EXHIBIT 10.31
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
dated as of
January 5, 2000
among
LAMONTS APPAREL, INC.,
a debtor and debtor-in-possession
as Borrower
FLEET RETAIL FINANCE INC.,
as Tranche A Lender,
BACK BAY CAPITAL FUNDING, LLC
as Tranche B Lender,
FLEET RETAIL FINANCE INC.
as Administrative Agent and Collateral Agent
and
BANKBOSTON, N.A.,
as Issuing Bank
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TABLE OF CONTENTS
PAGE
ARTICLE 1............................................................................................2
Definitions..........................................................................................2
SECTION 1.1. Defined Terms.................................................................2
SECTION 1.2. Rules of Interpretation.......................................................32
SECTION 1.3. Accounting Terms; GAAP........................................................34
ARTICLE 2............................................................................................34
Amount and Terms of Credit...........................................................................34
SECTION 2.1. Commitment of the Lenders.....................................................34
SECTION 2.2. Reserves; Changes to Reserves.................................................35
SECTION 2.3. Making of Loans...............................................................36
SECTION 2.4. Overadvances..................................................................37
SECTION 2.5. Swingline Loans...............................................................38
SECTION 2.6. Letters of Credit.............................................................38
SECTION 2.7. Settlements Amongst Tranche A Lenders.........................................43
SECTION 2.8. Notes; Repayment of Loans.....................................................45
SECTION 2.9. Interest on Loans.............................................................46
SECTION 2.10. Default Interest.............................................................46
SECTION 2.11. Certain Fees.................................................................47
SECTION 2.12. Unused Commitment Fee........................................................47
SECTION 2.13. Letter of Credit Fees........................................................47
SECTION 2.14. Nature of Fees...............................................................48
SECTION 2.15. Termination or Reduction of Commitments......................................48
SECTION 2.16. Alternate Rate of Interest...................................................48
SECTION 2.17. Conversion and Continuation of Tranche A Loans...............................49
SECTION 2.18. Mandatory Prepayment; Commitment Termination; Cash Collateral................50
SECTION 2.19. Optional Prepayment of Loans; Reimbursement of Lenders.......................52
SECTION 2.20. Maintenance of Loan Account; Statements of Account...........................54
SECTION 2.21. Cash Receipts................................................................55
SECTION 2.22. Application of Payments......................................................57
SECTION 2.23. Increased Costs..............................................................58
SECTION 2.24. Change in Legality...........................................................60
SECTION 2.25. Payments; Sharing of Setoff.................................................61
SECTION 2.26. Taxes........................................................................63
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SECTION 2.27. Priority and Collateral Security.............................................65
SECTION 2.28. Mitigation Obligations; Replacement of Lenders...............................67
SECTION 2.29. Interest Limitation..........................................................68
ARTICLE 3............................................................................................69
Representations and Warranties.....................................................69
SECTION 3.1. Organization; Powers..........................................................69
SECTION 3.2. Authorization; Enforceability.................................................69
SECTION 3.3. Governmental Approvals; No Conflicts..........................................70
SECTION 3.4. Financial Condition...........................................................70
SECTION 3.5. Properties....................................................................70
SECTION 3.6. Litigation and Environmental Matters..........................................71
SECTION 3.7. Compliance with Laws and Agreements...........................................71
SECTION 3.8. Investment and Holding Company Status.........................................72
SECTION 3.9. Taxes.........................................................................72
SECTION 3.10. ERISA........................................................................72
SECTION 3.11. Disclosure...................................................................72
SECTION 3.12. Subsidiaries.................................................................73
SECTION 3.13. Insurance....................................................................73
SECTION 3.14. Labor Matters................................................................73
SECTION 3.15. Security Documents...........................................................73
SECTION 3.16. Federal Reserve Regulations..................................................74
SECTION 3.17. Year 2000 Compliance.........................................................74
SECTION 3.18. Real Estate Leases...........................................................75
ARTICLE 4............................................................................................76
Conditions...........................................................................................76
SECTION 4.1. Closing Date..................................................................76
SECTION 4.2. Conditions Precedent to Each Loan and Each Letter of Credit...................78
ARTICLE 5............................................................................................80
Affirmative Covenants................................................................................80
SECTION 5.1. Financial Statements and Other Information....................................80
SECTION 5.2. Notices of Material Events....................................................82
SECTION 5.3. Information Regarding Collateral..............................................83
SECTION 5.4. Existence; Conduct of Business................................................84
SECTION 5.5. Payment of Obligations........................................................84
SECTION 5.6. Maintenance of Properties.....................................................84
SECTION 5.7. Insurance.....................................................................84
SECTION 5.8. Casualty and Condemnation.....................................................85
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SECTION 5.9. Books and Records; Inspection and Audit Rights................................86
SECTION 5.10. Compliance with Laws.........................................................86
SECTION 5.11. Use of Proceeds and Letters of Credit........................................87
SECTION 5.12. Additional Subsidiaries......................................................87
SECTION 5.13. Further Assurances...........................................................88
ARTICLE 6............................................................................................89
Negative Covenants...................................................................................89
SECTION 6.1. Indebtedness..................................................................89
SECTION 6.2. Liens.........................................................................90
SECTION 6.3. Fundamental Changes...........................................................91
SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions.....................92
SECTION 6.5. Asset Sales...................................................................93
SECTION 6.6. Hedging Agreements............................................................93
SECTION 6.7. Restricted Payments; Certain Payments of Indebtedness.........................93
SECTION 6.8. Transactions with Affiliates..................................................94
SECTION 6.9. Restrictive Agreements........................................................95
SECTION 6.10. Amendment of Material Documents..............................................95
SECTION 6.11. Capital Expenditures.........................................................95
SECTION 6.12. Financial Covenants..........................................................96
SECTION 6.13. Additional Subsidiaries......................................................98
SECTION 6.14. Return of Property...........................................................98
SECTION 6.15. Bankruptcy Proceedings.......................................................98
SECTION 6.16. Real Estate Leases...........................................................99
ARTICLE 7............................................................................................100
Events of Default....................................................................................100
SECTION 7.1.................................................................................100
SECTION 7.2. Tranche B Actionable Events...................................................104
SECTION 7.3. When Continuing...............................................................105
SECTION 7.4. Remedies......................................................................105
SECTION 7.5. Distribution of Collateral Proceeds...........................................106
ARTICLE 8............................................................................................108
SECTION 8.1. Administration by Administrative Agent........................................108
SECTION 8.2. The Collateral Agent..........................................................109
SECTION 8.3. Sharing of Excess Payments....................................................109
SECTION 8.4. Agreement of Required Lenders.................................................110
SECTION 8.5. Liability of Agents...........................................................110
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SECTION 8.6. Reimbursement and Indemnification.............................................111
SECTION 8.7. Rights of Agents..............................................................112
SECTION 8.8. Independent Lenders and Issuing Bank..........................................112
SECTION 8.9. Notice of Transfer............................................................112
SECTION 8.10. Successor Agent..............................................................113
SECTION 8.11. Reports and Financial Statements.............................................113
ARTICLE 9............................................................................................113
SECTION 9.1. Notices.......................................................................113
SECTION 9.2. Waivers; Amendments...........................................................114
SECTION 9.3. Expenses; Indemnity; Damage Waiver............................................117
SECTION 9.4. Successors and Assigns........................................................119
SECTION 9.5. Survival......................................................................121
SECTION 9.6. Counterparts; Integration; Effectiveness......................................122
SECTION 9.7. Severability..................................................................122
SECTION 9.8. Right of Setoff...............................................................123
SECTION 9.9. Governing Law; Jurisdiction; Consent to Service of Process....................123
SECTION 9.10. WAIVER OF JURY TRIAL.........................................................123
SECTION 9.11. ORDERS.......................................................................124
SECTION 9.12. Headings.....................................................................124
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EXHIBITS
A Assignment and Acceptance
B Interim Borrowing Order
C-1 Tranche A Note
C-2 Swingline Note
C-3 Tranche B Note
D-1 Opinion of Counsel to Loan Parties
D-2 Opinion of Bankruptcy Counsel
E Borrowing Base Certificate
SCHEDULES
1.1 Lenders and Commitments
1.2 Eligible Leasehold Real Estate
2.21(a) DDAs
2.21(b) Credit Card Arrangements
2.21(c) Blocked Accounts
2.21(f) Disbursement Accounts
3.3(c) Conflicts
3.5 Title to Properties; Real Estate
3.6 Disclosed Matters
3.12 Subsidiaries
3.13 Insurance
3.18 Licenses and Subleases
5.1(l) Financial Reporting Requirements
6.1 Indebtedness
6.2 Liens
6.4 Investments
6.8 Affiliate Transactions
6.9 Restrictions
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DEBTOR-IN-POSSESSION CREDIT AGREEMENT dated as of January 5, 2000,
among
LAMONTS APPAREL, INC., a debtor and debtor-in-possession, as Borrower,
a Delaware corporation, having its principal place of business and chief
executive office at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
the Tranche A Lenders party hereto;
BACK BAY CAPITAL FUNDING, LLC, as Tranche B Lender, a Delaware limited
liability company, having its principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
FLEET RETAIL FINANCE INC., as Administrative Agent and Collateral Agent
for the Lenders, a Delaware corporation, having its principal place of business
at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Borrower is a party to the Pre-Petition Agreement.
WHEREAS, as of the date hereof, the lenders under the Pre-Petition
Agreement are owed revolving loan principal obligations and term loan principal
obligations, plus interest, fees, costs and expenses.
WHEREAS, all obligations under the Pre-Petition Agreement are secured
by a security interest in the existing and after-acquired assets of the Borrower
granted to BBNA as collateral agent, and such security interest is perfected and
has priority over other security interests.
WHEREAS, on January 4, 2000 (the "Filing Date"), the Borrower filed a
petition under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
WHEREAS, the Borrower intends to continue to operate its business
pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
WHEREAS, the Borrower has requested that the Lenders referred to herein
provide financing to the Borrower consisting of loans and letter of credit
reimbursement obligations in an amount up to $45,000,000 pursuant to Sections
364(c)(1), (2) and (3) of the Bankruptcy Code in order to provide working
capital for the Borrower, to refinance the Pre-Petition Lender Debt (as
hereinafter defined) and for other general corporate purposes.
WHEREAS, the Borrower has agreed to secure its Obligations hereunder
with, INTER ALIA, liens on and security interests in and to all of the
property and interests, real and personal, tangible and intangible, of the
Borrower and its Subsidiaries, whether now owned or hereafter acquired,
subject in priority only to certain Liens and the Carve Out as hereinafter
provided, all on the terms and conditions set forth in the Loan Documents in
accordance with Sections 364(c)(1), (2) and (3) of the Bankruptcy Code.
WHEREAS, the Lenders have indicated their willingness to agree to
lend such amounts pursuant to Sections 364(c)(1), (2) and (3) of the
Bankruptcy Code on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of these premises and of the
mutual undertakings set forth herein, the parties hereto hereby agree as
follows.
ARTICLE 1.
Definitions
SECTION 1.1. DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below:
"ABR LOAN" shall mean any Tranche A Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article 2.
"ACH" shall mean automated clearing house transfers.
"ACCOUNT" shall mean any right to payment for goods sold or leased
or for services rendered, whether or not earned by performance.
"ACCRUAL RATE" has the meaning provided therefor in Section
2.9(b)(i).
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGENT" means FRF, in its capacity as administrative
agent for the Lenders hereunder.
"AFFILIATE" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
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"AGENTS" shall mean collectively, the Administrative Agent and the
Collateral Agent.
"ALTERNATE BASE RATE" shall mean, for any day, the higher of (a) the
annual rate of interest then most recently announced by BBNA at its head
office in Boston, Massachusetts as its "Base Rate" and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. If for
any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient
quotations thereof in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (b) of the first sentence
of this definition, until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in BBNA's
Base Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in BBNA's Base Rate or the Federal Funds
Effective Rate, respectively.
"APPLICABLE MARGIN" means 0.50% per annum for ABR Loans, and 2.75%
per annum for Eurodollar Loans and Standby Letters of Credit.
"APPRAISED VALUE" means the net appraised liquidation value at cost
of the Borrower's Inventory as set forth in the Stock Ledger Report
(expressed as a percentage of the Cost of such Inventory) as reasonably
determined from time to time by the Administrative Agent in accordance with
its standard procedures and with the assistance of an independent appraiser
satisfactory to the Administrative Agent (which appraisals may be conducted
up to three times per fiscal year of the Borrower prior to a Default or Event
of Default, and more frequently as required by the Agents after a Default or
an Event of Default, in all cases at the expense of the Borrower).
"ASSEMBLY (OR ATD)" means Assembly Transportation Distribution
Systems, Inc., a Washington corporation (and its successors as operator of
the distribution center of the Borrower in Kent, Washington, or any similar
facility from time to time of the Borrower).
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.4), and accepted by the Administrative
Agent, in the form of EXHIBIT A or any other form approved by the
Administrative Agent.
3
"AVAILABILITY RESERVES" means such reserves as the Administrative
Agent from time to time reasonably determines in the Administrative Agent's
discretion as being appropriate to reflect the impediments to the Agents'
ability to realize upon the Collateral.
"BANKRUPTCY CODE" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, 11 U.S.C.
Sections101 et seq.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Western District of Washington at Seattle or such other court having
jurisdiction over the Proceedings.
"BBNA" means BankBoston, N.A., a national banking association, and
shall include its successors and assigns.
"BLOCKED ACCOUNT AGREEMENTS" has the meaning set forth in
Section 2.21(c).
"BLOCKED ACCOUNT BANKS" shall mean the banks with whom the Borrower
has entered into Blocked Account Agreements.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section 2.21(c).
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States of America.
"BORROWER" means, Lamonts Apparel, Inc., a Delaware corporation, a
debtor and debtor-in-possession.
"BORROWING" shall mean (a) the incurrence of Tranche A Loans or of
the Tranche B Loan, as the case may be, on a single date and having, in the
case of Eurodollar Loans, a single Interest Period, or (b) a Swingline Loan.
"BORROWING BASE" means, at any time of calculation, subject to the
provisions of Section 2.2 hereof, an amount equal to
(a) the Inventory Advance Rate times the result of (i) the
Cost of Eligible Inventory, Eligible Layaway Inventory and 85% of
Eligible In Transit Inventory MINUS (ii) Inventory Reserves; PROVIDED,
THAT (i) the amount of the Borrowing Base consisting of Eligible In
Transit Inventory (after applying the Inventory Advance Rate thereto)
shall not exceed $6,500,000, or, only during the period from September
8 to November 23, $9,000,000 and (ii) the amount of the Borrowing Base
consisting of Eligible Layaway Inventory (after applying the
4
Inventory Advance Rate thereto) shall not exceed $100,000 or, only
during the period from July 1 to September 15, $3,000,000; MINUS
(b) the then amount of all Availability Reserves, MINUS
(c) the amounts then outstanding, if any, under the
Pre-Petition Agreement, MINUS
(d) the Loan to Value Reserve, MINUS
(e) $500,000 in respect of the Carve Out.
"BORROWING BASE CERTIFICATE" has the meaning assigned to such term
in Section 5.1(h).
"BORROWING REQUEST" means a request by the Borrower for a Borrowing
in accordance with Section 2.3.
"BREAKAGE COSTS" shall have the meaning set forth in Section 2.19(b).
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which commercial banks in Boston, Massachusetts are authorized
or required by law to remain closed, PROVIDED that, when used in connection
with a Eurodollar Loan, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London
interbank market.
"CAPITAL EXPENDITURES" means, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Borrower
or the Subsidiaries that are (or would be) characterized as capital assets on
a consolidated balance sheet of the Borrower and the Subsidiaries prepared in
accordance with GAAP and (b) Capital Lease Obligations incurred by the
Borrower or the Subsidiaries during such period.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations (i) are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP or (ii) arise under any lease treated as a
loan or financing for U.S. income tax purposes, and the amount of such
obligations shall be the stipulated loss value, termination value or
equivalent amount under such lease.
5
"CARVE OUT" means, at any time of determination, the sum of (i) all
amounts payable to the United States Trustee pursuant to 28 U.S.C.
ss.1930(a)(6) and any fees payable to the Clerk of the Court and (ii)
Priority Professional Expenses.
"CASH COLLATERAL ACCOUNT" shall mean an interest-bearing account
established by the Borrower with the Collateral Agent at BBNA under the sole
and exclusive dominion and control of the Collateral Agent designated as the
"Lamonts Apparel Cash Collateral Account".
"CASH RECEIPTS" has the meaning provided therefor in Section 2.21(c).
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq.
"CHANGE IN CONTROL" means (i) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ or some other
person reasonably satisfactory to the Agents and the Lenders shall cease to
be the Chief Executive Officer and President of the Borrower, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ or some other person reasonably satisfactory to the Agents and the
Lenders shall cease to be the Vice-Chairman of the Borrower, or ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ or some other person reasonably satisfactory to the Agents and the
Lenders shall cease to be the Chief Financial Officer of the Borrower; (ii)
there shall occur any change in a majority of the membership of the board of
directors of the Borrower; or (iii) any person or group of persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act)
of fifty-one percent (51%) or more of the outstanding shares of common stock
of the Borrower.
"CHANGE IN LAW" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule
or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance by
any Lender or the Issuing Bank (or, for purposes of Section 2.23(b), by any
lending office of such Lender or by such Lender's or the Issuing Bank's
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued
after the date of this Agreement.
"CLOSING DATE" means the date on which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 9.2).
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
6
"COLLATERAL" means any and all "Collateral", as defined in any
applicable Security Document.
"COLLATERAL AGENT" means FRF, in its capacity as collateral agent
under the Security Documents and, to the extent designated by FRF, BBNA as
its subagent, with all the same rights and benefits provided for the
"Collateral Agent" under this Agreement.
"COMMERCIAL LETTER OF CREDIT" means any Letter of Credit issued for
the purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Borrower in the ordinary
course of business of the Borrower.
"COMMITMENT" shall mean, with respect to each Lender, the aggregate
commitment of such Lender hereunder (for both Tranche A Loans and the Tranche
B Loan) in the amount set forth opposite its name on SCHEDULE 1.1 hereto or
as may subsequently be set forth in the Register from time to time, as the
same may be reduced from time to time pursuant to Section 2.15.
"COMMITMENT FEE" has the meaning provided therefor in Section 2.12
hereof.
"COMMITMENT PERCENTAGE" shall mean, with respect to each Lender,
that percentage of the Commitments of all Lenders hereunder in the amount set
forth opposite its name on SCHEDULE 1.1 hereto or as may subsequently be set
forth in the Register from time to time, as the same may be reduced from time
to time pursuant to Section 2.15.
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent deducted
from revenues in determining Consolidated Net Income, the sum of (a) the
aggregate amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of Letter of Credit Fees paid during such period, (c) the
aggregate amount of income tax, other revenue-based taxes (but not sales tax)
and state franchise tax expense for such period, (d) all amounts attributable
to depreciation and amortization and other non-cash charges for such period,
(e) Reorganization Expenses paid during such period, and (f) all
extraordinary non-cash charges, minus (g) without duplication and to the
extent added to revenues in determining Consolidated Net Income for such
period, all extraordinary and non-cash gains during such period, in each case
determined in accordance with GAAP and plus or minus (h) without duplication,
any gains or losses realized upon the sale of any fixed assets, all as
determined on a consolidated basis with respect to the Borrower and the
Subsidiaries in accordance with GAAP.
7
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest
expense, both expensed and capitalized (including amortization of debt
issuance costs, accretion of discounted debt, original issue discount,
interest paid in kind, the interest component in respect of Capital Lease
Obligations, commitment fees, agency fees, facility fees, balance deficiency
fees, letter of credit fees and similar fees and expenses in connection with
the borrowing of money), accrued or paid by the Borrower and the Subsidiaries
during such period, determined on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED NET INCOME" means, for any period, net income or loss
of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, PROVIDED that there shall be
excluded (a) the income of any Person in which any other Person (other than
the Borrower or the Subsidiaries or any director holding qualifying shares in
compliance with applicable law) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Borrower
or the Subsidiaries by such Person during such period and (b) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary or is
merged into or consolidated with any member of the Borrower or the
Subsidiaries or the date that Person's assets are acquired by the Borrower or
the Subsidiaries.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or
otherwise. The terms "CONTROLLING" and "CONTROLLED" have meanings correlative
thereto.
"COST" means (i) with respect to Eligible Inventory, the average
cost of purchases, as reported on the Borrower's Stock Ledger Report, based
upon the Borrower's accounting practices which are in effect on the date of
this Agreement and are consistent with the Borrower's past practices and (ii)
with respect to Eligible Layaway Inventory and Eligible In Transit Inventory,
the calculated cost determined by a methodology disclosed in the Borrowing
Base Certificate and reasonably acceptable to the Administrative Agent.
"Cost" does not include inventory capitalization costs or other non-purchase
price charges used in the Borrower's calculation of cost of goods sold.
"COST FACTOR" means the result of 1 minus the Borrower's then
cumulative markup percentage derived from the Borrower's Stock Ledger Report
and calculated on a rolling twelve month basis.
"CREDIT CARD NOTIFICATIONS" has the meaning provided therefor in
Section 2.21(c).
8
"CREDIT CARD OBLIGOR" shall mean any Person which has received a
Credit Card Notification with respect to the Accounts due to the Borrower
from such Credit Card Obligor.
"CREDIT EXTENSIONS" as of any day, shall be equal to the sum of (a)
the principal balance of all Loans then outstanding, and (b) the then amount
of the Letter of Credit Outstandings.
"CREDITORS' COMMITTEE" means the Official Unsecured Creditors'
Committee to be appointed by the United States Trustee in relation to the
Proceedings.
"CURRENT PAY INTEREST" has the meaning provided therefor in
Section 2.9(b)(ii).
"DDA" means any checking or other demand deposit account maintained
by any Loan Party.
"DDA Notification" has the meaning provided therefor in
Section 2.21(c).
"DEFAULT" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DELINQUENT LENDER" shall have the meaning set forth in
Section 2.25(e).
"DISBURSEMENT ACCOUNTS" shall have the meaning set forth in
Section 2.21(f).
"DISCLOSED MATTERS" means the actions, suits and proceedings and the
environmental matters disclosed in SCHEDULE 3.06.
"DOLLARS" or "$" refers to lawful money of the United States of
America.
"ELIGIBLE ASSIGNEE" means any of (a) a commercial bank organized
under the laws of the United States, or any State thereof or the District of
Columbia, and having total assets in excess of $1,000,000,000; (b) a savings
and loan association or savings bank organized under the laws of the United
States, or any State thereof or the District of Columbia, and having a net
worth of at least $100,000,000. calculated in accordance with GAAP; (c) a
commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development (the
9
"OECD"), or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, or the central bank of any country which
is a member of the OECD, PROVIDED, in each case, that such bank is acting
through a branch or agency located in the country in which it is organized or
another country which is also a member of the OECD; (d) a commercial finance
company or other financial institution organized under the laws of any State
of the United States or the District of Columbia and having a net worth, in
accordance with GAAP, of at least $500,000,000; and (e) if, but only if, an
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agents, such approval not to be unreasonably withheld.
"ELIGIBLE IN TRANSIT INVENTORY" shall mean items of Inventory in
the possession of Assembly or an inventory consolidator from whom the
Collateral Agent has received a waiver in form and substance satisfactory to
the Collateral Agent, or in route from Assembly or such other consolidator to
the Borrower's locations, which would otherwise qualify as Eligible Inventory
but for the operation of clause (b) of such definition.
"ELIGIBLE INVENTORY" shall mean, as of the date of determination
thereof, items of Inventory of the Borrower that are finished goods,
merchantable and readily saleable to the public in the ordinary course deemed
by the Administrative Agent in its reasonable discretion, consistent with its
usual business practices and policies, to be eligible for inclusion in the
calculation of the Borrowing Base. Without limiting the foregoing, unless
otherwise approved in writing by the Administrative Agent, none of the
following shall be deemed to be Eligible Inventory, and Eligible Inventory
shall be reduced by the following:
(a) Inventory that is not owned solely by the Borrower, or is
leased or on consignment or the Borrower does not have good and valid
title thereto or which is subject to layaway or to any Lien or legal
encumbrance pursuant to the Store Credit Card Program or any other
credit card program;
(b) Inventory (including any portion thereof in transit from
vendors) that is not located at property that is owned or leased by the
Borrower;
(c) Inventory that represents, in the reasonable judgment of
the Administrative Agent, (i) goods damaged, defective or otherwise
unmerchantable, (ii) goods that do not conform in all material respects
to the representations and warranties contained in this Agreement or
10
any of the Security Documents, or (iii) goods to be returned to the
vendor;
(d) Inventory that is not located in the United States of
America (excluding territories and possessions thereof);
(e) Inventory that is not subject to a perfected
first-priority security interest in favor of the Collateral Agent for
the benefit of the Secured Parties;
(f) Inventory which is the subject of store closing,
liquidation, going-out-of-business, or similar sale, as to which in
each case, the Borrower has received an initial payment of the
guaranteed price from the Person conducting such sale(s).
(g) Inventory which consists of samples, labels, bags,
packaging, and other similar non-merchandise categories.
(h) Inventory as to which insurance in compliance with the
provisions of Section 5.7 hereof is not in effect.
"ELIGIBLE LAYAWAY INVENTORY" shall mean items of Inventory which
would qualify as Eligible Inventory if not subject to layaway, net of related
deposits.
"ELIGIBLE LEASEHOLD REAL ESTATE" shall mean any Real Estate listed
on SCHEDULE 1.2 which is leased to the Borrower, which lease has a FLV of at
least $150,000 and otherwise constitutes Eligible Real Estate and as to which
the Borrower has executed and delivered to the Collateral Agent such
mortgages and other documents as the Collateral Agent may reasonably request,
and shall have delivered title insurance, environmental studies, and other
Real Estate requirements, as reasonably required by the Collateral Agent,
including, but not limited to, those items required by FIRREA; PROVIDED THAT
the Borrower shall not be obligated to deliver new mortgages, title
insurance, environmental studies and other Real Estate requirements unless
the Collateral Agent is not satisfied with such items as have previously been
delivered to BBNA under the Pre-Petition Agreement and which have been
assigned to the Collateral Agent. The ▇▇▇▇▇▇ Litigation or any proceeds
thereof shall not be Eligible Leasehold Real Estate but shall be Collateral.
"ELIGIBLE REAL ESTATE" means Eligible Leasehold Real Estate which
satisfies each of the following conditions:
11
(a) the Collateral Agent has a perfected first-priority lien
in such properties for the benefit of the Secured Parties; and
(b) each of such properties have been appraised by a third
party appraiser or, prior to the Closing Date, subjected to other
evaluation, in each case acceptable to the Collateral Agent; and
(c) the Real Estate (i) is used by the Borrower for offices or
as a distribution center, or (ii) is or was used by the Borrower for
the conduct of a retail store business or offices, PROVIDED HOWEVER, no
Real Estate which was previously used by the Borrower for the operation
of a retail store or offices which is no longer in operation and is
"dark" shall be eligible for borrowing unless such Real Estate is
actively being marketed for sale in a commercially reasonable manner;
and
(d) as to any particular property, as to which the mortgagor
is in compliance with the representations, warranties and covenants set
forth in the Mortgage relating to such property, unless the
Administrative Agent and the Tranche B Lender, in their discretion,
otherwise determine to waive this requirement in the determination of
Eligible Real Estate.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or
otherwise (including any liability for damages, natural resource damage,
costs of environmental remediation, administrative oversight costs, fines,
penalties or indemnities), of any of the Borrower or the Subsidiaries
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to
any Hazardous Materials, (d) the Release or threatened Release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
12
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or
not waived; (c) the filing pursuant to Section 412(d) of the Code or Section
303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by the Borrower or any
of its ERISA Affiliates of any liability under Title IV of ERISA with respect
to the termination of any Plan; (e) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the
Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"ESCROW ACCOUNT" has the meaning assigned to such term in the Order.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of
Eurodollar Loans.
"EURODOLLAR LOAN" shall mean any Tranche A Loan bearing interest at
a rate determined by reference to the Adjusted LIBO Rate in accordance with
the provisions of Article 2.
"EVENT OF DEFAULT" has the meaning assigned to such term in Section
7.1.
"EXCESS AVAILABILITY" means, as of any date of determination, after
giving effect to all then held checks (if any) for expenses required or
authorized to be paid subsequent to the commencement of the Proceedings, and
overdrafts created, or authorized to be paid, subsequent to the commencement
of the Proceedings, the difference between (a) the lesser of
13
the Borrowing Base or the aggregate Tranche A Commitments, and (b) the
outstanding Tranche A Credit Extensions.
"EXCLUDED ASSETS" shall have the meaning assigned to such term in
the Order.
"EXCLUDED TAXES" means, with respect to the Agents, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.28(b)), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender's failure to comply with Section 2.26(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment),
to receive additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 2.26(a).
"FRF" means Fleet Retail Finance Inc., a Delaware corporation.
"FRF CONCENTRATION ACCOUNT" shall have the meaning set forth in
Section 2.21(c).
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the quotations for such
day for such transactions received by BBNA from three Federal funds brokers
of recognized standing selected by it.
"FEE LETTER" means the letter entitled "Fee Letter" among the
Borrower, FRF, the Tranche B Lender and the Agents of even date herewith, as
such letter may from time to time be amended.
14
"FILING DATE" has the meaning set forth in the preamble.
"FINAL BORROWING ORDER" means the Order issued in the Proceedings
after notice and a final hearing pursuant to Rule 4001(c) of the Federal
Rules of Bankruptcy Procedure.
"FINANCIAL OFFICER" means, with respect to any Loan Party, the chief
financial officer, vice president-finance, vice president-treasurer and audit
services of such Loan Party.
"FLV" means, as to any Eligible Real Estate, the forced liquidation
value of such Eligible Real Estate reasonably determined in accordance with an
appraisal, or prior to the Closing Date an evaluation, acceptable to the
Administrative Agent.
"FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"FOREIGN SUBSIDIARY" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"FRONTING FEE" has the meaning assigned to such term in Section
2.13(b).
"GAAP" means generally accepted accounting principles in the United
States of America.
"GIFT CERTIFICATE AND MERCHANDISE CREDIT LIABILITY" means, at any
time, the aggregate face value at such time of (a) outstanding gift certificates
of the Borrower entitling the holder thereof to use all or a portion of the
certificate to pay all or a portion of the purchase price for any Inventory, and
(b) outstanding merchandise credits of the Borrower.
"GIFT CERTIFICATE AND MERCHANDISE CREDIT LIABILITY RESERVE" means, at
any time of calculation, an amount equal to 25% of the Borrower's
Gift Certificate and Merchandise Credit Liability.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body,
15
court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, PROVIDED that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"▇▇▇▇▇▇ LITIGATION" means the Borrower's claims against ▇▇▇▇▇▇
Investment Company which are the subject of litigation pending in the United
States District Court for the District of Alaska as ▇▇▇▇ ▇▇. ▇▇▇-▇▇▇▇ (▇▇▇).
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
16
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITEE" has the meaning provided therefor in Section 9.3(b).
"INELIGIBLE PROFESSIONAL EXPENSES" means fees or expenses incurred by
any Person, including the Creditors' Committee, in (A) preventing, hindering or
delaying the Lenders' or the Agents' enforcement or realization upon any of the
Collateral once an Event of Default has occurred, (B) using cash collateral or
selling any other Collateral without the Agents' consent, (C) incurring
Indebtedness without the Agents' consent or (D) objecting to or contesting in
any manner, or raising any defenses to, the validity, extent, perfection,
priority or enforceability of the Pre-Petition Lender Debt or the Obligations or
any mortgages, liens or security interests with respect thereto or any other
rights or interests of the Agents and the Lenders, or in asserting any claims or
causes of action, including, without limitation, any actions under Chapter 5 of
the Bankruptcy Code, against any agent or lender under the Pre-Petition
Agreement, the Agents or the Lenders, PROVIDED that nothing herein shall exclude
from Priority Professional Expenses the reasonable fees or expenses incurred by
any such person in investigating such matters.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan
(including a Swingline Loan), the last day of each month, and (b) with respect
17
to any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part.
"INTEREST PERIOD" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two or three months
thereafter, as the Borrower may elect, PROVIDED that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period, and (c) any Interest Period which would otherwise
end after the Maturity Date shall end on the Maturity Date. For purposes hereof,
the date of a Borrowing initially shall be the date on which such Borrowing is
made and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"INTERIM BORROWING ORDER" means an order of the Bankruptcy Court in the
Proceedings authorizing and approving this Agreement on an interim basis under
Section 364(c) of the Bankruptcy Code and issued at a preliminary hearing under
Bankruptcy Rule 4001, in form and substance satisfactory to the Agents and the
Lenders and their counsel and the Borrower and its counsel. The Interim
Borrowing Order shall, among other things, (i) have authorized (A) the borrowing
of the Loans and the repayment in full of the Pre-Petition Lender Debt, (B) the
rollover of any letters of credit issued under the Pre-Petition Agreement
pursuant to this Agreement, and granted the claim status and Liens described in
Section 2.27, and prohibited the granting of additional Liens on the assets of
the Borrower and its Subsidiaries, (ii) provide that such Liens are
automatically perfected by the entry of the Interim Borrowing Order and also
grant to the Collateral Agent for the benefit of the Agents and the Lenders
relief from the automatic stay of Section 362(a) of the Bankruptcy Code to
enable the Agents, if the Required Lenders elect to do so in their discretion,
to make all filings and recordings and to take all other actions considered
necessary or advisable by the Required Lenders to perfect, protect and insure
the priority of its Liens upon the Collateral as a matter of nonbankruptcy law,
(iii) provide for the preservation of certain challenges or objections to the
Pre-Petition Agreement or the Pre-Petition Lender Debt by the Creditors'
Committee or any party in interest, subject to the requirement that such
challenge or objection be filed no later than the earlier of (x) the date which
falls on the 120th day following
18
the entry of the Final Borrowing Order and (y) the 150th day following the
entry of the Interim Borrowing Order (or if such day is not a Business Day,
on the next succeeding Business Day), and (iv) be in full force and effect.
"INVENTORY" has the meaning assigned to such term in the Security
Agreement.
"INVENTORY ADVANCE RATE" means 70%, PROVIDED THAT such percentage shall
be 65% until entry of the Final Borrowing Order, and at any time thereafter if
such order shall have been stayed, modified, appealed, reversed or otherwise
affected without the written consent of the Agents and each of the Lenders.
"INVENTORY RESERVES" means such Reserves as may be established from
time to time by the Administrative Agent in the Administrative Agent's
reasonable discretion pursuant to Section 2.2 with respect to changes in the
determination of the saleability, at retail, of the Eligible Inventory or which
reflect such other factors as negatively affect the market value of the Eligible
Inventory. Without limiting the generality of the foregoing, Inventory Reserves
may include (but are not limited to) reserves based on (i) obsolescence; (ii)
seasonality; (iii) shrinkage; (iv) imbalance; (v) change in Inventory character;
(vi) change in Inventory composition; (vii) change in Inventory mix; (viii)
markdowns (both permanent and point of sale); and (ix) retail markons and
markups inconsistent with prior period practice and performance; industry
standards; current business plans; or advertising calendar and planned
advertising events.
"INVENTORY SHRINK RESERVE" means at the time of reference thereto, an
amount reasonably determined by the Agents from time to time based on commercial
finance examinations of the Borrower and its inventory, with regard to the
Borrower's historical experience with respect to losses of inventory due to
shoplifting, employee theft, inventory errors, and other "shrinkage" events. The
parties acknowledge and agree that as of the Closing Date, the Inventory Shrink
Reserve shall equal the inventory shrink reserve determined by the Borrower
consistent with its past practices PLUS an incremental amount equal to 0.3% of
year-to-date retail sales, which incremental amount shall be subject to
reasonable adjustment by the Agents to reflect the results of physical
inventories.
"ISSUING BANK" means BBNA, in its capacity as the issuer of Letters of
Credit hereunder, and any successor to BBNA in such capacity as selected by the
Administrative Agent. The Issuing Bank may, in its discretion, arrange for one
or more Letters of Credit to be issued by Affiliates of the Issuing
19
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"L/C DISBURSEMENT" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LENDERS" shall mean the Persons identified on SCHEDULE 1.1 hereto and
each assignee that becomes a party to this Agreement as set forth in Section
9.4(b).
"LETTER OF CREDIT" shall mean a Standby Letter of Credit or a
Commercial Letter of Credit, that is issued for account of the Borrower, issued
in connection with the purchase of Inventory by the Borrower and for other
purposes for which the Borrower has historically obtained letters of credit, or
for any other purpose that is reasonably acceptable to the Administrative Agent,
and in form and substance reasonably satisfactory to the Issuing Bank. "Letter
of Credit" shall include, without limitation, the letter(s) of credit issued by
the Issuing Bank under the Pre-Petition Agreement, if any.
"LETTER OF CREDIT FEES" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.13.
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder PLUS (b) the amount of all L/C Disbursements for
which the Issuing Bank has not then been reimbursed.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Telerate Page 3750, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be that rate of interest
(rounded upwards, if necessary to the next 1/16 of 1%) determined by the
Administrative Agent to be the highest prevailing rate per annum at which
deposits in dollars are offered to BBNA by first class banks in the London
interbank market in which BBNA participates at 10:00 a.m. (Boston time) not less
than two Business Days before the first day of the Interest Period for the
subject Eurodollar
20
Borrowing, for a deposit approximately in the amount of the subject Borrowing
and for a period of time approximately equal to such Interest Period.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of
Credit, the Fee Letter, all Borrowing Base Certificates, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, the Security
Documents, and any other instrument or agreement executed and delivered in
connection therewith, in each case as amended, modified, supplemented or
restated from time to time.
"LOAN PARTIES" ▇▇▇▇▇ the Borrower and the Subsidiary Loan Parties
(if any).
"LOANS" shall mean all loans (including, without limitation,
Swingline Loans) at any time made to the Borrower or for account of the
Borrower pursuant to this Agreement, whether constituting Tranche A Loans or
the Tranche B Loan.
"LOAN TO VALUE RESERVE" means a reserve the amount of which is
determined by the Agents in their reasonable discretion so (a) at any time after
the Final Borrowing Order is issued when Excess Availability (determined without
regard to the Loan to Value Reserve) does not exceed $10,000,000, that the
Credit Extensions shall never exceed 90% of the Appraised Value of Eligible
Inventory, and to the extent included in the Borrowing Base, Eligible Layaway
Inventory and 85% of Eligible In Transit Inventory (net of Inventory Reserves to
the extent the Agents reasonably determine that such Reserves have not been
adequately factored into the Appraised Value), plus the Real Estate Availability
at such time, and (b) at any time, that the sum of the Tranche A Loans
(including Swingline Loans) then outstanding and the then amount of the Letter
of Credit Outstandings shall never exceed 85% of the Appraised Value of Eligible
Inventory and, to the extent included in the Borrowing Base, Eligible Layaway
Inventory and 85% of Eligible In Transit Inventory (net of Inventory Reserves to
the extent the Agents reasonably determine that such Reserves have not been
adequately factored into the Appraised Value) at any time.
21
"MARGIN STOCK" has the meaning assigned to such term in Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, property, assets, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, other than any
material adverse effect arising solely by virtue of the commencement of the
Proceedings, or (b) the validity or enforceability of this Agreement or any of
the other Loan Documents or any of the material rights or remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank or the Lenders
hereunder or thereunder.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and the Subsidiaries in an aggregate
principal amount exceeding $100,000. For purposes of determining the amount of
Material Indebtedness at any time, the "principal amount" of the obligations of
the Borrower or any Subsidiary in respect of any Hedging Agreement at such time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"MATURITY DATE" means February 10, 2000, unless the Final Borrowing
Order is issued by that date (which order shall not then have been stayed,
appealed by a Loan Party, or modified, reversed or otherwise affected), and if
the Final Borrowing Order is so issued, "Maturity Date" shall mean the earlier
of (i) July 31, 2001 or (ii) the effective date of a Reorganization Plan in the
Proceedings that has been confirmed by an order issued by the Bankruptcy Court.
"MAXIMUM RATE" has the meaning provided therefor in Section 2.29.
"MINORITY LENDERS" has the meaning provided therefor in Section
9.2(f).
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGES" means the deeds of trust, mortgages, security agreements
and assignments related to the Real Estate between the Borrower owning the real
property encumbered thereby and the Collateral Agent for the benefit of the
Secured Parties.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
22
"NET PROCEEDS" means, with respect to any event, (a) the cash proceeds
received in respect of such event, including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, in each case net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses (including appraisals
required in order to obtain approval of the Bankruptcy Court, and legal, title
and recording tax expenses and commissions) paid by any Loan Party or Subsidiary
to third parties (other than Affiliates) in connection with such event and (ii)
in the case of a sale or other disposition of an asset (including pursuant to a
casualty or condemnation), the amount of all payments required to be made by the
Loan Parties and the Subsidiaries as a result of such event to repay (or to
establish an escrow for the repayment of) Indebtedness (other than Loans)
secured by such asset or otherwise subject to mandatory prepayment as a result
of such event, or a Permitted Encumbrance that is senior to the Lien of the
Collateral Agent.
"NONCOMPLIANCE NOTICE" has the meaning provided therefor in Section
2.5(b).
"NOTES" means, collectively, the Tranche A Notes and the Tranche B
Note.
"OBLIGATIONS" has the meaning provided therefor in the Security
Agreement.
"ORDERS" means the Interim Borrowing Order and the Final Borrowing
Order.
"OTHER TAXES" means any and all current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"OVERADVANCE" means, at any time of calculation, a circumstance in
which the Tranche A Credit Extensions exceed the lesser of (a) the Tranche A
Commitments or (b) the Borrowing Base.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
23
"PERFECTION CERTIFICATE" means a certificate to the Security Agreement
in a form approved by the Collateral Agent.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.5, or payment of which is
stayed by the commencement of the Proceedings;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 60 days or are being contested in compliance with
Section 5.5, or payment of which is stayed by the commencement of the
Proceedings;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business consistent with the Borrower's past
practices;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (l) of Article 7;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary; and
(g) other Liens perfected (but not granted) after the
commencement of the Proceedings to the extent that such
post-commencement date perfection in respect of pre-commencement date
claims is expressly permitted under the Bankruptcy Code.
PROVIDED that, except as provided in any one of more of clauses (a) through (g)
above, the term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
24
"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above
(without regard to the limitation on maturity contained in such clause)
and entered into with a financial institution satisfying the criteria
described in clause (c) above.
"PERMITTED OVERADVANCE" means an Overadvance determined by the
Administrative Agent, in its reasonable discretion, (a) which is made to
maintain, protect or preserve the Collateral and/or the Lenders' rights under
the Loan Documents, or (b) which is otherwise in the Lenders' interests;
PROVIDED THAT Permitted Overadvances shall not (i) exceed the lesser of (x)
$1,500,000, or (y) 1.5% of the Cost of Eligible Inventory and, to the extent
included in the Borrowing Base, Eligible Layaway Inventory and 85% of Eligible
In Transit Inventory, in the aggregate outstanding at any time or (ii) remain
outstanding for more than twenty (20) consecutive Business Days, unless all of
the Lenders otherwise agree; and PROVIDED FURTHER that the foregoing shall not
(1) modify or abrogate any of the provisions of Section 2.6(f) hereof regarding
the Tranche A Lenders' obligations with respect to L/C Disbursements, or (2)
result in any claim or liability against the Administrative Agent (regardless of
the amount of any Overadvance) for "inadvertent Overadvances" (i.e. where an
Overadvance results from changed
25
circumstances beyond the control of the Administrative Agent (such as a
reduction in the collateral value)).
"PERMITTED PRIOR LIENS" means valid, perfected and otherwise
unavoidable Liens existing as of the Filing Date and Liens otherwise approved in
writing by the Agents.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PIK INTEREST" has the meaning set forth in Section 2.9(b)(iii).
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PREPAYMENT EVENT" means any of the following events:
(a) any sale, transfer or other disposition (including
pursuant to a sale and leaseback transaction) of any property or asset
of a Loan Party or any Subsidiary, other than any sale, transfer or
other disposition permitted by Sections 6.5 (a)(i);
(b) any business interruption which gives rise to an insurance
payment, or any casualty or other insured damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of a Loan Party or any Subsidiary;
(c) the issuance by a Loan Party or any Subsidiary of any
equity securities, other than any such issuance of equity securities to
the Borrower or a Subsidiary; or
(d) the incurrence by a Loan Party or any Subsidiary of any
Indebtedness of the type described in clause (a), (b) or (c) of the
definition of the term "Indebtedness", other than Indebtedness
permitted by Section 6.1(a).
"PRE-PETITION AGREEMENT" means the Amended and Restated Debtor in
Possession and Exit Financing Loan Agreement dated September 26, 1997 among the
Borrower, the Lenders party thereto, BankBoston, N.A., as Agent,
26
and all instruments, documents and agreements executed in connection
therewith, each as amended and in effect.
"PRE-PETITION LENDER DEBT" means all Obligations under and as defined
in the Pre-Petition Agreement.
"PRIORITY PROFESSIONAL EXPENSES" means allowed and unpaid fees, costs
and reasonable expenses of professionals retained in the Proceedings pursuant to
Sections 327 and 1103 of the Bankruptcy Code consisting of attorneys,
accountants, financial advisors, and consultants retained by the Borrower, the
Creditors' Committee or any Chapter 11 or Chapter 7 trustee appointed in the
Proceedings; PROVIDED, HOWEVER, that (i) the term "Priority Professional
Expenses" shall not include any Ineligible Professional Expenses and (ii) the
amount of Priority Professional Expenses shall not exceed the Professional
Expense Cap.
"PROCEEDINGS" means the case, pursuant to Chapter 11 of the Bankruptcy
Code, initiated by the Borrower in the United States Bankruptcy Court for the
Western District of Washington at Seattle.
"PROFESSIONAL EXPENSE CAP" means up to $500,000 in accrued but unpaid
Priority Professional Expenses existing at the time of determination of the
Professional Expense Cap (inclusive of any holdbacks required by the Bankruptcy
Court and exclusive of retainers held by any such professionals). To the extent
that, following an Event of Default, any Priority Professional Expenses are paid
from the Collateral, or from the Borrower's assets against which the
Super-Priority Claim applies, the Professional Expense Cap shall be reduced on a
dollar for dollar basis.
"REAL ESTATE AVAILABILITY" means the 25% of the FLV of Eligible
Leasehold Real Estate.
"REAL ESTATE" means the land, together with the buildings, structures,
parking areas, and other improvements thereon, now or hereafter owned or leased
by any Loan Party, including all easements, rights-of-way, and similar rights
relating thereto and all leases, tenancies, and occupancies thereof.
"REAL ESTATE LEASES" means all store or other retail outlet leases to
which the Borrower is a party and to which Eligible Leasehold Real Estate are
subject.
"REGISTER" has the meaning set forth in Section 9.4(c).
27
"REGULATION U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"RELEASE" has the meaning set forth in Section 101(22) of CERCLA.
"RELEASE PRICE" means as to any Eligible Real Estate, the Net Proceeds
which are required to be realized in order for the Lien of the Collateral Agent
to be released therefrom in connection with a sale of such Eligible Real Estate,
such Release Price being an amount equal to or greater than 75% of the FLV of
such Eligible Real Estate, PROVIDED THAT if the Net Proceeds from any such
Eligible Real Estate are less than 75% of the FLV of such Eligible Real Estate,
the Release Price shall be subject to the prior approval of the Tranche B
Lender.
"REORGANIZATION EXPENSES" means expenses of the Borrower and its
Subsidiaries incurred in connection with or relating to the Proceedings,
including but not limited to professional fees and expenses and expenses in the
following categories: payroll, publicity, publication, printing and notice fees,
claims tracking and U.S. Trustee fees.
"REORGANIZATION PLAN" means a plan of reorganization in the
Proceedings.
"REQUIRED LENDERS" shall mean, at any time, Lenders having Commitments
at least equal to 66 2/3% of the Commitments, or if all of the Commitments have
been terminated, Lenders whose percentage of the outstanding Obligations (after
settlement and repayment of all Swingline Loans by the Tranche A Lenders)
aggregate not less than 66 2/3% of all such Obligations; PROVIDED, HOWEVER, (i)
if at any time there are less than three Tranche A Lenders, then all Tranche A
Lenders shall be required at such time and (ii) for purposes of this definition,
so long as the Tranche A Commitments have not been terminated the amount of the
Tranche B Commitment shall be deemed to be the outstanding amount of the Tranche
B Loan.
"RESERVES" means all (if any) Inventory Reserves, Availability
Reserves and the Loan to Value Reserve.
28
"RESTRICTED PAYMENT" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of any Loan Party or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of a member of
any Loan Party or any Subsidiary or any option, warrant or other right to
acquire any such shares of capital stock of any Loan Party or any Subsidiary.
"RETAIL" means the lesser of (a) the lowest ticketed retail price
offered to the public, or (b) the Cost of Inventory divided by the Cost
Factor.
"S&P" means Standard & Poor's.
"SECURED PARTIES" has the meaning assigned to such term in the
Security Agreement.
"SECURITY AGREEMENT" means the Security Agreement among the Loan
Parties and the Collateral Agent for the benefit of the Secured Parties.
"SECURITY DOCUMENTS" means the Security Agreement, the Mortgages, and
each other security agreement or other instrument or document executed and
delivered pursuant to Section 5.12 or 5.13 to secure any of the Obligations.
"SETTLEMENT DATE" has the meaning provided in Section 2.7(b) hereof.
"STANDBY LETTER OF CREDIT" means any Letter of Credit other than a
Commercial Letter of Credit.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such
29
Regulation D or any comparable regulation. The Statutory Reserve Rate shall
be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"STOCK LEDGER REPORT" means the Stock Ledger Report issued in
connection with the Borrower's ledger system maintained consistently in
accordance with past practice and any replacement thereto reasonably
acceptable to the Administrative Agent.
"STORE CREDIT CARD PROGRAM" means the Borrower's existing private
label credit card program, evidenced by and implemented pursuant to the Store
Credit Card Program Documents, and/or any other private label credit card
program for purchases of merchandise in the Borrower's stores by its
customers, on terms substantially similar to the Store Credit Card Program in
effect on the Closing Date or on terms more favorable to the Lenders and the
Borrower, in each case as shall be approved by the Agents; it being
understood that the Store Credit Card Program may not, in any event, consist
of a so-called receivable "securitization" or similar receivables purchase
facility.
"STORE CREDIT CARD PROGRAM DOCUMENTS" means the Revolving Credit
Program Agreement made as of June 1, 1999 by and between Green Tree Financial
Corporation and the Borrower in the form delivered to the Agents prior to the
Closing Date, evidencing and relating to the Store Credit Card Program, and,
to the extent each is approved by the Agents, any amendments, modifications,
and successor or substitute documents with respect thereto, evidencing or
relating to the Store Credit Card Program as in effect from time to time.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any other corporation, limited liability company, partnership, association or
other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, owned, controlled or held, or (b)
that is, as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.
"SUBSIDIARY" means any subsidiary of the Borrower.
30
"SUBSIDIARY LOAN PARTY" means any Subsidiary that is not a Foreign
Subsidiary.
"SUPER-PRIORITY CLAIM" means a claim against the Borrower or its
estate in the Proceedings which is an administrative expense claim having
priority over (i) any and all allowed administrative expenses and (ii)
unsecured claims now existing or hereafter arising, including, without
limitation, administrative expenses of the kind specified in or ordered
pursuant to Sections 105, 326, 330, 331, 503(a), 503(b), 506(c), 507(a),
507(b), 546(c), 546(d) or 1114 of the Bankruptcy Code, subject only to the
Carve Out and shall not extend to the Excluded Assets.
"SWINGLINE LENDER" means FRF, in its capacity as lender of
Swingline Loans hereunder.
"SWINGLINE LOAN" shall mean a Tranche A Loan made by the Swingline
Lender to the Borrower pursuant to Section 2.5 hereof.
"TAXES" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERMINATION DATE" shall mean the earlier to occur of (i) the
Maturity Date, or (ii) the date on which the maturity of the Loans are
accelerated and the Commitments are terminated.
"TOTAL COMMITMENT" shall mean, at any time, the sum of the
Commitments at such time.
"TRANCHE A COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender hereunder set forth as its Tranche A Commitment
opposite its name on SCHEDULE 1.1 hereto or as may subsequently be set forth
in the Register from time to time, as the same may be reduced from time to
time pursuant to Section 2.15.
"TRANCHE A COMMITMENT PERCENTAGE" shall mean at any time, with
respect to each Lender, the percentage obtained by dividing its Tranche A
Commitment at such time by all Tranche A Commitments at such time.
"TRANCHE A CREDIT EXTENSIONS" as of any day, shall be equal to the
sum of (a) the principal balance of all Tranche A Loans then outstanding and
(b) the then amount of the Letter of Credit Outstandings.
31
"TRANCHE A LENDER" shall mean each Lender having a Tranche A
Commitment as set forth on SCHEDULE 1.1 hereto or in the Assignment and
Acceptance by which it becomes a Lender.
"TRANCHE A LOANS" shall mean all loans at any time made by any
Tranche A Lender pursuant to Sections 2.3 or 2.5.
"TRANCHE A NOTES" shall mean the promissory notes of the Borrower
(i) substantially in the form of EXHIBIT C-1, each payable to the order of a
Tranche A Lender, evidencing the Tranche A Loans and (ii) substantially in
the form of EXHIBIT C-2, payable to the Swingline Lender, evidencing the
Swingline Loans.
"TRANCHE B COMMITMENT" shall mean $5,000,000.
"TRANCHE B LENDER" shall mean Back Bay Capital Funding, LLC.
"TRANCHE B LOAN" shall mean the loan at any time made by the Tranche
B Lender pursuant to Section 2.1(b).
"TRANCHE B NOTE" shall mean the promissory note of the Borrower,
substantially in the form of EXHIBIT C-3, payable to the order of the Tranche
B Lender, evidencing the Tranche B Loan.
"TYPE", when used in reference to any Tranche A Loan or Tranche A
Borrowing, refers to whether the rate of interest on such Tranche A Loan, or
on the Tranche A Loans comprising such Borrowing, is determined by reference
to the Adjusted LIBO Rate or the Alternate Base Rate.
"UNUSED TRANCHE A COMMITMENT" shall mean, on any day, (a) the then
aggregate amount of the Tranche A Commitments MINUS (b) the sum of (i) the
principal amount of Tranche A Loans then outstanding, and (ii) the principal
amount of Swingline Loans then outstanding and (iii) the then Letter of
Credit Outstandings.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, restated, modified or
32
supplemented from time to time in accordance with its terms and the
terms of this Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section" refers to that section
of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
(j) Unless otherwise expressly indicated, in the computation
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and
including."
(k) This Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in accordance with the
terms thereof.
33
(l) This Agreement and the other Loan Documents are the result
of negotiation among, and have been reviewed by counsel to, among
others, the Agents and the Borrower and are the product of discussions
and negotiations among all parties. Accordingly, this Agreement and the
other Loan Documents are not intended to be construed against the
Agents or any of the Lenders merely on account of either Agents' or any
Lenders' involvement in the preparation of such documents.
(e) The words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible
and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.3. ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect on the Closing Date, PROVIDED
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to reflect the effect of any
change occurring after the date hereof in GAAP or in the application thereof
on the operation of such provision (or if the Administrative Agent notifies
the Borrower that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given
before or after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect and applied
immediately before such change shall have become effective until such
provision shall have been amended in accordance herewith.
ARTICLE 2.
AMOUNT AND TERMS OF CREDIT
SECTION 2.1. COMMITMENT OF THE LENDERS.
(a) Each Tranche A Lender severally and not jointly with any
other Lender, agrees, upon the terms and subject to the conditions herein set
forth, to extend credit to the Borrower on a revolving basis, in the form of
Tranche A Credit Extensions and in an amount not to exceed the lesser of such
Lender's Tranche A Commitment or such Tranche A Lender's Tranche A Commitment
Percentage of the Borrowing Base, subject to the following limitations:
(i) The aggregate outstanding amount of the Tranche A
Credit Extensions shall not at any time exceed the lower of (A)
34
$40,000,000 or any lesser amount to which the Tranche A
Commitments have then been reduced by the Borrower pursuant to
Section 2.15, and (B) the then amount of the Borrowing Base,
plus the aggregate amount of cash then held in the Cash
Collateral Account.
(ii) No Tranche A Lender shall be obligated to issue
any Letter of Credit, and Letters of Credit shall be available
from the Issuing Bank, subject to the ratable participation of
all Tranche A Lenders, as set forth in Section 2.2. The
Borrower will not at any time permit the aggregate Letter of
Credit Outstandings to exceed $8,000,000.
(iii) Subject to all of the other provisions of this
Agreement, Tranche A Loans that are repaid may be reborrowed
prior to the Termination Date. No new Tranche A Credit
Extension, however, shall be made to the Borrower after the
Termination Date.
(b) The Tranche B Lender agrees, upon the terms and subject to
the conditions herein set forth, on the Closing Date to make a Tranche B Loan
to the Borrower in an amount equal to such Tranche B Lender's Tranche B
Commitment. The Tranche B Loan that is repaid may not be reborrowed.
(c) Each Borrowing of Tranche A Loans (other than Swingline
Loans) shall be made by the Tranche A Lenders PRO RATA in accordance with
their respective Tranche A Commitments. The failure of any Lender to make any
Loan shall neither relieve any other Lender of its obligation to fund its
Loan in accordance with the provisions of this Agreement nor increase the
obligation of any such other Lender.
SECTION 2.2. RESERVES; CHANGES TO RESERVES.
(a) The initial Inventory and Availability Reserves as of the
date of this Agreement are the following:
(i) Gift Certificate and Merchandise Credit Liability
Reserve (an Availability Reserve); and
(ii) Inventory Shrink Reserve (an Inventory Reserve).
(b) The Administrative Agent may hereafter establish additional
Reserves (in addition to the items described in clauses (c), (d) and (e) of
the definition of "Borrowing Base") or change any of the foregoing Reserves,
in
35
the exercise of the reasonable judgment of the Administrative Agent and in a
manner consistent with its general practices, PROVIDED THAT such Reserves
shall not be established or changed except upon not less than seven (7) days
notice to the Borrower.
SECTION 2.3. MAKING OF LOANS.
(a) Except as set forth in Sections 2.17 and 2.24, Tranche A
Loans by the Tranche A Lenders shall be either ABR Loans or Eurodollar Loans
as the Borrower may request subject to and in accordance with this Section
2.3, provided that all Swingline Loans shall be only ABR Loans. All Loans
made pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, be Loans of the same Type. Each Lender may fulfill its
Commitment with respect to any Loan by causing any lending office of such
Lender to make such Loan; but any such use of a lending office shall not
affect the obligation of the Borrower to repay such Loan in accordance with
the terms of the applicable Note. Each Lender shall, subject to its overall
policy considerations, use reasonable efforts (but shall not be obligated) to
select a lending office which will not result in the payment of increased
costs by the Borrower pursuant to Section 2.23. Subject to the other
provisions of this Section 2.3 and the provisions of Section 2.24, Borrowings
of Loans of more than one Type may be incurred at the same time, but no more
than four (4) Borrowings of Eurodollar Loans may be outstanding at any time.
(b) The Borrower shall give the Administrative Agent two
Business Days prior telephonic notice (thereafter confirmed in writing) of
each Borrowing of Eurodollar Loans and one Business Day's prior notice of
each Borrowing of ABR Loans (or, at the Administrative Agent's option, on the
same Business Day for any Borrowing of ABR Loans). Any such notice, to be
effective, must be received by the Administrative Agent not later than 2:00
p.m., Boston time, on the second Business Day in the case of Eurodollar Loans
prior to, and on the first Business Day in the case of ABR Loans prior to
(or, at the Administrative Agent's option, on the same Business Day in the
case of ABR Loans), the day on which such Borrowing is to be made. Such
notice shall be irrevocable and shall specify the amount of the proposed
Borrowing (which shall be in an integral multiple of $100,000, but not less
than $1,000,000 in the case of Eurodollar Loans) and the date thereof (which
shall be a Business Day) and shall contain disbursement instructions. Such
notice shall specify whether the Borrowing then being requested is to be a
Borrowing of ABR Loans or Eurodollar Loans and, if Eurodollar Loans, the
Interest Period with respect thereto. If no election of Interest Period is
specified in any such notice for a Borrowing of Eurodollar Loans, such notice
shall be deemed a request for an Interest Period of one month. If no election
is made as to the Type of Loan, such notice shall be deemed a request for
36
Borrowing of ABR Loans. The Administrative Agent shall promptly notify each
Lender of its proportionate share of such Borrowing (but in any event by
12:00 noon (Boston time) if the Borrowing is to be made on the same Business
Day), the date of such Borrowing, the Type of Borrowing being requested and
the Interest Period or Interest Periods applicable thereto, as appropriate.
On the borrowing date specified in such notice, each Lender shall make its
share of the Borrowing available at the office of the Administrative Agent at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, no later than 3:00 p.m., Boston
time, in immediately available funds. Unless the Administrative Agent shall
have received notice from a Tranche A Lender prior to the proposed date of
any Borrowing that such Tranche A Lender will not make available to the
Administrative Agent such Tranche A Lender's share of such Borrowing, the
Administrative Agent may assume that such Tranche A Lender has made such
share available on such date in accordance with this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Tranche A Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Tranche A Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Tranche A Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Tranche A Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Tranche A
Lender's Loan included in such Borrowing, and Borrower is thereupon relieved
of the obligation hereinabove provided to pay the Administrative Agent such
amount on demand. Upon receipt of the funds made available by the Tranche A
Lenders to fund any borrowing hereunder, the Administrative Agent shall
disburse such funds in the manner specified in the notice of borrowing
delivered by the Borrower and shall use reasonable efforts to make the funds
so received from the Tranche A Lenders available to the Borrower no later
than 4:00 p.m., Boston time.
SECTION 2.4. OVERADVANCES. The Agents and the Tranche A Lenders have
no obligation to make any Tranche A Loan or to provide any Letter of Credit
if an Overadvance would result. The Administrative Agent, may in its
discretion, make Permitted Overadvances without the consent of the Lenders
and each Lender shall be bound thereby. Any Permitted Overadvances may
constitute Swingline Loans. The making of any Permitted Overadvance is for
the benefit of the Borrower; such Permitted Overadvances constitute Tranche A
Loans and Obligations. The making of any such Permitted Overadvances
37
on any one occasion shall not obligate the Administrative Agent or any Lender
to make or permit any Permitted Overadvances on any other occasion or to
permit such Permitted Overadvances to remain outstanding.
SECTION 2.5. SWINGLINE LOANS
(a) The Swingline Lender is authorized by the Lenders, but is
not obligated, to make Swingline Loans up to $7,500,000 in the aggregate
outstanding at any time, consisting only of Tranche A Loans (consisting of
ABR Loans) upon a notice of Borrowing received by the Administrative Agent
and the Swingline Lender (which notice, at the Swingline Lender's discretion,
may be submitted prior to 2:00 p.m., Boston time, on the Business Day on
which such Swingline Loan is requested). Swingline Loans shall be subject to
periodic settlement with the Tranche A Lenders under Section 2.7 below.
(b) Swingline Loans may be made only in the following
circumstances: (A) for administrative convenience, the Swingline Lender may,
but is not obligated to, make Swingline Loans in reliance upon the Borrower's
actual or deemed representations under Section 4.2, that the applicable
conditions for borrowing are satisfied or (B) if the conditions for borrowing
under Section 4.2 cannot be fulfilled, the Borrower shall give immediate
notice thereof to the Administrative Agent and the Swingline Lender (a
"NONCOMPLIANCE NOTICE"), and the Administrative Agent shall promptly provide
each Lender with a copy of the Borrower's Noncompliance Notice. If the
conditions for borrowing under Section 4.2 cannot be fulfilled, the Required
Lenders may direct the Swingline Lender to, and the Swingline Lender
thereupon shall, cease making Swingline Loans until such conditions can be
satisfied or are waived in accordance with Section 9.2 hereof. Unless the
Required Lenders so direct the Swingline Lender, the Swingline Lender may,
but is not obligated to, continue to make Swingline Loans beginning one
Business Day after the Non-Compliance Notice is furnished to the Lenders.
Notwithstanding the foregoing, no Swingline Loans shall be made pursuant to
this subsection (b) if the aggregate outstanding amount of the Tranche A
Credit Extensions would exceed the lower of (i) $40,000,000 or any lesser
amount to which the Tranche A Commitments have then been reduced by the
Borrower pursuant to Section 2.15, and (ii) the then amount of the Borrowing
Base, plus the aggregate amount of cash then held in the Cash Collateral
Account.
SECTION 2.6. LETTERS OF CREDIT.
(a) Upon the terms and subject to the conditions herein set
forth, the Borrower may request the Issuing Bank, at any time and from time
to time after the date hereof and prior to the Termination Date, to issue,
and
38
subject to the terms and conditions contained herein, the Issuing Bank shall
issue, for the account of the Borrower one or more Letters of Credit;
PROVIDED that no Letter of Credit shall be issued if after giving effect to
such issuance (i) the aggregate Letter of Credit Outstandings shall exceed
the lesser of $8,000,000, or (ii) the aggregate Tranche A Credit Extensions
would exceed the limitation set forth in Section 2.1(a)(i); and PROVIDED,
FURTHER, that no Letter of Credit shall be issued if the Issuing Bank shall
have received notice from the Administrative Agent or the Required Lenders
that the conditions to such issuance set forth in Section 4.2 have not been
met.
(b) Each Standby Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the
date that is five Business Days prior to the Maturity Date, PROVIDED that
each Standby Letter of Credit may, upon the request of the Borrower, include
a provision whereby such Letter of Credit shall be renewed automatically for
additional consecutive periods of 12 months or less (but not beyond the date
that is five Business Days prior to the Maturity Date) unless the Issuing
Bank notifies the beneficiary thereof at least 30 days prior to the
then-applicable expiration date that such Letter of Credit will not be
renewed.
(c) Each Commercial Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date 120 days after the date
of the issuance of such Commercial Letter of Credit and (ii) the date that is
five Business Days prior to the Maturity Date.
(d) Drafts drawn under each Letter of Credit shall be reimbursed
by the Borrower in dollars on the same Business Day of any such drawing by
paying to the Administrative Agent an amount equal to such drawing not later
than 2:00 p.m., Boston time, on the date that such drawing is paid, if the
Borrower shall have received notice of such payment prior to 12:00 noon,
Boston time, on such date, or, if such notice has not been received by the
Borrower prior to such time on such date, then not later than 2:00 p.m.,
Boston time, on (i) the Business Day that the Borrower receives such notice,
if such notice is received prior to 12:00 noon, Boston time, on the day of
receipt, or (ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received prior to such
time on the day of receipt, PROVIDED that the Borrower may, subject to the
conditions to borrowing set forth herein, request in accordance with Section
2.3 that such payment be financed with an ABR Loan or Swingline Loan in an
equivalent amount and, to the extent so financed, the Borrower's obligation
to make such payment shall be discharged and replaced by the resulting ABR
Loan or Swingline Loan. The Issuing Bank shall, promptly
39
following its receipt thereof, examine all documents purporting to represent
a demand for payment under a Letter of Credit. The Issuing Bank shall
promptly notify the Administrative Agent and the Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing
Bank has made or will make payment thereunder, PROVIDED that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Lenders with respect to any
such payment.
(e) If the Issuing Bank shall make any L/C Disbursement, then,
unless the Borrower shall reimburse the Issuing Bank in full on the date such
payment is made, the unpaid amount thereof shall bear interest, for each day
from and including the date such payment is made to but excluding the date
that the Borrower reimburses the Issuing Bank therefor, at the rate per annum
then applicable to ABR Loans, PROVIDED that, if the Borrower fails to
reimburse such Issuing Bank when due pursuant to paragraph (c) of this
Section, then Section 2.10 shall apply. Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Tranche A Lender pursuant to
paragraph (f) of this Section to reimburse the Issuing Bank shall be for the
account of such Tranche A Lender to the extent of such payment.
(f) Immediately upon the issuance of any Letter of Credit by the
Issuing Bank (or the amendment of a Letter of Credit increasing the amount
thereof), and without any further action on the part of the Issuing Bank, the
Issuing Bank shall be deemed to have sold to each Tranche A Lender, and each
such Tranche A Lender shall be deemed unconditionally and irrevocably to have
purchased from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Tranche A Lender's Tranche
A Commitment Percentage, in such Letter of Credit, each drawing thereunder
and the obligations of the Borrower and the other Loan Parties under this
Agreement and the other Loan Documents with respect thereto. Upon any change
in the Tranche A Commitments pursuant to Section 9.4, it is hereby agreed
that with respect to all Letter of Credit Outstandings, there shall be an
automatic adjustment to the participations hereby created to reflect the new
Tranche A Commitment Percentages of the assigning and assignee Tranche A
Lenders. Any action taken or omitted by the Issuing Bank under or in
connection with a Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for the Issuing Bank
any resulting liability to any Tranche A Lender.
(g) In the event that the Issuing Bank makes any L/C
Disbursement and the Borrower shall not have reimbursed such amount in full
to the Issuing Bank pursuant to this Section 2.6, the Issuing Bank shall
40
promptly notify the Administrative Agent, which shall promptly notify each
Tranche A Lender of such failure, and each Tranche A Lender shall promptly
and unconditionally pay to the Administrative Agent for the account of the
Issuing Bank the amount of such Tranche A Lender's Tranche A Commitment
Percentage of such unreimbursed payment in dollars and in same day funds. If
the Issuing Bank so notifies the Administrative Agent, and the Administrative
Agent so notifies the Tranche A Lenders prior to 2:00 p.m., Boston time, on
any Business Day, each such Tranche A Lender shall make available to the
Issuing Bank such Tranche A Lender's Tranche A Commitment Percentage of the
amount of such payment on such Business Day in same day funds. If and to the
extent such Tranche A Lender shall not have so made its Tranche A Commitment
Percentage of the amount of such payment available to the Issuing Bank, such
Tranche A Lender agrees to pay to the Issuing Bank, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent for the account of the
Issuing Bank at the Federal Funds Effective Rate. Each Tranche A Lender
agrees to fund its Tranche A Commitment Percentage of such unreimbursed
payment notwithstanding a failure to satisfy any applicable lending
conditions or the provisions of Sections 2.1 or 2.6, or the occurrence of the
Termination Date. The failure of any Tranche A Lender to make available to
the Issuing Bank its Tranche A Commitment Percentage of any payment under any
Letter of Credit shall neither relieve any Tranche A Lender of its obligation
hereunder to make available to the Issuing Bank its Tranche A Commitment
Percentage of any payment under any Letter of Credit on the date required, as
specified above, nor increase the obligation of such other Tranche A Lender.
Whenever any Tranche A Lender has made payments to the Issuing Bank in
respect of any reimbursement obligation for any Letter of Credit, such
Tranche A Lender shall be entitled to share ratably, based on its Tranche A
Commitment Percentage, in all payments and collections thereafter received on
account of such reimbursement obligation.
(h) Whenever the Borrower desires that the Issuing Bank issue a
Letter of Credit (or the amendment, renewal or extension of an outstanding
Letter of Credit), it shall give to the Issuing Bank and the Administrative
Agent at least two Business Days' prior written (including telegraphic,
telex, facsimile or cable communication) notice (or such shorter period as
may be agreed upon in writing by the Issuing Bank and the Borrower)
specifying the date on which the proposed Letter of Credit is to be issued,
amended, renewed or extended (which shall be a Business Day), the stated
amount of the Letter of Credit so requested, the expiration date of such
Letter of Credit, the name and address of the beneficiary thereof, and the
provisions thereof. If requested by the Issuing Bank, the Borrower shall also
submit a letter of credit application on the Issuing Bank's standard form in
connection with
41
any request for the issuance, amendment, renewal or extension of a Letter of
Credit.
(i) The obligations of the Borrower to reimburse the Issuing
Bank for any L/C Disbursement shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including, without limitation (it being understood that
any such payment by the Borrower shall be without prejudice to, and shall not
constitute a waiver of, any rights the Borrower might have or might acquire
as a result of the payment by the Issuing Bank of any draft or the
reimbursement by the Borrower thereof): (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim,
setoff, defense or other right which the Borrower may have at any time
against a beneficiary of any Letter of Credit or against any of the Lenders,
whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction; (iii) any draft, demand, certificate or
other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (iv) payment by the Issuing Bank
of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower's obligations hereunder; or (vi) the
fact that any Event of Default shall have occurred and be continuing. None of
the Administrative Agent, the Lenders, the Issuing Bank or any of their
Affiliates shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice
or other communication under or relating to any Letter of Credit (including
any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes
beyond the control of the Issuing Bank, provided that the foregoing shall not
be construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing
Bank's failure to comply with standard practices of institutions that
regularly issue letters of credit when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof.
The parties hereto expressly agree that, in the absence of gross negligence
or willful misconduct on the part of
42
the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have complied with
standard practices in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented that appear on their face to be in
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of
such Letter of Credit.
(j) If any Event of Default shall occur and be continuing, on
the Business Day that the Borrower receives notice from the Administrative
Agent or the Required Lenders demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in the Cash Collateral
Account an amount in cash equal to 105% of the Letter of Credit Outstandings
as of such date plus any accrued and unpaid interest thereon. Each such
deposit shall be held by the Collateral Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Collateral Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such Cash Collateral Account. Other than
any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Collateral Agent at
the request of the Borrower and at the Borrower's risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such Cash Collateral
Account shall be applied by the Collateral Agent to reimburse the Issuing
Bank for payments on account of drawings under Letters of Credit for which it
has not been reimbursed and, to the extent not so applied, shall be held for
the satisfaction of the reimbursement obligations of the Borrower for the
Letter of Credit Outstandings at such time or, if the maturity of the Loans
has been accelerated, be applied to satisfy other obligations of the Borrower
under this Agreement. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within one Business Day after all Events of Default
have been cured or waived.
SECTION 2.7. SETTLEMENTS AMONGST TRANCHE A LENDERS
(a) The Swingline Lender may (but shall not be obligated to), at
any time, on behalf of the Borrower (which hereby authorizes the Swingline
Lender to act in its behalf in that regard) request the Administrative Agent
43
to cause the Tranche A Lenders to make a Tranche A Loan (which shall be an
ABR Loan) in an amount equal to such Tranche A Lender's Tranche A Commitment
Percentage of the outstanding amount of Swingline Loans made in accordance
with Section 2.5 hereof, which request may be made regardless of whether the
conditions set forth in Article 4 have been satisfied. Upon such request,
each Tranche A Lender shall make available to the Administrative Agent the
proceeds of such Tranche A Loan for the account of the Swingline Lender. If
the Swingline Lender requires a Tranche A Loan to be made by the Tranche A
Lenders and the request therefor is received prior to 12:00 Noon, Boston
time, on a Business Day, such transfers shall be made in immediately
available funds no later than 3:00 p.m., Boston time, that day; and, if the
request therefor is received after 12:00 Noon, Boston time, then no later
than 3:00 p.m., Boston time, on the next Business Day. The obligation of each
Tranche A Lender to transfer such funds is irrevocable, unconditional and
without recourse to or warranty by the Administrative Agent or the Swingline
Lender. If and to the extent any Tranche A Lender shall not have so made its
transfer to the Administrative Agent, such Tranche A Lender agrees to pay to
the Administrative Agent, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to the Administrative Agent at the Federal Funds Effective Rate.
(b) The amount of each Tranche A Lender's Tranche A Commitment
Percentage of outstanding Tranche A Loans shall be computed weekly (or more
frequently in the Administrative Agent's discretion) and shall be adjusted
upward or downward based on all Tranche A Loans and repayments of Tranche A
Loans received by the Administrative Agent as of 3:00 p.m., Boston time, on
the first Business Day following the end of the period specified by the
Administrative Agent (such date, the "SETTLEMENT DATE").
(c) The Administrative Agent shall deliver to each of the
Tranche A Lenders promptly after the Settlement Date a summary statement of
the amount of outstanding Tranche A Loans for the period and the amount of
repayments received for the period. As reflected on the summary statement:
(x) the Administrative Agent shall transfer to each Tranche A Lender its
applicable Tranche A Commitment Percentage of repayments, and (y) each
Tranche A Lender shall transfer to the Administrative Agent (as provided
below), or the Administrative Agent shall transfer to each Tranche A Lender,
such amounts as are necessary to insure that, after giving effect to all such
transfers, the amount of Tranche A Loans made by each Tranche A Lender with
respect to Tranche A Loans shall be equal to such Tranche A Lender's
applicable Tranche A Commitment Percentage of Tranche A Loans outstanding as
of such Settlement Date. If the summary statement requires transfers to be
made to the Administrative Agent by the Tranche A Lenders
44
and is received prior to 12:00 Noon, Boston time, on a Business Day, such
transfers shall be made in immediately available funds no later than 3:00
p.m., Boston time, that day; and, if received after 12:00 Noon, Boston time,
then no later than 3:00 p.m., Boston time, on the next Business Day. The
obligation of each Tranche A Lender to transfer such funds is irrevocable,
unconditional and without recourse to or warranty by the Administrative
Agent. If and to the extent any Tranche A Lender shall not have so made its
transfer to the Administrative Agent, such Tranche A Lender agrees to pay to
the Administrative Agent, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to the Administrative Agent at the Federal Funds Effective Rate.
SECTION 2.8. NOTES; REPAYMENT OF LOANS.
(a) The Tranche A Loans outstanding to each Tranche A Lender
(and to the Swingline Lender, with respect to Swingline Loans) shall be
evidenced by a Tranche A Note duly executed on behalf of the Borrower, dated
the Closing Date, in substantially the form attached hereto as EXHIBIT C-1 OR
C-2, as applicable, payable to the order of such Tranche A Lender (or the
Swingline Lender, as applicable) in an aggregate principal amount equal to
such Tranche A Lender's Tranche A Commitment (or, in the case of the Tranche
A Note evidencing the Swingline Loans, $7,500,000). The Tranche B Loan
outstanding to the Tranche B Lender shall be evidenced by a Tranche B Note
duly executed on behalf of the Borrower, dated the Closing Date, in
substantially the form attached hereto as EXHIBIT C-3, payable to the order
of the Tranche B Lender in an aggregate principal amount equal to the Tranche
B Lender's Tranche B Commitment.
(b) The outstanding principal balance of all Swingline Loans
shall be repaid on the earlier of the Termination Date or, on the date
otherwise requested by the Swingline Lender in accordance with the provisions
of Section 2.7(a). The outstanding principal balance of all other Obligations
shall be payable on the Termination Date (subject to earlier repayment as
provided below). Each Note shall bear interest from the date thereof on the
outstanding principal balance thereof as set forth in this Article 2. Each
Lender is hereby authorized by the Borrower to endorse on a schedule attached
to each Note delivered to such Lender (or on a continuation of such schedule
attached to such Note and made a part thereof), or otherwise to record in
such Lender's internal records, an appropriate notation evidencing the date
and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, each payment of interest on any such Loan and the
other information provided for on such schedule; PROVIDED, HOWEVER, that the
failure of any Lender to make such a notation or any error therein shall not
affect the obligation of the Borrower to repay the Loans
45
made by such Lender in accordance with the terms of this Agreement and the
applicable Notes.
SECTION 2.9. INTEREST ON LOANS.
(a) TRANCHE A LOANS (i) Subject to Section 2.10, each ABR Loan
shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum that shall be equal to
the then Alternate Base Rate, PLUS the Applicable Margin for ABR Loans.
(ii) Subject to Section 2.10, each Eurodollar Loan shall
bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal, during each
Interest Period applicable thereto, to the Adjusted LIBO Rate for such
Interest Period, PLUS the Applicable Margin for Eurodollar Loans.
(iii) Accrued interest on all ABR Loans and Eurodollar
Loans shall be payable in arrears on each Interest Payment Date
applicable thereto, at maturity (whether by acceleration or otherwise),
after such maturity on demand and (with respect to Eurodollar Loans)
upon any repayment or prepayment thereof (on the amount prepaid).
(b) TRANCHE B LOAN: (i) Subject to Section 2.10, each Tranche B
Loan shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to 16% (the
"Accrual Rate").
(ii) Accrued interest on the Tranche B Loan, calculated at
13.0% per annum ("CURRENT PAY INTEREST") shall be payable monthly in
arrears, on the first day of each month, commencing February 1, 2000,
and at maturity (whether by acceleration or otherwise), and after such
maturity on demand.
(iii) The difference between accrued interest on the Tranche B
Loan at the Accrual Rate and at the current pay rate (i.e. 3.0% per
annum) ("PIK INTEREST"), shall be capitalized quarterly in arrears and
shall be added to the principal balance of Tranche B, commencing
February 1, 2000. PIK Interest shall thereafter bear interest at the
rate of 16% per annum and PIK Interest shall be payable on the first
anniversary of the Closing Date and at the Termination Date.
SECTION 2.10. DEFAULT INTEREST. Effective upon the occurrence of any
Event of Default and at all times thereafter while such Event of Default is
continuing, interest shall accrue on all outstanding Tranche A Loans
46
(including Swingline Loans) and the Tranche B Loan (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) equal to the rate (including the
Applicable Margin for Tranche A Loans) in effect from time to time PLUS 2.00%
per annum, and such interest shall be payable on demand.
SECTION 2.11. CERTAIN FEES. The Borrower shall pay to the
Administrative Agent, for the account of the Administrative Agent, the fees
set forth in the Fee Letter as and when payment of such fees is due as
therein set forth. The Borrower shall pay to the Administrative Agent, for
the account of the Tranche B Lender, the fees set forth in the Fee Letter, as
and when payment of such fees is due as therein set forth.
SECTION 2.12. UNUSED COMMITMENT FEE. The Borrower shall pay to the
Administrative Agent for the account of the Tranche A Lenders, a commitment
fee (the "COMMITMENT FEE") equal to 0.375% per annum (on the basis of actual
days elapsed in a year of 360 days) of the average daily balance of the
Unused Tranche A Commitment for each day commencing on and including the
Closing Date and ending on but excluding the Termination Date. The Commitment
Fee so accrued in any calendar month shall be payable on the first Business
Day of the immediately succeeding calendar month, except that all Commitment
Fees so accrued as of the Termination Date shall be payable on the
Termination Date. The Administrative Agent shall pay the Commitment Fee to
the Tranche A Lenders based upon their respective shares of their Tranche A
Commitment MINUS their Tranche A Credit Extensions.
SECTION 2.13. LETTER OF CREDIT FEES.
(a) The Borrower shall pay the Administrative Agent, for the
account of the Tranche A Lenders, monthly in arrears, on the date of issuance
of a Letter of Credit and monthly thereafter, a fee (each, a "Letter of
Credit Fee") equal to the following per annum percentages of the average face
amount of the following categories of Letters of Credit outstanding during
the subject month:
(i) Standby Letters of Credit: The Applicable
Margin for Standby Letters of Credit.
(ii) Commercial Letters of Credit: 1.75%
(b) The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Bank, and in addition to all Letter of Credit Fees
otherwise provided for hereunder, a fronting fee (the "Fronting Fee") equal
to
47
0.125% per annum of the average daily balance of the maximum amount that at
any time is available for drawing or payment under each Letter of Credit,
payable monthly in arrears, as well as such fees and charges in connection
with the issuance, negotiation, settlement, amendment and processing of each
Letter of Credit issued by the Issuing Bank as are customarily imposed by the
Issuing Bank from time to time in connection with letter of credit
transactions.
SECTION 2.14. NATURE OF FEES. All fees shall be paid on the dates
due, in immediately available funds, to the Administrative Agent for the
respective accounts of the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders, as provided herein. Once paid, all fees
shall be fully-earned and shall not be refundable under any circumstances.
SECTION 2.15. TERMINATION OR REDUCTION OF COMMITMENTS. Upon at least
two Business Days' prior written notice to the Administrative Agent, the
Borrower may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Tranche A Commitments. Each such reduction
shall be in the principal amount of $1,000,000 or any integral multiple
thereof. Each such reduction or termination shall (i) be applied ratably to
the Tranche A Commitments of each Tranche A Lender and (ii) be irrevocable
when given. At the effective time of each such reduction or termination, the
Borrower shall pay to the Administrative Agent for application as provided
herein (i) all Commitment Fees accrued on the amount of the Tranche A
Commitments so terminated or reduced through the date thereof, (ii) any
amount by which the Tranche A Credit Extensions outstanding on such date
exceed the amount to which the Tranche A Commitments are to be reduced
effective on such date and (iii) all earned and unpaid fees with respect to
such Tranche A Credit Extensions, in each case pro rata based on the amount
prepaid.
SECTION 2.16. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Tranche A Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;
48
then the Administrative Agent shall give notice thereof to the Borrower and
the Tranche A Lenders by telephone or telecopy as promptly as practicable
thereafter and, until the Administrative Agent notifies the Borrower and the
Tranche A Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Borrowing Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing
shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.17. CONVERSION AND CONTINUATION OF TRANCHE A LOANS. The
Borrower shall have the right at any time, on two Business Days' prior
irrevocable notice to the Administrative Agent (which notice, to be
effective, must be received by the Administrative Agent not later than 2:00
p.m., Boston time, on the third Business Day preceding the date of any
conversion), (x) to convert any outstanding Borrowings of Tranche A Loans
(but in no event Swingline Loans) of one Type (or a portion thereof) to a
Borrowing of Tranche A Loans of the other Type or (y) to continue an
outstanding Borrowing of Eurodollar Loans for an additional Interest Period,
subject to the following:
(a) no Borrowing of Tranche A Loans may be converted into, or
continued as, Eurodollar Loans at any time when an Event of Default has
occurred and is continuing (nothing contained herein being deemed to obligate
the Borrower to incur Breakage Costs upon the occurrence of an Event of
Default unless the Obligations are accelerated);
(b) if less than a full Borrowing of Tranche A Loans is
converted, such conversion shall be made PRO RATA among the Tranche A
Lenders, as applicable, in accordance with the respective principal amounts
of the Tranche A Loans comprising such Borrowing held by such Tranche A
Lenders immediately prior to such refinancing;
(c) the aggregate principal amount of Tranche A Loans being
converted into or continued as Eurodollar Loans shall be in an integral of
$100,000 and at least $1,000,000;
(d) each Tranche A Lender shall effect each conversion by
applying the proceeds of its new Eurodollar Loan or ABR Loan, as the case may
be, to its Tranche A Loan being so converted;
(e) the Interest Period with respect to a Borrowing of
Eurodollar Loans effected by a conversion or in respect to the Borrowing of
Eurodollar Loans being continued as Eurodollar Loans shall commence on the
date of
49
conversion or the expiration of the current Interest Period applicable to
such continuing Borrowing, as the case may be;
(f) a Borrowing of Eurodollar Loans may be converted
only on the last day of an Interest Period applicable thereto;
(g) each request for a conversion with a Borrowing of
Eurodollar Loans which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month;
(h) no more than four (4) Borrowings of Eurodollar Loans
may be outstanding at any time; and
If the Borrower does not give notice to convert any Borrowing of Eurodollar
Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as Eurodollar Loans, in each case as provided above,
such Borrowing shall automatically be converted to a Borrowing of ABR Loans
at the expiration of the then-current Interest Period. The Administrative
Agent shall, after it receives notice from the Borrower, promptly give each
Tranche A Lender notice of any conversion, in whole or part, of any Tranche A
Loan made by such Tranche A Lender.
SECTION 2.18. MANDATORY PREPAYMENT; COMMITMENT TERMINATION; CASH
COLLATERAL. The outstanding Obligations shall be subject to mandatory
prepayment as follows:
(a) If at any time the amount of the Tranche A Credit
Extensions exceeds the lower of (i) the then amount of the Tranche A
Commitments and (ii) the then amount of the Borrowing Base, PLUS the
aggregate amount of all cash held in the Cash Collateral Account, the
Borrower will immediately upon notice from the Administrative Agent (A)
prepay the Tranche A Loans in an amount necessary to eliminate such excess
and (B) if, after giving effect to the prepayment in full of all outstanding
Tranche A Loans such excess has not been eliminated, deposit cash into the
Cash Collateral Account in an amount equal to 105% of the remaining amount of
such excess.
(b) The Tranche A Loans shall be repaid daily in
accordance with the provisions of Section 2.21(h) hereof.
(c) Subject to the terms of the Order, if applicable, in
the event and on each occasion that any Net Proceeds are received by or on
behalf of a Loan Party or any Subsidiary in respect of any Prepayment Event,
the Borrower shall, immediately after such Net Proceeds are received, prepay
the Loans in
50
an aggregate principal amount equal to such Net Proceeds in the following
priority:
(i) Except as provided in clause (ii) below, the Net Proceeds
realized from any Prepayment Event shall be paid FIRST, in reduction of
the Swingline Loans, SECOND, in reduction of the Tranche A Loans,
THIRD, to the Cash Collateral Account as collateral for the Letter of
Credit Outstandings, FOURTH, to the Tranche B Loan, and FIFTH, to all
other Obligations,
(ii) The Net Proceeds from any sale of Real Estate and
furniture, fixtures and equipment shall be applied first, to the
Tranche B Loan until the Tranche B Loan is paid in full, and then to
the Tranche A Loans (including Swingline Loans) (or if no such Tranche
A Loans are then outstanding, to the Cash Collateral Account as
collateral for the Letter of Credit Outstandings) PROVIDED, HOWEVER
that if no Event of Default has occurred and is continuing, the amount
required to be applied pursuant to this clause (ii) upon the sale of
Eligible Leasehold Real Estate shall be limited to 75% of the FLV of
such Eligible Leasehold Real Estate, with the remaining Net Proceeds
being applied pursuant to clause (i) above.
(d) Subject to the foregoing, outstanding ABR Loans shall
be prepaid before outstanding Eurodollar Loans are prepaid. Each partial
prepayment of Eurodollar Loans shall be in an integral multiple of $100,000
equal to or greater than $1,000,000. No prepayment of Eurodollar Loans shall
be permitted pursuant to this Section 2.18 other than on the last day of an
Interest Period applicable thereto, unless the Borrower simultaneously
reimburses the Tranche A Lenders for all "Breakage Costs" (as defined below)
associated therewith. In order to avoid such Breakage Costs, as long as no
Event of Default has occurred and is continuing, at the request of the
Borrower, the Administrative Agent shall hold all amounts required to be
applied to Eurodollar Loans in the Cash Collateral Account and will apply
such funds to the applicable Eurodollar Loans at the end of the then pending
Interest Period therefor (provided that the foregoing shall in no way limit
or restrict the Agents' rights upon the subsequent occurrence of an Event of
Default). No partial prepayment of a Borrowing of Eurodollar Loans shall
result in the aggregate principal amount of the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $1,000,000. Any
prepayment of the Tranche B Loan shall permanently reduce the Tranche B
Commitments; and any prepayment of the Tranche A Loans shall not permanently
reduce the Tranche A Commitments.
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(e) All amounts required to be applied to all Tranche A
Loans hereunder shall be applied ratably in accordance with each Tranche A
Lender's Tranche A Commitment Percentage.
(f) Upon the Termination Date, the credit facility
provided hereunder shall be terminated in full and the Borrower shall pay, in
full and in cash, all outstanding Loans and all other outstanding Obligations.
SECTION 2.19. OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF LENDERS.
(a) The Borrower shall have the right at any time and
from time to time to prepay outstanding Tranche A Loans in whole or in part,
(x) with respect to Eurodollar Loans, upon at least two Business Days' prior
written, telex or facsimile notice to the Administrative Agent prior to 2:00
p.m., Boston time, and (y) with respect to ABR Loans, on the same Business
Day if written, telex or facsimile notice is received by the Administrative
Agent prior to 2:00 p.m., Boston time, subject to the following limitations:
(i) Subject to Section 2.18, all prepayments shall be paid to
the Administrative Agent for application, FIRST, to the prepayment of
outstanding Swingline Loans, SECOND, to the prepayment of other
outstanding Tranche A Loans ratably in accordance with each Tranche A
Lender's Tranche A Commitment Percentage, and THIRD, to the funding of
a cash collateral deposit in the Cash Collateral Account in an amount
equal to 105% of all Letter of Credit Outstandings.
(ii) Subject to the foregoing, outstanding ABR Loans shall be
prepaid before outstanding Eurodollar Loans are prepaid. Each partial
prepayment of Eurodollar Loans shall be in an integral multiple of
$100,000 equal to or greater than $1,000,000. No prepayment of
Eurodollar Loans shall be permitted pursuant to this Section 2.19 other
than on the last day of an Interest Period applicable thereto, unless
the Borrower simultaneously reimburses the Tranche A Lenders for all
"Breakage Costs" (as defined below) associated therewith. No partial
prepayment of a Borrowing of Eurodollar Loans shall result in the
aggregate principal amount of the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $1,000,000.
(iii) Each notice of prepayment shall specify the prepayment
date, the principal amount and Type of the Tranche A Loans to be
prepaid and, in the case of Eurodollar Loans, the Borrowing or
Borrowings pursuant to which such Tranche A Loans were made.
52
Each notice of prepayment shall be irrevocable and shall commit the
Borrower to prepay such Tranche A Loan by the amount and on the date
stated therein. The Administrative Agent shall, promptly after
receiving notice from the Borrower hereunder, notify each Tranche A
Lender of the principal amount and Type of the Tranche A Loans held
by such Tranche A Lender which are to be prepaid, the prepayment
date and the manner of application of the prepayment.
(b) The Borrower shall reimburse each Tranche A Lender on
demand for any loss incurred or to be incurred by it in the reemployment of
the funds released (i) resulting from any prepayment (for any reason
whatsoever, including, without limitation, conversion to ABR Loans or
acceleration by virtue of, and after, the occurrence of an Event of Default)
of any Eurodollar Loan required or permitted under this Agreement, if such
Tranche A Loan is prepaid other than on the last day of the Interest Period
for such Tranche A Loan or (ii) in the event that after the Borrower delivers
a notice of borrowing under Section 2.3 in respect of Eurodollar Loans, such
Tranche A Loans are not made on the first day of the Interest Period
specified in such notice of borrowing for any reason other than a breach by
such Tranche A Lender or the Administrative Agent of its obligations
hereunder. Such loss shall be the amount as reasonably determined by such
Tranche A Lender as the excess, if any, of (A) the amount of interest which
would have accrued to such Tranche A Lender on the amount so paid or not
borrowed at a rate of interest equal to the Adjusted LIBO Rate for such
Tranche A Loan, for the period from the date of such payment or failure to
borrow to the last day (x) in the case of a payment or refinancing with ABR
Loans other than on the last day of the Interest Period for such Tranche A
Loan, of the then current Interest Period for such Tranche A Loan or (y) in
the case of such failure to borrow, of the Interest Period for such Tranche A
Loan which would have commenced on the date of such failure to borrow, over
(B) the amount of interest which would have accrued to such Tranche A Lender
on such amount by placing such amount on deposit for a comparable period with
leading banks in the London interbank market (collectively, "BREAKAGE
COSTS"). Any Tranche A Lender demanding reimbursement for such loss shall
deliver to the Borrower from time to time one or more certificates setting
forth the amount of such loss as determined by such Tranche A Lender.
(c) In the event the Borrower fails to prepay any Loan on
the date specified in any prepayment notice delivered pursuant to Section
2.19(a), the Borrower on demand by any Lender shall pay to the Administrative
Agent for the account of such Lender any amounts required to compensate such
Lender for any loss incurred by such Lender as a result of such failure to
prepay, including, without limitation, any loss, cost or expenses incurred by
reason of
53
the acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Any Lender demanding
such payment shall deliver to the Borrower from time to time one or more
certificates setting forth the amount of such loss as determined by such
Lender.
(d) Whenever any partial prepayment of Loans are to be
applied to Eurodollar Loans, such Eurodollar Loans shall be prepaid in the
chronological order of their Interest Payment Dates.
(e) The Borrower may not prepay the Tranche B Loan at any
time except from the application of Net Proceeds in accordance with the
provisions of Section 2.18 hereof. The Administrative Agent shall, promptly
notify each Tranche B Lender of the principal amount and Type of the Tranche
B Loan held by such Tranche B Lender which are to be prepaid, the prepayment
date and the manner of application of the prepayment.
SECTION 2.20. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT.
(a) The Administrative Agent shall maintain an account on
its books in the name of the Borrower (the "LOAN ACCOUNT") which will reflect
(i) all Swingline Loans and all loans and advances made by the Lenders to the
Borrower or for the Borrower's account, including the Loans, (ii) all L/C
Disbursements, fees and interest that have become payable as herein set
forth, and (iii) any and all other Obligations that have become payable.
(b) The Loan Account will be credited with all amounts
received by the Administrative Agent from the Borrower or from others for the
Borrower's account, including all amounts received in the FRF Concentration
Account from the Blocked Account Banks, and the amounts so credited shall be
applied as set forth in Sections 2.22(a) and (b). After the end of each
month, the Administrative Agent shall send to the Borrower a statement
accounting for the charges, loans, advances and other transactions occurring
among and between the Administrative Agent, the Lenders and the Borrower
during that month. The monthly statements shall, absent manifest error, be an
account stated, which is final, conclusive and binding on the Borrower.
54
SECTION 2.21. CASH RECEIPTS.
(a) Annexed hereto as SCHEDULE 2.21(a) is a list of all
present DDAs, which Schedule includes, with respect to each depository (i)
the name and address of that depository; (ii) the account number(s)
maintained with such depository; and (iii) a contact person at such
depository.
(b) Annexed hereto as SCHEDULE 2.21(b) is a list
describing all arrangements to which any Loan Party is a party with respect
to the payment to any Loan Party of the proceeds of all credit card charges
for sales by any Loan Party.
(c) On or prior to the Closing Date, the Borrower shall
have (i) delivered to the Administrative Agent notifications executed on
behalf of the Loan Parties to each depository institution with which any DDA
is maintained in form satisfactory to the Administrative Agent, of the
Administrative Agent's interest in such DDA (each, a "DDA NOTIFICATION"), and
(ii) delivered to the Administrative Agent notifications executed on behalf
of the Loan Parties to each of the Loan Party's credit card clearinghouses
and processors of notice in form satisfactory to the Administrative Agent
(each, a "CREDIT CARD NOTIFICATION"), and (iii) entered into agency
agreements with the banks maintaining the deposit accounts identified on
SCHEDULE 2.21(c) (collectively, the "BLOCKED ACCOUNTS"), which agreements
(the "BLOCKED ACCOUNT AGREEMENTS") shall be in form and substance
satisfactory to the Administrative Agent. The Administrative Agent
acknowledges receipt by BBNA of certain DDA Notifications, Credit Card
Notifications, and Blocked Account Agreements prior to the commencement of
the Proceedings in connection with the Pre-Petition Agreement; the Borrower
acknowledges that such notifications and agreements shall be held by BBNA as
subagent to the Collateral Agent and remain in full force and effect with
respect to this Agreement and the Obligations, and the Borrower shall execute
promptly after the Closing Date such further documents as the Administrative
Agent may reasonably request in order to supplement, amend or confirm such
notifications and agreements. The DDA Notifications, Credit Card
Notifications and Blocked Account Agreements shall require the sweep on each
Business Day of all available cash receipts from the sale of Inventory and
other assets, all collections of Accounts, and all other cash payments
received by the Borrower or any other Loan Party from any Person or from any
source or on account of any sale or other transaction or event, except only
the proceeds of the Loans (all such non-excluded cash receipts and
collections, "CASH RECEIPTS"), to a concentration account maintained by the
Collateral Agent at BBNA (the "FRF CONCENTRATION ACCOUNT"). In that regard,
the Borrower shall cause the
55
ACH or wire transfer to a Blocked Account, no less frequently than daily (and
whether or not there is then an outstanding balance in the Loan Account) of
(A) the then contents of each DDA, each such transfer to be net of any
minimum balance, not to exceed $5,000 per store, as may be required to be
maintained in the subject DDA by the bank at which such DDA is maintained or
such greater amount as otherwise agreed to by the Administrative Agent; and
(B) the proceeds of all credit card charges not otherwise provided for
pursuant hereto. Further, whether or not any Obligations are then
outstanding, the Borrower shall cause the ACH or wire transfer to the FRF
Concentration Account, no less frequently than daily, of the then entire
ledger balance of each Blocked Account, net of such minimum balance, not to
exceed $5,000 per store, as may be required to be maintained in the Blocked
Account by the bank at which the Blocked Account is maintained or such
greater amount as otherwise agreed to by the Administrative Agent. In the
event that, notwithstanding the provisions of this Section 2.21, the Borrower
receives or otherwise has dominion and control of any such proceeds or
collections, such proceeds, and collections shall be held in trust by the
Borrower for the Administrative Agent and shall not be commingled with any of
the Borrower's other funds or deposited in any account of the Borrower or any
other Loan Party other than as instructed by the Administrative Agent.
(d) The Borrower shall accurately report to the
Administrative Agent all amounts deposited in the Blocked Accounts to ensure
the proper transfer of funds as set forth above. If at any time other than
the times set forth above any cash or cash equivalents owned by the Borrower
or any other Loan Party are deposited to any account, or held or invested in
any manner, otherwise than in a Blocked Account that is subject to a Blocked
Account Agreement, the Administrative Agent shall require the Borrower to
close such account and have all funds therein transferred to an account
maintained by the Administrative Agent at BBNA and all future deposits made
to a Blocked Account which is subject to a Blocked Account Agreement.
(e) The Borrower may request that the Administrative
Agent close DDAs or Blocked Accounts and/or open new DDAs or Blocked Accounts
(or, in either case, permit the Borrower to do so), subject to the execution
and delivery to the Administrative Agent of appropriate DDA Notifications or
Blocked Account Agreements (unless expressly waived by the Administrative
Agent) consistent with the provisions of this Section 2.21 and otherwise
satisfactory to the Administrative Agent. Unless consented to in writing by
the Administrative Agent, the Borrower and the other Loan Parties may not
maintain any bank accounts or enter into any agreements with credit card
processors other than the ones expressly contemplated herein.
56
(f) The Borrower may also maintain one or more
disbursement accounts (the "DISBURSEMENT ACCOUNTS") to be used by the
Borrower for disbursements and payments (including payroll) in the ordinary
course of business or as otherwise permitted hereunder; provided that the
Borrower delivers a DDA Notification for each such Disbursement Account, and
further provided that the amount on deposit in any such Disbursement Account
shall at no time exceed the sums set forth on SCHEDULE 2.21(f). The only
Disbursement Accounts as of the Closing Date are those described in SCHEDULE
2.21(f).
(g) The FRF Concentration Account is, and shall remain,
under the sole dominion and control of the Collateral Agent. Each Loan Party
acknowledges and agrees that (i) such Loan Party has no right of withdrawal
from the FRF Concentration Account, (ii) the funds on deposit in the FRF
Concentration Account shall continue to be collateral security for all of the
Obligations and (iii) the funds on deposit in the FRF Concentration Account
shall be applied as provided in Section 2.22(a).
(h) Daily, the Collateral Agent shall promptly apply
funds in the FRF Concentration Account in reduction of the Obligations (in
the manner set forth in Section 2.22 hereof).
(i) The Agents and the Lenders agree that a failure to
comply with this Section 2.21 temporarily due to unintentional human error
shall not constitute an Event of Default.
SECTION 2.22. APPLICATION OF PAYMENTS.
(a) Subject to the provisions of Sections 2.18, 2.21 and
7.5 and, to the extent applicable, the Order, all amounts received in the FRF
Concentration Account from any source, including the Blocked Account Banks,
shall be applied, on the day immediately following receipt, in the following
order: FIRST, to pay interest due and payable on Credit Extensions and to pay
fees and expense reimbursements and indemnification then due and payable to
the Administrative Agent, the Issuing Bank, the Collateral Agent, and the
Lenders; SECOND to repay outstanding Swingline Loans; THIRD, to repay
outstanding Tranche A Loans that are ABR Loans and all outstanding
reimbursement obligations under Letters of Credit; FOURTH, to repay
outstanding Tranche A Loans that are Eurodollar Loans and all Breakage Costs
due in respect of such repayment pursuant to Section 2.19(b) or, at the
Borrower's option (if no Event of Default has occurred and is then
continuing), to fund a cash collateral deposit to the Cash Collateral Account
sufficient to pay, and with direction to pay, all such outstanding Eurodollar
Loans on the last day of the then-pending Interest Period therefor; FIFTH if
any
57
Event of Default has occurred and is continuing, to fund a cash collateral
deposit in the Cash Collateral Account in an amount equal to 105% of the
aggregate maximum amount that then is or at any time may become available for
drawing or payment under all Letter of Credit Outstandings; PROVIDED,
HOWEVER, that if such Event of Default shall be waived pursuant to the terms
hereof, such cash collateral shall be released and applied pursuant to
clauses SIXTH and SEVENTH below; SIXTH, if all outstanding Tranche A Credit
Extensions have been repaid or secured by cash collateral deposits as set
forth above, to repay the outstanding Tranche B Loan; and SEVENTH, to pay all
other Obligations that are then outstanding and payable. Any other amounts
received by the Administrative Agent, the Issuing Bank, the Collateral Agent
or any Lender as contemplated by Section 2.21 shall also be applied in the
order set forth above in this Section 2.22.
(b) Any amounts received in the FRF Concentration Account
at any time when all of the Obligations have been and remain fully repaid
shall be remitted to the Borrower, if and as the Borrower may request.
(c) All credits against the Obligations shall be
conditioned upon final payment to the Administrative Agent of the items
giving rise to such credits. If any item deposited to the FRF Concentration
Account and credited to the Loan Account is dishonored or returned unpaid for
any reason, whether or not such return is rightful or timely, the
Administrative Agent shall have the right to reverse such credit and charge
the amount of such item to the Loan Account and the Borrower shall indemnify
the Administrative Agent, the Collateral Agent, the Issuing Bank and the
Lenders against all claims and losses resulting from such dishonor or return.
SECTION 2.23. INCREASED COSTS.
(a) If any Change in Law shall:
(1) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender or any holding
company of any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or the Issuing Bank; or
(2) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Tranche A Lender or any Letter of Credit
or participation therein;
58
and the result of any of the foregoing shall be to increase the cost to such
Tranche A Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Tranche A Lender or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received
or receivable by such Tranche A Lender or the Issuing Bank hereunder (whether
of principal, interest or otherwise), then the Borrower will pay to such
Tranche A Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Tranche A Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.
(b) If any Lender or the Issuing Bank reasonably
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or the
Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the
Loans made by, or participations in Letters of Credit held by, such Lender,
or the Letters of Credit issued by the Issuing Bank, to a level below that
which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's
holding company could have achieved but for such Change in Law (taking into
consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such
Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank or such Lender's
or the Issuing Bank's holding company for any such reduction suffered. Each
Lender and the Issuing Bank shall allocate such cost increase among its
customers reasonably and in good faith.
(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender
or the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the Issuing Bank's right to demand
such compensation, PROVIDED that the Borrower shall not be required to
compensate a Lender or the Issuing Bank pursuant to this Section for any
increased costs or reductions incurred more than 90 days prior to the date
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that such Lender or the Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender's or the Issuing Bank's intention to claim
compensation therefor, and PROVIDED FURTHER that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the 90-day
period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.24. CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, if (x) any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful for a Lender to make or
maintain a Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Lender determines that the making or continuance of any of its Eurodollar
Loans has become impracticable as a result of a contingency occurring after
the date hereof which adversely affects the London interbank market or the
position of such Lender in the London interbank market, then, by written
notice to the Borrower, such Lender may (i) declare that Eurodollar Loans
will not thereafter be made by such Lender hereunder, whereupon any request
by the Borrower for a Eurodollar Borrowing shall, as to such Lender only, be
deemed a request for an ABR Loan unless such declaration shall be
subsequently withdrawn; and (ii) require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of the
effective date of such notice as provided in paragraph (b) below. In the
event any Lender shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would
otherwise have been applied to repay the Eurodollar Loans that would have
been made by such Lender or the converted Eurodollar Loans of such Lender
shall instead be applied to repay the ABR Loans made by such Lender in lieu
of, or resulting from the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.24, a notice to the Borrower by
any Lender pursuant to paragraph (a) above shall be effective, if lawful, and
if any Eurodollar Loans shall then be outstanding, on the last day of the
then-current Interest Period; and otherwise such notice shall be effective on
the date of receipt by the Borrower.
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SECTION 2.25. PAYMENTS; SHARING OF SETOFF.
(a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest,
fees or reimbursement of drawings under Letters of Credit, or of amounts
payable under Sections 2.19(b), 2.23 or 2.26, or otherwise) prior to 2:00
p.m., Boston time, on the date when due, in immediately available funds,
without setoff or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent
at its offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ or such other
address as the Administrative Agent designates by written notice to the
Borrower, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments
pursuant to Sections 2.19(b), 2.23, 2.26 and 9.3 shall be made directly to
the Persons entitled thereto and payments pursuant to other Loan Documents
shall be made to the Persons specified therein. The Administrative Agent
shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof.
If any payment under any Loan Document shall be due on a day that is not a
Business Day, except with respect to Eurodollar Borrowings, the date for
payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed drawings under Letters of Credit, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties,
and (ii) second, towards payment of principal and unreimbursed drawings under
Letters of Credit then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal and unreimbursed drawings
under Letters of Credit then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in drawings under Letters of
Credit or Swingline Loans resulting in such Lender's receiving payment of a
greater proportion of the aggregate amount of its Loans and participations in
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drawings under Letters of Credit and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in drawings under Letters of
Credit and Swingline Loans of other Lenders to the extent necessary so that
the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in drawings under Letters of Credit
and Swingline Loans, PROVIDED that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or
participations in drawings under Letters of Credit to any assignee or
participant, other than to the Borrower or any Affiliate thereof (as to which
the provisions of this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may, subject to the terms of the Order, exercise against the
Borrower rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the
amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the Issuing Bank, as the case may be, the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to
such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.
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(e) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Lender that fails (i) to
make available to the Administrative Agent its PRO RATA share of any Loan or
to make a required payment with respect to an L/C Disbursement or (ii) to
comply with the provisions of this Agreement with respect to making
dispositions and arrangements with the other Lenders, where such Lender's
share of any payment received, whether by setoff or otherwise, is in excess
of its PRO RATA share of such payments due and payable to all of the Lenders,
in each case as, when and to the full extent required by the provisions of
this Agreement, shall be deemed delinquent (a "Delinquent Lender") and shall
be deemed a Delinquent Lender until such time as such delinquency is
satisfied. A Delinquent Lender shall be deemed to have assigned any and all
payments due to it from the Borrower, whether on account of outstanding
Loans, unpaid reimbursement obligations with respect to L/C Disbursements,
interest, fees or otherwise, to the remaining nondelinquent Lenders for
application to, and reduction of, their respective PRO RATA shares of all
outstanding Loans and unpaid reimbursement obligations with respect to L/C
Disbursements. The Delinquent Lender hereby authorizes the Administrative
Agent to distribute such payments to the nondelinquent Lenders in proportion
to their respective PRO RATA shares of all outstanding Loans and unpaid
reimbursement obligations with respect to L/C Disbursements. A Delinquent
Lender shall be deemed to have satisfied in full a delinquency when and if,
as a result of application of the assigned payments to all outstanding Loans
and unpaid reimbursement obligations with respect to L/C Disbursements of the
nondelinquent Lenders, the Lenders' respective PRO RATA shares of all
outstanding Loans and unpaid reimbursement obligations with respect to L/C
Disbursements have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such
delinquency.
SECTION 2.26. TAXES.
(a) Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes,
PROVIDED that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section) the Administrative Agent, Lender or Issuing Bank (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii)
the Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
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(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender or
the Issuing Bank, or by the Administrative Agent on its own behalf or on
behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest
error.
(d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of
a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender shall deliver to the Borrower and the
Administrative Agent two copies of either United States Internal Revenue
Service Form 1001 or Form 4224, or, in the case of a Foreign Lender's
claiming exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form
W-8, or any subsequent versions thereof or successors thereto (and, if such
Foreign Lender delivers a Form W-8, a certificate representing that such
Foreign Lender is not a bank for purposes of Section 881(c) of the Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of the Borrower and is not a controlled foreign corporation related
to the Borrower (within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Foreign Lender claiming complete
exemption from or reduced rate of, U.S. Federal withholding tax on payments
by the Borrower under this Agreement and the other Loan Documents. Such forms
shall be delivered by each Foreign Lender on or before the date it becomes a
party to this Agreement (or, in the case of a transferee that is a
participation holder, on or before the date such participation holder becomes
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a transferee hereunder) and on or before the date, if any, such Foreign
Lender changes its applicable lending office by designating a different
lending office (a "New Lending Office"). In addition, each Foreign Lender
shall deliver such forms promptly upon the obsolescence or invalidity of any
form previously delivered by such Foreign Lender. Notwithstanding any other
provision of this Section 2.26(e), a Foreign Lender shall not be required to
deliver any form pursuant to this 2.26(e) that such Foreign Lender is not
legally able to deliver.
(f) The Borrower shall not be required to indemnify any Foreign
Lender or to pay any additional amounts to any Foreign Lender in respect of
U.S. Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that the obligation to pay such additional amounts would not have
arisen but for a failure by such Foreign Lender to comply with the provisions
of paragraph (e) above. Should a Lender become subject to Taxes because of
its failure to deliver a form required hereunder, Borrower shall, at Lender's
expense, take such steps as such Lender shall reasonably request to assist
such Lender to recover such Taxes.
SECTION 2.27. PRIORITY AND COLLATERAL SECURITY.
(a) The Borrower hereby represents, warrants and covenants that,
upon entry of the Interim Borrowing Order or the Final Borrowing Order,
whichever first occurs, (a) the Obligations shall at all times constitute a
Super-Priority Claim having priority, pursuant to Section 364(c)(1) of the
Bankruptcy Code and as otherwise provided herein or in the Orders, subject
only to the Carve Out and other than in respect of the Excluded Assets, and
(b) pursuant to Section 364(c)(2) and (3) of the Bankruptcy Code and the
Security Documents, the Obligations shall at all times be secured by a
perfected security interest (i) in all of the assets, whether now owned or
hereafter acquired of the Borrower, pursuant to the terms of the Security
Documents, other than Excluded Assets, and (ii) a first priority perfected
pledge, in favor of the Collateral Agent, for the benefit of the Lenders and
the Agents, of the capital stock or other equity interests of each Subsidiary
of the Borrower, subject only to (A) Permitted Prior Liens, and (B) the Carve
Out; PROVIDED that the priority of such Lien securing the Obligations, to the
extent the proceeds thereof shall have been used to repay (or provide cash
collateral for) the Pre-Petition Lender Debt and to the extent of any
commitment under the Pre-Petition Agreement, shall also be equitably
subrogated to such Lien priority as was enjoyed by the Liens securing the
Pre-Petition Lender Debt prior to the repayment (or cash collateralization)
thereof on the Closing Date. The security interests securing the Obligations
shall not be subject to Section 551 of the Bankruptcy Code.
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(b) The Borrower agrees to take all action that the Agents or any
Lender may reasonably request as a matter of nonbankruptcy law to perfect and
protect the Agents' and the Lenders' Liens upon the Collateral and for such
Liens to obtain the priority therefor contemplated hereby, including, without
limitation, executing and delivering such mortgages and related documents and
instruments, financing statements, providing such notices and assents of
third parties, obtaining such governmental approvals and providing such other
instruments and documents in recordable form as the Agents or any Lender may
reasonably request.
(c) The Borrower agrees that (i) the Obligations shall not be
discharged by the entry of an order confirming a Reorganization Plan (and the
Borrower, pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby
waives any such discharge), (ii) the Super-Priority Claim granted to the
Agents and Lenders pursuant to the Orders and the Liens granted to the Agents
and Lenders pursuant to the Orders and the Security Documents shall not be
affected in any manner by the entry of an order confirming a Reorganization
Plan and (iii) the Borrower shall not propose or support any Reorganization
Plan that is not conditioned upon the payment in full in cash, on or prior to
the earlier to occur of (A) the effective date of such Reorganization Plan
and (B) the Termination Date, of all of the Obligations and the Pre-Petition
Lender Debt, and, with respect to Obligations arising pursuant to Section 9.3
after such date, thereafter for the payment in full of such Obligations in
cash when due and payable.
(d) The Collateral Agent shall be fully subrogated to the rights
and interests, including the priorities, of BBNA as collateral agent under
the Pre-Petition Agreement with respect to all collateral (as defined
therein) upon payment of the Obligations (as defined therein). The Borrower
hereby authorizes BBNA to take all actions requested by the Collateral Agent
to assign all mortgages and security interests to the Collateral Agent, all
at the Borrower's expense.
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SECTION 2.28. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.
(a) If any Lender requests compensation under Section 2.23, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.26, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.23 or 2.26, as the case may be, in the future and (ii) would not subject
such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable and documented costs and expenses incurred by any Lender in
connection with any such designation or assignment; PROVIDED, HOWEVER, that
the Borrower shall not be liable for such costs and expenses of a Lender
requesting compensation if (i) such Lender becomes a party to this Agreement
on a date after the Closing Date and (ii) the relevant Change in Law occurs
on a date prior to the date such Lender becomes a party hereto.
(b) If any Lender requests compensation under Section 2.23, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.26, or if any Lender defaults in its obligation to fund Loans hereunder,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (and in accordance with and subject to the
restrictions contained in Section 9.4), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), PROVIDED that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, the Issuing Bank and Swingline
Lender, which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal
of its Loans and participations in unreimbursed drawings under Letters of
Credit and Swingline Loans, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.23 or payments
required to be made pursuant to Section 2.26, such assignment will result in
a reduction in such compensation or payments. A Lender shall not be required
to make any such assignment and delegation if, prior thereto, as a
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result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrower to require such assignment and delegation cease to apply.
SECTION 2.29. INTEREST LIMITATION. Notwithstanding any other term of
this Agreement, any Note or any other Loan Document, the maximum amount of
interest which may be charged to or collected from any Person liable
hereunder, under any Note or under any other Loan Document by any Lender,
shall be absolutely limited to, and shall in no event exceed, the maximum
amount of interest (the "Maximum Rate") which could lawfully be charged or
collected under applicable law, so that the maximum of all amounts
constituting interest under applicable law, howsoever computed, shall never
exceed, as to any Person liable therefor, the Maximum Rate, and any term of
this Agreement, any Note or any other Loan Document which could be construed
as providing for interest in excess of such lawful maximum shall be and
hereby is made expressly subject to and modified by the provisions of this
Section. If, in respect of any applicable period, the effective interest rate
on any amounts owing pursuant to this Agreement, the Notes or any of the
other Loan Documents, absent the Maximum Rate limitation contained herein,
would have exceeded the Maximum Rate, and if in any applicable period, such
effective interest rate would otherwise be less than the Maximum Rate, then
the effective interest rate for such future applicable period shall be
increased to the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that a court of
competent jurisdiction shall, notwithstanding the provisions of this Section
2.29, determine that any Lender has received interest hereunder or under any
of the other Loan Documents in excess of the Maximum Rate, such excess shall,
to the extent permitted by applicable law, be applied first to any interest
not in excess of the Maximum Rate then due and not yet paid, then to the
outstanding principal of the Loans, then to fees and any other unpaid
Obligations, and thereafter shall be refunded to the Borrower or as a court
of competent jurisdiction may otherwise order. In the event that, upon
payment in full of the Obligations, the total amount of interest paid or
accrued under the terms of this Agreement is less than the total amount of
interest which would have been paid or accrued had the interest not been
limited hereby to the Maximum Rate, then the Borrower shall, to the extent
permitted by applicable law, pay to the Lenders hereunder or under the Notes
an amount equal to the excess, if any, of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect with respect to the Obligations hereunder or under the Notes
and (ii) the amount of interest which would have accrued had the applicable
effective interest rate not been limited hereunder by the Maximum Rate over
(b) the amount of interest actually paid or accrued under this Agreement. In
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determining whether or not the interest paid or payable under any specific
contingency exceeds the Maximum Rate, the Borrower and any Lender or the
Administrative Agent, as the case may be, shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as
an expense, fee, or premium, rather than as interest, (ii) exclude any
voluntary prepayments and the effects thereof, and (iii) spread the total
amount of interest throughout the entire contemplated term of the Obligations
so that the interest rate is uniform throughout the entire term of the
Obligations. The term "applicable law" as used in this Section 2.29 means the
law chosen pursuant to Section 9.9 hereof or, if (despite the parties'
intentions otherwise) the forum court does not enforce such contractual
choice of law, the applicable law after the forum court applies the choice of
law rules of the forum, including any federally mandated choice of law. The
term includes applicable federal law, such as the provisions of Section 5197
of the Revised Statutes of the United States of America, as amended, 12
U.S.C. Section 85, as amended.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Lenders that:
SECTION 3.1. ORGANIZATION; POWERS. Each Loan Party is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, is qualified to do business in, and is
in good standing in, every jurisdiction where such qualification is required.
SECTION 3.2. AUTHORIZATION; ENFORCEABILITY. The transactions
contemplated hereby and by the other Loan Documents to be entered into by
each Loan Party are within such Loan Party's corporate powers and have been
duly authorized by all necessary corporate and, if required, stockholder
action. This Agreement has been duly executed and delivered by each Loan
Party that is a party hereto and, when the Interim Borrowing Order is issued
by the Bankruptcy Court in the Proceedings, constitutes, and each other Loan
Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party and when the Interim Borrowing Order is entered
by the Bankruptcy Court in the Proceedings, will constitute, a legal, valid
and binding obligation of such Loan Party (as the case may be), enforceable
in accordance with its terms, subject to applicable bankruptcy,
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insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
SECTION 3.3. GOVERNMENTAL APPROVALS; NO CONFLICTS. The transactions to
be entered into contemplated by the Loan Documents (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except for the approval of the Bankruptcy Court in the
Proceedings and such others as have been obtained or made and are in full force
and effect and except filings necessary to perfect Liens created under the Loan
Documents, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of any Loan Party or any order of any
Governmental Authority, (c) except as set forth in SCHEDULE 3.03(c), will not
violate or result in a default under any indenture, agreement or other
instrument entered into after the commencement of the Proceedings binding upon
any Loan Party or its assets, or give rise to a right thereunder to require any
payment to be made by any Loan Party, and (d) will not result in the creation or
imposition of any Lien on any asset of any member of the Borrower, except Liens
created under the Loan Documents.
SECTION 3.4. FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders' equity and
cash flows (i) as of and for each of the fiscal years in the three year
period ended January 30, 1999, reported on by its independent public
accountants, and (ii) as of and for the fiscal periods ending since such date
through October 31, 1999, respectively, certified by its chief financial
officer. Such financial statements present fairly, in all material respects,
the financial position and results of operations and cash flows of the
Borrower and its consolidated subsidiaries as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) In addition, the Borrower has heretofore furnished the
Lenders with a Fiscal Year 2000 Forecast Update dated as of December 15, 1999.
SECTION 3.5. PROPERTIES.
(a) Except as disclosed in SCHEDULE 3.05, each Loan Party has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for minor defects in title that do
not interfere
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with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes.
(b) Each Loan Party owns, or is licensed to use, all trademarks,
trade names, copyrights, patents and other intellectual property material to
its business, and the use thereof by the Loan Party does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect.
(c) SCHEDULE 3.05 sets forth the address (including county) of
all Real Estate that is owned or leased by any Loan Party as of the Closing
Date.
SECTION 3.6. LITIGATION AND ENVIRONMENTAL MATTERS.
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of
any Loan Party, threatened against or affecting any Loan Party (i) which is
not stayed by the commencement of the Proceedings and as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve any of the Loan Documents.
(b) Except for the Disclosed Matters and except with respect to
any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, no Loan Party
(i) has failed to comply with any Environmental Law or to obtain, maintain or
comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability,
(iii) has received notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change
in the status of the Disclosed Matters that, individually or in the
aggregate, has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect, except by virtue of the commencement of the
Proceedings.
SECTION 3.7. COMPLIANCE WITH LAWS AND AGREEMENTS. Each Loan Party is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, material agreements and
other instruments binding upon it or its property, except to the extent the
Borrower is not required to comply therewith in the Proceedings or enforcement
of remedies on account of the failure to comply
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therewith is stayed in the Proceedings, and except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.8. INVESTMENT AND HOLDING COMPANY STATUS. No Loan Party is
(a) an "investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.9. TAXES. Each Loan Party has timely filed or caused to be
filed all tax returns and reports required to have been filed and has paid or
caused to be paid all taxes required to have been paid by it, except (a) taxes
that are being contested in good faith by appropriate proceedings, for which
such member, as applicable, has set aside on its books adequate reserves, and as
to which no Lien has arisen, or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect, or (c)
taxes which were unpaid as of the commencement of the Proceedings.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur which is not stayed by virtue of the commencement of the
Proceedings and that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $100,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $100,000 the fair market value of
the assets of all such underfunded Plans.
SECTION 3.11. DISCLOSURE. The Loan Parties have disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
any Loan Party is subject, and all other matters known to any of them, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of any of the reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered
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hereunder or thereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, PROVIDED that, with
respect to projected financial information, the Loan Parties represent only
that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time (it being understood that such
projections are not a guaranty of future performance and that actual results
may differ, perhaps materially, from such projections).
SECTION 3.12. SUBSIDIARIES. SCHEDULE 3.12 sets forth the name of, and
the ownership interest of the Borrower in each Subsidiary of the Borrower and
identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of
the Closing Date.
SECTION 3.13. INSURANCE. SCHEDULE 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrower and the Subsidiaries as of
the Closing Date. As of the Closing Date, all premiums in respect of such
insurance that are due and payable have been paid.
SECTION 3.14. LABOR MATTERS. As of the Closing Date, there are no
strikes, lockouts or slowdowns against any Loan Party pending or, to the
knowledge of the Loan Parties, threatened. The hours worked by and payments made
to employees of the Loan Parties have not been in violation of the Fair Labor
Standards Act or any other applicable federal, state, local or foreign law
dealing with such matters. All post-Proceeding payments due from any Loan Party,
or for which any claim may be made against any Loan Party, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of such member. The consummation of the
transactions contemplated by the Loan Documents will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Loan Party is bound.
SECTION 3.15. SECURITY DOCUMENTS.
(a) Each of the Orders create in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Security
Agreement) and constitute the creation of a fully perfected Lien on, and
security interest in, all right, title and interest of the grantors
thereunder in such Collateral, in each case prior and superior in right to
any other person, other than with respect to Liens expressly permitted by
Section 6.2 and as otherwise provided in such Order.
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(b) Each of the Orders create in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, legal, valid and enforceable
mortgage and security interests in the Real Estate which constitute fully
perfected Liens on, and security interests in, all right, title and interest
of the grantors thereunder in such Real Estate, in each case prior and
superior in right to any other person, other than with respect to Liens
expressly permitted by Section 6.2(f) and as otherwise provided in such Order.
(c) Upon the entry of the Interim Borrowing Order or the Final
Borrowing Order, whichever occurs first, all filings, assignments, pledges
and deposits of documents or instruments will have been made and all other
actions will have been taken that are necessary or advisable, under
applicable law, to establish and perfect the Collateral Agent's security
interest in the Collateral. The Collateral and the Collateral Agent's rights
with respect to the Collateral are not subject to any setoff, claims,
withholdings, or other defenses. The Borrower is the owner of the Collateral,
free from any lien, security interest, encumbrance, or any other claim or
demand, except for Permitted Liens.
SECTION 3.16. FEDERAL RESERVE REGULATIONS.
(a) No Loan Party is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to buy or carry Margin Stock or to extend
credit to others for the purpose of buying or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose or (ii) for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulations U or X.
(c) Less than 25% of the assets of the Loan Parties on a
consolidated basis consist of Margin Stock.
SECTION 3.17. YEAR 2000 COMPLIANCE. The Borrower and its Subsidiaries
have reviewed the areas within their businesses and operations which could be
adversely affected by, and have developed a program to address on a timely
basis, the "Year 2000 Problem" (i.e. the risk that computer applications used by
the Borrower or any of its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999). Based upon
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such review, each of the Borrower and its Subsidiaries reasonably believes
that the "Year 2000 Problem" will not have any materially adverse effect on
the business or financial condition of the Borrower or any of its
Subsidiaries.
SECTION 3.18. REAL ESTATE LEASES. With respect to the Real Estate
Leases, on and after the Closing Date, (i) each Real Estate Lease is valid and
in full force and effect, and the Borrower is the lessee under each Real Estate
Lease and is in possession of all of the premises demised by each Real Estate
Lease; (ii) none of the Real Estate Leases has been amended, modified, or
supplemented except by written instrument which has heretofore been delivered to
the Tranche B Lender or the Agents and except as may be expressly permitted
herein after the Closing Date; (iii) except as has heretofore been disclosed in
writing to the Tranche B Lender, the Borrower has no knowledge as of the date
hereof or as of the Closing Date of any failure, breach, default, or event of
default by the lessor under any of the Real Estate Leases in the performance of
any of its material obligations under such Real Estate Lease which such failure,
breach, default, or event of default has resulted or which in the reasonable
judgment of the Tranche B Lender would be expected to result in any material
adverse effect upon any of the Borrower's leasehold interests under any such
Real Estate Lease or the value of any such interest; (iv) except with respect to
any defaults of the types referred to in Section 365(e)(1) of the Bankruptcy
Code existing as of the Closing Date, there is no existing breach, default, or
event of default on the part of the Borrower under any of the Real Estate Leases
which would (A) result in the lessor under any Real Estate Lease having the
right: (x) to terminate or cancel any such Real Estate Lease; or (y) to
accelerate the Borrower's monetary obligations thereunder; or (B) in the
reasonable judgment of the Tranche B Lender be expected to result in any
material adverse effect upon any of the Borrower's leasehold interests under any
such Real Estate Lease or the value of any such interest; (v) the Borrower has
not assigned, transferred, pledged, mortgaged, or otherwise hypothecated any of
the Real Estate Leases or any interest therein, other than to the Collateral
Agent and to any holders of Permitted Liens therein; (vi) except for licenses
and subleases listed on SCHEDULE 3.18 attached hereto and except for licenses to
licensees of merchandise departments in its retail stores, the Borrower has not
sublet or licensed any of the premises demised under any of the Real Estate
Leases; and (vii) as of the date hereof and as of the Effective Date, there has
been no eminent domain proceeding, fire or casualty or other event not
constituting a failure to perform, breach, default, or event of default by the
Borrower or the lessor under any Real Estate Lease which, either presently or
with the passage of time or giving of notice, or both, in each such case, would
entitle the lessor under any Real Estate Lease to terminate or cancel such Real
Estate Lease.
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ARTICLE 4.
CONDITIONS
SECTION 4.1. CLOSING DATE. The obligation of the Tranche A Lenders to
make each Tranche A Loan, the Tranche B Lender to make the Tranche B Loan and of
the Issuing Bank to issue each Letter of Credit, including the initial Loan and
the initial Letter of Credit, is subject to the following conditions precedent:
(a) LOAN DOCUMENTS. The Agents (or their counsel) shall have
received from each party hereto other than the Tranche A Lenders and Tranche B
Lender either (i) a counterpart of this Agreement and all other Loan Documents
signed on behalf of such party or (ii) written evidence satisfactory to the
Agents (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement and
all other Loan Documents.
(b) OPINIONS. The Agents shall have received a favorable written
opinion (addressed to each Agent and the Lenders and dated the Closing Date) of
each of (i) Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇, counsel for the Loan Parties
substantially in the form of EXHIBIT D-1, and (ii) ▇▇▇▇, ▇▇▇▇▇▇▇ & Cleveland,
bankruptcy counsel for the Loan Parties, substantially in the form of EXHIBIT
D-2, and, in the case of each such opinion required by this paragraph, covering
such other matters relating to the Loan Parties, the Loan Documents or the
transactions contemplated thereby as the Required Lenders shall reasonably
request. The Loan Parties hereby request such counsel to deliver such opinions.
(c) OTHER DOCUMENTS. The Agents shall have received such documents
and certificates as the Agents or their counsel may reasonably request relating
to the organization, existence and good standing of each Loan Party, the
authorization of the transactions contemplated by the Loan Documents and any
other legal matters relating to the Loan Parties, the Loan Documents or the
transactions contemplated thereby, all in form and substance satisfactory to the
Agents and their counsel.
(d) EXCESS AVAILABILITY. After giving effect to the first funding
under the Loans; any charges to the Loan Account made in connection with the
establishment of the credit facility contemplated hereby; and Letters of Credit
to be issued at, or immediately subsequent to, such establishment, Excess
Availability shall be not less than $6,000,000. The Agents shall have received a
Borrowing Base Certificate dated the Closing Date, relating to the
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calendar week ended on January 1, 2000, and executed by a Financial Officer
of the Borrower.
(e) NO VIOLATIONS. The consummation of the transactions
contemplated hereby shall not (i) violate any applicable law, statute, rule or
regulation or (ii) conflict with, or result in a default or event of default
under, any material agreement of any Loan Party (except to the extent the
Borrower is not required to comply therewith in the Proceedings or enforcement
of remedies on account of the failure to comply therewith is stayed in the
Proceedings).
(f) APPROVALS. All necessary consents and approvals to the
transactions contemplated hereby shall have been obtained and shall be
satisfactory to the Agents, except for any consents or approvals as to which the
failure to obtain will not have a Material Adverse Effect. Without limiting the
foregoing, there shall have been issued in the Proceedings an Interim Borrowing
Order, which order shall not have been stayed, appealed, modified, reversed or
otherwise affected.
(g) FINANCIAL CONDITION. The Agents shall be satisfied that any
financial statements delivered to them fairly present the business and financial
condition of the Loan Parties, and that, other than the commencement of the
Proceedings, there has been no material adverse change in the assets, business,
financial condition, income or prospects of the Loan Parties since the date of
the most recent financial information delivered to the Agents.
(h) LITIGATION. There shall not be pending any litigation or
other proceeding which is not stayed by the commencement of the Proceedings, the
result of which might have a Material Adverse Effect on the Loan Parties.
(i) NO CHANGE. Other than the commencement of the Proceedings,
there shall not have occurred any material adverse change in the condition
(financial or otherwise), operations, assets, income and/or prospects of the
Loan Parties since October 31, 1999, except as disclosed to the Agents and the
Lenders in writing prior to the date hereof.
(j) GOVERNMENTAL REGULATION. No material changes in governmental
regulations or policies affecting the Borrower, the Agents or any Lender
involved in this transaction shall have occurred prior to the Closing Date.
(k) NO DISRUPTION. There shall not have occurred any disruption or
material adverse change in the financial or capital markets in general that
77
would, in the opinion of the Administrative Agent, have a material adverse
effect on the market for loan syndications or in the market for equity
securities in particular, or adversely affecting the syndication of the Loans.
(l) PAYOFF. There shall have been delivered to the Administrative
Agent a payoff letter with respect to the Pre-Petition Agreement and the amount
of the Loans requested on the Closing Date shall not be less than the payoff
amount specified in such payoff letter.
(m) OTHER MATTERS. There shall have been delivered to the
Administrative Agent such additional instruments and documents as the Agents or
counsel to the Agents may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of
the Closing Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.2) at or prior to 2:00 p.m., Boston time, on January 7,
2000 (and, in the event such conditions are not so satisfied or waived, this
Agreement shall terminate at such time).
SECTION 4.2. CONDITIONS PRECEDENT TO EACH LOAN AND EACH LETTER OF
CREDIT. In addition to those conditions described in Section 4.1, the obligation
of the Tranche A Lenders to make each Tranche A Loan and of the Issuing Bank to
issue each Letter of Credit, is subject to the following conditions precedent:
(a) NOTICE. The Administrative Agent shall have received a notice
with respect to such borrowing or issuance, as the case may be, as required by
Article 2.
(b) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement and the other Loan Documents or otherwise
made in writing in connection herewith or therewith shall be true and correct in
all material respects on and as of the date of each Borrowing or the issuance of
each Letter of Credit hereunder with the same effect as if made on and as of
such date, other than representations and warranties that relate solely to an
earlier date.
(c) NO DEFAULT. On the date of each Borrowing hereunder and the
issuance of each Letter of Credit, the Borrower and the other Loan Parties shall
be in compliance with all of the terms and provisions set forth herein
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and in the other Loan Documents to be observed or performed and no Default or
Event of Default shall have occurred and be continuing.
(d) BORROWING BASE CERTIFICATE. The Administrative Agent shall
have received the timely delivery of the most recently required Borrowing Base
Certificate (ending on the Saturday of the immediately preceding week), with
each such Borrowing Base Certificate including schedules as reasonably required
by the Administrative Agent.
(e) CASE ADMINISTRATION. The Interim Borrowing Order shall be in
full force and effect and shall not have been reversed, modified or amended in
any respect, provided, that the Bankruptcy Court shall enter the Final Borrowing
Order authorizing and approving this Agreement pursuant to Section 364(c) of the
Bankruptcy Code and Bankruptcy Rule 4001, in form and substance satisfactory to
the Agents and the Lenders, and the Final Borrowing Order shall be in full force
and effect, and shall not have been reversed, modified or amended in any
respect, prior to the earlier to occur of (i) February 10, 2000 and (ii) the
time of the making of any Loan or the issuance, extension or renewal of any
Letter of Credit the amount of which, when added to the principal amount of all
Loans and (as the case may be) the maximum drawing amount of all Letters of
Credit then outstanding, would exceed the aggregate amount thereof which was
authorized by the Bankruptcy Court in the Interim Borrowing Order for Loans or
Letters of Credit or both. If either the Interim Borrowing Order or the Final
Borrowing Order is the subject of a pending appeal in any respect, none of such
Order, the making of the Loans, the issuance, extension or renewal of any
Letters of Credit, or the performance by the Borrower of any of its obligations
under any of the Loan Documents shall be the subject of a presently effective
stay pending appeal. The Borrower and the Agents and the Lenders shall be
entitled to rely in good faith upon the Orders notwithstanding objection thereto
or appeal therefrom by any interested party. The Borrower and the Agents and the
Lenders shall be permitted and required to perform their respective obligations
in compliance with this Agreement notwithstanding any such objection or appeal
unless the relevant Order has been stayed by a court of competent jurisdiction.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section 4.2 have
been satisfied at that time and that after giving effect to such extension of
credit the Borrower shall continue to be in compliance with the Borrowing Base.
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ARTICLE 5.
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all L/C
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:
SECTION 5.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Loan
Parties will furnish to the Agents:
(a) within 95 days after the end of each fiscal year of the
Borrower, its consolidated and consolidating balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end
of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all audited (in the case of such
consolidated statements) and reported on by independent public accountants of
recognized national standing (without a "going concern" or like qualification
or exception and without any qualification or exception as to the scope of
such audit, except for qualifications and exceptions resulting from the
commencement and pendency of the Proceedings) to the effect that such
consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its consolidated and
consolidating balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments, purchase accounting adjustments and the
absence of footnotes;
(c) within 35 days after the end of each of the first two
fiscal months of each fiscal quarter of the Borrower other than the first
fiscal quarter, and within 50 days after the end of each of the first two
fiscal months of the first fiscal quarter, (i) its consolidated balance sheet
and
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related statements of operations, stockholders' equity and cash flows as of
the end of and for such fiscal month and the then elapsed portion of the
fiscal year, all certified by one of its Financial Officers as presenting in
all material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments, purchase accounting adjustments and the absence of footnotes and
(ii) an itemized accounting of all amounts paid or credited to the Escrow
Account during each such month, in each case certified by a Financial Officer;
(d) concurrently with any delivery of financial statements
under clause (a), (b), or (c) above, a certificate of the Borrower, completed
by a Financial Officer of the Borrower, (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating compliance
with Section 6.11 and Section 6.12, and (iii) stating whether any change in
GAAP or in the application thereof has occurred since the date of the
Borrower's audited financial statements referred to in Section 3.4 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting rules
or guidelines);
(f) concurrently with any delivery of financial statements
under clause (c) above, a consolidated statement of projected cash flow
prepared on a weekly basis for the following 8 week period;
(g) within 30 days following the commencement of each fiscal
year of the Borrower, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet and related statements of
projected operations and cash flow as of the end of and for such fiscal year)
and, promptly when available, any significant revisions of such budget;
(h) on Tuesday of each week, a certificate in the form of
EXHIBIT E (a "BORROWING BASE CERTIFICATE") showing the Borrowing Base as of
the close of business on Saturday of the immediately preceding week, each
such Certificate to be certified as complete and correct on behalf of the
Borrower by a Financial Officer of the Borrower;
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(i) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed
by any Loan Party with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as the case may be;
(j) promptly upon receipt thereof, copies of all reports
submitted to the Borrower by independent certified public accountants in
connection with each annual, interim or special audit of the books of the
Borrower or any of its Subsidiaries made by such accountants, including any
management letter commenting on the Borrower's internal controls submitted by
such accountants to management in connection with their annual audit;
(k) copies, when so filed or submitted, of any pleading filed
in the Proceedings by or on behalf of any of the Loan Parties or the
submission by or on behalf of any of the Loan Parties of any report or
financial statement to the Bankruptcy Court in which the Proceedings are
pending or the office of the United States Trustee, or the submission by or
on behalf of any of the Loan Parties of any financial statement to any
committee appointed in the Proceedings;
(l) the financial and collateral reports described on SCHEDULE
5.01(l) hereto, at the times set forth in such Schedule;
(m) daily, a detailed summary of the Net Proceeds received
from any Prepayment Event; and
(n) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of any Loan Party, or compliance with the terms of any Loan
Document, as the Agents or any Lender may reasonably request.
SECTION 5.2. NOTICES OF MATERIAL EVENTS. The Loan Parties will
furnish to the Administrative Agent, the Issuing Bank, the Collateral Agent,
and each Lender prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting any Loan Party or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
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(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected
to result in a Material Adverse Effect;
(d) any failure by any Loan Party to pay rent becoming due
subsequent to the commencement of the Proceedings and payable as an
administrative expense at any of such Loan Party's locations, which failure
continues for the lesser of the applicable cure period under the lease or ten
(10) days following the day on which such rent first came due; and
(e) the discharge by the Loan Parties of either their present
independent accountants or Loan Parties, or any withdrawal or resignation by
such independent accountants or consultants.
Each notice delivered under this Section shall be accompanied by a statement
by a Financial Officer or other executive officer of the Borrower on behalf
of the Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with
respect thereto.
SECTION 5.3. INFORMATION REGARDING COLLATERAL.
(a) The Loan Parties will furnish to the Agents prompt written
notice of any change (i) in any Loan Party's corporate name or in any trade
name used to identify it in the conduct of its business or in the ownership
of its properties, (ii) in the location of any Loan Party's chief executive
office, its principal place of business, any office in which it maintains
books or records relating to Collateral owned by it or any office or facility
at which Collateral owned by it is located (including the establishment of
any such new office or facility), (iii) in any Loan Party's identity or
corporate structure or (iv) in any Loan Party's Federal Taxpayer
Identification Number. The Loan Parties will promptly notify the Agents if
any material portion of the Collateral is damaged or destroyed and
immediately deliver an updated Borrowing Base Certificate reflecting such
loss.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a)
of Section 5.1, the Borrower shall deliver to the Agents a certificate of a
Financial Officer of the Borrower setting forth the information required
pursuant to the Perfection Certificate or confirming that there has been no
change in such information since the date of the Perfection Certificate
delivered on the Closing Date or the date of the most recent certificate
delivered pursuant to this Section.
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SECTION 5.4. EXISTENCE; CONDUCT OF BUSINESS. Each Loan Party will,
and will cause each of the Subsidiaries to, do or cause to be done all things
necessary to comply with its respective charter, certificate of
incorporation, articles of organization, and/or other organizational
documents, as applicable; and by-laws and/or other instruments which deal
with corporate governance, and to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business.
SECTION 5.5. PAYMENT OF OBLIGATIONS. Each Loan Party will, and will
cause each of the Subsidiaries to, pay its Indebtedness and other obligations,
including tax liabilities, arising subsequent to, or not stayed by, the
commencement of the Proceedings before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Loan Party or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (c) such contest effectively suspends collection of the contested
obligation and enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect. Nothing contained herein shall be deemed to
limit the rights of the Administrative Agent under Section 2.2(b) hereof.
SECTION 5.6. MAINTENANCE OF PROPERTIES. Each Loan Party will, and will
cause each of the Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted.
SECTION 5.7. INSURANCE.
(a) Each Loan Party shall (i) maintain insurance with
financially sound and reputable insurers with an A.M. Best rating of A- or
better (or, to the extent consistent with prudent business practice, a
program of self-insurance approved by the Administrative Agent) on such of
its property and in at least such amounts and against at least such risks as
is customary with companies in the same or similar businesses operating in
the same or similar locations, including public liability insurance against
claims for personal injury or death occurring upon, in or about or in
connection with the use of any properties owned, occupied or controlled by it
(including the insurance required pursuant to the Security Documents); (ii)
maintain such other insurance as may be required by law; and (iii) furnish to
the Administrative Agent, upon written request, full information as to the
insurance carried.
84
(b) Fire and extended coverage policies maintained with respect
to any Collateral shall be endorsed or otherwise amended to include (i) a
non-contributing mortgage clause (regarding improvements to real property)
and lenders' loss payable clause (regarding personal property), in form and
substance satisfactory to the Collateral Agent, which endorsements or
amendments shall provide that, the insurer shall pay all proceeds otherwise
payable to the Borrower or the other Loan Parties under the policies directly
to the Collateral Agent, (ii) a provision to the effect that none of the
Borrower, the Administrative Agent, the Collateral Agent, or any other party
shall be a coinsurer and (iii) such other provisions as the Collateral Agent
may reasonably require from time to time to protect the interests of the
Lenders. Commercial general liability policies shall be endorsed to name the
Collateral Agent as an additional insured. Business interruption policies
shall name the Collateral Agent as a loss payee and shall be endorsed or
amended to include (i) a provision that, the insurer shall pay all proceeds
otherwise payable to the Borrower or the other Loan Parties under the
policies directly to the Administrative Agent or the Collateral Agent, (ii) a
provision to the effect that none of the Borrower, the Administrative Agent,
the Collateral Agent or any other party shall be a co-insurer and (iii) such
other provisions as the Collateral Agent may reasonably require from time to
time to protect the interests of the Lenders. Each such policy referred to in
this paragraph also shall provide that it shall not be canceled, modified or
not renewed (i) by reason of nonpayment of premium except upon not less than
30 days' prior written notice thereof by the insurer to the Collateral Agent
(giving the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than 60 days'
prior written notice thereof by the insurer to the Collateral Agent. All such
insurance which covers the Collateral shall include an endorsement in favor
of the Collateral Agent, which endorsement shall provide that the insurance,
to the extent of the Collateral Agent's interest therein, shall not be
impaired or invalidated, in whole or in part, by reason of any act or neglect
of the Borrower or by the failure of any grantor to comply with any warranty
or condition of the policy. The Borrower shall deliver to the Collateral
Agent, prior to the cancellation, modification or nonrenewal of any such
policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Collateral Agent)
together with evidence satisfactory to the Collateral Agent of payment of the
premium therefor.
SECTION 5.8. CASUALTY AND CONDEMNATION. Each Loan Party will furnish to
the Agents and the Lenders written notice within 10 days of any casualty or
other insured damage to any material portion of any Collateral or the
commencement of any action or proceeding for the taking of any material
85
portion of the Collateral or any part thereof or interest therein under power
of eminent domain or by condemnation or similar proceeding.
SECTION 5.9. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS.
(a) Each Loan Party will, and will cause each of the
Subsidiaries to, keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to
its business and activities. Each Loan Party will, and will cause each of the
Subsidiaries to, permit any representatives designated by any Agent or any
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably
requested.
(b) Each Loan Party will, and will cause each of the
Subsidiaries to, from time to time upon the request of the Collateral Agent
or the Required Lenders through the Administrative Agent, permit the
Collateral Agent or the Lenders or professionals (including investment banks,
consultants, accountants, lawyers and appraisers) retained by the Collateral
Agent, the Administrative Agent or the Lenders to conduct (i) evaluations of
the Borrower's practices in the computation of the Borrowing Base and (ii)
appraisals of the assets included in the Borrowing Base and related financial
information such as, but not limited to, sales, gross margins, payables,
accruals and reserves (it being understood and agreed to that, in the absence
of a Default or Event of Default, the Collateral Agent will conduct such
evaluations and appraisals not more than three times per fiscal year of the
Borrower), and pay the reasonable and documented fees and expenses of the
Collateral Agent, the Lenders or such professionals with respect to such
evaluations and appraisals.
(c) The Agents may from time to time conduct "mystery shopping"
visits to any or all of the Borrower's business premises, shall provide to
the Borrower a copy of any written report of the results of such "mystery
shopping" issued by any third party "mystery shopper" engaged by the Agents,
and all reasonable expenses incurred by the Agents with respect to such
visits (absent a Default or Event of Default, not to exceed $1,500 per
rolling twelve month period) shall be reimbursed by the Borrower pursuant to
Section 9.3.
SECTION 5.10. COMPLIANCE WITH LAWS. Each Loan Party will, and will
cause each of the Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could
not
86
reasonably be expected to result in a Material Adverse Effect. Each Loan
Party will, and will cause each of the Subsidiaries to, comply with all laws,
rules, regulations and orders entered in or relating to the Proceedings.
SECTION 5.11. USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of
Loans made hereunder and Letters of Credit issued hereunder will be used only
(a) first, to pay the full amount of the Pre-Petition Debt, (b) to finance the
acquisition of working capital assets of the Borrower, including the purchase of
inventory and equipment, in each case in the ordinary course of business and (c)
to finance capital expenditures of the Borrower, and (d) for general corporate
purposes, which may include payments permitted to be made under Section 6.7. No
part of the proceeds of any Loan will be used, whether directly or indirectly,
for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
SECTION 5.12. ADDITIONAL SUBSIDIARIES. The Loan Parties will not, and
will not permit any Subsidiary to, form or acquire any Subsidiary without the
express written consent of the Required Lenders. If (i) any additional
Subsidiary is formed or acquired after the Closing Date, the Borrower will
notify the Agents and the Lenders thereof or (ii) the Administrative Agent
determines that the Subsidiary existing on the Closing Date has material assets
and notifies the Borrower, then (a) if such Subsidiary is a Subsidiary Loan
Party, the Borrower will cause such Subsidiary to become a guarantor of the
Obligations and become a party to each applicable Security Document in a manner
satisfactory to the Collateral Agent within three Business Days after such
Subsidiary is formed or acquired or the Agent gives the notice described in
clause (ii) above and promptly take such actions to create and perfect Liens on
such Subsidiary's assets to secure the Obligations as any Agent or the Required
Lenders shall reasonably request and (b) if any shares of capital stock or
Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party, the
Borrower and the Borrower will cause such shares and promissory notes evidencing
such Indebtedness to be pledged pursuant to a pledge agreement, in a form
satisfactory to the Collateral Agent and which shall thereafter constitute a
Security Document, within three Business Days after such Subsidiary is formed or
acquired or the Agent gives the notice described in clause (ii) above (except
that, if such Subsidiary is a Foreign Subsidiary, shares of common stock of such
Subsidiary to be pledged pursuant to such pledge agreement may be limited to 65%
of the outstanding shares of common stock of such Subsidiary).
87
SECTION 5.13. FURTHER ASSURANCES.
(a) Each Loan Party will, and will cause each Subsidiary Loan
Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements and other documents), that may
be required under any applicable law, or which any Agent or the Required
Lenders may reasonably request, to effectuate the transactions contemplated
by the Loan Documents or to grant, preserve, protect or perfect the Liens
created or intended to be created by the Security Documents or the validity
or priority of any such Lien, all at the expense of the Loan Parties. Without
limiting the foregoing, prior to the entry of the Final Borrowing Order, the
Agents shall have received the Security Documents duly executed by the
applicable Loan Parties and such other instruments, documents and agreements
as the Agents and their counsel shall have reasonably requested to confirm,
perfect and more fully vest the rights of the Agents and the Lenders under
the Loan Documents, including, without limitation, in the collateral granted
pursuant to the Security Documents. The Loan Parties also agree to provide to
the Agents, from time to time upon request, evidence reasonably satisfactory
to the Agents as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.
(b) If any material assets are acquired by the Borrower or any
Loan Party after the Closing Date (other than assets constituting Collateral
under the Security Agreement that become subject to the Lien of the Security
Agreement upon acquisition thereof), the Loan Parties will notify the Agents
and the Lenders thereof, and the Loan Parties will cause such assets to be
subjected to a Lien securing the Obligations and will take such actions as
shall be necessary or reasonably requested by any Agent or the Required
Lenders to grant and perfect such Liens, including actions described in
paragraph (a) of this Section, all at the expense of the Loan Parties.
(c) Upon the request of the Administrative Agent, the Borrower
shall cause each of its customs brokers to deliver an agreement to the
Administrative Agent covering such matters and in such form as the
Administrative Agent may reasonably require.
(d) Not later than thirty (30) days after the Closing Date the
Borrower shall have entered into a Blocked Account Agreement with Bank of
America, N.A. ("Bank of America") with respect to the Blocked Accounts
maintained by the Borrower with Bank of America, such Blocked Account
Agreement to be in form and substance reasonably satisfactory to the
Administrative Agent.
88
(e) Not later than ten (10) Business Days after the Closing
Date the Loan Parties shall have delivered to the Administrative Agent
certificates of all insurance maintained in accordance with Section 5.7 of
this Agreement and Section 4.11 of the Security Agreement showing the
Collateral Agent listed as loss payee together with certified copies of, or
binder certificates evidencing, such policies of insurance, in each case in
form and substance reasonably satisfactory to the Agents.
(f) Not later than ten (10) days after the Closing Date the
Loan Parties shall have caused Streamline (inventory consolidators) to
deliver a waiver in form and substance reasonably satisfactory to the
Collateral Agent.
(g) Not later than thirty (30) days after the Closing Date the
Borrower shall have delivered assignments to the Collateral Agent of and
amendments to all mortgages in favor of the agent under the Pre-Petition
Agreement and such new mortgages and title insurance policies as the
Collateral Agent reasonably requests, all in form and substance reasonably
satisfactory to the Collateral Agent.
ARTICLE 6.
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all L/C Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
SECTION 6.1. INDEBTEDNESS.
(a) The Loan Parties will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness arising prior to the commencement of the
Proceedings and set forth in SCHEDULE 6.01;
(iii) Indebtedness of the Borrower or the Subsidiaries
incurred subsequent to the commencement of the Proceedings to finance
the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness
assumed in
89
connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof or result in
an earlier maturity date or decreased weighted average life thereof,
PROVIDED that (A) such Indebtedness is incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement and (B) the aggregate principal amount of Indebtedness
permitted by this clause (iii) shall not exceed $2,000,000 at any time
outstanding;
(iv) Indebtedness under Hedging Agreements entered into in
accordance with Section 6.6;
(v) unsecured Indebtedness in respect of presently existing
limited recourse arrangements under the Store Credit Card Program
Documents;
(vi) Indebtedness with respect to customer deposits not
exceeding in the aggregate $1,250,000 taken in the ordinary course
prior to the Filing Date; and
(vii) other unsecured Indebtedness of the Borrower arising
subsequent to the commencement of the Proceedings in an aggregate
principal amount not exceeding $2,000,000 at any time outstanding.
(b) Subject to the provisions of Section 6.7, none of the Loan
Parties will, nor will they permit any Subsidiary to, issue any preferred
stock (except for preferred stock (i) all dividends in respect of which are
to be paid (and all other payments in respect of which are to be made) in
additional shares of such preferred stock, in lieu of cash, until the date
that is at least 360 days following the Maturity Date, (ii) that is not
subject to redemption other than redemption at the option of the Loan Party
issuing such preferred stock and (iii) all payments in respect of which are
expressly subordinated to the Obligations) or be or become liable in respect
of any obligation (contingent or otherwise) to purchase, redeem, retire,
acquire or make any other payment in respect of (i) any shares of capital
stock of any Loan Party or (ii) any option, warrant or other right to acquire
any such shares of capital stock.
SECTION 6.2. LIENS. The Loan Parties will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
90
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of any Loan Party set
forth in SCHEDULE 6.02, PROVIDED that (i) such Lien shall not apply to any
other property or asset of any Loan Party and (ii) such Lien shall secure
only those obligations that it secures as of the Closing Date, and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(d) any Lien existing on any property or asset (exclusive of
any Accounts or Inventory) prior to the acquisition thereof by the Borrower
or existing on any property or asset (exclusive of any Accounts or Inventory)
of any Person that becomes a Subsidiary after the date hereof prior to the
time such Person becomes a Subsidiary, PROVIDED that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien shall secure only those obligations that it secures on the
date of such acquisition or the date such Person becomes a Subsidiary, as the
case may be and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(e) Liens on fixed or capital assets acquired, constructed or
improved by any Loan Party PROVIDED that (i) such security interests secure
Indebtedness permitted by clause (iii) of Section 6.1(a), (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction
or improvement, (iii) the Indebtedness secured thereby does not exceed 100%
of the cost of acquiring, constructing or improving such fixed or capital
assets and (iv) such security interests shall not apply to any other property
or assets of any Loan Party.
SECTION 6.3. FUNDAMENTAL CHANGES.
(a) The Loan Parties will not and will not permit any
Subsidiary to, merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or liquidate or dissolve.
(b) The Borrower and the Subsidiaries will not engage in
any business other than businesses of the type conducted by the Borrower and
91
the Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto.
SECTION 6.4. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Loan Parties will not, and will not permit any of the
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger)
any capital stock, evidences of indebtedness or other securities (including
any option, warrant or other right to acquire any of the foregoing) of, make
or permit to exist any loans or advances to, Guarantee any obligations of, or
make or permit to exist any investment or any other interest in, any other
Person, or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit,
except:
(a) Permitted Investments;
(b) investments existing on the Closing Date, and set forth on
SCHEDULE 6.04, to the extent such investments would not be permitted
under any other clause of this Section;
(c) investments received in connection with the bankruptcy
or reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(d) Hedging Agreements permitted under Section 6.6; and
(e) loans or advances to employees for the purpose of travel,
entertainment or relocation in the ordinary course of business in an
aggregate amount not to exceed $100,000 at any time outstanding;
PROVIDED, HOWEVER, that (A) in each such case referred to in this Section 6.4,
arrangements have been made to the satisfaction of the Agents and the Lenders
for the perfection and protection and the preservation of the priority of the
Collateral Agent's Lien therein and (B) in the case of any Investments referred
to in clause (a) of this Section 6.4 which do not consist of cash collateral
expressly required to be delivered and which, in fact, have been delivered to
the Collateral Agent hereunder, such investments are made only at a time when
Tranche A Loan outstandings are zero (other than Letters of Credit with respect
to which the Agent has received cash collateral in the amount of 105% of the
maximum drawing amount).
92
SECTION 6.5. ASSET SALES. The Loan Parties will not, and will not
permit any of the Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any capital stock, nor will the Loan Parties permit any of
the Subsidiaries to issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except:
(a) (i) sales of Inventory in the ordinary course of business,
or (ii) so long as no Event of Default exists or would arise therefrom, sales
of used or surplus equipment and Permitted Investments in the ordinary course
of business;
(b) so long as no Event of Default exists or would arise
therefrom, sales of Real Estate and furniture, fixtures and equipment
relating to such Real Estate on such terms and conditions as may be
reasonably acceptable to the Tranche B Lender or approved by the Bankruptcy
Court in the Proceedings, but in no event shall the Net Proceeds from the
sale of any Eligible Real Estate be less than the Release Price therefor;
(c) so long as no Event of Default exists or would arise
therefrom, the liquidation of the Inventory of up to seven of the Borrower's
retail stores on a bulk basis on terms reasonably acceptable to the Agents,
conducted by a professional liquidator on an "equity" basis and not a
commission or other basis, with net proceeds after liquidation costs equal to
not less than 75% of the Cost of such liquidated Inventory PROVIDED that the
related Real Estate Lease remains subject to Section 6.16;
PROVIDED that all sales, transfers, leases and other dispositions permitted
hereby shall be made at arm's length and for fair value and solely for cash
consideration. In connection with a permitted disposition, the Collateral
Agent shall, at the expense of the Borrower, release all of its Liens on the
assets disposed of, but not the proceeds of such disposition.
SECTION 6.6. HEDGING AGREEMENTS. The Loan Parties will not, and will
not permit any of the Subsidiaries to, enter into any Hedging Agreement,
other than Hedging Agreements entered into in the ordinary course of business
to hedge or mitigate risks to which the Borrower is exposed in the conduct of
its business or the management of its liabilities.
SECTION 6.7. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS.
(a) The Loan Parties will not, and will not permit any
Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except as long as no Event of Default
exists or would
93
arise therefrom the Loan Parties may declare and pay dividends with respect
to their capital stock payable solely in additional shares of their common
stock.
(b) The Loan Parties will not, and will not permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any
payment or other distribution (whether in cash securities or other property)
of or in respect of principal of or interest on any Indebtedness, or any
payment or other distribution (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Indebtedness, except:
(i) payment of regularly scheduled interest and principal
payments as and when due in respect of any permitted Indebtedness
incurred subsequent to the commencement of the Proceedings or for
payments required or permitted to be made pursuant to an order of the
Bankruptcy Court in the Proceedings for adequate protection payments
pursuant to the Bankruptcy Code;
(ii) refinancings of Indebtedness described in clause (i),
above, to the extent permitted by Section 6.1;
(iii) payments in an amount not to exceed $1,500,000 or such
greater amount as the Administrative Agent agrees to in writing to fund
a reclamation program, the terms of which are subject to the
Administrative Agent's consent; and
(iv) the return of customer deposits described in
Section 6.1(a)(vi) in the ordinary course of business consistent
with the Borrower's past practice.
(c) The Loan Parties will not, and will not permit any
Subsidiary to, after the occurrence and during the continuance of an Event of
Default, deposit or otherwise credit any amounts to the Escrow Account
without the express prior written consent of the Administrative Agent and the
Lenders.
SECTION 6.8. TRANSACTIONS WITH AFFILIATES. The Loan Parties will not,
and will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business at prices
and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm's-length basis from
94
unrelated third parties, (b) transactions between or among the Subsidiary
Loan Parties not involving any other Affiliate, (c) until the occurrence of
any Event of Default, any Restricted Payment permitted by Section 6.7, and
(d) any transactions listed on SCHEDULE 6.8.
SECTION 6.9. RESTRICTIVE AGREEMENTS. The Loan Parties will not and
will not permit any Subsidiary to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Loan Parties
or any Subsidiary to create, incur or permit to exist any Lien upon any of
its property or assets or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary, provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by
law or by any Loan Document, (ii) the foregoing shall not apply to
restrictions and conditions identified on SCHEDULE 6.9 (but shall apply to
any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, PROVIDED such
restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall
not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness
and (v) clause (a) of the foregoing shall not apply to customary provisions
in leases restricting the assignment or subleasing thereof.
SECTION 6.10. AMENDMENT OF MATERIAL DOCUMENTS. The Loan Parties will
not, and will not permit any Subsidiary to, amend, modify or waive any of its
rights under (a) its certificate of incorporation, by-laws or other
organizational documents, if an Event of Default or Material Adverse Effect
would result, (b) any leases or subleases relating to Real Estate, or (c) any
other instruments, documents or agreements entered into prior to the
commencement of the Proceedings, in each case to the extent that such amendment,
modification or waiver would be adverse to the interests of the Lenders or
otherwise have a Material Adverse Effect.
SECTION 6.11. CAPITAL EXPENDITURES. The Loan Parties will not permit
the aggregate amount of Capital Expenditures made by the Borrower and the
Subsidiaries in any fiscal period to exceed the amount set forth below opposite
such period:
95
------------------------------------ -------------------------------
FISCAL PERIOD ENDING AMOUNT
------------------------------------ -------------------------------
Fiscal year ending January, 2001 $4,000,000
------------------------------------ -------------------------------
Six fiscal month period
ending July, 2001 $2,500,000
------------------------------------ -------------------------------
SECTION 6.12. FINANCIAL COVENANTS.
(a) MINIMUM CONSOLIDATED EBITDA The Borrower and the
Subsidiaries shall achieve Consolidated EBITDA, tested monthly on a cumulative
basis from February 1, 2000 through each fiscal month up to and including the
fiscal month ending January 2001 and on a rolling twelve month basis thereafter,
as follows:
@@
------------------- -----------------------------------------------
MONTH ENDING CUMULATIVE MINIMUM CONSOLIDATED EBITDA
------------------- -----------------------------------------------
February, 2000 ($2,000,000)
------------------- -----------------------------------------------
March, 2000 ($1,800,000)
------------------- -----------------------------------------------
April, 2000 ($1,600,000)
------------------- -----------------------------------------------
May, 2000 ($1,500,000)
------------------- -----------------------------------------------
June, 2000 ($650,000)
------------------- -----------------------------------------------
July, 2000 ($250,000)
------------------- -----------------------------------------------
August, 2000 $0
------------------- -----------------------------------------------
September, 2000 $400,000
------------------- -----------------------------------------------
October, 2000 $1,200,000
------------------- -----------------------------------------------
November, 2000 $2,500,000
------------------- -----------------------------------------------
96
------------------- -----------------------------------------------
December, 2000 $8,400,000
------------------- -----------------------------------------------
January, 2001 $6,000,000
------------------- -----------------------------------------------
February, 2001 $5,000,000
------------------- -----------------------------------------------
March, 2001 $5,000,000
------------------- -----------------------------------------------
April, 2001 $5,000,000
------------------- -----------------------------------------------
May, 2001 $5,000,000
------------------- -----------------------------------------------
June, 2001 $5,000,000
------------------- -----------------------------------------------
July, 2001 $5,000,000
------------------- -----------------------------------------------
@@
(b) PURCHASES OF INVENTORY. The Borrower shall not
permit its purchases of new Inventory, calculated on a cumulative basis from
February 1, 2000, on a rolling two month basis to be less than the following
as of the end of applicable months:
@@
------------------------ ----------------------------------
MONTH ENDING CUMULATIVE PURCHASES
------------------------ ----------------------------------
March, 2000 $38,000,000
------------------------ ----------------------------------
April, 2000 $42,000,000
------------------------ ----------------------------------
May, 2000 $45,200,000
------------------------ ----------------------------------
June, 2000 $54,000,000
------------------------ ----------------------------------
July, 2000 $54,100,000
------------------------ ----------------------------------
August, 2000 $53,100,000
------------------------ ----------------------------------
September, 2000 $70,000,000
------------------------ ----------------------------------
97
------------------------ ----------------------------------
October, 2000 $75,700,000
------------------------ ----------------------------------
November, 2000 $83,800,000
------------------------ ----------------------------------
December, 2000 $73,100,000
------------------------ ----------------------------------
January, 2001 $39,400,000
------------------------ ----------------------------------
February, 2001 $20,000,000
------------------------ ----------------------------------
March, 2001 $42,600,000
------------------------ ----------------------------------
April, 2001 $47,800,000
------------------------ ----------------------------------
May, 2001 $45,200,000
------------------------ ----------------------------------
June, 2001 $54,000,000
------------------------ ----------------------------------
July, 2001 $54,100,000
------------------------ ----------------------------------
@@
SECTION 6.13. ADDITIONAL SUBSIDIARIES. The Loan Parties will not, and
will not permit any Subsidiary to, create or purchase any additional Subsidiary
without the express written consent of the Required Lenders.
SECTION 6.14. RETURN OF PROPERTY. Without the prior written consent of
the Administrative Agent, the Borrower shall not consent to or suffer the entry
of an order in the Proceedings which authorizes the return of any of the
Borrower's property pursuant to Section 546(g)* of the Bankruptcy Code.
SECTION 6.15. BANKRUPTCY PROCEEDINGS. The Borrower will not, and will
not permit any of its Subsidiaries to seek, consent or suffer to exist (i) any
modification, stay, vacation or amendment to the Orders; (ii) a priority claim
for any administrative expense or unsecured claim against the Borrower (now
existing or hereafter arising of any kind or nature whatsoever, including
without limitation any administrative expense of the kind specified in ▇▇▇▇▇▇▇
▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇(▇), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d) or
1114 of the Bankruptcy Code) equal or superior to the priority claim of the
Agents and the Lenders in respect of the Obligations, except with respect to the
Carve Out and to the proceeds of avoidance actions of the Borrower under Chapter
5 of the Bankruptcy Code (with the exception of
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actions brought pursuant to Section 549 of such Chapter to recover any
post-petition transfer of the Collateral); and (iii) any Lien on any
Collateral, having a priority equal or superior to the Liens in favor of the
Agents and the Lenders in respect of the Obligations, except for Permitted
Prior Liens.
SECTION 6.16. REAL ESTATE LEASES. Except in connection with the sale or
transfer of Eligible Real Estate or other assets related to a Real Estate Lease
that is otherwise permitted by the terms of this Agreement, the Borrower will
not, and will not permit any of its Subsidiaries to, with respect to the Real
Estate Leases, (i) transmit any written communication to the lessor under any
Real Estate Lease without the approval of the Tranche B Lender if such
communication relates to or involves (A) any actual or alleged breach, default,
or event of default under the subject Real Estate Lease, (B) any actual or
proposed renewal, extension, termination, cancellation, or other change in the
term of the subject Real Estate Lease, (C) any actual or proposed modification
to or waiver of any material provision of the subject Real Estate Lease, or (D)
any other matter that would result in the lessor under any Real Estate Lease
having the right: (x) to terminate or cancel any such Real Estate Lease; or (y)
to accelerate the Borrower's monetary obligations thereunder; or which in the
reasonable judgment of the Tranche B Lender would be expected to result in any
material adverse effect upon any of the Borrower's leasehold interests under any
such Real Estate Lease, or the value of any such interest, (ii) terminate or
cancel, or agree to terminate or cancel, any Real Estate Lease, or settle,
compromise, or adjust, or agree to settle, compromise, or adjust, any claim
(other than the ▇▇▇▇▇▇ Litigation) involving an amount in excess of two months'
rent which the Borrower may have against the lessor under any Real Estate Lease
(including, without limitation, any claim based upon any alleged default by any
lessor or upon any casualty or eminent domain proceeding), without the prior
written consent of the Tranche B Lender, (iii) amend, modify, or supplement, or
agree to amend, modify, or supplement, any Real Estate Lease without the prior
written consent of the Tranche B Lender, unless such amendment, modification, or
supplement is minor or immaterial or of an administrative or operational nature
and would not in the reasonable judgment of the Tranche B Lender adversely
affect the value of the Borrower's leasehold interest; (iv) assign any Real
Estate Lease or sublet or license any portion of the premises without the prior
written consent of the Tranche B Lender, other than to the Collateral Agent, to
any holders of Permitted Liens therein, or licenses to licensees of merchandise
departments in the Borrower's retail stores if any such license does not effect
any form of leasehold interest in any portion of the premises demised to the
Borrower under any of the Real Estate Leases or if any such license does effect
such an interest, such interest is terminable on no more than 60 days notice, or
on any sale, or other disposition of the Real Estate Lease; (v) make any
material structural alteration to any of the
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premises demised by any of the Real Estate Leases which is not contemplated
or provided for by such Real Estate Lease, or remove any material constituent
of the real estate collateral from its present location, in either case
without the prior written consent of the Tranche B Lender, if such alteration
or removal would (A) result in the lessor under any Real Estate Lease having
the right: (x) to terminate or cancel any such Real Estate Lease; or (y) to
accelerate the Borrower's monetary obligations thereunder; or (B) in the
reasonable judgment of the Tranche B Lender, be expected to result in any
material adverse effect upon any of the Borrower's leasehold interests under
any such Real Estate Lease; or (vi) pledge, mortgage, or otherwise
hypothecate any of the Real Estate Leases other than to the Collateral Agent
and to any holders of Permitted Liens therein.
ARTICLE 7.
EVENTS OF DEFAULT
SECTION 7.1. If any of the following events ("EVENTS OF DEFAULT") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan or
any reimbursement obligation in respect of any L/C Disbursement not funded by an
ABR Loan or a Swingline Loan pursuant to Section 2.6(d) when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of one Business Day;
(c) any representation or warranty made or deemed made by or on
behalf of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) the Loan Parties shall fail to observe or perform any
covenant, condition or agreement contained in Article 2, Article 5 (except for
Sections 5.4, 5.5, 5.6, 5.10, 5.12 and 5.13(a), (b) and (c)) or Article 6
(except for Sections
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6.3(b) and 6.16(i) to the extent that a failure under Section 6.16(i) would
not in the reasonable judgment of the Tranche B Lender have a material
adverse effect upon the relevant leasehold interest or the value thereof);
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified above in this Article), and such failure shall continue unremedied
for a period of 10 days after notice thereof from the Administrative Agent to
the Borrower (which notice will be given at the request of any Lender);
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness incurred subsequent to the commencement, or otherwise required
by the Bankruptcy Court to be paid during the pendency, of the Proceedings,
when and as the same shall become due and payable (after giving effect to the
expiration of any grace or cure period set forth therein);
(g) any event or condition occurs that results in any Material
Indebtedness incurred subsequent to the commencement, or otherwise required
to be paid during the pendency, of the Proceedings, becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any such Material
Indebtedness or any trustee or agent on its or their behalf to cause any such
Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity, PROVIDED that this clause (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer
of the property or assets securing such Indebtedness permitted in accordance
with the terms of this Agreement;
(h) The entry of an order in the Proceedings, which order
constitutes the stay of any Order or a modification or reversal of any Order
to which the Agents and each Lender have not consented in writing;
(i) The appointment in the Proceedings of a trustee or of any
examiner having expanded powers to operate all or any part of any Loan
Party's business;
(j) The conversion of the Proceedings to a case under Chapter 7 of
the Bankruptcy Code;
(k) The entry of any order which provides relief from the
automatic stay otherwise imposed pursuant to Section 362 of the Bankruptcy
Code, which order permits any creditor, other than the Agents, to realize
upon, or
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to exercise any right or remedy with respect to, any material asset of any
Loan Party or to terminate any license, franchise, or similar agreement,
where the exercise of such right or remedy or such realization or termination
could have a material adverse effect on the Borrower's and the Subsidiaries'
financial condition or ability to conduct their business in the ordinary
course.
(l) (i) one or more judgments for the payment of money in an
aggregate amount in excess of $100,000 shall be rendered against any Loan
Party or any combination thereof and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be effectively
stayed or (ii) any action shall be legally taken by a judgment creditor to
attach or levy upon any material assets of any Loan Party to enforce any such
judgment, but only if and to the extent that the enforcement of any of the
judgments or actions described in this paragraph (l) is not stayed in the
Proceedings;
(m) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Loan
Parties in an aggregate amount exceeding $100,000;
(n) (i) any challenge by or on behalf of any Loan Party to the
validity of any Loan Document or the applicability or enforceability of any
Loan Document strictly in accordance with the subject Loan Document's terms
or which seeks to void, avoid, limit, or otherwise adversely affect any
security interest created by or in any Loan Document or any payment made
pursuant thereto.
(ii) any challenge by or on behalf of any other Person to the
validity of any Loan Document or the applicability or enforceability of
any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise
adversely affect any security interest created by or in any Loan
Document or any payment made pursuant thereto, but in each case, only
if an order or judgment as to such challenge has been entered adverse
to the Agents and the Lenders.
(iii) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not
to be, a valid and perfected Lien on any Collateral, with the priority
required by the applicable Security Document, except as a result of the
sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents;
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(o) a Change in Control shall occur;
(p) the occurrence of any uninsured loss to any material portion
of the Collateral;
(q) the indictment of, or institution of any legal process or
proceeding against, any Loan Party, under any federal, state, municipal, and
other civil or criminal statute, rule, regulation, order, or other
requirement having the force of law where the relief, penalties, or remedies
sought or available include the forfeiture of any property of any Loan Party
and/or the imposition of any stay or other order, the effect of which could
reasonably be to restrain in any material way the conduct by the Loan
Parties, taken as a whole, of their business in the ordinary course, and such
indictment remains unquashed or such legal process remains undismissed for a
period of 45 days or more;
(r) the determination of the Borrower, whether by vote of the
Borrower's board of directors or otherwise to: suspend the operation of the
Borrower's business in the ordinary course, liquidate all or, except as
permitted by Section 6.5, a material portion of the Borrower's assets or
store locations, or, except as permitted by Section 6.5, employ an agent or
other third party to conduct any so-called store closing, store liquidation
or "Going-Out-Of-Business" sales; or the filing of a motion or other
application in the Proceedings seeking authority to do any of the foregoing;
(s) an application shall be filed by the Borrower for the approval
of any other Super-Priority Claim in the Proceedings which is PARI PASSU with
or senior to the claims of the Agents and the Lenders against the Borrower
hereunder or under any of the other Loan Documents (unless after giving
effect to the transactions contemplated by such application, all Obligations
(whether contingent or otherwise) shall be paid in full in cash and the
Commitments shall be terminated), or there shall arise any such
Super-Priority Claim;
(t) the Borrower shall fail to comply with any order of the
Bankruptcy Court in any material respect to the material detriment of the
Lenders and the Agents or which otherwise would have a Material Adverse
Effect;
(u) the Borrower shall pay or discharge any pre-petition
Indebtedness (other than (i) customary first day orders reasonably acceptable
to the Agents, (ii) the return of deposits described in Section 6.1(a), (iii)
the payment of the Pre-Petition Lender Debt; and (iv) the payment of
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reclamation claims permitted by Section 6.7(b)(iii)) in excess of $100,000 in
the aggregate;
(v) the Borrower (or any other person in the case of clause (ii))
shall file a motion in the Proceedings (i) to use cash collateral of the
Lenders under Section 363(c) of the Bankruptcy Code without the Lenders'
consent, (ii) to recover from any portions of the Collateral any costs or
expenses of preserving or disposing of such Collateral under Section 506(c)
of the Bankruptcy Code, or (iii) to take any other action or actions adverse
to the Lenders or their rights and remedies hereunder or under any of the
other Loan Documents or the Lenders' interest in any of the Collateral;
(w) a suit or action against the Lenders or the Agents shall be
commenced by the Borrower, any federal, state environmental protection or
health and safety agency or any official committee in the Proceedings, which
suit or action asserts any claim or legal or equitable remedy contemplating
subordination of any claim or Lien of the Lenders or the Agents, and, with
respect to any suit or action by any such federal or state agency, (i) a
preliminary order for relief or judgment or decree shall have been entered in
such suit or action against the Lenders or the Agents or (ii) a motion to
dismiss brought by the Lenders or the Agents in response thereto shall have
been denied;
then, and in every such event, and at any time thereafter during the
continuance of such event, subject to the terms of the Order, the
Administrative Agent may, and at the request of the Required Lenders shall,
by notice to the Borrower, take either or both of the following actions, at
the same or different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to
be due and payable), and thereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower.
SECTION 7.2. TRANCHE B ACTIONABLE EVENTS. If any of the following
events occurs:
(a) any Event of Default set forth in Sections 7.1(a) or (b) (with
respect to the Tranche B Loan) or any Overadvance (other than a Permitted
Overadvance) exists for more than twenty days; or
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(b) acceleration of the Tranche A Loans;
then, and in every such event and at any time thereafter during the
continuance of any such event, subject to the terms of the Order, the
Administrative Agent may, and at the request of the Tranche B Lender shall,
by notice to the Borrower take one or more of the following actions, at the
same or different times: (i) provided that either (A) the Tranche A Loans
have been declared due and payable pursuant to Section 7.1 or (B) 20 Business
Days have elapsed since the occurrence of such event, declare the Tranche B
Loan then outstanding to be forthwith due and payable, whereupon the
principal of the outstanding Tranche B Loan together with accrued interest
thereon and any unpaid accrued fees and all other liabilities of the Borrower
accrued hereunder and under any other Loan Document shall become forthwith
due and payable, without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by the Borrower and the
other Loan Parties, anything contained herein or in any other Loan Document
to the contrary notwithstanding; (ii) provided that either (A) the Tranche A
Loans have been declared due and payable pursuant to Section 7.1 or (B) 20
Business Days have elapsed since the occurrence of the such event, instruct
the Collateral Agent to exercise its remedies under the Security Documents
(including, without limitation, foreclosure upon and taking possession of the
Collateral) and (iii) exercise any and all other remedies under the Loan
Documents and applicable law available to the Administrative Agent, the
Issuing Bank, the Collateral Agent and the Lenders. In the event that the
Tranche A Lenders declare the Tranche A Loans to be due and payable pursuant
to Section 7.1, then the Agents shall thereupon follow the instructions of
the Required Lenders (subject to the provisions of Sections 7.4 and 9.2
hereof).
SECTION 7.3. WHEN CONTINUING. For all purposes under this Agreement,
each Default and Event of Default that has occurred shall be deemed to be
continuing at all times thereafter unless it either (a) is cured or corrected
to the reasonable written satisfaction of the Lenders in accordance with
Section 9.2, or (b) is waived in writing by the Lenders in accordance with
Section 9.2. For all purposes under this Agreement, each event described in
Section 7.2 that has occurred shall be deemed to be continuing at all times
thereafter unless it either (a) is cured or corrected to the reasonable
written satisfaction of the Tranche B Lender in accordance with Section 9.2
or (b) is waived in writing by the Tranche B Lender in accordance with
Section 9.2.
SECTION 7.4. REMEDIES. Upon the occurrence of an Event of Default
and acceleration of the Obligations, and following the giving and expiration
of seven Business Days' notice to the Borrower, the Creditors' Committee, and
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the United States Trustee, the Agents shall have relief from the automatic
stay and may foreclose on all or any portion of the Collateral or otherwise
exercise remedies against the Collateral permitted by applicable
nonbankruptcy law. During such seven-Business-Day notice period, the Borrower
shall be entitled to an emergency hearing with the Bankruptcy Court for the
sole purposes of contesting whether an Event of Default has occurred. Unless
during such period the Bankruptcy Court determines that an Event of Default
has not occurred, the automatic stay, as to the Lenders and the Agents, shall
automatically terminate at the end of such notice period and without further
notice or order. Nothing herein shall preclude the Borrower, the Creditors'
Committee or the United States Trustee from seeking injunctive relief
pursuant to Section 105 of the Bankruptcy Code, PROVIDED that the Agents
reserve their right to contest such extraordinary relief.
At the expiration of any seven Business Day notice period referred
to above, in case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Lenders shall have
accelerated the maturity of the Loans pursuant to Section 7.1, each Lender,
if owed any amount with respect to the Loans, reimbursement obligations with
respect to L/C Disbursements or other Obligations, may, and the Agent may, if
requested by the Required Lenders and in its sole discretion, on behalf of
the Lenders, proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations to
such Lender are evidenced, including as permitted by applicable law the
obtaining of the EX PARTE appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of such Lender. No
remedy herein conferred upon any Lender or the Agents or the holder of any
Note or the purchaser of any reimbursement obligation with respect to an L/C
Disbursement is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
SECTION 7.5. DISTRIBUTION OF COLLATERAL PROCEEDS. (a) In the event
that, following the occurrence and during the continuance of any Event of
Default, either Agent or any Lender, as the case may be, receives any monies
in connection with the enforcement of any of the Security Documents, or
otherwise with respect to the realization upon any of the Collateral, such
monies shall be applied to the Obligations as follows:
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(i) First, to the payment of, or (as the case may be) the
reimbursement of the Agents for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agents in connection with the collection of such
monies by the Agents, for the exercise, protection or enforcement by
the Agents of all or any of the rights, remedies, powers and privileges
of the Agents under this Agreement or any of the other Loan Documents
or in respect of the Collateral or in support of any provision of
adequate indemnity to the Agents against any taxes or liens which by
law shall have, or may have, priority over the rights of the Agents to
such monies,
(ii) second, to pay interest on, and then principal of, Swingline
Loans;
(iii) third, to pay interest on the Tranche A Loans (other than
Swingline Loans) then due and payable;
(iv) fourth, to pay the principal of Tranche A Loans (it being
understood that such repayment shall be accompanied by a permanent
reduction in the Tranche A Commitment (if then in effect) in the amount
of such repayment);
(v) fifth, to cash collateralize Letters of Credit in an amount
equal to 105% of the maximum drawing amount thereof;
(vi) sixth, to pay the principal of and all Current Pay Interest
and PIK Interest on the Tranche B Loan;
(vii) seventh, to pay all other Obligations in the order agreed
to in writing by the Administrative Agent and the Lenders, then upon
payment and satisfaction in full or other provisions for payment in
full satisfactory to the Lenders, the Agents and Secured Parties of
all of the Obligations, to the payment of any obligations required
to be paid pursuant to Section 9-504(1)(c) of the Uniform Commercial
Code; and
(viii) eighth, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto.
(b) Notwithstanding the foregoing, in the event that any such
amounts constitute the proceeds of Collateral which, pursuant to Section
2.18, are required to be applied to pay the Tranche B Loan, such amounts
shall be applied FIRST to pay amounts pursuant to clause (a)(i) above, SECOND
to prepay the Tranche B Loan in accordance with Section 2.18, THIRD to repay
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Tranche A Loans (it being understood that such repayment shall be accompanied
by a permanent reduction in the Tranche A Commitment in the amount of such
repayment), and FOURTH in accordance with the preceding clause (a).
(c) (i) With respect to each type of Obligation owing to the
Lenders, such as interest, principal, fees and expenses, all payments shall
be made to the Lenders PRO RATA, and (ii) the Agents may in their discretion
make proper allowance on a PRO RATA basis among the Lenders to take into
account any Obligations not then due and payable.
ARTICLE 8.
THE AGENTS
SECTION 8.1. ADMINISTRATION BY ADMINISTRATIVE AGENT. (a) The general
administration of the Loan Documents shall be by the Administrative Agent.
The Lenders, the Collateral Agent and the Issuing Bank each hereby
irrevocably authorizes the Administrative Agent (i) to enter into the Loan
Documents to which it is a party and (ii) at its discretion, to take or
refrain from taking such actions as agent on its behalf and to exercise or
refrain from exercising such powers under the Loan Documents and the Notes as
are delegated by the terms hereof or thereof, as appropriate, together with
all powers reasonably incidental thereto. The Administrative Agent shall have
no duties or responsibilities except as set forth in this Agreement and the
remaining Loan Documents.
(b) The relationship between the Agents and each of the Lenders
and the Issuing Bank is that of an independent contractor. The use of the
term "Agents" is for convenience only and is used to describe, as a form of
convention, the independent contractual relationship between the Agents and
each of the Lenders and the Issuing Bank. Nothing contained in this Agreement
nor the other Loan Documents shall be construed to create an agency, trust or
other fiduciary relationship between the Agents and the Issuing Bank or any
of the Lenders.
(c) As an independent contractor empowered by the Lenders and the
Issuing Bank to exercise certain rights and perform certain duties and
responsibilities hereunder and under the other Loan Documents, each of the
Agents is nevertheless a "representative" of the Lenders and the Issuing
Bank, as that term is defined in Article 1 of the UCC, for purposes of
actions for the benefit of the Lenders, the Issuing Bank and the Agents with
respect
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to all collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of any Agent as "secured party",
"mortgagee" or the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests, mortgages or
deeds of trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the Lenders,
the Issuing Bank and the Agents.
SECTION 8.2. THE COLLATERAL AGENT. Each Lender, the Administrative
Agent and the Issuing Bank hereby irrevocably (i) designate FRF as Collateral
Agent under this Agreement and the other Loan Documents (and, to the extent
designated from time to time by FRF, BBNA as its subagent), (ii) authorize
the Collateral Agent to enter into the Security Documents and the other Loan
Documents to which it is a party and to perform its duties and obligations
thereunder and (iii) agree and consent to all of the provisions of the
Security Documents. All Collateral shall be held or administered by the
Collateral Agent (or its duly-appointed agent) for its benefit and for the
ratable benefit of the other Secured Parties. Any proceeds received by the
Collateral Agent from the foreclosure, sale, lease or other disposition of
any of the Collateral and any other proceeds received pursuant to the terms
of the Security Documents or the other Loan Documents shall be paid over to
the Administrative Agent for application as provided in Sections 2.18, 2.22,
or 7.5, as applicable.
SECTION 8.3. SHARING OF EXCESS PAYMENTS. Each of the Lenders, the
Agents and the Issuing Bank agrees that if it shall, through the exercise of
a right of banker's lien, setoff or counterclaim against the Borrower or any
other Loan Party, including, but not limited to, a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising
from, or in lieu of, such secured claim and received by such Lender, any
Agent or the Issuing Bank under any applicable bankruptcy, insolvency or
other similar law, or otherwise, obtain payment in respect of the Obligations
owed it (an "EXCESS PAYMENT") as a result of which such Lender, such Agent or
the Issuing Bank has received payment of any Loans or other Obligations
outstanding to it in excess of the amount that it would have received if all
payments at any time applied to the Loans and other Obligations had been
applied in the order of priority set forth in Section 2.22, then such Lender,
Agent or the Issuing Bank shall promptly purchase at par (and shall be deemed
to have thereupon purchased) from the other Lenders, such Agent and the
Issuing Bank, as applicable, a participation in the Loans and Obligations
outstanding to such other Persons, in an amount reasonably determined by the
Administrative Agent in good faith as the amount necessary to ensure that the
economic benefit of such excess payment is
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reallocated in such manner as to cause such excess payment and all other
payments at any time applied to the Loans and other Obligations to be
effectively applied in the order of priority set forth in Section 2.22 and,
within Tranche A and Tranche B, to each Lender PRO RATA in proportion to its
Tranche A Commitment and Tranche B Commitment, respectively; PROVIDED, that
if any such excess payment is thereafter recovered or otherwise set aside
such purchase of participations shall be correspondingly rescinded (without
interest). The Borrower and each other Loan Party expressly consents to the
foregoing arrangements and agrees that any Lender, any Agent or the Issuing
Bank holding (or deemed to be holding) a participation in any Loan or other
Obligation may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower or such
other Loan Party to such Lender, such Agent or the Issuing Bank as fully as
if such Lender, Agent or the Issuing Bank held a Note and was the original
obligee thereon, in the amount of such participation.
SECTION 8.4. AGREEMENT OF REQUIRED LENDERS.
(a) Upon any occasion requiring or permitting an approval,
consent, waiver, election or other action on the part of only the Required
Lenders, action shall be taken by the Agents for and on behalf or for the
benefit of all Lenders upon the direction of the Required Lenders, and any
such action shall be binding on all Lenders, (ii) upon any occasion requiring
or permitting an approval, consent, waiver, election or other action on the
part of only the Tranche B Lender, action shall be taken by the Agents for
and on behalf or for the benefit of all Lenders upon the direction of the
Tranche B Lender, and any such action shall be binding on all Lenders. No
amendment, modification, consent, or waiver shall be effective except in
accordance with the provisions of Section 9.2.
(b) Upon the occurrence of an Event of Default, the Agents shall
(subject to the provisions of Section 9.2) take such action with respect
thereto as may be reasonably directed by the Required Lenders or the Tranche
B Lender pursuant to Section 7.2, as applicable; PROVIDED THAT unless and
until the Agents shall have received such directions, the Agents may (but
shall not be obligated to) take such action as it shall deem advisable in the
best interests of the Lenders. In no event shall the Agents be required to
comply with any such directions to the extent that the Agents believe that
the Agents' compliance with such directions would be unlawful or commercially
unreasonable.
SECTION 8.5. LIABILITY OF AGENTS.
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(a) Each of the Agents, when acting on behalf of the Lenders and
the Issuing Bank, may execute any of its respective duties under this
Agreement by or through any of its respective officers, agents and employees,
and none of the Agents nor their respective directors, officers, agents or
employees shall be liable to the Lenders or the Issuing Bank or any of them
for any action taken or omitted to be taken in good faith, or be responsible
to the Lenders or the Issuing Bank or to any of them for the consequences of
any oversight or error of judgment, or for any loss, except to the extent of
any liability imposed by law by reason of such Agent's own gross negligence
or willful misconduct. The Agents and their respective directors, officers,
agents and employees shall in no event be liable to the Lenders or the
Issuing Bank or to any of them for any action taken or omitted to be taken by
them pursuant to instructions received by them from the Required Lenders, or
the Tranche B Lender, as applicable, or in reliance upon the advice of
counsel selected by it. Without limiting the foregoing, none of the Agents,
nor any of their respective directors, officers, employees, or agents shall
be responsible to any Lender or the Issuing Bank for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of, or
for any statement, warranty or representation in, this Agreement, any Loan
Document or any related agreement, document or order, or shall be required to
ascertain or to make any inquiry concerning the performance or observance by
the Borrower or any other Loan Party of any of the terms, conditions,
covenants, or agreements of this Agreement or any of the Loan Documents.
(b) None of the Agents nor any of their respective directors,
officers, employees, or agents shall have any responsibility to the Borrower
or the other Loan Parties on account of the failure or delay in performance
or breach by any Lender (other than by the Agent in its capacity as a Lender)
or the Issuing Bank of any of their respective obligations under this
Agreement or the Notes or any of the Loan Documents or in connection herewith
or therewith.
(c) The Administrative Agent and the Collateral Agent, in such
capacities hereunder, shall be entitled to rely on any communication,
instrument, or document reasonably believed by such person to be genuine or
correct and to have been signed or sent by a person or persons believed by
such person to be the proper Person or Persons, and, such Person shall be
entitled to rely on advice of legal counsel, independent public accountants,
and other professional advisers and experts selected by such Person.
SECTION 8.6. REIMBURSEMENT AND INDEMNIFICATION. Each Lender agrees
(i) to reimburse (x) each Agent for such Lender's Commitment Percentage of
any expenses and fees incurred by such Agent for the benefit of
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the Lenders or the Issuing Bank under this Agreement, the Notes and any of
the Loan Documents, including, without limitation, counsel fees and
compensation of agents and employees paid for services rendered on behalf of
the Lenders or the Issuing Bank, and any other expense incurred in connection
with the operations or enforcement thereof not reimbursed by the Borrower or
the other Loan Parties and (y) each Agent for such Lender's Commitment
Percentage of any expenses of such Agent incurred for the benefit of the
Lenders or the Issuing Bank that the Borrower has agreed to reimburse
pursuant to Section 9.3 and has failed to so reimburse and (ii) to indemnify
and hold harmless the Agents and any of their directors, officers, employees,
or agents, on demand, in the amount of such Lender's Commitment Percentage,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against it or any of them in any way relating to or arising out of
this Agreement, the Notes or any of the Loan Documents or any action taken or
omitted by it or any of them under this Agreement, the Notes or any of the
Loan Documents to the extent not reimbursed by the Borrower or the other
Credit Parties (except such as shall result from their respective gross
negligence or willful misconduct).
SECTION 8.7. RIGHTS OF AGENTS. It is understood and agreed that FRF
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Lenders and may exercise such rights and
powers, as well as its rights and powers under other agreements and
instruments to which it is or may be party, and engage in other transactions
with the Borrower or any other Loan Party, as though it were not the
Administrative Agent or the Collateral Agent, respectively, of the Lenders
under this Agreement.
SECTION 8.8. INDEPENDENT LENDERS AND ISSUING BANK. The Lenders and
the Issuing Bank each acknowledge that they have decided to enter into this
Agreement and to make the Loans or issue the Letters of Credit hereunder
based on their own analysis of the transactions contemplated hereby and of
the creditworthiness of the Borrower and the other Loan Parties and agrees
that the Agents shall bear no responsibility therefor.
SECTION 8.9. NOTICE OF TRANSFER. The Agents may deem and treat a
Lender party to this Agreement as the owner of such Lender's portion of the
Loans for all purposes, unless and until, and except to the extent, an
Assignment and Acceptance shall have become effective as set forth in Section
9.4(b).
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SECTION 8.10. SUCCESSOR AGENT. Any Agent may resign at any time by
giving five (5) Business Days' written notice thereof to the Lenders, the
Issuing Bank, the other Agents and the Borrower. Upon any such resignation of
any Agent, the Required Lenders shall have the right to appoint a successor
Agent, which so long as there is no Default, or Event of Default, shall be
reasonably satisfactory to the Borrower. If no successor Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation, the retiring Agent may, on behalf of the Lenders, the other
Agents and the Issuing Bank, appoint a successor Agent which shall be (i) a
commercial bank (or affiliate thereof) organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of a least $100,000,000, (ii) or a Lender capable of complying with
all of the duties of such Agent (and the Issuing Bank), hereunder (in the
opinion of the retiring Agent and as certified to the Lenders in writing by
such successor Agent) which, in the case of (i) and (ii) above, so long as
there is no Default, or Event of Default, shall be reasonably satisfactory to
the Borrower. Upon the acceptance of any appointment as Agent by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation hereunder as such Agent,
the provisions of this Article 8 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was such Agent under this
Agreement.
SECTION 8.11. REPORTS AND FINANCIAL STATEMENTS. Promptly after
receipt thereof from the Borrower, the Administrative Agent shall remit to
each Lender and the Collateral Agent copies of all financial statements
required to be delivered by the Borrower hereunder and all commercial finance
examinations and appraisals of the Collateral received by the Administrative
Agent.
ARTICLE 9.
MISCELLANEOUS
SECTION 9.1. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy (with a copy sent by overnight courier
service), as follows:
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(a) if to any Loan Party, to it at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (Telecopy No.
(▇▇▇) ▇▇▇-▇▇▇▇) with copies to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esquire (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) and to Heller, Ehrman, White &
▇▇▇▇▇▇▇▇▇, 6100 Bank of America Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent, the Collateral Agent, the
Issuing Bank or the Swingline Lender to Fleet Retail Finance Inc., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Assistant Vice President (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to
▇▇▇▇▇▇▇ ▇▇▇▇, LLP ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇, (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to any other Lender, to it at its address (or telecopy
number) set forth on the signature pages hereto or on any Assignment and
Acceptance for such Lender.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the
date of receipt.
SECTION 9.2. WAIVERS; AMENDMENTS.
(a) No failure or delay by the Administrative Agent, the Issuing
Bank or any Lender in exercising any right or power hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Agents, the Issuing Bank and the Lenders hereunder
and under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted
by paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Agents, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.
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(b) Except as provided in Section 9.2(e) below, neither this
Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except, in the case of this Agreement,
pursuant to an agreement or agreements in writing entered into by the Loan
Parties and the Required Lenders or, in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the Agents
and the Loan Party or Loan Parties that are parties thereto, in each case
with the consent of the Required Lenders, PROVIDED that no such agreement
shall (i) increase the Commitment of any Lender without the written consent
of such Lender, (ii) reduce the principal amount of any Loan or L/C
Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount
of any Loan or L/C Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of the Commitment or the Maturity
Date, without the written consent of each Lender affected thereby, (iv)
change Sections 2.15, 2.18, 2.21, 2.22, 6.5 or 7.5 of this Agreement or
Section 6.3 of the Security Agreement, without the written consent of each
Lender, (v) change any of the provisions of this Section or the definition of
the term "Required Lenders", or any other provision of any Loan Document
specifying the number or percentage of Lenders required to waive, amend or
modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (vi) release any Loan
Party from its obligations under any Loan Document, or limit its liability in
respect of such Loan Document, without the written consent of each Lender,
(vii) except for sales described in Section 6.5, release any portion of the
Collateral in excess of $1,000,000 in the aggregate from the Liens of the
Security Documents, without the written consent of each Lender, (viii) change
the definition of the term "Borrowing Base" or any component thereof, or
"Loan to Value Reserve" or any component thereof without the written consent
of each Lender, (ix) increase the Permitted Overadvance, without the written
consent of each Lender, (x) subordinate the Obligations hereunder, or the
Liens granted hereunder or under the other Loan Documents, to any other
Indebtedness or Lien, as the case may be without the prior written consent of
each Lender, or (xi) change the methodology of calculating, or the categories
of, initial Reserves established pursuant to Section 2.2(a) hereof, without
the written consent of each Lender, and PROVIDED FURTHER that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Agents or the Issuing Bank without the prior written consent of the Agents or
the Issuing Bank, as the case may be.
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(c) No such modification, amendment or waiver shall without the
written consent of the Tranche B Lender (i) accelerate the principal or
interest payment, or maturity, dates of the Tranche A Loans (other than in
connection with an acceleration of the Loans in connection with an Event of
Default), or (ii) waive any event described in Section 7.2 hereof or amend
any provision of Article 7 or (iii) create any additional Event of Default
which is not also an event subject to the provisions of Section 7.2 hereof.
(d) Notwithstanding anything to the contrary contained in this
Section 9.2, in the event that the Borrower requests that this Agreement or
any other Loan Document be modified, amended or waived in a manner which
would require the consent of all of the Lenders pursuant to Section 9.2 and
such amendment is approved by the Required Lenders and the Tranche B Lender,
but not by the requisite percentage of the Lenders, the Borrower, the
Required Lenders and the Tranche B Lender shall be permitted to amend this
Agreement without the consent of the Lender or Lenders which did not agree to
the modification or amendment requested by the Borrower (such Lender or
Lenders, collectively the "MINORITY LENDERS") to provide for (w) the
termination of the Commitment of each of the Minority Lenders, (x) the
addition to this Agreement of one or more other financial institutions, or an
increase in the Commitment of one or more of the Tranche A Lenders or the
Tranche B Lender, so that the aggregate Tranche A Commitments and the Tranche
B Loan after giving effect to such amendment shall be in the same amount as
the aggregate Tranche A Commitments and the Tranche B Loan, respectively,
immediately before giving effect to such amendment, (y) if any Loans are
outstanding at the time of such amendment, the making of such additional
Loans by such new or increasing Lender or Lenders, as the case may be, as may
be necessary to repay in full the outstanding Loans (including principal,
interest, and fees) of the Minority Lenders immediately before giving effect
to such amendment and (z) such other modifications to this Agreement or the
Loan Documents as may be appropriate and incidental to the foregoing.
(e) No notice to or demand on the Borrower or any Loan Party shall
entitle the Borrower or any other Loan Party to any other or further notice
or demand in the same, similar or other circumstances. Each holder of a Note
shall be bound by any amendment, modification, waiver or consent authorized
as provided herein, whether or not a Note shall have been marked to indicate
such amendment, modification, waiver or consent and any consent by a Lender,
or any holder of a Note, shall bind any Person subsequently acquiring a Note,
whether or not a Note is so marked. No amendment to this Agreement shall be
effective against the Borrower or any other Loan Party unless signed by the
Borrower or such other Loan Party, as the case may be.
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SECTION 9.3. EXPENSES; INDEMNITY; DAMAGE WAIVER.
(a) The Loan Parties shall pay (i) all reasonable and documented
out-of-pocket expenses incurred by the Agents and their Affiliates, including
the reasonable and documented fees, charges and disbursements of counsel for
the Agents (including, without limitation, ▇▇▇▇▇▇▇ ▇▇▇▇ LLP and special local
counsel to the Agents), outside consultants for the Agents and internally
allocated charges with respect to the Administrative Agent's collateral
examination group, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of the
Loan Documents or any amendments, modifications or waivers of the provisions
thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all reasonable and documented out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all reasonable and documented out-of-pocket expenses
incurred by the Agents, the Issuing Bank or any Lender, including the
reasonable and documented fees, charges and disbursements of any counsel and
any outside consultants for the Agents, the Issuing Bank or any Lender and
the internally allocated charges with respect to the Administrative Agent's
collateral examination group, in connection with the enforcement or
protection of its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the Loans made or Letters of
Credit issued hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans or
Letters of Credit; PROVIDED THAT the Lenders who are not the Agents or the
Issuing Bank shall be entitled to reimbursement for no more than one counsel
representing all such Lenders (absent a conflict of interest in which case
the Lenders may engage and be reimbursed for additional counsel).
Notwithstanding the foregoing, absent the continuance of a Default or Event
of Default, the Borrower's reimbursement obligation to the Agents (i) for
inventory appraisals shall not exceed $40,000 per rolling twelve-month
period, (ii) for real estate appraisals shall not exceed $20,000 per rolling
twelve-month period and (iii) for examinations shall not exceed $45,000 per
rolling twelve-month period, plus, in each case, out-of-pocket costs and
expenses.
(b) The Loan Parties shall, jointly and severally, indemnify the
Agents, the Issuing Bank and each Lender, BBNA and each Related Party of any of
the foregoing Persons (each such Person being called an "INDEMNITEE") against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable and documented fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in
117
connection with, or as a result of (i) the execution or delivery of any Loan
Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the transactions contemplated
by the Loan Documents or any other transactions contemplated hereby, (ii) any
Loan or Letter of Credit or the use of the proceeds therefrom (including any
refusal by the Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii) any actual or
alleged presence or Release of Hazardous Materials on or from any property
currently or formerly owned or operated by any Loan Party or any of the
Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of the Subsidiaries, (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto, or (v) the reversal or withdrawal of any
provisional credits granted by the Agents or BBNA or any Affiliate upon the
transfer of funds from lock box, bank agency or concentration accounts or in
connection with the provisional honoring of checks or other items or
otherwise in connection with the provision of cash management or similar
services, PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses resulted from the gross negligence or willful misconduct of
such Indemnitee or any Affiliate of such Indemnitee (or of any officer,
director, employee, advisor or agent of such Indemnitee or any such
Indemnitee's Affiliates).
(c) To the extent that any Loan Party fails to pay any amount
required to be paid by it to the Agents or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the Agents
or the Issuing Bank, as the case may be, such Lender's pro rata share
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount, PROVIDED that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agents
or the Issuing Bank. For purposes hereof, a Lender's "pro rata share" shall
be determined based upon its share of the Total Commitments at the time.
(d) To the extent permitted by applicable law, no Loan Party shall
assert, and each hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with,
or as a result of, this Agreement or any agreement or instrument contemplated
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hereby, the transactions contemplated by the Loan Documents, any Loan or
Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.4. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns permitted hereby (including any Affiliate of the Issuing Bank
that issues any Letter of Credit), except that no Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any such attempted assignment or
transfer without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the
Related Parties of each of the Agents, the Issuing Bank and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Any Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans at the time owing to it),
PROVIDED that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the Agents and the Issuing Bank must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender
or an Affiliate of a Lender or an assignment of the entire remaining amount
of the assigning Lender's Commitment or Loans, the amount of the Commitment
or Loans of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment
is delivered to the Administrative Agent) shall not be less than $7,500,000
unless the Administrative Agent otherwise consents, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under Tranche A or Tranche B, as
applicable, (iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, and, after completion
of the syndication of the Loans, together with a processing and recordation
fee of $3,500. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party
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hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all of the assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Section 9.3). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply
with this paragraph shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in Boston,
Massachusetts a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the Loans and L/C Disbursements
owing to, each Lender pursuant to the terms hereof from time to time (the
"REGISTER"). The entries in the Register shall be conclusive, and the Loan
Parties, the Administrative Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the processing
and recordation fee referred to in paragraph (b) of this Section and any
written consent to such assignment required by paragraph (b) of this Section,
the Administrative Agent shall accept such Assignment and Acceptance and
record the information contained therein in the Register. No assignment shall
be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Agents, and the Issuing Bank, sell participations to one or more Lenders or
other entities (a "PARTICIPANT") in all or a portion of such Lender's rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it), PROVIDED that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Loan Parties, the Agents, the
Issuing
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Bank and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation in the Tranche A Commitments, the Tranche A Loans and
the Letters of Credit Outstandings shall provide that such Lender shall
retain the sole right to enforce the Loan Documents and to approve any
amendment, modification or waiver of any provision of the Loan Documents,
PROVIDED that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.2(b) that
affects such Participant. The provisions of the preceding sentence shall not
apply to any participation of the Tranche B Commitments or the Tranche B
Loan. Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.23, 2.25 and 2.26
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section
9.8 as though it were a Lender, PROVIDED such Participant agrees to be
subject to Section 2.25(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.23 or 2.26 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.26 unless (i) the Borrower is notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.26(f) as though it were a Lender and (ii)
such Participant is eligible for exemption from the withholding tax referred
to therein, following compliance with Section 2.26(f).
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to
any such pledge or assignment of a security interest, PROVIDED that no such
pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
SECTION 9.5. SURVIVAL. All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
121
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of
any Letters of Credit, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Agents, the Issuing Bank
or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under
this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.23, 2.26 and 9.3 and Article 8 shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Letters of Credit and the Commitments or the
termination of this Agreement or any provision hereof.
SECTION 9.6. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This
Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Agents or the Tranche B Lender constitute the
entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
4.1, this Agreement shall become effective when the Interim Borrowing Order
has been issued by the Bankruptcy Court in the Proceedings, and when it shall
have been executed by the Agents and the Lenders and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.7. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
122
SECTION 9.8. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, subject to the terms of the Order, each Lender
and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender or
Affiliate to or for the credit or the account of the Borrower against any of
and all the obligations of the Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender may have.
SECTION 9.9. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS AND THE
PROVISIONS OF THE BANKRUPTCY CODE.
(b) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.1. Nothing
in this Agreement or any other Loan Document will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
123
CERTIFICATIONS IN THIS SECTION. EXCEPT AS PROHIBITED BY LAW, THE BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
SECTION 9.11. ORDERS.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, ALL RIGHTS AND REMEDIES OF THE AGENTS OR ANY LENDER UNDER THIS
AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS OF THE ORDERS, ALL
REPRESENTATIONS AND WARRANTIES ARE QUALIFIED BY THE EFFECT OF SUCH ORDERS,
AND ALL SUCH REMEDIES AND THE ENFORCEMENT OF SUCH RIGHTS SHALL BE EXERCISED
IN A MANNER CONSISTENT WITH SUCH ORDER THEN IN EFFECT. IF ANY PROVISION IN
THIS AGREEMENT SHALL CONFLICT WITH ANY OF THE PROVISIONS OF THE ORDER THEN IN
EFFECT, THE PROVISIONS OF THE ORDER SHALL CONTROL.
SECTION 9.12. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part
of this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
124
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
LAMONTS APPAREL, INC., a debtor
and debtor in possession as Borrower
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Executive Vice President
--------------------------------
FLEET RETAIL FINANCE INC.,
as Administrative Agent, as Collateral
Agent, as Swingline Lender, and as
Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Managing Director
--------------------------------
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
125
BACK BAY CAPITAL FUNDING,
LLC, as Tranche B Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: Managing Director
--------------------------------
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
BANKBOSTON, N.A., as Issuing
Bank, and as otherwise provided
herein
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Managing Director
--------------------------------
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
126
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated as of __________, 200_
Reference is made to the Debtor in Possession Credit Agreement,
dated as of January 4, 2000 (as from time to time amended, modified,
supplemented or restated and in effect from time to time, the "Credit
Agreement"), by and among LAMONTS APPAREL, INC., a Delaware corporation and a
debtor and debtor-in-possession (the "Borrower"), the lending institutions
referred to therein as Lenders (collectively, the "Lenders"), BANKBOSTON,
N.A., a national banking association, as issuing bank, and FLEET RETAIL
FINANCE INC., a Delaware corporation, as collateral agent and administrative
agent (in such capacity, the "Agent") for the Lenders. Capitalized terms used
herein without definition that are defined in the Credit Agreement shall have
the meanings assigned to such terms in the Credit Agreement.
_______________________________ (the "Assignor") and __________ (the
"Assignee") hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$________ interest in and to the rights, benefits, indemnities and obligations
of the Assignor under the Credit Agreement equal to ________ % in respect of the
aggregate amount of the Tranche A Commitments immediately prior to the Effective
Date (as hereinafter defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment and Acceptance,
(B) as of the date hereof, its Tranche A Commitment is $________, its Tranche A
Commitment Percentage is ____%, the aggregate outstanding principal balance of
its Tranche A Loans equals $______, the aggregate amount of its Letter of Credit
participations equals $______ (in each case after giving effect to the
assignment contemplated hereby but without giving effect to any contemplated
assignments which have not yet become effective), and (C) immediately after
giving effect to all assignments
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which have not yet become effective, the Assignor's Tranche A Commitment
Percentage will be sufficient to give effect to this Assignment and Acceptance,
(ii) makes no representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any of the other Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant thereto or the attachment,
perfection or priority of any security interest or mortgage, other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
free and clear of any claim or encumbrance; (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any of its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the performance or
observance by the Borrower or any of its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any of
its obligations under the Credit Agreement or any of the other Loan Documents or
any other instrument or document delivered or executed pursuant thereto; and
(iv) attaches hereto the Tranche A Note delivered to it under the Credit
Agreement.
The Assignor requests that the Borrower exchange the Assignor's Tranche
A Note for new Tranche A Notes payable to the Assignor and the Assignee as
follows:
Notes Payable to
the Order Of: Amount of Tranche A Note
------------- ------------------------
Assignor $__________
Assignee $__________
3. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants
that (A) it is duly and legally authorized to enter into this Assignment and
Acceptance, (B) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or
by-laws of the Assignee, or of any agreement binding on the Assignee, (C) all
acts, conditions and things required to be done and performed and to have
occurred prior to the execution, delivery and performance of this Assignment and
Acceptance, and to render the same the legal, valid and binding obligation of
the Assignee, enforceable against it in accordance with its terms, have been
done and performed and have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has
-3-
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it will, independently and without reliance upon the Assignor, the Agent 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 Credit Agreement; (iv) represents and warrants that
it is an eligible assignee; (v) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(vi) agrees that it will perform in accordance with their terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vii) acknowledges that it has made
arrangements with the Assignor satisfactory to the Assignee with respect to its
PRO RATA share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
4. EFFECTIVE DATE. The effective date for this Assignment and
Acceptance shall be __________ (the "Effective Date"). Following the execution
of this Assignment and Acceptance, each party hereto shall deliver its duly
executed counterpart hereof to the Agent for acceptance by the Agent and
recording in the Register by the Agent. SCHEDULE 1.1 to the Credit Agreement
shall thereupon be replaced as of the Effective Date by the SCHEDULE 1 annexed
hereto.
5. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder, and (ii) the Assignor
shall, with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; PROVIDED, HOWEVER, that the Assignor shall retain
its rights to be indemnified pursuant to Section 9.3 of the Credit Agreement
with respect to any claims or actions arising prior to the Effective Date.
6. PAYMENTS. Upon such acceptance of this Assignment and Acceptance by
the Agent and such recording, from and after the Effective Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and the Assignee shall make any appropriate adjustments
in payments for periods prior to the Effective
-4-
Date by the Agent or with respect to the making of this assignment directly
between themselves.
7. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS).
8. COUNTERPARTS. This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
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IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[NAME OF ASSIGNOR]
By:___________________________________
Name:
Title:
[NAME OF ASSIGNEE]
By:___________________________________
Name:
Title:
CONSENTED TO:
FLEET RETAIL FINANCE
INC., as Administrative Agent and
Collateral Agent
By:________________________________________
Name:
Title:
BANKBOSTON, N.A., as Issuing Bank
By:________________________________________
Name:
Title:
Exhibit B
Judge: The ▇▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chapter: 11
Date: January 6, 2000
Time: 9:30 a.m.
Location: Park Place Building
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ BANKRUPTCY COURT
WESTERN DISTRICT OF WASHINGTON
* * * * * * * * * * * * * * * * * * * * *
In re: *
* Case No. 00-00045
LAMONTS APPAREL, INC. * Chapter 11
Debtor *
*
* * * * * * * * * * * * * * * * * * * * *
INTERIM ORDER
AUTHORIZING POST-PETITION SECURED SUPERPRIORITY FINANCING
PURSUANT TO SECTIONS 364(c)(1), 364 (c)(2) AND 364 (c)(3)
OF THE BANKRUPTCY CODE
THIS MATTER having come before the Court upon the Motion (the "MOTION")
of Lamonts Apparel, Inc. ("LAMONTS"), debtor and debtor in possession (the
"DEBTOR") seeking entry of an order:
(a) authorizing the Debtor to obtain credit and incur debt secured by
liens (as defined in Section 101(37) of Title 11, United States Code, as amended
(the "BANKRUPTCY CODE") and referred to herein as "LIENS") on property of the
Debtor's estate pursuant to Sections 364(c)(2) and 364(c)(3) of the Bankruptcy
Code and with priority, as to administrative expenses, as provided in Section
364(c)(1) of the Bankruptcy Code,
(b) authorizing the Debtor to establish that financing arrangement (the
"DIP CREDIT FACILITY") with Fleet Retail Finance Inc., a Delaware corporation
with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Administrative
Agent and Collateral Agent (individually or collectively, the "AGENT") for a
syndicate of lenders and for BankBoston, N.A. ("BBNA") as Issuing Bank and in
such other capacities as provided in the Loan Documents (as defined below)
(collectively, the "LENDERS"), and the Lenders, which is contemplated by the
Credit Agreement (the "DIP LOAN AGREEMENT"), substantially in the form annexed
hereto as EXHIBIT B, and incur the Obligations as provided for in and as
contemplated by the DIP Loan Agreement (the "OBLIGATIONS"),
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(c) authorizing the Debtor to provide the Agent (for the benefit of the
Agent and the Lenders) with Liens upon the Debtor's property as provided in and
as contemplated by the DIP Loan Agreement, as supplemented by this Order (the
DIP Loan Agreement and all such instruments and documents as may be executed and
delivered in connection therewith or which relate thereto being referred to
hereinafter, collectively, as the "LOAN DOCUMENTS"),
(d) authorizing the Debtor to grant the Agent (for the benefit of the
Agent and the Lenders) a Super-Priority Claim over any and all administrative
expenses other than as set forth in Paragraph 12, below, and
(e) authorizing the Debtor to utilize the proceeds of borrowings under
the DIP Credit Facility to retire the Debtor's obligations to the Pre-Petition
Lenders (as hereinafter defined) consisting of unpaid principal, accrued and
unpaid interest, contingent reimbursement obligations under undrawn letters of
credit, if any, and unpaid fees and expenses for which the Debtor is
responsible, PROVIDED, HOWEVER, that such payment is without prejudice to the
rights of the parties identified in Paragraph 7 below to seek the relief
described therein.
It appearing that notice of the Motion is sufficient and complies with
the requirements of Bankruptcy Rule 4001(c), and for good cause shown,
IT HEREBY APPEARS THAT:
A. On January 4, 2000 (the "COMMENCEMENT DATE"), the Debtor filed a
voluntary petition under Chapter 11 of the Bankruptcy Code.
B. Entry of this Interim Order is necessary for the Debtor to avoid
immediate and irreparable harm to its business and property of the estate
pending a hearing on a Final Order in this matter.
C. The Debtor has continued in the management and operation of its
businesses and property as debtor in possession pursuant to Bankruptcy Code
Sections 1107 and 1108. No trustee or examiner has been appointed in this case
as of the date hereof.
D. This Court has jurisdiction, pursuant to 28 U.S.C. Sections 157(b)
and 1334, over these proceedings, and over the property affected hereby.
E. An immediate need exists for the Debtor to obtain funds with which
to purchase inventory, continue its operations, and administer and preserve the
value of its estate. The ability of the Debtor to finance its operations
requires the additional availability of working capital to the fullest extent
provided by the Loan Documents, the absence of which would immediately and
irreparably harm the Debtor, its estate, and its creditors and the possibility
for a successful reorganization.
F. The Debtor is unable to obtain unsecured credit allowable under
Bankruptcy Code Section 503(b)(1) as an administrative expense.
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G. The Debtor also is unable to obtain secured credit, allowable only
under Bankruptcy Code Sections 364(c)(2) and 364(c)(3), except under the terms
and conditions provided in this Order. The Debtor is unable to obtain credit for
borrowed money without the Debtor's granting to the Agent (for the benefit of
the Agent and the Lenders) (i) Liens on all or substantially all of the assets
of the Debtor pursuant to Bankruptcy Code Section 364(c)(2) and 364(c)(3), and
(ii) super-priority administrative expense claim status pursuant to Section
364(c)(1) of the Bankruptcy Code and as provided by this Order.
H. The ability of the Debtor to finance its operations and the
availability of sufficient working capital through the incurrence of
indebtedness for borrowed money and other financial accommodations is vital to
the Debtor's ability to preserve and maintain its going concern value and its
ability to consummate a successful reorganization.
I. The relief requested in the Motion is necessary, essential, and
appropriate for the continued operation of the Debtor's business and the
management and preservation of its property.
J. It is in the best interest of Debtor's estate to be allowed to
establish the DIP Credit Facility contemplated by the DIP Loan Agreement and the
other Loan Documents.
K. The terms and conditions of the DIP Credit Facility, including those
which provide for the payment of interest to, and fees of, the Agent and the
Lenders at the times and in the manner provided under the DIP Credit Facility,
are believed to be fair, reasonable, and the best available under the
circumstances.
L. The DIP Loan Agreement was negotiated in good faith and at arms
length between the Debtor, on the one hand, and the Agent and the Lenders, on
the other hand. Credit to be extended under the DIP Credit Facility will be so
extended in good faith, in consequence of which the Agent and the Lenders are
entitled to the protection and benefits of Bankruptcy Code Section 364(e).
M. As of the Commencement Date, the Debtor, BBNA as Agent (the
"PRE-PETITION AGENT"), and certain other lending institutions (the "PRE-PETITION
LENDERS") are parties to that certain Amended and Restated Debtor in Possession
and Exit Financing Loan Agreement dated September 26, 1997 (the "PRE-PETITION
AGREEMENT") as amended and extended to the Commencement Date. The Pre-Petition
Agreement was approved by this Court (▇▇▇▇▇▇, J.) by the Final Order Authorizing
Postpetition Term Loan Financing and Granting of Security Interests and
Superpriority Claim [BankBoston, N.A.] dated September 19, 1997, entered in Case
No. 95-00100, a prior Chapter 11 case of the Debtor. The Order Confirming
Debtor's Modified and Restated Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code and Specifying Certain Related Deadlines and Procedures dated
December 18, 1997 ratified and confirmed the terms of the Pre-Petition Credit
Facility. As of the Commencement Date, the aggregate amount due and owing to the
Pre-Petition Agent and such Pre-Petition Lenders under the Pre-Petition
Agreement (the "PRE-PETITION DEBT") was approximately $15,367,434.93 in
principal on
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revolving credit loans, $9,625,236.98 in principal on the term loan, plus
interest, commitment, agent's and other fees, and costs, charges and expenses.
N. After consultation with and upon the advice of counsel, the Debtor
has acknowledged and agreed that the Pre-Petition Debt is secured by security
interests and liens on all or substantially all of the Debtor's real and
personal property including, without limitation, all accounts, inventory,
equipment, general intangibles, leasehold real estate and investment property
(the "PRE-PETITION COLLATERAL").
O. After consultation with and upon the advice of counsel, the Debtor
has acknowledged and agreed that (i) the Pre-Petition Lenders have valid,
perfected and unavoidable liens in such of the Debtor's properties and assets
which constitute Pre-Petition Collateral, (ii) the Debtor has no offsets,
defenses, claims or counterclaims against the Pre-Petition Lenders with respect
to the Pre-Petition Debt, (iii) as of the Commencement Date, the Pre-Petition
Debt constitutes an allowed secured claim within the meaning of 11 U.S.C.
Section 506 in an amount that is not less than $24,992,672, plus interest, fees,
and costs, and (iv) the Debtor has waived and released any right it may have to
challenge the Pre-Petition Debt and the security therefor. Nothing contained in
this Paragraph shall, however, be deemed to limit the rights of other parties in
interest under Paragraph 7 of this Order.
P. The notice of the hearing following which this Interim Order was
entered, which notice was provided by the Debtor to (i) the Debtor's twenty
largest unsecured creditors, (ii) counsel for the unofficial pre-petition
committee of trade creditors, (iii) the United States Trustee, and (iv) the
Pre-Petition Agent and Lenders, constitutes adequate notice under the
circumstances in accordance with Bankruptcy Rule 4001(c) and Bankruptcy Code
Section 102(1), as required by Bankruptcy Code Sections 364(c) and in light of
the nature and urgency of the relief requested in the Motion.
Q. Good and sufficient cause has been shown for the entry of this
Order. Among other things, the entry of this Order will enable the Debtor to
continue the operation of its business, increase the possibility for a
successful reorganization, and avoid disputes with the Pre-Petition Lenders with
respect to adequate protection, and thereby is in the best interest of the
Debtor, its creditors, and its estate.
NOW, THEREFORE, on the Motion of the Debtor and the record before the
Court with respect to the Motion made by the Debtor, and with the consent of the
Debtor, the Agent and the Pre-Petition Lenders to the form and entry of this
Order, and good cause appearing,
IT IS ON THIS 6TH day of January, 2000, ORDERED that:
APPROVAL OF AND AUTHORIZATION AS TO BORROWING
1. The Debtor is authorized to:
a. Establish the DIP Credit Facility.
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b. Execute each of the Loan Documents.
c. Borrow up to $45,000,000 under the DIP Credit Facility with a
sublimit of $8,000,000 with respect to letters of credit.
2. Pursuant to Bankruptcy Code Sections 363 and 549, the Debtor is authorized
and directed to pay the full amount of the Pre-Petition Debt with the proceeds
of the DIP Credit Facility. The Agent and Pre-Petition Agent are directed to
apply the proceeds of such post-petition borrowings to pay the Pre-Petition Debt
or, in the case of undrawn letters of credit issued under the Pre-Petition Loan
Documents, if any, to convert the contingent reimbursement obligations relating
to such letters of credit to post-petition reimbursement obligations under the
Loan Documents. Any such payments or applications are without prejudice to the
estate's right to cause disgorgement from the holders of the Pre-Petition Debt
to the extent, if any, that any of the Pre-Petition Debt or any of the
mortgages, liens and security interests in the Pre-Petition Collateral is proven
avoidable in accordance with and subject to the provisions of Paragraph 7,
below. Upon payment of the Pre-Petition Debt, the Agent shall be fully
subrogated to the rights and interests, including the priorities, of the
Pre-Petition Agent with respect to the Pre-Petition Collateral.
3. The Debtor is hereby authorized to grant to the Agent (for the benefit of the
Agent and the Lenders) valid, binding, enforceable and perfected Liens in and to
all assets of the Debtor of any kind or nature whatsoever, real or personal,
wherever located, whether now existing or hereafter acquired, and the proceeds
of all of the foregoing (the "Collateral"). Collateral consisting of personal
property is more fully described in the Security Agreement, a copy of which is
attached hereto as an Appendix and incorporated herein by reference. The term
"Collateral" also includes all real property interests, including all real
estate leasehold interests. The term "Collateral" shall not include the
following: (a) any avoidance actions under Chapter 5 of the Bankruptcy Code (or
proceeds thereof), with the exception of actions brought pursuant to Section 549
of such Chapter to recover any post-petition transfer of the Collateral (or
proceeds thereof), and (b) the Professionals' Interest in the Escrow Account
described in Paragraph 13 below (collectively, for clauses a and b, the
"EXCLUDED ASSETS").
4. The Debtor is hereby authorized and required to do and perform all acts and
to make, execute, and deliver all instruments and documents which may be
requisite or necessary for the performance by the Debtor under the Loan
Documents and the creation and perfection of the Liens described in and provided
for by the Loan Documents, and to assure the priority thereof as contemplated
hereby.
5. The automatic stay imposed under Bankruptcy Code Section 362(a) is hereby
lifted to permit the Debtor to grant the aforesaid Liens, to make the payment of
Pre-Petition Debt and perform such other acts as may be required to fulfill the
requirements of Paragraph 2, and otherwise to perform the Debtor's liabilities
and Obligations.
6. Each officer of the Debtor as may be so authorized by the Debtor's Board of
Directors, acting singly, is hereby authorized to execute and deliver each of
the Loan Documents, such execution and delivery to be conclusive of their
respective authority to act in the name of and on behalf of the Debtor.
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7. Nothing in this Order or the Loan Documents shall prejudice the right of any
official committee of unsecured creditors appointed herein (the "COMMITTEE") or
any other party in interest to seek to object to or challenge (i) the validity,
extent, perfection or priority of the mortgages, security interests and liens of
the Pre-Petition Lenders in and to the Pre-Petition Collateral, or (ii) the
validity, allowability, priority or status of the Pre-Petition Debt. Unless such
an objection or challenge is filed within the earlier of (x) 120 days after the
date of entry of a Final Order authorizing the Debtor's entry into the DIP
Credit Facility or (y) 150 days after the date of entry of this Interim Order,
all such objections and challenges shall be forever waived, and the Pre-Petition
Debt shall be allowed as a secured claim within the meaning of 11 U.S.C. Section
506 for all purposes in connection with this case. Thereafter, any and all
challenges (including, but not limited to, those under 11 U.S.C. Sections 544,
547 and/or 548) by any party (including, without limitation, the Committee and
any Chapter 11 or Chapter 7 trustee appointed herein) to the validity,
sufficiency, extent, perfection, priority or refinancing of, or seeking the
avoidance of, the Pre-Petition Lenders' liens in the Pre-Petition Collateral or
the Pre-Petition Debt or any payments thereon shall be forever barred.
8. The Liens to be created and granted to the Agent (for the benefit of the
Agent and the Lenders), as provided in Paragraph 3, above, are created pursuant
to Bankruptcy Code Sections 364(c)(2) and 364(c)(3) and, subject to (a) liens on
the Pre-Petition Collateral, (b) the Carve Out (defined and described below),
and (c) Permitted Prior Liens (as defined and described in the DIP Loan
Agreement), are first, prior, perfected, and superior to any security, mortgage,
or collateral interest or lien or claim to the Collateral. The Liens securing
the Obligations shall not be subject to Section 551 of the Bankruptcy Code.
9. This Order shall be sufficient and conclusive evidence of the validity,
perfection, and priority of the Agent's Liens upon the Collateral to secure all
Obligations, without the necessity of filing or recording any financing
statement or other instrument or document which may otherwise be required under
the law of any jurisdiction or the taking of any other action to validate or
perfect the Liens of the Agent in and to the Collateral or to entitle the Agent
to the priorities granted herein, PROVIDED, HOWEVER, that the Debtor may execute
and the Agent may file or record financing statements or other instruments to
evidence and to perfect the Liens authorized hereby, and PROVIDED FURTHER that
no such filing or recordation shall be necessary or required in order to create
or perfect any such Lien.
10. The Agent, in its discretion, may file a xerographic copy of this Order as a
financing statement with any recording officer designated to file financing
statements or with any registry of deeds or similar office in any jurisdiction
in which the Debtor has real or personal property.
11. The DIP Loan Agreement and each of the Loan Documents, respectively, shall
constitute and evidence valid and binding Obligations, enforceable in accordance
with their terms.
ADMINISTRATIVE CLAIM
12. The Obligations shall be an allowed administrative expense claim (the
"SUPER-PRIORITY CLAIM") with priority under Bankruptcy Code Section 364(c)(1)
and otherwise over all
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administrative expense claims and unsecured claims against the Debtor, now
existing or hereafter arising, of any kind or nature whatsoever, including,
without limitation, administrative expenses of the kinds specified in or ordered
pursuant to Bankruptcy Code Sections 105, 326, 330, 331, 503(a), 503(b), 506(c),
507(a), 507(b), 546(c), 546(d), and 1114, PROVIDED, HOWEVER, that the
Super-Priority Claim shall be subject to the Carve Out described in Paragraph 13
below and shall not extend to the Excluded Assets.
13. At any time of determination, the Carve Out to which the Liens and
Super-Priority Claim of the Agent and Lenders are subject pursuant to Paragraphs
8 and 12 hereof shall be in the amount of the sum of (i) all amounts payable to
the United States Trustee pursuant to 28 U.S.C. Section 1930(a)(6) and any fees
payable to the Clerk of the Court, plus (ii) allowed and unpaid fees, costs and
reasonable expenses of professionals retained in this case pursuant to Sections
327 and 1103 of the Bankruptcy Code consisting of attorneys, accountants,
financial advisors, and consultants (collectively, the "PROFESSIONALS") retained
by the Debtor, the Committee or any Chapter 11 or Chapter 7 trustee appointed
herein (the "PRIORITY PROFESSIONAL EXPENSES"), subject in all events to the
Professional Expense Cap defined below. Priority Professional Expenses shall not
include any fees or expenses incurred by any Person, including the Committee, in
(a) preventing, hindering or delaying the Lenders' or the Agent's enforcement or
realization upon any of the Collateral once an Event of Default has occurred,
(b) using cash collateral or selling any other Collateral without the Agent's
consent, (c) incurring Indebtedness without the Agent's consent or (d) objecting
to or contesting in any manner, or raising any defenses to, the validity,
extent, perfection, priority or enforceability of the Pre-Petition Debt or the
Obligations or any mortgages, liens or security interests with respect thereto
or any other rights or interests of the Agents and the Lenders, or in asserting
any claims or causes of action, including, without limitation, any actions under
Chapter 5 of the Bankruptcy Code, against the Pre-Petition Agent, the
Pre-Petition Lenders, the Agent or the Lenders, PROVIDED that nothing herein
shall exclude from Priority Professional Expenses the reasonable fees or
expenses incurred by any such Person in investigating such matters. The
Professional Expense Cap means up to $500,000 in accrued but unpaid Priority
Professional Expenses existing at the time of determination of the Professional
Expense Cap (inclusive of any holdbacks required by the Bankruptcy Court and
exclusive of retainers held by any such professionals). To the extent that,
following an Event of Default, any Priority Professional Expenses are paid from
the Collateral, or from the Debtor's assets against which the Super-Priority
Claim applies, the Professional Expense Cap shall be reduced on a dollar for
dollar basis.
The Professionals may submit to the Debtor, in arrears and no more frequently
than monthly, invoices for services performed and expenses incurred. Prior to
the occurrence of an Event of Default, the Debtor is authorized and directed
(subject to having availability to do so under the DIP Credit Facility) to
deposit an amount sufficient to pay such invoices into an interest-bearing
escrow account to be maintained at BBNA for such purpose (the "ESCROW ACCOUNT").
Upon the Court's allowance of applications for compensation and reimbursement
filed by any of the Professionals under Sections 330 or 331 of the Bankruptcy
Code, the compensation and reimbursement allowed (the "PROFESSIONALS' INTEREST")
shall be disbursed to such Professionals from the Escrow Account. Any residual
interest of the Debtor in the Escrow Account shall not constitute Excluded
Assets.
-8-
14. No cost or expense which is incurred by the Debtor or any other person in
connection with or on account of the preservation and/or disposition of any
Collateral or which otherwise could be chargeable to the Agent or the Collateral
by the Debtor or any other person pursuant to Bankruptcy Code Section 506(c), or
otherwise, shall be chargeable to the Agent or the Collateral.
15. Unless the Agent has provided its prior written consent or all Obligations
have been paid in full and the commitment to extend credit under the DIP Credit
Facility has been cancelled, there shall not be entered in these proceedings, or
in any successor case, any order which authorizes:
a. the obtaining of credit or the incurring of indebtedness that is (i)
secured by a security, mortgage, or collateral interest or other lien on all or
any portion of the Collateral which is equal or senior to the Liens and security
interests held by the Agent, and/or (ii) entitled to priority administrative
status which is equal or senior to that granted to Agent herein; or
b. the enforcement of any claimed security, mortgage, or collateral
interest or other lien of any person other than of the Agent on all or any
portion of the Collateral (other than Permitted Prior Liens); or
c. the Debtor's return of goods constituting Collateral pursuant to
Section 546(g)* of the Bankruptcy Code.
16. Without limiting the provisions and protections of Paragraph 15, above, if
at any time prior to the repayment in full of all Obligations and the
termination of the Lenders' obligation to make loans and advances under the Loan
Documents, the Debtor or any Chapter 11 or Chapter 7 trustee appointed herein
shall obtain credit or incur debt pursuant to Bankruptcy Code Section 364(b) or
364(c), then all of the consideration for such credit or debt shall immediately
be turned over to the Agent in reduction of the Obligations.
17. All Obligations are due and payable upon the earliest to occur of
a. July 31, 2001, or any earlier Maturity Date as defined in the DIP
Loan Agreement; or
b. the acceleration of the Obligations by the Agent following the
occurrence of an Event of Default (as defined in the DIP Loan Agreement); or
c. the effective date of any plan of reorganization in this Chapter 11
case.
Unless and until the Obligations are repaid in full, the protections afforded to
the Agent under the Loan Documents and hereunder, and any actions taken pursuant
thereto, and the Carve Out shall survive the entry of any order confirming a
plan of reorganization or converting this case into a case pursuant to Chapter 7
of the Bankruptcy Code, and the Liens and the Super-Priority Claim shall
continue in these proceedings and in any such successor case, and such Liens and
Super-Priority Claim shall maintain their priority as provided by this Order
until the Obligations have been satisfied in full.
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18. The amount, time and manner of payment of the Obligations, the creation,
scope, perfection and priority of the Liens, and the Super-Priority Claim, shall
not be altered or impaired by any plan of reorganization which may hereafter be
confirmed or by any further order which may hereafter be entered.
REMEDIES UPON AN EVENT OF DEFAULT
19. Any automatic stay otherwise applicable to the Agent is hereby modified so
that upon the occurrence of an Event of Default (as defined in the DIP Loan
Agreement) and the acceleration of the Obligations, and at any time thereafter,
with seven (7) Business Days' prior written notice of such occurrence, in each
case given to the Debtor, counsel to the Committee, and the United States
Trustee, the Agent shall be entitled to exercise the Agent's rights and remedies
upon default as provided in the DIP Loan Agreement and applicable nonbankruptcy
law. Following the giving of notice by the Agent of the occurrence of any Event
of Default and the acceleration of the Obligations:
a. the Debtor shall continue to deliver and cause the delivery of the
proceeds of Collateral to the Agent, as provided in the DIP Loan Agreement;
b. the Agent shall continue to apply such proceeds in accordance with
the provisions of the DIP Loan Agreement and in accordance with this Order;
c. any right the Debtor may have pursuant to the Loan Documents or any
order entered herein prior to the acceleration of the Obligations to use any of
such proceeds, or any other cash collateral (as defined in Bankruptcy Code
363(a)), other than towards the satisfaction of the Obligations and the Carve
Out, shall terminate, PROVIDED that the Debtor shall not be precluded from
seeking an order authorizing the use of cash collateral pursuant to Section
363(c) of the Bankruptcy Code, and the Agent or any Lender shall not be
precluded from contesting relief under said Section 363(c);
d. any obligation otherwise imposed on the Agent and the Lenders to
provide any loan or advance pursuant to the DIP Credit Facility shall be
suspended; and
e. the Agent or any Lender shall have the right to cause, in a
commercially reasonable manner, the immediate sale or other disposition of the
Collateral constituting interests in real estate by directing the Debtor or any
Chapter 11 or Chapter 7 trustee appointed herein to assume, assign, sell or
otherwise dispose of any or all of such real estate Collateral pursuant to
Sections 363 and 365 of the Bankruptcy Code. The Liens shall attach to the
proceeds of any such sale or other disposition of the real estate Collateral,
which proceeds shall be immediately turned over to the Agent for application in
accordance with the provisions of the DIP Loan Agreement.
During such seven Business Day notice period, the Debtor shall be entitled to an
emergency hearing with the Bankruptcy Court for the sole purpose of contesting
whether an Event of Default has occurred. Nothing herein shall preclude the
Debtor, the Committee or the United
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States Trustee from seeking injunctive relief pursuant to Section 105 of the
Bankruptcy Code, provided that the Agent and the Lenders reserve their right to
contest such extraordinary relief.
20. Nothing included herein shall prejudice, impair, or otherwise affect the
Agent's right to seek any other or supplemental relief in respect of the Debtor
or the Agent's right, as provided in the DIP Loan Agreement, to suspend or
terminate the making of loans under the DIP Loan Agreement.
MISCELLANEOUS PROVISIONS
21. If any provision of this Interim Order is hereafter modified, vacated or
stayed by subsequent order of this or any other Court for any reason, such
modification, vacatur, or stay shall not affect the validity of any Obligations
incurred prior to the effective date of such modification, vacatur, or stay, or
the validity, perfection, priority, or enforceability of any Lien granted by the
Debtor to the Agent.
22. The payments made (subject to the provisions of Paragraphs 2 and 7 hereof)
and the Liens and Super-Priority Claim granted to the Agent under the DIP Credit
Facility and this Interim Order, and the priority thereof, shall be binding on
the Debtor, any Chapter 11 or Chapter 7 trustee appointed herein, all creditors
of the Debtor and all other parties in interest, as provided in Bankruptcy Code
Section 364(e).
23. The Agent's or any Lender's failure to seek relief or otherwise exercise its
rights and remedies under the DIP Credit Facility or this Order shall not
constitute a waiver of any of the Agent's or such Lender's rights hereunder,
thereunder, or otherwise.
24. The Debtor and the Agent may amend or waive any provision of any of the Loan
Documents in accordance with the terms thereof, provided that such amendment or
waiver, in the judgment of the Debtor and the Agent, is either nonprejudicial to
the rights of third parties or is not material, and further provided that the
Debtor shall furnish counsel to the Committee with reasonable prior notice
thereof. Except as otherwise provided herein, no waiver, modification, or
amendment of any of the provisions of the Loan Documents shall be effective
unless set forth in writing, signed by the parties thereto and approved by the
Court.
25. In the event of any inconsistency between the terms and conditions of any
Loan Document and of this Order, the provisions of this Order shall govern and
control.
26. This matter is set for a Final Hearing at 11:00 A.M. (Pacific Time) on
January 31, 2000 in this Court, at which time any party in interest may appear
and state its objections, if any, to the borrowings by the Debtor. The following
parties shall immediately, and in no event later than January 10, 2000, be
mailed or faxed copies of the Order: (i) the Debtor's twenty largest unsecured
creditors, (ii) any other party which has filed a request for special notice
with this Court and served such request upon the Debtor's counsel, (iii) counsel
for the Committee or, if the Committee has not been appointed or has not chosen
counsel as of the time of service, counsel to the unofficial pre-petition
committee of trade creditors, (iv) all immediate landlords that are direct
parties to leases with the Debtor, (v) the United States Trustee, (vi) the
Securities
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and Exchange Commission, and (vii) the Pre-Petition Lenders. Objections shall be
in writing and shall be filed with the Clerk of the Bankruptcy Court with a
copies served upon ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (Telecopy No. 213
251-5288); ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇▇▇ & Cleveland, PLLC, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (Telecopy No. 206-583-0359); ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Assistant Vice President, BankBoston Retail Finance Inc., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Telecopy ▇▇. ▇▇▇ ▇▇▇-▇▇▇▇); ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇.,
▇▇▇▇▇▇▇ ▇▇▇▇, LLP ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Telecopy No. 617
951-8736); ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (Telecopy No. 206-624-0717),
and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Kronish ▇▇▇▇ ▇▇▇▇▇▇ & Hellmen LLP, ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (Telecopy No. 212-479-6275). Any
objections by creditors or other parties in interest to any of the provisions of
the DIP Credit Facility or this Order shall state with particularity the grounds
for such objection, and shall be deemed waived unless filed in the Court and
received by the parties listed above on or before 5:00 p.m. on January 24, 2000.
SO ORDERED by the Court this 6TH day of January, 2000.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
U. S. BANKRUPTCY JUDGE
Exhibit C-1
FORM OF
TRANCHE A NOTE
$40,000,000 as of January 4, 2000
FOR VALUE RECEIVED, the undersigned LAMONTS APPAREL, INC., a Delaware
corporation and a debtor and debtor-in-possession (the "Borrower"), hereby
promises to pay to the order of FLEET RETAIL FINANCE INC., a Delaware
corporation (the "Lender") at the Administrative Agent's head office at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇:
(a) prior to or on the Maturity Date (as defined in the Credit
Agreement) the principal amount of Forty Million Dollars ($40,000,000)
or, if less, the aggregate unpaid principal amount of Tranche A Loans
advanced by the Lender to the Borrower pursuant to the Debtor-
in-Possession Credit Agreement dated as of January 4, 2000 (as amended,
modified, supplemented or restated and in effect from time to time, the
"Credit Agreement"), among the Borrower, the Lender, certain other
lending institutions party thereto, BankBoston, N.A., as issuing bank,
and Fleet Retail Finance Inc., as administrative agent and collateral
agent;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rates
provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Lender and
any holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the agreements
of the Borrower contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available
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in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein that are
defined in the Credit Agreement shall have the same meanings herein as in the
Credit Agreement.
The Borrower irrevocably authorizes the Lender to make or cause to be
made, at or about the time of the Borrowing of any Tranche A Loan or at the time
of receipt of any payment of principal of this Note, an appropriate notation on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, reflecting the making of such
Tranche A Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Tranche A Loans set forth on the grid attached to this
Note, or the continuation of such grid, or any other similar record, including
computer records, maintained by the Lender or the Adminstrative Agent with
respect to any Tranche A Loans shall be PRIMA FACIE evidence of the principal
amount thereof owing and unpaid to the Lender, but the failure to record, or any
error in so recording, any such amount on any such grid, continuation or other
record shall not limit or otherwise affect the obligation of the Borrower
hereunder or under the Credit Agreement to make payments of principal of and
interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the
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addition or release of any other party or person primarily or secondarily
liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 9.1 OF THE CREDIT
AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Tranche A Note to
be signed in its corporate name and its corporate seal to be impressed thereon
by its duly authorized officer as of the day and year first above written.
[Corporate Seal]
LAMONTS APPAREL, INC., a debtor
and debtor-in-possession
By: ___________________________
Name:
Title:
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Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
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EXHIBIT C-2
FORM OF
SWINGLINE NOTE
$7,500,000 as of January 4, 2000
FOR VALUE RECEIVED, the undersigned LAMONTS APPAREL, INC., a Delaware
corporation and a debtor and debtor-in-possession (the "Borrower"), hereby
promises to pay to the order of FLEET RETAIL FINANCE INC., a Delaware
corporation (the "Swingline Lender") at the Administrative Agent's head office
at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇:
(a) prior to or on the Maturity Date (as defined in the Credit
Agreement) the principal amount of Seven Million Five Hundred Thousand
Dollars or, if less, the aggregate unpaid principal amount of Swingline
Loans advanced by the Swingline Lender to the Borrower pursuant to the
Debtor-in-Possession Credit Agreement dated as of January 4, 2000 (as
amended, modified, supplemented or restated and in effect from time to
time, the "Credit Agreement"), among the Borrower, the Swingline
Lender, certain other lending institutions party thereto, BankBoston,
N.A., as issuing bank, and Fleet Retail Finance Inc., as administrative
agent and collateral agent;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rates
provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Swingline
Lender and any holder hereof is entitled to the benefits of the Credit
Agreement, the Security Documents and the other Loan Documents, and may enforce
the agreements of the Borrower contained therein, and any
-2-
holder hereof may exercise the respective remedies provided for thereby or
otherwise available in respect thereof, all in accordance with the respective
terms thereof. All capitalized terms used in this Note and not otherwise defined
herein that are defined in the Credit Agreement shall have the same meanings
herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Swingline Lender to make or
cause to be made, at or about the time of the Borrowing of any Swingline Loan or
at the time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Swingline Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Swingline Loans set forth on the grid attached to this
Note, or the continuation of such grid, or any other similar record, including
computer records, maintained by the Swingline Lender or the Adminstrative Agent
with respect to any Swingline Loans shall be PRIMA FACIE evidence of the
principal amount thereof owing and unpaid to the Swingline Lender, but the
failure to record, or any error in so recording, any such amount on any such
grid, continuation or other record shall not limit or otherwise affect the
obligation of the Borrower hereunder or under the Credit Agreement to make
payments of principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Swingline Lender or any holder
hereof in exercising any right hereunder shall operate as a waiver of such right
or of any other rights of the Swingline Lender or such holder, nor shall any
delay, omission or waiver on any one occasion be deemed a bar or waiver of the
same or any other right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the
addition or release of any other party or person primarily or secondarily
liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 9.1 OF THE CREDIT
AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Swingline Note to
be signed in its corporate name and its corporate seal to be impressed thereon
by its duly authorized officer as of the day and year first above written.
[Corporate Seal]
LAMONTS APPAREL, INC., a debtor
and debtor-in-possession
By: ___________________________
Name:
Title:
------------------- -------------------- ------------------------ -------------------- --------------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
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Exhibit ▇-▇
▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇ NOTE
$5,000,000 as of January 5, 2000
FOR VALUE RECEIVED, the undersigned LAMONTS APPAREL, INC., a Delaware
corporation and a debtor and debtor-in-possession (the "Borrower"), hereby
promises to pay to the order of BACK BAY CAPITAL FUNDING, LLC, a Delaware
limited liability company (the "Lender") at the Administrative Agent's head
office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇:
(a) prior to or on the Maturity Date (as defined in the
Credit Agreement referred to below) the principal amount of Five
Million Dollars ($5,000,000), evidencing the Tranche B Loan made
by the Lender to the Borrower pursuant to the Debtor-in-Possession
Credit Agreement dated as of January 4, 2000 (as amended and in
effect from time to time, the "Credit Agreement"), by and among the
Borrower, the Lender, certain other lending institutions party thereto,
BankBoston, N.A., as issuing bank, and Fleet Retail Finance Inc. as
administrative agent and collateral agent;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest from the date hereof on the principal amount from
time to time outstanding to and including the maturity hereof at the
rates and times and in all cases in accordance with the terms of the
Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Lender and
any holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the agreements
of the Borrower contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All
-2-
capitalized terms used in this Note and not otherwise defined herein that are
defined in the Credit Agreement shall have the same meanings herein as in the
Credit Agreement.
The Borrower irrevocably authorizes the Lender to make or cause to be
made, at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the receipt of such payment. The outstanding amount of the Tranche B Loans set
forth on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by the Lender
or the Administrative Agent with respect to the Tranche B Loans shall be PRIMA
FACIE evidence of the principal amount of the Tranche B Loans owing and unpaid
to the Lender, but the failure to record, or any error in so recording, any such
amount on any such grid, continuation or other record shall not limit or
otherwise affect the obligation of the Borrower hereunder or under the Credit
Agreement to make payments of principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any future occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
-3-
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 9.1 OF THE CREDIT
AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Tranche B Note to
be signed in its corporate name and its corporate seal to be impressed thereon
by its duly authorized officer as of the day and year first above written.
[Corporate Seal]
LAMONTS APPAREL, INC., a debtor
and debtor-in-possession
By: __________________________
Name:
Title:
January 6, 2000
24514-0005
Fleet Retail Finance Inc., as Tranche A Lender,
Administrative Agent and Collateral Agent
Back Bay Capital Funding, LLC, as Tranche B Lender
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
BankBoston, N.A., as Issuing Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Lamonts Apparel, Inc.
Ladies and Gentlemen:
We have acted as counsel to Lamonts Apparel, Inc., a Delaware
corporation, and a debtor and debtor-in-possession (the "Company"), in
connection with the Debtor in Possession Credit Agreement (the "Credit
Agreement"), dated as of January 5, 2000, between the Company, as Borrower, the
Tranche A Lenders named therein, Back Bay Capital Funding, LLC, a Delaware
limited liability company, as Tranche B Lender, Fleet Retail Finance Inc., a
Delaware corporation, as Administrative Agent and Collateral Agent for the
Lenders, and BankBoston, N.A., a national banking association, as Issuing Bank.
This opinion is rendered to you pursuant to Section 4.1(b) of the Credit
Agreement. Capitalized terms used without definition in this opinion have the
meanings given to them in the Credit Agreement.
I.
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures
(other than signatures on behalf of the Company), the legal capacity of natural
persons and the conformity to the
2
originals of all records, documents and instruments submitted to us as copies.
We have also assumed the transactions to which the Loan Documents relate are
primarily for agricultural, commercial, investment or business purposes, and not
for personal, family or household purposes, within the meaning of RCW 19.52.080.
We have based our opinion upon our review of the following records,
documents, instruments and certificates and such additional certificates
relating to factual matters as we have deemed necessary or appropriate for our
opinion:
(a) The Credit Agreement;
(b) The Notes;
(c) The Security Agreement;
(d) The Fee Letter;
(e) The Certificate of Incorporation of the Company certified by
the Delaware Secretary of State as of December 29, 1999, and
certified to us by an officer of the Company as being complete
and in full force and effect as of the date of this opinion;
(f) The By-Laws of the Company certified to us by an officer of
the Company as being complete and in full force and effect as
of the date of this opinion;
(g) Records certified to us by an officer of the Company as
constituting all records of proceedings and actions of the
board of directors of the Company relating to the transactions
contemplated by the Loan Documents;
(h) A Certificate of Good Standing relating to the Company issued
by the Secretary of State of the State of Delaware, dated
December 29, 1999;
(i) A Certificate of Existence/Authorization relating to the
Company issued by the Washington Secretary of State, dated
January 3, 2000;
(j) A certificate of an officer of the Company as to certain
factual matters (the "Officer's Certificate");
(k) A certificate of the President of the Company as to certain
agreements and instruments to which the Company is a party or
by which the Company or any of its properties are bound to
meeting the criteria set forth therein (the "Certificate
Relating to Agreements"), a copy of which is attached as an
exhibit hereto; and
2
(l) Each of the agreements and instruments identified in the
Certificate Relating to Agreements.
Items (a)-(d) above are collectively referred to herein as the "Loan
Documents".
Our opinion expressed in Paragraph 1 of Part III as to the good
standing of the Company under the laws of the State of Delaware is based solely
upon the Certificate of Good Standing listed as item (h) above. Our opinion
expressed in Paragraph 2 of Part III as to the authority of the Company to
transact business as a foreign corporation under the laws of the State of
Washington is based solely on the Certificate of Existence/Authorization listed
as item (i) above. We have made no additional investigations after the dates of
either Certificate in rendering our opinion in Paragraphs 1 and 2 of Part III.
With respect to our opinions in Paragraphs 4 and 6 of Part III, we have
assumed:
(i) the Company will not in the future take any discretionary
action (including the decision not to act) permitted under the
transaction documents that would result in a violation of law
or constitute a breach or default under any other agreement or
court order;
(ii) the Company will obtain all permits and governmental approvals
required in the future, and take all actions similarly
required, relevant to the subsequent consummation of the
transaction or performance of the Loan Documents; and
(iii) all parties to the Loan Documents will act in accordance with,
and will refrain from taking any action that is forbidden by,
the terms and conditions of the Loan Documents.
Where our opinion relates to our "knowledge," that knowledge is based
upon our examination of the records, documents, instruments and certificates
enumerated or described above and the actual contemporaneous knowledge of
attorneys in this firm who are currently involved in legal representation of the
Company in connection with the Loan Documents. We have not examined any records
of any court, administrative tribunal or other similar entity in connection with
our opinion.
II.
We express no opinion as to:
A. The attachment, perfection, priority or enforcement of any lien or
security interest created, or purported to be created, by any of the Loan
Documents.
3
B. The applicable choice of law rules that may affect the
interpretation or enforcement of the Loan Documents. We note, however, that
Section 1-105 of the Washington Uniform Commercial Code (Revised Code of
Washington ("RCW"), Title 62A) states that when a transaction bears a reasonable
relation to this state and also to another state or nation the parties may agree
that the law of either state or of such other state or nation shall govern their
rights and duties.
C. Any securities, tax, anti-trust, land use, safety, environmental or
hazardous materials laws, rules or regulations or laws, rules or regulations
applicable to any party to the Loan Documents by virtue of its status as a
financial institution engaged in business of the type exemplified by the Loan
Documents.
D. The application or effect of insolvency or bankruptcy laws,
including, but not limited to, the U.S. Bankruptcy Code (Title 11 of the United
States Code), and the order issued by the Western District of Washington U.S.
Bankruptcy Court with respect to the Company on January 6, 2000 ("Bankruptcy
Order"). For these issues, we understand that you will be relying on a legal
opinion of ▇▇▇▇, ▇▇▇▇▇▇▇ & Cleveland of even date herewith.
This opinion is limited to the federal laws of the United States of
America, the laws of the State of Washington, and the Delaware General
Corporation Law insofar as it relates to corporate formalities, and we disclaim
any opinion as to the laws of any other jurisdiction. We further disclaim any
opinion as to any statute, rule, regulation, ordinance, order or other
promulgation of any regional or local governmental body or as to any related
judicial or administrative opinion. We note that the Credit Agreement expressly
provides that it is to be governed and construed in accordance with the internal
laws of the Commonwealth of Massachusetts. With your consent we have assumed
that, notwithstanding that choice of law provision, Washington law will govern
interpretation and enforcement of the Credit Agreement.
III.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of our opinion, and
subject to the limitations and qualifications expressed below, it is our opinion
that:
1. The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware.
2. The Company is authorized to transact business as a foreign
corporation in the State of Washington.
4
3. The Company has all requisite corporate power and corporate
authority to enter into and perform the Loan Documents, to own
its properties and to carry on its business as, to our
knowledge, it is now conducted.
4. The execution and delivery of the Loan Documents, the
borrowing and the obtaining of Letters of Credit thereunder,
have been duly authorized by all necessary corporate action on
the part of the Company and such Loan Documents have been duly
executed and delivered on behalf of the Company.
5. The Loan Documents are valid and binding obligations of the
Company, enforceable against the Company in accordance with
their respective terms, subject, as to enforcement, (i) to
bankruptcy, insolvency, reorganization, arrangement,
moratorium and other laws of general applicability relating to
or affecting creditors' rights and (ii) to general principles
of equity, whether such enforceability is considered in a
proceeding in equity or at law.
6. Neither the execution and delivery of the Loan Documents on
behalf of the Company, nor the performance by the Company of
its agreements and obligations thereunder (i) conflicts with
any provision of the Certificate of Incorporation or By-Laws
of the Company, (ii) violates any law applicable to the
Company or any ruling or order applicable to the Company of
which we have knowledge, excluding the Bankruptcy Order, on
which we express no opinion, (iii) result in a breach or
violation of, or constitutes a default under, any term of any
agreement or instrument identified in the Certificate Relating
to Agreements, with the exception that the filing of a
petition seeking relief pursuant to the Bankruptcy Code (Title
11 of the United States Code) constitutes default under
Section 13.1(c)of the Comdisco Agreement, Section 7.01(e) of
the Greentree Agreement, and Section 8.3(c) of the ACS
Agreement; or (iv) requires any governmental consent,
approval, authorization, registration, declaration, or filing.
7. The Company may not plead the defense of usury or maintain any
action therefor in connection with the Loans contemplated by
the Loan Documents.
IV.
We further advise you that:
A. As noted, the enforceability of the Loan Documents is subject
to the effect of general principles of equity. These
principles include, without limitation, concepts of commercial
reasonableness, materiality and good faith and fair
5
dealing. As applied to the Loan Documents, these principles
will require you to act reasonably, in good faith and in a
manner that is not arbitrary or capricious in the
administration and enforcement of the Loan Documents and will
preclude you from invoking penalties for defaults that bear no
reasonable relation to the damage suffered or that would
otherwise work a forfeiture.
B. The enforceability of the Loan Documents is subject to the
effects of (i) RCW Section 62A.1-102, which provides that
obligations of good faith, diligence, reasonableness and care
prescribed by the Washington Uniform Commercial Code may not
be disclaimed by agreement, although the parties may by
agreement determine the standards by which the performance of
such obligations is to be measured if those standards are not
manifestly unreasonable, (ii) RCW 62A.1-203, which imposes an
obligation of good faith in the performance or enforcement of
a contract and (iii) legal principles under which a court may
refuse to enforce, or may limit the enforcement of, a contract
or any clause of a contract that a court finds as a matter of
law to have been unconscionable at the time it was made.
C. The effectiveness of indemnities, rights of contribution,
exculpatory provisions and waivers of the benefits of
statutory provisions may be limited on public policy grounds.
D. Pursuant to RCW 4.84.330, any provision in an agreement
requiring a party to pay another party's attorneys' fees and
costs in actions to enforce the provisions of such agreement
will be construed to entitle the prevailing party in any
action, whether or not that party is the specified party, to
be awarded its reasonable attorneys' fees, costs and necessary
disbursements.
E. Provisions of the Loan Documents requiring that waivers must
be in writing may not be binding or enforceable if a
non-executory oral agreement has been created modifying any
such provision or an implied agreement by trade practice or
course of conduct has given rise to a waiver.
F. Provisions of the Loan Documents regarding the right of the
Lender to apply proceeds of fire or other casualty insurance
policies or awards of damages in condemnation proceedings
against the Company's secured obligations will not be
enforceable unless the application of such proceeds or damages
by the Lender is reasonably necessary to protect the security
of the Lender.
6
G. If enforcement of the Loan Documents is accompanied by
judicial or nonjudicial proceedings to realize upon collateral
pledged or mortgaged by the Company to the Collateral Agent
for the benefit of the Lenders, such activities will be
subject to statutory and other legal requirements generally
applicable to a lender exercising remedies relating to real or
personal property collateral of a borrower, such as the
"anti-deficiency" and "one-action" rules found in the
Washington Deed of Trust Act. Such legal requirements may
affect the ability of a lender to collect all amounts due and
owing under the Loan Documents during the pendency or after
the completion of such proceedings.
V.
This opinion is rendered to you in connection with the Loan Documents
and is solely for your benefit. This opinion may not be relied upon by your for
any other purpose, or relied upon by any other person (other than a successor or
assignee or a participant in the Credit Agreement), without our prior written
consent. We disclaim any obligation to advise you of any change of law that
occurs, or any facts of which we become aware, after the date of this opinion.
Very truly yours,
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
7
ATTACHMENT TO HEWM LEGAL OPINION
CERTIFICATE RELATING TO AGREEMENTS
OF
LAMONTS APPAREL, INC.
I, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, as the President and Chief Executive Officer of
LAMONTS APPAREL, INC., (the "Company"), a Delaware corporation, hereby certify
as follows:
The following is a list of all the agreements and instruments to which
the Company is a party or by which the Company or any of its properties is bound
which constitute a contract for the purchase of goods or services for payment of
a consideration in excess of $500,000, except for (i) open-ended purchase orders
for the purchase of goods on cash terms, (ii) contracts for the purchase of
utilities or professional services, (iii) contracts for the purchase of
employment services, (iv) contracts for the purchase of credit card processing
services, and (v) contracts for the use of real estate:
1. Revolving Credit Program Agreement dated June 1, 1999, between
Green Tree Financial Corporation and the Company ("Greentree
Agreement").
2. Master Lease Agreement dated July 28, 1999, between Comdisco,
Inc., and the Company ("Comdisco Agreement").
3. Standard Service Agreement dated February 13, 1989, between
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Incorporated and the Company ("▇▇▇▇▇▇
Agreement").
4. Master Agreement for Data Processing and Related Services
dated February 14, 1997, between Affiliated Computer Services,
Inc., and the Company ("ACS Agreement").
IN WITNESS WHEREOF, I have hereunto set my hand as of this 5th day of
January, 2000.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President & CEO
8
LAWYERS
--------------------------------------------------------------------------------
▇▇▇▇, ▇▇▇▇▇▇▇ & CLEVELAND, PLLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ o (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Direct Line: (▇▇▇) ▇▇▇-▇▇▇▇
Direct Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
January 6, 2000
REPLY TO OUR FILE NO.
000007\00001
Fleet Retail Finance Inc., as Tranche
A Lender, Administrative Agent and
Collateral Agent
Back Bay Capital Funding, LLC, as Tranche
B Lender
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BankBoston, N.A. as Issuing Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: DEBTOR IN POSSESSION
FINANCING FOR LAMONTS APPAREL, INC.
Ladies and Gentlemen:
We have acted as counsel to Lamonts Apparel, Inc., a Delaware
corporation, debtor and debtor in possession (the "Borrower"), in connection
with (i) the Debtor in Possession Credit Agreement dated as of January 5, 2000
(the "Loan Agreement") among the Borrower, the Tranche A Lenders named therein,
Back Bay Capital Funding, LLC, as Tranche B Lender, BankBoston, N.A. as Issuing
Bank and FleetBoston Retail Finance Inc. as Administrative and Collateral Agent
for the Lenders, and (ii) the other Loan Documents (as defined in the Loan
Agreement).
This opinion is rendered to you pursuant to Section 4.1(b) of the Loan
Agreement. Capitalized terms used herein without definition shall have the
respective meanings given them in the Loan Agreement.
We have examined the originals or copies, certified or otherwise
identified to our satisfaction, of each of the following: (1) an executed copy
of the Loan Agreement; (2) an executed copy of the Security Agreement; (3) the
executed Notes; (4) the executed Fee Letter; (5)
January 6, 2000
Page 2
the Interim Order and the notice of hearing on the motion seeking entry of the
Interim Order; and (6) such other documents as we deemed necessary or
appropriate to render this opinion letter.
In rendering our opinion, we have assumed, without any independent
investigation, (i) the legality, validity, binding effect and enforceability of
each Loan Document, the valid existence and good standing of the parties
thereto, the valid authorization, proper execution and delivery of the Loan
Documents, and that the Loan Documents are within the Borrower's powers; (ii)
the authenticity and completeness of all documents submitted to us as originals,
the conformity to original and to recorded documents as of the date hereof of
all documents submitted to us as certified, conformed or photostatic copies, and
the genuineness of all signatures and the legal capacity of natural persons. We
understand that you will be relying on the legal opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ White
& ▇▇▇▇▇▇▇▇▇ as to such matters with respect to the Borrower.
Based upon the foregoing, and subject to the limitations and
qualifications set forth herein, we are of the opinion that:
1. The execution and delivery by the Borrower of each of the Loan
Documents to which it is a party, the borrowing of the Loans and the obtaining
of the Letters of Credit and the performance by the Borrower of its agreements
and obligations under each of such Loan Documents to which it is a party do not
and will not contravene, violate or cause a default under any ruling, order or,
to the best of our knowledge and belief, any other requirement of the Bankruptcy
Code and Rules, including the Interim Order, applicable to or binding upon the
Borrower or its properties and assets.
2. The Interim Order was entered by the Bankruptcy Court on January 6,
2000, and has not been reversed, modified, amended or stayed, remains in full
force and effect, and no appeals therefrom, or motions to reverse, modify, or
amend the Interim Order, are pending or otherwise outstanding.
3. Notice of the hearing on the motion seeking entry of the Interim
Order was given in writing to all parties required by order of the Bankruptcy
Court and on the dates shown on the attached Declarations of Service.
This opinion is limited to the specific issues addressed and is limited
in all respects to laws and facts existing on the date of this letter.
January 6, 2000
Page 3
This opinion is rendered solely to you. It may be relied upon solely by
you and used by you solely in connection with the transactions identified
herein. It is not to be used, circulated, quoted or otherwise relied upon by
third parties without our prior written consent; provided, however, that you may
furnish this opinion to any assignee of or participant in the Loan Agreement,
who may rely upon and use this opinion.
Very truly yours,
▇▇▇▇, ▇▇▇▇▇▇▇ & CLEVELAND, PLLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DHO:cs
EXHIBIT E
FORM OF
BORROWING BASE CERTIFICATE
Dated:_____________
For Period Ended: _____________________
The undersigned, __________, the duly elected and qualified
_________________ of Lamonts Apparel, Inc., debtor and debtor in possession (the
"Borrower"), hereby certifies pursuant to Section 5.1(h) of the Debtor in
Possession Credit Agreement, dated as of January 5, 2000 (as amended, modified,
supplemented or restated and in effect from time to time, the "Credit
Agreement"), among the Borrower, the lending institutions that are or may become
parties thereto from time to time (collectively, the "Lenders"), BankBoston,
N.A., in its capacity as issuing bank and Fleet Retail Finance Inc. in its
capacity as administrative agent and collateral agent for the Lenders, that (a)
the information set forth in this Borrowing Base Certificate was true and
correct as of the last day of the period specified herein, (b) this Borrowing
Base Certificate has been prepared in accordance with the applicable provisions
of the Credit Agreement relating to the computation of the Borrowing Base and
the various components thereof, and (c) as of the date of this Borrowing Base
Certificate, there exists no Default or Event of Default.
Capitalized terms used herein without definition that are defined in
the Credit Agreement shall have the same meanings herein as in the Credit
Agreement.
LAMONTS APPAREL, INC., DEBTOR
AND DEBTOR IN POSSESSION
By:______________________________
Name:
Title:
BORROWING BASE AS OF , 20 FOR THE WEEK ENDED , 20
------- --- ----------- ---
[WORKSHEET TO BE PREPARED BY FLEETBOSTON]
SCHEDULE 1.1
COMMITMENT
LENDER COMMITMENT % AMOUNT
------ ------------ ------
Fleet Retail Finance Inc. 100% of Tranche A $40,000,000 of
Commitment Tranche A
Back Bay Capital Funding, LLC 100% of Tranche B $5,000,000 of
Commitment Tranche B
SCHEDULE 1.2
ELIGIBLE LEASEHOLD REAL ESTATE
@@
STORE # LOCATION APPRAISED VALUE
508 Crossroads 177,612
510 Manito 19,756
512 Totem Lake 723,557
520 Sea-Tac Mall 1,132,753
526 Factoria 1,289,581
▇▇▇ ▇▇▇▇▇▇▇▇▇ 746,940
536 Yakima 478,934
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ 760,690
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 2,442,415
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ 306,115
586 Tri-Cities 478,900
TOTAL $8,730,253
@@
SCHEDULE 5.1(L)
COLLATERAL REPORTING
A. DAILY (BY 11:30 AM)
Borrowing Base Certificate - Rolled Weekly (FRF format)
B. WEEKLY (BY WEDNESDAY FOR THE PRECEDING WEEK)
Sales Audit Reconciliation (FRF form)
C. MONTHLY (20 DAYS AFTER FISCAL MONTH END)
Monthly, within Twenty (20) days of the end of the
previous fiscal month, the Borrower shall provide the Administrative
Agent with the following (each in such form as may be specified from
time to time by the Administrative Agent):
1. Inventory Certificate (FRF form) signed by a Financial Officer of the
Borrower.
2. Retail Stock Ledger - "RIM" (summary by department).
B. MONTHLY REPORTS (35 DAYS AFTER FISCAL MONTH END).
Monthly, within thirty (35) days of the end of the previous fiscal month, the
Borrower shall provide the Administrative Agent with original counterparts of
the following (each in such form as the Administrative Agent from time to time
may specify):
1. A reconciliation of the above described Retail Stock Ledger
Reports and Inventory Certificate to Availability and to the
general ledger as of the end of the subject month.
2. An Inventory Aging Report.
3. A report of intransit inventory.
4. A report of actual cartons shipped (cost/retail/units)
5. A schedule of purchases from the Borrower's ten largest
vendors (in terms of year-to-date purchases), which schedule
shall be in such form as may be satisfactory to the
Administrative Agent and shall include year-to-date cumulative
purchases.
6. A Gross Margin Reconciliation Report.
7. A Store Activity Report.
8. Certificates of Rents Paid.