does not maintain
a welfare plan (as defined in Section 3(1) of ERISA) which provides benefits or
coverage after a participant's termination of employment. None of the Borrowers
nor any of their respective ERISA Affiliates have incurred any liability under
the Worker Adjustment and Retraining Notification Act. All Plans in existence on
the Closing Date are set forth on Schedule 6.09 hereto.
6.10. Taxes, etc. All tax returns required to be filed by each
Borrower and its Subsidiaries have been properly prepared, executed and filed.
All taxes, assessments, fees and other governmental charges upon each Borrower
and its Subsidiaries or upon any of their respective properties, income, sales
or franchises which are shown thereon as due and payable have been paid, unless
payment thereof is being contested in good faith by appropriate proceedings
which stay the imposition of any penalty, fine or Lien resulting from the non-
payment thereof and with respect to which, adequate reserves therefor are being
maintained. The reserves and provisions for taxes, if any, on the books of each
Borrower are adequate for all open years and for its current fiscal period.
Except as set forth on Schedule 6.10, each Borrower does not know of any
proposed additional assessment or basis for any material assessment for
additional taxes (whether or not reserved against).
6.11. Regulation G, T, U or X. Each Borrower is not and will not
be engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation G, T, U or X issued by
the Board), and no proceeds of any Loan will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
6.12. Nature of Business. Each Borrower is not engaged in any
business other than the direct mail catalog and internet marketing and sales
business or the leasing of commercial property in connection with such business.
6.13. Adverse Agreements. etc. None of the Borrowers or any of
their Subsidiaries is a party to any agreement or instrument, or subject to any
charter or other corporate restriction or any judgment, order, regulation,
ruling or other requirement of a court or other Governmental Authority or
regulatory body, which has a Material Adverse Effect, or, to the
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best knowledge of any Borrower, is reasonably likely to have a Material Adverse
Effect.
6.14. Holding Company and Investment Company Acts. Neither any
Borrower nor any of their respective Subsidiaries is (i) a "holding company" or
a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or (ii) an "investment company" or an "affiliated person" or
"promoter" of or "principal underwriter" of or for an "investment company", as
such terms are defined in the Investment Company Act of 1940, as amended.
6.15. Permits, etc. Each Borrower and its Subsidiaries have all
material permits, licenses, authorizations and approvals required for them
lawfully to own and operate their business.
6.16. Priority, Title. Except for Permitted Liens (including
the Liens set forth in Schedule 8.01), the Liens granted under the Security
Documents constitute and shall at all times constitute perfected, first priority
Liens on the Collateral which are subject to no other Liens other than Permitted
Liens, and each Borrower is the sole and absolute owner of the Collateral with
full right to pledge, sell, consign, transfer and create Liens therein. Except
as set forth on Schedule 8.01, no Person has any right of first refusal, option
or other preferential right to purchase any Collateral. The Borrowers will at
their expense forever warrant and, at the Administrative Agent's request, defend
the same from any and all claims and demands of any other Person other than the
Permitted Liens; and the Borrowers will not grant, create or permit to exist,
any Lien upon the Collateral, or any proceeds thereof, in favor or any other
Person other than Permitted Liens. The Borrowers and its respective Subsidiaries
have good and marketable title to all of their properties and assets, free and
clear of all Liens except Permitted Liens.
6.17. Full Disclosure. The representations or warranties made by
the Borrowers under this Agreement and the other Loan Documents, taken as a
whole, are not false or misleading in any material respect and the Loan
Documents, the schedules and exhibits thereto and the certificates, reports,
statements and other documents or information furnished to the Administrative
Agent or the Lenders in connection herewith or therewith or with the
consummation of the transactions contemplated hereby and thereby, taken as a
whole, do not contain any material misstatement of fact. To the extent any
Borrower furnishes any projections of the financial position and results of
operations of any Borrower for, or as at the end of, certain future periods,
such projections were believed at the time furnished to be reasonable, have been
or will have been prepared on a reasonable basis and in good faith by such
Borrower, and have been or will be based on assumptions believed by such
Borrower to be reasonable at the time made and upon the best
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information then available to the Borrowers, it being understood, however, that
actual results may differ from such projections.
6.18. Operating Lease Obligations. On the Closing Date, (i) each
Borrower does not have any material obligations as lessee for the payment of
rent for any real property other than the Operating Lease Obligations set forth
in Schedule 6.18 hereto and (ii) each Borrower does not have any personal
property leases providing for total rent payments in excess of $1,000,000 in the
aggregate under any single lease except as set forth on Schedule 6.18 hereto.
6.19. Environmental Matters. Except as disclosed in Schedule
6.19 hereto (i) none of the operations of any Borrower is the subject of any
federal, state or local investigation to determine whether any Remedial Action
is needed to address the presence, disposal, Release or threatened Release; (ii)
the operations of each Borrower and its Subsidiaries are in compliance with all
Environmental Laws; (iii) there has been no Release at any of the properties
owned or operated by any Borrower, its Subsidiaries or any predecessor in
interest or title, or at any disposal or treatment facility which received
Hazardous Materials generated by any Borrower, its Subsidiaries or any
predecessor in interest or title which is reasonably likely to result in
Environmental Liabilities and Costs of $250,000 or more; (iv) no Environmental
Actions have been asserted against any Borrower, its Subsidiaries or any
predecessor in interest or title nor does any Borrower or its Subsidiaries have
knowledge or notice of any threatened or pending Environmental Action against
any Borrower, its Subsidiaries or any predecessor in interest or title which, if
adversely determined, is reasonably likely to result in Environmental
Liabilities and Costs of $250,000 or more; (v) each Borrower and its
Subsidiaries have obtained all permits, approvals, authorizations and licenses
required by Environmental Laws necessary for their operations, and all such
permits, approvals, authorizations and licenses are in effect and each Borrower
and its Subsidiaries are in compliance with all terms and conditions of such
permits, approvals, authorizations and licenses; (vi) no Environmental Actions
have been asserted against any facilities that may have received Hazardous
Materials generated by any Borrower, its Subsidiaries or any predecessor in
interest or title which, if adversely determined, is reasonably likely to result
in Environmental Liabilities and Costs of $250,000 or more.
6.20. Schedules. All of the information which is required to be
scheduled to this Agreement is set forth on the Schedules attached hereto, is
correct and accurate as of the Closing Date and does not omit to state any
information material thereto.
6.21. Insurance. Each Borrower and its Subsidiaries keep their
properties adequately insured and maintain (i) insurance to such extent and
against such risks, including
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fire, as is customary with companies in the same or similar businesses, (ii)
workers compensation insurance in the amount required by applicable law, (iii)
public liability insurance in the amount customary with companies in the same or
similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, and (iv) such other insurance as may be
required by law or by the Loan Documents. Schedule 6.21 hereto sets forth a list
of all insurance maintained by each Borrower and its Subsidiaries on the Closing
Date.
6.22. Use of Proceeds. The proceeds of the Loans shall be used for
working capital and general corporate purposes. The Letters of Credit will be
used (A) to import Inventory in the ordinary course of the Borrower's business,
and (B) for general corporate purposes, including but not limited to workers'
compensation insurance and general liability insurance programs.
6.23. Security Documents. The Security Documents create and grant
to the Administrative Agent, for the benefit of the Lenders, a legal, valid and
perfected first priority Lien on the Collateral subject to no other Liens except
for Permitted Liens.
6.24. Financial Accounting Practices, etc.
(a) Each Borrower and its Subsidiaries make and keep books,
records and accounts which, in reasonable detail, accurately and fairly reflect
their respective transactions and dispositions of their respective assets and
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary (A) to permit preparation of financial statements in conformity
with GAAP except as previously disclosed to the Administrative Agent and (B) to
maintain accountability for assets, and (iii) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(b) Each Borrower and its Subsidiaries maintain a system of
internal procedures and controls sufficient to provide reasonable assurance that
the information required to be set forth in each Borrowing Base Certificate
(including, without limitation, information relating to the identification of
assets which are Inventory and the valuation thereof) is accurate.
6.25. No Material Adverse Effect. Since December 31, 1996, there
has not occurred any Material Adverse Effect or any event which could have a
Material Adverse Effect.
6.26. Real Property; Leases.
(a) Schedule 6.26 hereto sets forth a complete and accurate
description and list as of the Closing Date of the
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location, by state and street address, of all real property owned and leased by
each Borrower, together with, in the case of real property that is owned, a
statement as to whether such real property is the subject of a contract of sale
(and, if so, a statement as to the status of such sale).
(b) As of the Closing Date, each Borrower has valid leasehold
interests in the Leases described in Schedule 6.26 hereto. Schedule 6.26 hereto
sets forth with respect to each Lease, the commencement date, termination date,
renewal options (if any) and annual base rents. Each such Lease is valid and
enforceable in accordance with its terms in all material respects and is in full
force and effect. Neither any Borrower nor, to the knowledge of the Borrowers,
any other party to any Lease is in default of its obligations thereunder and the
Borrowers have not at any time delivered or received any notice of default which
remains uncured under any such Lease and, as of the Closing Date, no event has
occurred which, with the giving of notice or the passage of time, or both, would
constitute a default under any such Lease, except for defaults the consequence
of which in the aggregate would have no Material Adverse Effect.
(c) All permits required to have been issued to the Borrowers
with respect to the real property owned or leased by the Borrowers to enable
such property to be lawfully occupied and used for all of the purposes for which
it is currently occupied and used (separate and apart from any other
properties), have been lawfully issued and are in full force and effect, other
than such permits which if not obtained, would not have a Material Adverse
Effect, and all such real property complies in all material respects with all
applicable legal and insurance requirements.
(d) The Borrowers have not received any notice, nor does any
Borrower have any knowledge, of any pending, threatened or contemplated
condemnation proceeding affecting any real property owned or leased by any
Borrower or any Subsidiary.
(e) No portion of any real property owned or leased by any
Borrower or any of its Subsidiaries has suffered any damage by fire or other
casualty loss which has not heretofore been completely repaired and restored to
its condition existing prior to such casualty or which if not repaired or
restored is not reasonably likely to result in a Material Adverse Effect.
6.27. Location of Bank Accounts. Schedule 6.27 hereto sets
forth a complete and accurate list as of the Closing Date of all deposit and
other accounts, including the Cash Concentration Account, the Disbursement
Account, the GDI Vista Account and all Depository Accounts, maintained by each
Borrower and its Subsidiaries together with a description thereof (i.e. the bank
at which such deposit or other account is maintained and the account number and
the purpose thereof).
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6.28. No Event of Default. No event has occurred and is continuing
and no condition exists which constitutes an Event of Default or Potential
Default.
6.29. Capitalized Leases. As of the Closing Date, Capitalized
Lease Obligations of each Borrower and its Subsidiaries do not exceed $500,000
in the aggregate.
6.30. Tradenames. Schedule 6.30 hereto sets forth a complete and
accurate list as of the Closing Date of all tradenames used by the Borrowers.
6.31. Solvency. After giving effect to the transactions
contemplated by this Agreement and the Related Documents and each Credit
Extension, the Borrowers taken as a whole are Solvent.
6.32. Inventory. There is no location at which any Borrower
has any Inventory (except for Inventory in transit) other than (i) those
locations listed on Schedule 1.01(A) hereto and (ii) any other locations
approved in writing by the Administrative Agent pursuant to the definition of
"Eligible Inventory". Schedule 1.01(A) hereto contains a true, correct and
complete list, as of the Closing Date, of the legal names and addresses of each
store and warehouse at which Inventory of all of the Borrowers is stored. None
of the receipts received by any of the Borrowers from any warehouse states that
the goods covered thereby are to be delivered to bearer or to the order of a
named Person or to a named Person and such named Person's assigns.
6.33. Intellectual Property. The Borrowers own or license or
otherwise have the right to use all material licenses, permits, patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, copyright applications, franchises, authorizations and other
intellectual property rights that are necessary for the operations of their
businesses and, to the knowledge of the Borrowers, without infringement upon or
conflict with the rights of any other Person with respect thereto. To the best
knowledge of the Borrowers, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by any Borrower infringes upon or conflicts with
any rights owned by any other Person, and no claim or litigation regarding any
of the foregoing is pending or threatened, except for such infringements and
conflicts which could not have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of the Borrowers, no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or proposed, which, individually or in the aggregate, could have a
Material Adverse Effect.
6.34. Material Contracts. Set forth in Schedule 6.34 hereto is a
complete and accurate list as of the Closing Date of all Material Contracts of
each Borrower, showing the parties and
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subject matter thereof and amendments and modifications thereto. Each such
Material Contract (i) is in full force and effect and is binding upon and
enforceable against such Borrower and, to such Borrower's knowledge, all other
parties thereto in accordance with its terms, (ii) has not been otherwise
amended or modified in any material respect, and (iii) there exists no default
under any Material Contract by such Borrower or, to such Borrower's knowledge,
any other party thereto which has not been cured or waived.
6.35. Labor Relations; Collective Bargaining Agreements.
(a) Set forth on Schedule 6.35 hereto is a list (including
dates of termination) of all Collective Bargaining Agreements as of the Closing
Date between or applicable to each of the Borrowers and any union, labor
organization or over bargaining agent in respect of the employees of each of the
Borrowers.
(b) None of the Borrowers is engaged in any unfair labor
practice that is reasonably likely to have a Material Adverse Effect. There is
(i) no significant unfair labor practice complaint pending against any Borrower
or, to the best knowledge of each Borrower, threatened against any of them,
before the National Labor Relations Board, and no significant grievance or
significant arbitration proceeding arising out of or under any Collective
Bargaining Agreement is now pending against any Borrower, or to the knowledge of
any Borrower, threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage is pending against any Borrower or to the
knowledge of the Borrowers, threatened against any Borrower, and (iii) to the
knowledge of the Borrowers, no union representation question existing with
respect to the employees of any Borrower, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as is not reasonably likely to have a Material Adverse Effect.
6.36. Accounts. The chief executive office of each Borrower
and the location of its books and records are set forth on Schedule 6.36 hereto.
All agreements related to credit card receivables, including private label
credit cards as of the Closing Date, are listed on such Schedule 6.36.
ARTICLE VII.
AFFIRMATIVE COVENANTS
So long as any principal of or interest on the Loans or the
Reimbursement Obligations or any other Obligations (whether or not due) shall
remain unpaid or the Lenders shall have any Revolving Credit Commitment
hereunder, each Borrower will, unless the Majority Lenders shall otherwise
consent in writing:
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7.01. Reporting Requirements. Furnish to the Lenders:
(a) As soon as practicable and in any event within ninety
(90) days after the close of each fiscal year of the Parent, a consolidated and
consolidating statement of operations and cash flows of the Parent and its
Subsidiaries (including all Borrowers) for such fiscal year and a balance sheet
of the Parent and its consolidated Subsidiaries (including the Borrowers) as of
the close of such fiscal year, and notes to each, all in reasonable detail,
setting forth in comparative form the corresponding figures for the preceding
fiscal year, which consolidated statement and balance sheet shall be audited and
accompanied by an opinion of Ernst & Young LLP or other independent certified
public accountants of recognized national standing selected by the Parent and
reasonably satisfactory to the Administrative Agent. The opinion of such
accountants (the "Accountant's Opinion") shall be without a "going concern"
qualification or like qualification or exception or qualification arising out of
the scope of the audit with respect to such consolidated statement and balance
sheet being prepared in compliance with GAAP and shall in any event contain a
written statement of such accountants substantially to the effect that (i) such
accountants examined such statement and balance sheet in accordance with
generally accepted auditing standards and accordingly made such tests of
accounting records and such other auditing procedures as such accountants
considered necessary in the circumstances and (ii) in the opinion of such
accountants such statement and balance sheet present fairly, in all material
respects, the financial position of the Parent and its consolidated Subsidiaries
as of the end of such fiscal year and the results of its operations and the
changes in its financial position for such fiscal year, in conformity with GAAP
(except for changes in application in which such accountants concur). A copy of
the Accountant's Opinion shall be delivered to the Administrative Agent and each
Lender and signed by such independent public accountants. Each set of the
consolidated statement and balance sheets delivered pursuant to this Section
7.01(a) shall be accompanied by (1) a certificate or report dated the date of
such statement and balance sheet by the accountants who certified or reported on
such statement and balance sheet stating in substance that they have reviewed
this Agreement and that in making the examination necessary for their
certification of such statement and balance sheet they did not become aware of
any Event of Default or Potential Default, or if they did become so aware, such
certificate or report shall state the nature and period of existence thereof, if
determinable and (2) a certificate dated the date of the delivery of such
statements and balance sheet by the Designated Financial Officer of the Parent
stating in substance that he has reviewed this Agreement and that in making the
examination necessary for this certification, he did not become aware of any
Event of Default or Potential Default, or if he did become so aware, such
certificate shall state the nature and period of existence thereof if
determinable in form and substance satisfactory to the Administrative Agent.
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(b) As soon as practicable and in any event within forty-five
(45) days after the close of each of the first three fiscal quarters of each of
the Parent's fiscal years (except sixty days for the fiscal quarters ended March
31 and June 30, 1997), unaudited consolidated statements of operations and cash
flows of the Parent and its consolidated Subsidiaries (including the Borrowers)
as of the close of such fiscal quarter and a balance sheet of the Parent and its
consolidated Subsidiaries as of the close of such fiscal quarter, and notes to
each, all in reasonable detail setting forth in comparative form the
corresponding figures for the corresponding fiscal quarter for the preceding
fiscal year, which statements and balance sheet shall be certified by a
Designated Financial Officer of the Parent as presenting fairly, in all material
respects, the financial position of the Parent and its consolidated Subsidiaries
(including the Borrowers) as of the end of such quarter and the results of its
operations and the changes in its financial position for such quarter, in
conformity with GAAP applied in a manner consistent except as otherwise
disclosed therein with that of the most recent audited financial statements
furnished to the Lenders, subject to year-end adjustments. Each set of
statements and balance sheets delivered pursuant to this Section 7.01(b) shall
be accompanied by a certificate of a Designated Financial Officer of the Parent
dated the date of delivery of such statements and balance sheet stating that he
has reviewed this Agreement and that to the best of his knowledge he did not
become aware of any Event of Default or Potential Default, or if he did become
so aware, such certificate shall state the nature and period of existence
thereof, if determinable, in form and substance satisfactory to the
Administrative Agent.
(c) As soon as practicable and in any event within thirty
(30) days after the end of each fiscal month (commencing with the fiscal month
ended October 31, 1997) of the Parent (other than the last month of each of the
first three fiscal quarters of the Parent) unaudited statements of operations
and cash flows for the Parent and its consolidated Subsidiaries (including the
Borrowers) for such fiscal month and for the period from the beginning of such
fiscal year to the end of such fiscal month, and an unaudited balance sheet of
the Parent and its consolidated Subsidiaries (including the Borrowers) as of the
end of such fiscal month, all in reasonable detail, setting forth in comparative
form the corresponding figures for the same periods during the preceding fiscal
year, and accompanied by (1) a certificate of a Designated Financial Officer of
the Parent stating that such statements present fairly, in all material
respects, the financial position of the Parent and its consolidated Subsidiaries
(including the Borrowers) as of the end of such fiscal month and the results of
its operations and cash flows for such fiscal month, applied in a manner
consistent with prior practice, and, subject to year-end adjustments, and (2) a
Certificate of the Designated Financial Officer of the Parent stating that he
has reviewed this Agreement and that to the best of his knowledge he did not
become aware of any Event of Default or Potential Default, or if he did become
so aware, such
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certificate shall state the nature and period of existence thereof, if
determinable.
(d) As soon as practicable and in any event within ten (10)
Business Days after the end of each fiscal month (including the fiscal month in
which this Agreement is executed), the Parent shall furnish to the Lenders a
monthly inventory report and accounts payable analysis in form and substance
reasonably satisfactory to the Administrative Agent and certified by a
Designated Financial Officer of the Parent, which shall be accompanied by a
reconciliation from the monthly inventory report as of the Parent's close of
business on the last day of the preceding month.
(e) As soon as practicable and in any event within ten (10)
Business Days after the end of each week (including the week in which this
Agreement is executed), the Parent shall furnish to the Lenders weekly sales
reports, weekly inventory reports and a Borrowing Base Certificate, each as of
the Parent's close of business on the Saturday of the preceding week and in form
and substance reasonably satisfactory to the Administrative Agent and certified
by a Designated Financial Officer of the Parent.
(f) As soon as possible, and in any event within five (5)
days after the occurrence of a Potential Default or an Event of Default or a
Material Adverse Effect, the written statement of the Designated Financial
Officer of the Parent, setting forth the details of the Potential Default or
Event of Default, Material Adverse Effect and the action which the Borrower
proposes to take with respect thereto.
(g) Promptly upon their becoming available, a copy of (1) all
reports financial statements or other information delivered by any to its
shareholders or the Securities Exchange Commission, (2) all reports, proxy
statements, financial statements and other information generally distributed by
the Borrower to its creditors or the financial community in general, and (3) any
accountant's management letters and any audit or other reports submitted to any
Borrower by independent accountants in connection with any annual, interim or
special audit of any Borrower.
(h) (1) As soon as possible and in any event (A) within thirty
(30) days after any Borrower or any of its ERISA Affiliates knows or has reason
to know that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Benefit Plan has occurred, and (B) within
20 days after any Borrower or any of its ERISA Affiliates knows or has reason to
know that any other Termination Event with respect to any Benefit Plan has
occurred, or that any Borrower or any of its ERISA Affiliates has failed to make
a required installment to a Benefit Plan within the meaning of Section 412(m) of
the IRC Code, a statement of the Designated Financial Officer of the Parent
describing such Termination Event
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and the action, if any, which such Borrower or such ERISA Affiliate proposes to
take with respect thereto, (2) promptly and in any event within three (3)
Business Days after receipt thereof by any Borrower or any of its ERISA
Affiliates from the PBGC, copies of each notice received by any Borrower or any
of its ERISA Affiliates of the PBGC's intention to terminate any Plan or to have
a trustee appointed to administer any Plan, (3) promptly and in any event within
30 days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
with respect to each Benefit Plan and Multiemployer Plan, (4) promptly and in
any event within five Business Days after receipt thereof by the Borrower or any
of its ERISA Affiliates from a sponsor of a Multiemployer Plan or from the PBGC,
a copy of each notice received by any Borrower or any of its ERISA Affiliates
concerning the imposition or amount of withdrawal liability under Section 4202
of ERISA or indicating that such Multiemployer Plan may enter reorganization
status under Section 4241 of ERISA, (5) promptly, and in any event within ten
(10) days after the Borrower or any of their respective ERISA affiliates is
required to send a notice of a plant closing or mass layoff (as defined in the
Worker Adjustment and Retraining Notification Act), and (6) promptly and in any
event within 30 days after any Borrower or any ERISA Affiliate takes action to
establish Benefit Plan or contribute to a Multiemployer Plan, a statement of the
Designated Financial Officer of the Parent describing such Benefit Plan or
Multiemployer Plan.
(i) Promptly after, and in any event within ten (10) days
after, an officer of any Borrower learns of any of the following, notice
thereof:
(i) the receipt by any Borrower or any of its
Subsidiaries of notification that any real or personal property of
such Borrower or such Subsidiary is subject to any Environmental
Lien;
(ii) notice of violation of any Environmental Law which
could reasonably be expected to subject the Borrower or any of its
Subsidiaries to Environmental Liabilities and Costs of $250,000 or
more; or
(iii) notice of the commencement of any Environmental
Action by any Borrower or any of its Subsidiaries of any
Environmental Law, which if adversely determined, could reasonably be
expected to subject any Borrower or any of its Subsidiaries to
Environmental Liabilities and Costs of $250,000 or more.
(j) Promptly after the commencement thereof but in any event
not later than ten (10) days after service of process with respect thereto on,
or the obtaining of knowledge thereof by any Borrower or any of its
Subsidiaries, notice of each action, suit or proceeding involving such Borrower
or any of
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its Subsidiaries before any court or other Governmental Authority or other
regulatory body or any arbitrator which could have a Material Adverse Effect.
(k) Promptly after submission to any Governmental Authority all
documents and information furnished to such Governmental Authority in connection
with any investigation of any Borrower or any of its Subsidiaries other than
routine inquiries by such Governmental Authority.
(1) As soon as available, and in any event within ten (10) Business
Days after (1) receipt or delivery thereof, copies of any material notices that
the Borrower receives or delivers in connection with any Material Contract and,
(2) any Borrower enters into a Material Contract (including, without limitation
any agreements related to credit card receivables), a copy of such Material
Contract.
(m) Within ten (10) Business Days after the end of each month, a
receivables aging report.
(n) Promptly upon request, such other information concerning the
condition or operations, financial or otherwise, of each Borrower or any of
their Subsidiaries as the Administrative Agent or any Lender from time to time
may reasonably request.
(o) By September 30, 1997, monthly financial projections for the six
months ending March 31, 1998 and the twelve months ending March 31, 1999.
7.02. Compliance with Laws, etc. Comply, and cause each of its
Subsidiaries to comply with all applicable laws, rules, regulations and orders
(including, without limitation, Environmental Laws and compliance in respect of
their businesses or use, maintenance or operation of real and personal
properties owned or leased by them), such compliance to include, without
limitation, (i) paying before the same become delinquent all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits
or upon any of its properties, and (ii) paying all lawful claims which if unpaid
might become a Lien or charge upon any of its properties, except to the extent
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof, except, in the case of all such non-compliance (other than non-
compliance in the payment of federal, state and local taxes which, if unpaid,
could result in a Lien on any Collateral or any other non-compliance that may
result in a Lien on Collateral), where all such instances of non-compliance
taken together will not have Material Adverse Effect.
7.03. Preservation of Existence, etc. Except as expressly permitted by
Section 8.04, maintain and preserve its
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existence, rights and privileges, and become or remain duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by them or in which the transaction of their business makes such
qualification necessary, except where all instances of such failure to qualify
or remain in good standing or such failure to maintain rights and privileges
taken together will not have a Material Adverse Effect.
7.04. Keeping of Records and Books of Account. Keep, and
cause each of its Subsidiaries to keep, adequate records and books of account,
with complete entries made in accordance with generally accepted accounting
principles consistently applied.
7.05. Inspection Rights. Permit, and cause each of its
Subsidiaries to permit, the Administrative Agent or any Lender, or any agents or
representatives thereof or such professionals or other Persons as the
Administrative Agent may designate (i) to examine and inspect the books and
records of the Borrowers and take copies and extracts therefrom at reasonable
times and during normal business hours, (ii) to verify materials, leases, notes,
receivables, deposit accounts and other assets of the Borrowers from time to
time, and (iii) to conduct, at the expense of the Borrowers, Inventory
appraisals and/or valuations at the distribution center(s) and warehouses of the
Borrowers provided that, in the absence of a continuing Event of Default, all
such action described in clauses (i) through (iii) above shall be conducted at
reasonable times, during normal business hours and upon prior notice.
7.06. Maintenance of Properties, etc. Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of their
properties (including all real properties leased or owned by them) which are
necessary or useful in the proper conduct of their business in good working
order and condition, ordinary wear and tear excepted, and comply, and cause each
of its Subsidiaries to comply, at all times with the provisions of all Leases to
which each of them is a party as lessee or under which each of them occupies
property, so as to prevent any loss or forfeiture thereof or thereunder.
7.07. Maintenance of Insurance. Maintain, and cause each of
its Subsidiaries to maintain, with responsible and reputable insurance companies
or associations, insurance (including, without limitation, comprehensive general
liability, hazard and business interruption insurance) with respect to their
properties (including all real properties leased or owned by them) and business,
in such amounts and covering such risks, as is required by any Governmental
Authority or other regulatory body having jurisdiction with respect thereto or
as is carried generally in accordance with sound business practice by companies
in similar businesses similarly situated and in any event in amount, adequacy
and scope reasonably satisfactory to the Administrative Agent. All policies
covering the Collateral are to be made payable to the Administrative Agent, in
case of loss
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under a standard non-contributory "lender" or "secured party" clause and are to
contain such other provisions as the Administrative Agent may require to fully
protect the Administrative Agent's interest in the Collateral and to any
payments to be made under such policies. All original policies or true copies
thereof are to be delivered to the Administrative Agent, premium prepaid, with
the loss payable and additional insured endorsement in the Administrative
Agent's favor, and shall provide for not less than thirty (30) days prior
written notice to the Administrative Agent of the exercise of any right of
cancellation; provided, however, that original policies may be delivered not
later than thirty (30) days from the Closing Date. At the Parent's request, or
if any Borrower fails to maintain such insurance, the Administrative Agent may
arrange for such insurance, but at the Borrowers' expense and without any
responsibility on the Administrative Agent's part for: obtaining the insurance,
the solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims. Upon the occurrence of an Event of Default, the
Administrative Agent shall have the sole right, in the name of the
Administrative Agent and the Borrowers, to file claims under any insurance
policies, to receive, receipt and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
7.08. Environmental. Comply, and cause each of its
Subsidiaries to comply in all material respects, with the requirements of all
Environmental Laws and provide to the Administrative Agent all documentation in
connection with such compliance that the Administrative Agent may reasonably
request; not cause or permit the Collateral or any property or facility owned,
operated or occupied by any Borrower or its Subsidiaries to be used for any
activities involving, directly or indirectly, the use, generation, treatment,
storage, release or disposal of any Hazardous Materials except in compliance
with applicable laws; and immediately notify the Administrative Agent of any
Release of Hazardous Materials in excess of any reportable quantity and take any
Remedial Actions required to ▇▇▇▇▇ such Release. On behalf of the Borrower and
its Subsidiaries, each Borrower hereby agrees to defend, indemnify, and hold
harmless the Administrative Agent, the Lenders and the Letter of Credit Issuer,
their employees, agents, officers, and directors, from and against any claims,
demands, penalties, fines, liabilities (including strict liability),
settlements, damages, costs, or expenses (including, without limitation,
attorney and consultant fees, investigation and laboratory fees, court costs,
and litigation expenses) and Environmental Liabilities and Costs arising out of
(i) any Release, or threatened Release on any property presently or formerly
owned or occupied by any Borrower or its Subsidiaries (or their predecessors in
interest or title) or at any disposal facility which received Hazardous
Materials generated by any Borrower or its Subsidiaries; (ii) any violation of
Environmental Laws (iii) any Environmental Actions; (iv) any personal injury
(including wrongful death) or property damage
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(real or personal) arising out of or related to exposure to Hazardous Materials
used, handled, generated transported or deposited by any Borrower or its
Subsidiaries (or any predecessor in interest or title); and/or (v) the breach of
any representation or warranty made by any Borrower in Section 6.19 hereof or
the breach of any covenant made by any Borrower in this Section 7.08. This
environmental indemnity shall survive the repayment of the Obligations and
discharge or release of any security interest granted under the Loan Documents.
7.09. Further Assurances. Do, execute, acknowledge and
deliver, and cause its Subsidiaries to do, execute, acknowledge and deliver, at
the sole cost and expense of the Borrower all such further acts, deeds,
conveyances, mortgages, assignments estoppel certificates, financing statements,
notices of assignment, transfers and assurances as the Administrative Agent may
require from time to time in order (a) to carry out more effectively the
purposes of this Agreement or any other Related Document, (b) to subject to
valid and perfected first priority Liens all of the Collateral, (c) to perfect
and maintain the validity, effectiveness and priority of any of the Related
Documents and the Lien intended to be created thereby, and (d) to better assure,
convey, grant, assign, transfer and confirm unto the Administrative Agent, the
Lenders and the Letter of Credit Issuer the rights now or hereafter intended to
be granted to the Administrative Agent, the Lenders and the Letter of Credit
Issuer under this Agreement any Loan Document or any other instrument under
which any Borrower or its Subsidiary may be or may hereafter become bound to
convey, mortgage or assign to the Administrative Agent, the Lenders and the
Letter of Credit Issuer.
7.10. Intentionally Omitted.
7.11. Change in Collateral: Collateral Records. Give the
Administrative Agent not less than thirty (30) days' prior written notice of any
change in the location of any Collateral, other than to locations, that as of
the date hereof, are known to the Administrative Agent and at which the
Administrative Agent has filed financing statements and otherwise fully
perfected its Liens thereon. Each Borrower shall advise the Administrative Agent
promptly of any other change in the location of any Collateral. Each Borrower
shall also advise the Administrative Agent promptly, in sufficient detail, of
any material adverse change relating to the type quantity or quality of the
Collateral or the security interests granted therein. Each Borrower agrees to
execute and deliver to the Administrative Agent for the benefit of the
Administrative Agent from time to time, solely for the Administrative Agent's
convenience in maintaining a record of the Collateral, such written statements
and schedules as the Administrative Agent may reasonably require, designating,
identifying or describing the Collateral. A Borrower's failure, however, to
promptly give the Administrative Agent such statements or schedules shall not
affect, diminish, modify or
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otherwise Limit the Administrative Agent's security interest in the Collateral.
7.12. Financial Accounting Practices, etc.
(a) Make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect the transactions and maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are recorded as necessary
(A) to permit preparation of financial statements in conformity with GAAP and
(B) to maintain accountability for assets, and (iii) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(b) Maintain a system of internal procedures and
controls sufficient to provide reasonable assurance that the information
required to be set forth in each Borrowing Base Certificate (including, without
limitation, information relating to the identification of assets which are
Eligible Inventory as provided herein and the valuation thereof) is accurate in
all material respects.
7.13. Cash Management System.
(a) (i) Cause all cash and all proceeds from Accounts
and from the sale of Inventory and Equipment and any insurance proceeds paid
with respect to Inventory and Equipment to be deposited on a daily basis (other
than a non-business day) into the Depository Accounts in the ordinary course of
business of the Borrower, (ii) cause all remittances on credit card sales to be
transferred on a daily basis other than a non-business day into the Cash
Concentration Account consistent with the terms of the relevant credit card
servicer agreement, (iii) cause all good funds in the Depository Accounts to be
transferred on a daily basis other than a non-business day (or weekly in the
case of (A) (x) the Depository Account at ▇▇▇▇▇ Fargo (account number 0099-
022246), (y) The Chase Manhattan Bank (account number 785100997) and (z) PNC
Bank (account number 8611717138) and (B) any other Depository Account with the
consent of the Administrative Agent, which consent shall not be unreasonably
withheld taking into account the amount of funds in such Account), into the Cash
Concentration Account in the ordinary course of business of such Borrower,
provided that such Borrower shall in good faith estimate the good funds that are
available in each Depository Account after taking into consideration bank fees,
deposited checks returned because of insufficient funds, change orders and the
payment of deposited checks, (iv) cause all cash deposited in the Cash
Concentration Account, the Disbursement Account and the GDI Vista Account to be
sent, from and after the date the Administrative Agent shall so request (such
request to be made only after an Event of Default shall have occurred or at any
time the Availability shall be less than $2,500,000), by wire transfer
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or such other method of transfer that is acceptable to the Administrative Agent
to the Agent Account or to such other account as the Administrative Agent may
otherwise direct, (v) instruct the Administrative Agent to cause all funds
transferred to the Agent Account to be credited to the Loan Account and applied
to reduce the Obligations outstanding from time to time and (vi) take all such
actions as the Administrative Agent deems necessary or advisable to send all
cash, all proceeds from the sale of or insurance proceeds with respect to
Inventory or Equipment, all remittances or other proceeds of Collateral to the
Cash Concentration Account to be applied according to this Section 7.13. If the
Administrative Agent has instructed the Cash Concentration Account Bank in
writing to transfer the cash from the Cash Concentration Account to the Agent
Account, which instruction shall only be made after an Event of Default shall
have occurred or at any time the Availability shall be less than $2,500,000, the
Parent shall not make any withdrawals from the Cash Concentration Account, the
Disbursement Account or the GDI Vista Account. If the Administrative Agent has
not instructed the Cash Concentration Account Bank in writing to transfer the
cash from the Cash Concentration Account to the Agent Account, the Parent may
transfer funds from the Cash Concentration Account, the Disbursement Account or
the GDI Vista Account solely to pay expenses of the Borrowers which are due or
will become due within one month, provided, however, that the Parent may
transfer any sum of funds between any of the Cash Concentration Account, the
Disbursement Account and the GDI Vista Account.
(b) Upon the opening of any new Depository Account,
notify the Administrative Agent in writing of the creation of such new
Depository Account and shall execute and deliver to the Administrative Agent a
Depository Account Agreement relating to such Depository Account. If a Borrower
is unable to obtain a Depository Account Agreement from any Depository Account
Bank at such time, such Borrower shall promptly thereafter terminate such
account and not deposit any funds therein.
7.14. Intentionally Omitted.
7.15. Additional Subsidiaries. If a Person shall become a
Subsidiary of the Borrower after the Closing Date, cause such Person to comply
with the provisions of Section 4.07 hereof.
7.16. ERISA. Upon the Administrative Agent's request, deliver
to the Administrative Agent a copy of each Plan and for each such Plan (a) that
is a "single employer plan" (as defined in Section 4001 (a) (15) of ERISA), the
most recently completed actuarial valuation prepared therefore by such Plan's
regular enrolled actuary and the Schedule B, "Actuarial Information" to the IRS
Form 5500 (Annual Report) most recently filed with the Internal Revenue Service
and (b) that is a "multiemployer plan" (as defined in Section 4001 (a) (3) of
ERISA), each of the documents referred to in clause (a) either in the
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possession of such Borrower or reasonably available thereto from the sponsor or
trustees of such Plan.
7.17. Maintenance of Equipment. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its Equipment in
as good and substantial repair and condition as the same is now or at the time
the security interest granted in the Security Agreement shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where necessary. Each Borrower also agrees to safeguard, protect and
hold all Equipment for the Administrative Agent's account, for the benefit of
the Lenders, and make no disposition thereof except as permitted by Section
8.04. The proceeds of any such sales permitted hereunder shall be deposited to a
Depository Account. Upon the sale, exchange, or other disposition of the
Equipment, as herein provided, the security interest provided for in the
Security Agreement shall, without break in continuity and without further
formality or act, continue in, and attach to, all proceeds, including any
instruments for the payment of money, accounts receivable, contract rights,
documents of title, shipping documents, chattel paper and all other cash and
non-cash proceeds of such sales, exchange or disposition. As to any such sale,
exchange or other disposition, the Lenders shall have all of the rights of an
unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Notwithstanding anything hereinabove contained to the contrary, the
Borrower may sell, exchange or otherwise dispose of Equipment to the extent
permitted by Section 8.04 herein.
ARTICLE VIII.
NEGATIVE COVENANTS
So long as any principal of or interest on the Loans or the
Reimbursement Obligations or any Obligations (whether or not due) shall remain
unpaid or any Lender shall have any Revolving Credit Commitment hereunder, each
Borrower will not, without the prior written consent of the Majority Lenders:
8.01. Liens, etc. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any Lien upon or with respect to
any of their properties, rights or other assets, whether now owned or hereafter
acquired, or assign or otherwise transfer, or permit any of its Subsidiaries to
assign or otherwise transfer, any right to receive income, other than the
following ("Permitted Liens"):
(a) Liens created pursuant to the Loan Documents;
(b) Liens existing on the date hereof, as set forth in
Schedule 8.01 hereto;
(c) Liens for taxes, assessments or governmental
charges or levies to the extent that the payment thereof shall not be required
by Section 7.02 hereof;
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(d) Liens created by operation of law other than Environmental Liens, such
as materialmen's liens, mechanics' liens and other similar liens, arising in the
ordinary course of business which secure amounts not overdue for a period of
more than thirty (30) days or which are being contested in good faith by
appropriate proceedings;
(e) deposits, pledges or Liens (other than Liens arising under ERISA)
securing (1) obligations incurred in respect of workers' compensation,
unemployment insurance or other forms of governmental insurance or benefits, (2)
the performance of bids, tenders, leases, contracts (other than for the payment
of money) and statutory obligations, or (3) obligations on surety or appeal
bonds, but only to the extent such deposits, pledges or Liens are incurred or
otherwise arise in the ordinary course of business and secure obligations which
are not past due;
(f) restrictions on the use of real property and minor irregularities in
the title thereto which do not (1) secure obligations for the payment of money
or (2) materially impair the value of such property or its use by the Borrowers
in the normal conduct of such Person's business;
(g) purchase money Liens on or purchase money security interests in
equipment or real property acquired or held in the ordinary course of its
business securing Indebtedness, provided that the Liens do not extend to any
Collateral and the holders of such Liens shall expressly provide that the
Administrative Agent and the Lenders shall at all times have access to the
premises in order to acquire, hold, improve, repair, maintain, sell or otherwise
dispose of Collateral;
(h) Liens securing Capitalized or Operating Leases;
(i) to the extent the same constitutes Liens, the interest of the consignor
in Inventory held by the Borrower on consignment;
(j) Liens on real property of the Borrower which secure Indebtedness
incurred by the Borrower provided the conditions set forth in clause (g) are
satisfied with respect to such real property;
(k) Liens upon any property or assets (other than Collateral) of any
Subsidiary of any Borrower existing at the time such Subsidiary is acquired by,
merged into or consolidated with the Borrower in accordance with the terms of
this Agreement, provided that such Liens were not created in contemplation of
any such acquisition, merger or consolidation;
(l) pre-existing Liens upon any property or assets (other than Collateral)
existing at the time such property or assets are acquired by a Borrower,
provided that such Liens were not created in contemplation of such acquisition;
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(m) Renewals and replacements of the Liens described in clauses (b),
(g), (k) and (1) of this Section 8.01, provided that any such renewal or
replacement Lien shall be limited to the property or assets covered by the Lien
renewed or replaced and the Indebtedness secured by any such renewal or
replacement Lien shall be in an amount not greater than the amount of
Indebtedness secured by the Lien renewed or replaced; and
(n) Liens on the equity interests in a Borrower formed solely for the
purpose of the acquisition of substantially all the assets or securities of a
Person or a division of such Person (whether directly or by means of merger with
or into such Person) or a Person who after such acquisition will become a
Borrower which Liens secure solely Indebtedness permitted under Section 8.02(c)
to finance such acquisition.
8.02. Indebtedness. Create, incur or suffer to exist, or permit any of its
Subsidiaries to create, incur or suffer to exist, any Indebtedness, other than:
(a) Indebtedness created hereunder or under the Notes or any Letter
of Credit;
(b) Indebtedness existing on the date hereof, as set forth in
Schedule 8.02 hereto, and any extension of maturity, refinancing or other
modification of the terms thereof, provided, however, that such extension,
refinancing or modification (A) is pursuant to terms that are not less favorable
to the Borrower and its Subsidiaries than the terms of the Indebtedness being
extended, refinanced or modified, and (B) after giving effect to the extension,
refinancing or modification of such Indebtedness, the amount of such
Indebtedness outstanding is not greater than the amount of such Indebtedness
outstanding immediately prior to such extension, refinancing or modification;
(c) unsecured Indebtedness (except such Indebtedness may be secured
to the extent set forth in Section 8.01(n)), including Guarantees by the Parent
and other Borrowers of such Indebtedness, incurred to fund the acquisition of a
Person that becomes a Subsidiary as a result of such acquisition or
substantially all the assets of a Person or a division of such Person;
(d) To the extent the same constitutes Indebtedness, Indebtedness
secured by Liens or security interests permitted by Section 8.01 hereof;
(e) subordinated Indebtedness provided, however, that the amount,
rate, terms and the provisions subordinating such indebtedness to the Loans are
in form and substance acceptable to the Administrative Agent in its sole
discretion; and
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(f) Indebtedness under any Capital Lease or Operating Lease relating
to equipment entered into in the ordinary course of business.
8.03. Guarantees, etc. Become liable, or permit any of its Subsidiaries to
become liable, under any Guarantee in connection with any Indebtedness of any
other Person, other than:
(a) Guarantees by endorsement of negotiable instruments for deposit
or collection in the ordinary course of business;
(b) Guarantees existing on the date hereof, as set forth in Schedule
8.03 hereto, but not any renewal or other modification thereof; and
(c) Guarantees in respect of Indebtedness permitted by Section 8.02
hereof;
8.04. Merger. Consolidation, Sale of Assets. etc.
(a) Merge or consolidate with any Person (other than another Borrower
or a Person who after such acquisition will become a Borrower) provided that no
such merger or consolidation shall be permitted unless (i) prior to and after
giving effect to such merger or consolidation no Potential Default (including
under Section 8.12) shall have occurred or be continuing, and (ii) the Parent
gives the Administrative Agent at least 5 days' prior written notice of such
merger or consolidation and supplies the Administrative Agent with such
information, documents and financial statements and projections as it may
reasonably request).
(b) Sell, assign, lease or otherwise transfer or dispose of, or
permit any of its Subsidiaries to sell, assign, lease or otherwise transfer or
dispose of, whether in one transaction or in a series of related transactions,
any of their properties rights or other assets whether now owned or hereafter
acquired to any Person, provided that:
(i) each Borrower may sell Inventory in the ordinary course of
business, provided that the Net Proceeds of such sales of Inventory shall
be deposited in a Depository Account or a Cash Concentration Account
pursuant to the terms of Section 7.13 hereof;
(ii) each Borrower may dispose of (a) property that is not
Collateral, (b) Equipment having book value of less than $500,000 in
aggregate per fiscal year or (c) Collateral that is obsolete, worn-out, or not
used or deemed useful by the Borrower in the ordinary course of business;
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(iii) in the event any Collateral is sold,
assigned or transferred either as currently permitted
hereunder, or if consented to by the Administrative Agent at
any other time, 100% of the proceeds thereof shall be deemed
to be a mandatory prepayment hereunder; and
(iv) each Borrower may dispose of all or
part of its assets to another Borrower. In the event of a
sale or transfer of all the assets of one Borrower (a
"Selling Borrower") to another Borrower, the Selling Borrower
shall, unless a Potential Default shall have occurred and be
continuing, be released as a Borrower hereunder.
8.05. Change in Nature of Business. Make, or permit its
Subsidiaries to make, any change in the nature of its business as carried on at
the date hereof except for changes that will not fundamentally and substantively
alter the character of its business from that conducted by the Parent on the
Closing Date.
8.06. Loans, Advances and Investments, etc. Make, or permit
any of its Subsidiaries to make, any loan or advance to any Person (except as
permitted by Section 8.09(d)) or purchase or otherwise acquire, or permit any of
its Subsidiaries to purchase or otherwise acquire, any capital stock,
properties, assets or obligations of, or any interest in, any Person, other
than:
(a) Permitted Investments;
(b) investments, loans and advances, not to exceed
$500,000 in the aggregate, in Persons for which there is a letter of intent or
agreement providing for the acquisition of the stock or substantially all the
assets of such Persons;
(c) investments comprised of (i) the acquisition of the
capital stock or assets of Persons provided that, as a result of such
acquisition, such Person (in the case of the direct or indirect acquisition of
stock of such Person) and its Subsidiaries (in the case of the direct or
indirect acquisition of the capital stock of such Subsidiary) becomes a Borrower
pursuant to the provisions of Section 4.07 hereof and (ii) assets purchased by a
Borrower or a Person who, after giving effect to the acquisition of assets,
becomes a Borrower pursuant to the provisions of Section 4.07 hereof;
(d) receivables owing to the Borrower or any of its
Subsidiaries if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with the customary trade terms of the
Borrower or its applicable Subsidiary as the case may be; and
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(e) investments existing on the date hereof as set
forth in Schedule 8.06 hereto.
8.07. Dividends, Prepayments, etc. Declare or pay any
dividends (other than dividends payable solely in nonredeemable equity
securities), purchase or otherwise acquire for value any of their capital stock
now or hereafter outstanding, return any capital to their stockholders as such,
or make any other payment or distribution of assets to its stockholders as such,
or permit any of their Subsidiaries to do any of the foregoing or to purchase or
otherwise acquire for value any stock of any Borrower or make any payment on any
subordinated Indebtedness in violation of the subordination provisions thereof
other than payments to a Borrower or Parent, provided, however, that (i) within
60 days after the delivery to the Administrative Agent of consolidated audited
financial statements for a fiscal year pursuant to Section 7.01(a) demonstrating
positive consolidated net income for the fiscal year, the Parent may, so long as
no Potential Default or Event of Default shall have occurred and be continuing
or shall result from such payment, declare and pay any such dividend in an
amount not in excess of fifty (50%) percent of the such consolidated net income
and (ii) any Borrower may pay cash dividends solely to the Parent or solely to
any other Borrower which is directly or indirectly wholly owned by the Parent.
Any amount not so declared and paid pursuant to clause (ii) in the prior
sentence within such 60 day period may not be paid at any time thereafter.
8.08. Federal Reserve Regulations. Permit any Loan or the
proceeds of any Loan under this Agreement to be used for any purpose which
violates or is inconsistent with the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System.
8.09. Transactions with Affiliates. Enter into or be a party
to, or permit any of their Subsidiaries to enter into or be a party to, any
transaction with any Affiliate of any Borrower (other than another Borrower)
except (a) as otherwise provided herein, (b) for reasonable compensation to
officers and directors, (c) management fees payable to the Parent, (d)
reimbursement of reasonable expenses and related fringe benefits including
employee stock options and other employee benefit plans, indemnification rights
and advances for business purposes to employees and (e) in the ordinary course
of business in a manner and to an extent consistent with past practice and
necessary or desirable for the prudent operation of its business for fair
consideration and on terms no less favorable to such Borrower as are available
from unaffiliated third parties.
8.10. Environmental. Permit the use, handling, generation,
storage, treatment, Release or disposal of any Hazardous Material at property
owned or leased by any Borrower or its Subsidiaries except in compliance with
Environmental Laws.
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8.11. ERISA.
(a) Engage, or permit any ERISA Affiliate to engage,
in any prohibited transaction described in Section 406 of ERISA or 4975 of the
IRC Code for which a statutory or class exemption is not available or a private
exemption has not previously been obtained from the Department of Labor and that
would have a Material Adverse Effect;
(b) permit, or permit any ERISA Affiliate to permit,
any enforceable Lien from arising under Section 412(n) of the IRC Code;
(c) amend or permit any ERISA Affiliate to amend any
Benefit Plan in a manner that would require security under Section 307 of ERISA;
or
(d) request or permit any ERISA Affiliate to request
a waiver of the minimum funding requirements under Section 412 of the IRC Code
in respect of any Benefit Plan.
8.12. Minimum Consolidated Net Worth. Permit as of any
date set forth below, the sum of (x) consolidated net worth of the Parent and
its consolidated Subsidiaries plus (y) the aggregate unpaid principal amount
(or, in the case of Indebtedness issued at a discount, the unpaid accreted
amount) of the Convertible Subordinated Debentures and of any subordinated
Indebtedness issued under Section 8.02 (e) to be less than the amount set forth
opposite such date:
December 31, 1997 $30,000,000
March 31, 1998 $35,000,000
June 30, 1998 $40,000,000
September 30, 1998 $45,000,000
December 31, 1998 $50,000,000
March 31, 1999 $55,000,000
June 30, 1999 $60,000,000
September 30, 1999 $65,000,000
December 31, 1999 $70,000,000
March 31, 2000 $75,000,000
June 30, 2000 $80,000,000
September 30, 2000 $85,000,000
December 31, 2000 $90,000,000
March 31, 2001 $95,000,000
June 30, 2001 $100,000,000
September 30, 2001 $105,000,000
December 31, 2001 $110,000,000
March 31, 2002 and each
quarter thereafter $115,000,000
ARTICLE IX.
DEFAULTS
9.01. Events of Default. An Event of Default shall mean
the occurrence or existence of one or more of the following
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events or conditions (whatever the reason for such Event of Default and whether
voluntary, involuntary or effected by operation of law):
(a) (i) Any Borrower shall fail to make any payment of principal under this
Agreement on any Loan or any Reimbursement Obligation when due or (ii) any
Borrower shall fail to pay when due any other amount payable under this
Agreement or any other Related Document (including but not limited to the making
of deposits in the Depositor Accounts, or the Cash Concentration Accounts or the
Letter of Credit Cash Collateral Account) including any interest or fee due
hereunder or under any other Related Document and such failure under this clause
(ii) shall continue for a period of five (5) days; or
(b) Any representation or warranty, made or, pursuant to Section 5.02(b)
hereof, deemed made by any Borrower under this Agreement or any other Related
Document or any statement made or deemed made by any Borrower in any financial
statement certificate report or document furnished to the Administrative Agent
or the Lenders pursuant to or in connection with this Agreement or any other
Related Document, shall prove to have been false or misleading in any material
respect as of the time when made, it being understood that (i) actual results
may differ from projections and (ii) representations and warranties are not
required to be accurate on a continuous basis but only (x) on the date of
Notices of Borrowings and Borrowers' acceptance of the proceeds of such loan (y)
the submission of a Letter of Credit Application and the date of issuance of the
Letter of Credit or (2) at any date that such representations and warranties are
required to be made pursuant to this Agreement and the Related Documents; or
(c) Any Borrower shall default in the performance or observance of the
covenants contained in Sections 7.03, 7.05, 7.11, 7.13, 7.14 or 7.15 or Article
VIII hereof; or
(d) Any Borrower shall default in the performance or observance of any
other covenant, agreement or duty under this Agreement or any other Related
Document (to the extent not otherwise set forth in this Section 9.01) and such
default shall have continued unremedied for a period of ten (10) days; or
(e) Any Borrower shall have entered into any consent or settlement decree
or agreement or similar arrangement with a Governmental Authority or any
judgment, order, decree or similar action shall have been entered against any
such Person based on or arising from the violation of or pursuant to any
Environmental Law, or the generation, storage, transportation, treatment,
disposal or Release of any Hazardous Material and, in connection with any of the
foregoing, any such Person shall incur Environmental Liabilities and Costs which
are unstayed, due and owing in an amount in excess of $500,000; or
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(f) Any Borrower or any Subsidiary shall fail to pay any principal or
interest on any of its Indebtedness (excluding Indebtedness evidenced by the
Notes) in excess of $500,000, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness, or
any other default or event under any agreement or instrument relating to any
such Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of the maturity of such Indebtedness; or any such Indebtedness in
excess of such amount shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment) or purchased,
prior to the stated maturity thereof; or
(g) Any Borrower or any Subsidiary (i) shall institute any proceeding or
voluntary case seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for the Borrower or any Subsidiary or for
any substantial part of its property, (ii) shall be generally not paying its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, (iii) shall make a general assignment for the benefit of
creditors, or (iv) shall take any action to authorize or effect any of the
actions set forth above in this subsection (g); or
(h) Any proceeding shall be instituted against any Borrower or any
Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
any Borrower or any of its Subsidiaries or for any substantial part of its
property, and either such proceeding shall remain undismissed or unstayed for a
period of thirty (30) days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against it or
the appointment of a receiver trustee, custodian or other similar official for
it or for any substantial part of its property) shall occur; or
(i) Any material provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Borrower, or a proceeding shall be commenced
by any Borrower, or by any Governmental Authority or other regulatory body
having jurisdiction over any Borrower, seeking to establish the
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invalidity or unenforceability thereof, or any Borrower shall deny in writing
that any Borrower has any liability or obligation purported to be created under
any Loan Document; or
(j) The Security Agreement or any other Security Document,
after delivery thereof pursuant hereto, shall for any reason fail or cease to
create a valid and perfected and, except to the extent permitted by the terms
hereof or thereof first priority Lien on or security interest in any Collateral
(and, solely with respect to Equipment having a book value of $500,000 in the
aggregate, such failure shall have continued for a period of ten (10) days)
purported to be covered thereby; or
(k) One or more judgments or orders (other than a judgment
described in subsections (g) or (h) of this Section 9.01) for the payment of
money exceeding any applicable insurance or bond coverage by more than $500,000
in the aggregate shall be rendered against the Borrower or any Subsidiary and
either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (ii) there shall be any period of twenty (20)
consecutive days during which a stay of enforcement of any such judgment or
order by reason of a pending appeal or otherwise shall not be in effect; or
(1) Any Borrower or any of its ERISA Affiliates shall have
made a complete or partial withdrawal from a Multiemployer Plan and as a result
of such complete or partial withdrawal the Borrower or such ERISA Affiliate
incurs a withdrawal liability in an annual amount exceeding $500,000 or a
Multiemployer Plan enters reorganization status under Section 4241 of ERISA,
and, as a result thereof, any Borrower's or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $500,000; or
(m) Any Termination Event with respect to any Benefit Plan
shall have occurred, and, thirty (30) days after notice thereof shall have been
given to the Borrower by Administrative Agent, (i) such Termination Event (if
correctable) shall not have been corrected, and (ii) the then current value of
such Benefit Plan's vested benefits exceeds the then current value of assets
allocable to such benefits in such Benefit Plan by more than $500,000 (or in the
case of a Termination Event involving liability under Section 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA, the liability is in excess of such amount).
9.02. Consequences of an Event of Default. If an Event of Default
shall occur and be continuing or shall exist the Administrative Agent may, and
upon the direction of the Majority Lenders, shall by notice to the Parent (it
being expressly understood that such notice shall be deemed notice to each
Borrower),
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(a) declare the Revolving Credit Commitment of each Lender
and the Current Commitment terminated, whereupon the Revolving Credit Commitment
of each Lender and the Current Commitment will terminate immediately without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue; or
(b) declare the unpaid principal amount of the Notes,
interest accrued thereon, the total amount of the Letter of Credit Exposure that
is not cash collateralized in accordance with this Agreement, any fees due
hereunder and all other amounts owing by the Borrower hereunder or under the
Notes to be immediately due and payable without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived, and an
action therefor shall immediately accrue; or
(c) give notice to the Parent (it being understood that such
notice shall be deemed to be notice to each Borrower) of the occurrence and
continuance of an Event of Default; or
(d) any time when there are no Loans outstanding, maintain
cash collateral (to the extent any Borrower has or receives cash) equal to 105%
of all outstanding Letters of Credit; or
(e) apply all funds deposited in each Cash Concentration
Account, and in the Letter of Credit Cash Collateral Account to the payment in
whole or in part, of the Obligations; or
(f) set-off amounts in the Cash Concentration Account, the
Letter of Credit Cash Collateral Account, or any other account under the
dominion and control of the Administrative Agent and apply such amounts to the
Obligations of the Borrower hereunder and under the Related Documents; provided,
however, that upon the occurrence of any Event of Default described in
subsections (g) or (h) of Section 9.01, the Loans and all Reimbursement
Obligations, all interest thereon, all fees hereunder and all other amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by the
Borrowers.
9.03. Deposit for Letters of Credit. Upon demand to the Parent by the
Letter of Credit Issuer after the occurrence of any Event of Default, the
Borrowers shall deposit with the Administrative Agent for the benefit of the
Letter of Credit Issuer with respect to each Letter of Credit then outstanding
cash in an amount equal to the greatest amount for which such Letter of Credit
may be drawn. Such deposits shall be held by the Administrative Agent for the
benefit of the Letter of Credit Issuer in the Letter of Credit Cash Collateral
Account as
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security for, and to provide for the payment of, the Letter of Credit Exposure.
9.04. Certain Remedies. If an Event of Default occurs, each
of the Administrative Agent and the Lenders may exercise all rights and remedies
which it may have hereunder or under any other Related Document or at law or in
equity or otherwise. All such remedies shall be cumulative and not exclusive.
ARTICLE X.
MISCELLANEOUS
10.01. Holidays. Except as otherwise provided herein,
whenever any payment or action to be made or taken hereunder or under the Notes
shall be stated to be due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day and such
extension of time shall be included in computing interest or fees, if any, in
connection with such payment or action.
10.02. Records. The unpaid principal amount of the Notes, the
unpaid interest accrued thereon, the interest rate or rates applicable to such
unpaid principal amount, the duration of such applicability, the Current
Commitment, the Stated Amount of each Letter of Credit, the principal amount of
all Reimbursement Obligations, the Letter of Credit Exposure, the Unused Line
Fee and Letter of Credit Fees and all other fees due hereunder shall at all
times be ascertained from the records of Administrative Agent, which shall be
conclusive and binding absent manifest error.
10.03. Amendments and Waivers. (a) No amendment or
modification of any provision of this Agreement or of the Notes or of any other
Related Document shall be effective without the written agreement of the
Majority Lenders and the Borrower and no termination or waiver of any provision
of this Agreement or of any of the Notes, or consent to any departure by the
Borrower therefrom, shall in any event be effective without the written
concurrence of the Majority Lenders, which the Majority Lenders shall have the
right to grant or withhold at their sole discretion; except that any amendment,
modification, or waiver (i) of any provision of Article II or III which
amendment, modification or waiver increases the Revolving Credit Commitment of
any Lender, reduces the principal of, or interest on, the Loans or the
Reimbursement Obligations payable to any Lender, reduces the amount of any fee
payable for the account of any Lender, or postpones or extends any date fixed
for any payment of principal of, or interest or fees on, the Loans or Letter of
Credit Exposure payable to any Lender, (ii) that increases the aggregate amount
of the Revolving Credit Commitments, of the Lenders, (iii) of the definitions of
"Termination Date", "Majority Lenders" or "Pro Rata Shares", (iv) of the
definitions of "Eligible Receivable", "Eligible Inventory" or "Borrowing Base"
if the effect of such amendment, modification or waiver is
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to increase the Availability of the Borrowers, (v) of any provision of this
Agreement or any Related Document that would permit Liens on the Collateral or
release all or a substantial portion of Collateral (except as set forth in
Section 11.08 hereof or except as otherwise permitted herein), (v) of the
mandatory termination of the Revolving Credit Commitments contained in Section
2.04(a) (ii) hereof, or (vii) of the provisions contained in this Section 10.03,
shall be effective only if evidenced by a writing signed by or on behalf of (A)
any Lender affected thereby in the case of the amendments, modifications or
waivers described in clause (i) above or (B) all Lenders in the case of
amendments to definitions or waivers described in clauses (ii) through (vii)
above. No amendment, modification, termination, or waiver of any provision of
Article XI or any other provision referring to the Administrative Agent shall be
effective without the written concurrence of Administrative Agent. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Parent or any
other Borrower in any case shall entitle the Parent or any other Borrower to any
other or further notice or demand in similar or other circumstances. Any
amendment, modification, waiver or consent effected in accordance with this
Section 10.03 shall be binding on each Lender, each future Lender, and, if
signed by the Borrowers, on the Borrowers.
(b) Notwithstanding anything to the contrary contained in
subsection 10.03(a), in the event that any Borrower requests that this Agreement
or any other Related Document be amended or otherwise modified in a manner which
would require the unanimous consent of all of the Lenders and such amendment or
other modification is agreed to by the Majority Lenders, then with the consent
of the Borrowers and the Majority Lenders, the Borrowers and the Majority
Lenders may amend this Agreement without the consent of the Lender or Lenders
which did not agree to such amendment or other modification (collectively the
"Minority Lenders") to provide for (w) the termination of the Revolving Credit
Commitment of each of the Minority Lenders, (x) the addition to this Agreement
of one or more other Lenders, or an increase in the Revolving Credit Commitment
of one or more of the Majority Lenders, so that the Revolving Credit Commitments
after giving effect to such amendment shall be in the same aggregate amount as
the Revolving Credit Commitments immediately before giving effect to such
amendment, (y) if any Loans are outstanding at the time of such amendment, the
making of such additional Loans by such new Lenders or Majority Lenders, as the
case may be, as may be necessary to repay in full the outstanding Loans of the
Minority Lenders immediately before giving effect to such amendment and (z) the
payment of all interest, fees and other Obligations payable or accrued in favor
of the Minority Lenders and such other modifications to this Agreement as the
Borrowers and the Majority Lenders may determine to be appropriate.
10.04. No Implied Waiver; Cumulative Remedies. No course of dealing and no
--------------------------------------
delay or failure of the Lenders or the
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Administrative Agent in exercising any right power or privilege under this
Agreement, the Notes or any other Related Document shall affect any other or
future exercise thereof or exercise of any other right, power or privilege; nor
shall any single or partial exercise of any such right, power or privilege or
any abandonment or discontinuance of steps to enforce such a right, power or
privilege preclude any further exercise thereof or of any other right, power or
privilege. The rights and remedies of the Lenders or the Administrative Agent
under this Agreement, the Notes and the other Related Documents are cumulative
and not exclusive of any rights or remedies which the Lenders or the
Administrative Agent have thereunder or at law or in equity or otherwise. The
Lenders or the Administrative Agent may exercise their rights and remedies
against the Borrower and the Collateral as the Lenders and the Administrative
Agent may elect, and regardless of the existence or adequacy of any other right
or remedy.
10.05. Notices.
(a) All notices, requests, demands, directions and other
communications (collectively "Notices") under the provisions of this Agreement
or the Notes shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, or delivered by recognized
overnight courier and shall be effective (i) if mailed, three days after being
deposited in the mails, (ii) if telecopied, when sent, confirmation received and
(iii) if delivered, upon delivery with a receipt therefor. All notices shall
be sent to the applicable party at the address stated on the signature page
hereof together with, in the case of a letter of credit request and Letter of
Credit Application sent pursuant to Section 3.01(a), a copy to the
Administrative Agent at the address for the Administrative Agent provided on the
signature page hereof, or in accordance with the last unrevoked written
direction from such party to the other parties hereto.
(b) The Lenders and the Administrative Agent may
rely, and shall be fully protected in relying, on any notice purportedly made by
or on behalf of the Borrower and the Lenders and the Administrative Agent shall
have no duty to verify the identity or authority of any Person giving such
notice. The preceding sentence shall apply to all notices whether or not made in
a manner authorized or required by this Agreement or any other Related Document.
10.06. Expenses; Taxes; Attorneys' Fees; Indemnification. The
Borrowers jointly and severally agree to pay or cause to be paid, on demand, and
to save the Administrative Agent (and, in the case of clauses (c) through (m)
below, the Lenders) harmless against liability for the payment of all reasonable
out-of-pocket expenses, regardless of whether the transactions contemplated
hereby are consummated, including but not limited to reasonable fees and
expenses of counsel for the Administrative Agent and, in the case of clauses (c)
through (m)
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below, the Lenders), accounting, due diligence, periodic field audits,
appraisals, investigations, monitoring of assets, syndication, miscellaneous
disbursements, examination, travel, lodging and meals, incurred by the
Administrative Agent (and, in the case of clauses (c) through (m) below, the
Lenders) from time to time arising from or relating to: (a) the negotiation,
preparation, execution, delivery, performance and administration of this
Agreement and the other Related Documents, (b) any requested amendments waivers
or consents to this Agreement or the other Related Documents whether or not such
documents become effective or are given, (c) the preservation and protection of
any of the Administrative Agent's and the Lenders' rights under this Agreement
or the other Related Documents, (d) the defense of any claim or action asserted
or brought against the Administrative Agent or the Lenders by any Person that
arises from or relates to this Agreement, any other Related Document
Administrative Agent's or the Lenders' claims against the Borrower, or any and
all matters in connection therewith, (e) the commencement or defense of, or
intervention in, any court proceeding arising from or related to this Agreement
or any other Related Document, (f) the filing of any petition, complaint,
answer, motion or other pleading by the Administrative Agent or the Lenders, or
the taking of any action in respect of the Collateral or other security, in
connection with this Agreement or any other Related Document, (g) the
protection, collection, lease, sale, taking possession of or liquidation of, any
Collateral or other security in connection with this Agreement or any other
Related Document, (h) any attempt to enforce any Lien on any Collateral or other
security in connection with this Agreement or any other Related Document, (i)
any attempt to collect from the Borrower, (j) the receipt of any advice with
respect to any of the foregoing, (k) all Environmental Liabilities and Costs
arising from or in connection with the past, present or future operations of
each Borrower or its Subsidiaries involving any damage to real or personal
property or natural resources or harm or injury alleged to have resulted from
any Release of Hazardous Materials on, upon or into such property, (1) any costs
or liabilities incurred in connection with the investigation, removal, cleanup
and/or remediation of any Hazardous Materials present or arising out of the
operations of any facility of any Borrower or any of its Subsidiaries, or (m)
any costs or liabilities incurred in connection with any Environmental Lien.
Without limitation of the foregoing or any other provision of any Related
Document: (x) the Borrower agrees to pay all stamp, document, transfer,
recording or filing taxes or fees (including, without limitation, mortgage
recording taxes) and similar impositions now or hereafter determined by the
Administrative Agent or any of the Lenders to be payable in connection with this
Agreement or any other Related Document, and the Borrowers jointly and severally
agree to save the Administrative Agent and the Lenders harmless from and against
any and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions, and (y) if the Borrowers fail to perform any covenant or agreement
contained herein of in any other Related Document, the Administrative Agent
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may itself perform or cause performance of such covenant or agreement, and the
expenses of the Administrative Agent incurred in connection therewith shall be
reimbursed on demand by the Borrowers. The Borrowers jointly and severally agree
to indemnify and defend the Administrative Agent and the Lenders and their
directors, officers, agents, employees and affiliates (collectively, the
"Indemnified Parties") from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages, costs or expenses of any nature whatsoever
(including reasonable attorneys' fees and amounts paid in settlement) incurred
by, imposed upon or asserted against any of them arising out of or by reason of
any investigation, litigation or other proceeding or claim brought or threatened
relating to, or otherwise arising out of or relating to, the execution of this
Agreement or any other Related Document, the transactions contemplated hereby or
thereby or any Loan or proposed Loan or Letter of Credit or proposed Letter of
Credit hereunder (including, but without limitation, any use made or proposed to
be made by any Borrower or any of its Affiliates of the proceeds of any thereof,
or the delivery or use or transfer of or the payment or failure to pay under any
Loan or Letter of Credit) but excluding any such losses, liabilities, claims,
damages, costs or expenses to the extent finally judicially determined to have
resulted from the gross negligence or willful misconduct of the Indemnified
Party.
10.07. Application. Except to the extent, if any, expressly
-----------
set forth in this Agreement or in the Related Documents, the Administrative
Agent and the Lenders shall have the right to apply any payment received or
applied by it in connection with the Obligations to such of the Obligations then
due and payable as it may elect.
10.08. Severability. The provisions of this Agreement are
------------
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
10.09. Governing Law. This Agreement and the Notes shall be
-------------
deemed to be contracts under the laws of the State of New York, without regard
to choice of law principles, and for all purposes shall be governed by and
construed and enforced in accordance with the laws of said State.
10.10. Prior Understandings. This Agreement supersedes all
--------------------
prior understandings and agreements, whether written or oral, among the parties
hereto relating to the transactions provided for herein.
10.11. Duration, Survival. All representations and warranties
------------------
of the Borrower contained herein or made in connection
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herewith shall survive the making of the Loans and the issuance of any Letter of
Credit and shall not be waived by the execution and delivery of this Agreement,
the Notes or any other Related Document, any investigation by or knowledge of
the Administrative Agent or the Lenders, the making of any Loan or the issuance
of any Letter of Credit hereunder, or any other event whatsoever. All covenants
and agreements of the Borrowers contained herein shall continue in full force
and effect from and after the date hereof so long as the Borrowers may borrow
hereunder and until the Obligations have been paid in full and no Letters of
Credit remain outstanding. Without limitation, it is understood that all
obligations of the Borrowers to make payments to or indemnify the Administrative
Agent and the Lenders (including, without limitation, obligations arising under
Section 10.06 hereof) shall survive the payment in full of the Notes and all
Reimbursement Obligations and of all other obligations of the Borrowers
thereunder and hereunder.
10.12. Counterparts. This Agreement may be executed
------------
in any number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
10.13. Assignments, Participations.
---------------------------
(a) Each Lender may with the written consent of
the Administrative Agent, which consent shall not be unreasonably withheld,
assign to one or more commercial banks or other financial institutions a portion
of its rights and obligations under this Agreement (including, without
limitation, a portion of its Revolving Credit Commitment, the Loans owing to it
and its rights and obligations as a Lender with respect to Letters of Credit)
and the other Related Documents; provided, however, that (i) each such
assignment shall be in a principal amount of not less than $1,000,000 and in
multiples of $1,000,000 in excess thereof (or the remainder of such Lender's
Revolving Credit Commitment), and (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register (as hereinafter defined), an Assignment and
Acceptance. Upon such execution, delivery acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (A) the
assignee thereunder shall be a party hereto and to the other Related Documents
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letters of
Credit) of a Lender hereunder and thereunder and (B) the assigning Lender shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.
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(b) By executing and delivering an Assignment and Acceptance,
the assignor and the assignee thereunder confirm to and agree with each other
and the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, the assigning lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Related Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Related
Document furnished pursuant hereto; (ii) the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any of its Subsidiaries or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other Related Document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Related Documents, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the assigning Lender, the Administrative Agent or any
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Related Documents; (v) such assignee
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other
Related Documents as are delegated to the Administrative Agent by the terms
thereof together with such powers as are reasonably incidental thereto; and (vi)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement and the other Related
Documents are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its
address referred to on the signature page hereto, a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lenders and the Revolving Credit Commitment of,
and principal amount of the Loans owing to and the participation interest in the
Letters of Credit of, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower and any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender, an assignee Lender together with the Notes subject to
such assignment, the Administrative Agent shall if such Assignment and
Acceptance has
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been completed and is in substantially the form of Exhibit E hereto, (i) accept
such Assignment and Acceptance, (ii) give prompt notice thereof to the Borrower
and (iii) record the information contained therein in the Register. Within five
Business Days after its receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note a new Note to the order of such assignee Lender in an
aggregate principal amount equal to the Revolving Credit Commitment assumed by
it pursuant to such Assignment and Acceptance, and a new Note to the order of
the assigning Lender in an aggregate principal amount equal to the Revolving
Credit Commitment retained by it hereunder, in each case prepared by the
Administrative Agent. Such new Note shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note shall be dated
the date of the Administrative Agent's acceptance of such assignment and
acceptance and shall otherwise be in substantially the form of Exhibit A hereto.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Related Documents (including, without limitation,
all or a portion of its Revolving Credit Commitment and the Loans owing to it
and its participation in Letters of Credit); provided that (i) such Lender's
obligations under this Agreement (including, without limitation, its Revolving
Credit Commitment hereunder) and the other Related Documents shall remain
unchanged; (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Related Documents; and (iii) a
participant shall not be entitled to require such Lender to take or omit to take
any action hereunder except (A) action directly effecting an extension of the
maturity dates or decrease in the principal amount of the Loans or Reimbursement
Obligations, or (B) action directly effecting an extension of the due dates of
or a decrease in the rate of interest payable on the Loans or the fees payable
under this Agreement, or (C) actions directly effecting a release of all or a
substantial portion of the Collateral (except as set forth in Section 11.08 of
this Agreement or any Related Document).
(f) Notwithstanding the foregoing provisions of this Section
10.13, each Lender may at any time sell, assign, transfer, or negotiate all or
any part of its rights and obligations under this Agreement and the Related
Documents to any Affiliate of such Lender.
10.14. Successors and Assigns. This Agreement and the other
----------------------
Related Documents shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns except that no Borrower may
assign or transfer any of its
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rights hereunder or thereunder without the prior written consent of all of the
Lenders except as permitted by Section 8.04.
10.15. Confidentiality. Upon delivering to any Lender or the
---------------
Administrative Agent, or permitting any Lender or the Administrative Agent to
inspect, any written information pursuant to this Agreement or the other Related
Documents, each Lender and the Administrative Agent shall treat such information
as confidential to the extent such information is conspicuously marked
confidential, relates to acquisitions of significant assets by a Borrower,
relates to sales of significant assets by a Borrower or consists of financial
performance information. Each Lender and the Administrative Agent agrees to hold
such information in confidence from the date of disclosure thereof. Subject to
the other provisions of this Section 10.15, each Lender and the Administrative
Agent may disclose confidential information to its officers, directors,
employees, attorneys, accountants or other professionals engaged by any Lender
or the Administrative Agent only after determining that such third party has
been instructed to hold such information in confidence to the same extent as if
it were a Lender. Notwithstanding the foregoing, the provisions of this Section
10.15 shall not apply to information within any one of the following categories
or any combination thereof: (i) information the substance of which, at the time
of disclosure by any Lender or the Administrative Agent, has been disclosed to
or is known to any creditor (other than information as to which such creditor is
then under an obligation of nondisclosure), or any Person other than (A) a
director, officer, employee or agent of any of the Borrower or a professional
engaged by the Borrower or (B) a Person who is then under an obligation of
nondisclosure (otherwise than as a consequence of a wrongful act of any Lender
or the Administrative Agent), (ii) information which any Lender or the
Administrative Agent had in its possession prior to receipt thereof from the
disclosing party, or (iii) information received by any Lender or the
Administrative Agent from a third party having no obligations of nondisclosure
with respect thereto. Nothing contained in this Section 10.15 shall prevent any
disclosure: (x) believed in good faith by any Lender or the Administrative Agent
to be required by any law or guideline or interpretation or application thereof
by any Governmental Authority, arbitrator or grand jury charged with the
interpretation or administration thereof or compliance with any request or
directive of any Governmental Authority, arbitrator or grand jury (whether or
not having the force of law), (y) determined by counsel for any Lender or the
Administrative Agent to be necessary or advisable in connection with enforcement
or preservation of rights under or in connection with this Agreement or any
other Related Document or (z) of any information which has been made public by a
Person other than any Lender or the Administrative Agent. The Lenders and the
Administrative Agent shall have the right to disclose any confidential
information described in this Section 10.15 to the Letter of Credit Issuer and
to an assignee or prospective assignee or to a participant or prospective
participant in Loans hereunder, provided that the assigning or selling Lender
shall have obtained from such assignee or prospective assignee or
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participant or prospective participant an agreement to hold such information in
confidence to the same extent as if it were a Lender.
10.16. Waiver of Jury Trial. BY ITS EXECUTION AND DELIVERY OF
--------------------
THIS AGREEMENT, THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF UNDER
OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTE OR ANY OTHER RELATED DOCUMENT,
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
ADMINISTRATIVE AGENT, THE LENDERS, OR EACH BORROWER IN CONNECTION HEREWITH OR
THEREWITH, THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT
AND THE LENDERS TO ENTER INTO THIS AGREEMENT.
10.17. Right of Setoff. Upon the occurrence and during the
---------------
continuance of any Event of Default any Lender, the Administrative Agent and the
Letter of Credit Issuer may, and is hereby authorized to, at any time from time
to time, without notice to the Parent or any other Borrower (any such notice
being expressly waived by the Borrower) and to the fullest extent permitted by
law, set off and apply any and all deposits (general or special, time or demand,
provision or final) at any time held and other Indebtedness at any time owing by
such Lender, the Administrative Agent or the Letter of Credit Issuer to or for
the credit or the account of any Borrower against any and all Obligations of any
Borrower now or hereafter existing under the Loan Documents, irrespective of
whether or not any Lender, the Administrative Agent and the Letter of Credit
Issuer shall have made any demand hereunder or thereunder and although such
Obligations may be contingent or unmatured. Each Lender, the Administrative
Agent and the Letter of Credit Issuer agrees promptly to notify the Parent after
any such setoff and application made by such Lender, the Administrative Agent or
the Letter of Credit Issuer; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of each Lender, the Administrative Agent and the Letter of Credit Issuer under
this Section 10.17 are in addition to the other rights and remedies (including,
without limitation, other rights of setoff under applicable law or otherwise)
which such Lender, the Administrative Agent or the Letter of Credit Issuer may
have.
10.18. Headings. Section headings herein are included for
--------
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
10.19. Forum Selection and Consent to Jurisdiction. Any
-------------------------------------------
litigation based hereon, or arising out of, under or in connection with, this
Agreement or any other Loan Document, or any course of conduct, course of
dealing, statement (whether verbal or written) or action of the Administrative
Agent, any Lender, the Administrative Agent, the Letter of Credit Issuer or
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the Borrower may be brought and maintained exclusively in the courts of the
State of New York or the United States District Court for the Southern District
of New York; provided, however, that any suit seeking enforcement against any
Collateral or other property may be brought, at the Administrative Agent's
option, in the courts of any jurisdiction where such Collateral or other
property may be found. Each Borrower hereby expressly and irrevocably submits to
the jurisdiction of the courts of the State of New York and of the United States
District Court for the Southern District of New York for the purpose of any such
litigation and irrevocably agree to be bound by any judgment rendered thereby in
connection with such litigation. Each Borrower further irrevocably consents to
the service of process (i) by registered or certified mail, postage prepaid, to
the Borrower at its address for notices contained in Section 10.05 hereof, such
service to become effective five days after such mailing, or (ii) by personal
service within or without the State of New York. Nothing herein shall affect the
right of the Administrative Agent, any Lender or the Letter of Credit Issuer to
service of process in any other manner permitted by law. Each Borrower hereby
expressly and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in an inconvenient forum. To the extent that
any Borrower has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, the Borrower hereby irrevocably waives such immunity in
respect of its obligations under this Agreement and the other Loan Documents.
10.20. Termination.
10.20A. Termination of this Agreement
(a) Subject to Section 10.20B below and 10.20 (A) (b), the Borrowers
or the Majority Lenders may terminate this Agreement only as of the Initial
Termination Date and then only by giving the other at least sixty (60) Business
Days' prior written notice of termination; if this Agreement is not terminated
as aforesaid, there will be one automatic annual renewal on the Initial
Termination Date.
(b) Notwithstanding the foregoing, the Borrowers may terminate this
Agreement prior to the Initial Termination Date upon thirty (30) Business Days'
prior written notice by the Parent to the Administrative Agent.
10.20B. Termination Upon an Event of Default. Notwithstanding
the foregoing, the Administrative Agent may, and if required by the Majority
Lenders to do so shall, terminate this Agreement immediately upon the occurrence
of an Event of Default.
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10.20C. Maturity of Obligations Upon Termination. All
Obligations shall become due and payable as of any termination under this
Agreement and, pending a final accounting, if the Administrative Agent
determines in its good faith judgment that there is a reasonable basis for doing
so, the Administrative Agent may withhold any balances in a Borrower's account
(unless supplied with an indemnity satisfactory to the Administrative Agent) to
cover all of the Obligations then due and payable hereunder. All of the Lenders'
and the Administrative Agent's rights, liens and security interests shall
continue after any termination until payment in full of all Loans and other
amounts then due and payable hereunder at the date of such termination.
10.20D. Termination by Lenders. All or any Lender's
obligations under this Agreement shall terminate with respect to such Lender on
the Initial Termination Date by such Lender giving the Administrative Agent, the
Borrower and the other Lenders at least ninety (90) days' prior written notice
of termination. Within sixty (60) days of receipt of such notice from any
Lender, the Administrative Agent shall either: (i) give notice to the Borrower
of termination of this Agreement in accordance with the terms hereof and
thereof, in which event the obligations of the Lenders hereunder and thereunder
shall terminate as of the Initial Termination Date, or (ii) if the other Lenders
so elect, they shall have the right to purchase the terminating Lender's or
Lenders' pro rata share of its or their interest hereunder for the full amount
thereof on a pro rata basis among such electing Lenders, together with any
accrued interest. Termination of this Agreement by any Lender as herein provided
shall not affect the Lenders' respective rights and obligations under this
Agreement incurred prior to the effective date of termination as set forth in
the preceding sentence.
ARTICLE XI.
THE ADMINISTRATIVE AGENT
11.01. Appointment. Each Lender (and each subsequent holder
of any Note by its acceptance thereof) hereby irrevocably appoints and
authorizes CIT, in its capacity as Administrative Agent (i) to receive on behalf
of each Lender any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder for the account of the Lenders
and paid to the Administrative Agent, and, subject to Section 2.03 of this
Agreement, to distribute promptly to each Lender its Pro Rata Share of all
payments so received, (ii) to distribute to each Lender copies of all material
notices and agreements received by the Administrative Agent and not required to
be delivered to each Lender pursuant to the terms of this Agreement, provided
that the Administrative Agent shall not have any liability to the Lenders for
the Administrative Agent `s inadvertent failure to distribute any such notice or
agreements to the Lenders, and (iii) subject to Section 10.03 of this Agreement,
to take such action as the Administrative Agent deems appropriate on its behalf
to administer the Loans, Letters of Credit and the Loan Documents and to
exercise such other powers
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delegated to the Administrative Agent by the terms hereof or the Loan Documents
(including, without limitation, the power to give or to refuse to give notices,
waivers, consents, approvals and instructions and the power to make or to refuse
to make determinations and calculations) together with such powers as are
reasonably incidental thereto to carry out the purposes hereof and thereof. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions of the
Majority Lenders shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Letter of Credit Issuer shall not be required to
refuse to honor a drawing under any Letter of Credit and the Administrative
Agent shall not be required to take any action which, in the reasonable opinion
of the Administrative Agent, exposes the Administrative Agent to liability or
which is contrary to this Agreement or any Loan Document or applicable law.
11.02. Nature of Duties. The Administrative Agent shall have
no duties or responsibilities except those expressly set forth in this Agreement
or in the Related Documents. The duties of the Administrative Agent shall be
mechanical and administrative in nature. The Administrative Agent shall not have
by reason of this Agreement or any Related Document a fiduciary relationship in
respect of any Lender. Nothing in this Agreement or any of the Related
Documents, express or implied, is intended to or shall be construed to impose
upon the Administrative Agent any obligations in respect of this Agreement or
any of the Related Documents except as expressly set forth herein or therein.
Each Lender shall make its own independent investigation of the financial
condition and affairs of the Borrower in connection with the making and the
continuance of the Loans hereunder and with the issuance of the Letters of
Credit and shall make its own appraisal of the creditworthiness of the Borrower
and the value of the Collateral, and the Administrative Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the initial Credit Extension hereunder or at any time
or times thereafter, provided that, upon the reasonable request of a Lender, the
Administrative Agent shall provide to such Lender any documents or reports
delivered to the Administrative Agent by the Borrower pursuant to the terms of
this Agreement or any Related Document. If the Administrative Agent seeks the
consent or approval of the Majority Lenders to the taking or refraining from
taking any action hereunder, the Administrative Agent shall send notice thereof
to each Lender. The Administrative Agent shall promptly notify each Lender any
time that the Majority Lenders have instructed the Administrative Agent to act
or retrain from acting pursuant hereto.
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11.03. Rights, Exculpation, etc. The Administrative Agent and
its directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement or the other Loan Documents, except for their own gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the
Administrative Agent (i) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives written notice of the assignment or
transfer thereof, pursuant to Section 10.13 hereof, signed by such payee and in
form satisfactory to the Administrative Agent : (ii) may consult with legal
counsel (including, without limitation, counsel to the Administrative Agent or
counsel to the Borrower), independent public accountants, and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, certificates,
warranties or representations made in or in connection with this Agreement or
the other Loan Documents; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents; (iv) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Person, the existence or possible existence of any
Potential Default or Event of Default, or to inspect the Collateral or other
property (including, without limitation, the books and records) of any Person;
(v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall not be deemed to have made any representation
or warranty regarding the existence, value or collectibility of the Collateral,
the existence, priority or perfection of the Administrative Agent's Lien
thereon, or the Borrowing Base or any certificate prepared by the Borrower in
connection therewith, nor shall the Administrative Agent be responsible or
liable to the Lenders for any failure to monitor or maintain the Borrowing Base
or any portion of the Collateral. The Administrative Agent shall not be liable
for any apportionment or distribution of payments made by it in good faith
pursuant to Section 2.08(c), and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Lender to whom payment was due but not made, shall be to recover from other
Lenders any payment in excess of the amount which they are determined to be
entitled. The Administrative Agent may at any time request instructions from the
Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the Related Documents the Administrative Agent is
permitted or required to take or to grant, and if such instructions are promptly
requested, the Administrative Agent shall be absolutely entitled to refrain from
taking any action or
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to withhold any approval under any of the Related Documents until it shall have
received such instructions from the Majority Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting under this Agreement, the Notes, or any of the other
Related Documents in accordance with the instructions of the Majority Lenders.
11.04. Reliance. The Administrative Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents or
any telephone message believed by it in good faith to be genuine and correct and
to have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Related Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it.
11.05. Indemnification. To the extent that the Administrative Agent
is not reimbursed and indemnified by the Borrower, the Lenders will reimburse
and indemnify the Administrative Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by, or asserted against the Administrative Agent in any
way relating to or arising out of this Agreement or any of the Related
Documents or any action taken or omitted by the Administrative Agent under this
Agreement or any of the Related Documents, in proportion to each Lender's Pro
Rata Share, including, without limitation, advances and disbursements made
pursuant to Section 11.08; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements for which
there has been a final judicial determination that such resulted from the
Administrative Agent's gross negligence or willful misconduct. The obligations
of the Lenders under this Section 11.05 shall survive the payment in full of the
Loans and Reimbursement Obligations and the termination of this Agreement.
11.06 CIT Individually. With respect to its Pro Rata Share of the
Revolving Credit Commitments hereunder, the Loans made by it and the Note issued
to or held by it, CIT shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender or holder of a Note. The terms
"Lenders" or "Majority Lenders" or any similar term shall, unless the context
clearly otherwise indicates, include CIT in its individual capacity as a Lender
or one of the Majority Lenders. CIT and its Affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with the Borrower or any of its Subsidiaries as if it were not acting
as Administrative Agent pursuant hereto without any duty to account to the
Lenders. The Lenders
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acknowledge and agree that Chase and Dai-Ichi Kangyo Bank, Limited, New York
branch, as the Letter of Credit Issuer, is an Affiliate of the Administrative
Agent, and may take actions which are not in the interests of, or may have an
adverse effect on, the Lenders, or may omit to take actions which would be in
the interests of, or would have a favorable effect on, the Lenders, and the
Lenders will not assert any claim against the Administrative Agent based on
actions or omissions by the Letter of Credit Issuer and will not assert any such
actions or omissions as a defense or offset to the Lenders' obligations
hereunder.
11.07. Successor Agent.
(a) The Administrative Agent may resign from the performance
of all its functions and duties hereunder and under the other Related Documents
at any time by giving at least thirty (30) Business Days' prior written notice
to the Borrower and each Lender. Such resignation shall take effect upon the
acceptance by a successor Administrative Agent of appointment pursuant to
clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Administrative Agent who shall be reasonably
satisfactory to the Parent. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Agent, such successor Agent, such
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement
and the other Related Documents. After any Agent's resignation hereunder as the
Administrative Agent, the provisions of this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Related Documents.
(c) If a successor Administrative Agent shall not have been so
appointed within said thirty (30) Business Day period, the retiring Agent, with
the consent of the Borrower, shall then appoint a successor Administrative Agent
who shall serve as Administrative Agent until such time, if any, as the Majority
Lenders, with the consent of the Parent, appoint a successor Administrative
Agent as provided above.
11.08. Collateral Matters.
(a) The Administrative Agent may from time to time, during the
occurrence and continuance of an Event of Default, make such disbursements and
advances ("Agent Advances") which the Administrative Agent, in its sole
discretion, deems necessary or desirable to preserve or protect the Collateral
or any portion thereof, to enhance the likelihood or maximize the amount of
repayment by the Borrowers of the Loans and other Obligations or to pay any
other amount chargeable to the Borrower
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pursuant to the terms of this Agreement, including, without limitation, costs,
fees and expenses as described in Section 10.06. The Administrative Agent
Advances shall be repayable on demand and be secured by the Collateral. The
Administrative Agent Advances shall not constitute Loans but shall otherwise
constitute Obligations hereunder. The Administrative Agent shall notify each
Lender and the Parent in writing of each such Administrative Agent Advance,
which notice shall include a description of the purpose of such Administrative
Agent Advance. Without limitation to its obligations pursuant to Section 11.05,
each Lender agrees that it shall make available to the Administrative Agent,
upon the Administrative Agent's demand, in Dollars in immediately available
funds, the amount equal to such Lender's Pro Rata Share of each such
Administrative Agent Advance. If such funds are not made available to the
Administrative Agent by such Lender the Administrative Agent shall be entitled
to recover such funds, on demand from such Lender together with interest
thereon, for each day from the date such payment was due until the date such
amount is paid to the Administrative Agent, at the customary rate set by the
Administrative Agent for the correction of errors among banks for three (3)
Business Days and thereafter at the Regular Rate.
(b) The Lenders hereby irrevocably authorize the
Administrative Agent, at its option and in its discretion, to release any Lien
granted to or held by the Administrative Agent upon any Collateral upon
termination of the Revolving Credit Commitments and payment and satisfaction of
all Loans, Reimbursement Obligations, other Letter of Credit Exposure (whether
or not due) and all other Obligations which have matured and which the
Administrative Agent has been notified in writing are then due and payable; or
constituting property being sold or disposed of if the Parent certifies to the
Administrative Agent that the sale or disposition is made in compliance with
Section 8.04 b) hereof (and the Administrative Agent may rely conclusively on
any such certificate, without further inquiry); or constituting property in
which the Borrowers owned no interest at the time the Lien was granted or at any
time thereafter; or if approved, authorized or ratified in writing by the
Majority Lenders. Upon request by the Administrative Agent at any time, the
Lenders will confirm in writing the Administrative Agent's authority to release
particular types or items of Collateral pursuant to this Section 11.08(b).
(c) Without in any manner limiting the Administrative Agent's
authority to act without any specific or further authorization or consent by the
Majority Lenders (as set forth in Section 11.08(b)), each Lender agrees to
confirm in writing upon request by the Administrative Agent, the authority to
release Collateral conferred upon the Administrative Agent under Section
11.08(b). So long as no Event of Default is then continuing, upon receipt by the
Administrative Agent of Confirmation from the Majority Lenders of its authority
to release any particular item or types of Collateral, and upon at least five
(5) Business Days' prior written request by the Borrower the Administrative
Agent shall (and is hereby
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irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Administrative
Agent for the benefit of the Lenders upon such Collateral; provided, however,
that (i) the Administrative Agent shall not be required to execute any such
document on terms which, in the Administrative Agent's opinion, would expose
the Administrative Agent to liability or create an obligation or entail any
consequence other than the release of such Liens without recourse or warranty
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Lien upon (or obligations of the Borrowers in respect of) all
interests in the Collateral retained by the Borrowers.
(d) The Administrative Agent shall have no obligation
whatsoever to any Lenders to assure that the Collateral exists or is owned by
the Borrower or is cared for, protected or insured or has been encumbered or
that the Lien granted to the Administrative Agent pursuant to the Security
Documents has been properly or sufficiently or lawfully created, perfected,
protected or enforced or is entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Administrative Agent in this Section 11.08 or in any
of the Related Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Administrative
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Administrative Agent's own interest in the Collateral as one of the
Lenders and that the Administrative Agent shall have no duty or liability
whatsoever to any other Lender.
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ARTICLE XII.
INCONSISTENCIES
If there is any inconsistency between a Leasehold Mortgage or a
Trademark Security Agreement executed by a Borrower and a Security Agreement
executed by such Borrower, including in connection with the powers or rights of
the Administrative Agent or the Lenders after an Event of Default, the
provisions of the Credit Agreement and such Security Agreement shall prevail.
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Agreement as of the date first
above written.
BORROWERS
---------
GENESIS DIRECT, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
LITTLE GENESIS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
GIFTS FOR GRANDKIDS, LLC
HOT OFF THE ICE, LLC
BEYOND THE HORIZON, LLC
THE VOYAGER'S COLLECTION, LLC
THE TRAINING CAMP, LLC
CHILDSWORK/CHILDSPLAY, LLC
COMPETITIVE EDGE GOLF, LLC
FIRST STEP DESIGNS, LLC
LILLIPUT MOTOR COMPANY, LLC
▇-▇▇▇-▇▇▇-▇▇▇▇, LLC
ATHLETIC SUPPLY OF DALLAS, LLC
NINOS, LLC
GENESIS DIRECT SECAUCUS OPERATIONS, LLC
GENESIS DIRECT MEMPHIS OPERATIONS, LLC
GENESIS DIRECT OPERATIONS, LLC
GENESIS DIRECT MEMPHIS SERVICES, LLC
AFFINITY COLLEGE AND UNIVERSITY CATALOGS, LLC
By GENESIS DIRECT, INC., as
Managing Member of each of the
foregoing limited liability
companies
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
- 104 -
Address for Notices for all
Borrowers:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
AGENT AND LENDER
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THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
Address for Notices:
The CIT Group/Business Credit, Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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