LOAN AND SECURITY AGREEMENT
AMONG
TODAY'S MAN, INC.,
AS BORROWER
AND
THE GUARANTORS REFERRED TO
ON THE SIGNATURE PAGES
AND
THE FINANCIAL INSTITUTIONS
REFERRED TO ON THE SIGNATURE PAGES,
AS LENDERS
AND
MELLON BANK, N.A.,
INDIVIDUALLY AS A LENDER AND AS AGENT
DATED AS OF: DECEMBER 4, 1998
TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Accounting Terms and Determinations 18
1.3 UCC 18
1.4 Construction 18
1.5 Schedules and Exhibits 18
2. THE REVOLVING CREDIT FACILITY 18
2.1 The Facility 18
2.2 Notes 19
2.3 Borrowing Base 19
2.4 Eligible In-Transit Inventory Sublimit 19
2.5 Reserves 19
3. ADVANCES 19
3.1 General 19
3.2 Borrowing Procedures 20
3.3 Funding Procedure 20
3.4 Several Obligations to Lender 20
3.5 Permitted Assumptions by Agent 21
3.6 Use of Loan Proceeds 23
3.7 Expansion Store Sublimit 23
3.8 Settlement 24
3.9 Permitted Out-of-Formula Advances 25
3.10 Agent Loans 26
4. LETTERS OF CREDIT 26
4.1 General 26
4.2 Conditions to Issuance 27
4.3 Tenor 27
4.4 Sublimits 27
4.5 Procedure and Documentation 27
4.6 Reduction of Availability 27
4.7 Draws 28
4.8 Cash Collateral 28
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4.9 Indemnification 28
4.10 Risk Participations 29
4.11 Obligations Irrevocable 29
4.12 Risk Under Letters of Credit 30
4.13 Right of Reimbursement 31
5. FOREIGN EXCHANGE TRANSACTIONS 31
5.1 General 31
5.2 Conditions 31
5.3 Sublimits 31
5.4 Documentation 32
5.5 Payments Under FX Contracts 32
5.6 Liquidation of Permitted FX Contracts 32
5.7 Cash Collateral 33
5.8 FX Reserve Amount 33
5.9 Indemnification 33
5.10 Risk Participations 33
5.11 Obligations Irrevocable 33
5.12 Agent's Rights 34
6. INTEREST RATE 34
6.1 Interest Rate Options 34
6.2 Base Rate Plus Applicable Margin Fall Back 36
6.3 Indemnification 36
6.4 Applicable Margin 37
6.5 Funding Losses 38
6.6 Determinations 38
6.7 Default Interest 38
6.8 Post Judgment Interest 38
6.9 Calculation 38
6.10 Limitation of Interest to Maximum Lawful Rate 38
7. PAYMENTS AND FEES 39
7.1 Interest Payments 39
7.2 Principal Payments 39
7.3 Unused Line Fee 40
7.4 Expansion Store Sublimit Fee 40
7.5 Agent's Fees 40
7.6 Letter of Credit Fees 40
7.8 Other Fees 40
7.9 Interest and Breakage Costs on LIBOR Rate Loans 41
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7.10 Termination of Revolving Credit Facility and Termination Fee 41
7.11 Payment Method 42
7.12 Apportionment and Application of Payments 42
7.13 Reinstatement of Obligations 42
7.14 Maintenance of Loan Account; Statements of Obligations 43
7.15 Indemnity 43
7.16 Loss of Margin 43
8. SECURITY; COLLECTION OF ACCOUNTS AND PROCEEDS OF COLLATERAL 44
8.1 Personal Property 44
8.2 Real Property 47
8.3 Negotiable Collateral 47
8.4 Surety 47
8.5 General 47
8.6 Collection of Accounts; Proceeds of Collateral 47
9. REPRESENTATIONS AND WARRANTIES 49
9.1 Valid Organization, Good Standing and Qualification 49
9.2 Licenses 50
9.3 Ownership Interests 50
9.4 Subsidiaries 50
9.5 Financial Statements 50
9.6 No Material Adverse Change in Financial Condition 50
9.7 Pending Litigation or Proceedings 50
9.8 Due Authorization; No Legal Restrictions 51
9.9 Enforceability 51
9.10 No Default Under Other Obligations, Orders or
Governmental Regulations 51
9.11 Governmental Consents 51
9.12 Taxes 51
9.13 Title to Collateral 52
9.14 Names and Addresses 52
9.15 Current Compliance 52
9.16 Pension and Benefit Plans 52
9.17 Leases and Contracts 52
9.18 Intellectual Property 53
9.19 Eligible Inventory Warranties 53
9.20 Eligible Credit Card Accounts Warranties 53
9.21 Business Interruptions 54
9.22 Accuracy of Representations and Warranties 54
9.23 Equipment 54
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9.24 Inventory Records 54
9.25 FEIN 55
9.26 Solvency 55
9.27 Inventory Locations 55
9.28 Non-Operating Subsidiaries 56
9.29 Guarantor Business Activities 56
9.30 Warrants 56
9.31 Bankruptcy Plan 56
9.32 Credit Cards 57
9.33 Check Purchasing Agreements 57
10. YEAR 2000 COMPLIANCE 57
10.1 Representations and Warranties 57
10.2 Suppliers, Vendors and Servicers 57
10.3 Covenants 57
10.4 Definitions 58
11. AFFIRMATIVE COVENANTS 58
11.1 Payment of Principal, Interest and Other Amounts Due 58
11.2 Claims for Labor and Materials 58
11.3 Existence; Approvals; Qualification; Business Operations;
Compliance with Laws 58
11.4 Maintenance of Properties 58
11.5 Intellectual Property 59
11.6 Insurance 59
11.7 Inspections; Examinations 61
11.8 Pension Plans 62
11.9 Bank Accounts 62
11.10 Maintenance of Management 62
11.11 Transactions with Affiliates 62
11.12 Additional Documents and Future Actions 62
11.13 Returns 63
11.14 Title to Equipment 63
11.15 Taxes 63
11.16 Leases 63
11.17 Notices 63
11.18 New Trademark and Tradename Appraisals 64
11.19 Inventory Appraisals 64
11.20 Leasehold Mortgages; Appraisals; Etc 64
11.21 FX Contracts 64
11.22 Collateral Access Agreements 65
11.23 Additional Guarantors 65
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11.24 Plan of Reorganization 65
11.25 Credit Cards 65
12. NEGATIVE COVENANTS 66
12.1 Limitation on Sale and Leaseback 66
12.2 Limitation on Indebtedness 66
12.3 Investments and Loans 67
12.4 Guaranties 67
12.5 Disposition of Assets 67
12.6 Merger; Consolidation; Business Acquisitions; Subsidiaries 68
12.7 Taxes; Claims for Labor and Materials 68
12.8 Liens 68
12.9 Merchandise Letters of Credit 69
12.10 Insurance 69
12.11 Default Under Other Indebtedness 69
12.12 Transactions with Affiliates 69
12.13 Name or Chief Executive Address Change 69
12.14 Change in Location of Collateral 70
12.15 Material Adverse Contracts 70
12.16 Restrictions on Use of Proceeds 70
12.17 Benmol Note 70
12.18 Prepayments, Amendments and Royalty Payments 70
12.19 Change of Control 70
12.20 Consignments 71
12.21 Distributions 71
12.22 No Prohibited Transactions Under ERISA 71
12.23 Guarantor Business Activities 72
12.24 New Store Locations 72
12.25 Credit Cards 73
12.26 Trademark and Tradename Licenses 73
12.27 Check Purchase Agreement 73
12.28 Equipment Becoming Fixture 73
12.29 Warrants 73
12.30 Nature of Borrower's Business 73
13. FINANCIAL COVENANTS 73
13.1 Tangible Net Worth 73
13.2 Indebtedness to Tangible Net Worth Ratio 74
13.3 Capital Expenditures 74
13.4 Fixed Charge Coverage Ratio 74
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13.5 Most Favored Lender 74
14. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS 74
14.1 Annual Statements 74
14.2 Projections and Cash Flow 75
14.3 Quarterly Statements 75
14.4 Monthly Statements 76
14.5 Borrowing Base Certifications and Related Documents 76
14.6 Eligible Credit Card Accounts Borrowing Base Information
and Related Documents 76
14.7 Inventory Borrowing Base Information and Related Documents 77
14.8 SEC Reporting 77
14.9 Tax Returns 77
14.10 Audit Reports 77
14.11 Reports to Governmental Agencies and Other Creditors 77
14.12 Requested Information 77
14.13 Compliance Certificates 77
14.14 Accountant's Certificate 78
15. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE, INITIAL LETTER OF CREDIT OR
INITIAL PERMITTED FX CONTRACT 78
16. CONDITIONS PRECEDENT TO ALL ADVANCES, LETTERS OF CREDIT AND PERMITTED FX
CONTRACTS 81
16.1 Representations and Warranties 81
16.2 No Default or Event of Default 81
16.3 No Injunction or Order 81
16.4 No Bankruptcy 81
17. DEFAULT AND REMEDIES 81
17.1 Events of Default 81
17.2 Remedies 84
17.3 Sale or Other Disposition of Collateral 85
17.4 Actions With Respect to Accounts 86
17.5 Set-Off 88
17.6 Turnover of Property Held by Agent 88
17.7 Delay or Omission Not Waiver 88
17.8 Remedies Cumulative 88
17.9 Consents, Approvals and Discretion 89
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17.10 Certain Fees, Costs, Expense Expenditures 89
17.11 Indemnification 90
17.12 Time is of the Essence 91
18. COMMUNICATIONS AND NOTICES 91
19. WAIVERS 92
19.1 Waivers 92
19.2 Forbearance 93
19.3 Limitation on Liability 93
20. SUBMISSION TO JURISDICTION 93
21. AGENT 94
21.1 Appointment and Authorization 94
21.2 Delegation of Duties 94
21.3 Exculpatory Provisions 95
21.4 Reliance by Agent 95
21.5 Costs and Expenses; Indemnification 95
21.6 Events of Default 96
21.7 Actions Upon Default 96
21.8 Instructions 96
21.9 Investigation by Lenders 97
21.10 Agent in Its Individual Capacity 97
21.11 Resignation 98
21.12 Withholding Tax 98
21.13 Collateral Matters 99
21.14 Restrictions on Actions by Lenders; Sharing of Payments 100
21.15 Agency for Perfection 101
21.16 Payments by Agent to the Lenders 101
21.17 Concerning the Collateral and Related Loan Documents 101
21.18 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders 101
21.19 Other Reports; Loan Account 102
21.20 Several Obligations; No Liability 103
22. ASSIGNMENTS AND PARTICIPATIONS 103
22.1 Assignments 103
22.2 Participation 105
22.3 Financial and Other Information 105
22.4 Assignments to Federal Reserve 106
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22.5 Right of Agent to ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇. AMENDMENTS AND WAIVERS 106
24. MISCELLANEOUS 108
24.1 Brokers 108
24.2 Use of Agent's or Lender's Name 108
24.3 No Joint Venture 108
24.4 Survival 108
24.5 No Assignment 108
24.6 Publicity 108
24.7 Binding Effect 109
24.8 Severability 109
24.9 No Third Party Beneficiaries 109
24.10 Holidays 109
24.11 Law Governing 109
24.12 Integration 109
24.13 Exhibits and Schedules 109
24.14 Headings 109
24.15 Counterparts 109
24.16 Joint and Several 110
24.17 Limitation on Damages 110
24.18 Waiver of Right to Trial by Jury 110
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made effective as of December 4,
1998 by and among TODAY'S MAN, INC., a Pennsylvania corporation ("BORROWER");
each of the Subsidiaries of the Borrower identified under the caption
"Guarantor" on the signature pages of this Agreement or which, pursuant to
SECTION, shall become a "Guarantor" (individually, a "GUARANTOR" and,
collectively, the "GUARANTORS"); each of the financial institutions identified
under the caption "Lenders" on the signature pages of this Agreement (including
without limitation Mellon in such capacity) or which, pursuant to SECTION shall
become a "Lender" (individually, a "LENDER" and, collectively, the "LENDERS");
and MELLON BANK, N.A., a national banking association, as agent for the Lenders
(in such capacity, together with its successors in such capacity, the "AGENT").
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extensions of credit now or hereafter made to or for the
benefit of Borrower under this Agreement, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
2.
2.1 DEFINITIONS. The following words and phrases as used in capitalized form in
this Agreement, whether in the singular or plural, shall have the meanings
indicated:
ACCOUNT DEBTOR means any Person who is or who may become obligated
under, with respect to, or on account of, an account.
ACH means the automated clearing house system, which is a computer-based
nationwide system for electronic payments, supporting both debit and credit
transfers for participating depository institutions through automated clearing
house operators, who are generally Federal Reserve Banks.
ADVANCE means each advance by any member of the Lender Group under the
Revolving Credit Facility or this Agreement, including without limitation, Base
Rate Loans, LIBOR Rate Loans, Agent Loans, Out-of-Formula Advances permitted
under SECTION advances under Letters of Credit or Permitted FX Contracts, or
advances to pay Lender Group Expenses.
AFFILIATE means, as applied to any Person, any other Person who directly
or indirectly controls, is controlled by, is under common control with or is a
director or officer of such Person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to vote 20% or more
of the securities having ordinary voting power for the election of directors or
the direct or indirect power to direct the management and policies of a Person.
AGENT means Mellon, solely in its capacity as agent for the Lenders, and
shall include any successor agent.
AGENT'S FEES means the fees payable to Mellon solely for its account as
set forth in the Fee Agreement.
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AGENT LOANS has the meaning set forth in SECTION.
AGREEMENT means this Loan and Security Agreement.
APPLICABLE MARGIN has the meaning set forth in SECTION.
APPRAISED INVENTORY LIQUIDATION VALUE means the appraised liquidation
value of Borrower's inventory (based on the most recent appraisal obtained by
Agent), such appraisal by appraisers, and performed at the times, specified in
SECTION.
ASSIGNEE has the meaning set forth in SECTION.
ASSIGNING LENDER has the meaning set forth in SECTION.
ASSIGNMENT AND ACCEPTANCE has the meaning set forth in SECTION and shall
be in the form of EXHIBIT K.
ASSIGNMENT OF PATENTS, TRADEMARKS, LICENSES AND COPYRIGHTS means the
collateral assignments of patents, trademarks, licenses and copyrights of even
date herewith executed by Borrower and by D&L, Inc. in favor of Agent as
security for the Obligations.
ASSUMPTION AGREEMENT has the meaning set forth in SECTION.
AVAILABILITY means, as of the date of determination, the result (so long
as such result is a positive number) of (a) the lesser of (i) the Borrowing Base
(less Reserves, from time to time in effect), or (ii) the Maximum Revolving
Credit Facility Amount; less (b) the Revolving Credit Facility Usage.
AVERAGE UNUSED PORTION OF MAXIMUM REVOLVING AMOUNT means, as of any date
of determination, (a) the Maximum Revolving Credit Facility Amount, less (b) the
sum of (i) the average Daily Balance of Advances that were outstanding during
the immediately preceding month, plus (ii) the average Daily Balance of the
undrawn Letters of Credit that were outstanding during the immediately preceding
month.
BANKRUPTCY CODE means the United States Bankruptcy Code (11 U.S.C.
ss. 101 et seq.), as amended, and any successor statute.
BANKRUPTCY COURT means the United States Bankruptcy Court for the
District of Delaware.
BASE RATE means the rate per annum which is the higher of (i) the
Agent's Prime Rate, or (ii) the Federal Funds Rate plus 1/2%, in effect from
time to time (such interest rate to change immediately upon any change in the
Prime Rate or Federal Funds Rate).
BASE RATE LOAN means any Advance under the Revolving Credit Facility,
including an Agent Loan, bearing interest at the Base Rate plus Applicable
Margin.
BASE RATE LOAN REQUEST has the meaning set forth in SECTION 3.2(A).
BENEFIT PLAN means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA Affiliate
has been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
BENMOL NOTE means that certain subordinated demand note in the face
amount of $50,000,000.00 dated May 10, 1993 by Borrower in favor of Benmol, Inc.
which is subordinated to the Lenders pursuant to the Subordination Agreement
from Benmol, Inc.
BLOCKED ACCOUNT AGREEMENT means an agreement between Borrower, Agent and
a depository institution at which Borrower maintains a deposit account into
which cash, checks or drafts constituting proceeds of Borrower's inventory are
to be deposited as provided in this Agreement, in form and content satisfactory
to Agent, limiting the transfer of funds in such deposit account solely to the
Cash Collateral Account or otherwise as directed by Agent.
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BOOKS means all of a Person's books and records, including without
limitation, ledgers; records indicating, summarizing, or evidencing such
Person's properties or assets (including the Collateral) or liabilities; all
information relating to such Person's business operations or financial
condition; and all computer programs, disk or tape files, printouts, runs or
other computer prepared information.
BORROWER has the meaning set forth in the preamble to this Agreement.
BORROWING BASE has the meaning set forth in SECTION.
BUSINESS DAY means any day that is not a Saturday, Sunday, or other day
on which national banks are authorized or required to close.
CAPITAL EXPENDITURES means any expenditure that would be classified as a
capital expenditure in accordance with GAAP.
CAPITALIZED LEASE means each lease obligation which has been or should
be, in accordance with GAAP, capitalized on the books of the lessee.
CAPITALIZED LEASE OBLIGATION means all amounts payable with respect to a
Capitalized Lease.
CASH COLLATERAL ACCOUNT has the meaning set forth in SECTION 8.6(F).
CHANGE OF CONTROL shall be deemed to have occurred at such time as (i) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of more than 50% of the total voting power of all classes of stock then
outstanding of Borrower entitled to vote in the election of directors, (ii)
▇▇▇▇▇ ▇▇▇▇ shall own directly or indirectly less than 27% of the total voting
power of all classes of stock of Borrower or (iii) if ▇▇▇▇▇ ▇▇▇▇ is no longer
actively involved in substantially the same capacity as he is on the date hereof
in the business of Borrower.
CHECK PURCHASE AGREEMENT has the meaning set forth in SECTION.
CLOSING DATE means the date of the first to occur of the making of the
initial Advance, the issuance of the initial Letter of Credit or the entering
into of the initial Permitted FX Contract.
COLLATERAL has the meaning set forth in SECTION 8.5.
COLLATERAL ACCESS AGREEMENT means a landlord waiver or consent,
mortgagee waiver, bailee letter, or acknowledgment agreement of any
warehouseman, processor, lessor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Borrower's equipment,
Borrower's inventory or Borrower's Books, in each case, in form and substance
satisfactory to Agent.
COMMITMENT means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on
EXHIBIT A or on the signature page of the Assignment and Acceptance pursuant to
which such Lender became a Lender hereunder in accordance with the provisions of
SECTION, as such Commitment may be adjusted from time to time in accordance with
the provisions of SECTION and "COMMITMENTS" means, collectively, the aggregate
amount of the commitments of all of the Lenders.
COMPLIANCE CERTIFICATE means a certificate substantially in the form of
EXHIBIT B and delivered by the chief executive officer or chief financial
officer of Borrower to Agent, as required under SECTION.
CONFIRMATION ORDER means the order of the Bankruptcy Court dated
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December 12, 1997 confirming the Plan of Reorganization.
CONTRACT PERIOD means the period of time commencing on the date of this
Agreement and expiring on December 9, 2003.
CREDIT CARD AGREEMENTS has the meaning set forth in SECTION.
DAILY BALANCE means the amount of an Obligation owed at the end of a
given day.
DEFAULT means an event, condition or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
DEFAULT RATE has the meaning set forth in SECTION 6.7.
DEFAULTING LENDER has the meaning set forth in SECTION (D).
DISBURSEMENT LETTER means an instructional letter executed and delivered
by Borrower to Agent regarding the extensions of credit to be made on the
Closing Date, the form and substance of which shall be satisfactory to Agent.
DOLLARS OR $ means United States Dollars.
DRAW AMOUNT has the meaning set forth in SECTION 4.7.
EBITDA, for any period, means Net Income of Borrower for such period,
plus the aggregate amounts deducted in determining such Net Income in respect of
(i) Interest Expense, (ii) Tax Expense, and (iii) depreciation and amortization
expenses for such period, each determined in accordance with GAAP.
ELIGIBLE CREDIT CARD ACCOUNTS means accounts owing to Borrower from
credit card companies, issuers or servicers acting on behalf of such credit card
companies or issuers arising from or in connection with sales of finished goods
inventory of Borrower to retail customers effectuated through the use of credit
cards submitted for processing by Borrower in the immediately preceding three
(3) calendar days, or four (4) calendar days in the event that one of the three
calendar days is a holiday (not including Saturdays or Sundays) on which the
credit card companies or processors do not process credit card charges. In each
case the calculation of the calendar days shall include the sale transaction
date. Such credit card accounts must be processed pursuant to agreements with
each credit card company, issuer or servicer designated by them, which are in
full force and effect and as to which payment shall be made to Borrower either
without offset or defense or with respect to which any offset is already
reflected or "netted" from any Eligible Credit Card Account at the time of any
Advance with respect thereto.
ELIGIBLE IN-TRANSIT INVENTORY means those items of Borrower's inventory
consisting of first quality finished goods that satisfy all of the requirements
of Eligible Landed Inventory, except that such inventory is in-transit from
outside the United States to an Eligible Inventory Location. In addition, in
order for such inventory to qualify as Eligible In-Transit Inventory it must
comply with the following requirements:
(a) such inventory is not located in the United States;
(b) title to such inventory has passed to Borrower;
(c) negotiable documents of title with respect to such inventory
(including without limitation, a negotiable ▇▇▇▇ of lading) have been
delivered to Agent or its agent;
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(d) such inventory is insured against types of loss, damage, hazards,
and risks, and in amounts, satisfactory to Agent in its discretion and
Agent (for the pro rata benefit of Lenders) is named as the sole loss payee
with a lender's loss payable endorsement; and
(e) such inventory has been paid for or, if purchased under a
Merchandise Letter of Credit, such Merchandise Letter of Credit has been
drawn upon for payment and reimbursed; in each case, with documentation
therefor in form and substance satisfactory to Agent.
For purposes of determining Eligible In-Transit Inventory, there shall
be a reduction for the estimated costs relating to unpaid freight charges,
warehousing or storage charges, taxes, duties, processing charges, handling
charges and other similar unpaid costs.
ELIGIBLE INVENTORY means the Eligible In-Transit Inventory and the
Eligible Landed Inventory.
ELIGIBLE INVENTORY LOCATION means each of the locations described on
SCHEDULE 9.27(B), as such SCHEDULE 9.27(B) may be amended from time to time
pursuant to SECTION (C).
ELIGIBLE LANDED INVENTORY means Borrower's inventory consisting of first
quality finished goods held for sale in the ordinary course of Borrower's
business, that are located at or in-transit between an Eligible Inventory
Location, that strictly comply with each and all of the representations and
warranties respecting inventory made by Borrower in the Loan Documents, and that
are and at all times continue to be acceptable to the Agent in all respects;
provided, however, that standards of eligibility may be fixed and revised from
time to time by Agent on behalf of the Lender Group in its discretion. An item
of inventory shall not be included in Eligible Landed Inventory if:
(a) it is held by Borrower on consignment, is not owned solely by
Borrower or Borrower does not have good, valid, and marketable title
thereto;
(b) it is not located at an Eligible Inventory Location, or
in-transit between two (2) Eligible Inventory Locations;
(c) it is not (i) located on property owned or leased by Borrower,
or (ii) in a contract warehouse, in each case, segregated or otherwise
separately identifiable from goods of others, if any, stored on the
premises;
(d) it is not subject to a valid and perfected first priority
security interest in favor of the Agent on behalf of the Lender Group;
(e) it consists of damaged goods or goods classified as "return to
vendor";
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(f) it is obsolete, a restricted or custom item, or constitutes
stores, packaging and shipping materials or supplies used or consumed in
Borrower's business;
(g) it is subject to a Lien in favor of any third Person;
(h) it consists of ▇▇▇▇-and-hold goods;
(i) it consists of goods classified as "seconds," or goods acquired
on consignment;
(j) it is slow-moving, as determined by Agent based in the
reasonable judgment of Agent;
(k) it consists of raw materials;
(l) it consists of work-in-process;
(m) it consists of finished goods which do not meet the
specifications of the purchase order for which they were manufactured;
(n) it consists of goods produced in violation of the Fair Labor
Standards Act and subject to the so-called "hot goods" provision in Title
29 U.S.C. Section 215(a); or
(o) it consists of goods for which Agent would need a license,
permit or consent to sell or dispose of.
For the purposes of determining Eligible Landed Inventory, there shall
be a reduction for outstanding gift certificates valued at cost and shrinkage
and unreconcilable variances, if any, between the general ledger and the monthly
inventory ledger. Such reduction shall be separately accounted for by Borrower.
ELIGIBLE TRANSFEREE means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess of
$5,000,000,000, or the asset based lending Affiliate of such bank, (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of any such country, and having total assets in excess of
$5,000,000,000, or the asset based lending Affiliate of such bank; provided that
such bank is acting through a branch or agency located in the United States, (c)
a finance company, insurance or other financial institution, or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having total assets in excess of
$500,000,000, and (d) any Affiliate (other than individuals) of an existing
Lender.
ENVIRONMENTAL AGREEMENT means that certain Environmental Agreement
executed of even date with this Agreement by Borrower in favor of the Lender
Group.
ERISA means the Employee Retirement Income Security Act of 1974,
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29 U.S.C. ▇▇.▇▇. 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means (a) any Person subject to ERISA whose employees
are treated as employed by the same employer as the employees of Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of Borrower under
IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a member of an affiliated
service group of which Borrower is a member under IRC Section 414(m), or (d)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
Person subject to ERISA that is a party to an arrangement with Borrower and
whose employees are aggregated with the employees of Borrower under IRC Section
414(o).
ERISA EVENT means (a) a Reportable Event with respect to any Benefit
Plan or Multiemployer Plan, (b) the withdrawal of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during, a plan year in
which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041(c) of ERISA), (d) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (or the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of Borrower, any of its Subsidiaries
or ERISA Affiliates from a Multiemployer Plan, or (g) providing any security to
any Plan under Section 401(a)(29) of the IRC by Borrower or any of its
Subsidiaries or any of their ERISA Affiliates.
EVENT OF DEFAULT has the meaning set forth in SECTION.
EXCESS OPENING AVAILABILITY means the amount of Availability as
determined by Agent under the Revolving Credit Facility as of the Closing Date
if all Advances requested have been made to repay all obligations owed to the
Prior Lenders, after issuance of all Letters of Credit (if any) necessary to
secure Borrower's reimbursement obligations with respect to any letters of
credit issued and still outstanding under the revolving credit facility extended
to Borrower by the Prior Lenders, after deduction for all trade payables of
Borrower then more than thirty (30) past due (not including any trade payables
subject to a Permitted Protest), and after deduction for all fees, costs and
expenses then due and payable by Borrower under the Loan Documents.
EXPANSION STORE SUBLIMIT has the meaning set forth in SECTION 3.7.
FEDERAL FUNDS RATE means the daily rate of interest announced from time
to time by the Board of Governors of the Federal Reserve System in publication
H.15 as the "Federal Funds Rate."
FEE AGREEMENT means that certain Fee Agreement among Borrower,
Guarantors and Agent of even date with this Agreement.
FEIN means Federal Employer Identification Number.
FIXED CHARGE COVERAGE RATIO for any period means the ratio of (a)
Borrower's EBITDA, to (b) Borrower's Fixed Charges for such period.
FIXED CHARGES means for any period, the sum of (a) Interest Paid by
Borrower
7
during such period, plus (b) principal payments made by Borrower on
long-term Indebtedness (excluding payments of principal with respect to the
Revolving Credit Facility) and Capitalized Lease Obligations during such period,
plus (c) Taxes Paid by Borrower during such period, plus (d) Capital
Expenditures made by Borrower during such period, plus (e) the amortization
during such period of the Advances previously funded under the Expansion Store
Sublimit in accordance with SECTION, plus (f) dividends and distributions made
by Borrower for such period, if permitted pursuant to this Agreement.
FUNDING DATE means the date, which must be a Business Day, on which an
Advance occurs.
FX PARAMETERS LETTER means that certain letter agreement between Agent
and Borrower, a copy of which is attached hereto as EXHIBIT C, regarding the
parameters under which Agent will provide foreign exchange currency services to
Borrower.
FX RESERVE AMOUNT means, as of any date of determination, the amount of
the reserve established by Agent in its discretion from time to time against the
Borrowing Base in connection with Permitted FX Contracts.
GAAP means generally accepted accounting principles set forth as of the
relevant date in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable statute and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
GOVERNING DOCUMENTS means the certificate or articles of incorporation,
by-laws, partnership agreement, joint venture agreement or other organizational
or governing documents of any Person.
GUARANTOR means each of ▇▇▇▇ & ▇▇▇▇, Inc., a Delaware corporation,
Benmol, Inc., a Delaware corporation and D & L, Inc., a Delaware corporation,
and each other Person who shall become a "Guarantor" pursuant to or as required
under SECTION.
GUARANTOR BUSINESS ACTIVITIES has the meaning set forth in SECTION.
INDEBTEDNESS, as applied to a Person, means:
(a) all items (except items of capital stock or of surplus) which
in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all indebtedness,
obligations, and liabilities secured by any mortgage, pledge, lien,
conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is
subject, whether or not the indebtedness, obligations or liabilities
secured thereby shall have been assumed by such Person; and
(c) to the extent not included in the foregoing, all indebtedness,
obligations and liabilities of others which such Person has directly or
indirectly guaranteed, endorsed (other than for collection or deposit in
the ordinary course of business), sold with
8
recourse, or agreed (contingently or otherwise) to purchase or repurchase or
otherwise acquire or in respect of which such Person has agreed to supply or
advance funds (whether by way of loan, stock purchase, capital contribution or
otherwise) or otherwise to become directly or indirectly liable.
INDEMNIFIED AGENT PARTIES has the meaning set forth in SECTION
INDEMNIFIED PARTIES has the meaning set forth in SECTION.
INTEREST EXPENSE as applied to Borrower means for any period, the amount
of interest expense of Borrower for such period, determined in accordance with
GAAP.
INTEREST PAID as applied to Borrower means for any period, the amount of
interest actually paid by Borrower for such period, determined in accordance
with GAAP.
IRC means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
LANDLORD CONSENT means each consent of each owner and sublessor, in form
and content acceptable to Agent, expressly consenting to the applicable Mortgage
and the filing of a Memorandum of Lease in the appropriate real estate recording
office with respect to the applicable Mortgage.
LENDER and LENDERS have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement as a lender in accordance with the provisions of SECTION.
LENDER GROUP means, individually and collectively, each of the
individual Lenders and the Agent.
LENDER GROUP EXPENSES has the meaning set forth in SECTION 17.10.
LETTERS OF CREDIT means the Standby Letters of Credit and the
Merchandise Letters of Credit issued by Agent pursuant to this Agreement.
LIBOR LOAN REQUEST has the meaning set forth in SECTION 3.2(A).
LIBOR RATE means with respect to any Advance under the Revolving Credit
Facility accruing interest at a LIBOR Rate plus Applicable Margin as permitted
hereunder, for any day during each Rate Period, the per annum rate of interest
(computed on a basis of a year of 360 days and actual days elapsed) determined
by Agent to be equal to the quotient of (a) the per annum rate of interest
estimated in good faith by Agent in accordance with its usual procedures (which
determination shall be conclusive) to be the average of the rate per annum for
deposits, in an amount denominated in U.S. Dollars comparable to the amount of
principal relating to such Rate Period and having maturities comparable to such
Rate Period, offered to major money center banks in the London interbank market
as referenced by Reuters Screen "LIBOR" at or about 11:00 a.m., London time, two
(2) London business days prior to such Rate Period, divided by (b) a number
equal to 1.00 minus the LIBOR Reserve Percentage for the relevant Rate Period.
LIBOR RATE LOAN means any Advance under the Revolving Credit Facility
bearing interest at the LIBOR Rate plus Applicable Margin.
LIBOR RATE NOTIFICATION means a written notification from Borrower to be
delivered to Agent electing to convert an existing Base Rate Loan to a LIBOR
Rate Loan, in the form of EXHIBIT D attached hereto.
LIBOR RESERVE PERCENTAGE means the maximum rate at which reserves
9
(including any marginal, supplemental or emergency reserves) are required to be
maintained during the relevant Rate Period under Regulation D (and/or other
similar regulation) of the Board of Governors of the Federal Reserve System
against "Eurocurrency Liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the LIBOR Reserve Percentage shall
reflect any other reserves required to be maintained by reason of any regulatory
change against (a) any category of liabilities which includes deposits by
reference to which the LIBOR Rate is to be determined as provided in the
definition of "LIBOR Rate" or (b) any category of extensions of credit or other
assets which include loans, the interest rate of which is based on the LIBOR
Rate.
LICENSE AGREEMENT means the Amended and Restated License Agreement dated
September 30, 1993 between D & L, Inc. and Today's Man, Inc.
LIEN means any interest in property securing an obligation owed to, or a
claim by, any Person other than the owner of the property, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising, from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting any real property.
LOAN ACCOUNT has the meaning set forth in SECTION.
LOAN DOCUMENTS means this Agreement, the Pledge Agreements, the
Environmental Agreement, the Disbursement Letter, the Letters of Credit, the
Blocked Account Agreements, the Assignments of Patents, Trademarks, Licenses and
Copyrights, the Mortgages, the Notes, the Subordination Agreements, each Surety
Agreement and any other agreement entered into, now or in the future, in
connection with this Agreement.
LOAN REQUEST means a Base Rate Loan Request, a LIBOR Rate Loan Request
or a telephone loan request for a Base Rate Loan as permitted under SECTION.
LOANS means all Advances outstanding under the Revolving Credit
Facility, including without limitation Base Rate Loans, LIBOR Rate Loans and
Agent Loans.
LOAN YEAR means each consecutive twelve (12) month period during the
Contract Period, with the first Loan Year commencing on the date of this
Agreement and each subsequent Loan Year commencing on the anniversary date of
this Agreement.
MATERIAL ADVERSE CHANGE means (a) a material adverse change, as
determined by Agent in good faith, in the business, prospects, operations,
results of operations, assets, liabilities or condition (financial or otherwise)
of Borrower, individually, or of Borrower and Guarantors on a consolidated
basis, (b) the material impairment, as determined by Agent in good faith, of
Borrower's or any Guarantor's ability to perform its obligations under the Loan
Documents to which it is a party or of the Agent's or the Lender Group's ability
to enforce the Obligations of the Loan Documents or to realize upon the
Collateral, (c) a material adverse effect, as determined by Agent in good faith,
on the value of the Collateral or the amount that the Lender Group would be
likely to receive (after giving consideration to delays in payment
10
and costs of enforcement) in the liquidation of such Collateral, or (d) a
material impairment, as determined by Agent in good faith, of the priority of
the Liens in favor of the Agent for the benefit of the Lender Group with respect
to the Collateral.
MAXIMUM REVOLVING CREDIT FACILITY AMOUNT means $45,000,000.
MELLON means Mellon Bank, N.A., a national banking association, its
successors and assigns.
MEMORANDUM OF LEASE means each memorandum of lease as required to be
filed in the county where the Mortgages are to be recorded (as a condition to
their effective recordation) in form and substance satisfactory to Agent.
MERCHANDISE LETTER OF CREDIT means a documentary Letter of Credit issued
by Agent to support the purchase by Borrower of inventory prior to transit to an
Eligible Inventory Location, that provides that all draws thereunder must
require presentation of customary documentation (including a negotiable ▇▇▇▇ of
lading, and if applicable, commercial invoices, packing list, certificate of
origin, customs clearance documents, quota statement, inspection certificate,
beneficiaries statement, and ▇▇▇▇ of exchange, dock warrants, dock receipts,
warehouse receipts, or other documents of title) in form and substance
satisfactory to Agent and reflecting the passage to Borrower of title to first
quality inventory conforming to Borrower's contract with the seller thereof.
MORTGAGE means each leasehold mortgage (or deed of trust) securing the
Obligations in favor of Agent (for the benefit of the Lenders), in form and
substance satisfactory to Agent, encumbering the Real Property Collateral.
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any ERISA
Affiliate has contributed, or was obligated to contribute, within the past six
years.
NEGOTIABLE COLLATERAL means all of a Person's present and future letters
of credit, notes, drafts, instruments, investment property, security
entitlements, securities (including the shares of stock of direct and indirect
Subsidiaries of Borrower), documents, personal property leases (wherein such
Person is the lessor), chattel paper, and such Person's Books relating to any of
the foregoing.
NET INCOME means income (or loss) of Borrower after Tax Expense and
shall have the meaning given such term by GAAP, provided that there shall be
specifically excluded therefrom (a) gains from the sale of capital assets, (b)
net income of any other Person in which Borrower has an ownership interest,
unless received by Borrower in a cash distribution, (c) any gains arising from
extraordinary items, as defined by GAAP.
NON-ASSIGNABLE CONTRACTS has the meaning set forth in SECTION 8.1(E).
NOTE means each promissory note of Borrower executed and delivered
pursuant to SECTION.
NOTIONAL AMOUNT means the amount of U.S. dollars to be paid by Borrower
to Agent in connection with the purchase of foreign currency by Borrower
pursuant to each Permitted FX Contract.
OBLIGATIONS means the Agent's Fees and all Loans, Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations under
any outstanding Letters of Credit, obligations under or in respect of Permitted
FX Contracts, liabilities (including all amounts
11
charged to Borrower's Loan Account pursuant hereto), obligations, fees, charges,
costs, or Lender Group Expenses (including any fees or expenses that, but for
the provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by Borrower to the Lender Group of any
kind and description (whether pursuant to or evidenced by the Loan Documents or
pursuant to any other agreement between Agent or the Lender Group and Borrower,
and irrespective of whether for the payment of money), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or obligation owing from
Borrower to others that the Lender Group may have obtained by assignment or
otherwise, and further including all interest not paid when due and all Lender
Group Expenses that Borrower is required to pay or reimburse by the Loan
Documents, by law, or otherwise.
ORIGINATING LENDER has the meaning set forth in SECTION.
OUT-OF-FORMULA ADVANCE means the amount by which the then outstanding
Advances under the Revolving Credit Facility exceeds the Borrowing Base.
PARTICIPANT has the meaning set forth in SECTION.
PAY-OFF LETTER means a letter, in form and substance satisfactory to
Agent, from the agent for the Prior Lenders (a) specifying the amount necessary
to repay in full all of the obligations of Borrower owing to the Prior Lenders,
(b) containing a termination or release of all of the Liens existing in favor of
the Prior Lenders or their agents in and to the properties or assets of Borrower
and all Guarantors, (c) providing for the delivery to Agent of the original
Benmol Note, the original stock certificates for all stock covered by the Pledge
Agreements, all other Negotiable Collateral and the certificates of title for
any trailers constituting part of the Collateral, (d) providing for the delivery
to Agent of all UCC termination statements, releases of liens or mortgages
encumbering any patents, trademarks, tradenames or other intellectual property
of Borrower or Guarantors, and (e) providing for payments from collections of
accounts or sales of inventory by Borrower to be delivered or transmitted from
blocked accounts or cash collateral accounts maintained for the benefit of the
Prior Lenders to the Cash Collateral Account or to the deposit accounts of
Agent.
PBGC means the Pension Benefit Guaranty Corporation as defined in Title
IV of ERISA, or any successor thereto.
PERMITTED FX CONTRACTS means foreign currency exchange contracts between
Agent and Borrower that: (a) are in respect of marked-to-market risk on foreign
exchange future trades or options; (b) are entered into by Borrower in the
ordinary course of its business in connection with inventory purchases; (c) are
entered into in connection with the operational needs of Borrower's business and
not for speculative purposes; and (d) are provided by Agent pursuant to the FX
Parameters Letter.
PERMITTED PROTEST means the right of Borrower to protest any Lien (other
than any Lien that secures the Obligations), tax (other than payroll taxes or
taxes that are the subject of a United States federal tax lien), trade payable
or rental payment, provided that: (a) a bond is posted or a reserve with respect
to such obligation is established under the Revolving Credit Facility in each
case in an amount that is satisfactory to Agent, (b) any such protest is
instituted and diligently prosecuted by Borrower in good faith, and (c) Agent
has determined in good faith, that while any such protest is pending, there
would be no impairment of the enforceability, validity, or priority of any of
the Liens in favor of Agent for the benefit of the
12
Lender Group in and to the Collateral.
PERSON means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and any
governments and agencies and political subdivisions thereof.
PERSONAL PROPERTY COLLATERAL means all Collateral in which Borrower has
an interest other than the Real Property Collateral.
PLAN means any employee benefit plan, program, or arrangement maintained
or contributed to by Borrower or with respect to which it may incur liability.
PLAN OF REORGANIZATION means the Debtors' Second Amended Joint Plan of
Reorganization dated September 26, 1997 of Today's Man, Inc. and certain
affiliates and all exhibits, schedules and attachments thereto as confirmed by
order of the Bankruptcy Court entered on December 12, 1997, together with all
amendments, modifications and supplements thereto.
PLEDGE AGREEMENTS means collectively the pledge agreements of even date
herewith executed by (a) Borrower in form and substance satisfactory to Agent
pursuant to which Borrower pledges the stock of ▇▇▇▇ & ▇▇▇▇, Inc. to the Agent
for the benefit of the Lender Group and (b) ▇▇▇▇ & ▇▇▇▇, Inc. in form and
substance satisfactory to Agent pursuant to which ▇▇▇▇ & ▇▇▇▇, Inc. pledges the
stock of Benmol, Inc. and D & L, Inc. to the Agent for the benefit of the Lender
Group.
PRIME RATE means the annual interest rate established from time to time
by Agent and generally known by Agent as its "prime rate", whether published by
it publicly or only for the internal guidance of its loan officers. The Prime
Rate is used merely as a pricing index and is not and should not be considered
to represent the lowest or best rate available to a borrower.
PRIOR LENDERS means the lenders who have extended credit facilities to
Borrower pursuant to that certain Loan and Security Agreement dated December 30,
1997 with respect to which Foothill Capital Corporation has acted as agent.
PRO RATA SHARE means, with respect to a Lender, a fraction (expressed as
a percentage), the numerator of which is the amount of such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments.
RATE PERIOD means for any principal portion of the Revolving Credit
Facility for which Borrower elects a LIBOR Rate plus Applicable Margin, the
period of time for which such rate shall apply to such principal. Rate Periods
for principal accruing interest at the LIBOR Rate plus Applicable Margin shall
be for periods of one, two, three, six or nine months and for no other length of
time, provided that (a) no Rate Period may extend beyond the expiration of the
Contract Period, and (b) there shall only be one LIBOR Rate Loan outstanding at
any time with a Rate Period of nine months.
REAL PROPERTY COLLATERAL means any estates or interests in real property
and all improvements thereon, including without limitation, all leasehold and
subleasehold interests now owned or hereafter acquired by Borrower.
RENT RESERVE means a Reserve (a) prior to occurrence of a Default, in an
amount equal to one month's rent for any of Borrower's locations for which Agent
has not received a Landlord's Waiver or Collateral Access Agreement acceptable
to Agent, and (b)
13
upon the occurrence of a Default, in an amount equal to more than one month's
rent as determined by Agent for any of Borrower's locations for which Agent has
not received a Landlord's Waiver or Collateral Access Agreement acceptable to
Agent.
REPORTABLE EVENT means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder.
REPORT or REPORTS has the meaning set forth in SECTION.
REQUISITE LENDERS means, at any time, Agent, together with such other
Lenders whose Pro Rata Shares together with Agent aggregate 50.1% or more of the
Commitments.
RESERVES means reserves against Availability under the Revolving Credit
Facility, established by Agent at its discretion from time to time, including
without limitation, the Rent Reserve and FX Reserve Amount.
REVOLVING CREDIT FACILITY USAGE means, as of the date of determination,
the aggregate amount of (a) all outstanding Advances, (b) the outstanding
undrawn amount of Letters of Credit, and (c) the then applicable FX Reserve
Amount.
REVOLVING CREDIT FACILITY means the revolving credit facility
established for Borrower under this Agreement.
SETTLEMENT has the meaning set forth in SECTION.
SETTLEMENT DATE has the meaning set forth in SECTION.
SETTLEMENT NOTICE has the meaning set forth in SECTION 3.8(B).
SOLVENT means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person, including all rights of subrogation and contribution of such Person, are
greater than the sum of the debts, including contingent liabilities, of such
Person, (b) the present fair salable value of the properties and assets of such
Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured, (c)
such Person is able to realize upon its properties and assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts beyond such Person's ability to pay
as such debts mature, and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's properties and assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in the industry in
which such Person is engaged. In computing the amount of contingent liabilities
at any time, it is intended that such liabilities will be computed at the amount
that, in light of all the facts and circumstances existing at such time
(including without limitation, the likelihood that such Person would be
compelled to pay the full amount of any obligation with respect to which such
Person is a co-obligor with other Persons), represents the amount that
reasonably can be expected to become an actual or matured liability.
STANDBY LETTER OF CREDIT means each standby letter of credit (not
Merchandise Letter of Credit) issued by Agent pursuant to this Agreement.
SUBORDINATION AGREEMENT shall mean each subordination agreement from
each Guarantor in favor of Agent on behalf of the Lender Group.
SUBSIDIARY of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of stock or other ownership interests having
ordinary voting power to elect a majority of the
14
board of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.
SURETY AGREEMENTS has the meaning set forth in SECTION 8.4.
TANGIBLE NET WORTH shall mean, at any time, the amount by which all
assets of Borrower, excluding intangible assets, as that term would be defined
under GAAP, exceed all of Borrower's liabilities, as would be shown on a balance
sheet of Borrower prepared as of such date in accordance with GAAP.
TAXES PAID as applied to Borrower, means for any period, the amount of
taxes actually paid by Borrower during such period, determined in accordance
with GAAP.
TAX EXPENSE as applied to Borrower means for any period, the amount of
tax expense of Borrower for such period, determined in accordance with GAAP.
UCC means the Uniform Commercial Code as adopted in Pennsylvania, as it
may be amended from time to time.
UNOPENED STORES has the meaning set forth in SECTION.
VALUE with respect to Eligible Inventory, means the lower of cost
(determined on a first-in-first-out basis) or market value, determined in all
cases in accordance with GAAP.
WARRANTS PROCEEDS has the meaning set forth in SECTION.
WARRANTS has the meaning set forth in SECTION.
YEAR 2000 COMPLIANCE has the meaning set forth in SECTION 10.4.
1.1 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters shall be made in accordance with GAAP, and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP as in effect on the
date of determination. All financial statements to be delivered pursuant to this
Agreement shall be prepared in accordance with GAAP. All financial covenants are
to be calculated in accordance with GAAP as in effect on the date of
determination.
1.2
1.3 UCC. Any terms used in this Agreement that are defined in the UCC shall be
construed and defined as set forth in the UCC unless otherwise defined herein.
1.4
1.5 CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the term "including" is not limiting, and the term
"or" has, except where otherwise indicated, the inclusive meaning represented by
the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. An Event of Default shall "continue"
or be "continuing" until such Event of Default has been waived in writing in
accordance with SECTION. Section, subsection, clause, schedule, and exhibit
references are to sections, subsections, clauses, schedules and exhibits in this
Agreement unless otherwise specified. Any reference in this Agreement or in the
Loan Documents to this Agreement, any of the Loan Documents or any other
document or agreement shall include all alterations,
15
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, supplements, and restatements thereto and thereof, as applicable.
1.6
1.7 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to this
Agreement, as they may from time to time be amended or restated, shall be deemed
incorporated herein by reference.
1. THE REVOLVING CREDIT FACILITY.
2.
2.1 THE FACILITY. Subject to the terms and conditions of this Agreement and the
Loan Documents, the Lenders agree to establish for Borrower the Revolving Credit
Facility pursuant to which during the Contract Period, each Lender agrees to
extend to Borrower such Lender's Pro Rata Share of Advances and pursuant to
which Agent agrees to issue Letters of Credit for the account of Borrower and to
enter into Permitted FX Contracts for and with Borrower, provided that, the
Revolving Credit Facility Usage shall not exceed at any time the lesser of (a)
the Borrowing Base, or (b) the Maximum Revolving Credit Facility Amount.
1.1 NOTES. Borrower's obligation to repay each Lender's Pro Rata Share of
Advances and other extensions of credit under the Revolving Credit Facility
shall be further evidenced by Notes executed and delivered by Borrower in the
face amount of each Lender's Commitment payable to the order of such Lender and
substantially in the form attached hereto as EXHIBIT E.
1.2
1.3 BORROWING BASE. The "BORROWING BASE" as of the applicable date of
determination shall be determined based upon the following advance rates and
calculations:
1.4
(a) An advance rate of up to 85% of Borrower's Eligible Credit Card Accounts;
plus
(b)
(c) An advance rate of up to the lesser of (i) 65% of the Value of Borrower's
Eligible Landed Inventory, or (ii) 85% of the Appraised Inventory Liquidation
Value of Borrower's Eligible Landed Inventory; plus
(d)
(e) An advance rate of up to 65% of the Value of Borrower's Eligible In-Transit
Inventory; plus
(f)
(g) An advance rate of up to 65% of the outstanding, undrawn amount of
Merchandise Letters of Credit issued by Agent in connection with the purchase by
Borrower of finished goods inventory or cut, make and trim inventory (but not in
connection with the purchase of raw materials); minus
(h)
(i) All Reserves.
16
1.1 ELIGIBLE IN-TRANSIT INVENTORY SUBLIMIT. Notwithstanding anything herein or
elsewhere to the contrary, the maximum amount of Revolving Credit Facility Usage
based upon the Value of Borrower's Eligible In-Transit Inventory shall not
exceed $2,500,000.00.
1.1 RESERVES. The amount of the Borrowing Base shall be reduced by Reserves.
Such Reserves may be established by Agent at its discretion from time to time,
regardless of whether a Default or Event of Default has occurred or is
continuing.
1. ADVANCES.
2.
2.1 GENERAL. Advances under the Revolving Credit Facility shall be made by
Lenders to Borrower in accordance with the procedures set forth below. Within
the limitations set forth in this Agreement, Borrower may borrow, repay and
reborrow under the Revolving Credit Facility.
1.1 BORROWING PROCEDURES.
1.2
(a) FORM OF LOAN REQUEST. Borrower may request a Loan by delivering to the
officer of Agent designated from time to time by Agent, a written Loan Request.
Such written request for a Loan shall be in the form of EXHIBIT F, if the
request is for a Base Rate Loan (a "BASE RATE LOAN REQUEST"), or in the form of
EXHIBIT G if the request is for a LIBOR Based Loan (a "LIBOR RATE LOAN
REQUEST"). Such Loan Request forms may be in such other form as Agent may
require from time to time upon notice to Borrower. Each Loan Request received by
Agent shall be conclusively presumed to be executed and delivered by a duly
authorized officer or employee of Borrower. Once received by Agent, each Loan
Request shall be deemed irrevocable. Notwithstanding the foregoing, Borrower may
request a Base Rate Loan by a telephone request to the officer of Agent
designated from time to time by Agent. Each telephone request received by Agent
shall be conclusively presumed to be made by a duly authorized officer or
employee of Borrower. Once received by Agent, each telephone Loan Request shall
be deemed irrevocable. Agent, at its discretion, may require that each telephone
Loan Request be confirmed promptly by Borrower in writing.
(a) AVAILABILITY. Availability under the Revolving Credit Facility will be based
upon the most recent Borrowing Base Certificate required under SECTION
accompanied by the collateral and back-up information required under SECTIONS
AND.
(b)
(c) TIMING OF REQUEST. Each Base Rate Loan Request must be received by Agent no
later than 12:00 noon Philadelphia time on the requested Funding Date. Each
LIBOR Rate Loan Request must be received by Agent no later than 12:00 noon
Philadelphia time three (3) Business Days prior to the requested Funding Date.
(d)
17
1.2 FUNDING PROCEDURE. Agent shall give prompt written or telephone notice to
each Lender of such Lender's Pro Rata Share of the requested Loan, the interest
rate, requested Funding Date, and Rate Period (if the requested Loan is a LIBOR
Rate Loan). After receipt of such notice, each Lender shall make such
arrangements as are necessary to assure that such Lender's Pro Rata Share of the
requested Loan shall be made available to Agent (in U.S. Dollars) no later than
3:00 p.m. Philadelphia time on the requested Funding Date. After receipt of such
funds from each Lender and subject to the conditions set forth in this
Agreement, Agent shall disburse such Loan proceeds to Borrower by transferring
into Borrower's operating account maintained with Agent the amount of such Loan
proceeds, or otherwise in accordance with procedures acceptable to Agent.
1.3
1.4 SEVERAL OBLIGATIONS TO LENDER. Each Lender is severally bound by this
Agreement. There shall be no joint obligations of the Lenders under this
Agreement. No Lender shall be responsible for the failure by any other Lender to
perform its obligations under this Agreement or any of the Loan Documents. No
Commitment of any Lender shall be increased or decreased as a result of the
failure of any other Lender to perform its obligations under this Agreement or
any of the Loan Documents. The failure of any Lender to make a Loan under this
Agreement shall not excuse any other Lender from its obligations to fund its Pro
Rata Share of any Loan.
1.1 PERMITTED ASSUMPTIONS BY AGENT.
1.2
(a) Unless the Agent shall have received notice from a Lender prior to 12:30
p.m. Philadelphia time on the requested Funding Date of any Loan that such
Lender will not make available to the Agent such Lender's Pro Rata Share of such
Loan, the Agent may assume that such Lender has made or will make its Pro Rata
Share available to the Agent on the requested Funding Date of such Loan. The
Agent may in its discretion and in reliance upon such assumption make available
to the Borrower on such date a corresponding amount.
(a) If a Lender has not or does not make available to the Agent the full amount
of its Pro Rata Share of any Advance on the requested Funding Date, the Agent
may advance such corresponding amount and such Lender agrees to repay to the
Agent on demand such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid by such Lender to the Agent at the Federal Funds
Rate, provided, however, that if such Lender shall fail to make available to the
Agent the full amount of such Lender's Pro Rata Share of any Advance within two
(2) Business Days of the date it shall have received notice from the Agent that
its Pro Rata Share of such Advance has not been received, interest shall accrue
and be payable on such amount (from such second Business Day after notice is
received) at a rate equal to the rate payable by the Borrower on the
corresponding Loan. If such Lender shall reimburse the Agent for an amount
advanced by the Agent pursuant to the preceding subparagraph (a) with interest
as provided above, upon such reimbursement such amount shall constitute such
Lender's Pro Rata Share of the applicable Loan for all purposes of this
Agreement. If such Lender does not
18
reimburse such corresponding amount immediately upon the Agent's demand
therefor, the Agent shall notify the Borrower and the Borrower shall immediately
pay such corresponding amount to the Agent, with interest at the applicable rate
hereunder for such Loan. The failure of any Lender to fund its portion of any
Loan shall not relieve any other Lender of its obligation, if any, hereunder to
fund its respective Pro Rata Share of the Loan on the Funding Date, but no
Lender shall be responsible for any such failure of any other Lender.
(b)
(c) If the Agent advances any funds pursuant to this SECTION in respect of
another Lender's Commitment and whether or not the relevant Lender thereafter
reimburses the Agent, any contractual interest payable on such amount by the
Borrower hereunder for the period commencing on the date such amount was made
available by the Agent until the date the relevant Lender reimburses the Agent
shall be payable to the Agent and not such Lender and, in addition, such Lender
shall pay the Agent the interest payment referred to in paragraph (b) above and
any costs, losses or expenses incurred by Agent in connection therewith, as well
as a $3,500.00 fee to compensate the Agent for its efforts in connection
therewith. Such payment shall be retained by Agent for its own account.
(d)
(e) In the event that, at any time (other than during a period when a Default or
Event of Default has occurred and is continuing) a Lender for any reason fails
or refuses to fund its portion of a Loan, such Lender shall be deemed to be a
"DEFAULTING LENDER". Until such time as such Defaulting Lender has funded its
Pro Rata Share of such Loan (which late funding shall not absolve such
Defaulting Lender from any liability it may have), such Defaulting Lender shall
not have the right to vote regarding or to approve any issue on which voting or
approval is required or advisable under this Agreement or any other Loan
Document, and the amount of the Commitment or Loans of such Lender shall not be
counted as outstanding for purposes of determining REQUISITE LENDERS hereunder.
In addition, Agent shall not be obligated to transfer to any Defaulting Lender,
any payments (including principal, interest and fees) made by or for Borrower to
Agent or received by Agent as a result of the realization upon a sale of any
Collateral, for the Defaulting Lender's benefit, nor shall a Defaulting Lender
be entitled to any sharing in such payments. All of such payments shall instead
be payable to and retained by Agent. Agent may hold or, in its discretion,
relend to Borrower the amount of any such payments paid to or retained by Agent.
(f)
(g) Without prejudice to the survival of any other remedies against a Defaulting
Lender, if a Defaulting Lender fails to make available to the Agent the full
amount of such Lender's Pro Rata Share of any Advance within two (2) Business
Days of the date it shall have received notice from the Agent that its Pro Rata
Share of the Advance has not been received, the Borrower or the Agent may
require that such Lender transfer all of its right, title and interest under
this Agreement, such Lender's Note and each other Loan Document to Agent or to
any Eligible Transferee identified by the Borrower (with the consent of the
Agent) or by the Agent, subject to the following:
(h)
(i) such proposed transferee shall agree to assume all of the obligations of the
transferor Lender under the Loan Documents, for
19
consideration equal to the outstanding principal amount of such transferor
Lender's Loans, together with interest thereon to the date of such transfer;
(ii)
(iii) satisfactory arrangements shall be made for payment to such transferor
Lender of all other amounts payable hereunder to such Lender on or prior to the
date of such transfer, including any fees accrued hereunder (except any amounts
that would be payable under SECTION as a result of assigning rights and
obligations in respect of any LIBOR Based Loans on a day other than the last day
of the applicable Rate Period or would be payable under SECTION 7.10 as a result
of any termination of the Revolving Credit Facility, which amounts shall be
forfeited by the transferor Lender). In the event that any transfer is made
pursuant to this subparagraph (e), the Agent shall be entitled to a processing
and recording fee of $3,500 payable by the transferor Lender, which shall be
deducted from the consideration payable to the transferor Lender by the
transferee and shall be paid by the transferee to Agent; and
(iv)
(v) The transferor Lender agrees to pay to the transferee that portion of the
transferee's Pro Rata Share of Letter of Credit fees which the transferor Lender
has received related to Letters of Credit which have expiration dates after the
date of the transfer of the transferor Lender's Pro Rata Share to the
transferee, pro rated for the remaining term of such Letters of Credit after the
date of transfer of the transferor Lender's Pro Rata Share to the transferee.
This pro rata portion may be deducted from the consideration payable to the
transferor Lender by the transferee.
1.1 USE OF LOAN PROCEEDS. Borrower agrees to use Loan proceeds solely to repay
the principal, interest, fees and premiums (if any) payable to the Prior
Lenders, to pay transactional costs and expenses incurred in connection with
this Agreement, to provide for future working capital requirements of Borrower
consistent with the terms and conditions of this Agreement and to finance the
cost of acquiring finished goods inventory by Borrower to be sold from and at
new retail store locations of Borrower opened after the date of this Agreement,
subject to the Expansion Store Sublimit as described in SECTION.
1.1 EXPANSION STORE SUBLIMIT. Notwithstanding anything herein or elsewhere to
the contrary, Agent may permit Out-of-Formula Advances under the Revolving
Credit Facility in an amount up to $2,000,000.00 outstanding at any time (the
"EXPANSION STORE SUBLIMIT"), which Advances may only be used by Borrower to
finance the cost of acquiring finished goods inventory to be sold from and at
new retail store locations opened by Borrower after the date of this Agreement.
No more than five (5) Advances under the Expansion Store Sublimit shall be
permitted in any Loan Year. Each Advance under the Expansion Store Sublimit must
be in increments of $500,000.00. Each Advance under the Expansion Store Sublimit
shall be repaid in twelve (12) equal and consecutive monthly installments on the
first day of each calendar month commencing on the first day of the calendar
month after such Advance is made. To the extent not previously repaid all of
such Advances shall be repaid in full on the expiration date of the Contract
Period. Borrower may not prepay such Advances. All payments required to be made
by Borrower in connection with Advances under the Expansion Store
20
Sublimit may be made, at Agent's option, by Agent debiting the Borrower's
operating account maintained by Borrower with Agent.
1.2
1.3 The Expansion Store Sublimit shall only be available to Borrower at the
option of Agent. On or before December 1 of each year Agent will notify Borrower
whether the Expansion Store Sublimit will continue to be made available to
Borrower for the next twelve-month period.
1.4
1.5 Notwithstanding anything herein or elsewhere to the contrary: (a) the
outstanding principal of all Advances under the Revolving Credit Facility,
including without limitation Advances under the Expansion Store Sublimit, but
excluding Advances to pay interest, fees and Lender Group Expenses, shall not
exceed the Maximum Revolving Credit Facility; (b) upon the occurrence of a
Default, at the option of Agent, Borrower shall not be entitled to receive any
further Advances under the Expansion Store Sublimit; and (c) Borrower may only
use Advances under the Expansion Store Sublimit to finance the cost of acquiring
finished goods inventory to be sold from and at new retail store locations
opened by Borrower after the date of this Agreement.
1.1 SETTLEMENT.
1.2
(a) GENERAL. It is the intent of the Lenders that each Lender's funded portion
of all Advances shall at all times be equal to such Lender's Pro Rata Share.
However, Agent and the Lenders agree (which agreement is not for the benefit of
Borrower) that in order to facilitate administration of this Agreement and the
Advances, settlement ("SETTLEMENT") among Agent and Lenders of Advances and
payments received may, at Agent's option, occur on a periodic basis as provided
in this Section.
(a) SETTLEMENT NOTICE. Notwithstanding anything herein or elsewhere to the
contrary, Agent, in its discretion, may elect that Settlement occur among the
Lenders on a weekly or more frequent basis as determined by Agent in its
discretion. Agent shall notify each Lender by telephone followed promptly by a
telecopy or similar transmission of a requested Settlement, no later than 1:00
p.m. Philadelphia time on the Business Day immediately preceding the date of the
requested Settlement (the "SETTLEMENT DATE"). Each notice of a Settlement Date
shall be substantially in the form of EXHIBIT K attached hereto (a "SETTLEMENT
NOTICE").
(b)
(c) PAYMENT. If a Settlement Notice indicates that a payment is due to a Lender
by Agent, then Agent shall transfer such amount in immediately available funds
to the account designated by such Lender by no later than 3:00 p.m. Philadelphia
time on the Settlement Date. If a Settlement Notice indicates that a payment is
due from a Lender, such Lender shall transfer such amount in immediately
available funds to the account designated by Agent by no later than 3:00 p.m.
Philadelphia time on the Settlement Date. If any Lender does not make the
requested payment to Agent by 3:00 p.m. Philadelphia time on the Settlement
Date. Lender agrees to repay to the Agent such amount together with interest
thereon,
21
for each day from the Settlement Date until the date such amount is paid by such
Lender to the Agent at the Federal Funds Rate, provided that, if such Lender
shall fail to pay such amount within two (2) Business Days of the Settlement
Date, interest shall accrue and be payable on such amount (from such second
Business Day after the Settlement Date) at a rate equal to the rate payable by
the Borrower on Base Rate Loans. In addition, such Lender shall be deemed a
Defaulting Lender and the provisions of SECTION shall be applicable to such
Lender.
(d)
(e) INTEREST. During the period between Settlement Dates, (i) Agent shall be
entitled to interest at the applicable rate payable by Borrower on all Agent
Loans and other Advances (including Advances under SECTION 17.10) with respect
to which it has not received reimbursement or payment from the Lenders; and (ii)
each Lender shall be entitled to interest at the applicable rate payable by
Borrower on the Advances actually funded by such Lender only to the extent and
for the days such Advances are deemed outstanding under the Loan Account
maintained by Agent.
(f)
(g) NOTATION. Agent shall record on its books the principal amount of the
Advances owing to each Lender, including Agent Loans and Advances under SECTION
17.10 owing to Agent, and the interest therein of Agent and each Lender, from
time to time. In addition, each Lender is authorized, at such Lender's option,
to note the date and amount of each payment of principal of such Lender's Pro
Rata Share of Advances in its books and records, including computer records. The
books and records of Agent shall constitute rebuttably presumptive evidence,
absent manifest error, of the accuracy of the information contained therein.
(h)
(i) UNCONDITIONAL OBLIGATIONS. Settlements shall occur notwithstanding any
Default or Event of Default. The obligations of Lenders under this Section are
unconditional, are not subject to setoff or deduction and may not be terminated.
1.1 PERMITTED OUT-OF-FORMULA ADVANCES.
1.2
(a) Notwithstanding anything herein or elsewhere to the contrary, Agent may make
voluntary Out-of-Formula Advances without the consent of the Lenders for amounts
to be charged as Advances under the Revolving Credit Facility for interest,
fees, or Lender Group Expenses.
(a) In addition, Agent may, at its discretion (but subject to the last sentence
of this SUBSECTION, but is not obligated to, without the consent of the
Lenders, make, continue or permit to exist Out-of-Formula Advances (in addition
to those permitted under SECTION and SECTION ) even though the conditions for
borrowing under this Agreement have not been met, provided that: (i) the
aggregate amount of the Revolving Credit Facility Usage including the
outstanding balance of such Out-of-Formula Advances (but not including amounts
charged as Advances under the Revolving Credit Facility for interest, fees or
Lender Group Expenses), shall not at any time exceed the Maximum Revolving
Credit Facility Amount; (ii) the aggregate outstanding amount of such
Out-of-Formula Advances (not including Out-of-Formula
22
Advances under SECTION or amounts charged as Advances under the
Revolving Credit Facility for interest, fees or Lender Group Expenses) shall at
no time exceed Two Million Five Hundred Thousand Dollars ($2,500,000.00), (iii)
such Out-of-Formula Advances shall not be made more than three (3) times in any
one Loan Year; and (iv) such Out-of-Formula Advances may not remain outstanding
for more than thirty (30) days after they are made unless otherwise agreed to by
the Requisite Lenders. Notwithstanding the foregoing, Agent shall only make
Out-of-Formula Advances under this SUBSECTION, provided that, such Advances are
made pursuant to a plan proposed by the Agent and agreed to by the Requisite
Lenders for the elimination of such Out-of-Formula Advances. Such Out-of-Formula
Advances shall be in addition to the Out-of-Formula Advances permitted under
SECTION.
(b)
(c) The interest rate applicable to any Out-of-Formula Advances under this
Section shall be the Default Rate.
(d)
(e) Agent shall notify the Lenders as soon as practicable of any Out-of-Formula
Advances made under this Section. Each Lender shall be obligated to reimburse
the Agent for such Lender's Pro Rata Share of any Out-of-Formula Advance made or
permitted under this Section. Such reimbursement shall be made no later than
3:00 p.m. Philadelphia time on the date the Lender receives notice from the
Agent of the amount of such Lender's Pro Rata Share. If any Lender shall fail to
make available to the Agent the full amount of such Lender's Pro Rata Share of
any Out-of-Formula Advance permitted under this Section by 3:00 p.m.
Philadelphia time on the date such Lender receives notice from the Agent, such
Lender agrees to pay to Agent such amount together with interest thereon from
the date notice was received from the Agent at the Federal Funds Rate, provided
however, that if such amount plus interest is not received by Agent within two
(2) Business Days after the date such Lender shall have received notice from the
Agent that its Pro Rata Share is due, interest shall accrue and be payable on
such unpaid amount (from such second Business Day after notice is received) at a
rate equal to the rate payable by the Borrower on Base Rate Loans. In addition,
such Lender shall be deemed a Defaulting Lender and the provisions of SECTION
shall be applicable to such Lender.
(f)
1.2 AGENT LOANS. Agent, at its discretion, may elect to make any Advances
solely for Agent's own account and not as part of the Pro Rata Share of Agent as
a Lender, provided that, the aggregate outstanding principal balance of such
Advances shall not exceed $5,000,000 at any time. Such Advances shall constitute
"AGENT LOANS" under this Agreement.
1.3
1.4 All payments (including interest) allocable to Advances constituting Agent
Loans shall be payable to Agent solely for its own account. Agent Loans shall be
secured by all of the Collateral and shall constitute Advances and Obligations
under this Agreement.
1.5
1.6 Each Lender agrees to pay to Agent its Pro Rata Share of any Agent Loan upon
written request for payment by Agent. Such payment shall be made no later than
3:00 p.m. Philadelphia time on the date the Lender receives the written request
for payment from Agent. If any Lender shall fail to make available to the Agent
the full amount of such Lender's Pro Rata Share of such Agent Loan by 3:00 p.m.
Philadelphia time on the date such Lender receives the written request for
payment from the Agent, such Lender agrees to pay to Agent such amount, together
with interest thereon, from the date the written request was received from the
Agent at the Federal Funds Rate, provided however, that if such amount plus
interest is not received by Agent within two (2) Business Days after the date
such Lender shall have received the written request for payment from the Agent
that its Pro Rata
23
Share is due, interest shall accrue and be payable on such unpaid amount (from
such second Business Day after the written request for payment is received) at a
rate equal to the rate payable by the Borrower on Base Rate Loans. In addition,
such Lender shall be deemed a Defaulting Lender and the provisions of SECTION
shall be applicable to such Lender.
1. LETTERS OF CREDIT.
2.
2.1 GENERAL. Subject to the terms and conditions of this Agreement, Agent, at
its discretion, may issue from time to time until thirty (30) days prior to the
expiration of the Contract Period, upon the written request of Borrower, Letters
of Credit for the account of Borrower. Such Letters of Credit shall be in form
and content acceptable to Agent. The Agent shall be the sole issuer of Letters
of Credit under this Agreement.
1.1 CONDITIONS TO ISSUANCE. Agent shall have no obligation to issue any Letter
of Credit if:
1.2
(a) the conditions set forth in SECTIONS AND have not been satisfied;
(b)
(c) issuance of such Letter of Credit would violate the terms of any contract,
agreement or other document binding upon Borrower;
(d)
(e) any order, judgment or decree of any court, arbitrator or other governmental
authority shall purport by its terms to enjoin or restrain issuance of the
Letter of Credit;
(f)
(g) any law, rule, regulation or directive shall prohibit issuance of the Letter
of Credit or result in any liability to Agent as a result of such issuance; or
(h)
(i) Agent shall not have received the required issuance fee
set forth in SECTION.
(j)
1.3 TENOR. Each Standby Letter of Credit shall have a term not to exceed the
earlier to occur of: (a) twelve (12) months, or (b) thirty (30) days prior to
the expiration date of the Contract Period. Each Merchandise Letter of Credit
shall have a term not to exceed the earlier to occur of: (a) ninety (90) days,
or (b) thirty (30) days prior to the expiration date of the Contract Period.
1.4
24
1.5 SUBLIMITS. Agent shall have no obligation (a) to issue any Letter of
Credit, if the aggregate outstanding undrawn amount of all Letters of Credit
would exceed $20,000,000.00; (b) to issue any Standby Letters of Credit, if the
aggregate outstanding undrawn amount of all Standby Letters of Credit would
exceed $2,000,000.00; (c) to issue any Letter of Credit, if a Default or Event
of Default has occurred; or (d) to issue any Letter of Credit if the Revolving
Credit Facility Usage plus the amount of such new Letter of Credit to be issued
exceeds (i) the Borrowing Base (as reduced by all Reserves), or (ii) the Maximum
Revolving Credit Facility Amount.
1.6
1.7 PROCEDURE AND DOCUMENTATION. Each request for issuance of a Letter of
Credit must be received at least three (3) Business Days prior to the issuance
date and shall be accompanied by a duly executed letter of credit application in
the form required by Agent. Each application shall have noted therein that the
application is entered into in accordance with the terms of this Agreement.
Borrower will execute and deliver to Agent such other documents and agreements
as may be required by Agent in connection with the issuance of any Letter of
Credit.
1.8
1.9 REDUCTION OF AVAILABILITY. Availability under the Revolving Credit Facility
will be reduced by the total outstanding undrawn amount of all Letters of
Credit, provided that, the Borrowing Base shall include an advance rate for
certain Merchandise Letters of Credit as set forth in SECTION 2.3(D).
1.10
1.11 DRAWS. If Agent receives a request for a draw under any Letter of Credit,
Borrower agrees to pay to Agent on the day on which Agent shall honor such draw
request, the amount of such draw request (the "DRAW AMOUNT") in immediately
available funds. Unless Agent receives the Draw Amount in immediately available
funds on or before the day on which Agent honors such draw request, the amount
advanced by Agent to pay such draw shall be deemed to be a Base Rate Loan under
the Revolving Credit Facility, without any requirement that Borrower request
such Loan or otherwise comply with the Loan request provisions set forth in this
Agreement. Agent shall give prompt written or telephone notice to each Lender of
such Lender's Pro Rata Share of any Base Rate Loan advanced by Agent to pay any
draw under any Letter of Credit. After receipt of such notice, each Lender shall
make such arrangements as are necessary to assure that such Lender's Pro Rata
Share of such Base Rate Loan shall be made available to Agent (in U.S. Dollars)
no later than 3:00 p.m. Philadelphia time on the date the Draw Amount is to be
paid. After receipt of such funds from each Lender and subject to the conditions
set forth in this Agreement, Agent shall disburse such Loan proceeds by paying
the Draw Amount. If a Lender has not or does not make available to the Agent the
full amount of its Pro Rata Share on the date the draw is funded by Agent, the
Agent may advance such corresponding amount and such Lender agrees to repay to
the Agent on demand such corresponding amount together with interest thereon,
for each day from the date the draw is funded by Agent until the date such
amount is repaid by such Lender to the Agent at the Federal Funds Rate, provided
that, if such Lender shall fail to make available to the Agent the full amount
of such Lender's Pro Rata Share of the Advance within two (2) Business Days of
the date it shall have received notice from the Agent that its Pro Rata Share of
the Advance has not been received,
25
interest shall accrue and be payable on such amount (from such second Business
Day after notice is received) at a rate equal to the rate payable by the
Borrower on Base Rate Loans. In addition, such Lender shall be deemed a
Defaulting Lender and the provisions of SECTION shall be applicable to such
Lender.
1.12
1.13 CASH COLLATERAL. In the event that the Revolving Credit Facility is
terminated for any reason, the Contract Period expires or an Event of Default
occurs, Borrower will deposit with Agent immediately available funds in an
amount equal to 102% of the outstanding undrawn amount of all Letters of Credit.
Such funds and any proceeds of Collateral or other payments received by Agent
with respect to the Obligations after any such event, may be held by Agent as
cash collateral for the Obligations, including without limitation, the
Obligations of Borrower to Agent related to the Letters of Credit.
1.14
1.15 INDEMNIFICATION. Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability,
including payments made by the Lender Group, expenses, and attorney's fees
incurred by the Lender Group arising out of or in connection with any Letter of
Credit. Borrower agrees to be bound by Agent's regulations and interpretations
of any Letters of Credit issued by Agent to or for Borrower's account, even
though this interpretation may be different from Borrower's own. Borrower
understands and agrees that the Lender Group shall not be liable for following
Borrower's instructions or any instructions or provisions contained in any
Letter of Credit or any modifications, amendments, or supplements thereto.
1.1 RISK PARTICIPATIONS. Immediately upon issuance of any Letter of Credit,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received without recourse or warranty by Agent, an undivided participation
interest in such Letter of Credit and Agent's risk and liability under such
Letter of Credit, equal to such Lender's Pro Rata Share of the face amount of
such Letter of Credit
1.1 OBLIGATIONS IRREVOCABLE. The obligations of each Lender to make payments to
Agent with respect to its Pro Rata Share of any Letter of Credit issued by
Agent, and the obligations of Borrower to make payments to Agent (for the pro
rata benefit of the Lenders) in connection with any Letter of Credit shall be
irrevocable and not subject to any qualification or exception whatsoever,
including, without limitation, any of the following circumstances:
1.2
(a) any lack of validity or enforceability of any Letter of Credit, any
documents collateral to any Letter of Credit, this Agreement or any of the other
Loan Documents;
(b)
(c) the existence of any claim, set-off, defense, or other right which Borrower
may have at any time against any beneficiary named in any Letter of Credit or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or transferee may be acting), any Lender, Agent, or any other
Person, whether in connection with this
26
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between Borrower
or any other Person and the beneficiary named in any Letter of Credit);
(d)
(e) any draft, certificate, or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid, or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(f)
(g) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; or
(h)
(i) the occurrence of any Default or Event of Default.
(j)
(k) any amendment, modification, waiver, consent, or any substitution, exchange
or release of or failure to perfect any interest in collateral or security, with
respect to or under any Letter of Credit or any documents collateral thereto;
(l)
(m) payment by the Agent to the beneficiary under any Letter of Credit against
presentation of documents which do not comply with the terms of such Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit;
(n)
(o) any failure, omission, delay or lack on the part of the Agent or any Lender
to enforce, assert or exercise any right, power or remedy conferred upon the
Agent or such Lender under this Agreement, any of the other Loan Documents, any
of the Letter of Credit or any documents collateral thereto or any other acts or
omissions on the part of the Agent or any such Lender; or
(p)
(q) any other event or circumstance that would, in the absence of this SECTION,
result in the release or discharge by operation of law or otherwise of the
Borrower or any Person from the performance or observance of any obligation,
covenant or agreement contained herein.
(r)
(s) No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Borrower has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Borrower
against the Agent or any Lender.
1.1 RISK UNDER LETTERS OF CREDIT.
1.2
(a) In the administration and handling of Letters of Credit and any security
therefor, or any documents or instruments given in connection therewith, Agent
shall have the sole right, in its discretion, to take or refrain from taking any
and all actions under or upon the Letters of Credit.
27
(a) Subject to other terms and conditions of this Agreement, Agent shall issue
the Letters of Credit and shall hold the documents related thereto in its own
name and shall make all collections thereunder and otherwise administer the
Letters of Credit in accordance with Agent's regularly established practices and
procedures and Agent will have no further obligation with respect thereto. In
the administration of Letters of Credit, Agent shall not be liable for any
action taken or omitted on the advice of counsel, accountants, appraiser or
other experts selected by Agent and Agent may rely upon any notice,
communication, certificate or other statement from the Borrower, beneficiaries
of Letters of Credit, or any other Person which Agent believes to be authentic.
(b)
(c) In connection with the issuance and administration of Letters of Credit and
the assignments hereunder, Agent makes no representation and shall have no
responsibility with respect to (i) the obligations of the Borrower or any other
Person or the validity, sufficiency or enforceability of any document or
instrument given in connection therewith, or the taking of any action with
respect to same, (ii) the financial condition of, any representations made by,
or any act or omission of, the Borrower, or any other Person, or (iii) any
failure or delay in exercising any rights or powers possessed by Agent in its
capacity as issuer of Letters of Credit in the absence of its gross negligence
or willful misconduct. Each of the Lenders expressly acknowledges that it has
made and will continue to make its own evaluations of the Borrower's
creditworthiness without reliance on any representation of Agent or Agent's
officers, agents and employees.
(d)
1.2 RIGHT OF REIMBURSEMENT. Each Lender agrees to reimburse the Agent on demand,
its Pro Rata Share of (i) the costs and expenses of the Agent to be reimbursed
by the Borrower or pursuant to any Letter of Credit, to the extent not
reimbursed by the Borrower and (ii) any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, fees, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against Agent (in its capacity as issuer of any Letter
of Credit) in any way relating to or arising out of this Agreement, any Letter
of Credit, any documentation or any transaction relating thereto, to the extent
not reimbursed by the Borrower.
1. FOREIGN EXCHANGE TRANSACTIONS.
2.
2.1 GENERAL. Subject to the terms and conditions of this Agreement, Agent, at
its discretion, may enter into Permitted FX Contracts with Borrower under and
subject to the FX Parameters Letter, from time to time until one hundred twenty
(120) days prior to the expiration of the Contract Period. Each Permitted FX
Contract shall have a maturity date not to exceed the earlier to occur of (a)
twelve (12) months, or (b) thirty (30) days prior to the expiration date of the
Contract Period.
1.1 CONDITIONS. Without limiting Agent's discretion to enter into any Permitted
FX Contract, no Permitted FX Contract shall be entered into under this
Agreement, if:
1.2
28
(a) the conditions set forth in SECTIONS AND have not been satisfied;
(b)
(c) such Permitted FX Contract would violate the terms of any contract,
agreement or other document binding upon Borrower or Agent;
(d)
(e) any order, judgment or decree of any court, arbitrator or other governmental
authority shall purport by its terms to enjoin or restrain Borrower or Agent
from entering into such Permitted FX Contract; or
(f)
(g) any law, rule, regulation or directive enacted after the Closing Date shall
prohibit Borrower or Agent from entering into such Permitted FX Contract or
result in any liability to Agent as a result of such Permitted FX Contract.
(h)
1.3 SUBLIMITS. Without limiting Agent's discretion to enter into any Permitted
FX Contract, no Permitted FX Contract shall be entered into under this
Agreement, if (a) the then applicable FX Reserve Amount would exceed
$2,000,000.00; (b) if a Default or Event of Default has occurred; (c) if the
Revolving Credit Facility Usage, plus any increase to the FX Reserve Amount as a
result of such new Permitted FX Contract would exceed (i) the Borrowing Base (as
reduced by all Reserves), or (ii) the Maximum Revolving Credit Facility Amount;
or (d) if the aggregate Notional Amount of all outstanding Permitted FX
Contracts would exceed $12,000,000.
1.4
1.5 DOCUMENTATION. Borrower will execute and deliver to Agent such agreements
and documents as may be required by Agent in connection with any Permitted FX
Contract and at such times as may be required by Agent, including without
limitation any international foreign exchange and options master agreements.
1.6
1.7 PAYMENTS UNDER FX CONTRACTS. Borrower agrees to settle and pay all sums due
Agent with respect to any Permitted FX Contract prior to the time at which Agent
is required to settle with respect to its agreement to purchase any foreign
currency to satisfy such Permitted FX Contract. Borrower hereby irrevocably
authorizes Agent to make such settlement payment to itself on behalf of Borrower
by an Advance under the Revolving Credit Facility in the form of a Base Rate
Loan, without any requirement that Borrower request such Loan or otherwise
comply with the Loan request provisions set forth in this Agreement. Agent shall
give prompt written or telephone notice to each Lender of such Lender's Pro Rata
Share of any Base Rate Loan advanced by Agent to pay any sums in connection with
any Permitted FX Contract. After receipt of such notice, each Lender shall make
such arrangements as are necessary to assure that such Lender's Pro Rata Share
of such Base Rate Loan shall be made available to Agent (in U.S. Dollars) no
later than 3:00 p.m. Philadelphia time on the date such Base Rate Loan is
advanced. After receipt of such funds from each Lender and subject to the
conditions set forth in this Agreement, Agent shall disburse such Loan proceeds
by paying to itself such sums due by Borrower to Agent under the Permitted FX
Contracts. If a Lender has not or does not make available to the Agent the full
amount of its Pro Rata Share on the date such Base Rate Loan is to be advanced,
the Agent may advance such corresponding amount and such Lender agrees to repay
to the Agent on demand such corresponding amount together with interest thereon,
for each day from the date such Base Rate Loan was funded by Agent until the
date such Lender's Pro Rata Share is repaid by such Lender to the Agent at the
Federal Funds Rate, provided that, if such Lender shall fail to make available
to the Agent the full amount of such Lender's Pro Rata Share of such Base
29
Rate Loan within two (2) Business Days of the date it shall have received notice
from the Agent that its Pro Rata Share of the Base Rate Loan has not been
received, interest shall accrue and be payable on such amount (from such second
Business Day after notice is received) at a rate equal to the rate payable by
the Borrower on Base Rate Loans. In addition, such Lender shall be deemed a
Defaulting Lender and the provisions of SECTION shall be applicable to such
Lender.
1.8
1.9 LIQUIDATION OF PERMITTED FX CONTRACTS. If, upon the maturity date of any
Permitted FX Contract, Borrower does not pay or does not have Availability in an
amount sufficient to pay the full amount of Borrower's obligations to Agent
under such contract, or at any time upon the occurrence of an Event of Default,
Agent may, in its discretion, liquidate such Permitted FX Contract, at
Borrower's sole expense, and apply any amounts thereunder that would have been
payable to Borrower against the amounts owed to Agent by Borrower in connection
with such Permitted FX Contract. Notwithstanding the foregoing, the terms of any
international foreign exchange master agreement or international foreign
exchange and options master agreement entered into between Borrower and Agent
with respect to the Permitted FX Contracts shall govern the rights, remedies and
obligations of Borrower and Agent with respect to the Permitted FX Contracts. In
the event of any inconsistency between such agreements and the Loan Documents,
the terms of such agreements shall govern.
1.10
1.11 CASH COLLATERAL. In the event that the Revolving Credit Facility is
terminated for any reason, the Contract Period expires or an Event of Default
occurs, Borrower will deposit with Agent immediately available funds in an
amount equal to 200% of the then applicable FX Reserve Amount. Such funds and
any proceeds of Collateral or other payments received by Agent with respect to
the Obligations after any such event may be held by Agent as cash collateral for
Borrower's Obligations, including without limitation, the Obligations of
Borrowers to Agent related to the outstanding Permitted FX Contracts.
1.12
1.13 FX RESERVE AMOUNT. The FX Reserve Amount may be increased or decreased by
Agent at its reasonable discretion. Agent will promptly notify Borrower and
Lenders of any change in the FX Reserve Amount.
1.14
1.15 INDEMNIFICATION. Borrower and the Lenders (in accordance with their Pro
Rata Shares) hereby agree to indemnify, save, defend, and hold the Agent
harmless from any loss, cost, expense, or liability, including payments made by
the Agent, expenses, and attorney's fees incurred by the Agent arising out of or
in connection with any Permitted FX Contract.
30
1.1 RISK PARTICIPATIONS. Immediately upon issuance of any Permitted FX
Contract, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received without recourse or warranty by Agent, an undivided
participation in the Agent's risk and liability under such Permitted FX
Contract, equal to such Lender's Pro Rata Share. In the event that Agent suffers
any loss in connection with any Permitted FX Contract, the Lenders shall pay
their Pro Rata Share of such loss on demand following receipt of notice by such
Lender of the incurrence of such a loss by Agent.
1.1 OBLIGATIONS IRREVOCABLE. The indemnity obligations of Borrower and Lenders
under SECTION and the obligations of each Lender to make payments to Agent with
respect to any loss suffered by Agent in connection with any Permitted FX
Contracts and the obligations of Borrower to make payments to Agent pursuant to
any Permitted FX Contracts shall be irrevocable, not subject to any
qualification or exception whatsoever, including, without limitation, any of the
following circumstances:
1.2
(a) any lack of validity or enforceability of this Agreement, any of the other
Loan Documents, any Permitted FX Contract or any document collateral thereto;
(b)
(c) the existence of any claim, set-off, defense, or other right which Borrower
may have at any time against any Lender, Agent, or any other Person, whether in
connection with this Agreement, any Permitted FX Contract, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between Borrower or any other Person);
(d)
(e) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents, any Permitted FX
Contract or any document collateral thereto;
(f)
(g) the occurrence of any Default or Event of Default;
(h)
(i) any amendment, modification, waiver, consent, or any substitution, exchange
or release of or failure to perfect any interest in collateral or security, with
respect to or under any Permitted FX Contract or any documents collateral
thereto;
(j)
(k) any failure, omission, delay or lack on the part of the Agent or any Lender
to enforce, assert or exercise any right, power or remedy conferred upon the
Agent or such Lender under this Agreement, any of the other Loan Documents, any
Permitted FX Contract or any documents collateral thereto or any other acts or
omissions on the part of the Agent or any such Lender; or
(l)
(m) any other event or circumstance that would, in the absence of this SECTION,
result in the release or discharge by operation of law or otherwise of the
31
Borrower or any Person from the performance or observance of any obligation,
covenant or agreement contained herein.
(n)
1.3 AGENT'S RIGHTS. Notwithstanding anything in this Agreement or elsewhere to
the contrary, Agent will have the exclusive right to manage, perform and enforce
the terms of any Permitted FX Contract or any documents collateral therefor, and
to exercise and enforce all privileges and rights thereunder or related thereto
according to Agent's sole discretion and without the consent or approval of the
Lenders.
1. INTEREST RATE.
2.
2.1 INTEREST RATE OPTIONS.
2.2
(a) GENERAL. The principal balance of the Revolving Credit Facility will accrue
interest at the Borrower's option (subject to the limitations and conditions set
forth herein), at (a) the Base Rate plus Applicable Margin or (b) the LIBOR Rate
plus Applicable Margin. Borrower may request to have one or more portions of the
outstanding balance of the Loans as hereinafter permitted, accrue interest, at a
LIBOR Rate plus Applicable Margin by giving Agent three (3) Business Days prior
written notice in the form of a Request for LIBOR Rate Loan (for new Advances)
or a LIBOR Rate Notification (for existing advances). Agent shall give prompt
written or telephone notice to the Lenders of each Request for LIBOR Rate Loan
or LIBOR Rate Notification received by Agent, indicating the amount of the LIBOR
Rate Loan requested, the effective date of the LIBOR Rate and the Rate Period.
(a) CERTAIN PROVISIONS REGARDING INTEREST RATES. Borrower understands and
agrees:
(b)
(i) that subject to the provisions of this Agreement, the Base Rate plus
Applicable Margin and the LIBOR Rate plus Applicable Margin may apply
simultaneously to different parts of the outstanding principal balance of the
Revolving Credit Facility;
(ii)
(iii) that the LIBOR Rate plus Applicable Margin may apply simultaneously to
various portions of the outstanding principal balance of the Revolving Credit
Facility for various Rate Periods;
(iv)
(v) that the LIBOR Rate plus Applicable Margin applicable to one portion of the
outstanding principal balance of the Revolving Credit Facility may be different
from the LIBOR Rate plus Applicable Margin applicable to a different portion of
the outstanding principal balance of the Revolving Credit Facility;
(vi)
(vii) that LIBOR Rate Loans must be in minimum amounts of $1,000,000.00 each and
in increments of $1,000,000.00 above such minimum;
(viii)
32
(ix) that no more than four (4) separate LIBOR Rate Loans shall be permitted to
be outstanding at any one time; and
(x)
(xi) that only one LIBOR Rate Loan with a Rate Period of nine (9) months shall
be permitted to be outstanding at any one time.
(xii)
(c) CERTAIN LIMITATIONS. The right of the Borrower to elect a LIBOR Rate plus
Applicable Margin for any portion of the Revolving Credit Facility shall be
limited as follows:
(d)
(i) Borrower may not elect to borrow or to convert any Loan to a LIBOR Rate Loan
if at the time of such conversion or election there shall exist a Default or an
Event of Default.
(ii)
(iii) If a LIBOR Rate is elected, such interest rate shall remain in effect for
the Rate Period selected and such interest rate shall not otherwise be converted
to another interest rate prior to the expiration of the Rate Period except as
otherwise required by this Agreement.
(iv)
(v) LIBOR Rate Loans shall, commencing on the last day of the applicable Rate
Period, bear interest at the Base Rate plus the Applicable Margin unless prior
thereto the Agent shall have received a timely notice pursuant to this SECTION
(A) that an elective rate based on the LIBOR Rate plus Applicable Margin shall
be effective commencing on such date with respect to any or all of such
principal.
(vi)
(vii) Borrower may not elect a LIBOR Rate for any Rate Period if the effect of
such election, (as could reasonably be determined by the Borrower at the time of
such election) would be to require the Borrower to make a repayment or
prepayment of a LIBOR Rate Loan prior to the end of the relevant Rate Period.
Without limiting the generality of the foregoing, no Rate Period may be elected
that would end later than the expiration of the Contract Period.
(viii)
(e) LIBOR RATE UNASCERTAINABLE OR UNAVAILABLE. If, at any time, Agent shall
determine (which determination shall be conclusive) that the LIBOR Rate is
unavailable or cannot be ascertained, Agent shall promptly notify Borrower and
the Lenders of such determination. Upon such determination, the right of
Borrower to select, maintain and/or convert Advances to LIBOR Rate Loans shall
be suspended until notice from Agent to Borrower and the Lenders that the LIBOR
Rate is again available or ascertainable and, until such time, the outstanding
balance of the Revolving Credit Facility shall accrue interest at the Base Rate
plus Applicable Margin.
(f)
(g) LIBOR UNLAWFUL. In the event that, as a result of any change in any
applicable law or regulation or the interpretation thereof, it becomes unlawful
for any Lender to maintain or fund any advance under the Revolving Credit
Facility at the LIBOR
33
Rate plus Applicable Margin, then such Lender shall notify Borrower and Agent
thereof and such Lender's obligation to make, convert to, or maintain any
Advance under the Revolving Credit Facility at the LIBOR Rate plus Applicable
Margin shall be suspended until such time as such Lender may again cause the
LIBOR Rate plus Applicable Margin to be applicable and, until such time, such
Lender's Pro Rata Share of any Advances under the Revolving Credit Facility
subject to the LIBOR Rate plus Applicable Margin shall accrue interest at the
Base Rate plus Applicable Margin. Promptly after becoming aware that it is no
longer unlawful for such Lender to maintain or fund Advances under the Revolving
Credit Facility at the LIBOR Rate plus Applicable Margin, such Lender shall
notify Borrower and Agent thereof and such suspension shall cease to exist.
(h)
1.2 BASE RATE PLUS APPLICABLE MARGIN FALL BACK. With respect to any principal
amount (whether an Advance of new funds or an already outstanding amount), if
Borrower fails to request that the LIBOR Rate plus Applicable Margin option be
applicable by giving Agent a timely LIBOR Rate Notification or a Request for
LIBOR Rate Loan, such principal amount shall be deemed to accrue interest at the
Base Rate plus Applicable Margin.
1.3
1.4 INDEMNIFICATION. Borrower shall indemnify each Lender against any
loss, cost or expense (including, without limitation, loss of margin) which such
Lender has sustained or incurred as a consequence of: (i) any payment of any
LIBOR Rate Loan on a day prior to the last day of the corresponding Rate Period,
whether or not any such payment is made pursuant to acceleration, upon or after
an Event of Default, by reason of an application of proceeds incident to an
insured loss or condemnation of property, or for any other reason, and whether
or not any such payment is consented to by Agent or any Lender (unless Agent
shall have expressly waived such indemnity in writing); (ii) any attempt by
Borrower to revoke, in whole or part, any LIBOR Rate Notification or Request for
LIBOR Rate Loan given pursuant to this Agreement; (iii) any attempt by Borrower
to convert or renew any principal amount accruing interest at the LIBOR Rate
plus Applicable Margin on a day prior to the last day of the corresponding Rate
Period (whether or not such conversion or renewal is consented to by Agent,
unless Agent shall have expressly waived such indemnity in writing); or (iv) any
conversion of any amount earning interest at the LIBOR Rate plus Applicable
Margin on a day prior to the last day of the corresponding Rate Period.
1.5
1.6 APPLICABLE MARGIN. The "APPLICABLE MARGIN" is equal to the percent per
annum in excess of the Base Rate or LIBOR Rate as set forth in the following
pricing matrix:
1.7
34
REVOLVING REVOLVING EXPANSION
CREDIT CREDIT STORE
FACILITY FACILITY SUBLIMIT
[ALL [NON-EXPANSION
ADVANCES] STORE
SUBLIMIT]
Level Borrower's Annual Base Rate LIBOR Rate LIBOR Rate
EBITDA + + +
----------- --------------------------- ------------ ------------ -------------
Level I < $10,000,000 .00% 2.75% 3.25%
Level II >= $10,000,000 < $15,000,000 .00% 2.50% 3.00%
Level III >= $15,000,000 < $25,000,000 .00% 2.25% 2.75%
Level IV >= $25,000,000 < $30,000,000 .00% 2.00% 2.50%
Level V >= $30,000,000 .00% 1.75% 2.25%
From the Closing Date through the date of receipt of the Borrower's fiscal
year-end January 31, 1999 audited financial statements, the Applicable Margin
for Advances under the Revolving Credit Facility shall be the Applicable Margin
set forth on Level III in the above-described pricing matrix. Thereafter, the
Applicable Margin will be based upon Borrower's EBITDA on an annual basis as
reflected on Borrower's year-end audited financial statements delivered to Agent
pursuant to SECTION and absent an Event of Default, provided, however, if the
Borrower's year end financial statements are not delivered at the time specified
in SECTION below, then the Applicable Margin for any given kind of Loan shall,
in the event that such statements are not delivered within two (2) Business Days
of receipt of notice from the Agent, be the highest Applicable Margin set forth
above for such kind of Loan during any period that the Borrower is delinquent in
the delivery of such financial statements, provided further, that if such
financial statements are not delivered within thirty (30) days after the
original due date, then interest shall accrue, at the option of Agent, at the
Default Rate.
1.1 FUNDING LOSSES. Borrower shall pay to Agent on behalf of each Lender, from
time to time, upon request, such amount as the Lender determines is necessary to
compensate it for any loss, cost or expense, including, without limitation, loss
of the Applicable Margin incurred by it as a result of (a) any payment,
prepayment (whether voluntary, mandatory or scheduled) or conversion of a LIBOR
Rate Loan on a date prior to the last day of an Rate Period for such LIBOR Rate
Loan or (b) a LIBOR Rate Loan for any reason not being made or converted, or any
payment of principal thereof or interest thereof not being made, on the date
therefor determined in accordance with the applicable provisions of this
Agreement.
1.2
1.3 DETERMINATIONS. In making the determinations contemplated by
SECTIONS OR, the relevant Lender may make such estimates, assumptions,
allocations and the like that such Lender in good faith determines to be
appropriate, and the Lender's selection thereof in accordance with SECTIONS OR,
and the determinations made by the Lender on the basis thereof, shall be final,
binding and conclusive upon the Borrower, absent
35
manifest error. Each Lender shall furnish to the Borrower, upon request by
Borrower, a statement outlining in reasonable detail the computation of any
amounts claimed by it under SECTIONS OR and the assumptions underlying such
computations, which shall include a statement of an officer of such Lender
certifying that such request for compensation is being made pursuant to a policy
adopted by such Lender to seek such compensation generally from customers
similar to the Borrower and having similar provisions in agreements with such
Lender.
1.4
1.5 DEFAULT INTEREST. Interest will accrue on the principal balance of the
Revolving Credit Facility (including any principal balance previously accruing
interest at a LIBOR Rate plus Applicable Margin) after the occurrence of an
Event of Default or expiration of the Contract Period at a rate which is two
percent (2%) in excess of the Base Rate (the "DEFAULT RATE"). Borrower
acknowledges and agrees that the Default Rate is reasonable in light of the
increased risk of collection of the sums due under the Revolving Credit Facility
after occurrence of an Event of Default and the costs and expenses of Agent
related thereto.
1.6
1.7 POST JUDGMENT INTEREST. Any judgment obtained for sums due hereunder or
under the Loan Documents will accrue interest at the applicable Default Rate set
forth above until paid.
1.8
1.9 CALCULATION. Interest will be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed.
1.10
1.11 LIMITATION OF INTEREST TO MAXIMUM LAWFUL RATE. In no event will the rate
of interest payable hereunder exceed the maximum rate of interest permitted to
be charged by applicable law (including the choice of law rules) and any
interest paid in excess of the permitted rate will be refunded to Borrower. Such
refund will be made by application of the excessive amount of interest paid
against any sums outstanding hereunder and will be applied in such order as
Agent may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the sums outstanding will be refunded in cash
by Lenders. Any such crediting or refunding will not cure or waive any Default
by Borrower. Borrower agrees, however, that in determining whether or not any
interest payable hereunder exceeds the highest rate permitted by law, any
nonprincipal payment, including without limitation prepayment fees and late
charges, will be deemed to the extent permitted by law to be an expense, fee,
premium or penalty rather than interest.
36
1. PAYMENTS AND FEES.
2.
2.1 INTEREST PAYMENTS. Borrower will pay to the Agent (for the pro rata benefit
of the Lenders) interest on the principal balance of Base Rate Loans on the
first day of each calendar month, commencing on the first day of the first
calendar month following the date hereof, and on the expiration of the Contract
Period. Borrower will pay (for the pro rata benefit of the Lenders) interest on
the principal balance of LIBOR Rate Loans on the last day of each Rate Period,
provided that, for any Rate Period with a duration of more than one month,
interest will also be payable every thirtieth (30th) day after the commencement
of such Rate Period.
1.1 PRINCIPAL PAYMENTS. Funds received by Agent in the Cash Collateral Account
will be applied by Agent toward repayment of the Obligations or may be held as
cash collateral by Agent (for the pro rata benefit of the Lenders). Provided
that no Event of Default has occurred, such funds will be applied by Agent to
repay the principal balance of all Agent Loans and all other Loans, with such
payments to be applied first to repay Agent Loans, second to repay all other
Loans which are Base Rate Loans, and third to repay all Loans which are LIBOR
Rate Loans. To the extent that any sums are applied to repay LIBOR Rate Loans,
they shall be applied to LIBOR Rate Loans in the chronological order in which
the Rate Periods for such LIBOR Rate Loans expire. Upon the occurrence of an
Event of Default, Agent may discontinue such arrangement and may apply such
funds to costs, indemnities, fees, interest and principal, constituting
Obligations in such order as Agent, in its discretion elects.
Provided that no Event of Default has occurred, if all Advances and all
other Obligations then due and payable (not including contingent obligations
under undrawn Letters of Credit or outstanding Permitted FX Contracts) have been
paid in full, and thereafter funds are received by Agent in the Cash Collateral
Account, Agent will permit the transfer of such funds to Borrower's operating
account maintained with Agent.
Notwithstanding the foregoing, Borrower agrees to pay the outstanding
principal balance of the Revolving Credit Facility, together with any accrued
and unpaid interest thereon, and any other sums due pursuant to the terms hereof
on the earlier to occur of (a) the expiration of the Contract Period, or (b) ON
DEMAND after the occurrence of an Event of Default. Subject to the terms of
SECTION, if any Out-Of-Formula Advance (other than an Out-of-Formula Advance
permitted under the Expansion Store Sublimit) arises or exists under the
Revolving Credit Facility for any reason whatsoever, including without
limitation inventory or accounts becoming ineligible or any new or increased
Reserves, Borrower will repay such Out-Of-Formula Advance immediately upon the
earlier to occur of (i) notice or demand by Agent, or (ii) Borrower has
knowledge of such Out-of-Formula Advance. All Out-of-Formula Advances permitted
under SECTION shall be repaid in accordance with the terms of SECTION.
1.1 UNUSED LINE FEE. Borrower shall pay to Agent (for the pro rata benefit of
the Lenders) an unused line fee in an amount equal to .50% per annum times
37
the Average Unused Portion of the Maximum Revolving Credit Facility Amount. Such
fee will be payable monthly in arrears on the first day of each month, pro-rated
for the actual number of days in any partial month.
1.2
1.3 EXPANSION STORE SUBLIMIT FEE. Borrower shall pay to Agent (for the pro rata
benefit of the Lenders) a fee in the amount of $20,000 per annum which fee will
be payable in advance for each Loan Year that the Expansion Store Sublimit is
made available to Borrower. The fee for the first Loan Year shall be due and
payable on the Closing Date and each year's fee thereafter will be due and
payable on December 1 of such year.
1.4
1.5 AGENT'S FEES. Borrower shall pay to Agent, solely for the account of Agent,
the Agent's Fees as may be agreed upon in writing between Borrower and Agent.
1.6
1.7 LETTER OF CREDIT FEES. For each issuance, renewal or extension of a
Merchandise Letter of Credit, Borrower will pay to Agent (for the pro rata
benefit of the Lenders) an issuance or renewal fee in an amount equal to
three-quarters of one percent (3/4%) of the face amount of such Merchandise
Letter of Credit, payable coincident with and as a condition of the issuance,
renewal or extension of such Merchandise Letter of Credit. For each issuance,
renewal or extension of a Standby Letter of Credit hereunder, Borrower will pay
to Agent (for the pro rata benefit of the Lenders) an issuance, renewal or
extension fee in an amount equal to one and one-quarter percent (1-1/4%) per
annum of the face amount of such Standby Letter of Credit, payable coincident
with and as a condition of the issuance, renewal or extension of such Standby
Letter of Credit. Upon the occurrence of an Event of Default the fees provided
for in this Section shall be increased to 2 3/4% of the face amount of each
Merchandise Letter of Credit and to 3 1/4% per annum of the face amount of each
Standby Letter of Credit. All of such fees shall be computed on the basis of a
year of 360 days.
1.8
1.9 FX CONTRACT INCOME OR PROFITS. Agent shall be entitled to retain for its
sole account all income, profits and other compensation arising from or in
connection with any Permitted FX Contracts entered into pursuant to this
Agreement.
1.10
1.11 OTHER FEES. In addition to the above-described fees, the Borrower shall
pay, for the sole account of the Agent, Agent's standard documentation,
administration, payment and cancellation charges assessed by Agent in connection
with Letters of Credit and Permitted FX Contracts in effect from time to time.
1.12
1.13 INTEREST AND BREAKAGE COSTS ON LIBOR RATE LOANS. Borrower shall,
concurrently with any prepayment of any LIBOR Rate Loans, pay the full amount of
all interest accrued on such LIBOR Rate Loans and, if on a day prior to the last
day of the applicable Rate Period, pay such amounts as are required by SECTIONS
AND.
1.14
1.15 TERMINATION OF REVOLVING CREDIT FACILITY AND TERMINATION FEE. Borrower may
terminate the Revolving Credit Facility only upon at least
38
thirty (30) days' prior written notice to Agent and payment to Agent (for the
pro rata benefit of the Lenders) of a termination fee as set forth below.
1.16
1.17 Such termination fee shall be payable if the Revolving Credit Facility is
terminated regardless of the source of funds used to repay in full the
Obligations, including without limitation financing provided by another Person,
financing provided by one or more of the Lenders, the proceeds of a debt or
equity offering by Borrower, a sale of any of the assets of Borrower or a
"securitization" of any assets of Borrower.
1.18
1.19 The following termination fees shall be payable:
1.20
(a) If the termination occurs on or before December 9, 1999, the termination fee
will be equal to $1,350,000.00.
(b)
(c) If the termination occurs after December 9, 1999 but on or before December
9, 2000, the termination fee will be equal to $900,000.00.
(d)
(e) If the termination occurs after December 9, 2000, but on or before December
9, 2001, the termination fee will be equal to $450,000.00.
(f)
(g) if the termination occurs after December 9, 2001, there will be no
termination fee.
(h)
(i) In the event the Revolving Credit Facility is terminated as a result of an
Event of Default, Agent (for the pro rata benefit of the Lenders) shall be
entitled to receive the termination fee required to be paid under the prior
paragraphs. In the event that Agent, Requisite Lenders or all Lenders, as
required under this Agreement, agree to waive any Event of Default but require
as a condition of such waiver that the Contract Period be reduced or the
Revolving Credit Facility be terminated within a finite time period after such
waiver, Agent (for the pro rata benefit of the Lenders) shall be entitled to
receive the termination fee required to be paid under the prior paragraphs.
(j)
(k) The termination fee shall be presumed to be the amount of damages sustained
by Lenders as a result of such early termination and Borrower agrees that it is
reasonable under the circumstances currently existing. The early termination fee
provided for in this Section shall be deemed included in the Obligations.
(l)
1.21 PAYMENT METHOD. Borrower irrevocably authorizes Agent to debit all
payments required to be made by Borrower hereunder, under the Revolving Credit
Facility or under any of the Loan Documents, on the date due, from any deposit
account maintained by Borrower with Agent. If there are insufficient funds in
such accounts or Agent for any reason does not debit such accounts, Borrower
will make such payments directly to Agent. All payments are to be made in
immediately available funds. If Agent accepts payment in any
39
other form, such payment shall not be deemed to have been made until the funds
comprising such payment have actually been received by or made available to
Agent.
1.22
1.23 APPORTIONMENT AND APPLICATION OF PAYMENTS. Except as otherwise
provided with respect to Defaulting Lenders and Agent Loans, aggregate principal
and interest payments shall be apportioned ratably among the Lenders (according
to the their Pro Rata Shares) and payments of the fees (other than fees
designated for Agent's separate account) shall, as applicable, be apportioned
ratably among, the Lenders (according to their Pro Rata Shares). All payments
shall be remitted to Agent and all such payments not relating to principal or
interest on the Loans or of specific Advances, or not constituting payment of
specific fees and all proceeds of Collateral received by Agent, shall, subject
to the provisions of SECTION and SECTION, be applied, first, to pay any fees,
indemnities or expense reimbursements then due to Agent from Borrower; second,
to pay any fees, indemnities or expense reimbursements then due to the Lenders
from Borrower; third, to pay interest due in respect of all Advances, including
Loans and Agent Loans; fourth, to pay or prepay principal of Agent Loans; fifth,
ratably to pay principal of the Advances (other than Agent Loans) and
unreimbursed obligations in respect of Letters of Credit; and sixth, ratably to
pay any other Obligations due to Agent or any Lender by Borrower. To the extent
that any sums are applied to repay the principal balance of any Advances, they
shall be applied first to Base Rate Loans and then to LIBOR Rate Loans, in the
chronological order in which the Rate Periods for such LIBOR Rate Loans expire.
Agent shall promptly distribute to each Lender, pursuant to the applicable wire
transfer instructions received from each Lender in writing, such funds as it may
be entitled to receive, subject to a Settlement delay as provided for in
SECTION. Upon the occurrence of an Event of Default, any and all payments on
account of the Revolving Credit Facility will be applied to costs, indemnities,
fees, interest, principal and other sums due hereunder or under the Loan
Documents, in such order as Agent, in its discretion, elects.
1.24
1.25 REINSTATEMENT OF OBLIGATIONS. If Borrower or any Guarantor makes a payment
or payments with respect to any of the Obligations and such payment or payments,
or any part thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver, or
any other person under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or payments, the Obligations
or part thereof hereunder intended to be satisfied shall be revived and
continued in full force and effect as if said payment or payments had not been
made.
1.26
1.27 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrower (the "LOAN ACCOUNT") on
which Borrower will be charged with all Advances and Loans made to Borrower or
for Borrower's account, including, accrued interest, the Lender Group Expenses,
and any other payment Obligations of Borrower. Agent shall render statements
regarding the Loan Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting the Lender
Group Expenses owing, and such statements shall be conclusively presumed to be
correct and accurate, and shall constitute an account stated between
40
Borrower and the Lender Group unless, within thirty (30) days after receipt
thereof by Borrower, Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
1.28
1.29 INDEMNITY. Borrower will indemnify the Lender Group against any loss or
expense which the Lender Group sustains or incurs as a consequence of an Event
of Default, including, without limitation, any failure of Borrower to pay when
due (at maturity, by acceleration or otherwise) any principal, interest, fee or
any other amount due under this Agreement or the other Loan Documents. If any
member of the Lender Group sustains or incurs any such loss or expense it will
notify Borrower in writing of the amount determined in good faith by such member
of the Lender Group to be necessary to indemnify it for the loss or expense.
Such amount will be due and payable by Borrower to such member of the Lender
Group within ten (10) days after presentation by the member of the Lender Group
of a statement setting forth a brief explanation of and its calculation of such
amount, which statement shall be conclusively deemed correct absent manifest
error. Any amount payable by Borrower under this Section will bear interest at
the Default Rate from the due date until paid, both before and after judgment.
1.30
1.31 LOSS OF MARGIN. In the event that any present or future law, rule,
regulation, treaty or official directive or the interpretation or application
thereof by any central bank, monetary authority or governmental authority, or
the compliance with any guideline or request of any central bank, monetary
authority or governmental authority (whether or not having the force of law):
1.32
(a) subjects any member of the Lender Group to any tax with respect to any
amounts payable under this Agreement or the other Loan Documents by Borrower or
otherwise with respect to the transactions contemplated under this Agreement or
the other Loan Documents (except for taxes on the overall net income of such
member of the Lender Group imposed by the United States of America or any
political subdivision thereof); or
(b)
(c) imposes, modifies or deems applicable any deposit insurance, reserve,
special deposit, capital maintenance, capital adequacy, or similar requirement
against assets held by, or deposits in or for the account of, or loans or
advances or commitment to make loans or advances by, or letters of credit issued
or commitment to issue letters of credit by, any member of the Lender Group; or
(d)
(e) imposes upon any member of the Lender Group any other condition with respect
to advances or extensions of credit or the commitment to make advances or
extensions of credit under this Agreement,
(f)
(g) and the result of any of the foregoing is to increase the costs of such
member of the Lender Group, reduce the income receivable by or return on equity
of such member of the Lender Group or impose any expense upon such member of the
Lender Group with respect to any advances or extensions of credit or commitments
to make advances or extensions of credit under this Agreement, such member of
the Lender Group shall so notify Borrower in writing. Borrower
41
agrees to pay such member of the Lender Group the amount of such increase in
cost, reduction in income, reduced return on equity or capital, or additional
expense within ten (10) days after presentation by such member of the Lender
Group of a statement concerning such increase in cost, reduction in income,
reduced return on equity or capital, or additional expense. Such statement shall
set forth a brief explanation of the amount and such member of the Lender
Group's calculation of the amount (in determining such amount such member of the
Lender Group may use any reasonable averaging and attribution methods), which
statement shall be conclusively deemed correct absent manifest error. If the
amount set forth in such statement is not paid within ten (10) days after such
presentation of such statement, interest will be payable on the unpaid amount at
the Default Rate from the due date until paid, both before and after judgment.
(h)
(i) Notwithstanding the foregoing, if any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC, Borrower shall not be
liable for any increase in costs, reduction in income, reduced return on equity
or capital, or additional expenses of such Lender related to or arising from
such Lender's status as such a "foreign corporation, partnership or trust"
unless Borrower has consented to such Lender becoming a Lender under this
Agreement.
1. SECURITY; COLLECTION OF ACCOUNTS AND PROCEEDS OF COLLATERAL.
2.
2.1 PERSONAL PROPERTY. As security for the full and timely payment and
performance of all Obligations, Borrower and each Guarantor hereby grants to
Agent for the benefit of Lenders a first priority security interest in all of
the following:
(a) All of Borrower's and such Guarantor's present and future accounts, contract
rights, chattel paper, instruments and documents and all other rights to the
payment of money whether or not yet earned, for services rendered or goods sold,
consigned, leased or furnished by Borrower, Guarantors or otherwise, including,
without limitation, all accounts owing to Borrower or such Guarantor from credit
card companies or servicers acting on behalf of such credit card companies, in
all cases together with (i) all goods (including any returned, rejected,
repossessed or consigned goods), the sale, consignment, lease or other
furnishings of which shall give or may give rise to any of the foregoing, (ii)
all of Borrower's and such Guarantor's rights as a consignor, consignee, unpaid
vendor or other lienor in connection therewith, including stoppage in transit,
set-off, detinue, replevin and reclamation, (iii) all general intangibles
related thereto, (iv) all credit insurance, guaranties, mortgages, security
interests, assignments, and other encumbrances on real or personal property,
leases and other agreements or property securing or relating to any of the
foregoing, (v) choses-in-action, claims and judgments related to or arising out
of any of the foregoing, (vi) any return or unearned premiums, which may be due
upon cancellation of any insurance policies, and (vii) all proceeds of any of
the foregoing.
(b)
(c) All of Borrower's and such Guarantor's present and future inventory
(including but not limited to goods held for sale or lease or furnished or to be
furnished under contracts for service, raw materials, work-in-process, finished
goods and goods used or consumed in Borrower's or such Guarantor's business)
whether owned, consigned or held
42
on consignment, together with all merchandise, component materials, supplies,
packing, packaging and shipping materials, and all returned, rejected or
repossessed goods sold, consigned, leased or otherwise furnished by Borrower or
such Guarantor, all documents of title covering any of such goods or inventory
and all products and proceeds of any of the foregoing.
(d)
(e) All of Borrower's and such Guarantor's present and future general
intangibles (including but not limited to contract rights, rights arising under
common law, statutes or regulations, choses or things in action, goodwill,
monies due or receivable from pension funds, infringement claims, tax refunds
and rebates, manufacturing and processing rights, designs, patent rights and
applications therefor, trademarks and registration or applications therefor,
service marks and applications therefor, trade names, brand names, logos,
inventions, copyrights and all applications and registrations therefor),
licenses, permits, approvals, software and computer programs, license rights,
royalties, trade secrets, methods, processes, know-how, formulas, drawings,
specifications, descriptions, label designs, plans, blueprints, patterns and all
memoranda, notes and records with respect to any research and development, and
all products and proceeds of any of the foregoing.
(f)
(g) All of Borrower's and such Guarantor's present and future machinery,
equipment, furniture, furnishings, fixtures, trailers, machine tools, tools,
motors, dies, jigs, molds and other articles of tangible personal property of
every type (other than consumer goods, farm products or inventory), together
with all parts, substitutions, accretions, accessions, attachments, accessories,
additions, improvements, components and replacements thereof, all documents of
title covering any of such items and all manuals of operation, maintenance or
repair, and all products and proceeds of any of the foregoing.
(h)
(i) All of Borrower's and such Guarantor's present and future rights in all
proceeds of all licenses, permits, approvals, license rights, agreements and
general intangibles with respect to which there are valid and enforceable legal
or contractual restrictions prohibiting the collateral assignment or granting of
a security interest (the "NON-ASSIGNABLE CONTRACTS"), including without
limitation all proceeds from the sale, transfer or liquidation of such
Non-Assignable Contracts and the value allocable to such Non-Assignable
Contracts in any sale of Borrower's or such Guarantor's business or assets.
(j)
(k) All of Borrower's and such Guarantor's present and future general ledger
sheets, files, records, customer lists, literature, reports, catalogues, books
of account, invoices, purchase orders, bills, certificates or documents of
ownership, bills of sale, business papers, correspondence, credit files, tapes,
cards, computer runs and all other data and data storage systems whether in the
possession of Borrower, Guarantors or any service bureau.
(l)
(m) All letters of credit now existing or hereafter issued naming Borrower or
such Guarantor as a beneficiary or assigned to Borrower or such Guarantor,
including the right to receive payment thereunder and all documentation related
thereto, and all documents of title, negotiable and non-negotiable bills of
lading, electronic bills of lading,
43
shipper's rights, rights accruing under the law of agency or estoppel,
warranties, claims and insurance proceeds related thereto or associated
therewith.
(n)
(o) All documents of title, negotiable and non-negotiable bills of lading,
electronic bills of lading, shipper's rights, rights accruing under the law of
agency or estoppel, documents, agreements, instruments, warranties and claims
now existing or hereafter issued or arising in connection with any Merchandise
Letter of Credit now or hereafter issued under this Agreement, and all insurance
claims or proceeds related thereto.
(p)
(q) Those certain securities described on SCHEDULE hereto, all additional
securities pledged to Agent from time to time, together with all cash, stock or
other dividends paid upon such securities; all securities received in addition
to or in exchange for such securities; all subscription rights incident to such
securities; any other distribution in respect of such securities in any form;
and the proceeds thereof. All of such securities shall be freely assignable and
transferable to Agent, and shall be accompanied by such stock pledge agreements
and blank stock powers with signatures guaranteed as Agent may require.
(r)
(s) All of Borrower's and such Guarantor's present and future deposits, funds,
notes, drafts, investment property, security entitlements, instruments,
documents, policies, evidences and certificates of insurance, securities,
personal property leases (wherein Borrower or such Guarantor is the lessor) and
chattel paper and all other assets of Borrower or such Guarantor or in which
Borrower or such Guarantor has an interest and all proceeds thereof, now or at
any time hereafter on deposit with or in the possession or control of Agent or
owing by Agent to Borrower or such Guarantor or in transit by mail or carrier to
Agent or in the possession of any other Person acting on Agent's behalf, without
regard to whether Agent received the same in pledge, for safekeeping, as agent
for collection or otherwise, or whether Agent has conditionally released the
same, and in all assets of Borrower or such Guarantor in which Agent now has or
may at any time hereafter obtain a lien, mortgage, or security interest for any
reason.
(t)
(u) All present and future accounts maintained by Borrower or any Guarantor with
any depository institution, including without limitation all deposit accounts
now or hereafter maintained by Borrower with any depository institution pursuant
to SECTION (C)(II) and all sums on deposit therein. Borrower, such depository
institution and Agent shall enter into a Blocked Account Agreement satisfactory
to Agent for such deposit accounts.
(v)
(w) All proceeds of the foregoing.
(x)
1.2 REAL PROPERTY. As further security for the Obligations, Borrower shall grant
to Agent a leasehold mortgage lien encumbering certain leasehold interests of
Borrower as further described on SCHEDULE attached hereto.
1.3
1.4 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Borrower and
44
Guarantors, as applicable, shall immediately endorse and deliver physical
possession of such Negotiable Collateral to Agent.
1.5
1.6 SURETY. As further security for the Obligations, Borrower shall cause to be
executed and delivered to Agent, the absolute, unconditional, unlimited surety
agreement (collectively, the "SURETY AGREEMENTS") of each Guarantor in form and
content satisfactory to Agent.
1.7
1.8 GENERAL. The collateral described above in SECTIONS, and is collectively
referred to herein as the "COLLATERAL". The above-described security interests,
assignments, liens and guarantees shall not be rendered void by the fact that no
Obligations exist as of any particular date, but shall continue in full force
and effect until the Obligations have been repaid, neither Agent nor any Lender
has an agreement or commitment outstanding under the Loan Documents pursuant to
which Agent or such Lender may extend credit to or on behalf of Borrower and
Agent has executed termination statements or releases with respect thereto. IT
IS THE EXPRESS INTENT OF THE BORROWER AND THE GUARANTORS THAT ALL OF THE
COLLATERAL SHALL SECURE NOT ONLY THE OBLIGATIONS UNDER THE LOAN DOCUMENTS, BUT
ALSO ALL OTHER PRESENT AND FUTURE OBLIGATIONS OF BORROWER TO THE LENDER GROUP.
1.1 COLLECTION OF ACCOUNTS; PROCEEDS OF COLLATERAL.
1.2
(a) GENERAL. Borrower will collect its accounts only in the ordinary course of
business.
(a) NON-INVENTORY PROCEEDS. Immediately upon receipt, Borrower will forward to
Agent for deposit in the Cash Collateral Account all checks, drafts and other
monies received by Borrower which are proceeds of the Collateral (other than
proceeds resulting from the sale of inventory by Borrower to retail customers in
the ordinary course).
(b)
(c) CASH, CHECKS OR DRAFTS. Borrower will cause all payments in the form of
cash, checks or drafts received by Borrower as a result of the sale of inventory
by Borrower to retail customers to be deposited on each Business Day either (i)
in the Cash Collateral Account, or (ii) in accounts maintained with other
depository institutions acceptable to Agent and with respect to which account
Borrower, Agent and such depository institution have executed a Blocked Account
Agreement in form and content acceptable to Agent. To the extent that any checks
or drafts are returned unpaid for any reason and such checks or drafts may be
purchased from Borrower pursuant to the Check Purchase Agreement, Borrower will
comply with the terms of the Check Purchase Agreement to require NPC Check
Service Division to purchase such checks or drafts and will cause NPC Check
Services Division to forward the purchase price to the Cash Collateral Account.
(d)
45
(e) ACH TRANSFERS. Borrower will cause all payments in the form of credit card
charges received by Borrower as a result of the sale of inventory by Borrower to
retail customers to be processed by the issuing credit card company and in the
case of the "Today's Man" credit card by World Financial Network National Bank.
In accordance with the Credit Card Agreements, Borrower will submit credit card
charges for processing by the applicable credit card company or processor on the
Business Day immediately following the sale date and will comply with the
requirements of the Credit Card Agreements to enable the issuing credit card
company or the credit card processor to pay to Borrower by ACH remittance the
full amount of such credit remittances (subject only to such "netting out"
procedures as may be permitted under the Credit Card Agreements) as soon as
possible under the terms of the Credit Card Agreements. Borrower will cause all
ACH remittances from such credit card issuers and processors to be deposited
directly into the Cash Collateral Account.
(f)
(g) TRANSFERS TO AGENT. Borrower will cause all payments received by Borrower in
connection with the sale of inventory by Borrower to retail customers in the
form of cash, checks, drafts, credit card charges or any other medium of
payment, to the extent not deposited directly into the Cash Collateral Account,
to be wire transferred in immediately available funds into the Cash Collateral
Account at least three (3) times each calendar week (or more frequently as
required by Agent).
(h)
(i) CASH COLLATERAL ACCOUNT. Agent will establish a non-interest bearing account
in the name of Agent (the "CASH COLLATERAL ACCOUNT"). Agent will have sole
dominion and control over all items and funds in the Cash Collateral Account and
such items and funds may be withdrawn only by Agent. However, Agent will have
the right to apply all or any part of such funds towards payment of any of the
Obligations or to hold such funds as cash collateral. All funds and items
received or deposited into the Cash Collateral Account will be credited as
payments of the principal balance of the Revolving Credit Facility on the
Business Day on which such items are received or deposited into the Cash
Collateral Account. As compensation for the foregoing arrangement, Borrower will
pay to Agent for Agent's sole account, a sum equal to one (1) day's interest on
all such funds or deposits, at the applicable interest rate on the Loan against
which such funds or deposits are credited as a payment. Borrower will reimburse
Agent on demand for the amount of any items credited as provided above and
subsequently returned unpaid. Agent may terminate the foregoing arrangement upon
notice to Borrower.
(j)
(k) ITEMS HELD IN TRUST; ENDORSEMENTS. Borrower agrees that all monies, checks,
notes, instruments, drafts, chattel paper or other payments relating to or
constituting proceeds of any accounts receivable or other Collateral of Borrower
which come into the possession or under the control of Borrower or any
employees, agents or other persons acting for or in concert with Borrower, shall
be received and held in trust for Agent and such items shall be the sole and
exclusive property of Agent. Immediately upon receipt of any such notes,
instruments or chattel paper, Borrower and such other persons shall remit the
same or cause the same to be remitted, in kind, to Agent. Borrower shall deliver
or cause to be delivered to Agent, with appropriate endorsement and assignment
to Agent with full recourse to Borrower, all
46
instruments, notes and chattel paper constituting an account receivable or
proceeds thereof or other Collateral. Agent is hereby authorized to open all
mail addressed to Borrower and endorse all checks, drafts or other items for
payment on behalf of Borrower. Agent (and Agent's officers, employees and
agents) are granted a power of attorney by Borrower with full power of
substitution to execute on behalf of Borrower and in Borrower's name or to
endorse Borrower's name on any check, draft, instrument, note or other item of
payment or to take any other action or sign any document in order to effectuate
the foregoing. Such power of attorney being coupled with an interest is
irrevocable.
(l)
2. REPRESENTATIONS AND WARRANTIES. In order to induce the Lender Group to enter
into this Agreement, Borrower and Guarantors, jointly and severally, make the
following representations and warranties which shall be true, correct, and
complete in all respects as of the date hereof, and shall be true, correct, and
complete in all respects as of the Closing Date, and at and as of the date of
the making or entering into each Advance, Letter of Credit, or Permitted FX
Contract, thereafter, as though made on and as of the date of such Advance,
Letter of Credit or Permitted FX Contract (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement.
3.
3.1 VALID ORGANIZATION, GOOD STANDING AND QUALIFICATION. Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania, has full power and authority to
execute, deliver and comply with the Loan Documents, and to carry on its
business as it is now being conducted and is duly licensed or qualified as a
foreign corporation in good standing under the laws of each other jurisdiction
in which the character or location of the properties owned by it or the business
transacted by it requires such licensing or qualification.
3.2
3.3 Each Guarantor is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has full power and
authority to execute, deliver and comply with the Loan Documents, and to carry
on its business as it is now being conducted and is duly licensed or qualified
as a foreign corporation in good standing under the laws of each other
jurisdiction in which the character or location of the properties owned by it or
the business transacted by it requires such licensing or qualification.
3.4
3.5 LICENSES. Borrower, Guarantors and their employees, servants and agents
have all licenses, registrations, approvals and other authority as may be
necessary to enable them to own and operate their business and perform all
services and business which they have agreed to perform in any state,
municipality or other jurisdiction.
3.6
3.7 OWNERSHIP INTERESTS. The ownership of all stock, debentures, options,
warrants, bonds and other securities (debt and equity) of Borrower by ▇▇▇▇▇ ▇▇▇▇
and all directors of Borrower and all pledges, proxies, voting trusts, powers of
attorney and other agreements affecting the ownership or voting rights of said
interests is as set forth on SCHEDULE attached hereto.
47
3.8
3.9 SUBSIDIARIES. Except as set forth on SCHEDULE attached hereto, Borrower and
Guarantors do not own any shares of stock or other equity interests in any
Person, directly or indirectly (by any Subsidiary or otherwise). All of the
outstanding capital stock of each Guarantor has been validly issued and is fully
paid and non-assessable. Each of Today's Man Outlet, Inc., Benemax Development,
Inc. and F&S International, Inc. has no assets and does not now nor will it in
the future engage in any activities without the prior written consent of Agent.
3.10
3.11 No capital stock (or any securities, instruments, warrants, options,
purchase rights, conversion or exchange rights, calls, commitments or claims of
any character convertible into or exercisable for capital stock) of any direct
or indirect Subsidiary of Borrower is subject to the issuance of any security,
instrument, warrant, option, purchase right, conversion or exchange right, call,
commitment or claim of any right, title, or interest therein or thereto.
3.12
3.13 FINANCIAL STATEMENTS. Borrower has furnished to Agent the audited
financial statements of Borrower certified without qualification by independent
public accountants as of January 31, 1998 and all management and comment letters
from such accountants in connection therewith, and its internally prepared
interim financial statements of Borrower and Guarantors as of August 31, 1998.
Such financial statements of Borrower and Guarantors (together with the related
notes and comments), are correct and complete, fairly present the financial
condition and the assets and liabilities of Borrower and Guarantors at such
dates, and have been prepared in accordance with GAAP. With respect to the
interim statements, such statements are subject to year-end adjustment and any
accompanying footnotes.
3.14
3.15 NO MATERIAL ADVERSE CHANGE IN FINANCIAL CONDITION. There has been no
Material Adverse Change in the financial condition of Borrower or Guarantors
since August 31, 1998.
3.16
3.17 PENDING LITIGATION OR PROCEEDINGS. Except as set forth on SCHEDULE
attached hereto, there are no judgments outstanding or actions, suits or
proceedings pending or, to the best of Borrower's knowledge, threatened against
or affecting Borrower or any Guarantor, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
3.18
3.19 DUE AUTHORIZATION; NO LEGAL RESTRICTIONS. The execution and delivery by
Borrower and Guarantors of the Loan Documents, the consummation of the
transactions contemplated by the Loan Documents and the fulfillment and
compliance with the respective terms, conditions and provisions of the Loan
Documents: (a) have been duly authorized by all requisite corporate action of
Borrower and each Guarantor, (b) will not conflict with or result in a breach
of, or constitute a default (or might, upon the passage of time or the giving of
notice or both, constitute a default) under, any of the terms, conditions or
provisions of any applicable statute, law, rule, regulation or ordinance or
Borrower's or any Guarantor's Certificate or Articles of Incorporation or
By-Laws or any lease, indenture, mortgage, loan or credit
48
agreement or instrument to which Borrower or any Guarantor is a party or by
which any of them may be bound or affected, or any judgment or order of any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (c) will not result in the creation or
imposition of any Lien of any nature whatsoever upon any of the property or
assets of Borrower or any Guarantor under the terms or provisions of any such
agreement or instrument, except Liens in favor of Agent, and (d) do not require
any consent or approval of the stockholders of Borrower or any Guarantor or any
other Person.
3.20
3.21 ENFORCEABILITY. The Loan Documents have been duly executed by Borrower and
Guarantors and delivered to Agent and constitute legal, valid and binding
obligations of Borrower and Guarantors, enforceable in accordance with their
terms.
3.22
3.23 NO DEFAULT UNDER OTHER OBLIGATIONS, ORDERS OR GOVERNMENTAL REGULATIONS.
Borrower and Guarantors are not in violation of their Certificates or Articles
of Incorporation or in default in the performance or observance of any of their
obligations, covenants or conditions contained in any indenture or other
agreement creating, evidencing or securing any Indebtedness or pursuant to which
any such Indebtedness is issued. Borrower and Guarantors are not in violation of
or in default under any other agreement or instrument or any judgment, decree,
order, statute, rule or governmental regulation, applicable to them or by which
their properties may be bound or affected.
3.24
3.25 GOVERNMENTAL CONSENTS. Other than the filing of appropriate financing
statements, no consent, approval or authorization of or designation, declaration
or filing with or notice to any governmental authority on the part of Borrower
or Guarantors is required in connection with the execution, delivery or
performance by Borrower or Guarantors of the Loan Documents or the consummation
of the transactions contemplated thereby.
3.26
3.27 TAXES. Borrower and Guarantors have filed all tax returns which they are
required to file and have paid, or made provision for the payment of, all taxes
which have or may have become due pursuant to such returns or pursuant to any
assessment received by them. Such tax returns are complete and accurate in all
respects. Borrower and Guarantors do not know of any proposed additional
assessment or basis for any assessment of additional taxes.
3.28
3.29 TITLE TO COLLATERAL. The Collateral is and will be owned by Borrower and
Guarantors free and clear of all Liens of any kind, excepting only Liens in
favor of the Agent and those Liens permitted under SECTION below. Borrower and
Guarantors will defend the Collateral against any claims of all Persons other
than the Agent.
3.30
3.31 NAMES AND ADDRESSES. During the past five (5) years, Borrower and
Guarantors have not been known by any names (including trade names) other than
those set forth in SCHEDULE 9.14 attached hereto and have not been located at
any addresses other than those set forth on SCHEDULE 9.14 attached hereto. The
portions of the Collateral which are tangible property and Borrower's and
Guarantors' Books will at all times be located at the addresses set forth on
SCHEDULE 9.14; or such other location determined by Borrower and Guarantors
after prior
49
notice to Agent and delivery to Agent of any items requested by Agent to
maintain perfection and priority of Agent's security interests and access to the
Collateral and to Borrower's and Guarantors' Books. SCHEDULE 9.14 identifies the
chief executive offices of Borrower and Guarantors.
3.32
3.33 CURRENT COMPLIANCE. Borrower and Guarantors are currently in compliance
with all of the terms and conditions of the Loan Documents.
3.34
3.35 PENSION AND BENEFIT PLANS. Except as disclosed on SCHEDULE 9.16, (a)
Borrower and Guarantors have no obligations with respect to any Plan, (b) no
ERISA Events, including, without limitation, any "Reportable Event" or
"Prohibited Transaction" (as those terms are defined under ERISA), have occurred
in connection with any Plan of Borrower or Guarantors which might constitute
grounds for the termination of any such Plan by the PBGC or for the appointment
by any United States District Court of a trustee to administer any such Plan,
(c) all of the Borrower's and Guarantors' Plans meet with the minimum funding
standards of Section 302 of ERISA, and (d) Borrower and Guarantors have no
existing liability to the PBGC. Borrower and Guarantors are not subject to or
bound to make contributions to any Multi-Employer Plan.
3.36
3.37 The present value of the aggregate benefit liabilities under any of the
Plans, determined as of the end of such Plan's most recently ended plan year on
the basis of the actuarial assumptions specified for funding purposes in such
Plan's most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit liabilities.
The term "BENEFITS LIABILITIES" has the meaning specified in Section 4001 of
ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the meanings
specified in Section 3 of ERISA. Neither Borrower nor any ERISA Affiliates have
incurred withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA.
3.38
3.39 LEASES AND CONTRACTS. Borrower and Guarantors have complied with the
provisions of all material leases, contracts or commitments of any kind (such as
employment agreements, collective bargaining agreements, powers of attorney,
distribution agreements, patent license agreements, contracts for future
purchase or delivery of goods or rendering of services, bonus, pension and
retirement plans or accrued vacation pay, insurance and welfare agreements) to
which Borrower or any Guarantor is a party and are not in default thereunder. No
other party is in default under any such leases, contracts or other commitments
and no event has occurred which, but for the giving of notice or the passage of
time or both, would constitute an event of default thereunder. SCHEDULE sets
forth an accurate list of all material leases, contracts and commitments to
which Borrower or Guarantors are a party or by which any of them are bound.
3.40
3.41 INTELLECTUAL PROPERTY. Borrower and each Guarantor owns or possesses the
irrevocable right to use all of the patents, trademarks, service marks, trade
names, copyrights, licenses, franchises and permits and rights with respect to
the foregoing necessary to own and operate the Borrower's or such Guarantor's
properties and to carry on their business as
50
presently conducted and presently planned to be conducted without conflict with
the rights of others. SCHEDULE 9.18 sets forth an accurate list and description
of each such patent, trademark, service ▇▇▇▇, trade name, copyright, license,
franchise and permit and right with respect to the foregoing, together with all
registration or application numbers or identifying information with respect
thereto.
3.42
3.43 ELIGIBLE INVENTORY WARRANTIES. With respect to Borrower's inventory from
time to time scheduled, listed or referred to in any certificate, statement or
report prepared by or for Borrower and delivered to Agent and described as
Eligible In-Transit Inventory or Eligible Landed Inventory and upon which
Borrower is basing Availability under the Revolving Credit Facility, Borrower
warrants and represents that (a) such inventory is located at one of the
Eligible Inventory Locations or is in transit to one of such Eligible Inventory
Locations; (b) Borrower has good, indefeasible and merchantable title to such
inventory and such inventory is not subject to any lien or security interest
whatsoever except for the prior, perfected security interest granted to Agent;
(c) such inventory is of good and merchantable quality, free from any defects;
(d) such inventory is not subject to any licensing, patent, royalty, trademark,
trade name or copyright agreements with any third parties except as set forth on
SCHEDULE 9.19; (e) such inventory is not held by Borrower on consignment for
another Person; and (f) the completion of the manufacture and sale or other
disposition of such inventory by Agent following an Event of Default shall not
require the consent of any person and shall not constitute a breach or default
under any contract or agreement to which Borrower is a party or to which the
inventory is subject.
3.44
3.45 ELIGIBLE CREDIT CARD ACCOUNTS WARRANTIES. With respect to all accounts of
Borrower from time to time scheduled, listed or referred to in any certificate,
statement or report prepared by or for Borrower and delivered to Agent and
described as Eligible Credit Card Accounts and upon which Borrower is basing
Availability under the Revolving Credit Facility, Borrower warrants and
represents that (a) such Eligible Credit Card Account meets the requirements of
an Eligible Credit Card Account and represents the obligation of a credit card
company, issuer or servicer to pay the amount due Borrower in connection with a
bona fide sale to a retail customer in accordance with the terms of the
applicable Credit Card Agreement; (b) all agreements with each credit card
company, issuer or servicer designated by such credit card company or issuer,
are in full force and effect and all payments thereunder shall be made to
Borrower without offset or defense; (c) the accounts arose in the ordinary
course of Borrower's business; (d) the accounts are genuine, are in all respects
what they purport to be; (e) Borrower has absolute title to such accounts and
the accounts represent undisputed, bona fide transactions completed in
accordance with the terms thereof and as represented to Agent; (f) no payments
have been or will be made thereon, except payments delivered to Agent pursuant
to the Loan Documents; (g) there are no setoffs, counterclaims, disputes,
discounts, credits, charge backs, freight claims, allowances or adjustments
existing or asserted with respect thereto and Borrower has not made any
agreement with any Account Debtor for any deduction therefrom; (h) there are no
facts, events or occurrences which impair the validity or enforcement thereof or
may reduce the amount payable thereunder as shown on any certificates,
statements or reports, prepared by or for Borrower and delivered to Agent,
Borrower's Books and all invoices and statements delivered to Agent with respect
thereto; (i) the goods sold giving rise thereto are not subject to any lien,
claim,
51
encumbrance or security interest except that of Agent; and (j) the accounts have
not been sold, assigned or transferred to any other Person and no Person except
Borrower has any claim thereto or (with the exception of the applicable Account
Debtor) any claims to the goods sold.
3.46
3.47 BUSINESS INTERRUPTIONS. Within five (5) years prior to the date hereof,
neither the business, Collateral nor operations of Borrower or any Guarantor has
been materially and adversely affected in any way by any casualty, strike,
lockout, combination of workers, order of the United States of America, or any
state or local government, or any political subdivision or agency thereof,
directed against Borrower or any Guarantor. There are no pending or threatened
labor disputes, strikes, lockouts or similar occurrences or grievances against
the business being operated by Borrower or any Guarantor.
3.48
3.49 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or warranty
by Borrower or any Guarantor contained herein or in any certificate or other
document furnished by Borrower or any Guarantor pursuant hereto or in connection
herewith fails to contain any statement of material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made. There is no fact which Borrower or any Guarantor knows or
should know and has not disclosed to Agent, which does or may materially and
adversely affect Borrower or any Guarantor or any of their operations.
3.50
3.51 EQUIPMENT. All of Borrower's equipment used or held for use in Borrower's
business is substantially in good working order and is fit for such purposes.
3.52
3.53 INVENTORY RECORDS. Borrower keeps correct and accurate records itemizing
and describing the kind, type, quality, and quantity of inventory, and
Borrower's cost therefor.
1.1 FEIN. The Borrower's FEIN is ▇▇-▇▇▇▇▇▇▇. The Guarantors' FEIN are:
1.2
Benmol, Inc. - ▇▇-▇▇▇▇▇▇▇
D & L, Inc. - ▇▇-▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇, Inc. - ▇▇-▇▇▇▇▇▇▇
1.1 SOLVENCY. Borrower and each Guarantor is Solvent. No transfer of property
is being made by Borrower or any Guarantor and no obligation is being incurred
by Borrower or any Guarantor in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrower or any Guarantor.
52
1.1 INVENTORY LOCATIONS.
1.2
(a) ALL INVENTORY. All of Borrower's inventory in the United States is currently
located at or in transit between one of the locations set forth on SCHEDULE
9.27(A). SCHEDULE 9.27(A) sets forth the street address and the name of the
owner/lessor/warehouseman, as applicable, for such location.
(a) ELIGIBLE INVENTORY LOCATIONS. SCHEDULE 9.27(B) sets forth all Eligible
Inventory Locations of Borrower. Each Eligible Inventory Location is and will be
owned by Borrower or leased by Borrower, or is or will be a contract public
warehouse.
(b)
(c) ADDITIONS TO ELIGIBLE INVENTORY LOCATIONS. Borrower and Agent may modify
SCHEDULE 9.27(B) to add new Eligible Inventory Locations by executing a written
amendment to this Agreement in form and content acceptable to Agent, provided
that Borrower complies with all of the following conditions:
(d)
(i) Borrower executes and delivers to Agent such UCC-1 financing statements
covering all inventory and related assets of Borrower to be located at such new
location(s) as may be required by Agent to perfect Agent's Lien in such
inventory and related assets.
(ii)
(iii) Agent receives written confirmation that such new UCC-1 financing
statements have been filed in the appropriate offices required to perfect
Agent's Lien (for the pro rata benefit of the Lenders) at such new location(s).
(iv)
(v) Agent receives a search report from a reputable search company confirming
that there are no other Liens encumbering any of Borrower's assets at such new
location(s), except the Lien in favor of Agent (for the pro rata benefit of the
Lenders).
(vi)
(vii) Agent receives a copy of the lease, sub-lease, warehouse agreement or
similar agreement entered into by Borrower with the owner, lessor or operator of
the new location(s).
(viii)
(ix) Agent receives evidence satisfactory to Agent that all assets of Borrower
at such new location(s) are covered by the insurance coverage required under
SECTION (A).
(x)
(xi) Borrower uses its best efforts to provide to Agent (for the pro rata
benefit of Lenders) a Mortgage securing the Obligations and encumbering
Borrower's leasehold interest in such new location, together with a Landlord's
Consent from the owner/lessor, title insurance, evidence of compliance with
applicable environmental laws,
53
evidence of insurance coverage, flood zone certifications and such other items
as Agent may require, all of which must be in form, content and amount (if
applicable) acceptable to Agent.
(xii)
(xiii) Agent receives a Collateral Access Agreement from the owner/lessor of the
new location in form and content acceptable to Agent.
(xiv)
1.2 NON-OPERATING SUBSIDIARIES. Benemax Development, Inc., F&S International,
Inc. and Today's Man Outlet, Inc. are non-operating Subsidiaries of Borrower
without any material assets and will continue as non-operating entities without
material assets until their dissolution or merger.
1.3
1.4 GUARANTOR BUSINESS ACTIVITIES. Guarantors do not engage in any business
activities other than (a) in the case of ▇▇▇▇ & ▇▇▇▇, Inc. being the holding
company owning all of the outstanding and issued shares of Benmol, Inc. and D&L,
Inc. (b) in the case of Benmol, Inc. being the payee of the Benmol Note, and (c)
in the case of D&L, Inc. being the owner of the trademarks and other property
referred to in the License Agreement (collectively, the "GUARANTOR BUSINESS
ACTIVITIES").
1.5
1.6 WARRANTS. The copy of the Warrant Agreement attached as EXHIBIT L (the
"WARRANT AGREEMENT") is a true and complete copy of the form of warrant
agreement utilized for all outstanding warrants issued by Borrower (the
"WARRANTS") and there have been no modifications or amendments thereto. Borrower
has not entered into any agreements with the holders of any such Warrants
modifying or amending the terms thereof, including without limitation, any
agreement requiring Borrower to purchase or repurchase any Warrants or stock
issued pursuant to such Warrants.
1.7
1.8 BANKRUPTCY PLAN. The Plan of Reorganization has been approved by the
Confirmation Order. The Confirmation Order is final and the appeal period with
respect thereto has expired with no appeal or motion for reconsideration having
been filed. Borrower and Guarantors are currently in compliance with the terms
and conditions of the Plan of Reorganization. All of Borrower's and Guarantors'
obligations under the Plan of Reorganization have been satisfied in full, except
as described on SCHEDULE.
1.9
1.10 CREDIT CARDS. SCHEDULE sets forth an accurate and complete list of all
agreements between Borrower and any issuers of credit cards or credit card
processors and all amendments and modifications thereto (collectively, the
"CREDIT CARD AGREEMENTS"). Borrower is not in default of any of its obligations
under the Credit Card Agreements.
1.11
1.12 CHECK PURCHASING AGREEMENTS. Borrower has entered into a certain Agreement
dated May 6, 1996 with NPC Check Services Division (the "CHECK PURCHASE
AGREEMENT"), pursuant to which NPC Check Services Division has agreed to
purchase certain checks and money orders, subject to the terms and conditions of
such agreement. The
54
Check Purchase Agreement is in full force and effect and has not been modified
or amended. Borrower is not in default of any of its obligations under the Check
Purchase Agreement.
1. YEAR 2000 COMPLIANCE.
2.
2.1 Representations and Warranties. Borrower and Guarantors represent and
warrant to the Lender Group that they have undertaken and completed a detailed
inventory, review and assessment of all areas within their business operations
which could be materially and adversely affected by the failure of Borrower to
be Year 2000 Compliant; (b) they have contracted with ▇▇▇▇▇▇ Software to replace
Borrower's general ledger system and with JDA Software to replace Borrower's
merchandising system with Year 2000 Compliant systems in a timely fashion; and
(c) they have budgeted sufficient sums (reflected in the projections furnished
to Agent to address and resolve all issues to make Borrower Year 2000 Compliant.
1.1 Suppliers, Vendors and Servicers. Borrower and Guarantors represent and
warrant to the Lender Group that they have made an inquiry of each of their
material suppliers, venders and servicers to determine whether such suppliers,
vendors and servicers are or will be Year 2000 Compliant in a timely fashion.
Borrower and Guarantors agree that they will use reasonable efforts to use
material suppliers, vendors and servicers who are Year 2000 Compliant.
1.2
1.3 Covenants. Borrower and Guarantors agree that: (a) they will complete
installation and testing of their new general ledger system by March 31, 1999;
(b) they will complete installation and testing of their new merchandising
system by July 31, 1999; and (c) they will complete a satisfactory resolution of
all material problems related to any failure of Borrower to be Year 2000
Compliant no later than August 31, 1999. Such deadlines may be extended as a
result of problems outside the control of Borrower or Guarantors, provided that,
Borrower and Guarantors are diligently pursuing and continue to pursue
resolution of such problems and, provided that, all of such problems are
satisfactorily resolved in full prior to September 30, 1999. Borrower and
Guarantors will, from time to time, as requested by Agent, provide to Agent
written updates regarding Borrower's and Guarantors' efforts and status to
become Year 2000 Compliant. Borrower and Guarantors will provide Agent with
prompt written notice of the completion of installation and successful testing
of their new general ledger system and their new merchandising system.
1.4
1.5 Definitions. For purposes of this Section, (i) "Year 2000 Compliant" means
that neither the performance nor functionality of any system, computer hardware
or software, or any embedded microchips or other data processing capability
shall be materially and adversely affected by dates prior to, on or after
January 1, 2000, and that such items shall be able to interpret, store,
transmit, receive and manipulate data on and involving all calendar dates
correctly and without causing any abnormal ending scenarios in relation to dates
prior to, on or after January 1, 2000, and (ii) "MATERIAL SUPPLIERS, VENDORS AND
SERVICERS" means those suppliers, vendors and servicers of Borrower whose
business failure or inability to provide supplies, materials or services to or
for the benefit of Borrower or Guarantors would, with
55
reasonable probability, result in a material adverse effect on the business,
operations, property, condition (financial or otherwise) of Borrower, any
Guarantor or any of the Collateral.
1.6
2. AFFIRMATIVE COVENANTS. Borrower and Guarantors, jointly and severally,
covenant and agree that, so long as this Agreement has not been terminated and
until full and final payment of the Obligations, and unless Agent shall
otherwise consent in writing, Borrower and each Guarantor shall comply with the
following:
3.
3.1 Payment of Principal, Interest and Other Amounts Due. Borrower and
Guarantors will pay when due all Obligations without setoff, deduction or
counterclaim and without deduction or withholding for or on account of any
federal, state or local taxes.
3.2
3.3 Claims for Labor and Materials. Borrower and each Guarantor will pay or
cause to be paid when due all claims for labor, materials and supplies which, if
unpaid, might become a Lien upon any of its properties or assets.
3.4
3.5 Existence; Approvals; Qualification; Business Operations; Compliance with
Laws. Borrower and each Guarantor (a) will obtain, preserve and keep in full
force and effect its separate corporate existence and all rights, licenses,
registrations and franchises necessary to the proper conduct of its business or
affairs; (b) will qualify and remain qualified as a foreign corporation in each
jurisdiction in which the character or location of the properties owned by it or
the business transacted by it requires such qualification; (c) will continue to
operate its business as presently operated; and (d) will comply with the
requirements of all applicable laws and all rules, regulations (including
without limitation environmental statutes and regulations, the Fair Labor
Standards Act and the Americans With Disabilities Act) and orders of regulatory
agencies and authorities having jurisdiction over it.
3.6
3.7 Maintenance of Properties. Borrower and each Guarantor will maintain,
preserve, protect and keep or cause to be maintained, preserved, protected and
kept its real and personal property used or useful in the conduct of its
business in good working order and condition, reasonable wear and tear excepted,
and will pay and discharge when due the cost of repairs to and maintenance of
the same.
3.8
3.9 Intellectual Property. With respect to any and all trademarks,
registrations, copyrights, patents, patent rights and applications for any of
the foregoing, Borrower and each Guarantor shall maintain and protect the same
and shall take and assert any and all remedies available to Borrower or any
Guarantor to prevent any other Person from infringing upon or claiming any
interest in any such trademarks, registrations, copyrights, patents, patent
rights or applications for any of the foregoing.
3.10
3.11 Borrower and each Guarantor will notify Agent immediately of (a) the
creation by Borrower, any Guarantor or any of its employees of any inventions;
(b) any changes or improvements made to an invention created or owned by
Borrower or any Guarantor or any of its
56
employees; (c) the filing of any patent or trademark application, whether
domestic or foreign, by Borrower, Guarantors or any of their employees; (d) the
grant of any patent or trademark, whether domestic or foreign, to Borrower,
Guarantors or any of their employees; or (e) Borrower's or any Guarantor's
intent to abandon a patent or trademark.
3.12
3.13 Borrower and Guarantors will, if requested by Agent, (i) execute and
deliver to Agent assignments, financing statements, patent mortgages or such
other documents, in form and substance acceptable to Agent, necessary to perfect
and maintain Agent's security interest in all existing and future patents,
patent applications, trademarks, trademark applications, and other general
intangibles owned by Borrower or any Guarantor; (ii) furnish Agent with evidence
satisfactory to Agent, in its discretion, that all actions necessary to maintain
and protect each trademark and patent owned by Borrower, Guarantors or their
employees have been taken in a timely manner; and (iii) execute and deliver to
Agent an agreement permitting Agent to exercise all of Borrower's or any
Guarantor's rights in, to and under any patent or trademark owned by Borrower,
Guarantors, or any of their employees.
1.1 Insurance.
1.2
(a) Personal Property Collateral. Borrower will, at its expense, keep the
Personal Property Collateral insured against loss or damage by fire, theft,
explosion, sprinklers, and all other hazards and risks, as are ordinarily
insured against by other owners in similar businesses, in amounts acceptable to
Agent, but in any event in amounts sufficient to cover the Value of all of
Borrower's inventory (including in-transit inventory) and in amounts sufficient
to prevent Borrower from becoming a co-insurer under such policies. Borrower
also shall maintain business interruption, public liability, product liability
(to the extent currently in effect), and property damage insurance relating to
Borrower's ownership and use of the Personal Property Collateral, as well as
insurance against larceny, embezzlement, and criminal misappropriation.
(a) Real Property Collateral. Borrower, at its expense, shall obtain and
maintain (i) insurance of the type necessary to insure the Real Property
Collateral, for the full replacement cost thereof, against any loss by fire,
lightning, windstorm, hail, explosion, aircraft, smoke damage, vehicle damage,
earthquakes, elevator collision, and other risks from time to time included
under "extended coverage" policies, in such amounts as Agent may require, but in
any event in amounts sufficient to prevent Borrower from becoming a co-insurer
under such policies, (ii) combined single limit bodily injury and property
damages insurance against any loss, liability, or damages on, each parcel of
Real Property Collateral, in an amount reasonably acceptable to Agent; (iii)
business rental insurance covering annual receipts for a 12 month period for
each parcel of Real Property Collateral; and (iv) insurance for such other risks
as Agent may require. Replacement costs, at Agent's option, may be redetermined
by an insurance appraiser, satisfactory to Agent, not more frequently than once
every 12 months at Borrower's cost.
(b)
57
(c) Endorsements, Cancellation or Modification. Borrower and Guarantors shall
cause Agent (for the pro rata benefit of the Lenders) to be named as insured
mortgagee with respect to all Real Property Collateral, loss payee (with a
lender's loss payable endorsement) with respect to all Personal Property
Collateral, and additional insured with respect to all liability insurance, as
its interests may appear. Every policy of insurance referred to in this Section
shall contain an agreement by the insurer that thirty (30) days' written notice
will be given Agent by the insurer prior to cancellation or material and adverse
modification of the scope or amount of such insurance coverage. Any modification
of any insurance policy or coverage involving any decrease in the amount or
scope of coverage, must be approved by Agent in writing prior to the effective
date of such modification.
(d)
(e) General. All such policies of insurance shall be in such form, with such
companies, and in such amounts as may be reasonably satisfactory to Agent. Every
policy of insurance referred to in this Section shall contain an agreement by
the insurer that any loss payable thereunder shall be payable notwithstanding
any act or negligence of Borrower or the Lender Group which might, absent such
agreement, result in a forfeiture of all or a part of such insurance payment and
notwithstanding any foreclosure or other action or proceeding taken by the
Lender Group pursuant to the Mortgages upon the happening of an Event of
Default.
(f)
(g) Policies and Evidence of Insurance. Borrower and Guarantors shall cause to
be delivered to Agent the insurance policies and all endorsements thereto and
evidence of insurance utilizing a current ▇▇▇▇▇ 27 Evidence of Property
Insurance and at least thirty (30) days prior to the expiration of any such
insurance, additional policies or duplicates thereof and evidence of insurance
utilizing a current ▇▇▇▇▇ 27 Evidence of Property Insurance confirming the
renewal of such insurance and payment of the premiums therefor.
(h)
(i) Losses; Payments. Borrower and Guarantors shall direct all insurers that in
the event of any loss thereunder or the cancellation of any insurance policy,
the insurers shall make payments for such loss and pay all return or unearned
premiums directly to Agent (for the pro rata benefit of the Lenders) and not to
Borrower (or any Guarantor) and Agent jointly. In the event of any loss,
Borrower and Guarantors will give Agent immediate notice thereof and Agent may
make proof of loss whether the same is done by Borrower (or any Guarantor).
Agent is hereby granted a power of attorney by Borrower and Guarantors with full
power of substitution to file any proof of loss in Borrower's, any Guarantor's
or Agent's name, to endorse Borrower's or any Guarantor's name on any check,
draft or other instrument evidencing insurance proceeds, and to take any action
or sign any document to pursue any insurance loss claim. Such power being
coupled with an interest is irrevocable.
(j)
(k) In the event of any loss, Agent, at its option, may (a) retain and apply all
or any part of the insurance proceeds to repay or secure the Obligations, in
such order and amounts as Agent may elect, or (b) disburse all or any part of
such insurance proceeds to or for the benefit of Borrower for the purpose of
repairing or replacing Collateral after receiving proof satisfactory to Agent of
such repair or replacement, in either case without waiving or impairing the
Obligations or any provision of this Agreement. Any deficiency thereon shall be
paid by
58
Borrower to Agent upon demand. Borrower and Guarantors shall bear the full risk
of loss from any loss of any nature whatsoever with respect to the Collateral.
(l)
(m) Key Man Life Insurance. In the event Borrower obtains key man life insurance
for any executive, Borrower shall cause all proceeds payable under such life
insurance policies to be paid to Agent (for the pro rata benefit of the Lenders)
to be applied on account of the Obligations.
(n)
1.2 Inspections; Examinations. Borrower and Guarantors hereby irrevocably
authorize and direct all accountants and auditors employed by Borrower and
Guarantors at any time to exhibit and deliver to Agent copies of any and all of
Borrower's and Guarantors' financial statements, trial balances or other
accounting records of any sort in the accountant's or auditor's possession and
copies of all reports submitted to Borrower and Guarantors by such accountants
or auditors, including management letters, "comment" letters and audit reports,
and to disclose to Agent any information they may have concerning Borrower's or
any Guarantor's financial status and business operations. Borrower and
Guarantors further authorize all federal, state and municipal authorities to
furnish to Agent copies of reports or examinations relating to Borrower or any
Guarantor, whether made by Borrower, any Guarantor or otherwise.
1.3
1.4 The officers of Agent, or such Persons as Agent may designate, may visit and
inspect any of the properties of Borrower or any Guarantor, examine (either by
Agent's employees or by independent accountants) any of the Collateral or other
assets of Borrower and Guarantors, including the Books of Borrower and
Guarantors, and discuss the affairs, finances and accounts of Borrower and
Guarantors with their officers and with their independent accountants, at such
times as Agent may desire. Agent may conduct at any time and from time to time,
and Borrower and Guarantors will fully cooperate with, field examinations of the
inventory, accounts receivable and business affairs of Borrower and Guarantors.
Provided that no Event of Default or Default has occurred, such visits,
inspections and field examinations shall be at reasonable times and upon
reasonable notice by Agent.
1.5
1.6 Borrower will pay all costs and expenses of Agent related to such visits,
inspections and field examinations, subject to the limitations set forth in the
Fee Agreement.
1.7
1.8 Pension Plans. Borrower and Guarantors will (a) keep in full force and
effect any and all Plans which are presently in existence or may, from time to
time, come into existence under ERISA, unless such Plans can be terminated
without material liability to Borrower and Guarantors in connection with such
termination (as distinguished from any continuing funding obligation); (b) make
contributions to all of Borrower's and each Guarantor's Plans in a timely manner
and in a sufficient amount to comply with the requirements of ERISA; (c) comply
with all material requirements of ERISA which relate to such Plans so as to
preclude the occurrence of any Reportable Event, Prohibited Transaction or
material "accumulated funding deficiency" as such term is defined in ERISA; and
(d) notify Agent immediately upon receipt by Borrower or any Guarantor of any
notice of the institution of any proceeding or other action which
59
may result in the termination of any Plan and deliver to Agent, promptly after
the filing or receipt thereof, copies of all reports or notices which Borrower
or any Guarantor files or receives under ERISA with or from the Internal Revenue
Service, the PBGC, or the U.S. Department of Labor.
1.9
1.10 Bank Accounts. Borrower will maintain its operating account and main
disbursement accounts with Agent, unless otherwise agreed by Agent in writing.
Borrower will notify Agent in writing and on a continuing basis, of all deposit
accounts and certificates of deposit (including the numbers thereof) maintained
with or purchased from any other depository institutions.
1.11
1.12 Maintenance of Management. Borrower will cause its business to be
continuously managed by a majority of its present executive management or such
other persons (serving in such executive positions) as may be reasonably
satisfactory to Agent.
1.13
1.14 Transactions with Affiliates. Borrower will cause all of its Indebtedness
at any time owed to any Guarantor, Subsidiary, Affiliate, shareholder, director
and officer to be subordinated in all respects to all Obligations and will not
make any payments thereon, except as approved by Agent in writing.
1.15
1.16 Additional Documents and Future Actions. Borrower and Guarantors will, at
their sole cost, take such actions and provide Agent from time to time with such
agreements, financing statements and additional instruments, documents or
information as the Agent may in its discretion deem necessary or advisable to
perfect, protect, maintain or enforce its Lien in the Collateral or to carry out
the terms of the Loan Documents. Borrower and Guarantors hereby authorize and
appoint Agent as their attorney-in-fact, with full power of substitution, to
take such actions as Agent may deem advisable to protect the Collateral and its
interests thereon and its rights hereunder, to execute on Borrower's and
Guarantors' behalf and file at Borrower's and Guarantors' expense financing
statements, and amendments thereto, in those public offices deemed necessary or
appropriate by Agent to establish, maintain and protect a continuously perfected
Lien in the Collateral, and to execute on Borrower's and Guarantors' behalf such
other documents and notices as Agent may deem advisable to protect the
Collateral and its interests therein and its rights hereunder. Such power being
coupled with an interest is irrevocable. Borrower and Guarantors irrevocably
authorize the filing of a carbon, photographic or other copy of this Agreement,
or of a financing statement, as a financing statement and agree that such filing
is sufficient as a financing statement.
1.17
1.18 Returns. Borrower will cause returns and allowances, if any, as between
Borrower and its Account Debtors to be on the same basis and in accordance with
the usual customary practices of Borrower, as they exist from time to time.
1.19
1.20 Title to Equipment. Borrower will immediately deliver to Agent, properly
endorsed, any and all evidences of ownership of, certificates of title, or
applications for title to any items of equipment.
1.21
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1.22 Taxes. Borrower and Guarantors will cause all assessments and taxes,
whether real, personal, or otherwise, due or payable by, or imposed, levied, or
assessed against Borrower, any Guarantor or any of their property to be paid in
full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest. Borrower and Guarantors shall make due and
timely payment or deposit of all such federal, state, and local taxes,
assessments, or contributions required of it by law, and will execute and
deliver to Agent, on demand, appropriate certificates attesting to the payment
thereof or deposit with respect thereto. Borrower and Guarantors will make
timely payment or deposit of all tax payments and withholding taxes required of
it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Borrower and
Guarantors have made such payments or deposits.
1.23
1.24 Leases. Borrower and Guarantors will pay when due all rents and other
amounts payable under any leases to which Borrower or any Guarantor is a party
or by which Borrower's or any Guarantor's properties and assets are bound,
unless such payments are the subject of a Permitted Protest. To the extent that
Borrower or any Guarantor fails timely to make payment of such rents and other
amounts payable when due under its leases, Agent shall be entitled, in its
discretion, to reserve an amount equal to such unpaid amounts against the
Borrowing Base.
1.25
1.26 Notices. Borrower will immediately notify Agent of (a) any action or
proceeding brought against Borrower or any Guarantor wherein such action or
proceeding would, if determined adversely to Borrower or such Guarantor result
in liability of Borrower or such Guarantor in excess of One Hundred Thousand
Dollars ($100,000.00) individually, or Three Hundred Thousand Dollars
($300,000.00) in the aggregate, (b) the occurrence of any Event of Default, (c)
any fact, condition or event which, with the giving of notice or the passage of
time or both, could become an Event of Default, (d) the failure of Borrower or
any Guarantor to observe any of its undertakings under the Loan Documents, (e)
the occurrence of any Material Adverse Change, (f) any new locations to be added
as an additional Eligible Inventory Location; (g) the creation of any new
inventions or other events related to the intellectual property of Borrower or
any Guarantor; (h) the occurrence of any loss related to the Personal Property
Collateral or the Real Property Collateral; and (i) the receipt of any notice of
the institution or proceeding or other action which may result in the
termination of any Plan.
1.27
1.28 New Trademark and Tradename Appraisals. Borrower, at its sole cost and
expense, will deliver to Agent on or before May 15, 1999, new and current
trademark and tradename appraisals for the trademarks and tradenames listed on
Schedule. Such appraisals will be prepared on a basis acceptable to Agent and
otherwise in form and content acceptable to the Agent. Such appraisals will be
updated annually at Borrower's cost and expense, provided that, the Expansion
Store Sublimit is still made available.
1.29
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1.30 Inventory Appraisals. Borrower, at its sole cost and expense, will provide
to Agent a new current appraisal of Borrower's inventory based upon an appraised
liquidation value acceptable to Agent and in form and content acceptable to
Agent, on or before March 31, 1999 and annually thereafter on or before March
31st of each subsequent year.
1.31
1.32 Leasehold Mortgages; Appraisals; Etc. Borrower will continue to use its
best efforts to provide to Agent (for the pro rata benefit of the Lenders) on or
before May 15, 1999 leasehold mortgage liens on the store locations leased by
Borrower listed on Schedule, together with a Landlord's Consent and a
Memorandum of Lease executed by the applicable owner/landlord and such related
agreements as Agent may require. The form and content of the Mortgage,
Landlord's Consent and related documents must be acceptable to Agent. In
connection with each of such Mortgages, Borrower, at its sole cost and expense,
will provide to Agent a leasehold appraisal in form, content and on a basis
acceptable to Agent and prepared by an appraiser acceptable to Agent. Such
appraisal must be provided on or before March 31, 1999. Such appraisals will be
updated annually provided that the Expansion Store Sublimit is still made
available. Borrower will also provide to Agent evidence satisfactory to Agent
that such real estate is free of material contamination including hazardous
waste and any hazardous substance and the Borrower is in conformity with all
state and federal environmental regulations and requirements. Borrower will also
provide to Agent satisfactory evidence that such real estate is not located in a
flood hazard area, or if it is located in such a flood hazard area, that flood
insurance in amounts acceptable to Agent is maintained by Borrower. Borrower
will also provide to Agent title insurance for any leasehold interests
encumbered by a Mortgage in favor of the Agent (for the pro rata benefit of the
Lenders) in form, substance, amount and with such endorsements as may be
required by the Agent and subject only to such exceptions as may be acceptable
to Agent. Borrower will also provide to Agent opinions of counsel regarding such
Mortgages to which owners or landlords have consented, in form acceptable to
Agent.
1.33
1.34 FX Contracts. Unless otherwise consented to by Agent in writing, Borrower
will only enter into foreign exchange contracts with Agent and such foreign
exchange contracts shall comply with the requirements of Permitted FX Contracts
under this Agreement.
1.35
1.36 Collateral Access Agreements. Borrower has provided Agent with Collateral
Access Agreements in favor of Agent for the locations described on Schedule.
Borrower will use its best efforts to provide to Agent on or before March 31,
1999, Collateral Access Agreements in favor of Agent for all remaining locations
of Borrower, all in form and content acceptable to Agent. Borrower will provide
Agent with Collateral Access Agreements for all new locations of Borrower's
assets.
1.37
1.38 Additional Guarantors. Benemax Development, Inc., F&S International, Inc.,
and Today's Man Outlet, Inc. will be dissolved or merged into Borrower or one of
the Guarantors, on or before December 31, 1998. If they remain in existence
after December 31, 1998, Borrower will cause them to join in as Guarantors as
provided below for any
62
new Subsidiaries. In the event that any Guarantor or the Borrower shall form or
acquire any new Subsidiary after the date hereof, the Borrower or such Guarantor
will cause such new Subsidiary to become a "Guarantor" hereunder pursuant to an
Assumption Agreement in the form and content as required by Agent (an
"Assumption Agreement") pursuant to which such new Subsidiary shall agree to be
bound as a "Guarantor" by all provisions of this Agreement and the other Loan
Documents and Borrower or the applicable Guarantor shall cause such Subsidiary
to execute a Surety Agreement similar in form to the Surety Agreements executed
by the other Guarantors. Together with the Assumption Agreement for each new
Subsidiary, the Borrower or applicable Guarantor shall deliver such proof of
corporate action, incumbency of officers, opinions of counsel, UCC-1 financing
statements and other documents as the Agent shall request. Each of the Borrower
and the applicable Guarantor hereby agrees to immediately pledge to the Agent
under a Pledge Agreement and thereby grant a security interest to Agent (for the
pro rata benefit of the Lenders) in any and all of its ownership interests of
any Subsidiary which becomes a "Guarantor" hereunder pursuant to this Section.
1.39
1.40 Plan of Reorganization. Borrower and Guarantors will perform all
obligations required under the Plan of Reorganization in accordance with the
terms and conditions set forth in the Plan of Reorganization.
1.41
1.42 Credit Cards. Borrower will (a) comply in all material respects with the
terms and conditions of the Credit Card Agreements, (b) submit all credit card
charges resulting from the sale of inventory by Borrower to the issuing credit
card company or the credit card processor, (c) request that the issuing credit
card company or credit card processor remit payment for the credit card charges
submitted by Borrower by ACH remittance to the Cash Collateral Account as soon
as possible under the terms of the Credit Card Agreements after such credit card
charges are submitted for processing by Borrower, and comply with all
requirements and conditions in the Credit Card Agreements to enable such
remittances to be made within such time period, and (d) not take any actions
which will increase any full recourse or charge back liabilities of Borrower
under the Credit Card Agreements.
1.43
1.44 Warrants and Warrant Proceeds. All Warrant Proceeds will be deposited by
Borrower with Agent, to be held as cash collateral for the Borrower's
Obligations and may only be used by Borrower as follows: (a) to finance Capital
Expenditures for refurbishing and refitting of existing store locations of
Borrower; (b) to finance the Capital Expenditures required for new store
locations permitted to be opened by Borrower pursuant to Section after all new
store locations permitted to be opened under Section have been opened; (c) to
purchase inventory for the new store locations permitted to be opened by
Borrower pursuant to Section; and (d) to the extent that any balance of the
Warrant Proceeds remain undisbursed pursuant to subsections (a) through (c)
above as of February 1, 2002, Borrower may utilize up to $5,000,000 of such
Warrant Proceeds to pay down the principal balance of the Revolving Credit
Facility. Notwithstanding anything herein or elsewhere to the contrary, if an
Event of Default has occurred, Borrower may not utilize the Warrant Proceeds for
any purpose described above and Agent, at its option, may apply such Warrant
Proceeds to repay Borrower's Obligations or as otherwise provided in this
Agreement.
63
1.45
2. NEGATIVE COVENANTS. Borrower and Guarantors, jointly and severally, covenant
and agree that, so long as this Agreement has not been terminated and until full
and final payment of the Obligations, and unless Agent shall otherwise consent
in writing, Borrower and each Guarantor shall comply with the following:
3.
3.1 Limitation on Sale and Leaseback. Borrower and Guarantors will not enter
into any arrangement whereby any of them will sell or transfer any real property
or improvements thereon or other fixed assets owned by any of them and then or
thereafter rent or lease as lessee such property, improvements or assets or any
part thereof, or other property which any of them shall intend to use for
substantially the same purposes as the property sold or transferred.
3.2
3.3 Limitation on Indebtedness. Borrower and Guarantors will not have at any
time outstanding to any Person other than the Lender Group, any Indebtedness for
borrowed money, Capitalized Lease Obligations, or any outstanding letters of
credit, except:
3.4
(a) Current accounts payable of Borrower incurred in the ordinary course of
Borrower's business, accrued expenses and other current items arising out of
transactions (other than borrowings) in the ordinary course of Borrower's
business;
(b)
(c) Existing Indebtedness of Borrower for borrowed money and Capitalized Lease
Obligations described on Schedule 12.2;
(d)
(e) Future purchase money Indebtedness and Capitalized Lease Obligations of
Borrower in any one fiscal year not to exceed Four Million Dollars
($4,000,000.00) in the aggregate principal amount incurred to finance Capital
Expenditures permitted under Section in such fiscal year, provided that, Agent
shall have the right of first refusal to provide such financing on reasonably
competitive terms; and
(f)
(g) Indebtedness owed by Borrower to Benmol, Inc. pursuant to the Benmol Note,
which may not be amended without the prior written consent of Agent.
(h)
(i) Any of such existing permitted Indebtedness may not be refinanced or
replaced without the consent of the Agent.
(j)
3.5 Investments and Loans. Borrower and Guarantors will not have or make any
investments in all or any portion of the capital stock or securities of any
Person, or any loans, advances or extensions of credit to any Person, except:
3.6
(a) investments in direct or indirect obligations of, or obligations
unconditionally guaranteed by, the United States of America and maturing within
twelve (12) months from the date of acquisition;
64
(b)
(c) investments in commercial paper rated "Prime-1" by ▇▇▇▇▇'▇ Investors
Services or "A-1" by Standard & Poor's Corporation, or within an equivalent
rating by another rating agency of nationally recognized standing, maturing
within three hundred sixty-five (365) days from the date of acquisition;
(d)
(e) certificates of deposit maturing within twelve (12) months from the date of
acquisition issued by the Agent;
(f)
(g) loans and investments made by Benmol, Inc. to or in Borrower, all of which
loans must be subordinated to the Obligations on terms acceptable to the Agent;
(h)
(i) advances by Borrower to employees to meet expenses incurred by such
employees or advances with respect to salary, relocation, medical or hardship
matters, in each case in the ordinary course of business, provided that, the
aggregate of all of such advances does not exceed $500,000.00 outstanding at any
time; and
(j)
(k) investments and loans listed on Schedule attached hereto.
(l)
3.7 Guaranties. Borrower and Guarantors will not directly or indirectly
guarantee, endorse (other than for collection or deposit in the ordinary course
of business), discount, sell with recourse or for less than the face value or
agree (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or otherwise become directly or indirectly liable for, or agree
(contingently or otherwise) to supply or advance funds (whether by loan, stock
purchase, capital contribution or otherwise) in respect of, any Indebtedness,
obligations or liabilities of any Person, except in connection with the Surety
Agreements.
3.8
3.9 Disposition of Assets. Borrower and Guarantors will not sell, lease,
transfer or otherwise dispose any of their property or assets, except for (a)
sales of inventory to retail customers in the ordinary course of business, and
(b) the disposition of obsolete equipment with a "book" value of up to
$250,000.00 in the aggregate in any one fiscal year.
3.10
3.11 Merger; Consolidation; Business Acquisitions; Subsidiaries. Borrower and
Guarantors will not merge into or consolidate with any Person, acquire any
portion of the stock, ownership interests, assets or business of any Person,
permit any Person to merge into any of them or form any Subsidiaries, provided
that, any Guarantor may be merged into Borrower or any other Guarantor without
violating this Section.
3.12
3.13 Taxes; Claims for Labor and Materials. Borrower will not file or consent
to the filing of, any consolidated income tax return with any Person other than
a Guarantor. Guarantors will not file or consent to the filing of, any
consolidated income tax return with any Person other than Borrower.
65
3.14
3.15 Liens. Borrower and Guarantors will not create, incur or permit to exist
any Lien of any kind on their property or assets, whether now owned or hereafter
acquired, or upon any income, profits or proceeds therefrom, except:
3.16
(a) Liens held by Agent;
(b)
(c) Deposits made in the ordinary course of business (i) in connection with
worker's compensation, unemployment insurance, social security and other like
laws or (ii) to secure the performance of statutory obligations, not incurred in
connection with either (A) the borrowing of money or (B) the deferred purchase
price of goods or inventory;
(d)
(e) Encumbrances consisting of zoning restrictions, easements, restrictions on
the use of real property or minor irregularities of title thereto, none of which
impairs the use of such property by Borrower or Guarantors in the operation of
their business;
(f)
(g) Liens listed on Schedule 12.8 attached hereto; or
(h)
(i) Purchase money Liens or Capitalized Leases granted by or entered into by
Borrower, provided that:
(j)
(i) the property subject to any of the foregoing is acquired or leased by
Borrower in the ordinary course of its business and the Lien on any such
property is created contemporaneously with such acquisition;
(ii)
(iii) the purchase money Indebtedness or principal portion of the Capitalized
Lease Obligations so created shall not exceed 100% of the lesser of cost or fair
market value as of the time of acquisition or lease of the property covered
thereby;
(iv)
(v) the purchase money Indebtedness or Capitalized Lease Obligations shall only
be secured by the property so acquired or leased; and
(vi)
(vii) the purchase money Indebtedness or Capitalized Lease Obligations are
permitted by the provisions of Sections and.
(viii)
(ix) Borrower and Guarantors shall not enter into any agreement with any other
Person which shall prohibit the Borrower and Guarantors from granting, creating
or suffering to exist, or otherwise restrict in any way (whether by covenant, by
identifying such event as a default under such agreement or otherwise) the
ability of the Borrower and Guarantors to grant, create or suffer to exist, any
lien, security interest or other charge or encumbrance upon or with respect to
any of their assets in favor of the Agent.
(x)
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3.17 Merchandise Letters of Credit. Borrower and Guarantors will not apply for
or obtain any letters of credit for the payment of or to secure the payment for
any inventory or other assets to be acquired by Borrower or any Guarantors
except Merchandise Letters of Credit issued by Agent.
3.18
3.19 Insurance. Borrower shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under Section unless Agent (for the pro rata benefit of the Lenders) is named as
insured mortgagee with respect to all Real Property Collateral, loss payee (with
a lender's loss payable endorsement) with respect to all Personal Property
Collateral and additional insured with respect to all liability insurance, as
its interests may appear. Borrower immediately shall notify Agent whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same. Borrower shall promptly
provide Agent with an ▇▇▇▇▇ 27 Evidence of Property Insurance for any separate
insurance taken out. Thereafter Borrower shall promptly provide Agent with
originals of such policies.
3.20
3.21 Default Under Other Indebtedness. Borrower and Guarantors will not permit
any of their respective Indebtedness to be in default. If any Indebtedness of
Borrower or any Guarantor is declared or becomes due and payable before its
expressed maturity by reason of default or otherwise or to the knowledge of
Borrower or any Guarantor, the holder of any such Indebtedness shall have the
right (or upon the giving of notice or the passage of time, or both, shall have
the right) to declare such Indebtedness to be so due and payable, Borrower and
Guarantors will immediately give Agent written notice of such declaration,
acceleration or right of declaration.
3.22
3.23 Transactions with Affiliates. Borrower and Guarantors will not enter into
or conduct any transaction with any Affiliate without the prior written consent
of Agent.
3.24
3.25 Name or Chief Executive Address Change. Borrower and Guarantors will not
change their names, FEIN numbers, or chief executive addresses except upon
thirty (30) days prior written notice to Agent and delivery to Agent of any
items requested by Agent to maintain perfection and priority of Agent's first
priority Lien in Borrower's and Guarantors' accounts receivables, general
intangibles and similar assets and access to Borrower's and Guarantors' Books,
including without limitation, new UCC-1 financing statements and Collateral
Access Agreements.
3.26
3.27 Change in Location of Collateral. Borrower and Guarantors will not change
the location at which any of their inventory, equipment or other personal
property is located except upon thirty (30) days prior written notice to Agent
and delivery to Agent of any items requested by Agent to maintain its first
priority perfected Lien in and rights of access to Borrower's and Guarantors'
inventory, equipment and other personal property to be located at such new
locations, including without limitation, new UCC-1 financing statements and
Collateral Access Agreements.
3.28
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3.29 Material Adverse Contracts. Borrower and Guarantors will not become or be
a party to any contract or agreement which has a materially adverse impact on
Borrower's or any Guarantor's ability to perform under this Agreement or any
other Loan Document.
3.30
3.31 Restrictions on Use of Proceeds. Borrower will not carry or purchase with
the proceeds of the Revolving Credit Facility any "margin security" within the
meaning of Regulations U, G, T or X of the Board of Governors of the Federal
Reserve System.
3.32
3.33 Benmol Note. Borrower will not make any payment with respect to the Benmol
Note except as approved by Agent in writing, or except as authorized by Agent in
that certain Subordination Agreement of even date.
1.1 Prepayments, Amendments and Royalty Payments. Borrower and Guarantors will
not:
1.2
(a) Prepay, redeem, retire, defease, purchase, or otherwise acquire any
Indebtedness owing to any third Person, other than the Obligations in accordance
with this Agreement;
(a) Directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Section; or
(b)
(c) Pay any royalties to D & L, Inc. in excess, on a quarterly basis, of the
amount provided for in the License Agreement as in effect on the date hereof in
connection with the use by Borrower of the name "Today's Man".
(d)
1.2 Change of Control. Borrower will not cause, permit, or suffer, directly or
indirectly, any Change of Control. Borrower will not cease at all times to own
100% of all ownership interests in ▇▇▇▇ & ▇▇▇▇, Inc. ▇▇▇▇ & ▇▇▇▇, Inc. will not
cease at all times to own 100% of the ownership interests in Benmol, Inc. and in
D & L, Inc.
1.3
1.4 Consignments. Borrower and Guarantors will not (a) consign any inventory,
(b) sell any inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or
other conditional terms of sale, except for sales of shoe inventory pursuant to
that certain License Agreement between Borrower and Shoe Corporation of America
dated July 20, 1995 and except for sales of goods consigned by London Fog
Industries, Inc. to Borrower pursuant to the Consignment Agreement dated May 14,
1997 or (c) reflect any inventory received as consigned inventory from a
consignor as inventory of Borrower.
1.5
1.6 Distributions. Borrower and Guarantors will not make any distribution or
declare or pay any dividends (in cash or other property, other than capital
stock) on, or purchase, acquire, redeem, or retire any of Borrower's capital
stock, of any class,
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whether now or hereafter outstanding, except that, Benmol, Inc. and D & L, Inc.
shall pay dividends and make tax sharing contributions to ▇▇▇▇ & ▇▇▇▇, Inc. and
▇▇▇▇ & ▇▇▇▇, Inc. shall pay dividends and make tax sharing contributions to
Borrower in amounts consistent with past practices and in accordance with
applicable law.
1.7
1.8 No Prohibited Transactions Under ERISA. Borrower and Guarantors will not
directly or indirectly:
1.9
(a) engage, or permit any Subsidiary of Borrower to engage, in any prohibited
transaction which is reasonably likely to result in a civil penalty or excise
tax described in Section 406 of ERISA or 4975 of the IRC for which a statutory
or class exemption is not available or a private exemption has not been
previously obtained from the Department of Labor;
(b)
(c) permit to exist with respect to any Benefit Plan any accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the IRC), whether or
not waived;
(d)
(e) fail, or permit any Subsidiary of Borrower to fail, to pay timely required
contributions or annual installments due with respect to any waived funding
deficiency to any Benefit Plan;
(f)
(g) terminate, or permit any Subsidiary of Borrower to terminate, any Benefit
Plan where such event would result in any liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
(h)
(i) fail, or permit any Subsidiary of Borrower to fail, to make any required
contribution or payment to any Multiemployer Plan;
(j)
(k) fail, or permit any Subsidiary of Borrower to fail, to pay any required
installment or any other payment required under Section 412 of the IRC on or
before the due date for such installment or other payment;
(l)
(m) amend, or permit any Subsidiary of Borrower to amend, a Plan resulting in an
increase in current liability for the plan year such that either of Borrower,
any Subsidiary of Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the IRC; or
(n)
(o) withdraw, or permit any Subsidiary of Borrower to withdraw, from any
Multiemployer Plan where such withdrawal is reasonably likely to result in any
liability of any such entity under Title IV of ERISA;
(p)
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(q) which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $250,000.
(r)
1.10 Guarantor Business Activities. The Guarantors will not (a) engage in
business activities other than the Guarantor Business Activities, (b) incur any
Indebtedness, (c) incur any contingent liabilities except under the Loan
Documents, or (d) acquire any assets other than assets currently owned by such
Guarantors and proceeds of such existing assets.
1.11
1.12 New Store Locations.
1.13
(a) Borrower will not open any more than six (6) new stores in any fiscal year
without the consent of Agent. If Borrower opens less than six (6) new stores in
any fiscal year ("Unopened Stores"), the number of new stores which may be
opened in the next fiscal year may be increased by the number of such Unopened
Stores, provided that, in no event may Borrower open more than eight (8) new
stores in any one fiscal year without the consent of Agent. As a condition of
opening each new location, Borrower will (i) deliver to Agent at least ninety
(90) days prior written notice of its intent to open a new store; (ii) use its
best efforts to provide to Agent (for the pro rata benefit of the Lenders) a
first priority perfected Mortgage, a Landlord's Consent and a recorded
Memorandum of Lease for each new store location in form and content acceptable
to Agent; (iii) deliver to Agent any UCC-1 financing statements required by
Agent to perfect Agent's first priority Lien in assets of Borrower located on
such premises; (iv) deliver to Agent search reports in form and content
acceptable to Agent indicating that there are no Liens encumbering Borrower's
assets at such new location except the Lien in favor of Agent (for the pro rata
benefit of Lenders); and (v) deliver to Agent such legal opinions regarding the
Mortgage and related documents as Agent may require.
(b)
(c) In the event that Borrower receives proceeds as a result of the payment of
the exercise price of the existing Warrants currently issued by Borrower
(collectively, "Warrant Proceeds"), Borrower may utilize such Warrant Proceeds
to open additional new stores in excess of the number permitted under Section,
provided that (i) Borrower complies with the requirements set forth in
subsection Section (i) through (v) for such additional new stores; (ii) the
funds paid from the Warrant Proceeds to open such additional new stores must be
spent between February 1, 2000 and January 31, 2002; (iii) no more than three
(3) additional new stores may be opened in the fiscal year ending January 31,
2001 or in the fiscal year ending January 31, 2002; and (iv) no more than
eighteen (18) new stores, including new stores opened pursuant to Section and
this Section, may be opened between February 1, 2000 and January 31, 2002.
(d)
(e) Notwithstanding anything herein or elsewhere to the contrary, if an Event of
Default has occurred, Borrower may not open any new stores thereafter without
the prior consent of Agent.
(f)
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1.14 Credit Cards. Borrower will not amend, modify or terminate any of the
Credit Card Agreements without the prior written consent of Agent.
1.15
1.16 Trademark and Tradename Licenses. D & L, Inc. will not enter into any
license or similar right to use or royalty agreement with respect to the
"Today's Man" trademark/tradename without the prior written consent of Agent.
1.17
1.18 Check Purchase Agreement. Borrower will not amend, modify or terminate the
Check Purchase Agreement or enter into any new agreement regarding the purchase
of checks or money orders, without the prior written consent of Agent.
1.19
1.20 Equipment Becoming Fixture. Borrower will not permit any item of equipment
owned by Borrower to become a fixture to real estate or an accession to other
property, except for equipment which may become a trade fixture to premises
leased by Borrower but with respect to which the landlord has waived any right
of ownership or security interest, provided that, if Borrower has not received a
landlord's waiver for any location currently leased by Borrower, Borrower may
replace existing trade fixtures at such location with new replacement trade
fixtures in the ordinary course of Borrower's business.
1.21
1.22 Warrants. Borrower will not amend or modify the terms of any of the
Warrants or enter into any separate agreement related thereto which in either
case would require Borrower to purchase or repurchase any of the Warrants or any
stock issued pursuant to any of the Warrants.
1.23
1.24 Nature of Borrower's Business. Borrower will not make any change in the
principal nature of Borrower's business.
1.25
2. FINANCIAL COVENANTS. Except with the prior written consent of Agent, Borrower
will comply with the following:
3.
3.1 Tangible Net Worth. Borrower will maintain Tangible Net Worth of not less
than (a) $48,415,000 as of the date hereof and at all times thereafter until
January 30, 1999; (b) $52,492,000 as of January 31, 1999 and at all times
thereafter until January 30, 2000; (c) $57,680,000 as of January 31, 2000 and at
all times thereafter until January 30, 2001; (d) $62,680,000 as of January 31,
2001 and at all times thereafter until January 30, 2002; and (e) $67,680,000 as
of January 31, 2002 and at all times thereafter.
3.2
3.3 Indebtedness to Tangible Net Worth Ratio. Borrower will maintain a ratio of
Indebtedness (excluding any Subordinated Indebtedness) to Tangible Net Worth of
not more than 1.0 to 1.0 as of the date hereof and all times thereafter.
3.4
3.5 Capital Expenditures. Borrower will not cause, suffer or permit Borrower's
aggregate annual Capital Expenditures to exceed (a) $4,000,000 for the fiscal
year ending January 31, 1999; (b) $7,000,000 for the fiscal year ending January
31, 2000; and (c)
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$7,500,000 for the fiscal year ending January 31, 2001 and for each fiscal year
thereafter. To the extent that the permitted amount of Capital Expenditures are
not used in any one fiscal year, the unused portion not to exceed fifty percent
(50%) of permitted Capital Expenditures for such year may be utilized in the
following fiscal year. The limitations on permitted Capital Expenditures set
forth above shall not apply to Capital Expenditures funded with Warrant Proceeds
as permitted under Section or to Capital Expenditures made by Borrower to repair
or replace items damaged by a casualty loss.
3.6
3.7 Fixed Charge Coverage Ratio. Borrower will maintain a Fixed Charge Coverage
Ratio tested quarterly on a rolling four (4) quarters basis of not less than (a)
1.1 to 1.0 for the fiscal quarters ending January 31, 1999, April 30, 1999, July
31, 1999 and October 31, 1999, respectively; and (b) 1.5 to 1.0 for the fiscal
quarter ending January 31, 2000 and for each fiscal quarter end thereafter.
3.8
3.9 Most Favored Lender. Borrower agrees promptly to notify Agent of any
agreement for borrowed money to which Borrower is a party or under which it is
obligated and to provide Agent with a copy of such agreement. If such agreement
contains or at any time is amended to contain financial covenants more
restrictive than those contained in this Section, upon Agent's request,
Borrower agrees to amend this Agreement accordingly so that the covenants
contained herein are substantially the same as those contained in such other
agreements for borrowed money.
3.10
4. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS. Borrower and Guarantors
will maintain books of record and account in which full, correct and current
entries in accordance with GAAP will be made of all of their dealings, business
and affairs, and Borrower and Guarantors will deliver to Agent the following:
5.
5.1 Annual Statements. As soon as available and in any event within ninety (90)
days after the end of each fiscal year of Borrower:
5.2
(a) the audited, consolidated and consolidating income and retained earnings
statements of Borrower and its Subsidiaries for such fiscal year,
(b)
(c) the audited, consolidated and consolidating balance sheet of Borrower and
its Subsidiaries as at the end of such fiscal year, and
(d)
(e) the audited, consolidated and consolidating statement of cash flow of
Borrower and its Subsidiaries for such fiscal year,
(f)
(g) setting forth in comparative form the corresponding figures as at the end of
the previous fiscal year, all in reasonable detail, including all supporting
schedules and comments. The foregoing statements and balance sheets shall be
prepared in accordance with GAAP and shall be audited by independent certified
public accountants of recognized standing acceptable to Agent in the reasonable
exercise of its discretion with respect to which such accountants shall deliver
their
72
unqualified opinion. Notwithstanding the foregoing, if consolidating statements
are not prepared, Borrower and Guarantors shall provide such statements on a
stand-alone basis for Borrower and each Guarantor.
(h)
5.3 Projections and Cash Flow. As soon as available and in any event within
thirty (30) days prior to the end of each fiscal year of Borrower, projections
of profit and loss statements, cash flows and Availability prepared on a
month-by-month basis for the next succeeding twelve (12) months, prepared by the
chief financial officer of Borrower. Borrower has furnished to Agent initial
projections dated as of the date hereof containing the information required by
this Section. Borrower represents and covenants that (a) the initial projections
required by this Section have been prepared by the chief financial officer of
Borrower and represents the best available good faith estimate of Borrower
regarding the course of Borrower's business for the periods covered thereby; (b)
all future projections required by this Section shall be prepared by or under
the direction of the chief financial officer of Borrower and shall represent the
best available good faith estimate of Borrower regarding the course of
Borrower's business for the periods covered thereby; (c) the assumptions set
forth in the initial projections are and the assumptions set forth in the future
projections delivered hereafter shall be reasonable and realistic based on then
current economic conditions; (d) Borrower knows of no reason why Borrower should
not be able to achieve the performance levels set forth in the initial
projections and Borrower shall have no knowledge at the time of delivery of
future projections of any reason why Borrower shall not be able to meet the
performance levels set forth in said projections; and (e) Borrower has
sufficient capital as may be required for its ongoing business and to pay its
existing and anticipated debts as they mature.
5.4
5.5 Quarterly Statements. As soon as available and in any event within
forty-five (45) days after the close of each fiscal quarter of Borrower;
5.6
(a) the consolidated and consolidating income and retained earnings statements
of Borrower and its Subsidiaries for such quarter,
(b)
(c) the consolidated and consolidating balance sheet of Borrower and its
Subsidiaries as of the end of such quarter, and
(d)
(e) the consolidated and consolidating statement of cash flow of Borrower and
its Subsidiaries for such quarter,
(f)
(g) setting forth in comparative form the corresponding figures as at the end of
the corresponding quarter of the previous fiscal year (if applicable) and the
projected figures based upon the projections required under Section, all in
reasonable detail, subject to year end adjustments and certified by the chief
financial officer of Borrower to be accurate and to have been prepared in
accordance with GAAP. Notwithstanding the foregoing, if consolidating statements
are not prepared, Borrower and Guarantors shall provide such statements on a
stand-alone basis for Borrower and each Guarantor.
(h)
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5.7 Monthly Statements. As soon as available and in any event within thirty
(30) days after the end of each calendar month:
5.8
(a) the consolidated and consolidating income and retained earnings statements
of Borrower and its Subsidiaries for such month,
(b)
(c) the consolidated and consolidating balance sheet of Borrower and its
Subsidiaries as of the end of such month, and
(d)
(e) the consolidated and consolidating statement of cash flow of Borrower and
its Subsidiaries for such month,
(f)
(g) setting forth in comparative form the corresponding figures as at the end of
the corresponding month of the previous fiscal year (if applicable) and the
projected figures based upon the projections required under Section, all in
reasonable detail, subject to year-end adjustments, and certified by the chief
financial officer of Borrower to be accurate and to have been prepared in
accordance with GAAP. Notwithstanding the foregoing, if consolidating statements
are not prepared, Borrower and Guarantors shall provide such statements on a
stand-alone basis for Borrower and each Guarantor.
(h)
5.9 Borrowing Base Certifications and Related Documents. At least once every
calendar week and otherwise as requested by Agent, a Borrowing Base Certificate
in the form of Exhibit H attached hereto together with such additional
information as may be requested by Agent, certified as to accuracy by the chief
financial officer, controller, director of corporate reporting, or president of
Borrower.
5.10
5.11 Eligible Credit Card Accounts Borrowing Base Information and Related
Documents. At least once every calendar week and otherwise as requested by
Agent, an Eligible Credit Card Account report, assignment report of sales and
collections credit adjustments and other information pertaining to Eligible
Credit Card Accounts balances in the form of Exhibit I attached hereto, together
with such additional information and details as may be requested by Agent, all
certified as to accuracy by the chief financial officer, controller, director of
corporate reporting, or president of Borrower.
5.12
5.13 Inventory Borrowing Base Information and Related Documents. At least once
every calendar week and otherwise as requested by Agent, an inventory
certification in the form of Exhibit I attached hereto, together with such
additional information and details as may be requested by Agent, including
without limitation identification of all Eligible Inventory and identification
of ineligible items including gift certificates, shrinkage and unreconcilable
variances, all certified as to accuracy by the chief financial officer,
controller, director of corporate reporting, or president of Borrower.
5.14
5.15 SEC Reporting. Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual
Reports, and Form 8-K Current Reports, and any other filings made
74
by Borrower with the Securities and Exchange Commission, if any, as soon as the
same are filed, or any other information that is provided by Borrower to its
shareholders.
5.16
5.17 Tax Returns. Copies of Borrower's and each Guarantor's future federal
income tax returns, and any amendments thereto, within thirty (30) days of the
filing thereof with the Internal Revenue Service.
5.18
5.19 Audit Reports. Promptly upon receipt thereof, one copy of each other
report submitted to Borrower or any Guarantor, by independent accountants,
including management letters, "comment" letters, in connection with any annual,
interim or special audit report made by them of the Books of Borrower or any
Guarantor.
5.20
5.21 Reports to Governmental Agencies and Other Creditors. With reasonable
promptness, copies of all such financial reports, statements and returns which
Borrower or any Guarantor shall file with any federal or state department,
commission, board, bureau, agency or instrumentality and any report or statement
delivered by Borrower or any Guarantor to any supplier or other creditor in
connection with any payment restructuring.
5.22
5.23 Requested Information. With reasonable promptness, all such other data and
information in respect of the condition, operation and affairs of Borrower or
any Guarantor as Agent may reasonably request from time to time.
5.24
5.25 Compliance Certificates. Within the periods provided in Sections, and
above, a certificate of the chief financial officer of Borrower (a) stating that
Borrower has observed, performed and complied with each and every undertaking
contained herein, (b) setting forth the information and computations (in
sufficient detail) required in order to establish whether Borrower was operating
in compliance with the financial covenants in Section of this Agreement, and (c)
certifying that as of the date of such certification, there does not exist any
Event of Default or any occurrence or state of affairs which with the giving of
notice, passage of time or both would constitute an Event of Default. Such
certificate will be in the form of Exhibit B attached hereto.
5.26
5.27 Accountant's Certificate. Within the period provided in Section, a report
of the independent public accountants who render an opinion with respect to the
financial statements referred to therein, stating that they have reviewed the
terms of this Agreement and that in making the examinations necessary to their
certification mentioned in Section, they have reviewed the accounts and
condition of Borrower during the accounting period covered by their certificate
and that such review did not disclose the existence of any condition or event
which constitutes an Event of Default or would, upon giving notice or passage of
time or both, constitute an Event of Default (or that such conditions or events
existed, describing them).
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1. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE, INITIAL LETTER OF CREDIT OR
INITIAL PERMITTED FX CONTRACT. The obligation of (a) Agent or the Lenders to
make the initial Advance, (b) Agent to issue the initial Letter of Credit, or
(c) Agent to enter into the initial Permitted FX Contract is subject to the
fulfillment, to the satisfaction of Agent, of each of the following conditions
on or before the Closing Date. All of such agreements, documents and other items
must be in form, content and all other respects satisfactory to Agent.
1.1 The Closing Date shall occur on or before December 15, 1998;
1.2
1.3 Agent shall have received copies of record searches (including UCC searches
and judgments, suits, tax and other lien searches);
1.4
1.5 Agent shall have received confirmation from a service organization retained
by Agent to file financing statements and fixture filings that such filings have
been made in all relevant jurisdictions;
1.6
1.7 Agent shall have received each of the following documents, duly executed,
and each such document shall be in full force and effect:
1.8
(a) the Note(s);
(b)
(c) the Blocked Account Agreements;
(d)
(e) the Disbursement Letter;
(f)
(g) the Pay-Off Letter;
(h)
(i) each Pledge Agreement accompanied by original stock certificates and stock
powers;
(j)
(k) the Assignments of Patents, Trademarks, Copyrights and Licenses;
(l)
(m) each of the Surety Agreements;
(n)
(o) each of the Subordination Agreements;
(p)
(q) each of the Mortgages and the related Landlord's Consent and Memorandum of
Lease;
(r)
(s) the Environmental Agreement; and
76
(t)
(u) any and all other Loan Documents.
(v)
1.9 Agent shall have received a certificate from the Secretary of Borrower and
each Guarantor attesting to the resolutions of Borrower's and each Guarantor's
Board of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which Borrower and each Guarantor,
respectively, is a party and authorizing specific officers of Borrower and each
Guarantor to execute the same;
1.10
1.11 Agent shall have received copies of Borrower's and each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Borrower;
1.12
1.13 Agent shall have received a certificate of status with respect to Borrower
and each Guarantor, dated within 15 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower and each Guarantor, which certificate shall indicate that Borrower and
each Guarantor is in good standing in such jurisdiction;
1.14
1.15 Agent shall have received certificates of status with respect to Borrower
and each Guarantor, each dated within 15 days of the Closing Date, such
certificates to be issued by the appropriate officer of each jurisdiction in
which Borrower or such Guarantor is required to be qualified or licensed which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
1.16
1.17 Agent shall have received loss payee endorsements as well as the relevant
policies and evidence of insurance, together with the endorsements thereto, as
are required by Section;
1.18
1.19 Agent shall have received duly executed certificates of title with respect
to that portion of the Collateral that is subject to certificates of title with
appropriate releases with respect to prior Liens;
1.20
1.21 Agent shall have received the original Benmol Note and any other
subordinated note endorsed to the order of Agent;
1.22
1.23 Agent shall have received such Landlord's Release and Waiver Agreements or
Collateral Access Agreements from lessors, warehousemen, bailees, and other
third persons as Agent may require;
1.24
1.25 Agent shall have received an opinion of Borrower's and Guarantors' counsel;
1.26
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1.27 Agent shall have received satisfactory evidence that all tax returns
required to be filed by Borrower have been timely filed and all taxes upon
Borrower or its properties, assets, income, and franchises (including real
property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;
1.28
1.29 Agent shall have received copies of all licenses, approvals, consents,
authorizations and filings of Borrower and Guarantors, required or necessary for
the operation of their business;
1.30
1.31 There shall be Excess Opening Availability of at least $3,000,000.00.
1.32
1.33 No Material Adverse Change nor any material change in the value of the
Collateral shall have occurred from the date of financial information and
projections originally provided to Agent;
1.34
1.35 UCC-3 terminations and such other releases of all prior Liens and all other
items required under the Pay-Off Letter with all signatures and other
information needed for recordation shall have been received by Agent or by
another Person to be held in escrow to be released to Agent upon receipt by the
Prior Lenders of the pay-off amount specified in the Pay-Off Letter, or other
arrangements shall have been made for the delivery to Agent of such items; and
1.36
1.37 All other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded.
1.38
1.39 By completing the closing hereunder, or by making Advances hereunder, the
Lender Group does not thereby waive a breach of any warranty or representation
made by Borrower or Guarantors hereunder or any agreement, document, or
instrument delivered to Agent or any Lender or otherwise referred to herein, and
any claims and rights of the Lender Group resulting from any breach or
misrepresentation by Borrower or Guarantors are specifically reserved by the
Lender Group.
1. CONDITIONS PRECEDENT TO ALL ADVANCES, LETTERS OF CREDIT AND PERMITTED FX
CONTRACTS. In addition to, but not in limitation of, any other conditions set
forth in this Agreement, the obligation of (a) Agent or any Lender to make any
Advance, (b) Agent to issue any Letter of Credit, or (c) Agent to enter into any
Permitted FX Contract is subject to the fulfillment, to the satisfaction of
Agent, of each of the following conditions:
1.1 Representations and Warranties. The representations and warranties
contained in this Agreement and the other Loan Documents shall be true and
correct in all respects on and as of the date of such extension of credit, as
though made on and as
78
of such date (except to the extent that such representations and warranties
relate solely to an earlier date);
1.2
1.3 No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing on the date of such extension of credit, nor shall
either result from the making thereof;
1.4
1.5 No Injunction or Order. No injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any governmental authority
against Borrower, any Guarantor, the Lender, the Agent, or any Affiliate of
Borrower, any Guarantor, any Lender or the Agent; and
1.6
1.7 No Bankruptcy. No proceeding under any bankruptcy, reorganization,
arrangement of debt, insolvency, readjustment of debt, or receivership law shall
have been filed by or against Borrower or any Guarantor.
1. DEFAULT AND REMEDIES.
2.
2.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" or "Events of Default" hereunder:
(a) The failure of Borrower to pay when due and payable or when declared due and
payable, any portion of the Obligations, whether principal, interest, fees,
costs, indemnities, or other amounts constituting Obligations;
(b)
(c) The failure of Borrower or any Guarantor to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower or any Guarantor and the Lenders or the Agent;
(d)
(e) The failure of Borrower to pay Indebtedness for borrowed money in the
aggregate amount in excess of Five Hundred Thousand Dollars ($500,000.00) due to
any third Person or Persons or the existence of any other event of default under
any loan, security agreement, mortgage or other agreement pertaining thereto and
binding upon Borrower, after the expiration of any notice and/or grace periods
permitted in such documents;
(f)
(g) The adjudication of Borrower or any Guarantor as a bankrupt or insolvent, or
the entry of an Order for Relief against Borrower or any Guarantor or the entry
of an order appointing a receiver or trustee for Borrower or any Guarantor of
any of their property or approving a petition seeking reorganization or other
similar relief under the Bankruptcy Code or other similar laws of the United
States or any state or any other competent jurisdiction;
79
(h)
(i) A proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt, debt moratorium or receivership law is filed
by or against Borrower or any Guarantor, or Borrower or any Guarantor makes an
assignment for the benefit of creditors, or Borrower or any Guarantor takes any
action to authorize any of the foregoing; provided that, Borrower and Guarantors
shall have a period of sixty (60) calendar days after the date of the filing of
an involuntary proceeding against any of them in which to have such proceeding
dismissed and, further provided that, during such period the Lenders and Agent
shall have no obligation to make Advances, issue Letters of Credit, enter into
Permitted FX Contracts or otherwise extend credit to Borrower under the Loan
Documents.
(j)
(k) The suspension of the operation of Borrower's present business;
(l)
(m) Borrower becomes unable to meet its debts as they mature, or the admission
in writing by Borrower to such effect, or Borrower calls any meeting of all or
any material portion of its creditors for the purpose of debt restructure or
moratorium;
(n)
(o) All or any part of the Collateral or the assets of Borrower or any Guarantor
(i) are attached, seized, subjected to a writ or distress warrant, or levied
upon, or come within the possession or control of any, receiver, trustee,
custodian or assignee for the benefit of creditors; or (ii) become subject to
any Lien in excess of $100,000.00, which Lien is not otherwise permitted under
Section or which Lien is not subject to a Permitted Protest;
(p)
(q) The entry of a final judgment or judgments for the payment of money against
Borrower or any Guarantor in an aggregate amount in excess of One Hundred
Thousand Dollars ($100,000.00) which, within ten (10) days after such entry,
shall not have been discharged or execution thereof stayed pending appeal or
shall not have been discharged within ten (10) days after the expiration of any
such stay;
(r)
(s) Any representation or warranty of Borrower or any Guarantor in any of the
Loan Documents is discovered to be untrue in any material adverse respect or any
statement, certificate or data furnished by Borrower or any Guarantor pursuant
hereto is discovered to be untrue in any material adverse respect as of the date
as of which the facts therein set forth are stated or certified;
(t)
(u) Borrower or any Guarantor voluntarily or involuntarily dissolves or is
dissolved, terminates or is terminated; provided that, any Guarantor may be
dissolved or terminated if all of its assets are transferred to Borrower or
another Guarantor.
(v)
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(w) Borrower is enjoined, restrained, or in any way prevented by the order of
any court or any administrative or regulatory agency, the effect of which order
restricts Borrower from conducting all or any material part of its business;
(x)
(y) A breach by Borrower occurs under any material agreement, document or
instrument, whether heretofore, now or hereafter existing between Borrower and
any other Person and such breach results in a Material Adverse Change;
(z)
(aa) A Material Adverse Change occurs;
(bb)
(cc) A Change in Control occurs or Borrower ceases to own directly or indirectly
through a Subsidiary who is a Guarantor, 100% of the ownership interests in or
assets of ▇▇▇▇ & ▇▇▇▇, Inc., Benmol, Inc. and D & L, Inc.;
(dd)
(ee) Any strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty loss occurs resulting in the cessation or
substantial curtailment of production or other revenue producing activities at
any facility of Borrower for more than thirty (30) consecutive days;
(ff)
(gg) The loss, suspension, revocation or failure to renew any license or permit
now held or hereafter acquired by Borrower or any Guarantor, which loss,
suspension, revocation or failure to renew might result in a Material Adverse
Change;
(hh)
(ii) Any projection delivered to Agent pursuant hereto indicates that Borrower
will not be able to comply with the financial covenants set forth in Section;
(jj)
(kk) Any material breach by Borrower or any Guarantor under any of the
Subordination Agreements;
(ll)
(mm) The validity or enforceability of this Agreement, or any of the Loan
Documents, is contested by the Borrower or any Guarantor; or Borrower or any
Guarantor denies that it has any further liability or obligation under the Loan
Documents; or
(nn)
(oo) The indictment of Borrower or any Guarantor under any criminal statute, or
the commencement or threatened commencement of criminal or civil proceedings
against Borrower or any Guarantor pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of any property of
Borrower or any Guarantor, or Borrower or any Guarantor engages or participates
in any "check kiting" activity regardless of whether a criminal investigation
has been commenced.
(pp)
1.2 Remedies. Upon the occurrence of an Event of Default, or at any time
thereafter, Agent may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:
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1.3
(a) Declare the entire unpaid principal of the Revolving Credit Facility, all
other Obligations (including without limitations all contingent reimbursement
obligations under any Letters of Credit and all contingent obligations under any
Permitted FX Contract), or any part thereof, all interest accrued thereon, all
fees due hereunder and all other obligations of Borrower to Lenders hereunder or
under any other Loan Document otherwise arising immediately due and payable;
(b)
(c) Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement, under any of the Loan Documents, or under any other
agreement between Borrower and the Lenders;
(d)
(e) Cease issuing Letters of Credit or entering into Permitted FX Contracts;
(f)
(g) Convert any Loans earning interest at LIBOR Rate plus Applicable Margin to
Loans earning interest at the Base Rate plus Applicable Margin and require
Borrower to indemnify each Lender against any loss, cost or expense which such
Lender has sustained or incurred as a consequence of such conversion in
accordance with SECTIONS AND;
(h)
(i) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Agent or Lenders, but without affecting
the Agent's and Lenders' rights and security interests in the Collateral and
without affecting the Obligations;
(j)
(k) Reduce the amount of the Revolving Credit Facility or the advance rates for
the calculation of Availability under the formula set forth in SECTION, or
require additional Reserves;
(l)
(m) Hold as cash collateral, any and all balances and deposits of Borrower held
by any member of the Lender Group, and any amounts received in the Cash
Collateral Account, to secure the full and final repayment of all of the
Obligations;
(n)
(o) Enter the premises occupied by Borrower or any Guarantor and take possession
of the Collateral and any records relating thereto; and/or
(p)
(q) Exercise each and every right and remedy granted to it under the Loan
Documents, under the Uniform Commercial Code and under any other applicable law
or at equity.
(r)
(s) If an Event of Default occurs under SECTIONS (D) OR (E), all of the
Obligations shall become immediately due and payable.
(t)
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1.4 SALE OR OTHER DISPOSITION OF COLLATERAL. The sale, lease or other
disposition of the Collateral, or any part thereof, by Agent on behalf of the
Lender Group after an Event of Default may be for cash, credit or any
combination thereof, and any Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set-off the amount of such purchase
price against the Obligations then owing. Any sales of the Collateral may be
adjourned from time to time with or without notice. The Agent may cause the
Collateral to remain on Borrower's or any Guarantor's premises or otherwise or
to be removed and stored at premises owned by other Persons, at Borrower's
expense, pending sale or other disposition of the Collateral. Borrower or any
Guarantor at Agent's request, shall assemble the Collateral consisting of
inventory and tangible assets and make such assets available to Agent at a place
to be designated by Agent. Agent shall have the right to conduct such sales on
Borrower's or Guarantors' premises, at Borrower's or any Guarantor's expense, or
elsewhere, on such occasion or occasions as Agent may see fit. With respect to
any of Borrower's owned or leased premises, Borrower hereby grants Agent a
license to enter into possession of such premises and to occupy the same,
without charge, for up to 180 days in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise.
1.5
1.6 Any notice required to be given by Agent to Borrower or Guarantors of a
sale, lease or other disposition or other intended action by Agent with respect
to any of the Collateral which is personally delivered, delivered by private
carrier or transmitted by telecopy to Borrower or Guarantors, or is actually
received by Borrower or Guarantors if sent by mail, in each case at least five
(5) Business Days prior to such proposed action, shall constitute fair and
reasonable notice to Borrower and Guarantors of any such action.
1.7
1.8 The net proceeds realized by Agent upon any such sale or other disposition,
after deduction for the expenses of retaking, holding, storing, transporting,
preparing for sale, selling or otherwise disposing of the Collateral incurred by
Agent in connection therewith and all other costs and expenses related thereto
including attorney fees, shall be applied in such order as Agent, in its
discretion, elects, toward satisfaction of the Obligations. Agent shall account
to Borrower and Guarantors for any surplus realized upon such sale or other
disposition, and Borrower and Guarantors shall remain liable for any deficiency.
The commencement of any action, legal or equitable, or the rendering of any
judgment or decree for any deficiency shall not affect Agent's Lien in the
Collateral. Borrower and Guarantors agree that Agent has no obligation to
preserve rights to the Collateral against any other parties.
1.9
1.10 Agent is hereby granted a license or other right to use, after an Event of
Default, without charge, Borrower's or any Guarantor's labels, general
intangibles, intellectual property, equipment, real estate, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service marks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale and selling
any inventory or other Collateral and Borrower's and Guarantors' rights under
all contracts, licenses, approvals, permits, leases and franchise agreements
shall inure to Agent's benefit. Agent shall be
83
under no obligation to ▇▇▇▇▇▇▇▇ any assets in favor of Borrower or any Guarantor
or any other party or against or in payment of any or all of the Obligations.
1.11
1.12 ACTIONS WITH RESPECT TO ACCOUNTS. Borrower and Guarantors hereby
irrevocably make, constitute, and appoint Agent on behalf of the Lender Group
(and any of Agent's designated officers, employees or agents) as their true and
lawful attorney-in-fact, with full power of substitution, with power to sign
their name and to take any of the following actions, in their name or the name
of Agent, as Agent may determine, without notice to Borrower or any Guarantor
and at Borrower's and Guarantors' expense:
1.13
(a) Verify the validity and amount of or any other matter relating to the
Collateral by mail, telephone, telecopy or otherwise;
(b)
(c) Notify all Account Debtors that Borrower's and Guarantors' accounts have
been assigned to Agent (for the pro rata benefit of Lenders') and that Agent has
a Lien therein;
(d)
(e) Direct all Account Debtors to make payment of all Borrower's and Guarantors'
accounts directly to Agent and forward invoices directly to such Account
Debtors;
(f)
(g) Take control in any manner of any cash or non-cash items of payment or
proceeds of such accounts;
(h)
(i) After the occurrence of an Event of Default, notify the United States Postal
Service to change the address for delivery of mail addressed to Borrower or any
Guarantor to such address as Agent may designate:
(j)
(k) After the occurrence of an Event of Default, have access to any lockbox or
postal boxes into which Borrower's or any Guarantor's mail is deposited and
receive, open and dispose of all mail addressed to Borrower or any Guarantor
(any sums received pursuant to the exercise of the rights provided in the Loan
Documents may, at Agent's option, be deposited in the Cash Collateral Account);
(l)
(m) After the occurrence of an Event of Default, take control in any manner of
any rejected, returned, stopped in transit or repossessed goods relating to any
accounts;
(n)
(o) After the occurrence of an Event of Default, enforce payment of and collect
any accounts, by legal proceedings or otherwise, and for such purpose Agent (on
behalf of the Lender Group) may:
(p)
(i) Demand payment of any accounts or direct any Account Debtors to make payment
of accounts directly to Agent;
84
(ii)
(iii) Receive and collect all monies due or to become due to Borrower or any
Guarantor;
(iv)
(v) Exercise all of Borrower's or any Guarantor's rights and remedies with
respect to the collection of accounts,
(vi)
(vii) Settle, adjust, compromise, extend, renew, discharge or release the
accounts;
(viii)
(ix) Sell or assign the accounts on such terms, for such amount and at such
times as Agent deems advisable;
(x)
(xi) Prepare, file and sign Borrower's or any Guarantor's name or names on any
Proof of Claim or similar document in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
Account Debtor;
(xii)
(xiii) Prepare, file and sign Borrower's or any Guarantor's name or names on any
Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or
Mechanic's Lien or similar document in connection with the Collateral;
(xiv)
(xv) Endorse the name of Borrower or any Guarantor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to the accounts or goods pertaining thereto or
upon any checks or other media of payment or evidences of a security interest
that may come into Agent's possession;
(xvi)
(xvii) Sign the name of Borrower or any Guarantor to verifications of accounts
and notices thereof sent by Account Debtors to such Borrower or Guarantor; or
(xviii)
(xix) Take all other actions necessary or desirable to protect Borrower's,
Guarantors' or Agent's interest in the accounts.
(xx)
(xxi) Borrower and Guarantors ratify and approve all acts of said attorneys and
agree that said attorneys shall not be liable for any acts of commission or
omission, nor for any error of judgment or mistake of fact or law, except gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable. Borrower and Guarantors agree to assist the Agent in the collection
and enforcement of their accounts and not to hinder, delay or impede the Agent
in its collection or enforcement of said accounts.
(xxii)
1.14 SET-OFF. Without limiting the rights of each member of the Lender Group
under applicable law, Borrower and each Guarantor grants to each member of the
Lender
85
Group and agrees that each member of the Lender Group may without notice to
Borrower or any Guarantor (such notice being expressly waived), and without
constituting a retention of any Collateral in satisfaction of any Obligations
(within the meaning of Section 9-505 of the UCC) exercise a right of set-off, a
lien against and a security interest in all property of Borrower or Guarantors
now or at any time in such member of the Lender Group's possession in any
capacity whatsoever, including but not limited to any balance of any deposit,
trust or agency account, or any other account with any member of the Lender
Group as security for the Obligations. At any time and from time to time
following the occurrence of an Event of Default or Default, any member of the
Lender Group may without notice or demand, set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such member of the Lender Group
to or for the credit of Borrower or any Guarantor against any or all of the
Obligations.
1.15
1.16 TURNOVER OF PROPERTY HELD BY AGENT Borrower and Guarantors irrevocably
authorize any Affiliate of any member of Lender Group, upon and following the
occurrence of an Event of Default or a Default, at the request of any member of
the Lender Group and without further notice, to turn over to Agent any property
of Borrower or any Guarantor held by such Affiliate, including without
limitation, funds and securities for the Borrower's or Guarantors' account and
to debit, for the benefit of the Lender Group, any deposit account maintained by
Borrower or any Guarantor with such Affiliate (even if such deposit account is
not then due or there results a loss or reduction of interest or the imposition
of a penalty in accordance with law applicable to the early withdrawal of time
deposits), in the amount requested by Agent up to the amount of the Obligations,
and to pay or transfer such amount or property to Agent (for the pro rata
benefit of the Lenders) for application to the Obligations.
1.17
1.18 DELAY OR OMISSION NOT WAIVER. Neither the failure nor any delay on the part
of Agent or any Lender to exercise any right, remedy, power or privilege under
the Loan Documents upon the occurrence of any Event of Default or otherwise
shall operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Agent or any Lender. No single, partial or
full exercise of any rights, remedies, powers and privileges by the Agent or any
Lender shall preclude further or other exercise thereof. No course of dealing
between Agent or any Lender and Borrower or any Guarantor shall operate as or be
deemed to constitute a waiver of Agent's or any Lender's rights under the Loan
Documents or affect the duties or obligations of Borrower or Guarantors.
1.19
1.20 REMEDIES CUMULATIVE. The rights, remedies, powers and privileges provided
for herein shall not be deemed exclusive, but shall be cumulative and shall be
in addition to all other rights, remedies, powers and privileges in Agent's or
any Lender's favor at law or in equity.
1.21
1.22 CONSENTS, APPROVALS AND DISCRETION. Whenever the Agent's or any Lender's
consent or approval is required or permitted or any documents are required to be
acceptable to Agent or any Lender, such consent, approval or acceptability shall
be
86
at the sole and absolute discretion of Agent or such Lender. Whenever any
determination or act is at Agent's or any Lender's discretion, such
determination or act shall be at Agent's or such Lender's sole and absolute
discretion.
1.23
1.24 CERTAIN FEES, COSTS, EXPENSE EXPENDITURES. Borrower and Guarantors agree to
pay on demand all cost and expenses of the Lender Group (the "LENDER GROUP
Expenses"), including without limitation:
1.25
(a) all costs, expenses and fees (including attorneys' fees and other legal
costs, expenses and charges) incurred or paid by any member of the Lender Group
in connection with (i) advising, structuring, drafting, preparing, reviewing,
negotiating, administering the Loan Documents or any waivers, consents,
amendments, extensions, modifications or restatements related thereto; (ii)
interpreting, enforcing, protecting, preserving, defending or terminating any of
the Loan Documents or any of the Lender Group's rights and remedies related
thereto, irrespective of whether suit is brought (including without limitation,
all costs and expenses and attorneys' fees related to any "workout,"
"restructuring," insolvency or similar proceeding involving Borrower or any
Guarantor); (iii) legal advice relating to the rights and responsibilities of
any member of the Lender Group; (iv) the preparation for negotiations regarding,
consultations concerning or the defense or prosecution of any legal proceedings
involving, any claim (including third-party claims) made or threatened against
any member of the Lender Group related to or involving the Loan Documents, the
transactions contemplated under the Loan Documents, the Lender Group's
relationship with the Borrower and the Guarantors, or any actions taken pursuant
to the Loan Documents by the Lender Group;
(b)
(c) all costs, expenses and fees incurred or paid by any member of the Lender
Group for photocopying; notarization; couriers; messengers; telecommunications;
public record searches (including without limitation, real estate, tax lien,
litigation, UCC, bankruptcy, patent, trademark, copyright or motor vehicle
department searches); filing; recording; publication; appraisals (including
without limitation personal property, real estate, trademark, tradename, and
inventory appraisals); real estate surveys; real estate title insurance reports,
commitments, policies and endorsements; environmental audits or surveys; and
accounting or other professional advisors;
(d)
(e) all costs, expenses and fees incurred or paid by any member of the Lender
Group in connection with the disbursement of funds under the Loan Documents (by
wire transfer or otherwise); the dishonoring of checks, drafts or other items of
payment; correction or cure of any Default or Event of Default or enforcement of
the Loan Documents; gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale or advertising to sell any of the
Collateral (regardless of whether the sale is consummated); or exercising any
rights or remedies under the Loan Documents;
(f)
(g) all costs, expenses and other payments incurred or made by any member of the
Lender Group to any warehouseman, landlord, lessor or owner of any property at
which any of the Collateral is located to enable the Lender Group to obtain
access,
87
store, warehouse, ship, sell or otherwise preserve, protect and dispose of such
Collateral (including without limitation all lease payments, access charges,
utility charges and safety and security charges); and
(h)
(i) any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of the Loan Documents, and all
liabilities to any member of the Lender Group may become subject as the result
of delay in paying or omission to pay such taxes.
(j)
(k) In the event Borrower or any Guarantor shall fail to pay taxes, insurance,
assessments, fees, costs or expenses which it is required to pay hereunder, or
fails to keep the Collateral free from Liens (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Agent in its
discretion, may make expenditures for such purposes and the amount so expended
(including attorney's fees and expenses, filing fees and other charges) shall be
payable by Borrower and Guarantors on demand and shall constitute part of the
Obligations.
(l)
(m) With respect to any amount required to be paid by Borrower under this
Section, in the event Borrower fails to pay such amount on demand, at Agent's
option, all of said amounts required to be paid by Borrower, may be advanced by
Agent as a Base Rate Loan and Borrower shall also pay to Agent interest thereon
at the Default Rate. Each Lender shall reimburse Agent for such Lender's Pro
Rata Share thereof. If any Lender shall fail to make available to the Agent the
full amount of such Lender's Pro Rata Share by 3:00 p.m. Philadelphia time on
the date such Lender receives the written request for payment from the Agent,
such Lender agrees to pay to Agent such amount, together with interest thereon,
from the date the written request was received from the Agent at the Federal
Funds Rate, provided however, that if such amount plus interest is not received
by Agent within two (2) Business Days after the date such Lender shall have
received the written request for payment from the Agent that its Pro Rata Share
is due, interest shall accrue and be payable on such unpaid amount (from such
second Business Day after the written request for payment is received) at a rate
equal to the rate payable by the Borrower on Base Rate Loans. In addition, such
Lender shall be deemed a Defaulting Lender and the provisions of SECTION shall
be applicable to such Lender.
(n)
1.26 INDEMNIFICATION. Borrower agrees to indemnify and hold harmless, the Lender
Group, their parents and Affiliates and their officers, directors, shareholders,
employees and agents (collectively, the "INDEMNIFIED PARTIES"), from and against
any and all claims, liabilities, losses, damages, costs and expenses (whether or
not such Indemnified Party is a party to any litigation), including without
limitation attorney's fees and costs and costs of investigation, document
production, attendance at depositions or other discovery, incurred by any
Indemnified Party with respect to, arising out of or as a consequence of (a)
this Agreement or any of the other Loan Documents, including without limitation,
any failure of Borrower to pay when due (at maturity, by acceleration or
otherwise) any principal, interest, fee or any other amount due under this
Agreement or the other Loan Documents, or any other Event of Default; (b) the
use by Borrower of any proceeds advanced hereunder; (c) the transactions
contemplated hereunder; or (d)
88
any claim, demand, action or cause of action being asserted against (i) Borrower
or any of its Affiliates by any other Person, or (ii) any Indemnified Party by
Borrower in connection with the transactions contemplated hereunder.
Notwithstanding anything herein or elsewhere to the contrary, Borrower shall not
be obligated to indemnify or hold harmless any Indemnified Party from any
liability, loss or damage resulting solely from the gross negligence, wilful
misconduct or unlawful actions of such Indemnified Party or in connection solely
with a dispute between Indemnified Parties. Any amount payable to the Lender
Group under this Section which is not paid within five (5) days after demand is
made by Agent will bear interest at the Default Rate from the date of demand
until paid.
1.27
1.28 Borrower's obligations under this Section shall survive termination of this
Agreement and repayment of the Obligations.
1.29
1.30 TIME IS OF THE ESSENCE. Time is of the essence in Borrower's and
Guarantors' performance of their obligations under the Loan Documents.
1. COMMUNICATIONS AND NOTICES. Unless otherwise specifically provided for in
this Agreement, all notices, requests and other communications made or given in
connection with the Loan Documents shall be in writing and, unless receipt is
stated herein to be required, shall be deemed to have been validly given if
delivered personally to the individual or division or department to whose
attention notices to a party are to be addressed, or by private carrier, or
registered or certified mail, return receipt requested, or by telecopy with the
original forwarded by first-class mail, in all cases, with charges prepaid,
addressed as follows, until some other address (or individual or division or
department for attention) shall have been designated by notice given by one
party to the other:
To Borrower or Guarantors:
Today's Man, Inc.
Moorestown West Corporate Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President
and Chief Financial Officer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
89
With a copy of any notice of an Event of Default to be given for
informational purposes and not for notice purposes to:
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Agent:
Mellon Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Lenders at the address and telecopy numbers specified below on
EXHIBIT A hereto or in the applicable Assignment and Acceptance
Agreement.
To the extent that any written notice is required to be given within a notice
period of less than ten (10) Business Days, the parties agree to forward such
notice by personal delivery, by private carrier or by telecopy to the extent
reasonably practical.
ALL "PAYMENT IN FULL" CHECKS OR OTHER MEDIA OF PAYMENT MUST BE SENT TO AGENT
ONLY TO THE ABOVE ADDRESS.
1. WAIVERS.
2.
2.1 WAIVERS. IN CONNECTION WITH ANY PROCEEDINGS UNDER THE LOAN DOCUMENTS,
INCLUDING WITHOUT LIMITATION ANY ACTION BY ANY MEMBER OF THE LENDER GROUP IN
REPLEVIN, FORECLOSURE OR OTHER COURT PROCESS OR IN CONNECTION WITH ANY OTHER
ACTION RELATED TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREUNDER,
BORROWER AND GUARANTORS WAIVE:
(A) ALL ERRORS, DEFECTS AND IMPERFECTIONS IN SUCH PROCEEDINGS;
(B)
(C) ALL BENEFITS UNDER ANY PRESENT OR FUTURE LAWS EXEMPTING ANY PROPERTY, REAL
OR PERSONAL, OR ANY PART OF ANY PROCEEDS THEREOF FROM ATTACHMENT, LEVY OR SALE
UNDER EXECUTION, OR PROVIDING FOR ANY STAY OF EXECUTION TO BE ISSUED ON ANY
JUDGMENT RECOVERED UNDER ANY OF THE LOAN DOCUMENTS OR IN ANY REPLEVIN OR
FORECLOSURE PROCEEDING, OR OTHERWISE PROVIDING FOR ANY VALUATION, APPRAISAL OR
EXEMPTION;
90
(D)
(E) ALL RIGHTS TO INQUISITION ON ANY REAL ESTATE, WHICH REAL ESTATE MAY BE
LEVIED UPON PURSUANT TO A JUDGMENT OBTAINED UNDER ANY OF THE LOAN DOCUMENTS AND
SOLD UPON ANY WRIT OF EXECUTION ISSUED THEREON IN WHOLE OR IN PART, IN ANY ORDER
DESIRED BY AGENT;
(F)
(G) PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF DEMAND, NOTICE OF NONPAYMENT,
PROTEST AND NOTICE OF PROTEST OF ANY OF THE LOAN DOCUMENTS, INCLUDING THE NOTES;
(H)
(I) ANY REQUIREMENT FOR BONDS, SECURITY OR SURETIES REQUIRED BY STATUTE, COURT
RULE OR OTHERWISE; AND
(J)
(K) ANY DEMAND FOR POSSESSION OF COLLATERAL PRIOR TO COMMENCEMENT OF ANY SUIT.
(L)
1.2 FORBEARANCE. Agent may release, compromise, forbear with respect to, waive,
suspend, extend or renew any of the terms of the Loan Documents, without notice
to Borrower or any Guarantor.
1.3
1.4 LIMITATION ON LIABILITY. Borrower and Guarantors shall be responsible for
and the Lender Group is hereby released from any claim or liability in
connection with:
1.5
(a) Safekeeping any Collateral;
(b)
(c) Any loss or damage to any Collateral; or
(d)
(e) Any diminution in value of the Collateral.
(f)
(g) The Lender Group shall only be liable for any act or omission on their part
constituting gross negligence or wilful misconduct. In the event Borrower or
Guarantors bring suit against the Lender Group in connection with the
transactions contemplated hereunder and the Lender Group is found not to be
liable, Borrower and Guarantors will indemnify and hold the Lender Group
harmless from all costs and expenses, including attorney's fees, incurred by the
Lender Group in connection with such suit. This Agreement is not intended to
obligate the Lender Group to take any action with respect to the Collateral or
to incur expenses or perform any obligation or duty of Borrower.
91
1. SUBMISSION TO JURISDICTION. Borrower, Guarantors, Agent and Lenders hereby
consent to the jurisdiction of any state or federal court located within the
Commonwealth of Pennsylvania, and irrevocably agree that, subject to the Agent's
election, all actions or proceedings relating to the Loan Documents or the
transactions contemplated hereunder shall be litigated in such courts, and
Borrower and Guarantors waive any objection which they may have based on lack of
personal jurisdiction, improper venue or forum non conveniens to the conduct of
any proceeding in any such court and waive personal service of any and all
process upon them and consent that all such service of process be made by mail
or messenger directed to them at the address set forth in SECTION . Nothing
contained in this Section shall affect the right of Agent or any Lender to serve
legal process in any other manner permitted by law or affect the right of Agent
or any Lender to bring any action or proceeding against Borrower or Guarantors
or their property in the courts of any other jurisdiction.
1. AGENT.
2.
2.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably appoints
Mellon to act as Agent on its behalf under the Loan Documents. Mellon agrees to
act as Agent on behalf of the Lenders to the extent provided in the Loan
Documents. Each Lender hereby irrevocably authorizes Agent to take such actions,
exercise such powers and perform such duties on its behalf under the Loan
Documents as are specifically delegated to Agent by the terms of the Loan
Documents, together with such other powers as are reasonably incidental thereto.
Agent may use its discretion with respect to taking any actions or
exercising any powers which are not expressly required to be taken or exercised
in this Agreement. Without limiting the generality of the rights and powers of
the Agent under the Loan Documents, Lenders agree that Agent, at its discretion,
shall have the right, power and authority to: (a) maintain books and records
reflecting the status of the Advances, Loan Account, Collateral and related
matters, (b) execute and file financing statements or similar notices to perfect
security interests in the Collateral, and confirmation statements, renewals and
extensions related thereto, (c) make Advances for itself or on behalf of the
Lenders as provided in the Loan Documents, (d) receive, apply and distribute
collections and payments as provided in the Loan Documents, (e) open and
maintain the Cash Collateral Account, (f) exercise and enforce any and all
rights and remedies of the Lender Group as provided in the Loan Documents, and
(g) incur and pay Lender Group Expenses as Agent may deem necessary or
appropriate in its discretion.
The Agent's duties shall be purely ministerial and it shall have no
duties or responsibilities except those expressly set forth in the Loan
Documents. Notwithstanding anything herein or elsewhere to the contrary, Agent
shall not be required under any circumstances to take any action that, in its
good faith judgment, (a) is contrary to any provision of the Loan Documents or
any applicable law, or (b) would expose it to any liability or expense against
which it has not been indemnified to its satisfaction. The Agent shall not, by
reason of its serving as Agent, be a trustee or other fiduciary for any Lender.
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1.1 DELEGATION OF DUTIES. Agent may perform any of its duties or exercise any of
its powers under the Loan Documents by or through agents, employees or
attorneys-in-fact and shall be entitled to rely upon the advice of counsel
concerning all matters pertaining to its duties under the Loan Documents.
1.2
1.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its directors,
officers, employees, agents or attorneys-in-fact (a) shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
the Loan Documents, except for its or their own gross negligence or willful
misconduct; or (b) shall be responsible in any manner to any Lender for (i) any
recital, statement, representation, warranty, or information made or provided by
Borrower, any Guarantor or any officer, director, employee, agent or attorney
for Borrower or any Guarantor in any of the Loan Documents or in connection with
the transactions contemplated under the Loan Documents; (ii) any certificate,
report, statement or other document provided by Borrower, any Guarantor or any
officer, director, employee, agent or attorney for Borrower or any Guarantor
under or in connection with the Loan Documents; (iii) the validity,
effectiveness, genuineness, enforceability, sufficiency, or due execution of any
of the Loan Documents or any documents provided in connection with or pursuant
to the Loan Documents; (iv) any failure of Borrower, Guarantor, any Lender or
any other Person to perform any of their duties under the Loan Documents; (v)
the financial condition or performance by Borrower or any Guarantor; or (vi) the
occurrence of any Default or Event of Default.
1.4
1.5 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be fully
protected in relying, upon (a) any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telex, teletype, cablegram, telephone
message, statement, order, Loan Request, LIBOR Rate Notification, or other
document or conversation believed by Agent to be genuine and correct and to have
been signed, sent or made by a proper or authorized Person or Persons; and (b)
opinions, advice and other statements of legal counsel (including counsel to
Borrower or counsel to any Lender), accountants and other professional or expert
advisers selected by Agent.
1.6
1.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender Group
Expenses or other sums pursuant to SECTION deemed necessary or appropriate by
Agent in its discretion. Without limiting the generality of the foregoing, Agent
may incur and pay court costs, reasonable attorneys fees and legal expenses,
costs of collection, auctioneer fees, fees and costs of security guards and
insurance premiums in connection with preserving, protecting, maintaining and
disposing of the Collateral, regardless of whether Borrower reimburses or is
obligated to reimburse Agent for such expenditures. Agent is hereby authorized
by the Lenders to deduct and retain sufficient sums from all collections and
payments received from Borrower, Guarantors or with respect to any of the
Collateral to reimburse Agent for such expenditures prior to the distribution or
any amounts to the Lenders. In the event that Agent is not reimbursed for such
expenditures by Borrower, Guarantors or from collections or payments received
with respect to the Collateral, each Lender hereby agrees to reimburse and
indemnify Agent for such Lender's Pro Rata Share thereof.
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1.8
1.9 Each Lender agrees to indemnify and hold harmless, the Agent, its parent and
Affiliates, officers, directors, shareholders, employees and agents
(collectively, the "INDEMNIFIED AGENT PARTIES"), in accordance with such
Lender's Pro Rata Share, from and against any and all claims, liabilities,
losses, damages, costs and expenses (whether or not such Indemnified Agent Party
is a party to any litigation), including without limitation reasonable
attorney's fees and costs and costs of investigation, document production,
attendance at depositions or other discovery, incurred by any Indemnified Agent
Party with respect to, arising out of or as a consequence of (a) any Letter of
Credit, (b) any Permitted FX Contract, (c) this Agreement or any of the other
Loan Documents; (d) the transactions contemplated hereunder; or (e) any claim,
demand, action or cause of action being asserted against any Indemnified Agent
Party by Borrower or any other Person in connection with the transactions
contemplated hereunder. Notwithstanding anything herein or elsewhere to the
contrary, no Lender shall be obligated to indemnify or hold harmless any
Indemnified Agent Party from any liability, loss or damage resulting solely from
the gross negligence, wilful misconduct or unlawful actions of such Indemnified
Agent Party.
1.10
1.11 The terms of this SECTION shall not limit any of the obligations or
liabilities of each Lender to fund its Pro Rata Share of Advances, Lender Group
Expenses or other sums as provided elsewhere in this Agreement.
1.12
1.13 EVENTS OF DEFAULT. For all purposes under the Loan Documents, Agent shall
not be deemed to have knowledge of the occurrence of a Default or an Event of
Default (other than the non-payment to Agent of principal, interest, fees and
expenses required to be paid to Agent, for the pro rata benefit of the Lenders),
unless Agent has received a written notice from a Lender or from Borrower
referring to this Agreement, describing the Default or Event of Default and
stating that such notice is a "notice of default." Each Lender will give Agent
prompt written notice if such Lender becomes aware of any Default or Event of
Default. Upon receipt of any notice of default, Agent will promptly notify all
Lenders thereof. Each Lender shall be responsible for giving any notices of
Default or Events of Default to such Lender's Participants.
1.14
1.15 ACTIONS UPON DEFAULT. Upon the occurrence of and during the continuation of
any Event of Default, Agent may, in its discretion, and upon the written request
of the Requisite Lenders shall, declare the Obligations to be due and payable
and may proceed to exercise the rights or remedies under the Loan Documents, at
law or in equity, as Agent may deem appropriate and to enforce the rights of the
Lenders under their respective Notes by such proceedings as the Agent may deem
appropriate, whether at law or in equity. Notwithstanding the foregoing, Agent
shall be justified in failing or refusing to take any action unless it shall be
indemnified to its satisfaction or it shall reasonably determine that such
action will not expose the Agent to any liability.
1.16
1.17 INSTRUCTIONS. Agent shall in all cases be fully protected and no Lender
shall have a right of action against Agent as a result of Agent acting or
refraining
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from acting, under the Loan Documents (a) in accordance with the
written instructions of the Requisite Lenders or all Lenders, as appropriate,
(b) in accordance with the advice of legal counsel (whether or not such advice
shall ultimately be determined to be correct), or (c) as a court of competent
jurisdiction may direct. In the absence of written instructions from the
Requisite Lenders or all Lenders, as appropriate, Agent may take or not take any
action, at its discretion, unless this Agreement specifically requires the
consent of the Requisite Lenders or all Lenders.
1.18
1.19 INVESTIGATION BY LENDERS. Each Lender hereby represents, warrants and
agrees that:
1.20
(a) It has reviewed the Loan Documents and is fully aware of the terms of the
Loan Documents;
(b)
(c) Agent has not made any representation or warranty to it and that no act by
Agent shall at any time be deemed to constitute a representation or warranty by
Agent to any Lender;
(d)
(e) It has made and will continue to make, independently and without reliance
upon Agent and based upon such information, documents and other items as it
deems appropriate, its own appraisal of and investigation into the business,
prospects, operations, properties, financial condition and creditworthiness of
Borrower and Guarantors, and all applicable regulatory laws;
(f)
(g) It has made its own decision to enter into this Agreement and extend credit
to Borrower and will continue to make its own decision to fund its Pro Rata
Share of Advances, in every case without reliance upon any representations or
warranties by Agent;
(h)
(i) Agent shall be under no duty or responsibility to the Lenders to ascertain
or inquire into the performance or observance by Borrower or Guarantors with the
terms of the Loan Documents; and
(j)
(k) Except as provided in SECTIONS AND, Agent shall have no duty or
responsibility to provide any Lender with any information concerning the
business, prospects, operations, properties, financial condition or
creditworthiness of Borrower or any Guarantor.
(l)
1.21 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its Commitment, Agent
Loans and Advances made by it under the Loan Documents, Agent shall have the
same rights and powers under the Loan Documents as any other Lender and may
exercise such rights and powers as though it were not the Agent. The terms
"LENDER," "LENDERS" and "LENDER GROUP" shall include Agent in its individual
capacity as a lender under this Agreement.
1.22
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1.23 Agent and its Affiliates may make other loans to, issue other letters of
credit for the account of, accept deposits from, act as trustee under indentures
of, engage in foreign exchange contracts with and generally engage in any kind
of banking, trust, financial advisory, underwriting or other business with
Borrower, any Guarantor or their Affiliates as though Agent were not the Agent
under this Agreement, in all cases without notice to or consent of any Lender or
any liability to account to the Lenders for such business. In connection with
such other business activities, Agent and its Affiliates may receive information
regarding Borrower, Guarantors or their Affiliates. Agent shall be under no
obligation to provide such information to Lenders.
1.24 RESIGNATION. Agent may resign as Agent at any time following written notice
of such resignation to the Lenders and Borrower, and effective upon the
appointment of and acceptance of such appointment by, a successor Agent. If
Agent resigns under this Agreement, the Requisite Lenders shall appoint any
Lender as successor Agent for the Lenders. If no successor Agent is appointed
within ten (10) days of such retiring Agent's resignation notice, Agent may
appoint a successor Agent, after consulting with the Lenders and Borrower. In
any such event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "AGENT" shall mean such successor
Agent and the retiring Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this SECTION and all indemnification and expense reimbursement
provisions in the Loan Documents shall continue in effect for its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
1.1 WITHHOLDING TAX.
1.2
(a) If any, Lender is a "foreign corporation, partnership or trust" within the
meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Section 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrower to deliver to Agent and Borrower:
(i) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty, properly completed IRS Forms 1001 and W-8
before the payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii)
(iii) if such Lender claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected with a
United States trade or business of such Lender, two (2) properly completed and
executed copies of IRS Form 4224 before the payment of any interest is due in
the first taxable year of such Lender and in each succeeding taxable year of
such Lender during which interest may be paid under this Agreement, and IRS Form
W-9; and
(iv)
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(v) such other form or forms as may be required under the IRC or other laws of
the United States as a condition to exemption from, or reduction of, United
States withholding tax.
(vi)
(vii) Such Lender agrees to promptly notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(viii)
(b) If any Lender claims exemption from, or reduction of, withholding tax under
a United States tax treaty by providing IRS Form 1001 and such Lender sells,
assigns, grants a participation in, or otherwise transfers all or part of its
Pro Rata Share of the Obligations, such Lender agrees to notify Agent and
Borrower of the percentage amount in which it is no longer the beneficial owner.
To the extent of such percentage amount, Agent and Borrower will treat such
Lender's IRS Form 1001 as no longer valid.
(c)
(d) If any Lender claiming exemption from United States withholding tax by
filing IRS Form 4224 with Agent sells, assigns, grants a participation in, or
otherwise transfers all or part of its Pro Rata Share of the Obligations, such
Lender agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the IRC.
(e)
(f) If any Lender is entitled to a reduction in the applicable withholding tax,
Agent may withhold from any interest payment to such Lender an amount equivalent
to the applicable withholding tax after taking into account such reduction. If
the forms or other documentation required by subsection (a) of this SECTION are
not delivered to Agent, then Agent may withhold from any interest payment to
such Lender not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.
(g)
(h) If the IRS or any other governmental authority of the United States or other
jurisdiction asserts a claim that Agent or Borrower did not properly withhold
tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent and Borrower of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason), such Lender shall indemnify Agent and Borrower fully for
all amounts paid, directly or indirectly, by Agent or Borrower as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Agent or Borrower under this SECTION,
together with all costs and expenses (including attorneys fees and expenses).
The obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation of Agent.
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1.1 COLLATERAL MATTERS.
1.2
(a) The Lenders hereby irrevocably authorize Agent to release any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Obligations; and upon such termination
and payment Agent shall deliver to Borrower, at Borrower's sole cost and
expense, all UCC termination statements and any other documents necessary to
terminate the Loan Documents and release the Liens with respect to the
Collateral; (ii) constituting property being sold or disposed of if a release is
required or desirable in connection therewith and if Borrower certifies to Agent
that the sale or disposition is permitted under this Agreement or the other Loan
Documents (and Agent may rely conclusively on any such certificate, without
further inquiry); (iii) constituting property in which Borrower owned no
interest at the time the Lien was granted or at any time thereafter; or (iv)
constituting property leased to Borrower under a lease that has expired or been
terminated in a transaction permitted under this Agreement. Upon request by
Agent or Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this SECTION; provided, however, that (i) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Obligations or any Liens (other than
those expressly being released), upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(a) Agent shall have no obligation whatsoever to any of the Lenders to assure
that the Collateral exists or is owned by Borrower, is cared for, protected, or
insured or has been encumbered, or that the Liens of Agent (for the benefit of
the Lender Group) have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure, or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents. Lenders understand and agree that in respect of the Collateral, or
any act, omission or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion, given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
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1.1 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
1.2
(a) Each of the Lenders agrees that it shall not, without the express consent of
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of Agent, set off against the Obligations any amounts owing by such
Lender to Borrower or any accounts of Borrower now or hereafter maintained with
such Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by Agent, take or cause to be taken any action,
including the commencement of any legal or equitable proceedings, to foreclose
any Lien on, or otherwise enforce any security interest in, any of the
Collateral the purpose of which is, or could be, to give such Lender any
preference or priority against the other Lenders with respect to the Collateral.
(a) Subject to SECTION, if, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from Agent pursuant to the
terms of this Agreement, or (ii) payments from Agent in excess of such Lender's
Pro Rata Share of all such distributions by Agent, such Lender shall promptly
(1) turn the same over to Agent, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in same day funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
(b)
1.2 AGENCY FOR PERFECTION. Agent and each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Liens of the Lender Group in
assets which, in accordance with Division 9 of the UCC, can be perfected only by
possession. Should any Lender obtain possession of any such Collateral, such
Lender shall notify Agent thereof and, promptly upon Agent's request therefor,
shall deliver such Collateral to Agent or in accordance with Agent's
instructions.
1.3
1.4 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer or internal transfer of immediately
available funds pursuant to the wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify
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whether such payment (or any portion thereof) represents principal, interest,
fees or other payments required hereunder.
1.5
1.6 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the benefit of the Lender
Group. Each member of the Lender Group agrees that any action taken by Agent,
Requisite Lenders, or all Lenders, as applicable, in accordance with the terms
of this Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent, Requisite Lenders, or all Lenders, as applicable, of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
1.7
1.8 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS BY
LENDERS. By signing this Agreement, each Lender
1.9
(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report (each a
"REPORT" and, collectively, "REPORTS") prepared by Agent, and Agent shall so
furnish each Lender with such Reports;
(b)
(c) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report and (ii) shall not
be liable for any information contained in any Report;
(d)
(e) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding Borrower and will
rely significantly upon Borrower's books and records, as well as on
representations of Borrower's personnel;
(f)
(g) agrees to keep all Reports and other material information obtained by it
pursuant to the requirements of this Agreement in accordance with its reasonable
customary procedures for handling confidential information, it being understood
and agreed by Borrower that in any event such Lender may make disclosures (i)
reasonably required by any bona fide potential or actual assignee, transferee,
or Participant in connection with any contemplated or actual assignment or
transfer by such Lender of an interest herein or any participation interest in
such Lender's rights hereunder, (ii) of information that has become public by
disclosures made by Persons other than such Lender, its Affiliates, assignees,
transferees, or participants, or (iii) as required or requested by any court,
governmental or administrative agency, pursuant to any subpoena or other legal
process, or by any law, statute, regulation, or court order; provided, however,
that, unless prohibited by applicable law, statute, regulation, or court order,
such Lender shall notify Borrower of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof; and
(h)
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(i) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the identifying
Lender has made or may make to Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrower; and (ii) to pay and protect, and indemnify, defend, and hold Agent and
any such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses and other amounts (including
attorney costs) incurred by Agent and any such other Lender preparing a Report
as the direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.
(j)
1.10 OTHER REPORTS; LOAN ACCOUNT. Any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender promptly upon receipt thereof. To
the extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Borrower, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender's notice to Agent, whereupon Agent promptly shall request of
Borrower the additional reports or information specified by such Lender, and,
upon receipt thereof, Agent promptly shall provide a copy of same to such
Lender. Any time that Agent renders to Borrower a statement regarding the Loan
Account, Agent shall send a copy of such statement to each Lender. In addition,
Agent agrees to provide to each Lender with reasonable promptness a copy of (i)
the financial statements received by Agent from Borrower pursuant to SECTIONS,
AND; (ii) the projections received by Agent from Borrower pursuant to SECTION;
(iii) each Borrowing Base Certificate received by Agent from Borrower pursuant
to SECTION; and (iv) each compliance certificate received by Agent from Borrower
pursuant to SECTION.
1.11
1.12 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in favor
of Agent in its capacity as such, and not by or in favor of the Lenders, any and
all obligations on the part of Agent (if any) to make any Advances shall
constitute the several (and not joint) obligations of the respective Lenders on
a ratable basis, according to their respective Pro Rata Shares, to make an
amount of such Advances not to exceed, in principal amount, at any one time
outstanding, the amount of their respective Commitments. Nothing contained
herein shall confer upon any Lender any interest in, or subject any Lender to
any liability for, or in respect of, the business, assets, profits, losses, or
liabilities of any other Lender. Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any obligation,
duty, or liability to any Participant of any other Lender. Except as provided in
SECTION, no member of the Lender Group shall have any liability for the acts of
any other member of the Lender Group. No Lender shall be responsible to Borrower
or any other Person for any failure by any other Lender to fulfill its
obligations to make Advances, nor to advance for it or on its behalf in
connection with its
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Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
1. ASSIGNMENTS AND PARTICIPATIONS.
2.
2.1 ASSIGNMENTS.
(a) Any Lender may assign to one or more Eligible Transferees (each an
"ASSIGNEE") all, or any ratable part, of the Obligations, the Commitment, and
the other rights and obligations of such Lender (the "ASSIGNING LENDER") under
the Loan Documents; provided, however, that (i) Agent shall have a right of
first refusal to purchase any portion of the Obligations, the Commitment and
other rights and obligations of such Lender which any Lender desires to assign;
(ii) no assignment may be made without the prior written consent of Agent; (iii)
Borrower and Agent may continue to deal solely and directly with such Assigning
Lender in connection with the interest so assigned to an Assignee until (A)
written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, shall have been
given to Borrower and Agent by such Lender and the Assignee; (B) such Lender and
its Assignee shall have delivered to Borrower and Agent a fully executed
Assignment and Acceptance ("ASSIGNMENT AND ACCEPTANCE") in the form of EXHIBIT J
and (C) the Assigning Lender or Assignee has paid to Agent for Agent's sole and
separate account a processing fee in the amount of $3,500.00.
(b)
(c) From and after the date that Agent notifies the Assigning Lender that it has
received a fully executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the Assigning
Lender shall, to the extent that rights and obligations under the Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and in the
case of an Assignment and Acceptance covering all or the remaining portion of an
Assigning Lender's rights and obligations under the Loan Documents, such Lender
shall cease to be a party hereto and thereto).
(d)
(e) By executing and delivering an Assignment and Acceptance, the Assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such Assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with this Agreement or
any other Loan Documents, or the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of this Agreement or any other Loan Document
furnished pursuant hereto; (ii) such Assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower or any Guarantor or the performance or observance by Borrower or any
Guarantor of any of its
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obligations under the Loan Documents; (iii) such Assignee confirms that it has
received a copy of the Loan Documents, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon Agent, such Assigning Lender, or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents; (v) such Assignee appoints and
authorizes Agent to take such action as agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to Agent by the terms of the
Loan Documents, 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 the Loan Documents are
required to be performed by it as a Lender.
(f)
(g) Immediately upon execution and delivery of the Assignment and Acceptance
Agreement and payment of the required processing fee, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments of
the Assigning Lender and Assignee arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitment of the Assigning Lender pro tanto.
(h)
(i) On or prior to the effective date of any approved transfer, Borrower agrees
to execute and deliver to the Agent (i) a new Note for delivery to the Assignee
evidencing such Assignee's assigned Pro Rata Share of the Revolving Credit
Facility, and (ii) a replacement Note (if necessary) for delivery to the
Assigning Lender; such replacement Note to be exchanged for, but not given in
payment of, the Note previously held by the Assigning Lender. Each such Note
will be dated the date of this Agreement and shall be in substantially the form
of EXHIBIT E.
(j)
1.2 PARTICIPATION. Any Lender may sell to one or more Persons (a "PARTICIPANT")
participating interests in the Obligations, the Commitment, and the other rights
and interests of that Lender (the "ORIGINATING LENDER") under the Loan
Documents; provided, however, that (i) Agent shall have a right of first refusal
to purchase that portion of the Obligations, the Commitment and other rights and
obligations of such Originating Lender with respect to which the Originating
lender desires to sell a participating interest, (ii) no participating interest
may be sold without the prior written consent of Agent, (iii) the Originating
Lender shall remain solely responsible for the performance of such obligations,
(iv) Borrower and Agent shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (v) such
Participant shall, by accepting such participation, be bound by the provisions
of the Loan Documents, (vi) no Originating Lender shall transfer or grant any
participating interest under which the Participant has the sole and exclusive
right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the Contract Period; (B) reduce the interest rate
applicable to
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the Obligations hereunder in which such Participant is participating; (C)
release all or a material portion of the Collateral (except to the extent
expressly provided herein or in any of the Loan Documents) in which such
Participant is participating; or (D) postpone the payment of or reduce the
amount of, the interest or fees hereunder in which such Participant is
participating; and (vii) all amounts payable by Borrower hereunder shall be
determined as if such Originating Lender had not sold such participation; except
that, if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement; provided, however, that
no Participant may exercise any such right of setoff without notice to and the
consent of Agent. The rights of any Participant shall only be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any direct rights as to the other Lenders, Agent,
Borrower, the Collateral, or otherwise in respect of the Advances, the Letters
of Credit, or the Permitted FX Contracts. No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.
The provisions of this Section are solely for the benefit of the Lender Group,
and Borrower shall have no rights as a third party beneficiary of any of such
provisions.
1.3
1.4 FINANCIAL AND OTHER INFORMATION. In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose to
a third party all documents and information which it now or hereafter may have
relating to Borrower or any Guarantor or Borrower's or any Guarantor's business.
1.5
1.6 ASSIGNMENTS TO FEDERAL RESERVE. Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in the Obligations in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss. 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
1.7
1.8 RIGHT OF AGENT TO PURCHASE. In the event that Agent requests the consent or
approval of any of the Lenders with respect to any action to be taken by Agent
under the Loan Documents or with respect to any amendment, waiver or other
action with respect to the Loan Documents, and any Lender does not give such
consent or approval in writing as requested by Agent, then Agent may, at its
option, purchase from such Lender, all of such Lender's Pro Rata Share of the
Obligations, such Lender's Commitment and all other rights and obligations of
such Lender under the Loan Documents for an amount equal to (a) the outstanding
principal balance of all Advances funded by such Lender, plus all accrued and
unpaid interest thereon, plus (b) all other amounts payable to such Lender
hereunder on or prior to the date of transfer to Agent, including fees accrued
hereunder (except any amounts that would be payable under SECTION as a result of
assigning rights and obligations in respect of any LIBOR Based Loans on a day
other than the last day of the applicable Rate Period or payable under SECTION
as a result of any termination of the Revolving Credit Facility, which amounts
shall be forfeited by
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such Lender), minus (c) that portion of such Lender's Pro Rata Share of Letter
of Credit Fees which such Lender has received related to Letters of Credit which
have expiration dates after the date of the transfer to Agent of such Lender's
Pro Rata Share, pro rated for the remaining terms of such Letters of Credit
after the date of transfer of such Lender's Pro Rata Share to Agent. Such Lender
shall cooperate with Agent to transfer such Lender's interests to Agent as soon
as possible after request by Agent. Such Lender and Agent shall execute and
deliver an Assignment and Acceptance relating to such transfer and otherwise
comply with the provisions of SECTION.
1.9
2. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower or Guarantors therefrom, shall be effective unless the
same shall be in writing and signed by the Requisite Lenders (or by Agent at the
written request of the Requisite Lenders) and, in the case of amendments, by the
Borrower and the Guarantors, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Lenders, Borrower and the Guarantors and
acknowledged by Agent, do any of the following:
3.
(a) change the Commitment of any Lender (except pursuant to SECTION and except
as provided in this Agreement with respect to Defaulting Lenders);
(b)
(c) extend the Contract Period;
(d)
(e) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due to
the Lenders hereunder or under any other Loan Document;
(f)
(g) reduce the rate of interest specified herein for the Revolving Credit
Facility, or any fees or other amounts payable to Lenders or under the Loan
Documents;
(h)
(i) change the percentage of the Commitments, which is required for the Lenders
or any of them to take any action hereunder;
(j)
(k) increase the advance rate with respect to any of the component parts of the
Borrowing Base (except for the restoration of an advance rate after the prior
reduction thereof);
(l)
(m) amend this Section or any provision of the Agreement providing for consent
or other action by all Lenders;
(n)
(o) release any material portion of the Collateral or any Guaranty other than as
permitted or authorized by SECTION of this Agreement;
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(p)
(q) change the definition of "Requisite Lenders";
(r)
(s) release Borrower from any Obligation for the payment of money to the
Lenders; or
(t)
(u) amend any of the provisions of SECTION;
(v)
(w) and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by Agent, affect the rights or duties of Agent under this
Agreement or any other Loan Document; and, provided further, that the limitation
contained in SUBSECTIONS (A) OR (E) above shall not be deemed to limit the
ability of Agent to make Advances or Agent Loans, as provided in this Agreement.
The foregoing notwithstanding, (i) any amendment, modification, waiver, consent,
termination, or release of or with respect to any provision of this Agreement or
any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower or any Guarantor, shall not require consent by or the agreement of
Borrowers or any Guarantor, and (ii) any change with respect to any matters
affecting solely the Agent and not the other Lenders, including without
limitation, fees payable to Agent for its own account, shall not require the
consent or approval of any of the Lenders.
1. MISCELLANEOUS.
2.
2.1 BROKERS. The transaction contemplated hereunder was brought about and
entered into by the Lender Group and Borrower and Guarantors acting as
principals and without any brokers, agents or finders being the effective
procuring cause hereof. Borrower and Guarantors represent to the Lender Group
that Borrower and Guarantors have not committed the Lender Group to the payment
of any brokerage fee or commission in connection with this transaction. If any
such claim is made against the Lender Group by any broker, finder or agent or
any other Person, Borrower and Guarantors agree to indemnify, defend and hold
the Lender Group harmless against any such claim, at Borrower's and Guarantors'
own cost and expense, including the Lender Group's attorneys' fees. Borrower and
Guarantors further agree that until any such claim or demand is adjudicated in
the Lender Group's favor, the amount claimed and/or demanded shall be deemed
part of the Obligations secured by the Collateral.
1.1 USE OF AGENT'S OR LENDER'S NAME. Borrower and Guarantors shall not use the
name of any member of the Lender Group or the name of any Affiliate of any
member of the Lender Group in connection with any of their business or
activities except as may otherwise be required by the rules and regulations of
the Securities and Exchange Commission or any like regulatory body and except as
may be required in their dealings with any governmental agency.
1.2
1.3 NO JOINT VENTURE. Nothing contained herein is intended to permit or
authorize Borrower or Guarantors to make any contract on behalf of the Lender
Group, nor
106
shall this Agreement be construed as creating a partnership, joint
venture or making the Lender Group an investor in Borrower or any Guarantor.
1.4
1.5 SURVIVAL. All covenants, agreements, representations and warranties made by
Borrower and Guarantors in the Loan Documents or made by or on their behalf in
connection with the transactions contemplated herein shall be true at all times
this Agreement is in effect and shall survive the execution and delivery of the
Loan Documents, any investigation at any time made by the Lender Group or on
their behalf and the making by the Lender Group of the loans or advances to
Borrower. All statements contained in any certificate, statement or other
document delivered by or on behalf of Borrower or Guarantors pursuant hereto or
in connection with the transactions contemplated hereunder shall be deemed
representations and warranties by Borrower and Guarantors.
1.6
1.7 NO ASSIGNMENT. Borrower and Guarantors may not assign any of their rights
hereunder without the prior written consent of Agent, and Lenders shall not be
required to lend hereunder except to Borrower as it presently exists.
1.8
1.9 PUBLICITY. Agent may use its discretion in disclosing the fact of the
financing under this Agreement to any public forum including, without
limitations, "tombstone" announcements in the print media whether individually
or part of a general advertisement.
1.10
1.11 BINDING EFFECT. This Agreement and all rights and powers granted hereby
will bind and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
1.12
1.13 SEVERABILITY. The provisions of this Agreement and all other Loan Documents
are deemed to be severable, and the invalidity or unenforceability of any
provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
1.14
1.15 NO THIRD PARTY BENEFICIARIES. The rights and benefits of this Agreement and
the Loan Documents shall not inure to the benefit of any third party.
1.16
1.17 HOLIDAYS. If the day provided herein for the payment of any amount or the
taking of any action falls on a Saturday, Sunday or public holiday at the place
for payment or action, then the due date for such payment or action will be the
next succeeding Business Day.
1.18
1.19 LAW GOVERNING. This Agreement has been made, executed and delivered in the
Commonwealth of Pennsylvania and will be construed in accordance with and
governed by the laws of such Commonwealth, without regard to any rules or
principles regarding conflicts of law or any rule or canon of construction which
interprets agreements against the draftsman.
1.20
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1.21 INTEGRATION. The Loan Documents shall be construed as integrated and
complementary of each other, and as augmenting and not restricting the Lender
Group's rights, powers, remedies and security. The Loan Documents contain the
entire understanding of the parties thereto with respect to the matters
contained therein and supersede all prior agreements and understandings between
the parties with respect to the subject matter thereof and do not require parol
or extrinsic evidence in order to reflect the intent of the parties. In the
event of any inconsistency between the terms of this Agreement and the terms of
the other Loan Documents, the terms of this Agreement shall prevail.
1.22
1.23 EXHIBITS AND SCHEDULES. All exhibits and schedules attached hereto are
hereby made a part of this Agreement.
1.24
1.25 HEADINGS. The headings of the Articles, Sections, paragraphs and clauses of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement.
1.26
1.27 COUNTERPARTS. The Loan Documents and any notice or communication under the
Loan Documents may be executed in one or more counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. Delivery of a photocopy or telecopy of an executed counterpart
of a signature page to any Loan Document shall be effective as delivery of a
manually executed counterpart of such Loan Document.
1.28
1.29 JOINT AND SEVERAL. The obligations of Borrower and Guarantors under this
Agreement shall be joint and several obligations.
1.30
1.31 LIMITATION ON DAMAGES. BORROWER, GUARANTORS AND THE LENDER GROUP AGREE
THAT, IN ANY ACTION, SUIT OR PROCEEDING, IN RESPECT OF OR ARISING OUT OF THIS
AGREEMENT, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREUNDER, EACH
MUTUALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY CLAIM FOR
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
1.32
1.33 WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER, GUARANTORS AND THE LENDER GROUP
WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(A) ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER, GUARANTORS OR ANY MEMBER OF
THE LENDER GROUP WITH RESPECT TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. BORROWER, GUARANTORS AND THE LENDER GROUP AGREE AND CONSENT THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
108
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF BORROWER, GUARANTORS AND THE LENDER GROUP TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY. BORROWER AND GUARANTORS ACKNOWLEDGE THAT THEY HAVE HAD
THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY
UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND
KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.
1.34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BORROWER:
TODAY'S MAN, INC., a Pennsylvania corporation
[CORPORATE SEAL] By: ____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
GUARANTORS:
BENMOL, INC., a Delaware corporation
[CORPORATE SEAL]
By: ____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
D & L, INC., a Delaware corporation
[CORPORATE SEAL] By: ____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇ & ▇▇▇▇, INC., a Delaware corporation
[CORPORATE SEAL] By: ____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
LENDERS:
MELLON BANK, N.A.
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
109
AGENT:
MELLON BANK, N.A.
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
EXHIBITS
Exhibit "A" Commitments and Lender Addresses for Notice Purposes
Exhibit "B" Form of Compliance Certificate
Exhibit "C" FX Parameters Letter
Exhibit "D" Form of LIBOR Rate Notification
Exhibit "E" Form of Note
Exhibit "F" Form of Base Rate Loan Request
Exhibit "G" Form of LIBOR Rate Loan Request
Exhibit "H" Form of Borrowing Base Certificate
Exhibit "I" Forms of Assignment and Collection Report, Remittance Schedule
and Inventory Certificate
Exhibit "J" Form of Assignment and Acceptance
Exhibit "K" Form of Settlement Notice
Exhibit "L" Form of Warrant
SCHEDULES
Schedule 8.1(i) - Pledged Securities
Schedule 8.2 - Real Property to be Encumbered by Leasehold Mortgagor
Schedule 9.3 - Ownership Interests
Schedule 9.4 - Subsidiaries
Schedule 9.7 - Litigation
Schedule 9.14 - Names and Addresses (identifying chief executive offices)
Schedule 9.16 - Pension and Benefit Plans
Schedule 9.17 - Leases, Contracts and Commitments
Schedule 9.18 - Intellectual Property
Schedule 9.19 - Permitted License Agreements
Schedule 9.27(a) - All Inventory Locations
Schedule 9.27(b) - Eligible Inventory Locations
Schedule 9.31 - Remaining Obligations Under the Plan of Reorganization
Schedule 9.32 - Credit Card Agreements
Schedule 11.18 - Required Trademark and Tradename Appraisals
Schedule 11.20 - Store Locations Requiring Best Efforts for Leasehold
Mortgage Liens
Schedule 11.22 - Locations with Collateral Access Agreements
Schedule 12.2 - Permitted Indebtedness and Capitalized Lease Obligations
Schedule 12.3 - Permitted Investments and Loans
Schedule 12.8 - Permitted Liens
FIRST AMENDMENT AND MODIFICATION
TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the
"AGREEMENT") is made effective as April 28, 1999 by and among TODAY'S MAN, INC.,
a Pennsylvania corporation ("BORROWER"); each of the Subsidiaries of the
Borrower identified under the caption "Guarantor" on the signature pages of this
Agreement (individually, a "GUARANTOR" and, collectively, the "GUARANTORS");
each of the financial institutions identified under the caption "Lenders" on the
signature pages of this Agreement (including without limitation Mellon in such
capacity) (individually, a "LENDER" and, collectively, the "LENDERS"); and
MELLON BANK, N.A., a national banking association, as agent for the Lenders (in
such capacity, together with its successors in such capacity, the "AGENT").
BACKGROUND
A. Borrower, Guarantors, Lenders and Agent previously entered into a
certain Loan and Security Agreement dated December 4, 1998 (the "LOAN
AGREEMENT"), pursuant to which, inter alia, Lenders agreed to extend to Borrower
a revolving credit facility up to a maximum outstanding principal amount of
Forty Five Million Dollars ($45,000,000.00).
B. Borrower and Guarantors have requested and Lenders and Agent have agreed
to amend the terms of the Loan Agreement in accordance with the terms and
conditions hereof.
C. Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth for such terms in the Loan Agreement.
NOW, THEREFORE, in consideration of foregoing premises and intending to be
legally bound hereby, the parties hereto agree as follows:
1. PERMITTED ASSUMPTIONS BY AGENT. SECTION 3.5(A) of the Loan Agreement
shall be and is hereby amended to read, in its entirety, as follows:
"(A) Unless the Agent shall have received notice from a Lender prior
to 3:30 p.m. Philadelphia time on the requested Funding Date of any Loan
that such Lender will not make available to the Agent such Lender's Pro
Rata Share of such Loan, the Agent may assume that such Lender has made or
will make its Pro Rata Share available to the Agent on the requested
Funding Date of such Loan. The Agent may in its discretion and in reliance
upon such assumption make available to the Borrower on such date a
corresponding amount."
1
2. TANGIBLE NET WORTH. SECTION 13.1 of the Loan Agreement shall be and is
hereby amended and restated to read in its entirety as follows:
"13.1 TANGIBLE NET WORTH. Borrower will maintain Tangible Net Worth of
not less than (a) $49,500,000 as of February 1, 1999 and at all times
thereafter until January 30, 2000; (b) $56,000,000 as of January 31, 2000;
(c) $54,500,000 as of February 1, 2000 and at all times thereafter until
January 30, 2001; (d) $61,000,000 as of January 31, 2001 and at all times
thereafter until January 30, 2002; and (e) $66,400,000 as of January 31,
2002 and at all times thereafter."
3. FIXED CHARGE COVERAGE RATIO. SECTION 13.4 of the Loan Agreement shall be
and is hereby amended and restated to read in its entirety as follows:
"13.4 FIXED CHARGE COVERAGE RATIO. Borrower will maintain a Fixed
Charge Coverage Ratio tested quarterly on a rolling four (4) quarters basis
of not less than (a) 1.1 to 1.0 for the fiscal quarters ending January 31,
1999, April 30, 1999, July 31, 1999 and October 31, 1999, respectively; and
(b) 1.4 to 1.0 for the fiscal quarter ending January 31, 2000 and for each
fiscal quarter end thereafter."
4. FISCAL QUARTER END AND FISCAL YEAR END OF BORROWER. Notwithstanding
anything to the contrary contained in the Loan Agreement, Agent agrees that (i)
the fiscal quarter end of Borrower shall occur on the 13th, 26th and 39th
Saturday following the immediately preceding fiscal year end, and (ii) the
fourth quarter and fiscal year end of Borrower shall occur on the Saturday
falling closest to January 31 in each calendar year, and compliance by Borrower
with its fiscal quarter end and fiscal year end financial covenants as set forth
in Article 13 of the Loan Agreement shall be tested on such dates.
5. REPRESENTATION WARRANTIES. Borrowers and Guarantors hereby represent and
warrant, which representations and warranties shall survive until all
Obligations are paid and satisfied in full, as follows:
(a) All representations and warranties of Borrower and Guarantors set
forth in the Loan Documents are true and complete as of the date hereof.
(b) No condition or event exists or has occurred which would
constitute an event of default under the Loan Documents or under any other
agreement between Borrower, any Guarantor and any other third party (or
would, upon the giving of notice or the passage of time, or both constitute
an event of default).
(c) Borrower has not received any notice of default or event of
default from any other lender, trustee or lessor with respect to any other
loan, financing or lease agreement.
2
(d) The execution and delivery of this Agreement by Borrower and
Guarantors and all documents and agreements to be executed and delivered
pursuant to the terms hereof:
(ii) have been duly authorized by all requisite corporate action
by Borrower and by each Guarantor;
(iii) will not conflict with or result in the breach of or
constitute a default (upon the passage of time, delivery of notice or
both) under Borrower's or any Guarantor's Articles of Incorporation,
By-Laws or any applicable statute, law, rule, regulation or ordinance
or any indenture, mortgage, loan or other document or agreement to
which Borrower or any Guarantor is a party or by which any of them is
bound or affected; and
(iv) will not result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the
property or assets of Borrower or any Guarantor, except liens in favor
of the Agent or as permitted hereunder or under the Loan Documents.
6. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Borrower will pay all of
the Agent's expenses in connection with the review, preparation, negotiation,
documentation and closing of this Agreement and the consummation of the
transactions contemplated hereunder, including without limitation, costs and
fees and expenses of counsel retained by Agent and all fees related to filings,
recording of documents and searches, whether or not the transactions
contemplated hereunder are consummated. Nothing contained herein shall limit in
any manner whatsoever any Lender's or Agent's right to reimbursement under any
of the Loan Documents.
7. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Agreement shall be made in
accordance with the provisions of the Loan Agreement.
8. TIME OF ESSENCE. Time is of the essence of this Agreement.
9. INCONSISTENCIES. To the extent of any inconsistencies between the terms
and conditions of this Agreement and the terms and conditions of the Loan
Documents, the terms and conditions of this Agreement shall prevail. All terms
and conditions of the Loan Documents not inconsistent herewith shall remain in
full force and effect and are hereby ratified and confirmed by Borrower and
Guarantors.
10. BINDING EFFECT. This Agreement and all rights and powers granted hereby
will bind and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
11. SEVERABILITY. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
3
12. NO THIRD PARTY BENEFICIARIES. The rights and benefits of this Agreement
and the Loan Documents shall not inure to the benefit of any third party.
13. MODIFICATIONS. No modifications of this Agreement or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
14. HOLIDAYS. If the day provided herein for the payment of any amount or
the taking of any action falls on a Saturday, Sunday or public holiday at the
place for payment or action, then the due date for such payment or action will
be the next succeeding Business Day.
15. LAW GOVERNING. This Agreement has been made, executed and delivered in
the Commonwealth of Pennsylvania and will be construed in accordance with and
governed by the laws of such Commonwealth, without regard to any rules or
principles regarding conflicts of law or any rule or canon of construction which
interprets agreements against the draftsman.
16. HEADINGS. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties hereto concerning the subject matter set forth herein and supersedes
all prior or contemporaneous oral and/or written agreements and representations
not contained herein concerning the subject matter of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BORROWER:
TODAY'S MAN, INC., a Pennsylvania corporation
[CORPORATE SEAL] By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice
President
[CORPORATE SEAL]
GUARANTORS:
BENMOL, INC., a Delaware corporation
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
D & L, INC., a Delaware corporation
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
[CORPORATE SEAL]
▇▇▇▇ & ▇▇▇▇, INC., a Delaware corporation
By:
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[CORPORATE SEAL] ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
LENDERS:
MELLON BANK, N.A.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
AGENT:
MELLON BANK, N.A.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President