Exhibit 10.6
LOAN AND SECURITY AGREEMENT
Dated as of June 21, 2005
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
BANK OF AMERICA, N.A.
as the Agent
BANC OF AMERICA SECURITIES LLC
as Sole Lead Arranger and Book Manager
BANK OF AMERICA, N.A. and
THE CIT GROUP/BUSINESS CREDIT, INC.
as Co-Syndication Agents
GENERAL ELECTRIC CAPITAL CORPORATION
as Documentation Agent
▇▇▇▇▇ ▇▇▇▇▇, INC.
as Borrower
and
▇▇▇▇▇ ▇▇▇▇▇ HOLDINGS, INC.
THE SUBSIDIARIES OF ▇▇▇▇▇ ▇▇▇▇▇, INC. PARTY HERETO
as Guarantors
TABLE OF CONTENTS
Page
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ARTICLE 1 INTERPRETATION OF THIS AGREEMENT..................................... 2
1.1 Definitions........................................................... 2
1.2 Accounting Terms...................................................... 27
1.3 Interpretive Provisions............................................... 27
ARTICLE 2 LOANS AND LETTERS OF CREDIT.......................................... 28
2.1 Total Facility........................................................ 28
2.2 Revolving Loans....................................................... 28
2.3 Letters of Credit..................................................... 35
2.4 Bank Products......................................................... 42
ARTICLE 3 INTEREST AND FEES.................................................... 42
3.1 Interest.............................................................. 42
3.2 Conversion and Continuation Elections................................. 43
3.3 Maximum Interest Rate................................................. 44
3.4 Unused Line Fee....................................................... 45
3.5 Letter of Credit Fee.................................................. 45
3.6 Fee Letter............................................................ 45
3.7 Payment of Fees....................................................... 45
ARTICLE 4 PAYMENTS AND PREPAYMENTS............................................. 45
4.1 Revolving Loans....................................................... 45
4.2 Termination, Reduction or Increase of Facility........................ 46
4.3 Payments by the Loan Parties.......................................... 48
4.4 Payments as Revolving Loans........................................... 48
4.5 Apportionment and Application and Reversal of Payments................ 49
4.6 Indemnity for Returned Payments....................................... 49
4.7 Agent's and Lenders' Books and Records: Monthly Statements............ 50
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY............................... 50
5.1 Taxes................................................................. 50
5.2 Illegality............................................................ 52
5.3 Increased Costs and Reduction of Return............................... 53
5.4 Funding Losses........................................................ 53
5.5 Inability to Determine Rates.......................................... 54
5.6 Certificates of Lenders............................................... 54
5.7 Survival.............................................................. 54
(i)
ARTICLE 6 COLLATERAL........................................................... 54
6.1 Grant of Security Interest............................................ 54
6.2 Perfection and Protection of Security Interest........................ 56
6.3 Location of Collateral................................................ 57
6.4 Title to, Liens on, and Sale and Use of Collateral.................... 57
6.5 Access and Examination: Promotional Materials......................... 58
6.6 Collateral Reporting.................................................. 58
6.7 Accounts.............................................................. 60
6.8 Collection of Accounts; Payments...................................... 61
6.9 Inventory: Perpetual Inventory........................................ 62
6.10 Equipment............................................................. 63
6.11 Documents, Instruments, and Chattel Paper............................. 64
6.12 Right to Cure......................................................... 64
6.13 Power of Attorney..................................................... 64
6.14 The Agent's and Lenders' Rights, Duties and Liabilities............... 65
6.15 Patents, Trademarks and Copyrights.................................... 66
6.16 Grant of License to Use Intellectual Property......................... 67
ARTICLE 7 BOOKS AND RECORDS: FINANCIAL INFORMATION: NOTICES.................... 67
7.1 Books and Records..................................................... 67
7.2 Financial and Other Information....................................... 67
7.3 Notices to the Lenders................................................ 70
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS............................... 73
8.1 Authorization......................................................... 73
8.2 Validity and Priority of Security Interest............................ 73
8.3 Organization and Qualification........................................ 74
8.4 Corporate Name: Prior Transactions.................................... 74
8.5 Subsidiaries and Affiliates........................................... 74
8.6 Financial Statements and Projections.................................. 74
8.7 Capitalization........................................................ 75
8.8 Debt.................................................................. 75
8.9 Distributions......................................................... 75
8.10 Title to Property..................................................... 75
8.11 Real Estate: Leases................................................... 75
8.12 Proprietary Rights.................................................... 75
8.13 Trade Names........................................................... 76
8.14 Litigation............................................................ 76
8.15 Restrictive Agreements................................................ 76
8.16 Labor Disputes........................................................ 76
8.17 Environmental Laws.................................................... 76
8.18 No Violation of Law................................................... 77
8.19 No Default............................................................ 77
8.20 ERISA Compliance...................................................... 78
(ii)
8.21 Taxes................................................................. 78
8.22 Regulated Entities.................................................... 79
8.23 Use of Proceeds: Margin Regulations................................... 79
8.24 Copyrights, Patents, Trademarks and Licenses, etc..................... 79
8.25 No Material Adverse Change............................................ 79
8.26 Full Disclosure....................................................... 79
8.27 Material Agreements................................................... 79
8.28 Bank Accounts......................................................... 80
8.29 Commercial Tort Claims................................................ 80
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS................................... 80
9.1 Taxes and Other Obligations........................................... 80
9.2 Legal Existence and Good Standing..................................... 80
9.3 Compliance with Law and Agreements: Maintenance of Licenses........... 80
9.4 Maintenance of Property; Inspection of Property....................... 81
9.5 Insurance............................................................. 81
9.6 Environmental Laws.................................................... 82
9.7 Compliance with ERISA................................................. 82
9.8 Mergers, Consolidations or Sales...................................... 82
9.9 Distributions: Capital Change: Restricted Investments................. 83
9.10 Guaranties............................................................ 84
9.11 Debt.................................................................. 84
9.12 Prepayment............................................................ 85
9.13 Transactions with Affiliates.......................................... 85
9.14 Investment Banking and Finder's Fees.................................. 85
9.15 Business Conducted.................................................... 85
9.16 Liens................................................................. 86
9.17 Sale and Leaseback Transactions....................................... 86
9.18 New Subsidiaries...................................................... 86
9.19 Fiscal Year........................................................... 86
9.20 Use of Proceeds....................................................... 86
9.21 Further Assurances.................................................... 86
9.22 Obligations under Real Estate Leases, Equipment Leases and Licenses... 86
9.23 Reclamation Claims.................................................... 87
9.24 Sourcing Arrangements................................................. 87
9.25 Minimum Consolidated Fixed Charge Coverage Ratio...................... 87
9.26 Capital Expenditures.................................................. 87
9.27 Commercial Tort Claims................................................ 87
9.28 Plan of Reorganization................................................ 87
9.29 Borrower's Excluded Subsidiaries...................................... 88
ARTICLE 10 CONDITIONS OF LENDING............................................... 88
10.1 Conditions Precedent to Closing Date.................................. 88
10.2 Conditions Precedent to Each Loan..................................... 92
(iii)
ARTICLE 11 DEFAULT: REMEDIES................................................... 92
11.1 Events of Default..................................................... 92
11.2 Remedies.............................................................. 95
ARTICLE 12 TERM AND TERMINATION................................................ 97
12.1 Term and Termination.................................................. 97
ARTICLE 13 AMENDMENTS: WAIVER; PARTICIPATIONS: ASSIGNMENTS: SUCCESSORS......... 97
13.1 No Waivers: Cumulative Remedies....................................... 97
13.2 Amendments and Waivers................................................ 97
13.3 Assignments; Participations........................................... 99
ARTICLE 14 THE AGENT........................................................... 101
14.1 Appointment and Authorization......................................... 101
14.2 Delegation of Duties.................................................. 102
14.3 Liability of Agent.................................................... 102
14.4 Reliance by Agent..................................................... 102
14.5 Notice of Default..................................................... 103
14.6 Credit Decision....................................................... 103
14.7 Indemnification....................................................... 104
14.8 Agent in Individual Capacity.......................................... 104
14.9 Successor Agent....................................................... 104
14.10 Withholding Tax....................................................... 105
14.11 Collateral Matters.................................................... 106
14.12 Restrictions on Actions by Lenders; Sharing of Payments............... 107
14.13 Agency for Perfection................................................. 108
14.14 Payments by Agent to Lenders.......................................... 108
14.15 Concerning the Collateral and the Related Loan Documents.............. 108
14.16 Field Audit and Examination Reports: Disclaimer by Lenders............ 109
14.17 Relation Among Lenders................................................ 109
14.18 The Arranger and Co-Agents. Etc....................................... 109
ARTICLE 15 MISCELLANEOUS....................................................... 110
15.1 Severability.......................................................... 110
15.2 Governing Law: Choice of Forum: Service of Process.................... 110
15.3 WAIVER OF JURY TRIAL.................................................. 111
15.4 Survival of Representations and Warranties............................ 111
15.5 Other Security and Guaranties......................................... 111
15.6 Fees and Expenses..................................................... 111
15.7 Notices............................................................... 112
15.8 Waiver of Notices..................................................... 114
15.9 Binding Effect........................................................ 114
(iv)
15.10 Indemnity of the Agent and the Lenders by the Loan Parties............ 114
15.11 Limitation of Liability............................................... 115
15.12 Final Agreement....................................................... 115
15.13 Counterparts.......................................................... 115
15.14 Captions.............................................................. 115
15.15 Right of Setoff....................................................... 115
15.16 Joint and Several Liability........................................... 116
15.17 Confidentiality....................................................... 117
15.18 Conflicts with Other Loan Documents................................... 118
15.19 Appraisals............................................................ 118
15.20 Patriot Act........................................................... 119
15.21 Foreign Asset Control Regulations..................................... 119
ARTICLE 16 GUARANTEES.......................................................... 119
(v)
EXHIBITS
EXHIBIT A - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT B - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT C - FORM OF NOTICE OF BORROWING
EXHIBIT D - FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT E - FORM OF INTERCREDITOR AGREEMENT
SCHEDULES
Schedule 1.1(a) COMMITMENTS
Schedule 1.1(b) EXCLUDED SUBSIDIARIES
Schedule 1.1(c) MAJOR CREDIT CARD PROGRAM AGREEMENTS
Schedule 6.1(a)(xiv) COMMERCIAL TORT CLAIMS
Schedule 6.3 LOAN PARTIES' CHIEF EXECUTIVE OFFICE, THE LOCATION OF ITS
BOOKS AND RECORDS, THE LOCATIONS OF THE COLLATERAL
Schedule 6.15 INTELLECTUAL PROPERTY
Schedule 8.4 CORPORATE NAME; PRIOR TRANSACTIONS
Schedule 8.5 SUBSIDIARIES AND AFFILIATES
Schedule 8.7 CAPITALIZATION OF LOAN PARTIES
Schedule 8.8 DEBT
Schedule 8.10 OWNED REAL PROPERTY
Schedule 8.11 LEASES
Schedule 8.12 PROPRIETARY RIGHTS
Schedule 8.13 TRADE NAMES
Schedule 8.14 LITIGATION
Schedule 8.16 LABOR DISPUTES
Schedule 8.17 ENVIRONMENTAL ISSUES
Schedule 8.18 VIOLATIONS OF LAW
Schedule 8.20 ERISA ISSUES
Schedule 8.25 MATERIAL ADVERSE CHANGE
Schedule 8.27 MATERIAL AGREEMENTS
Schedule 8.28 BANK ACCOUNTS
Schedule 9.3 COMPLIANCE WITH LAWS
Schedule 9.10 EXISTING GUARANTIES
Schedule 9.13 TRANSACTIONS WITH AFFILIATES
Schedule 9.16 EXISTING LIENS
Schedule 10.1(j) GOOD STANDING CERTIFICATES
(vi)
LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of June 21, 2005, among the financial
institutions listed on the signature pages hereof (such financial institutions,
together with their respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the "Lenders"),
Bank of America, N.A., with an office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, as agent for the Lenders (in its capacity as agent, together with any
successor in such capacity, the "Agent"), Banc of America Securities LLC, as
sole lead arranger and book manager (in such capacity, the "Arranger"), Bank of
America, N.A. and The CIT Group/Business Credit, Inc., as co-syndication agents
(in such capacity, the "Co-Syndication Agents"), General Electric Capital
Corporation, as documentation agent (in such capacity, the "Documentation
Agent") ▇▇▇▇▇ ▇▇▇▇▇, Inc., a Delaware corporation ("Borrower", and in its
capacity as authorized representative of the Loan Parties, the "Authorized
Representative"), and each of its direct and indirect Subsidiaries that is a
signatory hereto as a Guarantor, and ▇▇▇▇▇ ▇▇▇▇▇ Holdings, Inc., a Delaware
corporation ("Holdings") as a Guarantor (each a "Guarantor" and collectively,
the "Guarantors").
WITNESSETH:
WHEREAS, Borrower and certain of the Guarantors have filed in the
Bankruptcy Court (as hereinafter defined) a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (as hereinafter defined) and have continued in
the possession of their assets and in the management of their businesses
pursuant to Sections 1107 and 1108 of the Bankruptcy Code, and such
reorganization cases are being jointly administered under Case Number 03-11540
(CB) (the "Case");
WHEREAS, pursuant to and subject to the terms and conditions of the Second
Amended and Restated Loan and Security Agreement, dated as of March 15, 2005 (as
amended, supplemented or otherwise modified prior to the date hereof, the "DIP
Loan Agreement"), among the Lenders, the Agent, the Arranger, the Co-Syndication
Agents, the Borrower, certain of the Guarantors and certain other Affiliates of
the Borrower and Guarantors, the Lenders agreed to make available to, among
others, the Borrower a debtor-in-possession revolving credit facility of up to
$150,000,000;
WHEREAS, the Borrower and certain of the Guarantors have obtained from the
Bankruptcy Court an order confirming their Plan of Reorganization;
WHEREAS, the Lenders and the Agent have agreed to provide the Borrower with
a revolving credit facility to fund payments due under the Plan of
Reorganization and the other working capital needs of Borrower and its
Subsidiaries subsequent to the effective date of the Plan of Reorganization.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
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ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions As used herein:
"Accelerated Delivery Period" means the period commencing upon the
occurrence of a Combined Availability Threshold Event and continuing until such
time thereafter until no Combined Availability Threshold Event exists for thirty
(30) consecutive days and the Borrower has delivered to the Agent evidence
reasonably satisfactory to the Agent of satisfaction of such condition for such
thirty (30) consecutive day period.
"Account Debtor" means each Person obligated in any way on or in connection
with an Account, Chattel Paper or General Intangible (including a payment
intangible).
"Accounts" means, with respect to any Loan Party, all of such Loan Party's
now owned or hereafter acquired or arising accounts (as defined in the UCC), and
any other rights of such Loan Party to payment for the sale or lease of
Inventory or goods or rendition of services, whether or not they have been
earned by performance, including, without limitation, Major Credit Card
Receivables.
"ACH Transactions" means any automatic clearing house transfer of funds by
the Bank or any other Lender (or any Affiliate of such Lender), in each
instance, for the account of any Loan Party.
"Additional Commitment Lender" has the meaning provided therefor in Section
4.2(c).
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, ten percent (10%) or more of
the outstanding equity interest of such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as agent for the Lenders,
and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent-Related Persons" means the Agent and any successor agent, together
with their respective Affiliates, and the officers, directors, employees,
counsel, representatives, agents and attorneys-in-fact of such Persons.
"Agent's Liens" means the Liens granted to the Agent, for the ratable
benefit of the Lenders, the Bank and the Agent, pursuant to this Agreement and
the other Loan Documents.
-2-
"Aggregate Outstandings" means, at any date of determination, without
duplication: the sum of (a) the aggregate unpaid principal balance of all
Revolving Loans, (b) one hundred percent (100%) of the aggregate undrawn amount
of all outstanding Letters of Credit and (c) the aggregate amount of any unpaid
reimbursement obligations in respect of all Letters of Credit.
"Agreement" means this Loan and Security Agreement.
"Agreement Value" means, for each Hedge Agreement, on any date of
determination, an amount determined by the Agent equal to: (a) in the case of a
Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross
Border) published by the International Swap and Derivatives Association, Inc.
(the "Master Agreement"), the amount, if any, that would be payable by a Loan
Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as
if (i) such Hedge Agreement was being terminated early on such date of
determination, (ii) such Loan Party or such Subsidiary was the sole "Affected
Party", and (iii) the Agent was the sole party determining such payment amount
(with the Agent making such determination pursuant to the provisions of the form
of Master Agreement); or (b) in the case of a Hedge Agreement traded on an
exchange, the ▇▇▇▇-to-market value of such Hedge Agreement, which will be the
unrealized loss on such Hedge Agreement to a Loan Party or its Subsidiary party
to such Hedge Agreement determined by the Agent based on the settlement price of
such Hedge Agreement on such date of determination, or (c) in all other cases,
the ▇▇▇▇-to-market value of such Hedge Agreement, which will be the unrealized
loss on such Hedge Agreement to a Loan Party or its Subsidiary party to such
Hedge Agreement determined by the Agent as the amount, if any, by which (i) the
present value of the future cash flows to be paid by such Loan Party or such
Subsidiary exceeds (ii) the present value of the future cash flows to be
received by such Loan Party or such Subsidiary pursuant to such Hedge Agreement;
capitalized terms used and not otherwise defined in this definition shall have
the respective meanings set forth in the above described Master Agreement.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means, the rates set forth in the table, below, based
upon the criteria contained therein:
LIBOR Rate Loans Base Rate Loans and all other
Level Facility Usage Applicable Margin Obligations Applicable Margin
----- -------------- ----------------- -----------------------------
I Average Aggregate Outstandings less 1.25% 0%
than $75,000,000
II Average Aggregate Outstandings greater 1.50% 0%
than or equal to $75,000,000
-3-
The Applicable Margin shall be adjusted on the first day of each calendar
month based upon the average daily Aggregate Outstandings during the preceding
calendar month. Upon the occurrence and during the continuance of an Event of
Default, at the option of the Agent or at the direction of the Required Lenders,
interest shall accrue at the Default Rate based on the Applicable Margin set
forth in Level II.
"Arranger" has the meaning specified in the introductory paragraph hereof.
"Assignee" has the meaning specified in Section 13.2(a).
"Assignment and Acceptance" has the meaning specified in Section 13.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Agent.
"Authorized Representative" has the meaning specified in the introductory
paragraph hereof
"Bank" means Bank of America, N.A., a national banking association, or any
successor entity thereto.
"Bank Loan" and "Bank Loans" have the meanings specified in Section 2.2(h).
"Bank Products" means any one or more of the following types of services or
facilities extended to any Loan Party by the Bank or any Affiliate of the Bank,
or any other Lender (or any of its Affiliates) or other bank, in each case,
reasonably acceptable to the Agent (it being agreed by the Agent that each of
the Lenders and their respective Affiliates is acceptable to the Agent): (i)
credit cards (including, without limitation, merchant card processing services);
(ii) ACH Transactions; (iii) cash management, including controlled disbursement
services; and (iv) Hedge Agreements.
"Bank Product Reserves" means all reserves which the Agent from time to
time establishes in its reasonable discretion for the Bank Products then
provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101).
"Bankruptcy Court" means the United States Bankruptcy Court for the
Southern District of New York and, to the extent the United States District
Court for the Southern District of New York sits in bankruptcy with respect to
any matter relating to the Case, then the United States District Court for the
Southern District of New York.
"Base Rate" means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by the Bank in Charlotte, North
Carolina, as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on
-4-
the day specified in the public announcement of such change. Each Interest Rate
based upon the Base Rate shall be adjusted simultaneously with any change in the
Base Rate.
"Base Rate Loan" means a Loan during any period in which it bears interest
based on the Base Rate.
"Blocked Account Agreement" means an agreement among a Loan Party, the
Agent and a Clearing Bank, in form and substance reasonably satisfactory to the
Agent, concerning the collection of payments which represent the proceeds of
Accounts or of any other Collateral.
"Borrower" has the meaning specified in the introductory paragraph to this
Agreement.
"Borrowing" means a borrowing hereunder consisting of Loans made on the
same day by the Lenders to the Borrower (or by the Bank in the case of a
Borrowing funded by Bank Loans) or by the Agent in the case of a Borrowing
consisting of an Agent Advance.
"Borrowing Base" means, at any time of calculation, an amount equal to:
(a) 85% of the aggregate Net Amount of Eligible Major Credit Card
Receivables of the Borrower at such time, plus
(b) 90% of the aggregate Orderly Liquidation Value of Eligible Inventory of
the Borrower at such time, plus
(c) LC Inventory Availability of the Borrower at such time, plus
(d) 90% of the aggregate Orderly Liquidation Value of Eligible In Transit
Inventory of the Borrower at such time, minus
(e) the then amount of all Reserves.
provided that the maximum amounts available to be borrowed and outstanding
under clauses (c) and (d), above, shall not exceed, in the aggregate, thirty
percent (30%) of the Borrowing Base at any time.
"Borrowing Base Certificate" means a certificate by a Responsible Officer
of the Borrower, substantially in the form of Exhibit A (or another form
acceptable to the Agent) setting forth a good faith calculation of the Combined
Availability, including a good faith calculation of each component thereof, as
of the close of business no more than three (3) Business Days prior to the date
of such certificate, all in such detail as shall be satisfactory to the Agent.
All calculations of Combined Availability in connection with the preparation of
any Borrowing Base Certificate shall originally be made by the Borrower and
certified to the Agent; provided, that the Agent shall have the right to review
and adjust, in the exercise of its reasonable credit judgment, any such
calculation (1) to reflect its reasonable estimate of declines in value of any
of the Collateral described therein, and (2) to the extent that such calculation
is not in accordance with this Agreement.
-5-
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York or Charlotte, North Carolina are required
or permitted to be closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with the LIBOR Rate or LIBOR Rate Loans, any
day that is a Business Day pursuant to clause (a) above and that is also a day
on which trading in Dollars is carried on by and between banks in the London
interbank market.
"Canadian Subsidiaries" means ▇▇▇▇▇ ▇▇▇▇▇ of Canada, Inc, Spiegel Group
Teleservices-Canada, Inc. and any of their respective Subsidiaries now existing
or hereafter arising.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Lender or of any corporation controlling a Lender.
"Capital Expenditures" means all payments due (whether or not paid) in
respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or in connection with a Capital Lease.
"Capital Lease" means any lease of property by any Loan Party which, in
accordance with GAAP, should be reflected as a capital lease on the balance
sheet of such Loan Party.
"Case" has the meaning specified in the Recitals hereof.
"Cash Control Termination Event" shall mean (a) all Events of Default have
been cured or waived as provided in this Agreement, and (b) Combined
Availability is greater than or equal to forty-five (45%) percent of the amounts
calculated in accordance with clause (a) of the definition of Combined
Availability for a period of 120 consecutive days; provided that a Cash Control
Termination Event may occur only on one occasion during the term of this
Agreement notwithstanding that the foregoing conditions may be satisfied on any
subsequent Event of Default or Combined Availability Threshold Event.
"Change of Control" means either of the following: (i) any one or more
events shall occur (whether at the same or different times) the result of which
is any "person" or "group of persons" (as such terms are used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended) shall become or
obtain rights (whether by means of warrant, options or otherwise) to become, the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 of the Securities
Exchange Act of 1934, as amended) directly or indirectly, of 20% or more of the
capital stock of Holdings, or (ii) the board of directors of Holdings shall
cease to consist of a majority of Continuing Directors, or (iii) Holdings shall
fail to own and control, of record and beneficially, directly or indirectly,
100% of the outstanding equity interests of each other Loan Party (except the
Agent's Liens or Liens to secure the Term Loan).
"Chattel Paper" means, with respect to any Loan Party, all of such Loan
Party's now owned or hereafter acquired chattel paper, as defined in the UCC,
including electronic chattel paper.
-6-
"Clearing Bank" means the Bank or any other banking institution with whom a
Payment Account has been established pursuant to a Blocked Account Agreement.
"Closing Date" means the date on which the conditions precedent set forth
in Section 10.1 have been satisfied or waived by the Lenders and this Agreement
becomes effective.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, and regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Combined Availability" of the Borrower means, at any time:
(a) the lesser of (i) the Maximum Revolver Amount at such time or (ii)
the Borrowing Base, minus
(b) the sum of (i) the aggregate unpaid balance of all Revolving Loans
made to the Borrower at such time, (ii) the aggregate amount of all Pending
Revolving Loans to be made to the Borrower at such time, (iii) the
aggregate undrawn amount of all outstanding Letters of Credit at such time,
and (iv) the aggregate amount of any unpaid reimbursement Obligations in
respect of Letters of Credit at such time.
"Combined Availability Threshold Event" means the occurrence for any
reason, at any time, of Combined Availability being less than or equal to thirty
(30%) percent of the amounts calculated in accordance with clause (a) of the
definition of Combined Availability.
"Commitment" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on
Schedule 1.1(a) attached to this Agreement or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
13.3 and Section 4.2, and "Commitments" means, collectively, the aggregate
amount of the commitments of all of the Lenders.
"Commitment Increase" has the meaning provided therefor in Section 4.2(c).
"Commitment Increase Date" has the meaning provided therefor in Section
4.2(c).
"Consolidated" means, when used to modify a financial term, test,
statement, or report of a Person, the application or preparation of such term,
test, statement or report (as applicable) based upon the consolidation, in
accordance with GAAP, of the financial condition or operating results of such
Person and its Subsidiaries.
"Consolidated EBITDA" means, with respect to any Person for any period, the
sum (without duplication) of (a) Consolidated Net Income for such period, plus
(b) depreciation, amortization, and all other non-cash charges that were
deducted in arriving at Consolidated Net Income for such period, plus (c)
provisions for taxes based on income that were deducted in arriving at
Consolidated Net Income for such period, plus (d) Consolidated Interest Expense
that
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was deducted in arriving at Consolidated Net Income for such period, all as
determined on a Consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person for any period, the ratio of (a) (i) Consolidated EBITDA for such period
minus (ii) the sum of (A) Capital Expenditures during such period plus (B)
federal, state and foreign income taxes paid in cash during such period, to (b)
Debt Service Charges for such period, all as determined on a Consolidated basis
in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, total interest expense (including that attributable to Capital Lease
obligations in accordance with GAAP) of such Person on a Consolidated basis with
respect to all outstanding Debt of such Person, including, without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under Hedge
Agreements, all as determined on a Consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the net income (or loss) of such Person on a Consolidated basis for such period
taken as a single accounting period determined in accordance with GAAP;
provided, however, that there shall be excluded (i) the income (or loss) of such
Person in which any other Person has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to such Person
during such period, (ii) the income (or loss) of such Person accrued prior to
the date it becomes a Subsidiary of a Person or any of such Person's
Subsidiaries or is merged into or consolidated with a Person or any of its
Subsidiaries or that Person's assets are acquired by such Person or any of its
Subsidiaries, and (iii) the income of any direct or indirect Subsidiary of a
Person to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by
operation of the terms of its organizational documents or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
"Consummation Date" means the date of substantial consummation (as defined
in Section 1101 of the Bankruptcy Code) of a Plan of Reorganization by the
Borrower confirmed by an order of the Bankruptcy Court, which order shall have
been certified by the Clerk of the Bankruptcy Court as having been duly entered,
and which order shall not have been reversed, modified, amended, vacated, or
stayed, and, unless otherwise agreed by the Agent, all appeal periods relating
to the confirmation order shall have expired and no appeals from the
confirmation order shall be outstanding.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Continuing Directors" means the directors of Holdings on the Closing Date,
after giving effect to the Plan of Reorganization, and each other director, if,
in each case, such other director's nomination for election to the board of
directors of Holdings is recommended by at least 66 2/3% of the then Continuing
Directors.
-8-
"Conversion/Continuation Date" means the date of any conversion or
continuation of a Base Rate Loan or LIBOR Rate Loan, or portion thereof, as
contemplated by Section 3.2.
"Co-Syndication Agents" has the meaning specified in the introductory
paragraph of this Agreement.
"Credit Support" has the meaning specified in Section 2.3(a).
"Debt" means, without duplication, all liabilities, obligations and
indebtedness of any Loan Party to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, consisting of indebtedness for borrowed money or the
deferred purchase price of property, excluding trade payables, but including in
any event (a) all Obligations; (b) all obligations and liabilities of any Person
secured by any Lien on any Loan Party's property, even though such Loan Party
shall not have assumed or become liable for the payment thereof; provided,
however, that all such obligations and liabilities which are limited in recourse
to such property shall be included in Debt only to the extent of the book value
of such property as would be shown on a balance sheet of such Loan Party
prepared in accordance with GAAP; (c) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by any Loan Party, even if
the rights and remedies of the lessor, seller or lender thereunder are limited
to repossession of such property; provided, however, that all such obligations
and liabilities which are limited in recourse to such property shall be included
in Debt only to the extent of the book value of such property as would be shown
on a balance sheet of such Loan Party prepared in accordance with GAAP; (d) all
obligations and liabilities under Guaranties; (e) the present value (discounted
at the Base Rate) of lease payments due under synthetic leases; (f) all
obligations and liabilities of any Loan Party, contingent or otherwise, as an
account party or applicant under or in respect of a letter of credit; and (g)
all obligations and liabilities of any Loan Party in respect of Hedge
Agreements, with Hedge Agreements to be valued at the Agreement Value thereof.
"Debt Service Charges" means for any period, the sum of (i) the expenses of
any Person and its Subsidiaries for such period for interest paid in cash with
respect to Debt (including, without limitation, the Obligations and all fees
paid in cash on account of or with respect thereto), plus (ii) regularly
scheduled principal payments made or required to be made on account of Debt
(excluding the Loans but including, without limitation, Capitalized Lease
obligations) for such period, in each case determined in accordance with GAAP.
"Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured, waived, or otherwise remedied
during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) 2% per
annum. Each Default Rate shall be adjusted simultaneously with any change in the
applicable Interest Rate. In addition, the Default Rate shall result in an
increase in the Letter of Credit Fee by two percentage points per annum.
-9-
"Defaulting Lender" has the meaning specified in Section 2.2(g)(ii).
"DIP Loan Agreement" has the meaning specified in the Recitals hereto.
"Distribution" means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of property in respect of capital
stock (or any options or warrants for, or other rights with respect to, such
stock) of such corporation, other than distributions in capital stock (or any
options or warrants for such stock) of the same class; or (b) the redemption or
other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
"Documentation Agent" has the meaning specified in the introductory
paragraph of this Agreement.
"Documents" means, with respect to any Loan Party, all documents as such
term is defined in the UCC, including bills of lading, warehouse receipts or
other documents of title, now owned or hereafter acquired by such Loan Party.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United States.
Unless otherwise specified, all payments under this Agreement shall be made in
Dollars.
"Eligible Assignee" means (a) a commercial bank, commercial finance company
or other asset based lender, having total assets in excess of $1,000,000,000,
that is reasonably acceptable to the Agent and only so long as no Event of
Default has occurred and is continuing, reasonably acceptable to the Authorized
Representative; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default has occurred and
is continuing, any other financial institution or other Person engaged in
making, purchasing or investing in commercial loans in the ordinary course of
its business that is reasonably acceptable to the Agent.
"Eligible In Transit Inventory" means Inventory (a) not yet delivered to
the Borrower, (b) for which payment has been made by the Borrower, (c) for which
a ▇▇▇▇ of lading or other title document names the Borrower as consignee, (d) as
to which a customs broker agency agreement, reasonably satisfactory to the
Agent, is in effect, and (e) which otherwise would not be excluded by the
definition of Eligible Inventory.
"Eligible Inventory" means Inventory of the Borrower which the Agent, in
its reasonable discretion, determines to be Eligible Inventory. Without limiting
the discretion of the Agent to establish other criteria of ineligibility,
Eligible Inventory shall not, unless the Agent in its sole discretion elects,
include any Inventory:
(a) that is not owned by the Borrower;
(b) that is not subject to the Agent's Liens, which are perfected as
to such Inventory, or that are subject to any other Lien whatsoever (other
than the Liens
-10-
described in clause (d) or (g) of the definition of Permitted Liens
provided that such Permitted Liens (i) are junior in priority to the
Agent's Liens or subject to Reserves and (ii) do not impair directly or
indirectly the ability of the Agent to realize on or obtain the full
benefit of the Collateral);
(c) that does not consist of finished goods;
(d) that consists of raw materials, work-in-process, chemicals,
samples, prototypes, supplies, or packing and shipping materials;
(e) that is not in good condition, is unmerchantable, or does not meet
all standards imposed by any Governmental Authority, having regulatory
authority over such goods, their use or sale;
(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of the Borrower's
business, or that is slow moving or stale;
(g) that is obsolete or repossessed or used goods taken in trade or
held for return to vendors;
(h) that is located outside the United States of America (or that is
in-transit from vendors or suppliers except Eligible In Transit Inventory
and LC Inventory Availability);
(i) that is located in a public warehouse or in possession of a bailee
or in a facility leased by any of the Borrower, if the warehouseman, or the
bailee, or the lessor has not delivered to the Agent, if requested by the
Agent, a subordination agreement in form and substance satisfactory to the
Agent or if a Reserve for rents or storage charges, if the Agent so
requires, has not been established for Inventory at that location;
(j) that contains or bears any Proprietary Rights licensed to the
Borrower by any Person, if the Agent is not satisfied that it may sell or
otherwise dispose of such Inventory in accordance with the terms of Section
11.2 without infringing the rights of the licensor of such Proprietary
Rights or violating any contract with such licensor (and without payment of
any royalties other than any royalties due with respect to the sale or
disposition of such Inventory pursuant to the existing license agreement),
and, as to which the Borrower has not delivered to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to
the Agent if requested;
(k) that is not reflected in the details of a current perpetual
inventory report; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible
Inventory.
-11-
"Eligible Major Credit Card Receivables" means all Major Credit Card
Receivables of the Borrower which the Agent in the exercise of its reasonable
discretion determines to be Eligible Major Credit Card Receivables. Without
limiting the discretion of the Agent to establish criteria of eligibility and
ineligibility, Eligible Major Credit Card Receivables shall not, unless the
Agent in its sole discretion elects, include any Major Credit Card Receivable
unless such Major Credit Card Receivable:
(a) has arisen under a Major Credit Card Account;
(b) was created in compliance with all Requirements of Law and
pursuant to a Major Credit Card Program Agreement that complies with all
Requirements of Law;
(c) is such that at the time of and at all times after the creation of
such Major Credit Card Receivable the Borrower has good and marketable
title thereto, free and clear of all Liens (other than Liens created
hereunder in favor of the Agent);
(d) is the legal, valid and binding payment obligation of the Major
Credit Card Obligor specified in the Major Credit Card Program Agreement
related thereto, enforceable against such obligor in accordance with its
terms, subject to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors'
rights and to general equitable principles;
(e) constitutes an "account" or a "general intangible" under Article 9
of the UCC;
(f) is payable in Dollars;
(g) is subject to a first priority and perfected security interest in
favor of the Agent for the benefit of the Agent and the Lenders; and
(h) complies with each of the representations, warranties, covenants
and agreements contained in Section 6.8 relating thereto.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"Environmental Compliance Reserve" means any reserve which the Agent
establishes in its reasonable discretion after prior written notice to the
Borrower from time to time for amounts that are reasonably likely to be expended
by any of the Loan Parties in order for such Loan Party and its operations and
property (a) to comply with any notice from a Governmental Authority asserting
material non-compliance with Environmental Laws, or (b) to correct any such
material non-compliance identified in a report delivered to the Agent and the
Lenders pursuant to Section 9.6.
"Environmental Laws" means all federal, state, or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed
-12-
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case relating to environmental, health,
safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental Authority
for (1) any liability under any Environmental Laws, or (2) damages arising from,
or costs incurred by such Governmental Authority in response to a Release or
threatened Release of a Contaminant into the environment.
"Equipment" means, with respect to any Loan Party, all of such Loan Party's
now owned and hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except Inventory), including
embedded software, motor vehicles with respect to which a certificate of title
has been issued, aircraft, dies, tools, jigs, molds and office equipment, as
well as all of such types of property leased by such Loan Party and all of such
Loan Party's rights and interests with respect thereto under such leases
(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with any Loan Party is treated as a single employer under Section
414 of the Code or Section 4001(a)(14) of ERISA.
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001 (a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multiemployer Plan or other applicable legislation or
notification that a Multiemployer Plan or Pension Plan regulated or governed by
other applicable legislation is in reorganization; (d) the filing of a notice of
intent to terminate or the treatment of a Pension Plan amendment as a
termination under Section 4041 or 4041A of ERISA or other law where such
termination or amendment would reasonably be expected to result in an
unsatisfied liability of any Loan Party or ERISA Affiliate to the Pension Plan
or PBGC, or the commencement of proceedings by the PBGC or other applicable
Governmental Authority to terminate a Pension Plan or Multiemployer Plan; (e)
the occurrence of an event or condition which would reasonably be expected to
constitute grounds under Section 4042 of ERISA or other law for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA or other applicable legislation, upon any Loan Party or any ERISA
Affiliate.
"Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100 of 1%) in effect
-13-
on such day applicable to member banks under regulations issued from time to
time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Offshore Rate for each outstanding LIBOR Rate
Loan shall be adjusted automatically as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"Excluded Subsidiaries" means those Subsidiaries of Holdings and the
Borrower listed on Schedule 1.1(b) hereto.
"Existing Letters of Credit" means each of the letters of credit issued
under the DIP Loan Agreement prior to the date hereof.
"FSAC" means Financial Services Acceptance Corp.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Fee Letter" means that certain fee letter dated as of the Closing Date by
and among the Borrower and the Agent, as amended, supplemented or otherwise
modified from time to time.
"Financial Statements" means, according to the context in which it is used,
the financial statements referred to in Section 8.6 or any other financial
statements required to be given to the Lenders or the Agent pursuant to this
Agreement.
"Fiscal Year" means the period of 52 or 53 consecutive weeks ending on the
last Saturday of December each year which make up the fiscal year of Holdings
and its Subsidiaries.
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"Fixed Assets" means, with respect to any Loan Party, Equipment and Real
Estate of such Loan Party.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession).
"General Intangibles" means, with respect to any Loan Party, all of such
Loan Party's now owned or hereafter acquired general intangibles (as defined in
the UCC), choses in action and causes of action and all other intangible
personal property of such Loan Party of every kind and nature (other than
Accounts), including, without limitation, all contract rights, payment
intangibles, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to such Loan Party
in connection with the termination of any Plan or other employee benefit plan or
any rights thereto and any other amounts payable to such Loan Party from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key employees on
which such Loan Party is beneficiary, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged equity interests or Investment Property and any letter of credit,
guarantee, claim, security interest or other security held by or granted to such
Loan Party, letter of credit, guarantee, claim, security interest or other
security held by or granted to such Loan Party.
"Governmental Authority" means any nation or government, any state,
municipality or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of the foregoing and any
department, agency, board, commission, tribunal, committee or instrumentality of
any of the foregoing.
"Guarantors" has the meaning specified in the introductory paragraph
hereof.
"Guaranty" or "Guarantee" means, with respect to any Person, all
obligations of such Person which in any manner directly or indirectly guarantee
or assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital
-15-
or other balance sheet condition; or (c) to lease property or to purchase any
debt or equity securities or other property or services.
"Hedge Agreement" means any and all transactions, agreements or documents
now existing or hereafter entered into, which provides for an interest rate,
credit, commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging any Loan Party's exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.
"Instruments" means, with respect to any Loan Party, all instruments as
such term is defined in the UCC, now owned or hereafter acquired by such Loan
Party.
"Intercreditor Agreement" means the Intercreditor Agreement between the
Agent and the agent under the Term Loan, substantially in the form of Exhibit E
hereto, as amended and in effect from time to time.
"Intercompany Accounts" means all assets and liabilities, however arising,
which are due to any Loan Party from, which are due from any Loan Party to, or
which otherwise arise from any transaction by any Loan Party with, any other
Loan Party or any Affiliate of any Loan Party.
"Interest Period" means, as to any LIBOR Rate Loan, the period commencing
on the Funding Date of such Loan or on the Conversion/Continuation Date on which
the Loan is converted into or continued as a LIBOR Rate Loan, and ending on the
date one, two, three or six months thereafter as selected by the Borrower in its
Notice of Borrowing or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated Termination
Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 3.1.
"Inventory" means, with respect to any Loan Party, all of such Loan Party's
now owned and hereafter acquired inventory (as defined in the UCC), goods and
merchandise, wherever located, to be furnished under any contract of service or
held for sale or lease, all returned goods, raw materials, work in process,
finished goods (including embedded software), other materials and supplies of
any kind, nature or description which are used or consumed in such Loan Party's
business or used in connection with the packing, shipping, advertising, selling
or finishing of
-16-
such goods, merchandise and such other personal property, and all documents of
title or other Documents representing them.
"Inventory Appraisal" means each Inventory Appraisal delivered pursuant to
Section 15.19, as updated pursuant to such Section.
"Investment Property" means, with respect to any Loan Party, all of such
Loan Party's right, title and interest in and to any and all: (a) securities
whether certificated or uncertificated; (b) securities entitlements; (c)
securities accounts; (d) commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Joint Venture Investments" means those investments required to be made by
▇▇▇▇▇ ▇▇▇▇▇ under joint venture agreements with respect to ▇▇▇▇▇ ▇▇▇▇▇ Japan,
Inc. and ▇▇▇▇▇ ▇▇▇▇▇ GmbH Germany, as in effect on the Closing Date, but only so
long as in any Fiscal Year the aggregate amount of such investments do not
exceed the aggregate amount received by ▇▇▇▇▇ ▇▇▇▇▇ in such Fiscal Year from
such Persons.
"Latest Projections" means the projections most recently received by the
Agent pursuant to Section 7.2(f).
"LC Inventory Availability" means, as of any date, an amount equal to 90%
of the Orderly Liquidation Percentage for Inventory of Borrower on such date
times the undrawn amount of all Letters of Credit issued by the Bank with a term
of 90 days or less (from the date of issue) issued to secure the payment by
Borrower of the purchase of overseas Inventory by Borrower in the ordinary
course of its business, as to which Inventory a customs broker agency agreement,
reasonably satisfactory to the Agent, is in effect and which Inventory is not
included in Eligible Inventory or Eligible In Transit Inventory, but would
otherwise constitute Eligible Inventory if such Inventory were not in-transit.
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and the Bank to the extent of any Bank Loan outstanding; provided
that no such Agent Advance or Bank Loan shall be taken into account in
determining any Lender's Pro Rata Share.
"Letter of Credit" means a letter of credit issued or caused to be issued
for the account of the Borrower pursuant to Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section 3.5.
"Letter of Credit Issuer" means the Bank, any affiliate of the Bank, any
other Lender or any affiliate of any such other Lender, in each instance, that
issues any Letter of Credit pursuant to this Agreement.
"Letter of Credit Rights" means, with respect to any Loan Party, all of
such Loan Party's now owned or hereafter acquired letter of credit rights, as
defined in the UCC.
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"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan, the
first day of each month and the last day of the Interest Period applicable to
such Loan.
"LIBOR Rate" means, with respect to any LIBOR Rate Loan for any Interest
Period, the rate of interest (rounded upwards, if necessary, to the next 1/16 of
1%) per annum at which deposits in dollars are offered by banks in the London
interbank market, appearing on Reuters Screen FRBD as of 11:00 a.m. (London
time) two Business Days before the first day of the Interest Period for the
subject LIBOR Rate Loan, for a deposit approximately in the amount of the
subject Borrowing and for a period of time approximately equal to such Interest
Period; provided, however, if the rate described above does not appear on the
Reuters System on any applicable interest determination date, the LIBOR Rate
shall be the rate (rounded upward, if necessary, to the nearest 1/16 of 1%),
determined on the basis of the offered rates for deposits in dollars for a
period of time comparable to such Interest Period which are offered to the Agent
by major banks in the London interbank market as selected by Agent at
approximately 11:00 a.m. London time, on the day that is two (2) Business Days
preceding the first day of such Interest Period. In the event that the Agent is
unable to obtain any such quotation as provided above, it will be deemed that a
LIBOR Rate pursuant to a LIBOR Rate Loan cannot be obtained.
"LIBOR Revolving Loan" or "LIBOR Rate Loan" means a Revolving Loan during
any period in which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including,
without limitation, a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; (b) to the extent not
included under clause (a), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan Account' means the loan account of the Borrower, which account shall
be maintained by the Agent.
"Loan Documents" means this Agreement, the Intercreditor Agreement, any
Hedge Agreement between a Loan Party and a Lender or an affiliate of a Lender,
the Fee Letter and any other agreements, instruments, and documents heretofore,
now or hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement.
"Loan Parties" means a collective reference to the Borrower and the
Guarantors, and "Loan Party" means any one of them.
"Loans" means, collectively, all loans and advances provided for in Article
2.
"Major Credit Card Account" means each account established by or with any
of the Major Credit Card Obligors under any Major Credit Card Program Agreement.
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"Major Credit Card Obligors" means JPMorgan Chase Bank, Chase Merchant
Services, L.L.C., ▇▇ ▇▇▇▇▇▇▇▇ Services, Inc., Novus Services, Inc., Discover
Business Services, Discover Financial Services, Inc., American Express Travel
Related Services Company, Inc., World Financial Network National Bank, each
successor thereto and any other financial institution designated by the Borrower
in writing and reasonably acceptable to the Agent, serving in a similar
capacity.
"Major Credit Card Program Agreements" means each of the agreements
described on Schedule 1.1(c) hereto, any amendments or supplements thereto and
any other agreement, specified by the Borrower in writing and reasonably
acceptable to the Agent, providing for the reimbursement of the Borrower for any
goods or services purchased from the Borrower with any credit, cash or similar
card bearing any of a Visa, Plus, MasterCard, Cirrus, Maestro, Discover, Optima,
World Financial Network National Bank or American Express logo.
"Major Credit Card Receivables" means all amounts due to the Borrower
pursuant to a Major Credit Card Program Agreement with respect to sales by the
Borrower of merchandise or services to its retail customers.
"Majority Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate more than 50% of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold more than 50% of the aggregate principal amount of
the Loans then outstanding.
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of (i) the Borrower, or (ii) Holdings and
its Subsidiaries taken as a whole or (iii) any substantial portion of the
Collateral; (b) a material impairment of the ability of the Loan Parties to
perform under any Loan Document and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Loan Parties of any Loan Document.
"Maximum Revolver Amount" means $150,000,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of
Section 4.2.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding five (5) years contributed to by any Loan Party or any
ERISA Affiliate.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party and at least one trade or business other than the Loan Party or (b) was so
maintained and in respect of which any Loan Party could reasonably be expected
to have liability under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"Net Amount of Eligible Major Credit Card Receivables" means, at any time,
the gross amount of Eligible Major Credit Card Receivables less sales, excise or
similar taxes, and less
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returns, discounts, claims, credits, allowances, accrued rebates, offsets,
deductions, counterclaims, disputes and other defenses of any nature at any time
issued, owing, granted, outstanding, available or claimed and less all finance
charges, late payment fees, annual fees (if any), credit insurance premiums,
returned check charges and any other fees or charges.
"Notice of Borrowing" has the meaning specified in Section 2.2(b).
"Notice of Conversion/Continuation" has the meaning specified in Section
3.2(b).
"Obligations" means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by any Loan Party to the Agent
and/or any Lender (or an affiliate of any Lender), arising under or pursuant to
this Agreement or any of the other Loan Documents, whether or not evidenced by
any note, or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all principal, interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable to
any Loan Party hereunder or under any of the other Loan Documents (including all
interest that accrues after the commencement of any case or proceeding by or
against the Borrower under any federal or state bankruptcy, insolvency,
receivership or similar law, to the extent allowable in such case or
proceeding). "Obligations" includes, without limitation, (a) all Revolving Loans
and all debts, liabilities, and obligations now or hereafter owing from any Loan
Party to the Agent and/or any Lender under or in connection with the Revolving
Loans or the Letters of Credit and (b) all debts, liabilities and obligations
now or hereafter arising from or in connection with Bank Products.
"Orderly Liquidation Percentage" means, with respect to Inventory of the
Borrower at any time, the ratio (expressed as a percentage) computed by dividing
(i) the net recovery value of the Inventory of the Borrower (which in any event
shall give effect to all costs and expenses of liquidation) as set forth in the
Inventory Appraisal most recently delivered pursuant to Section 15.19, as
updated pursuant to such Section by (ii) the cost (calculated in accordance with
the Borrower's historical practices) of the Inventory of the Borrower as set
forth in the corresponding Inventory Appraisal (or update thereof).
"Orderly Liquidation Value" means, with respect to the Eligible Inventory
of the Borrower at any time, an amount equal to the product of (i) the value of
the Eligible Inventory of the Borrower at such time valued at the cost
(calculated in accordance with the Borrower's historical practices), multiplied
by (ii) the Orderly Liquidation Percentage for the Borrower in effect at such
time.
"Other Taxes" means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to this Agreement or any other Loan Documents.
"Participating Lender" means any Person who shall have been granted the
right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who
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shall have entered into a participation agreement in form and substance
satisfactory to such Lender.
"Payment Account" means each blocked bank account established pursuant to
Section 6.8, to which the funds of a Loan Party (including, without limitation,
proceeds of Accounts and other Collateral) are deposited or credited.
"Payment Intangibles" means, with respect to any Loan Party, all of such
Loan Party's now owned or hereafter acquired payments intangibles, as defined in
the UCC.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.
"Pending Revolving Loans" means at any time, the aggregate principal amount
of all Revolving Loans requested by the Borrower in any Notice(s) of Borrowing
received by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA (other than a Multiemployer Plan) or a defined
benefit plan maintained in any non-U.S. jurisdiction, in each case which any
Loan Party sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a Multiple Employer Plan has made
contributions at any time during the immediately preceding five (5) plan years.
"Permitted Liens" means the following Liens (to the extent, with respect to
any Loan Party or any of its assets or properties, the same are valid, perfected
and non-avoidable in accordance with applicable law):
(a) Liens for taxes and assessments not delinquent encumbering assets
or properties of any Loan Party or statutory Liens for taxes encumbering
assets or properties of any Loan Party, provided that the payment of such
taxes which are due and payable is being contested in good faith and by
appropriate proceedings diligently pursued and as to which adequate
financial reserves have been established on the relevant Loan Party's books
and records and a stay of enforcement of any such Lien is in effect, and
provided further that nothing contained herein shall limit or impair the
Agent's right to establish Reserves on account of Liens encumbering
Accounts, Inventory, or proceeds thereof that are prior to the Agent's
Liens therein;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts
(other than for the repayment of Debt) or to secure indemnity, performance
or other similar bonds for the performance of bids, tenders or contracts
(other than for the repayment of Debt) or to secure statutory obligations
(other than liens arising under ERISA or Environmental Liens) or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds
(including,
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without limitation, customs bonds, utility bonds and lease bonds) in the
ordinary course of business;
(d) Liens imposed by law securing the claims or demands (in each case,
arising in the ordinary course of business) of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that the
payment of such claims or demands are not overdue by more than forty-five
(45) days or are being contested in good faith and by appropriate
proceedings diligently pursued and for which adequate reserves have been
provided in accordance with GAAP and, in each instance, a stay of
enforcement of any such Lien which arises from the nonpayment of any such
claims or demands is in effect and if any such Lien arises from the
nonpayment of such claims or demand when due, such claims or demands are
not material in the aggregate;
(e) reservations, exceptions, encroachments, easements, rights of way,
covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; provided that they do not in the
aggregate materially detract from the value of any Real Estate or
materially interfere with its use in the ordinary conduct of any Loan
Party's business;
(f) Liens arising from judgments and attachments in connection with
court proceedings provided that the attachment or enforcement of such Liens
would not result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves have
been set aside and no material property or asset is subject to a material
risk of loss or forfeiture and the claims in respect of such Liens are
fully covered by insurance (subject to ordinary and customary deductibles)
and a stay of execution pending appeal or proceeding for review is in
effect;
(g) Liens described on Schedule 9.16 hereto;
(h) purchase money Liens in Fixed Assets securing Debt permitted under
Section 9.11(d) (including the interest of a lessor under a Capital Lease
and purchase money Liens to which any capital property is subject at the
time of acquisition thereof, and limited in each case to the capital
property purchased with the proceeds thereof or subject to such Capital
Lease);
(i) Liens securing Term Debt permitted pursuant to Section 9.11(e)
hereof, provided that (x) the holder of such Term Debt shall have entered
into the Intercreditor Agreement;
(j) interests of licensees in trademarks and copyrights;
(k) Liens in favor of certain taxing authorities in the State of Texas
for taxes due prior to the commencement of the Case in an amount not to
exceed $150,000 in the aggregate; and
(l) extensions, renewals or replacements of any Liens referred to in
clauses (g), (h) and (i) of this definition; provided, that the principal
amount of the obligations
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secured thereby is not increased and that any such extension, renewal or
replacement is limited to the property originally encumbered thereby.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA
(other than a Multiemployer Plan) or the applicable laws of any other
jurisdiction) which any Loan Party sponsors or maintains or to which such Loan
Party makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Plan Note" means a promissory note to be made by Holdings payable to a
trust established under the Plan of Reorganization, the beneficial interests in
which shall be distributed to certain creditors of, among others, the Borrowers
pursuant to, and in accordance with, the Plan of Reorganization with respect to
the pre-petition securitization trusts which Holdings' Subsidiaries, SAC and
FSAC, hold an interest.
"Plan of Reorganization" means a plan (within the meaning of the Bankruptcy
Code) proposed by the Borrower for, among others, the Borrower which is filed
with and confirmed by an order by the Bankruptcy Court, which order shall have
been certified by the Clerk of the Bankruptcy Court as having been duly entered,
and which order of the Bankruptcy Court shall not have been reversed, modified,
amended, vacated, or stayed, and, unless otherwise agreed by the Agent, all
appeal periods relating to such orders of the Bankruptcy Court shall have
expired and no appeals from such orders of the Bankruptcy Court shall be
outstanding.
"Proceeds" as defined in the UCC.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed as
a percentage), the numerator of which is the amount of such Lender's Commitment
and the denominator of which is the sum of the amounts of all of the Lenders'
Commitments, or if no Commitments are outstanding, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations (other than any
Obligations under Bank Products) owed to such Lender and the denominator of
which is the aggregate amount of the Obligations (other than any Obligations
under Bank Products) owed to the Lenders, in each case after giving effect to a
Lender's participation in Bank Loans and Agent Advances.
"Proprietary Rights" means, with respect to any Loan Party, all of such
Loan Party's now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject matter
of copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service ▇▇▇▇ applications, and all licenses and rights related to
any of the foregoing, including, without limitation, those patents, trademarks,
service marks, trade names and copyrights set forth on Schedule 8.12 hereto, and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to ▇▇▇ for past, present and future infringement of any of the
foregoing.
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"Real Estate" means, with respect to any Loan Party, all of such Loan
Party's now or hereafter owned or leased estates in real property, including,
without limitation, all fees, leaseholds and future interests, together with all
of such Loan Party's now or hereafter owned or leased interests in the
improvements thereon, the fixtures attached thereto and the easements
appurtenant thereto.
"Release" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property.
"Reportable Event" means, with respect to a Pension Plan subject to Title
IV of ERISA, any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the PBGC.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate 66-2/3% or more of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold 66-2/3% or more of the aggregate principal amount of
the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Reserves" means reserves that limit the availability of credit hereunder,
consisting of reserves against the Borrowing Base established by the Agent from
time to time in the Agent's reasonable credit judgment exercised in good faith.
Agent shall give the Borrower three (3) days prior notice before implementing
any Reserve hereunder. Without limiting the generality of the foregoing, and
without duplication of any of the reserves taken into account in determining
"Orderly Liquidation Value", the following reserves shall be deemed to be a
reasonable exercise of the Agent's credit judgment: (a) Bank Product Reserves,
(b) a reserve for accrued, unpaid interest on the Obligations, (c) reserves in
an amount equal to two months rent for all of the Borrower's leased locations at
which Revolving Lender Priority Collateral is located (i) in which the Borrower
has granted a contractual Lien to the lessor, and (ii) in the states of
Virginia, Pennsylvania, Washington and other states in which applicable law
provides a landlord with a Lien for unpaid rent having priority over the Lien of
the Agent, (d) Inventory shrinkage and Inventory returns and anticipated returns
and markdowns, (e) Environmental Compliance Reserves, (f) past due customs
charges, (g) dilution, (h) past due warehousemen's or bailees' charges, (i)
reserves in an amount equal to fifty (50%) percent of the face amount of
outstanding gift certificates, and (j) reserves for claims against the Borrower
that the Agent reasonably believes could have priority over the Obligations.
"Responsible Officer" means the chief executive officer or the president of
the Borrower, as appropriate, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base
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Certificate, the chief financial officer, chief accounting officer, the
controller or the treasurer of Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Investment" means, as to any Loan Party, any acquisition of
property by such Loan Party in exchange for cash or other property, whether in
the form of an acquisition of stock, debt, or other indebtedness or obligation,
or the purchase or acquisition of any other property, or a loan, advance,
capital contribution, or subscription, except the following: (a) acquisitions of
Equipment to be used in the business of such Loan Party; (b) acquisitions of
Inventory in the ordinary course of business of such Loan Party, (c)
acquisitions of current assets acquired in the ordinary course of business of
such Loan Party; (d) direct obligations of the United States of America, or any
agency thereof, or obligations guaranteed by the United States of America,
provided that such obligations mature within one year from the date of
acquisition thereof, (e) acquisitions of certificates of deposit maturing within
one year from the date of acquisition, bankers' acceptances, Eurodollar bank
deposits, or overnight bank deposits, in each case issued by, created by, or
with a bank or trust company organized under the laws of the United States of
America or any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better by ▇▇▇▇▇'▇ Investors
Service, Inc. and maturing not more than 90 days from the date of creation
thereof, (g) shares of money market mutual or similar funds which invest
substantially all their assets in assets satisfying the requirements of clauses
(d) through (f) of this definition; (h) Hedge Agreements entered into by such
Loan Party in the ordinary course of its business and not for speculative
purposes; (i) Joint Venture Investments; (j) intercompany loans to and
investments in other Loan Parties, so long as any such loan or investment is (i)
useful for the ordinary conduct of the recipient's business, (ii) made in the
ordinary course of business and (iii) consistent with past practices; (k) loans
to and investments in Excluded Subsidiaries not to exceed $1,000,000 in the
aggregate (net of royalties paid to the Borrower) during the term of this
Agreement, and (l) loans to and investments in Canadian Subsidiaries not to
exceed $20,000,000 in the aggregate during the term of this Agreement.
"Revolving Lender Priority Collateral" has the meaning set forth in the
Intercreditor Agreement.
"Revolving Loans" has the meaning specified in Section 2.2 and includes
each Agent Advance and Bank Loan.
"SAC" means Spiegel Acceptance Corp.
"Settlement" and "Settlement Date" have the meanings specified in Section
2.2(j)(i).
"Solvent" shall mean with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business,
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(d) such Person does not intend to, and does not believe that it will, incur
debts beyond such Person's ability to pay as such debts mature, and (e) such
Person is not engaged in a business or a transaction, and is not about to engage
in a business or transaction, for which such Person's properties and assets
would constitute unreasonably small capital after giving due consideration to
the prevailing practices in the industry in which such Person is engaged. The
amount of all guarantees at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at the time, can reasonably be
expected to become an actual or matured liability.
"Stated Termination Date" means June 21, 2010.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
to a "Subsidiary" refer to a Subsidiary of Holdings. For all purposes of the
Loan Documents other than (i) any financial reporting requirements set forth in
this Agreement, (ii) any financial covenants set forth in this Agreement and
(iii) any provisions in this Agreement which relate to any financial statements
or related report or statement of Holdings (including, without limitation, any
Financial Statements), the term "Subsidiary" shall not include any Excluded
Subsidiary.
"Super Majority Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate more than 90% of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold more than 90% of the aggregate principal amount of
the Loans then outstanding.
"Supporting Obligations" means all supporting obligations as such term is
defined in the UCC, including letters of credit and guaranties issued in support
of Accounts, Chattel Paper, Documents, General Intangibles, Instruments or
Investment Property.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority.
"Term Debt" means the Debt due or to become due under a certain Term Loan
Agreement dated as of June 21, 2005 among JPMorgan Chase Bank, N.A., as
administrative agent, the lenders party thereto, the Borrower, and Holdings,
together with all other documents relating thereto, including, without
limitation, a certain Guarantee and Collateral Agreement dated as of June 21,
2005 (as each may be amended, modified, supplemented, extended, restated,
renewed or replaced from time to time in accordance with the terms hereof and
the Intercreditor Agreement).
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrower pursuant to Section 4.2 or by the Majority Lenders pursuant to Section
11.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"Total Facility" has the meaning specified in Section 2.1.
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"UCC" means the Uniform Commercial Code, as in effect from time to time, of
the State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the issue of perfection of
security interests, provided, that to the extent that the UCC is used to define
any term herein or in any other documents and such term is defined differently
in different Articles or Divisions of the UCC, the definition of such term
contained in Article or Division 9 shall govern.
"Unfunded Pension Liability" of a Pension Plan means, with respect to a
Pension Plan subject to Title IV of ERISA, the excess, if any, of the projected
benefit obligation of such Pension Plan over the fair value of the assets of
such Pension Plan, as determined pursuant to Statement of Financial Accounting
Standards No. 87 and, with respect to the Closing Date, as reflected in the
Financial Statements described in Section 8.6(a), and thereafter, as reflected
in the most recent audited Financial Statements required to be delivered to the
Agent pursuant to Section 7.2(a).
"Unused Letter of Credit Subfacility" means an amount equal to $75,000,000
minus the sum of(a) the aggregate undrawn amount of all outstanding Letters of
Credit plus, without duplication, (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.4.
1.2 Accounting Terms. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.
1.3 Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including,
without limitation."
(iii) 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."
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(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and 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 cumulative and shall each
be performed in accordance with their terms.
(g) For purposes of Article 11, a breach of a financial covenant
contained in any Section of Article 9 shall be deemed to have occurred as
of any date of determination thereof by the Agent on or after the last day
of any specified measuring period, regardless of when the Financial
Statements reflecting such breach are delivered to the Agent.
(h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Agent's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility Subject to all of the terms and conditions of this
Agreement, the Lenders severally agree to make available a total credit facility
of up to the Maximum Revolver Amount (the "Total Facility") for the Borrower's
use from time to time during the term of this Agreement. The Total Facility
shall be comprised of a revolving line of credit consisting of revolving loans
and letters of credit up to the Maximum Revolver Amount, as described in
Sections 2.2 and 2.3.
2.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the conditions precedent
set forth in Article 10, each Lender severally agrees, upon the Borrower's
request from time to time on any Business Day during the period from the
Closing Date to but excluding the Termination Date, to make revolving loans
(the "Revolving Loans") to the Borrower, in amounts not to exceed (except
for the Bank with respect to Bank Loans or Agent
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Advances) such Lender's Pro Rata Share of the Combined Availability. If the
Combined Availability is equal or less than zero, the Lenders may refuse to
make or otherwise restrict the making of Revolving Loans as the Lenders
determine until the Combined Availability is greater than zero, subject to
the Agent's authority, in its sole discretion, to make Agent Advances
pursuant to the terms of Section 2.2(i). Subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans.
(b) Procedure for Borrowing.
(i) Each Borrowing by the Borrower shall be made upon irrevocable
written notice of the Borrower delivered to the Agent in the form of a Notice of
Borrowing substantially in the form of Exhibit C or another form acceptable to
the Agent (each, a "Notice of Borrowing"), which must be received by the Agent
(i) prior to 1:30 p.m. (New York City time) three Business Days prior to the
requested Funding Date, in the case of LIBOR Rate Loans and (ii) no later than
1:30 p.m. on the requested Funding Date, in the case of Base Rate Loans,
specifying:
(A) the amount of the Borrowing (which Borrowing, in the
case of a request for a LIBOR Rate Loan, shall be in the amount of
$1,000,000 or an integral multiple of $1,000,000 in excess thereof);
(B) the requested Funding Date, which shall be a Business
Day;
(C) whether the Revolving Loans requested are to be Base
Rate Loans or LIBOR Revolving Loans (and if not specified, it shall be
deemed a request for a Base Rate Loan); and
(D) the duration of the Interest Period if the requested
Revolving Loans are to be LIBOR Revolving Loans. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any Borrowing
comprised of LIBOR Rate Loans, such Interest Period shall be one month;
provided, however, that with respect to the new Borrowings to be made on the
Closing Date, such Borrowings will consist of Base Rate Loans only.
(ii) After giving effect to any Borrowing, there may not be more
than eight (8) different Interest Periods in effect for the Borrower in the
aggregate.
(iii) With respect to any request for Base Rate Loans, in lieu of
delivering the above-described Notice of Borrowing, the Borrower may give the
Agent telephonic notice of such request by the required time with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice but the Agent shall be entitled to rely on the telephonic notice in
making such Revolving Loans. The Agent acknowledges that Notices of Borrowing
previously received from the Borrower in connection with the DIP Loan Agreement
shall remain in effect unless changed by the Borrower prior to the Closing Date.
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(iv) The Borrower shall have no right to request a LIBOR Rate
Loan while a Default or Event of Default has occurred and is continuing.
(c) Reliance upon Authority. On or prior to the Closing Date and
thereafter prior to any change with respect to any of the information
contained in the following clauses (i) and (ii), the Borrower shall deliver
to the Agent a writing setting forth (i) the account or accounts of the
Borrower to which the Agent is authorized to transfer the proceeds of the
Revolving Loans requested pursuant to this Section 2.2 (each such account,
a "Designated Account"), and (ii) the names of the officers and any other
designated representatives of the Borrower authorized to request Revolving
Loans on behalf of the Borrower, and shall provide the Agent with a
specimen signature of each such officer and other designated
representatives. The Agent acknowledges that notices previously received
from the Borrower in connection with the DIP Loan Agreement shall remain in
effect unless changed by the Borrower prior to the Closing Date. All such
Designated Accounts must be reasonably satisfactory to the Agent. The Agent
shall be entitled to rely conclusively on such officer's or designated
representatives' authority to request Revolving Loans on behalf of the
Borrower, the proceeds of which are to be transferred to any of the
accounts specified by the Borrower pursuant to the immediately preceding
sentence, until the Agent receives written notice to the contrary. The
Agent shall have no duty to verify the identity of any individual
representing him or herself as one of the officers or designated
representatives authorized by the Borrower.
(d) No Liability, The Agent shall not incur any liability to the
Borrower as a result of acting upon any notice referred to in Sections
2.2(b) and (c), which notice the Agent believes in good faith to have been
given by an officer duly authorized by the Borrower to request Revolving
Loans or for otherwise acting in good faith under this Section 2.2, and the
crediting of Revolving Loans to the Borrower's deposit account, or
transmittal to such Person as the Borrower shall direct, shall conclusively
establish the obligation of the Borrower to repay such Revolving Loans as
provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice
in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and
the Borrower shall be bound to borrow the funds requested therein in
accordance therewith.
(f) Agent's Election. Promptly after receipt of a Notice of Borrowing
(or telephonic notice in lieu thereof) pursuant to Section 2.2(b), the
Agent shall elect, in its discretion, (i) to have the terms of Section
2.2(g) apply to such requested Borrowing, or (ii) so long as the aggregate
outstanding principal amount of Bank Loans, after giving effect to the
requested Borrowing, does not exceed $25,000,000, to request the Bank to
make a Bank Loan pursuant to the terms of Section 2.2(h) in the amount of
the requested Borrowing; provided, however, that if the Bank declines in
its sole discretion to make a Bank Loan pursuant to Section 2.2(h), the
Agent shall elect to have the terms of Section 2.2(g) apply to such
requested Borrowing.
(g) Making of Revolving Loans.
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(i) In the event that the Agent shall elect to have the terms of
this Section 2.2(g) apply to a requested Borrowing as described in Section
2.2(f), then promptly after receipt of a Notice of Borrowing or telephonic
notice pursuant to Section 2.2(b), the Agent shall notify the Lenders by
telecopy, telephone or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of
the requested Borrowing available to the Agent in same day funds, to such
account of the Agent as the Agent may designate, not later than 2:00 p.m. (New
York City time) on the Funding Date applicable thereto. After the Agent's
receipt of the proceeds of such Revolving Loans, upon satisfaction of the
applicable conditions precedent set forth in Article 10, the Agent shall make
the proceeds of such Revolving Loans available to the Borrower on the applicable
Funding Date by transferring same day funds equal to the proceeds of such
Revolving Loans received by the Agent to the account of the Borrower designated
in writing by the Borrower and acceptable to the Agent; provided, however, that
the amount of Revolving Loans so made on any date shall in no event exceed the
Combined Availability on such date. If, notwithstanding the foregoing, the
amount of the Revolving Loans so made to the Borrower is in excess of the
Combined Availability on any occasion, neither the Agent nor the Lenders shall
be deemed to have changed the limits of the Maximum Revolver Amount or the
Combined Availability or to be obligated to exceed such limits on any other
occasion.
(ii) Unless the Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the Closing Date, at
least one Business Day prior to the date of such Borrowing, that such Lender
will not make available as and when required hereunder to the Agent that
Lender's Pro Rata Share of the Borrowing, the Agent may assume that each Lender
has made such amount available to the Agent in immediately available funds on
the Funding Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the Borrower such amount, that
Lender shall on the Business Day following such Funding Date make such amount
available to the Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice of the Agent submitted to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error, If such amount is so made available, such payment to the Agent
shall constitute such Lender's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the Borrower of
such failure to fund and, upon demand by the Agent, the Borrower shall pay such
amount to the Agent for the Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Loans comprising such Borrowing.
The failure of any Lender to make any Loan on any Funding Date (any such Lender,
prior to the cure of such failure, being hereinafter referred to as a
"Defaulting Lender") shall not relieve any other Lender of any obligation
hereunder to make a Loan on such Funding Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to the Agent for the Defaulting
Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a
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Defaulting Lender shall instead be paid to or retained by the Agent. The Agent
may hold and, in its discretion, re-lend to the Borrower the amount of all such
payments received or retained by it for the account of such Defaulting Lender.
Any amounts so re-lent to the Borrower shall bear interest at the rate
applicable to Base Rate Loans and for all other purposes of this Agreement shall
be treated as if they were Revolving Loans, provided, however, that for purposes
of voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender". Until a Defaulting Lender cures its failure to fund its Pro Rata Share
of any Borrowing (1) such Defaulting Lender shall not be entitled to any portion
of the Unused Line Fee and (2) the Unused Line Fee shall accrue in favor of the
Lenders which have funded their respective Pro Rata Shares of such requested
Borrowing, shall be allocated among such performing Lenders ratably based upon
their relative Commitments. This section shall remain effective with respect to
such Lender until such time as the Defaulting Lender shall no longer be in
default of any of its obligations under this Agreement. The terms of this
Section shall not be construed to increase or otherwise affect the Commitment of
any Lender, or relieve or excuse the performance by Borrower of its duties and
obligations hereunder.
(h) Making of Bank Loans.
(i) In the event the Agent shall elect, with the consent of the
Bank, to have the terms of this Section 2.2(h) apply to a requested Borrowing as
described in Section 2.2(f), the Bank shall make a Revolving Loan in the amount
of such Borrowing (any such Revolving Loan made solely by the Bank pursuant to
this Section 2.2(h) being referred to as a "Bank Loan" and such Revolving Loans
being referred to collectively as "Bank Loans") available to the Borrower on the
Funding Date applicable thereto by transferring same day funds to an account of
the Borrower, designated in writing by the Borrower and acceptable to the Agent;
provided, however, that the aggregate outstanding principal amount of Bank Loans
shall at no time exceed $25,000,000. Each Bank Loan is a Revolving Loan
hereunder and shall be subject to all the terms and conditions applicable to
other Revolving Loans except that all payments thereon shall be payable to the
Bank solely for its own account (and for the account of the holder of any
participation interest with respect to such Revolving Loan). The Agent shall not
request the Bank to make any Bank Loan if the Agent shall have received written
notice from any Lender that one or more of the applicable conditions precedent
set forth in Article 10 will not be satisfied on the requested Funding Date for
the applicable Borrowing. The Bank shall not otherwise be required to determine
whether the applicable conditions precedent set forth in Article 10 have been
satisfied or the requested Borrowing would exceed the Combined Availability on
the Funding Date applicable thereto prior to making, in its sole discretion, any
Bank Loan.
(ii) The Bank Loans shall be repayable as provided herein
(including without limitation Section 2.2(i)) and secured by the Collateral,
shall constitute Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to Base Rate Loans from time to time.
(i) Agent Advances.
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(i) Subject to the limitations set forth in the provisos
contained in this Section 2.2(i), the Agent is hereby authorized by the Borrower
and the Lenders, from time to time in the Agent's sole discretion, (1) after the
occurrence of a Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in Article 10 have not been
satisfied, to make Revolving Loans to the Borrower on behalf of the Lenders
which the Agent, in its reasonable business judgment, deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion thereof, (B)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (C) to pay any other amount chargeable to Borrower
pursuant to the terms of this Agreement, including, without limitation, costs,
fees and expenses as described in Section 15.6 (any of the advances described in
this Section 2.2(i) being hereinafter referred to as "Agent Advances");
provided, that (w) the Required Lenders may at any time revoke the Agent's
authorization contained in this Section 2.2(i) to make Agent Advances, any such
revocation to be in writing and to become effective prospectively upon the
Agent's receipt thereof, (x) the Agent shall not make an Agent Advance which
would cause the Aggregate Outstandings to exceed Combined Availability, (y) the
Agent shall not make an Agent Advance which, together with all other Agent
Advances then outstanding, would aggregate an amount in excess of 5% of the
Combined Availability (without giving effect to the Maximum Revolver Amount) at
the time such Agent Advance is made and (z) no Agent Advance shall be made if at
such time an Agent Advance has been outstanding for more than 45 consecutive
days.
(ii) The Agent Advances shall be repayable on demand and secured
by the Collateral, shall constitute Revolving Loans and Obligations hereunder,
and shall bear interest at the rate applicable to the Base Rate Loans from time
to time.
(j) Settlement. It is agreed that each Lender's funded portion of the
Revolving Loan is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, the Bank, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrower) that
in order to facilitate the administration of this Agreement and the other
Loan Documents, settlement among them as to the Revolving Loans, the Bank
Loans and the Agent Advances shall take place on a periodic basis in
accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by the
Agent, (1) on behalf of the Bank, with respect to each outstanding Bank Loan,
(2) for itself, with respect to each Agent Advance, and (3) with respect to
collections received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone or other similar form of transmission, of such
requested Settlement, no later than 1:00 p.m. (New York City time) on the date
of such requested Settlement (the "Settlement Date"). Each Lender (other than
the Bank, in the case of Bank Loans) shall make the amount of such Lender's Pro
Rata Share of the outstanding principal amount of Bank Loans and Agent Advances
with respect to which Settlement is requested available to the Agent, for itself
or for the account of the Bank, in same day funds, to such account of the Agent
as the Agent may designate, not later than 3:00 p.m. (New York City time), on
the Settlement Date applicable thereto. Settlement may start during the
continuation of a Default or an Event of Default and whether or not the
applicable conditions precedent set forth in
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Article 10 have then been satisfied. Such amounts made available to the Agent
shall be applied against the amounts of the applicable Bank Loan or Agent
Advance and, together with the portion of such Bank Loan or Agent Advance
representing the Bank's Pro Rata Share thereof, shall constitute Revolving Loans
of such Lenders. If any such amount is not made available to the Agent by any
Lender on the Settlement Date applicable thereto, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest thereon at
the Federal Funds Rate for the first three days from and after the Settlement
Date and thereafter at the Interest Rate then applicable to the Revolving Loans
(A) on behalf of the Bank, with respect to each outstanding Bank Loan, and (B)
for itself, with respect to each Agent Advance.
(ii) Notwithstanding the foregoing, not more than one Business
Day after demand is made by the Agent (whether before or after the occurrence of
a Default or an Event of Default and regardless of whether the Agent has
requested a Settlement with respect to a Bank Loan or Agent Advance), each other
Lender shall irrevocably and unconditionally purchase and receive from the Bank
or the Agent, as applicable, without recourse or warranty, an undivided interest
and participation in such Bank Loan or Agent Advance to the extent of such
Lender's Pro Rata Share thereof by paying to the Agent, in same day funds, an
amount equal to such Lender's Pro Rata Share of such Bank Loan or Agent Advance.
If such amount is not in fact made available to the Agent by any Lender, the
Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first three
days from and after such demand and thereafter at the Interest Rate then
applicable to the Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Bank Loan or Agent
Advance pursuant to subsection (ii) above, the Agent shall promptly distribute
to such Lender at such address as such Lender may request in writing, such
Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such Bank Loan or
Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances or Bank Loans are outstanding, may pay over to the Bank any payments
received by Agent, which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans for application to the Bank's
other outstanding Revolving Loans. If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have been applied
to the Bank's other outstanding Revolving Loans other than to Bank Loans or
Agent Advances, as provided for in the previous sentence, the Bank shall pay to
the Agent for the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of
the Revolving Loans. During the period between Settlement Dates, the Bank with
respect to Bank Loans, the Agent with respect to Agent Advances, and each Lender
with respect to the Revolving Loans other than Bank Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable under this
Agreement on the actual average daily amount of funds employed by the Bank, the
Agent and the other Lenders.
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(k) Notation. The Agent shall record on its books the principal amount
of the Revolving Loans owing to each Lender, including the Bank Loans owing
to the Bank, and the Agent Advances owing to the Agent, from time to time.
In addition, each Lender is authorized, at such Lender's option, to note
the date and amount of each payment or prepayment of principal of such
Lender's Revolving Loans in its books and records, including computer
records, such books and records constituting rebuttably presumptive
evidence, subject to Section 4.7 hereof, absent manifest error, of the
accuracy of the information contained therein.
(l) Lenders' Failure to Perform, All Loans (other than Bank Loans and
Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (a) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Loans hereunder, nor shall any Commitment of any
Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Loans hereunder, (b) no
failure by any Lender to perform its obligation to make any Loans hereunder
shall excuse any other Lender from its obligation to make any Loans
hereunder, and (c) the obligations of each Lender hereunder shall be
several, not joint and several.
2.3 Letters of Credit.
(a) Agreement to Cause Issuance. Subject to the terms and conditions
of this Agreement, and in reliance upon the representations and warranties
of the Borrower and the other Loan Parties herein set forth, the Agent
agrees to (1) cause the Letter of Credit Issuer to issue Letters of Credit
for the account of the Borrower, and/or (2) provide credit support or other
enhancement acceptable to the Agent to the Letter of Credit Issuer, which
issues Letters of Credit for the account of the Borrower (any such credit
support or enhancement being herein referred to as a "Credit Support") in
accordance with this Section 2.3 from time to time during the term of this
Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have any
obligation to cause to be issued any Letter of Credit or to provide Credit
Support for any Letter of Credit at any time if: (1) the maximum undrawn
amount of the requested Letter of Credit is greater than the Unused Letter
of Credit Subfacility at such time; (2) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from
the Borrower in connection with the opening thereof exceed the Combined
Availability at such time; (3) in the case of a standby Letter of Credit,
the maximum undrawn amount of the requested standby Letter of Credit,
together will all other standby Letters of Credit issued for the account of
the Borrower, exceeds $20,000,000; or (4) such Letter of Credit has an
expiration date later than 30 days prior to the Stated Termination Date or
more than 12 months from the date of issuance for standby letters of credit
and 180 days for documentary letters of credit. With respect to any Letter
of Credit which contains any "evergreen" or automatic renewal provision,
each Lender shall be deemed to have consented to any such extension or
renewal unless any such Lender shall have provided to the Agent, written
notice that it declines to consent to any such extension or renewal at
least thirty days prior to the date on which the Letter of Credit Issuer is
entitled to decline to extend or renew the Letter of Credit. If
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all of the requirements of this Section 2.3 are met and no Default or Event
of Default has occurred and is continuing, no Lender shall decline to
consent to any such extension or renewal.
(c) Other Conditions. In addition to being subject to the satisfaction
of the applicable conditions precedent contained in Article 10, the
obligation of the Agent to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit is subject to the following
conditions precedent having been satisfied in a manner satisfactory to the
Agent:
(i) The Borrower shall have delivered to the Letter of Credit
Issuer, at such times and in such manner as such Letter of Credit Issuer may
prescribe, an application in form and substance reasonably satisfactory to such
Letter of Credit Issuer and the Agent for the issuance of the Letter of Credit
and such other documents as may be required pursuant to the terms thereof, and
the form and terms of the proposed Letter of Credit shall be reasonably
satisfactory to the Agent and such Letter of Credit Issuer;
(ii) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(i) Request for Issuance. The Borrower shall give the Agent three
Business Days' prior written notice of the request for the issuance of a Letter
of Credit. Such notice shall be irrevocable and shall specify the original face
amount of the Letter of Credit requested, that such Letter of Credit is for the
account of the Borrower, the effective date (which date shall be a Business Day)
of issuance of such requested Letter of Credit, whether such Letter of Credit
may be drawn in a single or in partial draws, the date on which such requested
Letter of Credit is to expire (which date shall be a Business Day), the purpose
for which such Letter of Credit is to be issued, and the beneficiary of the
requested Letter of Credit. The Borrower shall attach to such notice the
proposed form of the Letter of Credit.
(ii) Responsibilities of the Agent; Issuance. The Agent shall
determine, as of the Business Day immediately preceding the requested effective
date of issuance of the Letter of Credit set forth in the notice from the
Borrower pursuant to Section 2.3(d)(i), (i) the amount of the applicable Unused
Letter of Credit Subfacility and (ii) the Combined Availability as of such date.
If (i) the undrawn amount of the requested Letter of Credit is not greater than
the applicable Unused Letter of Credit Subfacility and (ii) the issuance of such
requested Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof would not exceed the Combined
Availability, the Agent shall, subject to the
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terms and conditions hereof, cause the Letter of Credit Issuer to issue the
requested Letter of Credit on such requested effective date of issuance so long
as the other conditions here are met.
(iii) No Extensions or Amendment. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any Letter of
Credit issued pursuant hereto unless the requirements of this Section 2.3(d) are
met as though a new Letter of Credit were being requested and issued.
(iv) Notice of Issuance. On each Settlement Date, the Agent shall
give notice to each Lender of the issuance of all Letters of Credit issued since
the last Settlement Date.
(e) Payments Pursuant to Letters of Credit.
(i) Payment of Letter of Credit Obligations. Borrower agrees
jointly and severally to reimburse (i) the Letter of Credit Issuer for any draw
under any Letter of Credit and (ii) the Agent for the account of the Lenders
upon any payment pursuant to any Credit Support immediately when due, and to pay
the Letter of Credit Issuer the amount of all other obligations and other
amounts payable to such issuer under or in connection with any Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or other right
which Borrower may have at any time against such issuer or any other Person.
Each drawing under any Letter of Credit shall constitute a request by the
Borrower to the Agent for a Borrowing of a Base Rate Loan in the amount of such
drawing. The Funding Date with respect to such borrowing shall be the date of
such drawing.
(f) Participations.
(i) Purchase of Participations. Immediately upon issuance of any
Letter of Credit in accordance with Section 2.3(d), each Lender shall be deemed
to have irrevocably and unconditionally purchased and received without recourse
or warranty, an undivided interest and participation equal to such Lender's Pro
Rata Share of the face amount of such Letter of Credit or the Credit Support
provided through the Agent to the Letter of Credit Issuer, if not the Bank, in
connection with the issuance of such Letter of Credit (including, without
limitation, all obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments. Whenever the
Agent receives a payment from Borrower on account of reimbursement obligations
in respect of a Letter of Credit or Credit Support as to which the Agent has
previously received for the account of the Letter of Credit Issuer thereof
payment from a Lender, the Agent shall promptly pay to such Lender such Lender's
Pro Rata Share of such payment from Borrower in Dollars. Each such payment shall
be made by the Agent on the next Settlement Date.
(iii) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, Credit Support for
any Letter of Credit, reimbursement agreements executed in connection therewith,
applications for any Letter of Credit, and such other documentation as may
reasonably be requested by such Lender.
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(iv) Obligations Irrevocable. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or with respect
to their participation therein or with respect to any Credit Support for any
Letter of Credit or with respect to the Revolving Loans made as a result of a
drawing under a Letter of Credit and the obligations of the Borrower to make
payments to the Agent, for the account of the Lenders, shall be irrevocable and
shall not be subject to any qualification or exception whatsoever, including,
without limitation, any of the following circumstances:
(A) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or other
right which Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), any Lender, the Agent, the
issuer of such Letter of Credit, or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transactions
between Borrower or any other Person and the beneficiary named in any
Letter of Credit);
(C) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(E) the occurrence of any Default or Event of Default; or
(F) the failure of Borrower to satisfy the applicable
conditions precedent set forth in Article 10.
(g) Recovery or Avoidance of Payments: Refund of Payments in Error. In
the event any payment by or on behalf of any Loan Party received by the
Agent with respect to any Letter of Credit or Credit Support provided for
any Letter of Credit (or any guaranty by any Loan Party or reimbursement
obligation of the Borrower relating thereto) and distributed by the Agent
to the Lenders on account of their respective participations therein is
thereafter set aside, avoided or recovered from the Agent in connection
with any receivership, liquidation or bankruptcy proceeding, the Lenders
shall, upon demand by the Agent, pay to the Agent their respective Pro Rata
Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Agent upon the amount
required to be repaid by it. Unless the Agent receives notice from the
Borrower prior to the date on which any payment is due to the Lenders that
the Borrower will not make such payment in full as and when required, the
Agent may assume that the Borrower has made such payment in full to the
Agent on such date in immediately available funds and the Agent may (but
shall not be so required), in reliance upon such assumption, distribute to
each Lender on such due date an amount
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equal to the amount then due such Lender. If and to the extent the Borrower
has not made such payment in full to the Agent, each Lender shall repay to
the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
(h) Compensation for Letters of Credit.
(i) Letter of Credit Fee. The Borrower agrees to pay to the Agent
with respect to each Letter of Credit, for the account of the Lenders, the
Letter of Credit Fee specified in, and in accordance with the terms of, Section
3.5.
(ii) Issuer Fees and Charges. The Borrower shall pay to the
issuer of any Letter of Credit, or to the Agent, for the account of the issuer
of any such Letter of Credit, solely for such issuer's account, such fees and
other charges as are charged by such issuer for letters of credit issued by it,
including, without limitation, its standard fees for issuing, administering,
amending, renewing, paying and canceling letters of credit and all other fees
associated with issuing or servicing letters of credit, as and when assessed.
(i) Indemnification by Lenders. To the extent not reimbursed by the
Borrower and without limiting the obligations of the Borrower hereunder,
the Lenders agree to indemnify the issuer of any Letter of Credit ratably
in accordance with their respective Pro Rata Shares, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys' fees) or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against such issuer in any way relating to or arising out of any Letter of
Credit issued by such issuer or the transactions contemplated thereby or
any action taken or omitted by such issuer under any Letter of Credit
issued by such issuer or any Loan Document in connection therewith;
provided that no Lender shall be liable for any of the -------- foregoing
to the extent it arises from the gross negligence or willful misconduct of
the Person to be indemnified. Without limitation of the foregoing, each
Lender agrees to reimburse the issuer of any Letter of Credit promptly upon
demand for its Pro Rata Share of any costs or expenses payable by Borrower
to such issuer, to the extent that such issuer is not promptly reimbursed
for such costs and expenses by the Borrower. The agreement contained in
this Section shall survive payment in full of all other Obligations.
(j) Indemnification; Exoneration; Power of Attorney.
(i) Indemnification. In addition to amounts payable as elsewhere
provided in this Section 2.3, the Borrower hereby agrees to protect, indemnify,
pay and save the Lenders and the Agent harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which any Lender or the Agent may incur
or be subject to as a consequence, direct or indirect, of the issuance of any
Letter of Credit or the provision of any Credit Support or enhancement in
connection therewith. The agreement in this Section 2.3(j)(i) shall survive
payments of all Obligations and termination of this Agreement.
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(ii) Assumption of Risk by the Borrower. As among the Borrower,
the Lenders, and the Agent, the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof, (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (H) any consequences arising from causes
beyond the control of the Lenders or the Agent, including, without limitation,
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto Governmental Authority; or (I) any Letter of Credit issuer's
honor of a draw for which the draw or any certificate fails to comply in any
respect with the terms of the Letter of Credit. None of the foregoing shall
affect, impair or prevent the vesting of any rights or powers of the Agent or
any Lender under this Section 2.3(j).
(iii) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates shall not put the Agent or any
Lender under any resulting liability to the Borrower or relieve the Borrower of
any of its obligations hereunder to any such Person.
(iv) Rights Against Letter of Credit Issuer. Nothing contained in
this Agreement is intended to limit the Borrower's rights, if any, with respect
to the issuer of a Letter of Credit which arise as a result of the letter of
credit application and related documents executed by and between Borrower and
such issuer.
(v) Power of Attorney. In connection with all Inventory financed
by Letters of Credit, the Borrower hereby appoints the Agent, or the Agent's
designee, as its attorney, with full power and authority, upon the occurrence
and during the continuance of an Event of Default: (a) to sign and/or endorse
the Borrower's name upon any warehouse or other receipts; (b) to sign the
Borrower's name on bills of lading and other negotiable and non-negotiable
documents; (c) to clear Inventory through customs in the Agent's, the Borrower's
name, and to sign and deliver to customs officials powers of attorney in the
Borrower's name for such purpose; (d) to complete in the Borrower's or the
Agent's name, any order, sale, or transaction, obtain the necessary documents in
connection therewith, and collect the proceeds thereof, and (e) to do such other
acts and things as are necessary in order to enable the Agent to obtain
possession of the Inventory and to obtain payment of the Obligations. Neither
the Agent
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nor its designee, as the Borrower's attorney, will be liable for any acts or
omissions, nor for any error of judgment or mistakes of fact or law. This power,
being coupled with an interest, is irrevocable until all Obligations have been
paid and satisfied.
(vi) Account Party. The Borrower hereby authorizes and directs
any issuer of a Letter of Credit to name Borrower as an "Account Party" therein
and to deliver to the Agent, with notice thereof to the Borrower all
instruments, documents and other writings and property received by the issuer
pursuant to the Letter of Credit, and to accept and rely upon the Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit or the application therefor.
(vii) Control of Inventory. In connection with all Inventory
financed by Letters of Credit, the Borrower will, at the Agent's request during
the continuance of an Event of Default, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding Inventory, documents or
instruments in which the Agent holds a security interest to deliver them to the
Agent and/or subject to the Agent's order, and if they shall come into the
Borrower's possession, to deliver them, upon request, to the Agent in their
original form. The Borrower shall also, at the Agent's request, designate the
Agent as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(k) Cash Collateral; Supporting Letter of Credit. If, notwithstanding
the provisions of Section 2.3(b) and Section 12.1, any Letter of Credit or
Credit Support is outstanding upon the termination of this Agreement, then
upon such termination, the Borrower shall deposit with the Agent, for the
ratable benefit of the Agent and the Lenders, with respect to each Letter
of Credit or Credit Support then outstanding, cash in the amount of 105% of
the face amount of such Letter of Credit or a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to the
Agent, issued by an issuer reasonably satisfactory to the Agent in an
amount equal to the greatest amount for which such Letter of Credit or such
Credit Support may be drawn plus any fees and expenses associated with such
Letter of Credit or such Credit Support, under which Supporting Letter of
Credit the Agent is entitled to draw amounts necessary to reimburse the
Agent and the applicable Lenders for payments to be made by the Agent and
such Lenders under such Letter of Credit or Credit Support and any fees and
expenses associated with such Letter of Credit or Credit Support. Such
Supporting Letter of Credit shall be held by the Agent, for the ratable
benefit of the Agent and the applicable Lenders, as security for, and to
provide for the payment of, the aggregate undrawn amount of such Letters of
Credit or such Credit Support remaining outstanding. Such deposit of cash
or Supporting Letter of Credit, as applicable, shall be held by the Agent,
for the ratable benefit of the Agent and the Lenders, as security for, and
to provide for the payment of, the aggregate undrawn amount of such Letters
of Credit or Credit Support remaining outstanding until such time as such
Letters of Credit shall have been terminated or canceled and all of the
Obligations owing from the Borrower in respect of the Letters of Credit
and/or Credit Support have been paid in full.
(l) Existing Letters of Credit. The Borrower, the Agent and the
Lenders agree that the Existing Letters of Credit shall be deemed Letters
of Credit hereunder as if issued by the Letter of Credit Issuer.
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2.4 Bank Products. The Borrower may request and the Agent (in the case of
the Bank and its Affiliates) or another Lender (in the case of such other Lender
and its Affiliates) may, in its sole and absolute discretion, arrange for the
Borrower to obtain from the Bank or any of its Affiliates (in the case of the
Agent) or such other Lender or its Affiliates (in the case of such other Lender)
Bank Products although the Borrower is not required to do so. If Bank Products
are provided by an Affiliate of the Bank or another Lender, the Borrower agrees
to indemnify and hold the Agent, the Bank and the other Lenders harmless from
any and all costs and obligations now or hereafter incurred by the Agent, the
Bank or any other Lender which arise from any indemnity given by the Agent or
such other Lender, as the case may be, to its Affiliates related to such Bank
Products; provided, however, (x) nothing contained herein is intended to limit
the Borrower's rights, with respect to the Bank, another Lender or their
respective Affiliates, if any, which arise as a result of the execution of
documents by and between Borrower and the Bank or another Lender, as applicable,
which relate to Bank Products and (y) Bank Products consisting of cash
management services, including controlled disbursement services, and ACH
Transactions may only be provided to Borrower by the Bank or an Affiliate of the
Bank or another bank acceptable to the Agent. The indemnification and hold
harmless provisions contained in this Section shall survive termination of this
Agreement. Borrower acknowledges and agrees that the obtaining of Bank Products
from the Bank, another Lender or any of their respective Affiliates (a) is in
the sole and absolute discretion of the Bank, such other Lender or the
applicable Affiliate of the Bank or such other Lender, as the case may be, and
(b) is subject to all rules and regulations of the Bank, such other Lender or
the applicable Affiliate of the Bank or such other Lender, as the case may be.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear interest on
the unpaid principal amount thereof (including, to the extent permitted by
law, on interest thereon not paid when due) from the date made until paid
in full in cash at a rate determined by reference to the Base Rate or the
LIBOR Rate and Sections 3.1(a)(i) or (ii) as applicable, but not to exceed
the Maximum Rate described in Section 3.3. Subject to the provisions of
Section 3.2, any of the Loans may be converted into, or continued as, Base
Rate Loans or LIBOR Rate Loans in the manner provided in Section 3.2. If at
any time Loans are outstanding with respect to which notice has not been
delivered to the Agent in accordance with the terms of this Agreement
specifying the basis for determining the interest rate applicable thereto,
then those Loans shall be Base Rate Loans and shall bear interest at a rate
determined by reference to the Base Rate until notice to the contrary has
been given to the Agent in accordance with this Agreement and such notice
has become effective. Except as otherwise provided herein, the outstanding
Obligations shall bear interest as follows:
(i) For all Base Rate Loans and other Obligations (other than
LIBOR Revolving Loans) at a fluctuating per annum rate equal to the Base Rate
plus the Applicable Margin; and
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(ii) For all LIBOR Revolving Loans at a per annum rate equal to
the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in (i) above as of the effective date of such change. All interest charges shall
be computed on the basis of a year of 360 days and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). The Borrower shall pay to the Agent, for the ratable benefit of the
Lenders (x) interest accrued on all Base Rate Loans in arrears on the first day
of each month after the Closing Date and on the Termination Date and (ii)
interest on all LIBOR Revolving Loans in arrears on each LIBOR Interest Payment
Date.
(b) Default Rate. If any Default or Event of Default occurs and is
continuing and the Agent or the Majority Lenders in their discretion so
elect, then, while any such Default or Event of Default is continuing, all
of the Obligations shall bear interest at the Default Rate applicable
thereto.
3.2 Conversion and Continuation Elections.
(a) The Borrower may, upon irrevocable written notice to the Agent in
accordance with Subsection 3.2(b):
(i) elect, as of any Business Day, in the case of Base Rate Loans
to convert any such Loans (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $1,000,000 in excess thereof)
into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest Period,
to continue any LIBOR Rate Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $1,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, provided further that if the notice
shall fail to specify the duration of the Interest Period, such Interest Period
shall be one month.
(b) The Borrower shall deliver a Notice of Conversion/Continuation
(substantially in the form of Exhibit D or another form acceptable to the
Agent) (each, a "Notice of Conversion/Continuation") to be received by the
Agent not later than 11:00 a.m. (New York City time) at least three
Business Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued as LIBOR Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or renewed;
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(iii) the type of Loans resulting from the proposed conversion or
continuation; and
(iv) the duration of the requested Interest Period, provided,
however, the Borrower may not select an Interest Period that ends after the
Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable to LIBOR
Rate Loans, the Borrower has failed to timely select a new Interest Period
to be applicable to LIBOR Rate Loans or if any Event of Default then
exists, the Borrower shall be deemed (without the giving of a Notice of
Conversion/Continuation) to have elected to convert such LIBOR Rate Loans
into Base Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts
of the Loans with respect to which the notice was given held by each
Lender.
(e) During the existence of an Event of Default, the Borrower may not
elect to have a Loan converted into or continued as a LIBOR Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than eight (8) different Interest Periods in effect
with respect to the Borrower in the aggregate.
3.3 Maximum Interest Rate. In no event shall any interest rate provided for
hereunder exceed the maximum rate legally chargeable by the Lenders under
applicable law for loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at 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, 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, but for this Section 3.3,
have been paid or accrued if the interest rates otherwise set forth in this
Agreement had at all times been in effect, then the Borrower shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the difference between (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 or (ii) the amount of interest which would have accrued
had the interest rates otherwise set forth in this Agreement, at all times, been
in effect and (b) the amount of interest actually paid or accrued under this
Agreement. In the event that a court determines that the Agent and/or any Lender
has received interest and other charges hereunder in excess of the Maximum Rate,
such excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations other than interest, in the inverse order of
maturity, and if there are no Obligations outstanding, the Agent and/or such
Lender shall refund to the Borrower such excess.
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3.4 Unused Line Fee. Until the Obligations have been paid in full and this
Agreement is terminated, the Borrower agrees to pay, on the first day of each
month and on the Termination Date, to the Agent, for the ratable account of the
Lenders, an unused line fee (the "Unused Line Fee") equal to 0.25% per annum on
the amount by which the average daily Maximum Revolver Amount exceeded the sum
of the average daily outstanding amount of Revolving Loans, the average daily
aggregate undrawn face amount of all outstanding Letters of Credit plus the
average daily aggregate amount of any unpaid reimbursement Obligations in
respect of Letters of Credit, during the immediately preceding month or shorter
period if calculated on the Termination Date. The Unused Line Fee shall be
computed on the basis of a 360-day year for the actual number of days elapsed.
All payments received by the Agent on account of Accounts or as proceeds of
other Collateral shall be deemed to be credited to the Borrower's Loan Account
immediately upon receipt for purposes of calculating the unused line fee
pursuant to this Section 3.4.
3.5 Letter of Credit Fee. The Borrower agrees to pay to the Agent, for the
ratable account of the Lenders, for each Letter of Credit, a fee (the "Letter of
Credit Fee") equal to the Applicable Margin for LIBOR Rate Loans per annum of
the average daily outstanding undrawn face amount of such Letter of Credit, plus
all out-of-pocket costs, fees and expenses incurred by the Agent in connection
with the application for, issuance of, or amendment to such Letter of Credit,
which costs, fees and expenses will also include a "fronting fee" of 25 basis
points times the face amount of such Letter of Credit at the time of issuance.
The Letter of Credit Fee shall be payable by the Borrower monthly in arrears on
the first day of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remains outstanding. The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed. If any Event of Default occurs and is continuing, then
the Letter of Credit Fee shall be equal to the Applicable Margin for LIBOR Rate
Loans plus two percent (2%) per annum and shall be payable on demand.
3.6 Fee Letter. The Borrower agrees to pay the Agent all fees set forth in
the Fee Letter.
3.7 Payment of Fees. The Borrower agrees that all fees described in this
Article 3, including without limitation the fees payable pursuant to the terms
of the Fee Letter, shall be fully earned when accrued and non-refundable for any
reason whatsoever and shall be due and payable on the due dates set forth in
this Agreement.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrower shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrower may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; provided, however, that with
respect to any LIBOR Revolving Loans prepaid by the Borrower prior to the
expiration date of the Interest Period applicable thereto, the Borrower promises
to pay to the Agent for account of the Lenders the amounts described in Section
5.4. In addition, and without limiting the generality of the foregoing, upon
demand (within three days of
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demand if as a result of the imposition of a new Reserve, increase in a Reserve
or a change in eligibility criteria) the Borrower promises to pay to the Agent,
for the account of the Lenders, the amount, without duplication, by which the
Combined Availability is less than zero.
4.2 Termination, Reduction or Increase of Facility
(a) The Borrower may terminate this Agreement upon at least 5 Business
Days' written notice from the Borrower to the Agent and the Lenders, upon
(a) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, and the cancellation and return of all
outstanding Letters of Credit or the provision of collateral support for
such Letters of Credit as provided in Section 2.3(k), (b) the payment in
full in cash of all other Obligations together with accrued interest
thereon, and (c) with respect to any LIBOR Rate Loans prepaid in connection
with such termination prior to the expiration date of the Interest Period
applicable thereto, the payment of the amounts described in Section 5.4.
(b) The Borrower shall have the right, upon not less than five (5)
Business Days' written notice from the Borrower to the Agent to, from time
to time, permanently reduce the Maximum Revolver Amount; provided, that (i)
any such reduction in the Maximum Revolver Amount shall result in a
Dollar-for-Dollar decrease in the aggregate amount of the Commitments then
in effect, (ii) except as set forth in Section 4.2(a) hereof, the Borrower
shall not be permitted to reduce the Maximum Revolver Amount to less than
$75,000,000 and (iii) no such reduction of the Maximum Revolver Amount
shall be permitted if, after giving effect thereto and to any prepayments
of the Revolving Loans on the effective date thereof, Combined Availability
would be less than zero. Any such reduction shall be in an amount equal to
$25,000,000 or a multiple of $5,000,000 in excess thereof, and shall reduce
the aggregate Commitments then in effect pro rata among the Lenders.
(c) The Borrower shall have the right at any time, and from time to
time, to request an increase of the Maximum Revolver Amount by an amount
not to exceed $50,000,000. Any such requested increase shall be first made
in writing to all existing Lenders on a pro rata basis. In the event that
any existing Lender does not notify the Agent within ten (10) Business Days
from the receipt of the requested increase that the existing Lender will
increase its Commitment and the amount of its increase, such existing
Lender shall be deemed to have declined the requested increase of its
Commitment. To the extent that one or more existing Lenders decline to
increase their respective Commitments, or decline to increase their
Commitments to the amount requested by the Borrower, the Agent may arrange
for other Persons to become Lenders hereunder and to issue commitments in
an amount equal to the amount of the increase in the Maximum Revolver
Amount requested by the Borrower and not accepted by the existing Lenders
(each such increase by either means, a "Commitment Increase," and each such
Person issuing, or Lender increasing, its Commitment, an "Additional
Commitment Lender"); provided, however, that (i) no Lender shall be
obligated to provide a Commitment Increase as a result of any such request
by the Borrower, (ii) any Additional Commitment Lender which is not an
existing Lender shall be subject to the approval of the Agent, and (iii)
nothing contained herein shall constitute the
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unconditional obligation of the Agent to provide or obtain commitments for
such Commitment Increase, as the Agent only is agreeing hereby to use its
best efforts to arrange for Additional Commitment Lenders. Each Commitment
Increase shall be in a minimum aggregate amount of at least $10,000,000 and
in integral multiples of $10,000,000 in excess thereof.
(i) No Commitment Increase shall become effective unless and
until each of the following conditions have been satisfied:
(A) the Borrower, the Agent, and any Additional Commitment
Lender which is not then a Lender shall have executed and delivered a
joinder to the Loan Documents in such form as the Agent may reasonably
require;
(B) the Borrower shall have paid such fees and other
compensation to the Additional Commitment Lenders as the Borrower and each
such Additional Commitment Lenders may agree;
(C) the Borrower shall have paid such arrangement fees to
the Agent as the Borrower and the Agent may agree;
(D) to the extent requested by any Additional Commitment
Lender, a promissory note will be issued at the Borrower's expense, to each
such Additional Commitment Lender, to be in conformity with requirements of
this Agreement to the extent necessary to reflect the new Commitment of
such Additional Commitment Lender;
(E) no Default or Event of Default shall then exist or arise
therefrom; and
(F) the Borrower and the Additional Commitment Lenders shall
have delivered such other instruments, documents and agreements as the
Agent may reasonably have requested.
(ii) The Agent shall promptly notify each Lender as to the
effectiveness of each Commitment Increase (with each date of such effectiveness
being referred to herein as a "Commitment Increase Date"), and at such time (i)
the Maximum Revolver Amount under, and for all purposes of, this Agreement shall
be increased by the aggregate amount of such Commitment Increases, (ii) Schedule
1.1(a) shall be deemed modified, without further action, to reflect the revised
Commitments and Commitment Percentages of the Lenders, and (iii) this Agreement
shall be deemed amended, without further action, to the extent necessary to
reflect such increased Maximum Revolver Amount.
(iii) In connection with Commitment Increases hereunder, the
Lenders and the Borrower agree that, notwithstanding anything to the contrary in
this Agreement, (A) the Borrower shall, in coordination with the Agent, (x)
repay outstanding Revolving Loans of certain Lenders, and obtain Revolving Loans
from certain other Lenders (including the Additional Commitment Lenders), but in
no event in excess of each such Lender's Commitment, or (y) take such other
actions as reasonably may be required by the Agent, in each case to the extent
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necessary so that all of the Lenders effectively participate in each of the
outstanding Loans pro rata on the basis of their Pro Rata Shares (determined
after giving effect to any increase in the Maximum Revolver Amount pursuant to
this Section 4.2), and (B) the Borrower shall pay to the Lenders any costs of
the type referred to in Section 5.4 in connection with any repayment and/or
Revolving Loans required pursuant to preceding clause (A).
4.3 Payments by the Loan Parties
(a) All payments to be made by any Loan Party shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by any Loan Party shall be made to the Agent for the
account of the Lenders at the Agent's address set forth in Section 15.7,
and shall be made in Dollars and in immediately available funds, no later
than 2:00 p.m. (New York City time) on the date specified herein. Any
payment received by the Agent later than 2:00 p.m. (New York City time)
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business
Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Lenders that the Borrower will not
make such payment in full as and when required, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender. If and to
the extent the Borrower has not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to
such Lender, together with interest thereon at the Federal Funds Rate for
each day from the date such amount is distributed to such Lender until the
date repaid.
4.4 Payments as Revolving Loans. At the election of the Agent, all payments
of principal, interest, reimbursement obligations in connection with Letters of
Credit, fees, premiums and other sums payable hereunder, including all
reimbursement for expenses pursuant to Section 15.6, may be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrower pursuant to Section 2.2 or a deemed request, subject to Section 4.7
hereof, as provided in this Section 4.4. Borrower hereby irrevocably authorizes
the Agent to charge the Loan Account for the purpose of paying all amounts due
and payable hereunder, and agrees that all such amounts charged shall constitute
Revolving Loans (including Bank Loans and Agent Advances) and that all such
Revolving Loans so made shall be deemed to have been requested by the Borrower
pursuant to Section 2.2. With respect to reimbursement of expenses for which the
Borrower is obligated hereunder, the Agent will not charge the Loan Account of
the Borrower prior to giving the Borrower at least two Business Days notice of
each such reimbursable expense and, if the invoice for such reimbursable expense
provides for a due date, then the Agent will not charge the Loan Account prior
to the due date thereof.
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4.5 Apportionment and Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Loans to which such payments relate held by
each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of specific Revolving Loans,
or not constituting payment of specific fees, and all proceeds of Accounts or
other Collateral received by the Agent, shall be applied, ratably, subject to
the provisions of this Agreement, first, to pay any fees, indemnities or expense
reimbursements then due to the Agent from the Borrower or other Loan Parties,
second, to pay any fees, indemnities or expense reimbursements relating to Bank
Products of the type specified in clauses (ii) and (iii) of the definition
thereof then due to any Lender or any of its Affiliates from the Borrower (but
only if no Event of Default is continuing at such time; it being agreed that if
an Event of Default is continuing, clause second shall not be applicable);
third, to pay any fees or expense reimbursements then due to the Lenders from
the Borrower or other Loan Parties; fourth, to pay interest due in respect of
all Revolving Loans, including Bank Loans and Agent Advances; fifth, to pay or
prepay principal of Bank Loans and Agent Advances; sixth, to pay or prepay
principal of the Revolving Loans (other than Bank Loans and Agent Advances) and
unpaid reimbursement obligations in respect of Letters of Credit; seventh, to
pay an amount to Agent equal to all outstanding Obligations (contingent or
otherwise) with respect to Letters of Credit to be held as cash collateral for
such Obligations; eighth, to the payment of any Obligations then due and owing
of Borrower in respect of Bank Products (to the extent not paid pursuant to
clause second above) and ninth, to the payment of any other Obligation due to
the Agent or any Lender by the Borrower or other Loan Parties. Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the
Borrower, or unless an Event of Default is outstanding, neither the Agent nor
any Lender shall apply any payments which it receives to any LIBOR Revolving
Loan, except (a) on the expiration date of the Interest Period applicable to any
such LIBOR Revolving Loan or (b) in the event, and only to the extent, that
there are no outstanding Base Rate Loans and, in any event, the Borrower shall
pay LIBOR breakage losses in accordance with Section 5.4. The Agent and the
Lenders shall have the continuing and exclusive right to apply and reverse and
reapply any and all such proceeds and payments to any portion of the
Obligations.
4.6 Indemnity for Returned Payments. If, after receipt of any payment of,
or proceeds applied to the payment of, all or any part of the Obligations, the
Agent, any Lender, the Bank or any Affiliate of the Bank is for any reason
compelled to surrender such payment or proceeds to any Person, because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender, and the Borrower shall be liable to
pay to the Agent and the Lender, and hereby do indemnify the Agent and the
Lenders and hold the Agent and the Lenders harmless for, the amount of such
payment or proceeds surrendered. The provisions of this Section 4.6 shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent's and the Lenders' rights under this Agreement and shall be deemed to
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have been conditioned upon such payment or application of proceeds having become
final and irrevocable. The provisions of this Section 4.6 shall survive the
termination of this Agreement.
4.7 Agent's and Lenders' Books and Records: Monthly Statements. The Agent
shall record the principal amount of the Loans owing to each Lender, the undrawn
face amount of all outstanding Letters of Credit and the aggregate amount of
unpaid reimbursement obligations outstanding with respect to the Letters of
Credit from time to time on its books. In addition, each Lender may note the
date and amount of each payment or prepayment of principal of such Lender's
Loans in its books and records. Failure by Agent or any Lender to make such
notation shall not affect the obligations of the Borrower with respect to the
Loans or the Letters of Credit. The Borrower agrees that the Agent's and each
Lender's books and records showing the Obligations and the transactions pursuant
to this Agreement and the other Loan Documents shall be admissible in any action
or proceeding arising therefrom, and shall constitute rebuttably presumptive
proof thereof, irrespective of whether any Obligation is also evidenced by a
promissory note or other instrument. The Agent will provide to the Borrower a
monthly statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on the
Borrower and an account stated (except for reversals and reapplications of
payments made as provided in Section 4.5 and corrections of errors discovered by
the Agent), unless the Borrower notifies the Agent in writing to the contrary
within 30 days after such statement is rendered. In the event a timely written
notice of objections is given by the Borrower, only the items to which exception
is expressly made will be considered to be disputed by the Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes
(a) Except as provided in Section 5.1(c), any and all payments by
Borrower to each Lender or the Agent under this Agreement and any other
Loan Document shall be made free and clear of, and without deduction or
withholding for any Taxes (excluding the following Taxes ("Excluded
Taxes"): (i) Taxes imposed on, or measured by, the recipient's overall net
income or overall gross income imposed by the jurisdiction under the laws
of which such recipient is incorporated or otherwise organized, in which
such recipient is a resident for income tax purposes, or in which such
recipient's principal executive office or lending office is located, in
each case, including any political subdivision thereof, (ii) branch profits
taxes, franchise taxes, or similar taxes imposed on the recipient, and
(iii) any Taxes that would not have been imposed but for the activities of
the recipient in the jurisdiction imposing such Tax other than the
execution, delivery, performance, filing, recording, and enforcement of,
and the other activities contemplated in, this Agreement and the other Loan
Documents, and the recipient's participation in the transactions
contemplated by this Agreement and the other Loan Documents (all Taxes
other than Excluded Taxes, "Indemnified Taxes")). In addition, the Borrower
shall pay all Other Taxes.
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(b) Each Loan Party agrees, jointly and severally, to indemnify and
hold harmless each Lender and the Agent for the full amount of Indemnified
Taxes or Other Taxes (including any Indemnified Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section) paid by
the Lender or the Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within
30 days after the date such Lender or the Agent makes written demand
therefor.
(c) If any Loan Party shall be required by law to deduct, remit or
withhold any Indemnified Taxes or Other Taxes or the Agent or any Lender
shall be required to remit any Indemnified Taxes or Other Taxes, in either
case, from or in respect of any sum payable hereunder to any Lender or the
Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions, remittances and withholdings (including
deductions, remittances and withholdings applicable to additional sums payable
under this Section) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions,
remittances or withholdings been made;
(ii) such Loan Party shall make such deductions and withholdings;
(iii) such Loan Party shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) such Loan Party shall also pay to each Lender or the Agent
for the account of such Lender, at the time interest is paid, all additional
amounts which the respective Lender specifies as necessary to preserve the
after-tax yield such Lender would have received if such Taxes or Other Taxes had
not been imposed.
(d) Within 30 days after the date of any payment by any Loan Party of
Indemnified Taxes or Other Taxes, such Loan Party shall furnish the Agent
the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment reasonably satisfactory to the Agent.
(e) If any Loan Party is required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by such Loan Party which may
thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.
(f) If the Loan Parties are required to pay any amounts pursuant to
the provisions of this Section 5.1, and if thereafter any Lender or the
Agent (as the case may be) shall receive or be granted a credit against or
remission for Indemnified Taxes or Other Taxes payable by such Lender or
the Agent (as the case may be) in respect of the amounts so paid by
Borrower, such Lender or the Agent (as the case may be) shall to the extent
that it can do so without prejudice to the retention of the amount of such
credit or
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remission, pay to such Loan Party 30 days after the date on which such
Lender or the Agent effectively obtains the benefit of such credit or
remission an amount which it reasonably determines to be equal to such
credit or remission less any sum which it is required by law to deduct
therefrom. Such Lender or the Agent (as the case may be) may, in its sole
discretion, determine the order of utilization of all charges, deductions,
credits and expenses which reduce Taxes imposed on its net income. Nothing
in this Section 5.1(f) shall be construed as requiring any Lender or the
Agent (as the case may be) to conduct its business or to arrange or alter
in any respect its Tax or financial affairs so that it is entitled to
receive such credit or remission, other than performing any ministerial
acts necessary to be entitled to receive such credit or remission.
(g) In the event that any Lender or the Agent receives written
communication from any Tax authority with respect to an assessment or
proposed assessment of any Indemnified Taxes or Other Taxes, such Lender or
the Agent (as the case may be) shall promptly notify the Borrower in
writing and provide a copy of such communication to the Borrower. In the
event that an administrative or judicial proceeding is commenced involving
any Lender or the Agent which, if determined adversely to it, would result
in the payment of Indemnified Taxes or Other Taxes, such Lender or the
Agent (as the case may be) shall promptly notify the Borrower and shall
permit the Borrower to consult with such Lender or Agent regarding such
proceeding and the preparation of submissions in connections with such
proceeding; provided, however, that in the event that such Lender or the
Agent (as the case may be) fails to comply with this provision, with
respect to any communication, or administrative or judicial proceeding, the
Borrower shall continue to have liability to indemnify such Lender or the
Agent (as the case may be) hereunder with respect to Indemnified Taxes or
Other Taxes that are the subject of such communication or proceeding,
except to the extent that the Borrower was prejudiced and incurred
liability solely as a result of such failure.
5.2 Illegality
(a) If any Lender determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation
or administration of any Requirement of Law, has made it unlawful, or that
any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable lending office to make LIBOR
Rate Loans, then, on notice thereof by the Lender to the Borrower through
the Agent, any obligation of that Lender to make LIBOR Rate Loans shall be
suspended until the Lender notifies the Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any LIBOR
Rate Loan, the Borrower shall, upon its receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such
LIBOR Rate Loans of that Lender then outstanding, together with interest
accrued thereon and amounts required under Section 5.4, either on the last
day of the Interest Period thereof, if the Lender may lawfully continue to
maintain such LIBOR Rate Loans to such day, or immediately, if the Lender
may not lawfully continue to maintain such LIBOR Rate Loan. If the Borrower
is required to so prepay any LIBOR Rate Loan, then concurrently with such
prepayment,
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Borrower shall borrow from the affected Lender, in the amount of such
repayment, a Base Rate Loan.
5.3 Increased Costs and Reduction of Return
(a) If any Lender determines that, due to either (i) the introduction
of or any change in the interpretation of any law or regulation or (ii) the
compliance by that Lender with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining any LIBOR Rate Loans (in each case,
other than Taxes, which shall be governed exclusively by Section 5.1), then
the Borrower shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Agent), pay to the Agent for
the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or
(iv) compliance by such Lender or any corporation or other entity
controlling such Lender with any Capital Adequacy Regulation, affects or
would affect the amount of capital required or expected to be maintained by
such Lender or any corporation or other entity controlling such Lender and
(taking into consideration such Lender's or such corporation's or other
entity's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Lender to the Borrower
through the Agent, the Borrower shall pay to such Lender, from time to time
as specified by such Lender, additional amounts sufficient to compensate
such Lender for such increase.
5.4 Funding Losses. The Borrower shall reimburse each Lender and hold each
Lender harmless from any loss or expense which the Lender may sustain or incur
as a consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the prepayment or other payment (including after acceleration
thereof) of a LIBOR Rate Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. The Borrower shall also pay any customary administrative
fees charged by any Lender in connection with the foregoing.
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5.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Borrower may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
5.6 Certificates of Lenders. If any Lender claims reimbursement or
compensation under this Article 5 the Agent shall determine the amount thereof
and shall deliver to the Borrower (with a copy to the affected Lender) within 90
days of demand a certificate setting forth in reasonable detail the amount
payable to the affected Lender and such certificate shall be conclusive and
binding on the Borrower in the absence of manifest error.
5.7 Survival. The agreements and obligations of the Borrower in this
Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL.
6.1 Grant of Security Interest.
(a) As security for all present and future Obligations, each Loan
Party hereby grants to the Agent, for the ratable benefit of the Agent and
the Lenders, a continuing security interest in, lien on, and right of
set-off against, all of the following property of such Loan Party, whether
now owned or existing or hereafter acquired or arising, regardless of where
located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights;
(iv) all Chattel Paper;
(v) all Documents;
(vi) all Instruments;
(vii) all Supporting Obligations and Letter of Credit Rights;
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(viii) all General Intangibles;
(ix) all Payment Intangibles;
(x) all Equipment;
(xi) all Investment Property (other than the equity interests in
SAC and FSAC owned by Holdings as of the Closing Date);
(xii) all money, cash, cash equivalents, securities and other
property of any kind of such Loan Party held directly or indirectly by the Agent
or any Lender;
(xiii) all of such Loan Party's deposit accounts, credits, and
balances with and other claims against the Agent or any Lender or any of their
Affiliates or any other financial institution with which such Loan Party
maintains deposits, including any Payment Accounts;
(xiv) all commercial tort claims listed on Schedule 6.1(a)(xiv)
hereto;
(xv) all other assets and properties of the Loan Parties;
(xvi) all books, records and other property related to or
referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of
the foregoing; and
(xvii) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited to,
proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with all other property of any Loan Party or
other Person in which the Agent or any Lender may at any time be granted a Lien
to secure any or all of the Obligations, is herein collectively referred to as
the "Collateral". The Agent is not at this time requiring the Loan Parties to
perfect a Lien on any Real Estate owned by the Loan Parties; however, the Agent
may, at any time, request that appropriate documentation perfecting a Lien on
such Real Estate be executed, delivered and filed with the appropriate filing
offices by the Loan Parties, and the Loan Parties shall promptly undertake such
action upon such request.
(b) All of the Obligations shall be secured by all of the Collateral.
(c) The Agent's Liens have been independently granted by the Loan
Documents, and may be independently granted by other Loan Documents
heretofore or hereafter entered into. The Agent's Liens, this Agreement,
and the other Loan Documents supplement each other, and the grants,
priorities, rights and remedies of the Lenders and the Agent hereunder and
thereunder are cumulative. The Agent's Liens shall constitute valid and
perfected first priority Liens subject and subordinate only, to Permitted
Liens under (x) clauses (a), (d) and (k) of the definition of Permitted
Liens, (y) clause (g) of the
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definition of Permitted Liens to the extent specifically identified on
Schedule 9.16 as senior in priority to the Agent's Liens and (z) clause (i)
of the definition of Permitted Liens but only with respect to Term Lender
Priority Collateral (as defined in the Intercreditor Agreement), and shall
be prior to all other Liens, now existing or hereafter arising, in favor of
any other creditor or other Person.
6.2 Perfection and Protection of Security Interest.
(a) Each Loan Party shall, at its expense, perform all steps requested
by the Agent at any time to more fully effectuate, perfect, maintain,
protect, and enforce the Agent's Liens, including, without limitation, at
the request of the Agent: (i) executing, delivering and/or filing and
recording of any additional security agreements or assignments with respect
to the Collateral and filing or authorizing the Agent to file financing or
continuation statements, and amendments thereof, in form and substance
satisfactory to the Agent; (ii) delivering to the Agent the originals of
all Instruments, Documents, and Chattel Paper of such Loan Party
constituting Revolving Lender Priority Collateral, and all other Revolving
Lender Priority Collateral of which the Agent determines it should have
physical possession in order to perfect and protect the Agent's security
interest therein, duly pledged, endorsed or assigned to the Agent without
restriction; (iii) delivering to the Agent warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse
receipts are issued and certificates of title covering any portion of the
Collateral for which certificates of title have been issued; (iv) when an
Event of Default exists and is continuing, transferring its Inventory to
warehouses designated by the Agent; (v) placing notations on such Loan
Party's books of account to disclose the Agent's security interest; (vi)
obtaining control agreements from securities intermediaries with respect to
financial assets in the possession of securities intermediaries; (vii)
obtaining control agreements from banks and other financial institutions
with respect to deposit accounts (as defined in the UCC) maintained at such
bank or other financial institution; (viii) assigning and delivering to the
Agent all Supporting Obligations, including letters of credit on which such
Loan Party is named beneficiary with the written consent of the issuer
thereof, (ix) taking such other steps as are deemed necessary or desirable
by the Agent to maintain and protect the Agent's Liens. Each Loan Party
hereby authorizes the Agent to file one or more financing statements
disclosing the Agent's Liens. Each Loan Party agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
(b) If any Collateral of a Loan Party is at any time in the possession
or control of any warehouseman, bailee or any of a Loan Party's agents or
processors, then such Loan Party shall notify the Agent thereof and shall
use commercially reasonable efforts if requested by the Agent obtain a
bailee letter acknowledged by the bailee that notifies such Person of the
Agent's security interest in such Collateral and instructs such Person to
hold all such Collateral for the Agent's account subject to the Agent's
instructions; provided, however, that Agent agrees that it shall give not
give any such instructions regarding the Collateral unless an Event of
Default has occurred and is continuing. If at any time any Collateral is
located in any operating facility of a Loan Party that is leased by such
Loan Party, then such Loan Party shall use commercially reasonable efforts
if
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requested by the Agent to obtain written landlord lien waivers or
subordinations, in form and substance reasonably satisfactory to the Agent,
that waives or subordinates all present and future Liens which the owner or
lessor of such premises may be entitled to assert against such Collateral
and permits the Agent to have access to such leased premises in connection
with the exercise by the Agent of rights and remedies with respect to the
Collateral located therein.
(c) From time to time, each Loan Party shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to
the Agent, for the ratable benefit of the Agent and the Lenders, the
Collateral in which such Loan Party has an interest, but such Loan Party's
failure to do so shall not affect or limit the Agent's security interest or
any other rights of the Agent or any Lender in and to the Collateral with
respect to such Loan Party. So long as this Agreement is in effect and
until all Obligations have been fully satisfied, the Agent's Liens shall
continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Combined Availability or as the
basis for any advance, loan, extension of credit, or other financial
accommodation).
6.3 Location of Collateral. Each Loan Party represents and warrants to the
Agent and the Lenders that: (a) Schedule 6.3 is a correct and complete list of
such Loan Party's and each of its Subsidiaries' chief executive office, the
location of its books and records, the locations of the Collateral in which such
Loan Party has an interest, and the locations of all of its other places of
business; and (b) Schedule 8.11 correctly identifies any of such facilities and
locations that are not owned by such Loan Party or such Subsidiary and sets
forth the names of the owners and lessors or sublessors of such facilities and
locations; provided that with respect to (a) and (b) above, the Loan Parties
shall provide the Agent with an updated list of store locations on a quarterly
basis.. Without limiting the foregoing, each Loan Party represents that all of
its and its Subsidiaries' Inventory (other than Inventory in transit) is, and
covenants that all of its Inventory will be, located either (a) on premises
owned by such Loan Party or the relevant Subsidiary, (b) on premises leased by
such Loan Party or the relevant Subsidiary, provided that such Loan Party shall
have used commercially reasonable efforts to deliver to the Agent an executed
landlord waiver from the landlord of such premises in form and substance
satisfactory to the Agent, or (c) in a warehouse or with a bailee, provided that
such Loan Party shall have used commercially reasonable efforts to deliver to
the Agent an executed bailee letter from the applicable Person in form and
substance satisfactory to the Agent.
6.4 Title to, Liens on, and Sale and Use of Collateral. Each Loan Party
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of its and its Subsidiaries' Collateral is and
will continue to be owned by such Loan Party or the relevant Subsidiary, as
applicable, free and clear of all Liens whatsoever, except for Permitted Liens;
(b) the Agent's Liens in such Collateral will not be subject to any prior Lien
other than (x) in the case of the Agent's Liens encumbering Collateral not
consisting of Inventory, Accounts, and the proceeds thereof, to Permitted Liens
described in clauses (c), (d), (e), (g), (h) and (i) of the definition thereof
and (y) in the case of the Agent's Liens encumbering Collateral consisting of
Inventory, Accounts, and the proceeds thereof, the Liens set forth on Schedule
9.16, and in each case under clauses (x) and (y) above shall be prior to all
other Liens, now existing or hereafter arising, in favor of any other creditor
or other Person; (c) such Loan Party will (and will
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cause each of its Subsidiaries to) use, store, and maintain such Collateral with
all reasonable care and will use such Collateral for lawful purposes only; and
(d) such Loan Party will not (and will cause each of its Subsidiaries not to)
except as otherwise permitted by this Agreement, without the Agent's prior
written approval, sell, or dispose of or permit the sale or disposition of any
of such Collateral except for sales of Inventory in the ordinary course of
business, the use of cash to the extent not prohibited herein, and sales of
Equipment as permitted by Section 6.10. The inclusion of proceeds in the
Collateral shall not be deemed to constitute the Agent's or any Lender's consent
to any sale or other disposition of the Collateral except as expressly permitted
herein.
6.5 Access and Examination: Promotional Materials.
(a) Subject to Section 9.4(b), the Agent, accompanied by any Lender
which so elects, may at all reasonable times during regular business hours
and after reasonable notice (and at any time when a Default or Event of
Default exists) have access to, examine, audit, make extracts from or
copies of and inspect any or all of each Loan Party's and its Subsidiaries'
records, files, and books of account and the Collateral, and discuss each
Loan Party's and its Subsidiaries' affairs with each Loan Party's and its
Subsidiaries' officers and management. Each Loan Party will (and will cause
each of its Subsidiaries to) deliver to the Agent any instrument necessary
for the Agent to obtain records from any service bureau maintaining records
for such Loan Party and its Subsidiaries. If any of a Loan Party's or any
of its Subsidiaries' records or reports of the Collateral are prepared by
an accounting service or other agent, such Loan Party hereby authorizes
(and shall cause each of its Subsidiaries to authorize) and, upon the
request of the Agent, shall cause such service or agent to deliver such
records, reports, and related documents to the Agent, for distribution to
the Lenders, and/or, as the Agent shall choose, provide access to the Agent
thereto. The Agent may, and at the direction of the Majority Lenders shall,
at any time when a Default or Event of Default exists, and at the Loan
Parties' expense, make copies of all of any Loan Party's and its
Subsidiaries' books and records, or require a Loan Party to deliver (or
cause to be delivered) such copies to the Agent. The Agent may, without
expense to the Agent, use a Loan Party's supplies and premises as may be
reasonably necessary for maintaining or enforcing the Agent's Liens and
each Loan Party shall cooperate and make available its personnel for such
purposes. The Agent shall have the right, at any time, in the Agent's name
or in the name of a nominee of the Agent, to verify the validity, amount or
any other matter relating to the Accounts, Inventory, or other Collateral
of a Loan Party, by mail, telephone, or otherwise.
(b) Each Loan Party agrees that, subject to such Loan Party's or
Subsidiary's, as the case may be, prior consent for uses other than in a
traditional tombstone, which consent shall not be unreasonably withheld or
delayed, the Agent and each Lender may use such Loan Party's or such
Subsidiary's name in advertising and promotional material.
6.6 Collateral Reporting. Each Loan Party (or in the case of clause (h)
below, the Borrower) shall provide the Agent with the following documents at the
following times in form satisfactory to the Agent:
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(a) upon the request of the Agent, a schedule of such Loan Party's and
its Subsidiaries' respective Accounts created, credits given, cash
collected and other adjustments to Accounts of such Loan Party since the
last such schedule;
(b) upon the request of the Agent, an aging of such Loan Party's and
its Subsidiaries' respective Accounts, together with a reconciliation to
the previous aging delivered to the Agent of such Loan Party's and its
Subsidiaries' respective Accounts and to such Loan Party's and its
Subsidiaries' respective general ledgers, and, in the case of the Borrower,
to the corresponding Borrowing Base and, in each case, accompanied by such
supporting detail and documentation as shall be requested by the Agent in
its reasonable discretion;
(c) upon request of the Agent, a report of open vouchers payable by
vendor;
(d) upon request of the Agent, Inventory reports by category, with
additional detail showing additions to and deletions from the Inventory,
together with a reconciliation to such Loan Party's general ledger and, in
the case of the Borrower, to the Combined Availability;
(e) upon request of the Agent, copies of invoices in connection with
such Loan Party's and its Subsidiaries' respective Accounts, customer
statements, credit memos, remittance advices and reports, deposit slips,
shipping and delivery documents in connection with such Loan Party's and
its Subsidiaries' respective Accounts and for Inventory and Equipment
acquired by such Loan Party or any of its Subsidiaries, purchase orders and
invoices;
(f) upon request of the Agent, a statement of the balance of each of
the Intercompany Accounts;
(g) such other reports as to the Collateral of such Loan Party and its
Subsidiaries as the Agent shall reasonably request from time to time;
(h) on a monthly basis (not later than the fifteenth day after the
last day of the previous month with the information thereon to be as of the
last day of such previous month), a Borrowing Base Certificate; provided,
that during each Accelerated Delivery Period, the appropriate Loan Parties
shall deliver a Borrowing Base Certificate to the Agent on a weekly basis
(not later than the third Business Day after the last Business Day of the
previous week with the information thereon to be as of the last Business
Day of such previous week);
(i) on a monthly basis, by the 15th day of the following month, a
detailed report of Major Credit Card Receivables and Inventory of such Loan
Party; provided that if a Borrowing Base Certificate is otherwise then
required to be delivered on a weekly basis pursuant to clause (h) above as
a result of the occurrence of a Combined Availability Threshold Event, then
such report shall be delivered for such week at the time the Borrowing Base
Certificate for such week is or would be required to be delivered; and
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(j) with the delivery of each of the foregoing, a certificate of such
Loan Party executed by an officer thereof certifying as to the accuracy and
completeness of the foregoing.
6.7 Accounts.
(a) Each Loan Party hereby represents and warrants to the Agent and
the Lenders, with respect to such Loan Party's and its Subsidiaries'
respective Accounts, that: (i) each existing Account represents, and each
future Account will represent, a bona fide sale or lease and delivery of
goods by such Loan Party or the relevant Subsidiary, as applicable, or
rendition of services by such Loan Party or the relevant Subsidiary, as
applicable, in the ordinary course of such Loan Party's or such
Subsidiary's respective business; (ii) each existing Account is, and each
future Account will be, for a liquidated amount payable by the Account
Debtor thereon on the terms set forth in the invoice therefor or in the
schedule thereof delivered to the Agent, without any offset, deduction,
defense, or counterclaim except those known to such Loan Party and reported
to the Agent and the Lenders pursuant to this Agreement; (iii) no payment
will be received with respect to any Account, and no credit, discount, or
extension, or agreement therefor will be granted on any Account, except as
reported to the Agent and the Lenders in accordance with this Agreement or
properly reflected in a Borrowing Base Certificate; (iv) each copy of an
invoice delivered to the Agent by such Loan Party or any of its
Subsidiaries will be a genuine copy of the original invoice sent to the
Account Debtor named therein; and (v) all goods described in each invoice
will have been delivered to the Account Debtor and all services of such
Loan Party or the relevant Subsidiary, as applicable, described in each
invoice will have been performed.
(b) Neither any Loan Party nor any of its Subsidiaries shall re-date
any invoice or sale or make sales on extended dating beyond that customary
in such Loan Party's or the relevant Subsidiary's, as applicable, business
or modify any Account or extend any Account. If any Loan Party becomes
aware of any matter materially adversely affecting the collectability of
any Account or Account Debtor involving an amount greater than $250,000,
including information regarding the Account Debtor's creditworthiness, such
Loan Party will promptly so advise the Agent and if such Loan Party is a
Borrower, exclude such Account from its Eligible Accounts.
(c) Neither any Loan Party nor any of its Subsidiaries shall accept
any note or other instrument (except a check or other instrument for the
immediate payment of money) with respect to any Account without the Agent's
written consent. If the Agent consents to the acceptance of any such
instrument, it shall be considered as evidence of the Account and not
payment thereof and such Loan Party will promptly deliver or cause to be
delivered such instrument to the Agent, endorsed by such Loan Party or the
relevant Subsidiary, as applicable, to the Agent in a manner satisfactory
in form and substance to the Agent. Regardless of the form of presentment,
demand or notice of protest with respect thereto, the applicable Loan Party
or Subsidiary shall remain liable thereon until such instrument is paid in
full.
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(d) Other than with respect to credits, chargebacks and discounts
issued in the ordinary course of business, each Loan Party shall notify the
Agent promptly of all disputes and claims in excess of $250,000 with any
Account Debtor, and agrees (and shall cause each of its Subsidiaries to
agree) to settle, contest, or adjust such dispute or claim at no expense to
the Agent or any Lender. No discount, credit or allowance shall be granted
by any Loan Party or any of its Subsidiaries to any such Account Debtor
without the Agent's prior written consent, except for discounts, credits
and allowances made or given in the ordinary course of such Loan Party's or
the relevant Subsidiary's, as applicable, business when no Event of Default
exists hereunder. Each Loan Party shall send (or cause to be sent to) the
Agent a copy of each credit memorandum in excess of $250,000 as soon as
issued and, if such Loan Party is a Borrower, such Loan Party shall
promptly report that credit on Borrowing Base Certificates submitted by it.
The Agent may, and at the direction of the Majority Lenders shall, at all
times when an Event of Default exists hereunder, settle or adjust disputes
and claims directly with Account Debtors for amounts and upon terms which
the Agent or the Majority Lenders, as applicable, shall consider advisable
and, in all cases, the Agent will credit the Borrower's Loan Account with
only the net amounts received by the Agent in payment of any such Loan
Party's or Subsidiary's, as applicable, Accounts.
6.8 Collection of Accounts; Payments.
(a) Subject to the following sentence, each Loan Party shall make
collection of all of its Accounts and other Collateral for the Agent.
Within ninety (90) days after the Closing Date, each Loan Party shall have
established a Payment Account and a related lock-box service for
collections of its Accounts at the Bank or another Clearing Bank acceptable
to the Agent and, in each case, subject to a Blocked Account Agreement and
other documentation acceptable to the Agent and shall have instructed each
Account Debtor to make all payments directly to such Payment Account or to
the address established for such lock-box service and shall provide
evidence to the Agent, satisfactory to the Agent, that such instructions
have been given. If, notwithstanding such instructions, a Loan Party
receives any proceeds of Accounts or if a Loan Party receives any payments
on account of any other Collateral or any other payments of any source, it
shall immediately (and not less often then daily) deliver such payments to
the Agent in their original form or deposit such payments into the
applicable Payment Account or to another deposit account from which funds
are transferred daily into a Payment Account. Until the occurrence of a
Combined Availability Threshold Event or an Event of Default, the Loan
Parties shall have sole dominion and control of the transfer of funds from
the Payment Account and such lock-box. All collections and other payments
received in any such lock-box or Payment Account or directly by a Loan
Party or the Agent and all funds in any Payment Account or other deposit
account to which such collections or payments are deposited shall, upon the
occurrence of a Combined Availability Threshold Event or an Event of
Default, be subject to the Agent's sole dominion and control and
withdrawals by the applicable Loan Party shall not be permitted until a
Cash Control Termination Event occurs. The Agent or the Agent's designee
may, at any time after the occurrence of a Combined Availability Threshold
Event or an Event of Default and until a Cash Control Termination Event
occurs, notify Account Debtors of a Loan Party that the Accounts of such
Loan Party have been assigned to the Agent and of the Agent's security
interest
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therein, and may collect them directly and charge the collection costs and
expenses to the Borrower's Loan Account as a Revolving Loan. Upon the
occurrence of a Combined Availability Threshold Event or an Event of
Default and until a Cash Control Termination Event occurs, each Loan Party,
at the Agent's request, shall execute and deliver to the Agent such
documents as the Agent shall require to grant the Agent access to any post
office lock-box in which collections of Accounts of such Loan Party are
received, and if any payments are received by any Loan Party, such Loan
Party shall receive all payments as the Agent's trustee, and shall
immediately deliver all payments in their original form duly endorsed in
blank into a Payment Account established for the account of such Loan
Party, subject to a Blocked Account Agreement. To the extent that the Agent
has dominion and control of any Payment Accounts under the DIP Loan
Agreement on the Closing Date, the Agent shall release such control and
dominion as long as Combined Availability Threshold Event or an Event of
Default does not exist as of the Closing Date.
(b) If sales of Inventory of a Loan Party are made or services are
rendered for cash, the applicable Loan Party shall immediately deliver to
the Agent or deposit into a Payment Account the cash which such Loan Party
receives.
(c) All payments, including immediately available funds received by
the Agent at a bank designated by it, received by the Agent on account of
Accounts of a Loan Party or as proceeds of other Collateral will be the
Agent's sole property for its benefit and the benefit of the Lenders and
will be credited to the Borrower's Loan Account (conditional upon final
collection).
(d) In the event one or more of the Borrower or Loan Parties repay all
of the Obligations upon the termination of this Agreement or upon
acceleration of the Obligations, other than through the Agent's receipt of
payments on account of the Accounts of any of the Loan Parties or proceeds
of the other Collateral, such payment will be credited (conditional upon
final collection) to the Borrower's Loan Account on the day of the Agent's
receipt of immediately available funds.
6.9 Inventory: Perpetual Inventory.
(a) Each Loan Party represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the Inventory
owned by such Loan Party and each of its Subsidiaries is and will be held
for sale or lease (and in the case of raw materials and work in process for
further processing into finished goods to be held for sale), or to be
furnished in connection with the rendition of services, in the ordinary
course of such Loan Party's or such Subsidiary's, as applicable, business
and is and will be fit for such purposes. Each Loan Party will keep (and
will cause each of its Subsidiaries to keep) its Inventory in good and
marketable condition consistent with past practice, at its own expense.
Each Loan Party and its Subsidiaries will not, without the prior consent of
the Agent, acquire or accept any Inventory on consignment or appraisal.
Each Loan Party agrees that all Inventory produced in the United States
will be produced in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations, and orders thereunder. Each
Loan Party will conduct (or cause to be
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conducted) a physical count of its Inventory at least once per Fiscal Year,
and after and during the continuation of an Event of Default, at such other
times as the Agent requests. Each Loan Party will at all times maintain
(and will cause each of its Subsidiaries at all times to maintain) a
perpetual inventory reporting system at all times. Each Loan Party will not
(and will cause its Subsidiaries not to), without the Agent's written
consent, sell any Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis
and no such Inventory sold on any such basis will be deemed to be Eligible
Inventory. Any inventory of others which is on the premises of any Loan
Party for processing, cutting, manufacturing, finishing or otherwise, shall
be segregated and shall not be reported or included on any Borrowing Base
Certificate as Inventory or Eligible Inventory of Borrower.
(b) At the Agent's request, after the occurrence and during the
continuance of an Event of Default, in connection with all Inventory of a
Loan Party financed by Letters of Credit, such Loan Party will instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding Inventory, Documents or Instruments of such Loan Party
in which the Agent holds a security interest to deliver them to the Agent
and/or subject to the Agent's order, and if they shall come into such Loan
Party's possession, to deliver them, upon request, to the Agent in their
original form. Each Loan Party shall also, at the Agent's request, after
the occurrence and during the continuance of an Event of Default, designate
the Agent as the consignee on all bills of lading and other negotiable and
non-negotiable documents of such Loan Party.
6.10 Equipment.
(a) Each Loan Party represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that the Equipment owned
by such Loan Party and each of its Subsidiaries is and will be used or held
for use in such Loan Party's or such Subsidiary's respective business, and
is and will be fit for such purposes. Each Loan Party shall (and shall
cause each of its Subsidiaries to) keep and maintain its Equipment in good
operating condition and repair (ordinary wear and tear excepted) and shall
make all necessary replacements thereof consistent with past practice.
(b) Each Loan Party shall promptly inform the Agent of any material
additions to or deletions from its Equipment. Such Loan Party shall not
(and shall cause each of its Subsidiaries not to) permit any of its
Equipment to become a fixture with respect to real property or to become an
accession with respect to other personal property with respect to which
real or personal property the Agent does not have a Lien.
(c) The Loan Parties shall not (and shall cause each of their
respective Subsidiaries not to), without the Agent's written consent, sell,
lease as a lessor, or otherwise dispose of any of the Equipment of a Loan
Party or any of its Subsidiaries except as permitted by Section 9.8.
Subject to any of the rights of the holder of any Debt secured by a
superior Lien on Equipment of the Loan Parties, except as provided in
clause (c) of Section 9.8, all net cash proceeds of each such sale shall,
subject to Permitted Liens (if any) thereon be remitted to a Payment
Account.
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6.11 Documents, Instruments, and Chattel Paper. Each Loan Party represents
and warrants to the Agent and the Lenders that (a) all Documents, Instruments,
and Chattel Paper of such Loan Party describing, evidencing, or constituting
Collateral, and all signatures and endorsements thereon, are and will be
complete, valid, and genuine, and (b) all goods evidenced by such Documents,
Instruments and Chattel Paper are and will be owned by such Loan Party or its
relevant Subsidiary, as applicable, free and clear of all Liens other than
Permitted Liens.
6.12 Right to Cure. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of a
Loan Party hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which a Loan Party fails to pay or do (or cause to be paid or
done), including, without limitation, payment of any judgment against a Loan
Party or any of its Subsidiaries, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord's or bailee's claim, and any
other Lien upon or with respect to any of the Collateral. All payments that the
Agent makes under this Section 6.12 and all out-of-pocket costs and expenses
that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Borrower's Loan Account as a Base Rate Loan.
Any payment made or other action taken by the Agent under this Section 6.12
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed thereafter as herein provided.
6.13 Power of Attorney. Each Loan Party hereby appoints the Agent and the
Agent's designee as such Loan Party's attorney, with power: (a) to endorse such
Loan Party's name on any checks, notes, acceptances, money orders, or other
forms of payment or security that come into the Agent's or any Lender's
possession; (b) so long as any Default or Event of Default has occurred and is
continuing, to sign such Loan Party's name on any invoice, ▇▇▇▇ of lading,
warehouse receipt or other negotiable or non-negotiable Document constituting
Collateral, on drafts against customers, on assignments of Accounts of such Loan
Party, on notices of assignment, financing statements and other public records
and to file any such financing statements by electronic means with or without a
signature as authorized or required by applicable law or filing procedure; (c)
so long as any Default or Event of Default has occurred and is continuing, to
ask, demand, collect, ▇▇▇ for, recover, compound, receive and give acquittance
and receipts for moneys, due or to become due under or with respect to any of
the Collateral; (d) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for
delivery of such Loan Party's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to such Loan Party; (e) to send
requests for verification of Accounts of such Loan Party to customers or Account
Debtors; (f) so long as any Default or Event of Default has occurred and is
continuing, to complete in such Loan Party's name or the Agent's name, any
order, sale or transaction, obtain the necessary Documents in connection
therewith, and collect the proceeds thereof, (g) to clear Inventory of such Loan
Party through customs in such Loan Party's name, the Agent's name or the name of
the Agent's designee, and to sign and deliver to customs officials powers of
attorney in such Loan Party's name for such purpose; and (h) to do all things
necessary to carry out this Agreement. Each Loan Party ratifies and approves all
acts of such attorney. None of the Lenders or the Agent nor their attorneys will
be liable for any acts or omissions or for any error of judgment or mistake of
fact or law, except for the willful misconduct of the Agent or such Lender. This
power, being coupled with an interest, is irrevocable until this Agreement has
been terminated and the Obligations have been fully satisfied.
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6.14 The Agent's and Lenders' Rights, Duties and Liabilities.
(a) Each Loan Party assumes all responsibility and liability arising
from or relating to the use, sale or other disposition of the Collateral.
The Obligations shall not be affected by any failure of the Agent or any
Lender to take any steps to perfect the Agent's Liens or to collect or
realize upon any of the Collateral, nor shall loss of or damage to any of
the Collateral release any Loan Party from any of the Obligations.
Following the occurrence and continuation of an Event of Default, the Agent
may (but shall not be required to), and at the direction of the Majority
Lenders shall, without notice to or consent from any of the Loan Parties,
▇▇▇ upon or otherwise collect, extend the time for payment of, modify or
amend the terms of, compromise or settle for cash, credit, or otherwise
upon any terms, grant other indulgences, extensions, renewals, compositions
or releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any
insurance applicable thereto, or any Person liable directly or indirectly
in connection with any of the foregoing, without discharging or otherwise
affecting the liability of any Loan Party for the Obligations or under this
Agreement or any other agreement now or hereafter existing between the
Agent and/or any Lender and any Loan Party.
(b) It is expressly agreed by each Loan Party that, anything herein to
the contrary notwithstanding, such Loan Party shall remain liable under
each of its leases, agreements, contracts and licenses (each a "Contract"
and collectively, the "Contracts") to observe and perform all the
conditions and obligations to be observed and performed by it thereunder.
Each Loan Party further agrees to enforce the terms and provisions of its
Contracts in accordance with their terms, and not to waive, amend or modify
any provision thereof in any manner other than in the ordinary course of
business of such Loan Party in accordance with past practices and for a
valid economic or other business reason benefitting such Loan Party
(provided that in no event may any waiver, amendment or modification be
made that could reasonably be expected to have a Material Adverse Effect).
At the request of the Agent, a Loan Party will deliver copies of each
material Contract to which it is a party and each material amendment or
modification thereof to the Agent promptly upon the execution and delivery
thereof. Neither the Agent nor any Lender shall have any obligation or
liability under any Contract by reason of or arising out of this Agreement
or the granting herein of a Lien thereon or the receipt by the Agent or any
Lender of any payment relating to any Contract pursuant hereto. Neither the
Agent nor any Lender shall be required or obligated in any manner to
perform or fulfill any of the obligations of a Loan Party under or pursuant
to any Contract, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the sufficiency
of any performance by any party under any Contract, or to present or file
any claims, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or to which
it may be entitled at any time or times.
(c) The Agent may at any time after an Event of Default shall have
occurred and be continuing, without prior notice to the applicable Loan
Party, notify Account Debtors, parties to the Contracts of such Loan Party
and obligors in respect of Instruments and Chattel Paper of such Loan
Party, that the Accounts of such Loan Party
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and the right, title and interest of such Loan Party in and under such
Contracts, Instruments and Chattel Paper have been assigned to the Agent,
and that payments shall be made directly to the Agent, for itself and the
benefit of the Lenders. Upon the request of the Agent, a Loan Party shall
so notify Account Debtors, parties to Contracts of such Loan Party and
obligors in respect of Instruments and Chattel Paper of such Loan Party.
(d) The Agent may at any time during the continuance of an Event of
Default in the Agent's own name or in the name of the applicable Loan Party
communicate with Account Debtors, parties to Contracts, obligors in respect
of Instruments and obligors in respect of Chattel Paper to verify with such
Persons, to the Agent's satisfaction, the existence, amount and terms of
any such Accounts, Contracts, Instruments or Chattel Paper. If a Default or
Event of Default shall have occurred and be continuing, each Loan Party, at
its own expense, shall cause the independent certified public accountants
then engaged by such Loan Party to prepare and deliver to the Agent and
each Lender at any time and from time to time promptly upon the Agent's
request the following reports with respect to such Loan Party: (i) a
reconciliation of all Accounts of such Loan Party; (ii) an aging of all
Accounts of such Loan Party; (iii) trial balances; and (iv) a test
verification of such Accounts of such Loan Party as the Agent may request.
Each Loan Party, at its own expense, shall deliver to the Agent the results
of each physical verification, if any, which such Loan Party may in its
discretion have made, or caused any other Person to have made on its
behalf, of all or any portion of its Inventory.
6.15 Patents, Trademarks and Copyrights.
(a) No Loan Party has any interest in, or title to, any material
patent or trademark except as set forth in Schedule 6.15 hereto.
(b) Each Loan Party shall notify the Agent immediately if it knows or
has reason to know that any application or registration relating to any
material patent or trademark (now or hereafter existing) may become
abandoned or dedicated, or of any adverse determination or development
(including the institution of, or any such determination or development in,
any proceeding in the United States Patent and Trademark Office or any
court) regarding such Loan Party's ownership of such patent or trademark,
its right to register the same, or to keep and maintain the same.
(c) Each Loan Party shall deliver to the Agent, together with each
delivery of financial statements pursuant to Sections 7.2(a) and (c), a
list of all patents, trademarks and copyrights for which an application for
registration has been filed with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
during the period covered in such financial statements.
(d) Each Loan Party shall take all commercially reasonable actions
requested by the Agent to maintain and pursue each filed application, to
obtain the relevant registration and to maintain the registration of each
of the material patents, trademarks and copyrights (now or hereafter
existing), including the filing of applications for renewal, affidavits of
use, affidavits of noncontestability and opposition and interference and
cancellation proceedings.
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(e) In the event that, in the reasonable opinion of the applicable
Loan Party, any of the material patent, trademark or copyright is infringed
upon, or misappropriated or diluted by a third party, the Authorized
Representative shall notify the Agent promptly after any Loan Party learns
thereof. Such Loan Party shall, unless it shall reasonably determine that
such patent, trademark or copyright is in no way material to the conduct of
its business or operations, promptly ▇▇▇ for infringement, misappropriation
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as the
Agent shall deem appropriate under the circumstances to protect such
patent, trademark or copyright.
6.16 Grant of License to Use Intellectual Property. For the purpose of
enabling the Agent to exercise rights and remedies hereunder (including in order
to take possession of, hold, preserve, process, assemble, prepare for sale,
market for sale, sell or otherwise dispose of Collateral) at such time as the
Agent shall be lawfully entitled to exercise such rights and remedies pursuant
to Section 11.2 and the Intercreditor Agreement, each Loan Party hereby grants
to the Agent, for the benefit of the Agent and Lenders, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to any Loan Party) to use, license or sublicense any Proprietary
Rights now owned or hereafter acquired by such Loan Party, and wherever the same
may be located, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.
ARTICLE 7
BOOKS AND RECORDS: FINANCIAL INFORMATION: NOTICES
7.1 Books and Records. Each Loan Party shall maintain (and shall cause each
of its Subsidiaries to maintain), at all times, correct and complete books,
records and accounts in which complete, correct and timely entries are made of
its transactions in all material respects in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). Each Loan Party shall (and shall cause each of its
Subsidiaries to), by means of appropriate entries, reflect in such accounts and
in all Financial Statements liabilities and reserves for all taxes and
provisions for depreciation and amortization of property and bad debts, all in
accordance with GAAP. Each Loan Party shall maintain (and shall cause each of
its Subsidiaries to maintain) at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts and
(b) the return, rejection, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory.
7.2 Financial and Other Information. Each Loan Party shall promptly furnish
to each Lender, all such financial information as the Agent or any Lender shall
reasonably request. Without limiting the foregoing, each Loan Party will furnish
to the Agent, in sufficient copies for distribution by the Agent to each Lender,
in such detail as the Agent or the Lenders shall request, the following:
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(a) As soon as available, but in any event not later than ninety (90)
days after the close of each Fiscal Year, a consolidated audited balance
sheet and a consolidated audited statement of operations, cash flow and of
stockholders' equity for Holdings and its consolidated Subsidiaries for
such Fiscal Year, and the accompanying notes thereto, setting forth in each
case in comparative form figures for the previous Fiscal Year, all in
reasonable detail, fairly presenting the financial position and the results
of operations of Holdings and its consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended and prepared in accordance with
GAAP. Such consolidated statements shall be examined in accordance with
generally accepted auditing standards by and, in the case of such
statements performed on a consolidated basis, accompanied by a report
thereon unqualified in any respect by independent certified public
accountants or chartered accountants selected by Holdings and reasonably
satisfactory to the Agent. Holdings, simultaneously with retaining such
independent public accountants to conduct such annual audit, shall send a
letter (in form acceptable to the Agent) to such accountants, with a copy
to the Agent and the Lenders, notifying such accountants that one of the
primary purposes for retaining such accountants' services and having
audited financial statements prepared by them is for use by the Agent and
the Lenders. Each of the Loan Parties hereby authorizes the Agent to
communicate directly with such Loan Party's certified public accountants or
chartered accountants and discuss directly with such accountants the
finances and affairs of such Loan Party and its consolidated Subsidiaries
and by this provision authorizes those accountants to disclose to the Agent
any and all financial statements of such Loan Party and its consolidated
Subsidiaries and other supporting financial documents and schedules
relating to such Loan Party and its consolidated Subsidiaries; provided,
however, that (i) the Agent shall notify such Loan Party of the Agent's
intention to discuss with such Loan Party's certified public or chartered
accountants the finances and affairs of such Loan Party and (ii) an officer
of such Loan Party shall have the right to be present during any such
discussion between its certified public or chartered accountants and the
Agent. Borrower shall certify by a certificate signed by its chief
financial officer that all such statements present fairly in all material
respects the financial position of Holdings and its consolidated
Subsidiaries as at the date thereof and the results of operation of
Holdings and its consolidated Subsidiaries for the Fiscal Year then ended,
in conformity with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to this Section 7.2(a).
(b) As soon as available, but in any event not later than thirty (30)
days after the end of each fiscal month (or, in the case of any fiscal
month which is the last fiscal month of any fiscal quarter, not later than
forty-five (45) days after the end of such fiscal month), (w) consolidated
unaudited management prepared balance sheets of Borrower and its
consolidated Subsidiaries as at the end of such fiscal month, and (x)
consolidated unaudited management prepared statements of income and cash
flow for Borrower and its consolidated Subsidiaries for such fiscal month
and for the period from the beginning of the Fiscal Year to the end of such
fiscal month, all in reasonable detail, fairly presenting the financial
position and results of operations of Borrower and its consolidated
Subsidiaries as at the date thereof and for such periods, and, in each
case, in comparable form, figures for the corresponding period in the prior
Fiscal Year and in the Loan Parties' budget. The Borrower shall certify by
a certificate signed by its chief financial officer that all such
statements present fairly the financial position and results of
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operations of Borrower and its consolidated Subsidiaries as at the dates
thereof and the results of operation of Borrower and its consolidated
Subsidiaries for the periods then ended.
(c) As soon as available, but in any event not later than forty-five
(45) days after the close of each fiscal quarter other than the fourth
quarter of a Fiscal Year, (w) consolidated unaudited balance sheets of
Holdings and its consolidated Subsidiaries as at the end of such quarter,
and (x) consolidated unaudited statements of income and statements of cash
flow for Holdings and its consolidated Subsidiaries for such quarter and
for the period from the beginning of the Fiscal Year to the end of such
quarter, all in reasonable detail, fairly presenting the financial position
and results of operations of Holdings and its consolidated Subsidiaries as
at the date thereof and for such periods, and, in each case, in comparable
form, figures for the corresponding period in the prior Fiscal Year and in
the Loan Parties' budget, and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). The Borrower shall certify by a certificate
signed by its chief financial officer that all such statements present
fairly, subject to normal year-end adjustments, the financial position of
Holdings and its consolidated Subsidiaries as at the dates thereof and the
results of operations of Holdings and its consolidated Subsidiaries for the
periods then ended in conformity with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to Section
7.2(a).
(d) With each of the audited Financial Statements delivered pursuant
to Section 7.2(a), a certificate of the independent certified public
accountants that examined such statement to the effect that they have
reviewed and are familiar with this Agreement and that, in examining such
Financial Statements, they did not become aware of any fact or condition
which then constituted a Default or Event of Default with respect to a
financial covenant, except for those, if any, described in reasonable
detail in such certificate.
(e) With each of the annual audited Financial Statements delivered
pursuant to Section 7.2(a), and within forty-five (45) days after the end
of each fiscal quarter, a certificate of the chief financial officer of the
Borrower setting forth in reasonable detail the calculations required to
establish that the Loan Parties were in compliance with any financial
covenants set forth in Article IX during the period covered in such
Financial Statements and as at the end thereof. Within thirty (30) days
after the end of each month, a certificate of the chief financial officer
of the Borrower (i) stating that, except as explained in reasonable detail
in such certificate, (A) all of the representations and warranties of the
Loan Parties contained in this Agreement and the other Loan Documents are
correct and complete in all material respects as at the date of such
certificate as if made at such time; (B) the Loan Parties are, at the date
of such certificate, in compliance in all material respects with all of
their respective covenants and agreements in this Agreement and the other
Loan Documents; and (C) no Default or Event of Default then exists or
existed during the period covered by such Financial Statements for such
month; and (ii) attaching thereto the monthly management performance report
for such month (which report shall be in a form substantially identical to
the form of monthly management performance report delivered to the Agent
prior to
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the date hereof). If such certificate discloses that a representation or
warranty is not correct or complete, or that a covenant has not been
complied with, or that a Default or Event of Default existed or exists,
such certificate shall set forth what action the Loan Parties have taken or
propose to take with respect thereto.
(f) (i) no sooner than 60 days before, and not later than 60 days
after, the beginning of each Fiscal Year, annual budgets (to include a
forecasted consolidated and consolidating balance sheet, statement of
income and statement of cash flow) for Holdings and its Subsidiaries (x) as
at the end of and for each month of such Fiscal Year and (y) as at the end
of and for each Fiscal Year thereafter through and including the Fiscal
Year in which the Stated Termination Date will occur and (ii) an updated
cash flow forecast in form and substance satisfactory to the Agent, to be
delivered with each of the financial statements required pursuant to
Sections 7.2(a) and (c).
(g) Promptly upon the filing thereof, copies of all reports, if any,
to or other documents filed by Holdings or any of its Subsidiaries with the
Securities and Exchange Commission under the Exchange Act.
(h) As soon as available, but in any event not later than 15 days
after any Loan Party's or any of its Subsidiaries' receipt thereof, a copy
of all management reports and management letters prepared for any Loan
Party or any of its Subsidiaries by any independent certified public or
chartered accountants of any Loan Party or any of its Subsidiaries.
(i) Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which any Loan Party or any
of its Subsidiaries makes available to its public shareholders.
(j) If requested by the Agent, promptly after filing with the IRS, a
copy of each federal income tax return filed by Holdings or by any of its
Subsidiaries.
(k) Promptly (but in any event not more than 2 Business Days) after
the consummation of an asset sale permitted by Sections 9.8(b), a
certificate of a Responsible Officer of the Borrower stating the amount of
the net cash proceeds received by the Borrower from such asset sale and the
portion of such net cash proceeds received by the Borrower with respect to
Inventory.
(l) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of any Loan Party or any Subsidiary thereof.
7.3 Notices to the Lenders. Each Loan Party shall notify the Agent, in
writing, of the following matters at the following times:
(a) Immediately after becoming aware of any Default, Event of Default,
or Combined Availability Threshold Event and, in the case of any Default or
Event of Default, such Loan Party shall specify in such written notice that
such written notice is a notice of a Default or an Event of Default.
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(b) Promptly (but in any event not more than 2 Business Days) after
becoming aware of the assertion by the holder of any material Debt of such
Loan Party or any of its Subsidiaries that a default exists with respect
thereto or that such Loan Party or Subsidiary is not in compliance with the
terms thereof, or the threat or commencement by such holder of any
enforcement action because of such asserted default or non-compliance.
(c) Promptly (but in any event not more than 2 Business Days) after
becoming aware of any event or circumstance which could reasonably be
expected to have a Material Adverse Effect.
(d) Promptly (but in any event not more than 2 Business Days) after
becoming aware of any pending or threatened action, suit, proceeding, or
counterclaim by any Person, or any pending or threatened investigation by a
Governmental Authority, which could reasonably be expected to have a
Material Adverse Effect.
(e) Promptly (but in any event not more than 2 Business Days) after
becoming aware of any pending or threatened strike, work stoppage, unfair
labor practice claim, or other labor dispute affecting any Loan Party or
any of its Subsidiaries in a manner which could reasonably be expected to
have a Material Adverse Effect.
(f) Promptly (but in any event not more than 2 Business Days) after
becoming aware of any violation of any law, statute, regulation, or
ordinance of a Governmental Authority affecting any Loan Party or any of
its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
(g) Promptly (but in any event not more than 2 Business Days) after
receipt of any notice of any violation by any Loan Party or any of its
Subsidiaries of any Environmental Law which could reasonably be expected to
have a Material Adverse Effect or that any Governmental Authority has
asserted that any Loan Party or any of its Subsidiaries is not in
compliance with any Environmental Law which could reasonably be expected to
have a Material Adverse Effect or is investigating any Loan Party's or any
of its Subsidiaries' compliance therewith,
(h) Promptly (but in any event not more than two Business Days) after
receipt of any written notice that any Loan Party or any of its
Subsidiaries is or may be liable to any Person as a result of the Release
or threatened Release of any Contaminant or that such Loan Party or
Subsidiary is subject to investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to the Release
or threatened Release of any Contaminant which, in either case, is
reasonably likely to give rise to liability in excess of $1,000,000.
(i) Immediately after receipt of any written notice of the imposition
of any Environmental Lien against any property of any Loan Party or any of
its Subsidiaries.
(j) Any organization change in any Loan Party's or any of its
Subsidiaries' name as it appears in its state or other jurisdiction of
incorporation or other organization, state or other jurisdiction of
incorporation or organization, type of entity, organizational
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identification number, locations of Collateral, or form of organization,
trade names or styles under which such Loan Party or any of its
Subsidiaries will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, in each case at
least thirty (30) days prior thereto.
(k) Within ten (10) Business Days after any Loan Party, any of its
Subsidiaries or any ERISA Affiliate knows or has reason to know, that an
ERISA Event that would reasonably be expected to result in a Material
Adverse Effect has occurred, and, when known, any action taken or
threatened by the IRS, the DOL or the PBGC or other Governmental Authority
with respect thereto.
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the DOL,
the IRS, or other Governmental Authority, as applicable, copies of the
following: (i) each annual report (form 5500 series), including Schedule B
thereto, filed with the PBGC, the DOL, the IRS, or other Governmental
Authority, with respect to each Plan, (ii) a copy of each funding waiver
request filed with the PBGC, the DOL, the IRS, or other Governmental
Authority, with respect to any Plan and all communications received by any
Loan Party, any of its Subsidiaries, or any ERISA Affiliate of any Loan
Party from the PBGC, the DOL, the IRS, or other Governmental Authority,
with respect to such request, and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL, the IRS, or other Governmental
Authority, with respect to each Plan by any Loan Party, any of its
Subsidiaries or any ERISA Affiliate of any Loan Party.
(m) Upon request and to the extent available, copies of each actuarial
report for any Plan or Multiemployer Plan and annual report for any
Multiemployer Plan; and within three (3) Business Days after receipt
thereof by Borrower or any of its Subsidiaries or ERISA Affiliates, copies
of the following: (i) any notices of the PBGC's or other authority's
intention to terminate a Plan as to have a trustee appointed to administer
such Plan, (ii) any unfavorable determination letter from the IRS regarding
the qualification of a Plan under Section 401(a) of the Code (and, upon
request, any favorable IRS determination letter), or (iii) any notice from
a Multiemployer Plan regarding the imposition of withdrawal liability.
(n) Within three (3) Business Days after the occurrence thereof, any
failure by any Loan Party, any of its Subsidiaries or any ERISA Affiliate
to make one or more required installments or any other required payments
under Section 412 of the Code or the applicable laws of any other
jurisdiction on or before the due date for such installment or payment,
which, in the aggregate, equal or exceed $1,000,000.
(o) Within three (3) Business Days after any Loan Party or any of its
Subsidiaries or any ERISA Affiliates knows or has reason to know that any
of the following events has or will occur: (i) a Multiemployer Plan has
been or will be terminated; (ii) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan; (iii) the
PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan; or (iv)
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with respect to any Plan of a Canadian Guarantor, any Lien arises with
respect to such Plan (save for contribution amounts not yet due).
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that any Loan Party, its
Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to take
with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Agent and the Lenders that
except as hereafter disclosed to and accepted by the Agent:
8.1 Authorization. Each of such Loan Party and its Subsidiaries has the
corporate power and authority to execute, deliver and perform this Agreement and
the other Loan Documents to which it is a party, to incur the Obligations, and
to grant to the Agent Liens upon and security interests in the Collateral owned
by it. Each of such Loan Party and its Subsidiaries has taken all necessary
corporate action (including, without limitation, obtaining approval of its
stockholders if necessary) to authorize its execution, delivery, and performance
of this Agreement and the other Loan Documents to which it is a party. No
consent, approval, or authorization of, or declaration or filing with, any
Governmental Authority, and no consent of any other Person, is required in
connection with such Loan Party's or any of its Subsidiary's execution, delivery
and performance of this Agreement and the other Loan Documents to which it is a
party. This Agreement and the other Loan Documents have been duly executed and
delivered by each of the Loan Parties and its Subsidiaries party thereto, and,
constitute the legal, valid and binding obligations of each of the Loan Parties
and its Subsidiaries party thereto, enforceable against each such Loan Party and
its Subsidiaries in accordance with their respective terms without defense,
set-off or counterclaim, except as such enforceability may be affected by
applicable bankruptcy or insolvency law or the unavailability of equitable
remedies. Such Loan Party's and Subsidiary's execution, delivery, and
performance of this Agreement and the other Loan Documents to which it is a
party do not and will not conflict with, or constitute a violation or breach of,
or constitute a default under, or, except for Liens created under the Loan
Documents or Permitted Liens, result in the creation or imposition of any Lien
upon the property of such Loan Party or any of its Subsidiaries by reason of the
terms of (a) any contract, mortgage, Lien, lease, agreement, indenture, or
instrument to which such Loan Party or any of its Subsidiaries is a party or
which is binding upon it, (b) any Requirement of Law applicable to such Loan
Party or any of its Subsidiaries, or (c) the certificate or articles of
incorporation or by-laws, amendment, continuation, amalgamation or other
organizational documents of such Loan Party or any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Agent, for the ratable benefit of the Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens other than Permitted Liens
under (x) clauses (a), (d) and (k) of the definition of Permitted Liens, (y)
clause (g) of the definition of Permitted Liens to the extent specifically
identified on Schedule 9.16 as senior in
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priority to the Agent's Liens and (z) clause (i) of the definition of Permitted
Liens but only with respect to Term Lender Priority Collateral (as defined in
the Intercreditor Agreement), securing all the Obligations, and enforceable
against such Loan Party and its Subsidiaries, as applicable, and all third
parties. Except as set forth in clauses (x), (y) or (z), above, no Liens
encumber any Collateral consisting of Inventory, Accounts, or the proceeds
thereof.
8.3 Organization and Qualification. Each of such Loan Party and its
Subsidiaries (a) is duly organized incorporated or amalgamated, as the case may
be, and validly existing in good standing under the laws of the jurisdiction of
its organization, incorporation or amalgamation, as the case may be, (b) is
qualified to do business as a foreign corporation and is in good standing in the
jurisdictions in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed, except where the failure to
so qualify or be licensed is not reasonably likely to have a Material Adverse
Effect and (c) has all requisite power and authority to conduct its business and
to own its property.
8.4 Corporate Name: Prior Transactions. Except as set forth on Schedule 8.4
neither such Loan Party nor any of its Subsidiaries has, during the past five
(5) years, been known by or used any other corporate or fictitious name, or been
a party to any merger, consolidation or amalgamation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a true and correct list of
the name and relationship to Holdings of each and all of Holdings's Subsidiaries
and other Affiliates.
8.6 Financial Statements and Projections.
(a) The Borrower has delivered to the Agent and the Lenders the
audited consolidated balance sheet and related consolidated statements of
income, cash flows, and changes in stockholders equity for the Borrower and
its consolidated Subsidiaries as of January 1, 2005, and for the Fiscal
Year then ended, accompanied by the report thereon by the Borrower's
independent certified public accountants. The Borrower has also delivered
to the Agent and the Lenders the unaudited consolidated and consolidating
balance sheet and related statements of income and cash flows for the
Borrower and its consolidated Subsidiaries for the fiscal quarter of the
Borrower ending April 2, 2005. All such financial statements have been
prepared in accordance with GAAP and present accurately and fairly in all
material respects the financial position of the Borrower and its
consolidated Subsidiaries as at the dates thereof and their results of
operations for the periods then ended in conformity with GAAP.
(b) The Latest Projections when submitted to the Lenders as required
herein represent Borrower's best estimates of the future financial
performance of Holdings and its consolidated Subsidiaries for the periods
set forth therein on the date when submitted. The Latest Projections have
been prepared on the basis of the assumptions set forth therein, which
Borrower believes are fair and reasonable in light of current and
reasonably foreseeable business conditions at the time such Latest
Projections are submitted to the Lenders.
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8.7 Capitalization. On the Closing Date, the capitalization of each of the
Loan Parties and its Subsidiaries is as shown on Schedule 8.7.
8.8 Debt. On the Closing Date, after giving effect to the making of the
Revolving Loans to be made on the Closing Date, the Loan Parties and their
Subsidiaries have no Debt, except (a) the Obligations, (b) the Term Debt, and
(c) Debt described on Schedule 8.8.
8.9 Distributions. Since December 31, 2004, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of Holdings or any of its Subsidiaries.
8.10 Title to Property. Each Loan Party and each of its Subsidiaries has
good and marketable title in fee simple to its real property, if any, listed in
Schedule 8.10 hereto as being owned by such Loan Party or Subsidiary, and each
of such Loan Party and Subsidiary has good title to all of its other property
(including, without limitation, the assets reflected on the January 1, 2005
Financial Statements delivered to the Agent and the Lenders, in each case,
except as disposed of in the ordinary course of business since the date thereof
and property subject to capital leases), free of all Liens except Permitted
Liens.
8.11 Real Estate: Leases. Schedule 8.11 sets forth a correct and complete
list, as of the Closing Date, of all leases and subleases of real property by
such Loan Party or any of its Subsidiaries as lessee or sublessee, and all
leases and subleases of real property by such Loan Party or Subsidiary, as
applicable, as lessor, lessee, sublessor or sublessee. Each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full
force and effect, and no default by such Loan Party or Subsidiary, as
applicable, or, to the knowledge of such Loan Party, any other party to any such
lease or sublease exists, except for any lease or sublease where the lack of
validity and enforceability thereof or of any default thereunder is not
reasonably likely to have a Material Adverse Effect. Each Loan Party and each of
its Subsidiaries have good and marketable title in fee simple to the Real Estate
identified on Schedule 8.10 as owned by such Loan Party or Subsidiary, or valid
leasehold interests in all Real Estate designated therein as "leased" by such
Loan Party or Subsidiary and such Loan Party or Subsidiary has good,
indefeasible, and merchantable title to all of its other property reflected on
the January 1, 2005 Financial Statements delivered to the Agent and the Lenders,
except as disposed of in the ordinary course of business since the date thereof,
free of all Liens except Permitted Liens.
8.12 Proprietary Rights. Schedule 8.12 sets forth a correct and complete
list of all of such Loan Party's and each of its Subsidiaries' material
Proprietary Rights (other than copyrights) as of the Closing Date. None of the
material Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 8.12. To the best of such Loan
Party's knowledge, none of the material Proprietary Rights infringes on or
conflicts with any other Person's property, and no other Person's property
infringes on or conflicts with the material Proprietary Rights. Such Loan Party
and each of its Subsidiaries has all Proprietary Rights necessary to the conduct
of such Loan Party's and its Subsidiaries' respective businesses.
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8.13 Trade Names. All trade names or styles under which such Loan Party or
any of its Subsidiaries will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule
8.13.
8.14 Litigation. Except as set forth on Schedule 8.14, there is no pending,
or to the best of such Loan Party's knowledge threatened, action, suit,
proceeding, or counterclaim by any Person, or investigation by any Governmental
Authority, or any basis for any of the foregoing, which could reasonably be
expected to have a Material Adverse Effect.
8.15 Restrictive Agreements. None of such Loan Party nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charter
or other corporate restriction, which affects its ability to execute, deliver,
and perform the Loan Documents and repay the Obligations or which materially and
adversely affects or, insofar as such Loan Party can reasonably foresee, could
reasonably be expected to materially and adversely affect, the property,
business, operations, or condition (financial or otherwise) of such Loan Party
or Subsidiary, or would in any respect have a Material Adverse Effect.
8.16 Labor Disputes. Except as set forth on Schedule 8.16, (a) there is no
collective bargaining agreement or other labor contract covering employees of
such Loan Party or any of its Subsidiaries, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of this
Agreement, (c) to the best of such Loan Party's knowledge, no union or other
labor organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of such Loan Party or any of its Subsidiaries or
for any similar purpose, and (d) there is no pending or (to the best of such
Loan Party's knowledge) threatened, strike, work stoppage, material unfair labor
practice claim, or other material labor dispute against or affecting such Loan
Party or any of its Subsidiaries or its employees.
8.17 Environmental Laws. Except as otherwise disclosed on Schedule 8.17:
(a) Such Loan Party and its Subsidiaries are in compliance in all
material respects with all Environmental Laws and neither such Loan Party
nor any of its Subsidiaries nor any of its presently owned real property or
presently conducted operations, nor to the best of such Loan Party's
knowledge, its previously owned real property or prior operations, is
subject to any enforcement order from or liability agreement with any
Governmental Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or remedial
action arising from the Release or threatened Release of a Contaminant.
(b) Such Loan Party and each of its Subsidiaries have obtained all
permits necessary for their respective current operations under
Environmental Laws, and all such permits are in good standing and such Loan
Party and each of its Subsidiaries are in compliance with all terms and
conditions of such permits.
(c) Neither such Loan Party nor any of its Subsidiaries, nor, to the
best of such Loan Party's knowledge, any of their respective predecessors
in interest, has in violation of applicable law stored, treated or disposed
of any hazardous waste.
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(d) Neither such Loan Party nor any of its Subsidiaries have received
any summons, complaint, order or similar written notice indicating that
they are not currently in compliance with, or that any Governmental
Authority is investigating their compliance with, any Environmental Laws or
that it is or may be liable to any other Person as a result of a Release or
threatened Release of a Contaminant.
(e) None of the present or, to such Loan Party's knowledge, past
operations of such Loan Party or any of its Subsidiaries is the subject of
any investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of
a Contaminant.
(f) There is not now, nor to the best of such Loan Party's knowledge
has there ever been, (i) on or in any Real Estate owned by any Loan Party
or (ii) on or in any of the Real Estate leased by any Loan Party, to the
extent caused by such Loan Party or any of its Subsidiaries or to the
extent the remediation costs incurred or to be incurred by the Loan Parties
or any of their Subsidiaries in connection therewith exceed or could
reasonably be expected to exceed $1,000,000 in the aggregate:
(i) any underground storage tanks or surface impoundments,
(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment.
(g) Neither such Loan Party nor any of its Subsidiaries has filed any
notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted Release or discharge of a Contaminant into the
environment that has not been cured to the satisfaction of the relevant
Governmental Authority.
(h) Neither such Loan Party nor any of its Subsidiaries has entered
into any negotiations or settlement agreements with any Person (including,
without limitation, the prior owner of their respective property) imposing
material obligations or liabilities on such Loan Party or any of its
Subsidiaries with respect to any remedial action in response to the Release
of a Contaminant or environmentally related claim.
(i) No Environmental Lien has attached to any owned Real Estate of any
of the Loan Parties or, to the best of such Loan Party's knowledge, any
leased Real Estate of any of the Loan Parties.
8.18 No Violation of Law. Except as set forth on Schedule 8.18, neither
such Loan Party nor any of its Subsidiaries is in violation of any law, statute,
regulation, ordinance, judgment, order, or decree applicable to it, which
violation could reasonably be expected to have a Material Adverse Effect.
8.19 No Default. Neither such Loan Party nor any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to
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which such Loan Party or any its Subsidiaries is a party or by which it is
bound, which default could reasonably be expected to have a Material Adverse
Effect.
8.20 ERISA Compliance. Except as specifically disclosed in Schedule 8.20:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and other federal or state law.
(b) Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the
knowledge of such Loan Party, nothing has occurred which would reasonably
be expected to cause the loss of such qualification.
(c) Such Loan Party, each of its Subsidiaries and each ERISA Affiliate
has made all required material contributions ("material contributions"
meaning for the purposes hereof, all required contributions in excess of
$1,000,000) to any Pension Plan subject to Section 412 of the Code and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any
Pension Plan.
(d) No Plan is a Multiemployer Plan as of the Closing Date and no Plan
shall be a Multiemployer Plan after the Closing Date.
(e) There are no pending or, to the knowledge of such Loan Party,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably
be expected to result in a Material Adverse Effect.
(f) There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably be expected to result in a Material Adverse Effect.
(g) (i) No ERISA Event has occurred or is reasonably expected to occur
which would result in a Material Adverse Effect; (ii) no Pension Plan has
any Unfunded Pension Liability in excess of $25,000,000; and (iii) to the
knowledge of such Loan Party, neither such Loan Party, any of its
Subsidiaries, nor any ERISA Affiliate has engaged in a transaction that
could reasonably be expected to be subject to Section 4069 or 4212(c) of
ERISA.
8.21 Taxes. Such Loan Party and its Subsidiaries has filed all federal,
state, foreign, provincial and other tax returns and reports required to be
filed, and has paid all federal and other taxes, assessments, fees and other
governmental charges levied or imposed upon it or its properties, income or
assets otherwise due and payable, except for Permitted Liens described in
clauses (a) and (k) of the definition thereof, or except, but only with respect
to the Excluded Subsidiaries of the Borrower, as could not reasonably be
expected to have a Material Adverse Effect.
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8.22 Regulated Entities. None of such Loan Party, any of its Subsidiaries
or any Person controlling such Loan Party, or any Subsidiary, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. None of such
Loan Party nor any of its Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or law, or any other federal or
state statute or regulation limiting its ability to incur indebtedness.
8.23 Use of Proceeds: Margin Regulations. The proceeds of the Loans are to
be used solely for working capital purposes. Neither such Loan Party nor any of
its Subsidiaries is engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.
8.24 Copyrights, Patents, Trademarks and Licenses, etc. To the best
knowledge of such Loan Party, such Loan Party and each of its Subsidiaries owns
or is licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, licenses, rights
of way, authorizations and other rights that are reasonably necessary for the
operation of its businesses, without conflict with the Proprietary Rights of any
other Person. To the best knowledge of such Loan Party, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now intended to be employed, by such Loan Party or any
Subsidiary infringes upon any material Proprietary Rights held by any other
Person. No claim or litigation regarding any of the foregoing is pending or, to
the knowledge of such Loan Party, threatened, and, to the knowledge of such Loan
Party, no patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
8.25 No Material Adverse Change. Except as set forth on Schedule 8.25, no
Material Adverse Effect has occurred since December 31, 2004.
8.26 Full Disclosure. None of the representations or warranties made by
such Loan Party or any of its Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
information or statements contained in any exhibit, report, statement,
certificate or other writing furnished by or on behalf of such Loan Party or any
of its Subsidiaries or otherwise made available by or on behalf of such Loan
Party or any of its Subsidiaries to the Agent or any Lender in connection with
the Loan Documents (including the offering and disclosure materials delivered by
or on behalf of such Loan Party or any of its Subsidiaries to the Lenders prior
to the Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
information or statements made therein, in light of the circumstances under
which they are made, not misleading in any material respect as of the time when
made or delivered.
8.27 Material Agreements. Schedule 8.27 hereto sets forth all material
agreements and contracts to which such Loan Party or any of its Subsidiaries is
a party or is bound as of the Closing Date.
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8.28 Bank Accounts. Schedule 8.28 contains a complete and accurate list of
all material bank accounts maintained by Borrower or any of its Subsidiaries
with any bank or other financial institution as of the Closing Date.
8.29 Commercial Tort Claims. As of the Closing Date, no Loan Party has any
commercial tort claim arising from any Collateral.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to the Agent and each Lender that, so long as any
of the Obligations remain outstanding or this Agreement is in effect:
9.1 Taxes and Other Obligations. Such Loan Party shall, and shall cause
each of its Subsidiaries to, (a) file when due all foreign, federal, provincial,
state and other tax returns and other reports which it is required to file; (b)
pay, or provide for the payment, when due, of all taxes, fees, assessments and
other governmental charges against it or upon its property, income and
franchises, make all required withholding and other tax deposits, and establish
adequate reserves for the payment of all such items, and provide to the Agent
and the Lenders, upon request, satisfactory evidence of its timely compliance
with the foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors and other
like Persons, and all other indebtedness owed by it and perform and discharge in
a timely manner all other obligations undertaken by it (in each instance under
this clause (c); provided, however, so long as the Authorized Representative has
notified the Agent in writing, neither such Loan Party nor any of its
Subsidiaries need pay any tax, fee, assessment or governmental charge that (i)
it is contesting in good faith by appropriate proceedings diligently pursued,
(ii) as to which such Loan Party or Subsidiary, as the case may be, has
established proper reserves for as provided in GAAP, and (iii) no Lien (other
than a Permitted Lien) results from such non-payment.
9.2 Legal Existence and Good Standing. Such Loan Party shall, and shall
cause each of its Subsidiaries to, maintain its legal existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
9.3 Compliance with Law and Agreements: Maintenance of Licenses. Except as
set forth on Schedule 9.3, such Loan Party shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act and all Environmental Laws).
Such Loan Party shall, and shall cause each of its Subsidiaries to, obtain and
maintain all material licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date. Neither such Loan Party nor any of its
Subsidiaries shall modify, amend or alter its certificate or article of
incorporation or other organizational documents other than in a manner which
does not adversely affect the rights of the Lenders or the Agent.
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9.4 Maintenance of Property; Inspection of Property.
(a) Such Loan Party shall, and shall cause each of its Subsidiaries
to, maintain all of its property necessary and useful in the conduct of its
business, in good operating condition and repair, ordinary wear and tear
excepted unless such Loan Party or Subsidiary, as the case may be,
determines in good faith that the continued maintenance of any of its
properties is no longer economically desirable.
(b) Such Loan Party shall permit representatives and independent
contractors of the Agent (at the expense of such Loan Party not to exceed
one (1) time in any twelve-month period unless a Combined Availability
Threshold Event has occurred and is continuing, in which case Agent may
perform such inspection at the expense of such Loan Party up to three (3)
times in such twelve-month period; provided, however that if such Combined
Availability Threshold Event is no longer continuing at the expiration of
such twelve-month period, such Loan Party shall be responsible to pay the
expense of any inspection not to exceed one (1) time in the next succeeding
twelve-month period unless a Combined Availability Threshold Event recurs)
to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts
therefrom and to discuss its affairs, finances and accounts with its
directors, officers and independent public accountants (at which such
discussions such Loan Party shall have the right to be present) at such
reasonable times during normal business hours and as soon as may be
reasonably desired, upon reasonable advance notice to such Loan Party;
provided, however, when an Event of Default exists, the Agent or any Lender
may do any of the foregoing at the expense of such Loan Party at any
reasonable time without advance notice, except that such Loan Party shall
have the right to be present at any discussions with its independent public
accountants.
9.5 Insurance.
(a) Such Loan Party shall, and shall cause each of its Subsidiaries
to, maintain with financially sound and reputable insurers having a rating
of at least A+ or better by Best Rating Guide, the insurance coverage
maintained by such Loan Party and its Subsidiaries on the Closing Date and
such additional coverage as the Agent or the Majority Lenders may
reasonably request from time to time. Without limiting the foregoing, upon
the Agent's or the Majority Lenders' request, such Loan Party or
Subsidiary, as appropriate, shall maintain flood insurance for its
Inventory which is, at any time, located in a Special Flood Hazard Area so
identified by the Director of the Federal Emergency Management Agency.
(b) Such Loan Party shall, and shall cause each of its Subsidiaries
to, cause the Agent, for the ratable benefit of the Agent and the Lenders,
to be named in each such policy as secured party and a loss payee or
additional insured, in a manner reasonably acceptable to the Agent. Each
policy of insurance shall contain a clause or endorsement requiring the
insurer to give not less than (x) 10 days' prior written notice to the
Agent in the event of cancellation of the policy for nonpayment of premium
and (y) 30 days' prior written notice to the Agent in the event of
cancellation of the policy for any other reason and a clause or endorsement
stating that the interest of the Agent shall not be invalidated
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by any act or neglect of any Loan Party, any of its Subsidiaries or the
owner of any property, by any foreclosure or other proceedings or notice of
sale relating to such property nor by any change in title or ownership of
such property or by the occupation of the locations for purposes more
hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by such Loan Party or Subsidiary, as appropriate,
when due, and certificates of insurance and photocopies of the policies
shall be delivered to the Agent, in each case in sufficient quantity for
distribution by the Agent to each of the Lenders. If such Loan Party or
Subsidiary, as appropriate, fails to procure such insurance or to pay the
premiums therefor when due, the Agent may, and at the direction of the
Majority Lenders shall, do so from the proceeds of Revolving Loans.
(c) Such Loan Party shall, and shall cause each of its Subsidiaries
to, promptly notify the Agent and the Lenders of any loss, damage, or
destruction to any material portion of the Collateral, whether or not
covered by insurance. The Agent is hereby authorized to collect all
insurance and condemnation proceeds in respect of Collateral directly
(excluding, so long as no Default or Event of Default has occurred and is
continuing, insurance and condemnation proceeds in an aggregate amount not
to exceed $1,000,000 with respect to each incident of loss, damage or
destruction of Collateral), and to apply them, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, ratably, to the reduction of the
Obligations in the order provided for in Section 4.5.
9.6 Environmental Laws. Such Loan Party shall, and shall cause each of its
Subsidiaries to, conduct its business in material compliance with all
Environmental Laws applicable to it, including, without limitation, those
relating to the generation, handling, use, storage, and disposal of any
Contaminant. Such Loan Party shall, and shall cause each of its Subsidiaries to,
take prompt and appropriate action to respond to any material non-compliance
with Environmental Laws and shall regularly report to the Agent on such
response. Such Loan Party shall provide such information and certifications
which the Agent may reasonably request from time to time to evidence compliance
with this Section.
9.7 Compliance with ERISA. Such Loan Party shall, and shall cause each of
its Subsidiaries and ERISA Affiliates to: (a) maintain each Plan in compliance
in all material respects with the applicable provisions of ERISA, the Code, and
other federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) use its best
reasonable efforts not to engage in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA which could reasonably be expected to have a
Material Adverse Effect; and (e) with respect to any Plan of a Canadian
Guarantor, not permit any Lien to arise or exist in connection with such Plan
(save for contributions not yet due).
9.8 Mergers, Consolidations or Sales. Such Loan Party shall not, and shall
not suffer or permit any of its Subsidiaries to, enter into any transaction of
merger, amalgamation, reorganization, or consolidation, or transfer, sell,
assign, lease, or otherwise dispose of all or any part of its property, or wind
up, liquidate or dissolve, or agree to do any of the foregoing, except
(a) for sales of Inventory in the ordinary course of its business,
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(b) sales or closings by the Borrower of its retail and outlet stores;
provided, that (x) in the case of any such sales (including "going out of
business" sales in connection with the closing down of a retail or outlet
store) which include assets consisting of Major Credit Card Receivables, or
Inventory, the net cash proceeds received by the Borrower from such sale
shall be in an aggregate amount not less than the proceeds from Revolving
Loans that the Borrower would be able to receive in respect of such Major
Credit Card Receivables, or Inventory, as the case may be, if such Major
Credit Card Receivables, or Inventory were included in the calculation of
Combined Availability (without giving effect to any Commitment, the Maximum
Revolver Amount, or any other limits included in the calculation of
Combined Availability) and such Net Proceeds shall be paid to the Agent for
application to the Obligations, and (y) the aggregate number of retail or
outlet stores of the Borrower sold or closed during the term of this
Agreement shall not exceed 50 stores (net of new stores opened by the
Borrower at any time during the term of this Agreement);
(c) for sales or other dispositions of Equipment in the ordinary
course of business that are obsolete or no longer useable by such Loan
Party or Subsidiary in its business with an aggregate fair market value not
to exceed $2,500,000 in any Fiscal Year (exclusive of any net cash proceeds
from any such sale or other disposition made in such Fiscal Year which is
reinvested in Equipment within 90 days of such sale or other disposition).
All Equipment purchased with such proceeds shall be free and clear of all
Liens, except the Agent's Liens and other Permitted Liens (except those
Permitted Liens under clause (i) of such defined term);
(d) for the sale or other disposition for cash of a registered
trademark or application for registration of a trademark (other than a
material trademark) that the applicable Loan Party determines, in the
exercise of good business judgment, is no longer beneficial, appropriate or
consistent with such Loan Party's merchandise assortment or brand image (it
being agreed by the parties hereto that "CW", "▇▇▇▇▇▇▇▇ & ▇▇▇▇▇" and
related trademarks and logos shall not be deemed to be material
trademarks). Following each such Equipment sale or disposition, such Loan
Party or Subsidiary, as the case may be, shall apply such proceeds first,
to satisfy any debt that is secured by a lien (other than the Agent's Lien)
encumbering such asset which is superior in priority to the Agent's, and
second, to the Loans in accordance with Section 4.5;
(e) the merger of Spiegel Management Group, Inc. with and into ▇▇▇▇▇
▇▇▇▇▇ Information Technology LLC as contemplated by the Plan of
Reorganization;
(f) sales of any interest of a Loan Party in any Joint Venture
Investments, provided that such transaction is made at arm's length and for
fair market value; and
(g) other sales of assets (other than Accounts or Inventory) in an
aggregate amount for all Loan Parties and their Subsidiaries not to exceed
$5,000,000 during the term of this Agreement;
9.9 Distributions: Capital Change: Restricted Investments. Such Loan Party
shall not, and shall not suffer or permit any of its Subsidiaries to, (i)
directly or indirectly declare or make,
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or incur any liability to make, any Distribution, except a Distribution to a
Loan Party, unless, after giving effect to such Distribution, (A) Combined
Availability is not less than $50,000,000, and (B) such Loan Party demonstrates
that it is Solvent to the reasonable satisfaction of the Agent; (ii) make any
change in its capital structure which could have a Material Adverse Effect or
issue any capital stock other than common stock; or (iii) make any Restricted
Investment.
9.10 Guaranties. Except as set forth on Schedule 9.10, such Loan Party
shall not, and shall not suffer or permit any of its Subsidiaries to, make,
issue, or become liable on any Guaranty, except (i) Guaranties of the Term Debt,
(ii) Guaranties of the Obligations in favor of the Agent, (iii) unsecured
Guaranties of Debt permitted to be incurred pursuant to Section 9.11 (iv) Joint
Venture Investments constituting Guaranties, and (v) Guaranties of Debt of the
Canadian Subsidiaries, which Debt shall not exceed $20,000,000 outstanding at
any time.
9.11 Debt. Such Loan Party shall not, and shall not suffer or permit any of
its Subsidiaries to, incur or maintain any Debt, other than:
(a) the Obligations;
(b) other Debt set forth on Schedule 8.8;
(c) Debt owing to a Loan Party; provided, that the aggregate amount of
Debt of all Canadian Subsidiaries to all Loan Parties shall not exceed
$20,000,000 at any time outstanding;
(d) Capital Leases of Equipment and purchase money secured Debt
incurred to purchase Fixed Assets; provided, that (i) Liens securing the
same attach only to the Fixed Asset acquired by the incurrence of such Debt
and (ii) the aggregate amount of such Debt (including Capital Leases)
outstanding does not at any time exceed $10,000,000;
(e) Term Debt;
(f) Debt evidencing a refunding, renewal or extension of the Debt
referred to in clauses (d) or (e) of this Section 9.11; provided, that (i)
the principal amount thereof is not increased, (ii) the Liens, if any,
securing such refunded, renewed or extended Debt do not attach to any
assets in addition to those assets, if any, securing the Debt to be
refunded, renewed or extended, (iii) no Person that is not an obligor or
guarantor of such Debt as of the Closing Date shall become an obligor or
guarantor thereof and (iv) the covenants, repayment provisions, events of
default and subordination provisions, if any, of such refunding, renewal or
extension are no less favorable to the applicable Loan Party, the Agent or
the Lenders than the original Debt;
(g) Joint Venture Investments;
(h) Debt consisting of the Plan Note;
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(i) Debt under Hedge Agreements entered into in connection with the
Term Loan and other unsecured Debt under Hedge Agreements entered into in
the ordinary course of business and not for speculative purposes; and
(j) other unsecured Debt in an aggregate principal amount not to
exceed $25,000,000 at any time outstanding.
9.12 Prepayment. Such Loan Party shall not, and shall not suffer or permit
any of its Subsidiaries to, voluntarily prepay, acquire or defease any Debt
except (i) the Obligations in accordance with the terms of this Agreement, (ii)
payment of the Plan Note solely from proceeds, if any, paid to Holdings from the
collection of the pre-petition securitization trusts in which Holdings'
Subsidiaries, SAC and FSAC, hold an interest, (iii) prepayment of the Term Debt
and payment of an amount not to exceed $15,000,000 during the term of this
Agreement for the prepayment of Debt other than the Term Debt provided, however,
that in either case under this clause (iii), after giving effect to such
payment, (A) Combined Availability is not less than $50,000,000, and (B) such
Loan Party demonstrates that it is Solvent to the reasonable satisfaction of the
Agent, and (iv) any refinancings of the Term Debt permitted under, and in
accordance with, the Intercreditor Agreement.
9.13 Transactions with Affiliates. Except as set forth below or on Schedule
9.13, such Loan Party shall not, and shall not suffer or permit any of its
Subsidiaries to, sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including,
but not limited to, any fees or expenses for management services), to any
Affiliate (other than a Loan Party), or lend or advance money or property to any
Affiliate (other than a Loan Party), or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any property,
of any Affiliate, or become liable on any Guaranty of the indebtedness,
dividends, or other Obligations of any Affiliate. Notwithstanding the foregoing,
while no Event of Default has occurred and is continuing, such Loan Party or
Subsidiary may engage in transactions with other Affiliates in the ordinary
course of business, in amounts and upon terms fully disclosed to the Agent and
the Lenders, and no less favorable to such Loan Party or Subsidiary than would
be obtained in a comparable arm's-length transaction with a third party who is
not an Affiliate.
9.14 Investment Banking and Finder's FeesThe Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, pay or agree to pay, or
reimburse any other party with respect to, any investment banking or similar or
related fee, underwriter's fee, finder's fee, or broker's fee to any Person in
connection with this Agreement except for the fees payable to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ Buckfire ▇▇▇▇▇ ▇▇▇▇ & Co., LLC and ▇▇▇▇▇▇▇ & Marsal Inc. Such Loan Party
shall defend and indemnify the Agent and the Lenders against and hold them
harmless from all claims of any Person that such Loan Party or any of its
Subsidiaries is obligated to pay for any such fees, and all costs and expenses
(including without limitation, attorneys' fees) incurred by the Agent and/or any
Lender in connection therewith.
9.15 Business Conducted. Such Loan Party shall not, and shall not suffer or
permit any of its Subsidiaries to, modify or alter in any material manner the
nature and type of its business as conducted at or prior to the Closing Date or
the manner in which such business is conducted.
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9.16 Liens Such Loan Party shall not, and shall not suffer or permit any of
its Subsidiaries to, create, incur, assume, or permit to exist any Lien on any
property now owned or hereafter acquired by it, except Permitted Liens. Schedule
9.16 sets forth as of the Closing Date all tax, judgment, ERISA and other Liens
of the type for which a notice thereof is filed or recorded in any public record
and all consensual perfected existing Liens the perfection of which is evidenced
by filing, recordation or possession.
9.17 Sale and Leaseback Transactions. Such Loan Party shall not (and shall
not suffer or permit any of its Subsidiaries to), directly or indirectly, enter
into any arrangement with any Person providing for such Loan Party or Subsidiary
to lease or rent property that such Loan Party or Subsidiary, as appropriate,
has sold or will sell or otherwise transfer to such Person.
9.18 New Subsidiaries. Such Loan Party shall not (and shall not suffer or
permit any of its Subsidiaries to), directly or indirectly, organize, create,
acquire or permit to exist any Subsidiary other than any Subsidiary set forth on
Schedule 8.5 as in effect on the Closing Date unless such new Subsidiary (i) is
organized under the laws of any jurisdiction of the United States of America and
(ii) joins this Agreement as a Borrower or Guarantor as the Agent may request,
and under each other applicable Loan Document in the manner provided therein
within thirty (30) days after such Subsidiary is formed or acquired and promptly
take such actions to create and perfect Liens on such Subsidiary's assets to
secure the Obligations as Agent shall reasonably request.
9.19 Fiscal Year. Such Loan Party shall not, and shall not suffer or permit
any of its Subsidiaries to, change its Fiscal Year.
9.20 Use of Proceeds. Such Loan Party shall not use any portion of the Loan
proceeds, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of such Loan Party or others incurred
to purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act. Such Loan
Party shall use the Loan proceeds received hereunder, exclusively, for general
corporate purposes permitted hereunder and to fund the working capital needs of
the Loan Party.
9.21 Further Assurances. Such Loan Party shall, and shall cause each of its
Subsidiaries to, execute and deliver, or cause to be executed and delivered, to
the Agent and/or the Lenders such documents and agreements, and shall take or
cause to be taken such actions, as the Agent or any Lender may, from time to
time, request to carry out the terms and conditions of this Agreement and the
other Loan Documents.
9.22 Obligations under Real Estate Leases, Equipment Leases and Licenses.
Such Loan Party shall, and shall cause each of its Subsidiaries to, pay all
obligations under its real estate leases, equipment leases and licenses of
intellectual property, if any, except to the extent (i) such Loan Party is
contesting any such obligations in good faith by appropriate proceedings, (ii)
such Loan Party has established proper reserves as required under GAAP and (iii)
the nonpayment of which does not result in the imposition of a Lien (other than
a Permitted Lien), provided, however, that without the consent of the Majority
Lenders, such Loan Party or
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Subsidiary may permit to expire any of its real estate leases (in a manner
consistent with a maximization of the value of the assets of such Loan Party or
Subsidiary).
9.23 Reclamation Claims. Such Loan Party shall, and shall cause each of its
Subsidiaries to, promptly furnish the Agent and the Lenders with information and
notices regarding any material reclamation claims (including amount and
claimant) upon such Loan Party's or Subsidiary's receipt thereof. Neither such
Loan Party nor any of its Subsidiaries shall incur any Liens related to
reclamation claims encumbering any Accounts, Inventory, or any proceeds thereof.
9.24 Sourcing Arrangements. Such Loan Party shall, and shall cause each of
its Subsidiaries to, maintain at all times its existing sourcing arrangements or
a replacement thereof which shall allow such Loan Party or Subsidiary, as the
case may be, to maintain an uninterrupted flow of Inventory from overseas
sufficient for the Borrower to satisfy the levels of Inventory and assumptions
related thereto as reflected in the Latest Projections.
9.25 Minimum Consolidated Fixed Charge Coverage Ratio. At any time that
Combined Availability (without giving effect to clause (a)(i) of the definition
thereof) is less than ten percent of the Maximum Revolver Amount, the Loan
Parties shall not permit the Consolidated Fixed Charge Ratio of the Borrower and
its Subsidiaries, to be less than 1.25:1.00. The Consolidated Fixed Charge
Coverage Ratio shall be tested quarterly on a trailing four quarters basis,
commencing with the quarter ending immediately prior to the date that Combined
Availability is less than the amount required herein and shall continue to be
tested until Combined Availability exceeds the amounts required herein for 3
consecutive fiscal quarters.
9.26 Capital Expenditures. Such Loan Party shall not make or incur any
Capital Expenditure if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by the Loan Parties on a consolidated basis would exceed
during (x) Fiscal Year 2005, $50,000,000 or (y) Fiscal Year 2006, Fiscal Year
2007 and Fiscal Year 2008, $60,000,000 or (z) Fiscal Year 2009 and each Fiscal
Year thereafter until the Stated Termination Date, $70,000,000.
9.27 Commercial Tort Claims. If any Loan Party shall at any time acquire a
commercial tort claim in excess of $100,000.00, such Loan Party shall promptly
notify the Agent in writing of the details thereof and the Loan Parties shall
take such actions as the Agent shall request in order to grant to the Agent, for
the ratable benefit of the Lenders, a perfected and first priority security
interest therein and in the proceeds thereof.
9.28 Plan of Reorganization. Notwithstanding any provision of this
Agreement to the contrary, so long as the Plan of Reorganization is reasonably
acceptable to the Agent, the Agent and the Lenders consent to the Borrower's and
the other Loan Parties' taking any steps and consummating any transactions that
are contemplated under such Plan of Reorganization or that are reasonable,
necessary, convenient for the implementation of such Plan of Reorganization. For
further clarity, the taking of such steps or the consummation of such
transactions (which may include the merger of one entity with another (as long
as the Borrower is the surviving entities), the making of payments required or
contemplated under the Plan of Reorganization, or the transfer of assets
required or contemplated under the Plan of Reorganization) will not constitute a
Default or Event of Default hereunder and nothing contained in this Agreement
shall be
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construed to prohibit or prevent the taking of such steps or the consummation of
such transactions, provided, however, that once such steps have been taken or
such transactions have been consummated and the Plan of Reorganization has gone
effective and has been implemented, if similar steps or similar transactions are
taken in the future outside the context of the implementation of the Plan of
Reorganization, the question of whether such steps or transactions are permitted
will be governed by the provisions of this Agreement without regard to this
section of the Agreement.
9.29 Borrower's Excluded Subsidiaries. Until such time as the Excluded
Subsidiaries of the Borrower which are limited liability companies formed under
the laws of the state of Delaware shall have become party to this Agreement, the
Intellectual Property Security Agreement, and the Intercreditor Agreement, and
shall have taken such other actions in the manner set forth in Section 9.18 to
create and perfect Liens on such Excluded Subsidiaries' assets to secure the
Obligations as Agent shall reasonably request, the Borrower shall not permit
such Excluded Subsidiaries to have any interest in any assets or property of the
nature that would be included in the Borrowing Base if owned by the Loan
Parties.
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Closing Date This Agreement shall become
effective at such time as the following conditions precedent having been
satisfied in a manner satisfactory to the Agent (and in the case of any
documents, agreements or other deliveries, such documents, agreements and
deliveries shall be in form and substance satisfactory to the Agent), in each
case with the consent of the Majority Lenders to the extent required in clauses
(a) through (w) hereof or Section 13.2(a)(ii) hereof:
(a) This Agreement and the other Loan Documents have been executed by
each party thereto and each Loan Party shall have performed and complied
with all covenants, agreements and conditions contained herein and in the
other Loan Documents which are required to be performed or complied with by
such Loan Party before or on such Closing Date.
(b) All representations and warranties made hereunder and in the other
Loan Documents shall be true and correct as of the Closing Date as if made
on such date (both immediately prior to, and after giving effect to, such
extension of credit).
(c) No Default or Event of Default shall exist on the Closing Date, or
would exist after giving effect to the Loans to be made on such date or the
Letters of Credit to be issued or the Credit Support to be provided on such
date.
(d) The Agent and the Lenders shall have received such opinions of
counsel (concerning, among other things, entry of the order confirming the
Plan of Reorganization and proper notice having been given) for the Loan
Parties as the Agent or any Lender shall request, each such opinion to be
in a form, scope, and substance reasonably satisfactory to the Agent, the
Lenders, and their respective counsel.
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(e) The Borrower shall have paid all fees and expenses of the Agent
and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby, including, without
limitation pursuant to the Fee Letter.
(f) To the extent not previously provided under the DIP Loan
Agreement, the Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage
as required by the Agreement.
(g) The Agent and the Lenders shall have had an opportunity, if they
so choose, to examine the books of account and other records and files of
the Loan Parties and to make copies thereof, and to conduct a pre-closing
audit which shall include, without limitation, verification of Inventory,
Accounts, and Combined Availability, and to conduct a pre-closing
appraisal, and the results of such examination and audit and appraisal
shall have been satisfactory to the Agent in all respects.
(h) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent.
(i) The Agent shall have received a copy of the certificate or
articles of incorporation or other constitutive documents, in each case
amended to date, of each of the Loan Parties, certified as of a recent date
by the Secretary of State or other appropriate official of the state or
other jurisdiction of its organization and dated as of a recent date; a
certificate of the Secretary of each of the Loan Parties, dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy
of such Loan Party's By-laws as in effect on the date of such certificate
and at all times since a date prior to the date of the resolution described
in item (B) below, (B) that attached thereto is a true and complete copy of
a resolution adopted by such Loan Party's Board of Directors (or in the
case of a Loan Party that is not a corporation, the equivalent governing
body) authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents to which it is a party and that such
resolution has not been modified, rescinded or amended and is in full force
and effect, (C) that such Loan Party's certificate or articles of
incorporation or other constitutive documents have not been amended since
the date of the last amendment thereto shown on the certificate of good
standing furnished hereinabove, and (D) as to the incumbency and specimen
signature of each of such Loan Party's officers executing this Agreement or
any other Loan Document delivered in connection herewith or therewith, as
applicable; a certificate of another of such Loan Party's officers as to
incumbency and signature of its Secretary.
(j) The Agent shall have received certificates of good standing,
existence or its equivalent with respect to each Loan Party certified as of
a recent date by the appropriate Governmental Authorities of the state or
other jurisdiction of incorporation or organization and in each other
jurisdiction listed on Schedule 10.1(j).
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(k) There shall be no material adverse change in the business,
operations, assets, properties, liabilities, profits, prospects or
financial position of the Loan Parties as determined by the Agent and the
Majority Lenders in their sole discretion.
(l) The Lenders shall be fully satisfied with the compliance by the
Loan Parties with any and all applicable laws, statutes, rules and
regulations relating to the conduct and operations of the business and
properties of the Loan Parties.
(m) The Borrower shall have received the proceeds of the Term Debt and
the Agent shall have entered into an Intercreditor Agreement with the
administrative agent for the Term Debt substantially in the form of Exhibit
E hereto.
(n) The Agent shall be satisfied with the terms and conditions of all
material Debt (including, without limitation, the Term Debt) and other
agreements of the Loan Parties and their Subsidiaries to remain outstanding
after the Closing Date (including, without limitation, any subordination or
other intercreditor provisions contained therein or applicable thereto).
(o) The Agent shall be reasonably satisfied with the all intercompany
arrangements relating to the acquisition, ownership and transfer of
Inventory of a Loan Party or otherwise.
(p) The Agent and the Lenders shall have received evidence reasonably
satisfactory to them that all material requisite governmental and material
third party consents and approvals (including, without limitation, consents
with respect to each Loan Party and each of its Subsidiaries) to the
transactions contemplated by this Agreement and the other Loan Documents
have been obtained, and remain in full force and effect; all applicable
waiting periods shall have expired without any action being taken by any
competent authority; and no law or regulation shall be applicable in the
judgment of the Agent that restrains, prevents or imposes materially
adverse conditions upon any of the Loan Documents or any of the
transactions contemplated thereby.
(q) The terms of all sourcing arrangements among the Loan Parties and
their suppliers shall have been fully disclosed to the Agent and the
Lenders and there shall have been a resolution satisfactory to the Agent of
any liens arising from any such supply arrangements.
(r) There shall have been delivered to the Agent such additional
instruments and documents as the Agent or its counsel reasonably may
require or request.
(s) The Bankruptcy Court shall have entered an order confirming the
Borrower's Plan of Reorganization, which shall have been certified by the
Clerk of the Bankruptcy Court as having been duly entered. Such order shall
not have been reversed, modified, amended, vacated, or stayed, and, unless
otherwise agreed by the Agent, all appeal periods relating to the
confirmation order shall have expired, and no appeals (unless consented to
by Agent) from the confirmation order shall be outstanding. All conditions
precedent to confirmation and to the "Effective Date" under and as defined
in the Plan of Reorganization shall have been met (or the waiver thereof
shall have been
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consented to by the Agent, which consent shall not be unreasonably withheld
or delayed) and the "Effective Date" and Consummation Date of the Plan of
Reorganization shall have occurred or shall be scheduled to occur but for
the initial extension of credit under the Post-Confirmation Agreement on or
after the Consummation Date.
(t) After giving effect to the making of any loans under this
Agreement (including the rollover of Loans under the DIP Loan Agreement),
the payment of all fees and expenses required hereunder and the issuance of
all Letters of Credit to be issued (including the Existing Letters of
Credit), in each case on the date of and immediately subsequent to the
"Effective Date" of the Borrower's Plan of Reorganization, the Loan Parties
shall have minimum Combined Availability of at least $25,000,000.
(u) The Borrower's Plan of Reorganization and the order of the
Bankruptcy Court confirming such Plan of Reorganization shall be reasonably
satisfactory in form and substance to the Agent. Without limiting the
generality of the foregoing, the capital structure of the Loan Parties
shall be reasonably satisfactory to the Agent in all respects and the terms
of any Debt of the Loan Parties shall be satisfactory to the Agent.
(v) The Agent shall have received results of searches or other
evidence reasonably satisfactory to the Agent (in each case dated as of a
date reasonably satisfactory to the Agent) indicating the absence of Liens
on any Collateral and proceeds thereof, except for Liens for which
termination statements and releases reasonably satisfactory to the Agent
are being tendered on the Closing Date.
(w) The Agent shall have received all documents and instruments,
including Uniform Commercial Code financing statements, required by law or
reasonably requested by the Agent to be filed, registered, published or
recorded to create or perfect the first priority Liens intended to be
created under the Loan Documents and all such documents and instruments
shall have been so filed, registered, published or recorded to the
satisfaction of the Agent.
The acceptance by the Borrower of any Loans made or Letters of Credit issued on
the Closing Date shall be deemed to be a representation and warranty made by the
Borrower to the effect that all of the conditions precedent to the making of
such Loans or the issuance of such Letters of Credit have been satisfied, with
the same effect as delivery to the Agent and the Lenders of a certificate signed
by a Responsible Officer of the Borrower, dated the Closing Date, to such
effect.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 10.1 have been fulfilled to the satisfaction of such
Lender, (ii) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 10.1, and (iii) all documents sent
to such Lender for approval, consent or satisfaction were acceptable to such
Lender.
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10.2 Conditions Precedent to Each Loan The obligation of the Lenders to
make each Loan and the obligation of the Agent to cause the Letter of Credit
Issuer to issue any Letter of Credit shall be subject to the further conditions
precedent that on and as of the date of any such extension of credit (and in the
case of any documents, agreements or other deliveries, such documents,
agreements and deliveries shall be in form and substance satisfactory to the
Agent):
(a) The following statements shall be true, and the acceptance by
Borrower of any extension of credit shall be deemed to be a statement by
Borrower each to the effect set forth in clauses (i), (ii) and (iii), with
the same effect as the delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer, dated the date of such
extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such extension of credit as though made on and
as of such date (both immediately prior to, and after giving effect to, such
extension of credit), other than any such representation or warranty which
relates to a specified prior date and except to the extent the Agent and the
Lenders have been notified in writing by the Authorized Representative that any
representation or warranty is not true and correct and the Majority Lenders have
explicitly waived in writing compliance with such representation or warranty;
and
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event of
Default; and
(iii) No event has occurred and is continuing, or would result
from such extension of credit, which has had or would have a Material Adverse
Effect.
(b) No such Borrowing shall exceed the amount of the Combined
Availability, provided, however, that the foregoing conditions precedent
are not conditions to each Lender participating in or reimbursing the Bank
or the Agent for such Lenders' Pro Rata Share of any Bank Loan or Agent
Advance as provided in Sections 2.2(h), (i) and (j).
(c) The Agent shall have received a Notice of Borrowing from the
Borrower to the extent required by Section 2.2(b).
ARTICLE 11
DEFAULT: REMEDIES
11.1 Events of Default. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) (i) any failure by the Borrower to pay the principal of or
interest or premium on any of the Obligations hereunder when due, whether
upon demand or otherwise, or (ii) any failure by the Borrower to pay any
fee or other amount owing hereunder when due, whether upon demand or
otherwise and such failure to pay shall continue for two Business Days;
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(b) any representation or warranty (other than in Section 8.20(b))
made or deemed made by any Loan Party in this Agreement or by any Loan
Party in any of the other Loan Documents, any Financial Statement, or any
certificate furnished by any Loan Party at any time to the Agent or any
Lender shall prove to be untrue in any material respect as of the date on
which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or performance of
any of the covenants and agreements contained in this Agreement or any
other Loan Documents and such default (other than in respect of any of
Article 6 or 7 or any of Sections 9.5(a), 9.5(b), 9.8, 9.9, 9.10, 9.11,
9.12, 9.13, 9.15, 9.16, 9.17, 9.18, 9.19, 9.20, 9.25, or 9.26, as to each
of which provisions no grace period shall be applicable) shall continue
unremedied for a period of thirty (30) or more days (or in the case of
Section 9.7(e) or 9.24, shall continue unremedied for a period of five (5)
or more days) or (ii) if this Agreement or any other Loan Document shall
terminate (other than in accordance with its terms or the terms hereof or
with the written consent of the Agent and the Majority Lenders) or become
void or unenforceable, without the written consent of the Agent and the
Majority Lenders;
(d) default shall occur with respect to any Debt (other than the
Obligations) in an outstanding principal amount which exceeds $5,000,000,
or under any agreement or instrument entered into or assumed by any Loan
Party under or pursuant to which any such Debt may have been issued,
created, assumed, or guaranteed by any Loan Party, and such default shall
continue for more than the period of grace, if any, therein specified, if
the effect thereof (with or without the giving of notice or further lapse
of time or both) is to accelerate, or to permit the holders of any such
Debt to accelerate, the maturity of any such Debt or any such Debt shall be
declared due and payable or be required to be prepaid (other than mandatory
prepayments (other than by virtue of acceleration) under the terms of such
Debt) prior to the stated maturity thereof; or any such Debt shall not be
paid on the maturity date therefor;
(e) any Loan Party, other than any non-material (as reasonably
determined by the Agent and the Majority Lenders) Subsidiary of the
Borrower, shall file a certificate of dissolution or like process under
applicable state or provincial law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up or liquidation, or shall take any
corporate action in furtherance thereof;
(f) all or any material part of the property of the Loan Parties taken
as a whole shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such property or of any
Loan Party shall be assumed by any Governmental Authority or any court of
competent jurisdiction at the instance of any Governmental Authority,
except where contested in good faith by proper proceedings diligently
pursued where a stay of enforcement is in effect;
(g) any Loan Document shall be terminated, revoked or declared void or
invalid or unenforceable or challenged by Borrower or any other Loan Party
or the
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Borrower or any other Loan Party shall attempt to terminate, revoke or
declare voided or invalid or unenforceable any Loan Document;
(h) one or more judgments, orders or decrees is entered against any
Loan Party or one or more fines, penalties or awards is entered or levied
by any Governmental Authority against any Loan Party involving in the
aggregate liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any
single or related or unrelated series of transactions, incidents or
conditions, of $5,000,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of 30 days after the
entry thereof;
(i) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Loan Party occurs which could
reasonably be expected to have a Material Adverse Effect and is not
adequately covered by insurance;
(j) there is filed against any Loan Party or any of its Subsidiaries
any criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding (1) is not dismissed within 120 days, and (2) could reasonably
be expected to result in the confiscation or forfeiture of any material
portion of the Collateral;
(k) for any reason (i) any Loan Document ceases to be in full force
and effect, (ii) any Lien with respect to any portion of the Collateral
intended to be secured thereby (A) ceases to be, or is not, valid,
perfected and prior to all other Liens (other than Permitted Liens
described in clause (d), (e), (g), (h), (i) (with respect to Term Lender
Priority Collateral), or (k) of the definition thereof), or (B) is
terminated, revoked or declared void, or (iii) any Lien (other than
Permitted Liens) exists with respect to any portion of the Collateral;
(l) (i) one or more ERISA Events shall occur with respect to any
Pension Plans or Multiemployer Plans which have resulted or could
reasonably be expected to result in liability of any Loan Party under Title
IV of ERISA to the Pension Plan, Multiemployer Plan, the PBGC or other
applicable Governmental Authority in an aggregate amount for all such
Pension Plans and Multiemployer Plans in excess of $5,000,000; or (ii) any
Loan Party or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount, together with all other such
amounts not paid by Borrower or ERISA Affiliate when due, in excess of
$1,000,000; or (iii) with respect to any Plan of a Canadian Guarantor, any
Lien arises with respect to such Plan (save for contribution amounts not
yet due); provided, however, that with respect to clauses (i) and (ii), any
liabilities under Title IV of ERISA and any missed installment payments to
a Multiemployer Plan shall only be included to the extent that they
constitute post-petition claims;
(m) there occurs a Change of Control;
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(n) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Loan Party or its debts, or of a substantial part
of its assets, under the Bankruptcy Code or any other insolvency,
receivership, liquidation, winding up or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, interim receiver, receiver, manager, monitor, liquidator,
conservator or similar official for any Loan Party or for a substantial
part of its assets, and, in any such case, such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered and continues unstayed and
in effect for 60 days;
(o) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under
the Bankruptcy Code or any other insolvency, receivership, liquidation,
winding up or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (p) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, interim receiver, receiver, manager, monitor, liquidator,
conservator or similar official for any Loan Party or for a substantial
part of its assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(p) any Loan Party shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due; or
(q) any default by any Person (other than the Agent) under the
Intercreditor Agreement.
11.2 Remedies.
(a) If a Default or Event of Default exists and is continuing, the
Agent may, in its discretion, and shall (and, in either case, without
limiting any other remedies available), at the direction of the Majority
Lenders, do one or more of the following at any time or times and in any
order during such continuance: (i) reduce the Maximum Revolver Amount, or
the advance rates against the Net Amount of Eligible Major Credit Card
Receivables, and/or Eligible Inventory used in computing the Combined
Availability, or reduce one or more of the other elements used in computing
the Combined Availability; (ii) without limiting Section 10.2, restrict the
amount of or refuse to make Revolving Loans; (iii) without
limiting Section 10.2, restrict or refuse to arrange for or provide Letters
of Credit or Credit Support. If an Event of Default exists,
the Agent shall, at the direction of the Majority Lenders, do one or more
of the following, in addition to the actions described in the preceding
sentence, at any time or times and in any order, without notice to or
demand on any Loan Party (provided, that, upon the occurrence
of any Event of Default described in Sections 11.1(n), (o), (p) or (q), all
Obligations shall automatically become immediately due and payable and all
Commitments shall automatically terminate without any further action by the
Agent or
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the Lenders): (A) terminate the Commitments and this Agreement; (B) declare
any or all Obligations to be immediately due and payable; (C) set-off
against any outstanding Obligations, amounts in the accounts of any Loan
Party maintained by or with any Lender or any agent or bailee thereof and
otherwise exercise any and all rights and remedies with respect to the
Collateral; (D) demand cash collateral equal to 105% of the face amount of
all outstanding Letters of Credit; and (E) pursue its other rights and
remedies under the Loan Documents and applicable law.
(b) Without limitation to the foregoing but subject to any applicable
notice requirements set forth in Section 11.2(a), if an Event of Default
exists and is continuing: (i) the Agent shall have for the benefit of the
Agent and the Lenders, in addition to all other rights of the Agent and the
Lenders, the rights and remedies of a secured party under the UCC and other
applicable laws; (ii) the Agent may, at any time, take possession of the
Collateral and keep it on the Loan Parties' premises, at no cost to the
Agent or any Lender, or remove any part of it to such other place or places
as the Agent may desire, or the Loan Parties shall, upon the Agent's
demand, at the Loan Parties' cost, assemble the Collateral and make it
available to the Agent at a place reasonably convenient to the Agent; (iii)
the Agent may sell and deliver any Collateral at public or private sales,
for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent deems advisable, in its sole discretion, and may, if the Agent
deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or
adjourned sale without giving a new notice of sale; and (iv) at the Agent's
request, the Loan Parties will engage a liquidator to conduct a "going out
of business" or similar sale on terms and conditions satisfactory to the
Agent. Without in any way requiring notice to be given in the following
manner, the Loan Parties agree that any notice by the Agent of sale,
disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable
notice to the Loan Parties if such notice is mailed by registered or
certified mail, return receipt requested, postage prepaid, or is delivered
personally against receipt, at least 10 Business Days prior to such action
to the Loan Parties' address specified in or pursuant to Section 15.7. If
any Collateral is sold on terms other than payment in full at the time of
sale, no credit shall be given against the Obligations until the Agent or
the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to the Loan Parties.
In the event the Agent seeks to take possession of all or any portion of
the Collateral by judicial process, the Loan Parties irrevocably waive: (a)
the posting of any bond, surety or security with respect thereto which
might otherwise be required; (b)any demand for possession prior to the
commencement of any suit or action to recover the Collateral; and (c) any
requirement that the Agent retain possession and not dispose of any
Collateral until after trial or final judgment. The Loan Parties agree that
the Agent has no obligation to preserve rights to the Collateral or marshal
any Collateral for the benefit of any Person. The Agent is hereby granted a
license or other right to use, without charge, the Loan Parties' labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral, and the Loan Parties' rights under
all licenses and all franchise agreements shall inure to the Agent's
benefit for such purpose. The proceeds of sale shall be applied first to
all expenses of sale, including reasonable attorneys' fees, and then to
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the Obligations in whatever order the Agent elects. The Agent will return
any excess to the Borrower and the Borrower shall remain liable for any
deficiency.
(c) If an Event of Default occurs, the Loan Parties hereby waive,
except to the extent expressly provided otherwise herein, to the fullest
extent permitted by applicable law, all rights to notice and hearing prior
to the exercise by the Agent of the Agent's rights to repossess the
Collateral without judicial process.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on the
Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence and during the
continuance of an Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including, without
limitation, all unpaid principal, accrued interest and any early termination or
prepayment fees or penalties) shall become immediately due and payable and the
Borrower shall immediately arrange for the cancellation and return of all
Letters of Credit then outstanding (or cash collateralization thereof, on terms
acceptable to the Agent, at 105% of the face amount of such Letters of Credit).
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, the Borrower shall remain bound
by the terms of this Agreement or under any other Loan Document and shall not be
relieved of any of their Obligations hereunder, and the Agent and the Lenders
shall retain all their rights and remedies hereunder (including, without
limitation, the Agent's Liens (including, without limitation, the superpriority
status thereof) in and all rights and remedies with respect to all then existing
and after-arising Collateral).
ARTICLE 13
AMENDMENTS: WAIVER; PARTICIPATIONS: ASSIGNMENTS: SUCCESSORS
13.1 No Waivers: Cumulative Remedies. No failure by the Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between or among any Loan
Party and the Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will not operate as a waiver thereof. No waiver by the
Agent on behalf of the Lenders or any Lender will be effective unless it is in
writing, and then only to the extent specifically stated. No waiver by the Agent
on behalf of the Lenders or the Lenders on any occasion shall affect or diminish
the Agent's and each Lender's rights thereafter to require strict performance by
the Borrower of any provision of this Agreement. The Agent and the Lenders may
proceed directly to collect the Obligations without any prior recourse to the
Collateral. The Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent or any
Lender may have.
13.2 Amendments and Waivers.
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(a) No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent with respect to any departure by
Borrower or other Loan Party therefrom, shall be effective unless the same
shall be in writing and signed by the Majority Lenders (or by the Agent at
the written request of the Majority Lenders) and the Borrower or other Loan
Parties party thereto and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given; provided, however, that
(i) no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders and the Loan Parties and acknowledged by
the Agent, do any of the following:
(A) increase or extend the Commitment of any Lender;
(B) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or
other amounts due to the Lenders (or any of them) hereunder or under any
other Loan Document;
(C) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable
hereunder or under any other Loan Document;
(D) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the
Lenders or any of them to take any action hereunder;
(E) increase any of the percentages set forth in the
definition of Combined Availability or amend the definitions of Combined
Availability, Eligible Inventory, or Eligible Major Credit Card Receivables
in a manner which will increase the amount of Combined Availability from
that in effect immediately prior to such amendment; provided that nothing
herein shall limit or restrict the Agent's discretion as set forth in such
definitions;
(F) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(G) release any Guaranties of the Obligations or release
Collateral other than as permitted by Section 14.11; or
(H) change the definitions of "Majority Lenders", "Required
Lenders" "Super Majority Lenders" or "Combined Availability Threshold
Event".
provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clause (i)(E) above and any other terms of this
Agreement, make Agent Advances in accordance with Section 2.2(i) and, provided
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document and provided further, that Schedule 1.1(a)
hereto may
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be amended from time to time by Agent alone to reflect assignments of
Commitments in accordance herewith.
(ii) No waiver or amendment of (A) any material provision of any
order confirming the Plan of Reorganization, or (B) the provisions of Sections
10.1(b), 10.1(c), 10.1(d), 10.1(t), 10.1(v) and 10.1(w) shall be made by the
Agent without the prior consent of the Majority Lenders.
(b) If, in connection with any proposed amendment, waiver or consent
(a "Proposed Change"):
(i) requiring the consent of all Lenders or the Super Majority
Lenders, the consent of Required Lenders is obtained, but the consent of other
Lenders is not obtained (any such Lender whose consent is not obtained as
described in this clause (i) and in clause (ii) below being referred to as a
"Non-Consenting Lender"), or
(ii) requiring the written consent of Required Lenders, the
consent of Majority Lenders is obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the Borrower's
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Lenders, and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Commitments for an amount equal to the principal
balances thereof and all accrued interest and fees with respect thereto through
the date of sale pursuant to Assignment and Acceptance Agreement(s), without
premium or discount.
13.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent (which
consent shall not be unreasonably withheld) assign and delegate to one or
more Eligible Assignees (provided that no consent of the Agent shall be
required in connection with any assignment and delegation by a Lender to an
Affiliate of such Lender) (each an "Assignee") all, or any ratable part of
all, of the Loans, the Commitments and the other rights and obligations of
such Lender hereunder, in a minimum amount of $5,000,000 and, if the
remaining Commitment of such Lender would be less than $5,000,000, the
entire amount of such Lender's Commitment; provided, however, that the
Borrower and the Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have
been given to the Borrower and the Agent by such Lender and the Assignee;
(ii) such Lender and its Assignee shall have delivered to the Borrower and
the Agent an Assignment and Acceptance in the form of Exhibit B
("Assignment and Acceptance") and (iii) the assignor Lender or Assignee has
paid to the Agent a processing fee in the amount of $3,500, except in the
case of an assignment and delegation by a Lender to an Affiliate of such
Lender.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received a duly executed Assignment and Acceptance and
payment of the above-
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referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the
Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement and
the other Loan Documents (and in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished pursuant hereto or the attachment,
perfection, or priority of any Lien granted by any Loan Party to the Agent
or any Lender in the Collateral; (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Loan Parties or the performance or
observance by the Loan Parties of any of their Obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (3) such
Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (4) such Assignee will, independently and without reliance upon
the Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (5) such Assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Agent by the terms hereof, together with such powers, including
discretionary rights and incidental power, as are reasonably incidental
thereto; and (6) such Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this
Agreement and the other Loan Documents are required to be performed by it
as a Lender.
(d) Immediately upon satisfaction of the requirements of Section
13.3(a) and each Assignee making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
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(e) Any Lender may, with the written consent of the Agent, at any time
sell to one or more commercial banks, financial institutions, or other
Persons not a Loan Party or an Affiliate of any Loan Party (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i)
the originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for
the performance of such obligations, (iii) the Borrower and the Agent shall
continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents and (iv) no Lender shall transfer or
grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document (except to the extent that such
amendment, waiver or consent both directly affects the Participant and
would (x) increase or extend the Commitment of the originating Lender, (y)
postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due
to the originating Lender hereunder or under any other Loan Document or (z)
reduce the principal of, or the rate of interest specified herein on, any
Revolving Loan owing to the originating Lender or any fees or other amounts
payable to the originating Lender hereunder or under any other Loan
Document), and all amounts payable by Borrower hereunder shall be
determined as if such Lender had not sold such participation; except that,
if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence
of an Event of Default, each Participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
ARTICLE 14
THE AGENT
14.1 Appointment and Authorization. Each Lender hereby designates and
appoints Bank as its Agent under this Agreement and the other Loan Documents and
each Lender hereby irrevocably authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this Article 14. The provisions of this
Article 14 are solely for the benefit of the Agent and the Lenders and the
Borrower shall have no rights as a third
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party beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the other
Loan Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Combined Availability, (b) the making of Agent Advances pursuant to Section
2.2(i), and (c) the exercise of remedies pursuant to Section 11.2, and any
action so taken or not taken shall be deemed consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Loan Party, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
14.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including
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counsel to the Loan Parties), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Majority
Lenders as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the
Majority Lenders (or all Lenders if so required by Section 13.2) and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to
such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory
to the Lender.
14.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Section 11; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Loan Parties, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender. Each Lender represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan
Parties, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the
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business, prospects, operations, property, financial and other condition or
creditworthiness of the Loan Parties which may come into the possession of any
of the Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrower or any
other Loan Party and without limiting the obligation of the Borrower and any
other Loan Parties to do so), in accordance with their Pro Rata Shares, from and
against any and all Indemnified Liabilities as such term is defined in Section
15.10; provided, however, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its Pro Rata Share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrower or any other Loan Parties. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of the Agent.
14.8 Agent in Individual Capacity. The Bank and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with any of the Loan Parties
and its Affiliates as though the Bank were not the Agent hereunder and without
notice to or consent of the Lenders. The Bank or its Affiliates may receive
information regarding the Loan Parties (including information that may be
subject to confidentiality obligations in favor of the Loan Parties) and the
Lenders acknowledge that the Agent and the Bank shall be under no obligation to
provide such information to them. With respect to its Loans, the Bank shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" include the Bank in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon at least 30 days'
notice to the Lenders and the Borrower. If the Agent resigns under this
Agreement, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders reasonably satisfactory to the Borrower. If no successor
agent is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Lenders and the Borrower, a
successor agent from among the Lenders. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall mean
such successor agent and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 14 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the
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Agent hereunder until such time, if any, as the Majority Lenders appoint a
successor agent as provided for above.
14.10 Withholding Tax.
(a) Each Lender that is not a "United States person," within the
meaning of the Internal Revenue Code, shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender and on
the date of the Assignment and Acceptance pursuant to which it becomes a
Lender in the case of each Assignee, and from time to time thereafter as
reasonably requested in writing by the Borrower (but only so long
thereafter as such Lender or Assignee remains lawfully able to do so),
provide each of the Agent and the Borrower with two original Internal
Revenue Service Forms W-8BEN or W-8ECI or a certification in writing to the
Agent and the Borrower that it is not (i) a "bank" (as defined in Section
881(c)(3)(A) of the Internal Revenue Code), (ii) a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code)
of Borrower or (iii) a controlled foreign corporation related to Borrower
(within the meaning of Section 864(d)(4) of the Internal Revenue Code),
along with an Internal Revenue Service Form W-8BEN, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service,
certifying that such Lender or Assignee is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement or any other Loan Document or, in the case of a Lender or
Assignee that has certified that it is not a "bank" as described above,
certifying that such Lender or Assignee is a foreign corporation,
partnership, estate or trust. If the forms provided by a Lender or Assignee
at the time such Lender or Assignee first becomes a party to this Agreement
indicate a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Indemnified
Taxes unless and until such Lender or Assignee provides the appropriate
forms certifying that a lesser rate applies, whereupon withholding tax at
such lesser rate only shall be considered excluded from Indemnified Taxes
for periods governed by such forms; provided, however, that if, at the
effective date of the Assignment and Acceptance pursuant to which an
Assignee becomes a party to this Agreement, the assignor Lender was
entitled to payments under Section 5.1 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Indemnified Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts
otherwise includable in Indemnified Taxes) United States withholding tax,
if any, applicable with respect to the Assignee on such date. If any form
or document referred in this subsection (a) requires the disclosure of
information, other than information necessary to compute the tax payable
and information required on the Closing Date by Internal Revenue Service
Form W-8BEN or W-8ECI or the related certificate described above, that the
applicable Lender or Assignee reasonably considers to be confidential, such
Lender or Assignee shall give notice thereof to the Borrower and shall not
be obligated to include in such form or document such confidential
information.
(b) For any period with respect to which a Lender or Assignee has
failed to provide the Borrower and the Agent with the appropriate form,
certificate or other document described in subsection (a) above (other than
if such failure is due to a change in law, or in the interpretation or
application thereof, occurring after the date on which a
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form, certificate or other document originally was required to be provided
or if such form, certificate or other document otherwise is not required
under subsection (a) above), such Lender or Assignee shall not be entitled
to additional amounts or indemnification under Section 5.1 with respect to
Indemnified Taxes imposed by the United States by reason of such failure;
provided, however, that should a Lender or Assignee become subject to
Indemnified Taxes because of its failure to deliver a form, certificate or
other document required hereunder, the Borrower shall take steps as such
Lender of Assignee shall reasonably request to assist such Lender or
Assignee to recover such Indemnified Taxes.
(c) If any Lender determines, as a result of any change after the date
hereof in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower and the Agent any form or certificate that such Lender is
obligated to submit pursuant to Section 14.10(a) or that such Lender is
required to withdraw or cancel any such form or certificate previously
submitted or any such form or certificate otherwise becomes ineffective or
inaccurate, such Lender shall promptly notify the Borrower and the Agent of
such fact and the Lender shall to that extent not be obligated to provide
any such form or certificate and will be entitled to withdraw or cancel any
affected form or certificate, as applicable.
(d) If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section 14.10, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation
or replacement of the Agent.
14.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its option
and in its sole discretion, to release any Agent's Lien upon any Collateral
(i) upon the termination of the Commitments and payment and satisfaction in
full by the Borrower of all Loans and reimbursement obligations in respect
of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such Obligations are
due) and payment of all other obligations; (ii) constituting property being
sold or disposed of if the Borrower certifies to the Agent that the sale or
disposition is made in compliance with Section 9.8 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which the Loan Parties owned no interest at the
time the Lien was granted or at any time thereafter; or (iv) constituting
property leased to any Loan Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement. Except as
provided
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above, the Agent will not release any of the Agent's Liens without the
prior written authorization of the Lenders; provided that the Agent may, in
its discretion and without the prior written authorization of the Lenders,
release the Agent's Liens on (x) Accounts, Inventory and other Collateral
in which the Agent has a first priority Lien valued in the aggregate not in
excess of $5,000,000 and (y) Collateral in which the Agent does not have a
first priority Lien without limitation as to amount if the holder of the
prior Lien therein releases its Lien in such Collateral and receives any
proceeds from the sale or other disposition of such Collateral. Upon
request by the Agent or any Loan Party at any time, the Lenders will
confirm in writing the Agent's authority to release any Agent's Liens upon
particular types or items of Collateral pursuant to this Section 14.11.
(b) Upon receipt by the Agent of any authorization required pursuant
to Section 14.11(a) from the Lenders of the Agent's authority to release
any Agent's Liens upon particular types or items of Collateral, and upon at
least 5 Business Days' prior written request by the Borrower, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent's Liens
upon such Collateral; provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's
opinion, would expose the Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without
recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of any Loan Party in respect
of) all interests retained by any Loan Party, including (without
limitation) the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any of the Loan
Parties or is cared for, protected or insured or has been encumbered, or
that the Agent's Liens have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any
duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent pursuant
to any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
the Agent may act in any manner it may deem appropriate, in its sole
discretion given the Agent's own interest in the Collateral in its capacity
as one of the Lenders and that the Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing.
14.12 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of all Lenders, set off against the
Obligations, any amounts owing by such Lender to any of the Loan Parties or
any accounts of any of the Loan Parties now or hereafter maintained with
such Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so by the Agent, take or cause to be taken any
action to enforce its rights under this Agreement or against any of the
Loan Parties, including,
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without limitation, the commencement of any legal or equitable proceedings,
to foreclose any Lien on, or otherwise enforce any security interest in,
any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of any Loan Party to such Lender
arising under, or relating to, this Agreement or the other Loan Documents,
except for any such proceeds or payments received by such Lender from the
Agent pursuant to the terms of this Agreement, or (ii) payments from the
Agent in excess of such Lender's ratable portion of all such distributions
by the Agent, such Lender shall promptly (1) turn the same over to the
Agent, in kind, and with such endorsements as may be required to negotiate
the same to the Agent, or in same day funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance
with the applicable provisions of this Agreement, or (2) purchase, without
recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received
shall be applied ratably as among the Lenders in accordance with their Pro
Rata Shares; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to
the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
14.13 Agency for Perfection. Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.14 Payments by Agent to Lenders. All payments to be made by the Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance)
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans, or otherwise.
14.15 Concerning the Collateral and the Related Loan Documents. Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Documents relating to the Collateral, for the ratable benefit of the Agent and
the Lenders. Each Lender agrees that any action taken by the Agent, Majority
Lenders, Required Lenders or all Lenders, as applicable, in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral,
and the exercise by the Agent, the Majority Lenders, the Required Lenders or all
Lenders, as applicable, of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.
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The Lenders acknowledge that the Revolving Loans, Agent Advances, Bank Loans,
Hedge Agreements, Bank Products and all interest, fees and expenses hereunder
constitute one Debt, secured pari passu by all of the Collateral.
14.16 Field Audit and Examination Reports: Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared
by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither the Bank nor the
Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other
party performing any audit or examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the
Loan Parties' books and records, as well as on representations of the Loan
Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may
reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to
Borrower, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of Borrower; and (ii) to
pay and protect, and indemnify, defend and hold the Agent and any such
other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses and other amounts
(including, without limitation Attorney Costs) incurred by the Agent and
any such other Lender preparing a Report as the direct or indirect result
of any third parties who might obtain all or part of any Report through the
indemnifying Lender.
14.17 Relation Among Lenders. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.
14.18 The Arranger and Co-Agents. Etc. Neither the Arranger nor any
co-agent, co-arranger, syndication agent or documentation agent in its capacity
as such shall have any right, power, obligation, liability, responsibility or
duty under this Agreement.
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ARTICLE 15
MISCELLANEOUS
15.1 Severability. The illegality or unenforceability of any provision of
this Agreement or any other Loan Document or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement, any other Loan
Document or any instrument or agreement required hereunder.
15.2 Governing Law: Choice of Forum: Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES
WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE
OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF
NEW YORK; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, THE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH LOAN PARTY, THE AGENT AND
THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL
HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS
DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR
OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT
ITS ADDRESS SET FORTH
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IN SECTION 15.7 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FOUR
(4) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS.
NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO
SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
15.3 WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE LENDERS AND THE AGENT EACH
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH LOAN
PARTY, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
15.4 Survival of Representations and Warranties. All of the Borrower's
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
15.5 Other Security and Guaranties. The Agent, may, without notice or
demand and without affecting any Loan Party's obligations hereunder or under any
other Loan Document, from time to time: (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part of the
Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.
15.6 Fees and Expenses. Each Loan Party agrees, jointly and severally, to
pay to the Agent, for its benefit, on demand, all reasonable costs and expenses
that Agent pays or incurs in connection with the negotiation, preparation,
syndication, consummation, administration, enforcement, and termination of this
Agreement and any of the other Loan Documents and each Loan Party agrees to pay
to each Lender all reasonable costs and expenses that such Lender pays or incurs
in connection with the enforcement of this Agreement and the other Loan
Documents,
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including, in each case, without limitation: (a) Attorney Costs; (b) reasonable
costs and expenses (including attorneys' and paralegals' fees and disbursements)
for any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions contemplated thereby;
(c) costs and expenses of lien and title searches and title insurance; (d)
taxes, fees and other charges for recording mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Agent's Liens (including reasonable costs and expenses paid or
incurred by the Agent in connection with the consummation of Agreement); (e)
sums paid or incurred to pay any amount or take any action required of Borrower
or other Loan Party under the Loan Documents that Borrower or other Loan Party
fails to pay or take; (f) costs of appraisals, inspections, and verifications of
the Collateral, including, without limitation, travel, lodging, and meals for
inspections of the Collateral and the Loan Parties' operations by the Agent plus
the Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $750 per day (or
portion thereof) for each Person retained or employed by the Agent with respect
to each field examination or audit); (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining Payment Accounts and lock boxes; and (h) costs and expenses of
preserving and protecting the Collateral. In addition, each Loan Party agrees,
jointly and severally, to pay costs and expenses incurred by the Agent
(including Attorneys' Costs) to the Agent, for its benefit, on demand, and to
the other Lenders for their benefit, on demand, and all reasonable fees,
expenses and disbursements incurred by such other Lenders for one law firm
retained by such other Lenders, in each case, paid or incurred to obtain payment
of the Obligations, enforce the Agent's Liens, sell or otherwise realize upon
the Collateral, and otherwise enforce the provisions of the Loan Documents, or
to defend any claims made or threatened against the Agent or any Lender arising
out of the transactions contemplated hereby (including without limitation,
preparations for and consultations concerning any such matters). Without
limiting the foregoing, the Loan Parties shall also pay on demand, jointly and
severally, directly or at the option of the Agent through direct charges to the
outstanding balance of the Loan all reasonable costs and expenses incurred by
the Agent or any Lender in connection with any litigation, contest, dispute,
suit or proceeding relating to this Agreement or any other Loan Document. The
foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by any Loan Party. All of the
foregoing costs and expenses shall be charged to the Borrower's Loan Account as
Revolving Loans as described in Section 4.4.
15.7 Notices. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof;
including, but not limited to, delivery by overnight mail and courier service,
(b) four (4) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted, in each
case addressed to the party to be notified as follows:
if to the Agent or to the Bank:
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Bank of America, N.A.
c/o Fleet Retail Group, LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to any Loan Party:
c/o ▇▇▇▇▇ ▇▇▇▇▇, Inc
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Senior Vice President and Chief
Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Shearman & Sterling LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Pachulski, Stang, Ziehl, Young, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
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15.8 Waiver of Notices. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate the Obligations and
notice of acceleration of the Obligations, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on any Loan
Party which the Agent or any Lender may elect to give shall entitle such Loan
Party to any or further notice or demand in the same, similar or other
circumstances.
15.9 Binding Effect. The provisions of this Agreement shall be binding upon
and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by Borrower without prior written consent of the Agent and each Lender.
The rights and benefits of the Agent and the Lenders hereunder shall, if such
Persons so agree, inure to any party acquiring any interest in the Obligations
or any part thereof.
15.10 Indemnity of the Agent and the Lenders by the Loan Parties.
(a) Each Loan Party agrees, jointly and severally, to defend,
indemnify and hold the Agent-Related Persons, and each Lender and each of
its respective officers, directors, employees, counsel, representatives,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time (including at any time following repayment of the
Loans and the termination, resignation or replacement of the Agent or
replacement of any Lender) be imposed on, incurred by or asserted against
any such Person in any way relating to or arising out of this Agreement or
any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person
under or in connection with any of the foregoing, including with respect to
any investigation, litigation or proceeding (including the Cases or any
appellate proceeding) related to or arising out of this Agreement, any
other Loan Document, or the Loans or the use of the proceeds thereof;
whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Loan Parties shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities resulting solely from the willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
(b) Each Loan Party, jointly and severally, hereby indemnifies,
defends and holds harmless the Indemnified Persons from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply
whether the hazardous substance is on, under or about any of such Loan
Party's property or operations or property leased to such Loan Party or
property to which such Loan Party has sent any hazardous substance. The
indemnity includes but is not limited to Attorneys' Costs. The indemnity
extends to the Agent-Related Persons, and each Lender, its parent,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous Substances" means any
substance, material or waste that is or becomes designated or regulated as
"toxic," "hazardous," "pollutant,"
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or "contaminant" or a similar designation or regulation under any federal,
state or local law (whether under a common law, statute, regulation or
otherwise) or judicial or administrative interpretation of such, including
without limitation petroleum or natural gas. This indemnity will survive
termination of the Agreement and the repayment of all other Obligations.
15.11 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY LOAN PARTY, ANY
LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, ADVISORS OR
ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY AND EACH LENDER HEREBY
WAIVES, RELEASES AND AGREES NOT TO ▇▇▇ UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER
OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
15.12 Final Agreement. This Agreement and the other Loan Documents are
intended by the Loan Parties, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement among them. Upon execution,
this Agreement supersedes any and all prior oral or written agreements relating
to the subject matter hereof except for the Fee Letter. No modification,
rescission, waiver, release, or amendment of any provision of this Agreement or
any other Loan Document shall be made, except in accordance with the terms of
this Agreement or any other Loan Document. All borrowings made and letters of
credit issued under the DIP Loan Agreement shall, upon execution hereof; be
deemed Borrowings hereunder or Letters of Credit issued hereunder, and all terms
and conditions hereof shall apply to such borrowings and letters of credit, and
to the parties hereto with respect to such borrowings and letters of credit.
15.13 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each of the Loan Parties in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
15.14 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.15 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Loan Party, any such notice being waived by each
Loan Party 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 by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Loan Party
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may
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be contingent or unmatured. Each Lender agrees promptly to notify the Borrower
and the Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO
LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH
LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
15.16 Joint and Several Liability. The Loan Parties shall be liable for all
amounts due to the Agent and/or any Lender under this Agreement, regardless of
which Loan Party actually receives Loans or other extensions of credit hereunder
(including the issuance of Letters of Credit for the account of the Borrower) or
the amount of such Loans received or Letters of Credit issued or the manner in
which the Agent and/or such Lender accounts for such Loans or other extensions
of credit on its books and records. The Borrower's Obligations with respect to
Loans made to it and Letters of Credit issued for its account, and each Loan
Party's Obligations arising as a result of the joint and several liability of
the Loan Parties hereunder, with respect to Loans made to the Borrower and
Letters of Credit issued for the account of the Borrower hereunder, shall be
separate and distinct Obligations, but all such Obligations shall be primary
Obligations of each Loan Party.
Each Loan Party's Obligations arising as a result of the joint and several
liability of the Loan Parties hereunder with respect to Loans or other
extensions of credit made to the Borrower hereunder (including the issuance of
Letters of Credit for the account of Borrower) shall, to the fullest extent
permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of any or all of
the other Loan Parties or of any promissory note or other document evidencing
all or any part of the Obligations of any or all other Loan Parties, (ii) the
absence of any attempt to collect the Obligations from any or all of the other
Loan Parties, or any other security therefor, or the absence of any other action
to enforce the same, (iii) the waiver, consent, extension, forbearance or
granting of any indulgence by the Agent and/or any Lender with respect to any
provision of any instrument evidencing the Obligations of any or all of the
other Loan Parties, or any part thereof; or any other agreement now or hereafter
executed by any or all of the other Loan Parties and delivered to the Agent
and/or any Lender, (iv) the failure by the Agent and/or any Lender to take any
steps to perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for the Obligations of any or all of the
other Loan Parties, (v) the Agent's and/or any Lender's election, in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by any or all of the other Loan Parties, as debtors-in-possession under
Section 364 of the Bankruptcy Code, or (vii) any other circumstances which might
constitute a legal or equitable discharge or defense of any or all of the other
Loan Parties. With respect to the Loan Parties' Obligations arising as a result
of the joint and several liability of the Loan Parties hereunder with respect to
Loans or other extensions of credit made to or for the account of the Borrower
hereunder (including the issuance of Letters of Credit for the account of the
Borrower), each Loan Party waives, until the Obligations shall have been paid in
full and this Agreement shall have been terminated, any right to enforce any
right of subrogation or any remedy which the Agent and/or any Lender now has or
may hereafter have against any other Loan Party, any endorser or any guarantor
of all or any part of the Obligations, and any benefit of, and any right to
participate in, any security or
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collateral given to the Agent and/or any Lender to secure payment of the
Obligations or any other liability of any Loan Party to the Agent and/or any
Lender.
Upon any Event of Default (but subject to any applicable notice
requirements set forth in Section 11.2(a)), the Agent may proceed directly and
at once, without notice, against any Loan Party to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against any
other Loan Party or any other Person, or against any security or collateral for
the Obligations. Each Loan Party consents and agrees that the Agent shall be
under no obligation to marshal any assets in favor of any Loan Party or against
or in payment of any or all of the Obligations.
Each Loan Party hereby irrevocably designates and appoints Borrower as the
"Authorized Representative" under this Agreement to deliver and receive all
notices and written notices on behalf of such Loan Party and to receive on
behalf of such Loan Party and distribute all distributions of the Loan Parties
in accordance with the respective interests of the Loan Parties. Each Loan Party
hereby unconditionally releases the Agent, the Bank, the Lenders and any of
their Affiliates with respect to any claims, obligations or duties that such
Persons may otherwise have been deemed to possess absent the designation and
appointment set forth in the preceding sentence.
15.17 Confidentiality.
(a) Each Loan Party hereby consent that the Agent and each Lender may
issue and disseminate to the public general information describing the
credit accommodations entered into pursuant to this Agreement, including
the name and address of such Loan Party and a general description of such
Loan Party's business and may use such Loan Party's name in advertising and
other promotional material.
(b) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by any of the Loan
Parties and provided to the Agent or such Lender by or on behalf of such
Loan Party, under this Agreement or any other Loan Document, except to the
extent that such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Agent or such Lender, or
(ii) was or becomes available on a nonconfidential basis from a source
other than such Loan Party, provided that such source is not bound by a
confidentiality agreement with such Loan Party known to the Agent or such
Lender; provided, however, that the Agent and any Lender may disclose such
information (1) at the request or pursuant to any requirement of any
Governmental Authority to which the Agent or such Lender is subject or in
connection with an examination of the Agent or such Lender by any such
Governmental Authority; (2) pursuant to subpoena or other court process,
provided that such Lender shall endeavor to promptly provide notice of such
proposed or compulsory disclosure to the affected Loan Parties to enable
such Loan Parties to oppose such disclosure or seek an appropriate
protective order; (3) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (4) to the extent
reasonably required in connection with any litigation or proceeding
(including, but not limited to, any bankruptcy proceeding) to which the
Agent, any Lender or their respective
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Affiliates may be party provided that, except with respect to clause (5)
below, such Lender shall endeavor to promptly provide notice of such
proposed or compulsory disclosure to the affected Loan Parties to enable
such Loan Parties to oppose such disclosure or seek an appropriate
protective order; (5) to the extent reasonably required in connection with
the exercise of any remedy hereunder or under any other Loan Document,
provided that any confidential information shall be submitted under seal;
(6) to the Agent's or such Lender's independent auditors, accountants,
attorneys and other professional advisors, each of which shall be advised
of the confidential nature of the information the obligation not to
disclose such information except as provided herein; (7) to any prospective
Participant or Assignee under any Assignment and Acceptance, actual or
potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the Agent
and the Lenders hereunder; (8) as expressly permitted under the terms of
any other document or agreement regarding confidentiality to which such
Loan Party is party or is deemed party with the Agent or such Lender, and
(9) to its Affiliates.
(c) Notwithstanding anything to the contrary in this Agreement or the
Other Loan Documents, each of the parties, its subsidiaries and their
respective representatives, affiliates, employees, officers, directors or
other agents are permitted to disclose to any and all Persons, without
limitations of any kind, the tax treatment and tax structure of the credit
facility provided hereunder and all materials of any kind (including
opinions or other tax analyses) that are or have been provided to the
Borrower, the Lenders or the Agent related to such tax treatment and tax
structure.
15.18 Conflicts with Other Loan Documents. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control
(other than the Canadian Guarantees, in which case the Canadian Guarantees shall
govern).
15.19 Appraisals.
(a) The Agent may engage an appraiser to conduct and deliver an
Inventory Appraisal of the Inventory of Borrower once each year (with
quarterly updates thereof), each such Inventory Appraisal (and quarterly
update) to be in form, scope and substance satisfactory to the Agent.
(b) Notwithstanding the provisions of clause (a) of this Section
15.19, whenever an Event of Default exists, the Agent may engage an
appraiser to conduct and deliver appraisals or updates thereof of any or
all of the Collateral, each such appraisal or update thereof to be in form,
scope and substance satisfactory to the Agent.
The Borrower agrees to pay the Agent on demand the cost of each appraisal
or update thereof conducted pursuant to this Section 15.19.
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15.20 Patriot Act. Each Lender hereby notifies the Borrower that pursuant
to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the "Act"), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the Act.
15.21 Foreign Asset Control Regulations. Neither the advance of the
Revolving Loans nor the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 U.S.C. Section 1 et seq., as amended) (the
"Trading With the Enemy Act") or any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) (the "Foreign Assets Control Regulations") or any enabling legislation
or executive order relating thereto (which for the avoidance of doubt shall
include, but shall not be limited to (a) Executive Order 13224 of September 21,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
"Executive Order") and (b) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56)). Furthermore, none of the Borrower or its Affiliates (a) is
or will become a "blocked person" as described in the Executive Order, the
Trading With the Enemy Act or the Foreign Assets Control Regulations or (b)
engages or will engage in any dealings or transactions, or be otherwise
associated, with any such "blocked person".
ARTICLE 16
GUARANTEES
Each Guarantor party hereto unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor party hereto, the due and punctual payment of the principal of and
interest on the Revolving Loans and of all other Obligations, when and as due,
whether at maturity, by acceleration, by notice or prepayment or otherwise
(including all interest that accrues after the commencement of any case or
proceeding by or against the Borrower under any federal or state bankruptcy,
insolvency, receivership or similar law, whether or not allowed in such case or
proceeding). Each Guarantor party hereto further agrees that the Obligations may
be extended and renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee notwithstanding
any extension or renewal of any Obligations.
To the fullest extent permitted by law, each Guarantor party hereto waives
presentment to, demand of payment from and protest to the Borrower or any other
Person of any of the Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment. To the fullest extent permitted
by law, the obligations of a Guarantor party hereto hereunder shall not be
affected by (a) the failure of the Agent or any Lender to assert any claim or
demand or to enforce any right or remedy against Borrower or any other Guarantor
under the provisions of this Agreement or any of the other Loan Documents or
otherwise; (b) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, any of the other Loan Documents, any
guarantee or any other agreement; (c) the release of any security held by the
Agent or any Lender for the Obligations or any of them; or (d)
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the failure of the Agent or any Lender to exercise any right or remedy against
any other Guarantor of the Obligations.
Each Guarantor party hereto further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Agent or any Lender to any security (if
any) held for payment of the Revolving Loan or to any balance of any deposit
account or credit on the books of the Agent or any Lender in favor of Borrower
or any other Person.
To the fullest extent permitted by law, the obligations of each Guarantor
party hereto hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of any of
the Obligations or otherwise. Without limiting the generality of the foregoing,
to the fullest extent permitted by law, the obligations of each Guarantor party
hereto hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Agent or any Lender to assert any claim or demand or to
enforce any remedy under this Agreement or under any other Loan Document, any
guarantee or any other agreement, by any waiver or modification of any provision
thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or omission which may or
might in any manner or to any extent vary the risk of such Guarantor or
otherwise operate as a discharge of such Guarantor as a matter of law or equity.
Each Guarantor party hereto further agrees that its guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof; of principal or of interest on any Revolving Loan
or any other Obligations is rescinded or must otherwise be returned by the Agent
or any Lender upon the bankruptcy or reorganization of any Guarantor or
otherwise.
Each Guarantor party hereto hereby waives and releases all rights of
subrogation against each Loan Party and its property and all rights of
indemnification, contribution and reimbursement from each Loan Party and its
property, in each case in connection with this guarantee and any payments made
hereunder, and regardless of whether such rights arise by operation of law,
pursuant to contract or otherwise.
The Guarantors hereby agree as among themselves that, if any Guarantor shall
make an Excess Payment (as defined below), such Guarantor shall have a right of
contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this paragraph shall be subordinate
and subject in right of payment to the Obligations until such time as the
Obligations have been paid in full and all Commitments have been terminated, and
none of the Guarantors shall exercise any right or remedy under this paragraph
against any other Guarantor until the Obligations have been paid in full and all
Commitments have been terminated. For purposes of this paragraph, (a) "Excess
Payment" shall mean the amount paid by any Guarantor in excess of its Pro Rata
Share of any Obligations; (b) "Pro Rata Share" shall mean, for any Guarantor in
respect of any payment of Obligations by such Guarantor, the ratio (expressed as
a
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percentage) as of the date of such payment of Obligations of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Guarantors; provided, however, that, for purpose of calculating the Pro Rata
Shares of the Guarantors in respect of any payment of Obligations, any Guarantor
that became a Guarantor subsequent to the date of any such payment shall be
deemed to have been a Guarantor on the date of such payment and the financial
information for such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such payment; and (c)
"Contribution Share" shall mean, for any Guarantor in respect of any Excess
Payment made by any other Guarantor, the ratio (expressed as a percentage) as of
the date of such Excess Payment of (i) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Guarantors other than
the maker of such Excess Payment exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Guarantors other than the maker of such Excess Payment; provided, however, that,
for purposes of calculating the Contribution Shares of the Guarantors in respect
of any Excess Payment, any Guarantor that became a Guarantor subsequent to the
date of any such Excess Payment shall be deemed to have been a Guarantor on the
date of such Excess Payment and the financial information for such Guarantor as
of the date such Guarantor became a Guarantor shall be utilized for such
Guarantor in connection with such Excess Payment.
[SIGNATURE PAGES TO FOLLOW.]
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWER"
▇▇▇▇▇ ▇▇▇▇▇, INC.
By /s/ ▇▇▇▇▇▇ Gylser
-------------------------------------
Name: ▇▇▇▇▇▇ Gylser
----------------------------------
Title: Vice President
---------------------------------
"GUARANTORS"
▇▇▇▇▇ ▇▇▇▇▇ HOLDINGS, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Senior Vice President and
Chief Operating Officer
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇ SERVICES, LLC
By /s/ ▇▇▇▇▇▇ Gylser
-------------------------------------
Name: ▇▇▇▇▇▇ Gylser
----------------------------------
Title: Vice President, Treasurer
---------------------------------
DISTRIBUTION FULFILLMENT SERVICES,
INC. (DFS)
By /s/ ▇▇▇▇▇▇ Gylser
-------------------------------------
Name: ▇▇▇▇▇▇ Gylser
----------------------------------
Title: Vice President, Treasurer
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇ INFORMATION TECHNOLOGY, LLC
By /s/ ▇▇▇▇▇▇ Gylser
-------------------------------------
Name: ▇▇▇▇▇▇ Gylser
----------------------------------
Title: Vice President, Treasurer
---------------------------------
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"AGENT"
BANK OF AMERICA, N.A. as the Agent
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
"LENDERS"
BANK OF AMERICA, N.A., as a Lender
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION.,
as a Lender
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Duly Authorized Signatory
---------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
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SCHEDULE 1.1(A)
COMMITMENTS
Lender Commitment
------------------------ ---------------
Bank of America, N.A. $ 50,000,000.00
General Electric Capital
Corporation $ 50,000,000.00
The CIT Group/Business
Credit, Inc. $ 50,000,000.00
TOTAL $150,000,000.00
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BORROWING BASE
AS OF (DATE)
1 Net Amount of Eligible Major Credit Card Receivables
2 Advance Rate 85%
3 MAJOR CREDIT CARD RECEIVABLES RECEIVABLES AVAILABILITY [1*2] 0
4 Stock Ledger Ending Inventory Less
5 Shrink
6 RTV
7 Salvage
8 Other
9 Total Ineligible Inventory (sum of lines 5-8)
10 Eligible Inventory (line 4 - line 9)
11 Orderly Liquidation Value (96.2% Dec 16 - Sept 30 /
103.5% Oct 1 - Dec 15) 91.5%
12 Orderly Liquidation Value of Eligible Inventory
(line 10 * line 11)
13 Loan to Value 90.0%
14 INVENTORY AVAILABILITY (LINE 12 * LINE 13)
15 Orderly Liquidation Percentage for Inventory 91.5%
16 Loan to Value 90.0%
17 Advance Rate 82.4%
18 Undrawn Doc. Letters of Credit within 90 days
19 L/C INVENTORY AVAILABILITY (LINE 17 * LINE 18)
20 Eligible In Transit Inventory
21 Orderly Liquidation Value (xx% date xx% date) 91.5%
22 Orderly Liquidation Value of Eligible In Transit Inventory
(line 20 * line 21)
23 Loan to Value 90%
24 IN TRANSIT INVENTORY AVAILABILITY (LINE 12 * LINE 13)
25 GROSS COLLATERAL AVAILABILITY (LINES 3+14+19+24)
less Reserves
26 Bank Product Reserves
27 Accrued, unpaid interest on the Obligations
28 Two months rent in PA, VA, WA
29 Environmental Compliance Reserves
30 50% of gift certificates, gift cards, merchandise credits
31 Other
32 Total of Reserves (sum lines 26-31)
33 Total Borrowing Base (line 25 - line 32)
Memo: L/C and In Transit % to Borrowing Base no more than 30%
A Borrowing Base
B Maximum Revolver Amount
C Lesser of A and B
D Unpaid balance of all Revolving Loans
E Aggregate amount of all Pending Revolving Loans
(equals advance request below)
F Undrawn amount of all outstanding Letters of Credit
G Unpaid reimbursement Obligations in respect of Letters of Credit
H Sum of D-G
I Combined Availability (line C-H)
Occurance of Combined Availability Threshold ▇▇▇▇▇?
ADVANCE REQUEST _______________________
The undersigned represents and warrants that the information set forth above has
been prepared in accordance with the requirements of the Loan and Security
Agreement dated June ___, 2005 between the Borrower and Bank of America NA, THE
CIT GROUP/BUSINESS CREDIT, INC, and GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇, INC.
AUHTORIZED SIGNATURE:
----------------------------------------
TITLE: (Title)
--------------------------------
EXHIBIT B
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance")
dated as of ____________________, 200_ is made between _________________________
(the "Assignor") and __________________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Loan and Security Agreement,
dated as of June 21, 2005 (as amended, amended and restated, modified,
supplemented or renewed, the "Loan and Security Agreement"; capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
thereto in the Loan and Security Agreement), made by, among others, (i) ▇▇▇▇▇
▇▇▇▇▇, Inc., a Delaware corporation ("Borrower"), (ii) each of its direct and
indirect Subsidiaries that is a signatory thereto as a Guarantor and ▇▇▇▇▇ ▇▇▇▇▇
Holdings, Inc., a Delaware corporation ("Holdings") as a Guarantor (each a
"Guarantor" and collectively, the "Guarantors"), (iii) the lenders from time to
time party thereto (the "Lenders"), and (iv) Bank of America, N.A., as agent (in
such capacity, together with any successor in such capacity, the "Agent").
WHEREAS, as provided under the Loan and Security Agreement, the Assignor
has a Commitment to make Revolving Loans to the Borrower and participate in
Letters of Credit and Credit Support in an aggregate principal amount at any
time outstanding not to exceed $_______________;
[WHEREAS, the Assignor has made Revolving Loans in the aggregate principal
amount of $__________ to the Borrower] [no Revolving Loans are outstanding under
the Loan and Security Agreement];
[WHEREAS, the Assignor has acquired a participation in its pro rata share
of the Lenders' liabilities under Letters of Credit and Credit Support in an
aggregate principal amount of $____________ (the "L/C Obligations")] [no Letters
of Credit are outstanding under the Loan and Security Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Loan and Security Agreement in
respect of its Commitment thereunder, together with a corresponding portion of
each of its outstanding Revolving Loans and L/C Obligations, in an amount equal
to $__________ (the "Assigned Amount") on the terms and subject to the
conditions set forth herein and the Assignee wishes to accept assignment of such
rights and to assume such obligations from the Assignor on such terms and
subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
a. Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) ___% of (A) the Commitment, [and the
Revolving Loans] [and L/C Obligations] of the Assignor and (B) all related
rights, benefits, obligations, liabilities and indemnities of the Assignor under
and in connection with the Loan and Security Agreement and the other Loan
Documents.
b. With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Loan and Security
Agreement and succeed to all of the rights and be obligated to perform all of
the obligations of a Lender under the Loan and Security Agreement, including the
requirements concerning confidentiality and the payment of indemnification, with
a Commitment in an amount equal to the Assigned Amount and acquire the rights of
the Assignor with respect to a corresponding portion of each of its outstanding
Revolving Loans. The Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan and Security
Agreement are required to be performed by it as a Lender. It is the intent of
the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Loan and Security Agreement to the extent such obligations have been assumed
by the Assignee; provided, however, the Assignor shall not relinquish its rights
under Sections 4.1, 4.3 and 15.10 of the Loan and Security Agreement to the
extent such rights relate to the time prior to the Effective Date.
c. After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's Commitment will be $__________.
d. After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor's Commitment will be $__________.
2. Payments.
a. As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the principal amount of all Revolving Loans assigned hereunder.
b. The Assignee further agrees to pay to the Agent a processing
fee in the amount specified in Section 13.3(a) of the Loan and Security
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the interests and obligations assigned to and assumed by
the Assignee hereunder shall be for the
account of the Assignor. Any interest, fees and other payments accrued on
and after the Effective Date with respect to the interests and obligations
assigned to and assumed by the Assignee hereunder shall be for the account
of the Assignee. Each of the Assignor and the Assignee agrees that it will
hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding two sentences and pay to the other party any such amounts which
it may receive promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Loan
and Security Agreement and the Schedules and Exhibits thereto, together
with copies of the most recent financial statements of the Borrower and
Guarantors, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter
into this Assignment and Acceptance; and (b) 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 and legal
decisions in taking or not taking action under the Loan and Security
Agreement.
5. Effective Date; Notices.
a. As between the Assignor and the Assignee, the effective date
for this Assignment and Acceptance shall be __________, 200_ (the "Effective
Date"); provided that the following conditions precedent have been satisfied on
or before the Effective Date:
i. this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
ii. the consent of the Agent required for an effective
assignment of the Assigned Amount by the Assignor to the
Assignee shall have been duly obtained and shall be in full
force and effect as of the Effective Date;
iii. the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Assignment and Acceptance;
iv. the Assignee shall have complied with Section 13.3 of the
Loan and Security Agreement (if applicable);
v. the processing fee referred to in Section 2(b) hereof and in
Section 13.3(a) of the Loan and Security Agreement shall
have been paid to the Agent; and
b. Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Agent for acknowledgment by the
Agent, a Notice of Assignment in the form attached hereto as Schedule 1.
6. [Agent.
a. The Assignee hereby appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
and Security Agreement as are delegated to the Agent by the Lenders pursuant to
the terms of the Loan and Security Agreement.
b. The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Loan and Security Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Assignor, the Agent
and the Borrower that under applicable law and treaties no tax will be
required to be withheld with respect to any payments to be made to the
Assignee hereunder, (b) agrees to furnish (if it is organized under the
laws of any jurisdiction other than the United States or any State thereof)
to the Agent and the Borrower prior to the time that the Agent or the
Borrower is required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of either U.S. Internal Revenue
Service Form W-8ECI or U.S. Internal Revenue Service Form W-8BEN (wherein
the Assignee claims entitlement to the benefits of a tax treaty that
provides for a complete exemption from U.S. federal income withholding tax
on all payments hereunder) and agrees to provide new Forms W-8ECI or W-8BEN
upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assignee, and (c)
agrees to comply with all applicable U.S. laws and regulations with regard
to such withholding tax exemption.
8. Representations and Warranties.
a. The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim; (ii) it is
duly organized and existing and it has the full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Loan and Security Agreement, no further action by, or notice to, or filing
with, any Person is required of it for such execution, delivery or performance;
and (iv) this Assignment and Acceptance has been duly executed and delivered by
it and constitutes the legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights and
to general equitable principles.
b. The Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan and Security Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan and Security Agreement or any other instrument or document furnished
pursuant thereto. The Assignor makes no representation or warranty in connection
with, and assumes no responsibility with respect to, the solvency, financial
condition or statements of the Borrower or the Guarantors, or the performance or
observance by the Borrower or the Guarantors, of any of their respective
obligations under the Loan and Security Agreement or other Loan Documents or any
other instrument or document furnished in connection therewith.
c. The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Loan and Security Agreement, no further action by, or
notice to, or filing with, any Person is required of it for such execution,
delivery or performance; (iii) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligation of the Assignee, enforceable against the Assignee in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights and to general equitable principles; and (iv) it is
an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrower or the Agent, which may be
required in connection with the assignment and assumption contemplated
hereby.
10. Miscellaneous.
a. Any amendment or waiver of any provision of this Assignment
and Acceptance shall be in writing and signed by the parties hereto. No failure
or delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
b. All payments made hereunder shall be made without any set-off
or counterclaim.
c. The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
d. This Assignment and Acceptance may be executed in any number
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
e. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in New York City over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. Each party to
this Assignment and Acceptance hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
f. THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AND SECURITY AGREEMENT,
ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
------------------------------------
Title:
---------------------------------
Address:
-------------------------------
----------------------------------------
----------------------------------------
[ASSIGNEE]
By:
------------------------------------
Title:
---------------------------------
Address:
-------------------------------
----------------------------------------
----------------------------------------
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 200_
Bank of America, N.A., as Agent
c/o Fleet Retail Group
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇ ▇▇▇▇▇, Inc.
Ladies and Gentlemen:
We refer to the Loan and Security Agreement, dated as of June 21, 2005 (as
amended, amended and restated, modified, supplemented or renewed, the "Loan and
Security Agreement"; capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned thereto in the Loan and Security
Agreement), made by, among others, (i) ▇▇▇▇▇ ▇▇▇▇▇, Inc., a Delaware corporation
("Borrower"), (ii) each of its direct and indirect Subsidiaries that is a
signatory thereto as a Guarantor and ▇▇▇▇▇ ▇▇▇▇▇ Holdings, Inc., a Delaware
corporation ("Holdings") as a Guarantor (each a "Guarantor" and collectively,
the "Guarantors"), (iii) the lenders from time to time party thereto (the
"Lenders"), and (iv) Bank of America, N.A., as agent (in such capacity, together
with any successor in such capacity, the "Agent").
1. We hereby give you notice of, and request the consent of the Agent to,
the assignment pursuant to the Assignment and Acceptance attached hereto (the
"Assignment and Acceptance") by _________________________ (the "Assignor") to
___________________ (the "Assignee") of ______% of the right, title and interest
of the Assignor in and to the Loan and Security Agreement (including the right,
title and interest of the Assignor in and to [the Commitment of the Assignor and
each of the outstanding Revolving Loans and L/C Obligations (as defined in the
Assignment and Acceptance) of the Assignor.
2. The Assignee agrees that, upon receiving the consent of the Agent to
such assignment, the Assignee will be bound by the terms of the Loan and
Security Agreement as fully and to the same extent as if the Assignee were the
Lender originally holding such interest in the Loan and Security Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: ______________________________
Address: ______________________________
______________________________
______________________________
Attention: ______________________________
Telephone: (____________________________)
Telecopier: (____________________________)
Telex (Answerback): ______________________________
(B) Payment Instructions:
Account No.: ______________________________
At: ______________________________
Reference: ______________________________
Attention: ______________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[NAME OF ASSIGNEE]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
Bank of America, N.A.,
as Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT C
NOTICE OF BORROWING
Date: ______________, 200_
To: Bank of America, N.A., as agent (the "Agent") for the lenders (the
"Lenders") from time to time party to the Loan and Security Agreement,
dated as of June 21, 2005 (as extended, renewed, amended or restated from
time to time, the "Loan and Security Agreement"; capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned
thereto in the Loan and Security Agreement), made by, among others, (i)
▇▇▇▇▇ ▇▇▇▇▇, Inc., a Delaware corporation ("Borrower"), (ii) each of its
direct and indirect Subsidiaries that is a signatory thereto as a Guarantor
and ▇▇▇▇▇ ▇▇▇▇▇ Holdings, Inc., a Delaware corporation ("Holdings") as a
Guarantor (each a "Guarantor" and collectively, the "Guarantors"), (iii)
the lenders from time to time party thereto (the "Lenders"), and (iv) Bank
of America, N.A., as agent (in such capacity, together with any successor
in such capacity, the "Agent").
Ladies and Gentlemen:
The Borrower refers to the Loan and Security Agreement and hereby gives you
notice irrevocably of the Borrowing requested by the undersigned specified
below:
1. The Business Day of the proposed Borrowing is _____________,
200_.
2. The aggregate amount of the proposed Borrowing is
$______________.
3. The Borrowing is to be comprised of [$__________ of Base Rate
Loans] and [$____________ of LIBOR Revolving Loans.]
[4. The duration of the initial Interest Period for the LIBOR
Revolving Loans included in the Borrowing shall be _____ months.]
The Borrower hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) The representations and warranties contained in the Loan and Security
Agreement and the other Loan Documents are true and correct in all material
respects as though made on and as of such date (both immediately prior to and
after giving effect to the proposed Borrowing) and, to the extent such
representations and warranties specifically relate to an earlier date, were true
and correct in all material respects on and as of such earlier date;
(b) No Default or Event of Default has occurred and is continuing, or would
result from such proposed Borrowing; and
(c) The proposed Borrowing will not exceed the Combined Availability of the
Borrower.
BORROWER:
▇▇▇▇▇ ▇▇▇▇▇, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT D
NOTICE OF CONTINUATION/CONVERSION
Date: ______________, 200_
To: Bank of America, N.A., as agent (the "Agent") for the lenders (the
"Lenders") from time to time party to the Loan and Security Agreement,
dated as of June 21, 2005 (as extended, renewed, amended or restated from
time to time, the "Loan and Security Agreement"; capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned
thereto in the Loan and Security Agreement), made by, among others, (i)
▇▇▇▇▇ ▇▇▇▇▇, Inc., a Delaware corporation ("Borrower"), (ii) each of its
direct and indirect Subsidiaries that is a signatory thereto as a Guarantor
and ▇▇▇▇▇ ▇▇▇▇▇ Holdings, Inc., a Delaware corporation ("Holdings") as a
Guarantor (each a "Guarantor" and collectively, the "Guarantors"), (iii)
the lenders from time to time party thereto (the "Lenders"), and (iv) Bank
of America, N.A., as agent (in such capacity, together with any successor
in such capacity, the "Agent").
Ladies and Gentlemen:
The Borrower refers to the Loan and Security Agreement and hereby gives you
notice irrevocably of the [conversion] [continuation] of the Revolving Loans
specified herein, that:
1. The Continuation/Conversion Date is __________, 200_.
2. The aggregate amount of the Revolving Loans to be [converted]
[continued] is $_______________.
3. The Revolving Loans are to be [converted into] [continued
as][LIBOR Revolving] [Base Rate] Loans.
[4. The duration of the initial Interest Period for the LIBOR
Revolving Loans included in the [conversion] [continuation] shall
be ___ months.]
The Borrower hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Continuation/Conversion
Date, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) The representations and warranties contained in the Loan and Security
Agreement and the other Loan Documents are true and correct in all material
respects as though made on and as of such date (both immediately prior to and
after giving effect to the proposed Continuation/Conversion Date) and, to the
extent such representations and warranties specifically relate to an earlier
date, were true and correct in all material respects on and as of such earlier
date; and
(b) No Default or Event of Default has occurred and is continuing, or would
result from such proposed [conversion] [continuation].
BORROWER:
▇▇▇▇▇ ▇▇▇▇▇, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SCHEDULE 1.1(A)
COMMITMENTS
LENDER COMMITMENT
------ ----------
BANK OF AMERICA, NA $ 50,000,000.00
GENERAL ELECTRIC CAPITAL CORPORATION $ 50,000,000.00
THE CIT GROUP/BUSINESS CREDIT, INC. $ 50,000,000.00
TOTAL $150,000,000.00
1
SCHEDULE 1.1(B)
EXCLUDED SUBSIDIARIES
SUBSIDIARY STATE/COUNTRY OF INCORPORATION
---------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇ GmbH & Co.* Germany
▇▇▇▇▇ ▇▇▇▇▇ Japan, Inc.* Japan
Financial Services Acceptance Corporation ▇▇
▇▇▇▇▇▇▇ Acceptance Corporation DE
▇▇▇▇▇ ▇▇▇▇▇ Diversified Sales, LLC Delaware
▇▇▇▇▇ ▇▇▇▇▇ International Development, LLC Delaware
* ▇▇▇▇▇ ▇▇▇▇▇ GmbH & Co. and ▇▇▇▇▇ ▇▇▇▇▇ Japan, Inc. have been included in
this Schedule 1.1(b) out of an abundance of caution; however, neither
entity is a "Subsidiary" under the Agreement.
2
SCHEDULE 1.1(C)
MAJOR CREDIT CARD PROGRAM AGREEMENTS
AGREEMENT EFFECTIVE DATE TERMINATION DATE
--------- ------------------ ----------------------------------------------
Merchant Services Agreement/Fee Schedule between September 1, 2003 August 31, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, N.A. and ▇▇▇▇▇ ▇▇▇▇▇, Inc., and
Bank of America Treasury Terms and Conditions
Card Acceptance Agreement between AMERICAN EXPRESS May 02, 2005 May 2, 2008. Can be terminated by either party
TRAVEL RELATED SERVICES COMPANY, INC. and ▇▇▇▇▇ after the initial three term with 120 day
▇▇▇▇▇, Inc., dated May 02, 2005 advance written notice by either party
Merchant Services Bankcard Agreement by and among June 18, 1999, July 8, 2005. Automatically renewable for
Spiegel, Inc., ▇▇▇▇▇ ▇▇▇▇▇, Inc. and Newport News, as amended on successive one-year periods unless terminated
Inc., THE CHASE MANHATTAN BANK (as successor to October 8, 2002 by either party upon 60 days' advance written
First Financial Bank) and Chase Merchant Services notice.
L.L.C.: pre-petition contract assumed by ▇▇▇▇▇
▇▇▇▇▇, Inc.
Amended and Restated Merchant Service Agreement May 25, 2005 Can be terminated by EB at any time with
between DISCOVER FINANCIAL SERVICES and ▇▇▇▇▇ advance written notice. Discover may terminate
▇▇▇▇▇, Inc. with 30 days advance written notice.
Private Label Credit Card Program Agreement May 2, 2003 May 2013
between WORLD FINANCIAL NETWORK NATIONAL BANK and
Spiegel, Inc. and ▇▇▇▇▇ ▇▇▇▇▇, Inc.
Merchant Agreement and Merchant Fee Schedule September 30, 2004 September 30, 2007. Automatic one year renewal
between PAYMENTECH CANADA and ▇▇▇▇▇ ▇▇▇▇▇ of unless terminated by either party with 60 days
Canada Inc. advance written notice prior to the end of any
term or renewal term.
▇
▇▇▇▇▇▇▇▇ #▇ ▇▇▇▇▇▇ to Card Acceptance Agreement May 2, 2005 May 2, 2008. Can be terminated by either party
between AMERICAN EXPRESS TRAVEL RELATED SERVICES after the initial three term with 120 day
COMPANY INC. and ▇▇▇▇▇ ▇▇▇▇▇ of Canada Inc. advance written notice by either party
4
SCHEDULE 6.1(A)(XIV)
COMMERCIAL TORT CLAIMS
Brookstone Company, Inc., et al., Plaintiffs (▇▇▇▇▇ ▇▇▇▇▇, Inc.) v. Pyramid
Company of ▇▇▇▇▇▇, et al., Defendants, pending before the U.S. District Court
for the Northern District of New York (Case No. 96-CV-1215-NAM-GLS).
5
SCHEDULE 6.3
CHIEF EXECUTIVE OFFICE, THE LOCATION OF ITS BOOKS AND RECORDS, THE LOCATIONS OF
THE COLLATERAL AND PLACES OF BUSINESS
LOCATION OF
COLLATERAL IN WHICH
SUBSIDIARY OF LOAN CHIEF ADMINISTRATIVE LOCATION OF LOAN PARTY HAS AN
LOAN PARTY PARTY OFFICE BOOKS AND RECORDS INTEREST PLACES OF BUSINESS
----------------- -------------------- --------------------- ----------------- -------------------- --------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ N/A WA
HOLDINGS, INC. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, INC. ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ Goods located in all ▇▇ ▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇ and District of
(excluding HI, WV Columbia);
and District of
Columbia) and in
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ (Alberta, British
Redmond, WA Columbia, Ontario,
Saskatchewan, Manitoba,
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇)
▇▇▇▇▇▇▇, ▇▇
15012 NE ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇/▇ ▇▇▇▇▇▇
Canada, Inc. Vaughan, Ontario
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ NE ▇▇▇▇ ▇▇▇▇▇▇
Services, LLC Groveport, OH ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇, Inc.
stores
6
located in certain
states.
Spiegel Group ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ N/A New Brunswick, Canada;
Teleservices-Canada, Toronto, Ontario
Inc. Groveport, OH
Distribution ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ 6600 Alum Creek OH
Fulfilment Services, Drive, Groveport, OH Drive, Groveport, OH
Inc. (DFS)
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Drive, Redmond, WA ▇▇▇▇▇▇▇▇▇▇▇ Drive, IL, WA
Information Westmont, IL Westmont, IL
Technology, LLC
SCHEDULE 6.15
INTELLECTUAL PROPERTY
▇▇▇▇▇ ▇▇▇▇▇, INC. TRADEMARKS
1. U.S. TRADEMARK REGISTRATIONS
TRADEMARK NUMBER DATE
--------- ------ ----
"Our creed. To give you such outstanding quality, value
service and guarantee that we may be worthy of your
high esteem" 2327855 03/14/00
Activator 2483723 08/28/01
All Week Long 1482049 03/22/88
Chehalis Sweater 2409309 11/28/00
Crosswinds 2284107 10/05/99
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ 06/05/01
Downlight 2474273 07/31/01
Ebtek 1990423 07/30/96
7
TRADEMARK NUMBER DATE
--------- ------ ----
Ebtek 2082388 07/22/97
Ebtek 2172875 07/14/98
Ebtek 2498168 10/16/01
▇▇▇▇▇ ▇▇▇▇▇ 880279 11/11/69
▇▇▇▇▇ ▇▇▇▇▇ 994152 09/24/74
▇▇▇▇▇ ▇▇▇▇▇ 2199981 10/27/98
▇▇▇▇▇ ▇▇▇▇▇ 2237509 04/06/99
▇▇▇▇▇ ▇▇▇▇▇ 2251500 06/08/99
▇▇▇▇▇ ▇▇▇▇▇ 2265464 07/27/99
▇▇▇▇▇ ▇▇▇▇▇ 2308646 01/18/00
▇▇▇▇▇ ▇▇▇▇▇ 2325813 03/07/00
▇▇▇▇▇ ▇▇▇▇▇ 2331757 03/21/00
▇▇▇▇▇ ▇▇▇▇▇ 2364451 07/04/00
▇▇▇▇▇ ▇▇▇▇▇ 2368565 07/18/00
▇▇▇▇▇ ▇▇▇▇▇ 2430268 02/20/01
▇▇▇▇▇ ▇▇▇▇▇ 2447116 04/24/01
▇▇▇▇▇ ▇▇▇▇▇ 2469401 07/17/01
▇▇▇▇▇ ▇▇▇▇▇ 2473338 07/31/01
▇▇▇▇▇ ▇▇▇▇▇ 2483518 08/28/01
▇▇▇▇▇ ▇▇▇▇▇ 2482728 08/28/01
▇▇▇▇▇ ▇▇▇▇▇ 2490354 09/18/01
▇▇▇▇▇ ▇▇▇▇▇ 2534952 01/29/02
▇▇▇▇▇ ▇▇▇▇▇ 2564655 04/23/02
▇▇▇▇▇ ▇▇▇▇▇ 2580307 06/11/02
▇▇▇▇▇ ▇▇▇▇▇ 2589917 07/02/02
▇▇▇▇▇ ▇▇▇▇▇ 2892465 10/12/04
▇▇▇▇▇ ▇▇▇▇▇ 2722529 06/03/03
▇▇▇▇▇ ▇▇▇▇▇ 2722528 06/03/03
▇▇▇▇▇ ▇▇▇▇▇ 2942552 04/19/05
▇▇▇▇▇ ▇▇▇▇▇ Adventurer 2260794 07/13/99
▇▇▇▇▇ ▇▇▇▇▇ Balance 2133309 01/27/98
▇▇▇▇▇ ▇▇▇▇▇ Coffee And Shop 2162220 06/02/98
8
TRADEMARK NUMBER DATE
--------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ Coffee and Shop 2215435 12/29/98
▇▇▇▇▇ ▇▇▇▇▇ Est. 1920 Stencil Goose (Design) 2307185 01/11/00
▇▇▇▇▇ ▇▇▇▇▇ Experience Based 2464677 06/26/01
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 2249685 06/01/99
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 2272158 08/24/99
▇▇▇▇▇ ▇▇▇▇▇ Home 2323764 02/29/00
▇▇▇▇▇ ▇▇▇▇▇ Legend for Four Generations and Design 2421176 01/16/01
▇▇▇▇▇ ▇▇▇▇▇ Legends 2010623 10/22/96
▇▇▇▇▇ ▇▇▇▇▇ Lifestyles 2363600 07/04/00
▇▇▇▇▇ ▇▇▇▇▇ Outdoor Outfitter Since 1920 (And Design) 1580777 01/30/99
▇▇▇▇▇ ▇▇▇▇▇ S.E.E.D. Fund 2178649 08/04/98
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 880280 11/11/69
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 1447361 07/14/87
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 2331753 03/21/00
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 2257761 06/29/99
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 2942551 04/19/05
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 2249698 06/01/99
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 2274112 08/31/99
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 2892466 10/12/04
▇▇▇▇▇ ▇▇▇▇▇ Since 1920 Goose Clock Design 2331904 03/21/00
Elkhorn 2801167 12/30/03
Experience Based 2464678 06/26/01
Guide Bag 2503096 10/30/01
Journeyman Bomber 2369427 06/18/00
▇▇▇▇ ▇▇▇▇▇ 798431 11/02/65
Laconner 2392157 10/03/00
More Bedding, More Bath, More At Home 2626680 09/24/02
North Cascade 2418414 01/02/01
Northwind 2001876 09/17/96
Our Guarantee Every Item We Sell Will Give You Complete
Satisfaction Or You May Return It For a Full Refund 2327854 03/14/00
Outdoor Gear for Life's Adventures 2724007 06/10/03
9
TRADEMARK NUMBER DATE
--------- ------ ----
Peel & Go (And Design) 2509561 11/20/01
Polar Parka 1023494 10/21/75
Ridgeline* 1861863 11/8/94
Snapjac 846314 03/19/68
Snowline* 1000773 12/31/74
Snohomish 2700812 03/25/03
Snohomish 2500760 10/23/01
Stormcheck 1488590 05/17/88
Stormcheck 2632241 10/08/02
Tapestry Vine* 2204237 11/17/98
Thermolene 1715903 09/15/92
Weatheredge 2375777 08/08/00
Windfoil 1483617 04/05/88
▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇ 2429474 02/20/01
2. U.S. TRADEMARK APPLICATIONS
TRADEMARK NUMBER DATE
--------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ Sport Shop Seattle 76/475072 12/13/02
Finespun 78/281909 08/01/03
Journeyman 76/027015 04/17/00
Lodge Collection 78/608317 04/13/05
Lodge Collection 78/608319 04/13/05
Lodge Collection 78/608320 04/13/05
Lodge Collection 78/608321 04/13/05
Lodge Collection 78/608323 04/13/05
Windcutter 78/488759 09/23/04
3. FOREIGN APPLICATIONS
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ 12 Philippines 42004 0011047 11/23/04
▇▇▇▇▇ ▇▇▇▇▇ Signature Design 12 Philippines 42004 0011048 11/23/04
10
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇ 11/24/94
▇▇▇▇▇ ▇▇▇▇▇ 18,21,24,25,42 Czech Republic 178214 3/25/02
▇▇▇▇▇ ▇▇▇▇▇ Signature 25,35 Uruguay 324.254 7/5/00
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ N/A 2/10/05
▇▇▇▇▇ ▇▇▇▇▇ 25 Singapore N/A 1/25/05
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 10/5/99
▇▇▇▇▇ ▇▇▇▇▇ 25 Mauritius N/A 2/11/05
4. FOREIGN REGISTRATIONS
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
Crosswinds 18 Canada TMA520019 11/30/99
Crosswinds 18 Germany 39824635 5/31/98
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇/▇▇/▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2168453 11/20/98
Desert Cloth 25 Canada 210946 1/6/76
Downlight 25 Canada 550308 8/30/01
Ebfleece 25 Canada 570492 11/8/02
Ebtek 18,25,28 Germany 39640125 9/30/96
Ebtek 18,25,28 UK & N. Ireland 2,113,271 10/18/96
Ebtek 14,18,25, Canada TMA544259 4/30/01
Ebtek 3 Canada TMA559776 3/27/02
▇▇▇▇▇ ▇▇▇▇▇ 25 Argentina 1915147 2/26/03
▇▇▇▇▇ ▇▇▇▇▇ 24 Japan 1,357,258 11/28/78
▇▇▇▇▇ ▇▇▇▇▇ 18,25 Indonesia 260691 6/29/90
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 8/26/92
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 8/26/92
▇▇▇▇▇ ▇▇▇▇▇ 16,20,24,25 Germany 2074047 12/22/92
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇ & ▇. ▇▇▇▇▇▇▇ B1,522,621 12/23/92
▇▇▇▇▇ ▇▇▇▇▇ 24 UK & N. Ireland B1,522,623 12/23/92
▇▇▇▇▇ ▇▇▇▇▇ 20 UK & N. Ireland B1,522,622 12/23/92
▇▇▇▇▇ ▇▇▇▇▇ 16,20,24,25,42 Switzerland 409,690 4/1/93
▇▇▇▇▇ ▇▇▇▇▇ 20 Mexico 504,655 4/12/93
▇▇▇▇▇ ▇▇▇▇▇ 24 Mexico 475,793 4/12/93
▇▇▇▇▇ ▇▇▇▇▇ 42 Mexico 486,135 2/3/94
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 3/4/94
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 8/26/92
11
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 4/12/93
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 4/7/94
▇▇▇▇▇ ▇▇▇▇▇ 16,18,20,24,25,35 France 94535788 9/13/94
▇▇▇▇▇ ▇▇▇▇▇ 16,18,20,24,25,35 Benelux 562322 12/22/94
▇▇▇▇▇ ▇▇▇▇▇ 16,18,20,24,25,42 Italy 722859 1/17/95
▇▇▇▇▇ ▇▇▇▇▇ 16,18,20,24,25,35 Austria 158118 5/22/95
▇▇▇▇▇ ▇▇▇▇▇ 16,18 UK & N. Ireland 2,023,636 6/10/95
▇▇▇▇▇ ▇▇▇▇▇ 25 Indonesia 359000 6/15/95
▇▇▇▇▇ ▇▇▇▇▇ 18 Switzerland 431,504 6/15/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇ & ▇. ▇▇▇▇▇▇▇ 2,024,571 6/21/95
▇▇▇▇▇ ▇▇▇▇▇ 14,18,35 Germany 39524347 6/30/95
▇▇▇▇▇ ▇▇▇▇▇ 20 Ireland 166958 7/13/95
▇▇▇▇▇ ▇▇▇▇▇ 24 Ireland 166949 7/13/95
▇▇▇▇▇ ▇▇▇▇▇ 25 Ireland 166950 7/13/95
▇▇▇▇▇ ▇▇▇▇▇ 16 Ireland 166946 7/13/95
▇▇▇▇▇ ▇▇▇▇▇ 18 Ireland 166947 7/13/95
▇▇▇▇▇ ▇▇▇▇▇ 24 Spain 1,977,402 7/19/95
▇▇▇▇▇ ▇▇▇▇▇ 20 Spain 1,977,401 7/19/95
▇▇▇▇▇ ▇▇▇▇▇ 16 Spain 1,977,399 7/19/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/29/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/29/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/29/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/29/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/29/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/29/95
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10/30/98
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10/30/98
▇▇▇▇▇ ▇▇▇▇▇ 16,18,20,24,25,35 Portugal 311,579 6/3/96
12
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ 35,42 Ireland 219537 7/1/96
▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 10/31/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 9/30/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 3/12/97
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 9/30/06
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 9/30/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 10/31/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 9/30/96
▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 9/30/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 320-9622 10/31/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 10/31/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 10/31/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 10/31/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 10/31/96
▇▇▇▇▇ ▇▇▇▇▇ 18 Bolivia 62420-C 11/1/96
▇▇▇▇▇ ▇▇▇▇▇ 16 Bolivia 62421-C 11/1/96
▇▇▇▇▇ ▇▇▇▇▇ 20 Bolivia 62418-C 11/1/96
▇▇▇▇▇ ▇▇▇▇▇ 24 Bolivia 62419-C 11/1/96
▇▇▇▇▇ ▇▇▇▇▇ 25 Bolivia 62414-C 11/1/96
▇▇▇▇▇ ▇▇▇▇▇ 42 Bolivia 62433-C 11/1/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇ 11/13/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/13/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/13/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/13/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 11/13/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 11/29/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 12/14/96
▇▇▇▇▇ ▇▇▇▇▇ 16,18,20,24,25,42 Hong Kong 19980140AA 12/20/96
(merged renewal)
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 12/25/96
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1/7/97
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1/14/97
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1/21/97
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1/21/97
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 2/7/97
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 7/4/97
▇▇▇▇▇ ▇▇▇▇▇ 35 Spain 2111150 10/5/98
13
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ 16 South Korea 449807 6/23/99
▇▇▇▇▇ ▇▇▇▇▇ 24,25 Chile 550597 10/21/99
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1/12/00
▇▇▇▇▇ ▇▇▇▇▇ 25 Honduras 76583 2/2/00
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 8/16/00
▇▇▇▇▇ ▇▇▇▇▇ 25 Paraguay 229943 11/13/00
▇▇▇▇▇ ▇▇▇▇▇ 3,4 Canada ▇▇▇▇▇▇▇▇▇ 6/20/01
▇▇▇▇▇ ▇▇▇▇▇ 25 China 1751950 4/21/02
▇▇▇▇▇ ▇▇▇▇▇ 9 New Zealand 670887 6/23/03
▇▇▇▇▇ ▇▇▇▇▇ 6 New Zealand 669972 5/10/04
▇▇▇▇▇ ▇▇▇▇▇ Adventurer 3 Canada TMA519505 11/17/99
▇▇▇▇▇ ▇▇▇▇▇ Adventurer 3 Japan ▇▇▇▇▇▇▇ 9/24/99
▇▇▇▇▇ ▇▇▇▇▇ Balance 3,4 Canada TMA544234 4/30/01
▇▇▇▇▇ ▇▇▇▇▇ Balance 3,4 Germany 39655067 12/31/96
▇▇▇▇▇ ▇▇▇▇▇ Balance 3,4 United Kingdom 2118186 8/1/97
▇▇▇▇▇ ▇▇▇▇▇ Design 25 Canada 156448 4/19/68
▇▇▇▇▇ ▇▇▇▇▇ Experienced
Based 3,4 United Kingdom 2225138 9/6/02
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Mexico 459796 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 22 Mexico 459800 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 9 Mexico 517017 4/7/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 8 Mexico 520325 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 11 Mexico 520323 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Mexico 459796 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 28 Mexico 472637 4/7/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 3 Mexico 467,858 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 21 Mexico 459798 3/3/94
14
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 12 Mexico 462324 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 14 Mexico 467,860 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 16 Mexico 459797 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 24 Mexico 462322 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 20 Mexico 462323 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 18 Mexico 467,863 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 42 Mexico 475,814 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 16,25,35 European CTM 001 395 284 11/24/02
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 France 94/535790 9/13/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 18,24,25 Benelux 562324 12/22/94
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Italy 722971 1/17/95
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Austria 157848 5/3/95
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Switzerland 431,450 6/15/95
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo ▇▇ ▇▇ & ▇. ▇▇▇▇▇▇▇ 2,024,572 6/21/95
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 18,24,25 Germany 39524753 6/30/95
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Ireland 167087 7/13/95
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Spain 1,977,406 7/19/95
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Portugal 311,581 6/3/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Brazil 817934634 10/1/96
15
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Bolivia 62415-C 11/1/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Colombia 287986 4/23/03
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 13 Japan ▇▇▇▇▇▇▇ 4/11/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo ▇▇ ▇▇▇▇▇▇▇ 208296 11/13/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Hong Kong 01925 of 1999 12/20/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 18 Japan ▇▇▇▇▇▇▇ 12/25/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 14 Japan ▇▇▇▇▇▇▇ 12/25/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 China 943415 1/21/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 29 Japan ▇▇▇▇▇▇▇ 1/31/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 30 Japan ▇▇▇▇▇▇▇ 4/31/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 28 Japan ▇▇▇▇▇▇▇ 12/25/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Japan ▇▇▇▇▇▇▇ 1/31/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 20 Japan ▇▇▇▇▇▇▇ 2/24/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 24 Japan ▇▇▇▇▇▇▇ 2/24/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 12 Japan ▇▇▇▇▇▇▇ 4/11/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 16 Japan ▇▇▇▇▇▇▇ 4/18/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 22 Japan ▇▇▇▇▇▇▇ 4/18/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 21 Japan ▇▇▇▇▇▇▇ 4/25/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 11 Japan ▇▇▇▇▇▇▇ 4/18/97
16
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 9 Japan ▇▇▇▇▇▇▇ 3/12/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 8 Japan ▇▇▇▇▇▇▇ 4/18/97
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 31 Japan ▇▇▇▇▇▇▇ 12/25/96
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 16 South Korea 449809 6/23/99
▇▇▇▇▇ ▇▇▇▇▇ Goose Logo 25 Taiwan 917864 12/1/00
▇▇▇▇▇ ▇▇▇▇▇ Home 42 Mexico 500235 5/16/94
▇▇▇▇▇ ▇▇▇▇▇ Home 28 Mexico 461385 3/22/94
▇▇▇▇▇ ▇▇▇▇▇ Home 21 Mexico 461357 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Home 24 Mexico 459373 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Home 3 Mexico 459371 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Home 27 Mexico 459372 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Home 20 Mexico 459375 3/3/94
▇▇▇▇▇ ▇▇▇▇▇ Home 16 Mexico 459369 3/3/94
▇▇▇▇▇ Bauer Home 16 Japan 3179794 7/31/96
Eddie Bauer Outdoor
Outfitter Since 1920
And Design 35 Canada TMA558217 2/20/02
Eddie Bauer Rewards
(and Design) 35 Canada TMA527813 5/16/00
Eddie Bauer Signature 25,35 Canada 156446 4/19/68
Eddie Bauer Signature 35 Canada 225694 1/27/78
Eddie Bauer Signature 20,21,22,25,27,28 Japan 1,453,370 1/30/81
Eddie Bauer Signature 12 Canada 383729 5/3/91
Eddie Bauer Signature 25 UK & N. Ireland 1,522,624 12/23/92
Eddie Bauer Signature 24 Mexico 459382 3/3/94
17
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
Eddie Bauer Signature 14 Mexico 459380 3/3/94
Eddie Bauer Signature 25 Mexico 500,236 3/3/94
Eddie Bauer Signature 3 Mexico 459377 3/3/94
Eddie Bauer Signature 21 Mexico 459376 3/3/94
Eddie Bauer Signature 18 Mexico 520324 3/3/94
Eddie Bauer Signature 16 Mexico 459381 3/3/94
Eddie Bauer Signature 20 Mexico 459383 3/3/94
Eddie Bauer Signature 12 Mexico 459385 3/3/94
Eddie Bauer Signature 22 Mexico 459,390 3/3/94
Eddie Bauer Signature 42 Mexico 471,740 3/22/94
Eddie Bauer Signature 28 Mexico 5203727 4/7/94
Eddie Bauer Signature 25 France 94/535789 9/13/94
Eddie Bauer Signature 25 Austria 155082 10/31/94
Eddie Bauer Signature 18,24,25 Benelux 562323 12/22/94
Eddie Bauer Signature 25 Italy 734591 1/20/95
Eddie Bauer Signature 25 UK & N. Ireland 2,023,643 6/10/95
Eddie Bauer Signature 25 Switzerland 431,434 6/15/95
Eddie Bauer Signature 18,24,25 Germany 39524754 6/30/95
Eddie Bauer Signature 25 Ireland 167741 7/13/95
18
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
Eddie Bauer Signature 25 Colombia 181988 12/13/95
Eddie Bauer Signature
Logo 6 New Zealand 669971 5/10/04
Eddie Bauer Signature 9 New Zealand 670888 6/26/03
Eddie Bauer Signature 25 Peru 22749 1/22/96
Eddie Bauer Signature 25 Portugal 311,580 6/3/96
Eddie Bauer Signature 25 Panama 076095 6/26/95
Eddie Bauer Signature 16 Japan 3201735 9/30/96
Eddie Bauer Signature 24 Japan 3209633 10/31/96
Eddie Bauer Signature
Design 25 Japan 1672356 3/22/84
Eddie Bauer Signature
Design 21 Japan 1710871 8/28/84
Eddie Bauer Signature
Design 19 Japan 1691416 6/21/84
Eddie Bauer Signature 20 Japan 3217067 10/31/96
Eddie Bauer Signature 25 Bolivia 62416-C 11/1/96
Eddie Bauer Signature 25 Ecuador 208196 11/13/96
Eddie Bauer Signature 22 Japan 3223118 11/29/96
Eddie Bauer Signature 25 Hong Kong 1403/1998 12/20/96
Eddie Bauer Signature 14 Japan 3242185 12/25/96
Eddie Bauer Signature 25 China 925486 1/7/97
Eddie Bauer Signature 16 South Korea 449808 6/23/99
19
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
Eddie Bauer Signature &
Design 22 Japan 1,672,363 3/22/84
Eddie Bauer Signature
Design 11 Japan 3343547 9/5/97
Eddie Bauer Signature &
Design 12 Japan 1,700,231 7/25/84
Eddie Bauer Signature
Design 13 Japan 3270241 3/12/97
Eddie Bauer Signature
Design 13 Japan 1691415 6/21/84
Eddie Bauer Signature
Design 9 Japan 3236084 12/25/96
Eddie Bauer Signature &
Design 24 Japan 1700228 7/25/84
Eddie Bauer Signature &
Design 21 Japan 1,710,871 8/28/84
Eddie Bauer Signature &
Design 20 Japan 1,666,279 3/22/84
Eddie Bauer Signature
Design 31 Japan 3209635 10/31/96
Eddie Bauer Signature
Design 30 Japan 3201768 9/30/96
Eddie Bauer Signature
Design 29 Japan 3200892 9/30/96
Eddie Bauer Signature &
Design 25,35 Canada 307215 9/20/85
Eddie Bauer Weatheredge
(Old) Design 18,24,25 Germany 398 23 848 4/30/98
Eddie Bauer Weatheredge
Design 18,24,25 Germany 39900675 1/31/99
Elkhorn 25 Canada TMA555061 12/5/01
Experience Based 35 Canada 1050874 7/31/02
Experience Based 25 Japan 4447820 1/19/01
Guide Bag 18 Canada 1049199 7/31/02
Jet Commuter 25 Canada 208450 7/25/75
Kara Koram 25 Canada 209152 8/29/75
Laconner 25 Canada TMA570497 11/8/02
20
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
Legend For Four
Generations 18,24,25 Japan 4442555 12/22/00
Mite Lite 11 Canada 285072 11/18/83
Mountain Range Design 18 Japan 4460365 3/16/01
North Cascade 25 Canada 571812 12/5/02
Polar Light 20,25 Canada 210240 10/24/75
Polar Parka 25 Canada TMA555034 12/5/01
Snapjac 25 Japan 3239757 12/25/96
Snap-Jac 25 Canada 207639 6/20/75
Snohomish 25 Canada 571243 11/25/02
Snowline 25 Canada 214625 7/2/76
Sport Shop & Design 28 Japan 3236093 12/25/96
Sport Shop & Design 18 Japan 3242034 12/25/96
Sport Shop & Design 25 Japan 3250460 1/31/97
Sport Shop & Design 20 Japan 3259910 2/24/97
Sport Shop & Design 16 Japan 3289264 4/25/97
Sport Shop & Design 9 Japan 3283562 4/18/97
Sport Shop And Design 20 Mexico 462321 3/3/94
Sport Shop And Design 25 Mexico 464161 3/3/94
Sport Shop & Design 28 Mexico 467873 4/7/94
Sport Shop And Design 14 Mexico 467,859 3/3/94
Sport Shop & Design 9 Mexico 462320 3/3/94
Sport Shop And Design 16 Mexico 459794 3/3/94
Sport Shop And Design 18 Mexico 472,634 3/22/94
21
TRADEMARK CLASS COUNTRY NUMBER DATE
--------- ----- ------- ------ ----
Sport Shop & Design 42 Mexico 477340 3/22/94
Thermolene 25 Canada TMA570498 11/8/02
Weatheredge 18,24,25 UK & N. Ireland 2158689 2/19/98
Weatheredge 18,24,25 Japan 4250842 3/12/99
Weatheredge 24,25 Canada TMA520639 12/18/99
Windcutter 25 Canada TMA570499 11/8/02
Windfoil 25 Canada TMA559886 4/4/02
AUSTRALIAN TRADEMARK REPORT
SERIAL
TRADEMARK CLASS FILE NUMBER NUMBER STATUS
--------- ------------------------------------------- ------------- ------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇ Class 16: Catalogues 00632.00.0447 645,509 Registered 6/24/03.
Class 18: Luggage including briefcases,
carry bags, field bags, duffel bags,
backpacks, day packs, pouches; umbrellas
Class 20: Tables, beds, chairs, pillows,
cushions
Class 24: Bedding and bed linen, quilts,
quilt covers, towels, blankets
Class 42: Retail store services and mail
order services relating to luggage, tables,
beds, chairs, pillows, cushions, bedding
and bed linen, quilts, quilt covers,
towels, blankets and articles of clothing
including footwear and headgear
▇▇▇▇▇ ▇▇▇▇▇ Class 6: Luggage locks 00632.00.0448 938,843 Registered 10/7/04.
Class 9: Voltage converters
Class 14: Travel alarm clocks
Class 18: Cargo duffel bags, travel duffel
bags, rolling duffel bags, backpacks, sport
duffel bags, rolling gear bags, rolling
backpacks, cargo cases, packing cases,
overseas cases, attache cases, brief cases,
business cases, toiletries bags, cosmetic
bags, vanity cases, garment bags, organizer
totes, luggage tabs, money belts, passport
cases, wallets,
22
SERIAL
TRADEMARK CLASS FILE NUMBER NUMBER STATUS
--------- ------------------------------------------- ------------- ------- ------------------------------
garment covers, belly bags, shoe bags, wet
pouches, luggage carts
▇▇▇▇▇ ▇▇▇▇▇ Class 25: Articles of clothing, including 00632.00.0449 937,199 This is a divisional
headgear and footwear application directed to
clothing products. This
application will remain
suspended pending completion
of the cancellation against
the ▇▇▇▇▇ Nike Hockey Class 25
registration.
▇▇▇▇▇ ▇▇▇▇▇ Class 9: Eyewear, including eyeglasses and 00632.00.0459 938,740 Registered 2/11/04.
eyeglass frames
▇▇▇▇▇ ▇▇▇▇▇ BALANCE Class 4: Candles 724,732 Registered 2/10/99.
GOOSE LOGO Class 25: Articles of clothing, including 00364.01.0831 645,506 Suspended pending completion
headgear and footwear of cancellation proceeding
against Class 25 ▇▇▇▇▇ Nike
Hockey registration. We will
make one further attempt to
convince the Office to allow
this ▇▇▇▇ because the
expression "▇▇▇▇▇" is only a
part of the overall composite
logo.
SIGNATURE LOGO Class 25: Articles of clothing, including 00364.01.0832 645,507 Suspended pending completion
headgear and footwear of cancellation proceeding
against the Class 25 ▇▇▇▇▇
Nike Hockey
23
SERIAL
TRADEMARK CLASS FILE NUMBER NUMBER STATUS
--------- ------------------------------------------- ------------- ------- ------------------------------
registration.
SIGNATURE LOGO Class 6: Luggage locks 00632.00.0446 937,046 Registered 11/11/04.
Class 9: Voltage converters
Class 14: Travel alarm clocks
Class 18: Cargo duffel bags, travel duffel
bags, rolling duffel bags, backpacks, sport
duffel bags, rolling gear bags, rolling
backpacks, cargo cases, packing cases,
overseas cases, attache cases, brief cases,
business cases, toiletries bags, cosmetic
bags, vanity cases, garment bags, organizer
totes, luggage tabs, money belts, passport
cases, wallets, garment covers, belly bags,
shoe bags, wet pouches, luggage carts
Class 20: Neck pillows
SIGNATURE LOGO Class 9: Eyewear, including eyeglasses and 00632.00.0460 938,739 Registered 2/11/04.
eyeglass frames
See also the disclosures set forth in Schedule 8.12, which are incorporated
herein and included in this Schedule 6.15 by this reference.
* ▇▇▇▇▇ ▇▇▇▇▇, Inc. has determined to abandon these trademarks.
24
SCHEDULE 8.4
CORPORATE NAME; PRIOR TRANSACTIONS
CHANGES IN LOAN PARTY'S OR ANY OF ITS SUBSIDIARIES CORPORATE NAME
N/A
USE BY ANY LOAN PARTY'S OR ANY OF ITS SUBSIDIARIES OF ANY OTHER FICTITIOUS NAME
N/A
MERGERS, CONSOLIDATIONS OR ACQUISITIONS
Any merger, consolidation, amalgamation, asset acquisition or property
acquisition contemplated to take place pursuant to the Plan of Reorganization.
25
SCHEDULE 8.5
SUBSIDIARIES AND AFFILIATES
STATE OF
INCORPORATION PERCENT BUSINESS
NAME (FORMATION) OWNERSHIP DESCRIPTION
---- -------------- -------------------- --------------------------------
Distribution Fulfillment Services, Delaware 100% owned by ▇▇▇▇▇ Warehousing
Inc. (DFS) ▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ Japan, Inc. Japan 30% -- ▇▇▇▇▇ ▇▇▇▇▇, Retail
Inc.
▇▇▇▇▇ ▇▇▇▇▇ of Canada, Inc. Canada-Federal 100% owned by ▇▇▇▇▇ Retail
▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ Services, LLC Ohio 100% owned by ▇▇▇▇▇ Gift Certificate Issuer
▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇, Inc. Delaware 100% owned by ▇▇▇▇▇ Retail
▇▇▇▇▇ Holdings, Inc.
Financial Services Acceptance Delaware 100% owned by ▇▇▇▇▇ ▇▇▇▇▇▇ of subordinated interests
Corporation ▇▇▇▇▇ Holdings, Inc. from Bankcard securitizations
▇▇▇▇▇ ▇▇▇▇▇ GmbH & Co. Germany 40% -- ▇▇▇▇▇ ▇▇▇▇▇, Retail
Inc.
Spiegel Acceptance Corporation Delaware 100% owned by ▇▇▇▇▇ ▇▇▇▇▇▇ of Seller interest from
▇▇▇▇▇ Holdings, Inc. preferred securitizations
26
STATE OF
INCORPORATION PERCENT BUSINESS
NAME (FORMATION) OWNERSHIP DESCRIPTION
---- -------------- -------------------- --------------------------------
Spiegel Group Teleservices-Canada, Inc. Canada 100% owned by ▇▇▇▇▇ Customer Sales center
▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ Information Technology, LLC Delaware 100% owned by ▇▇▇▇▇ IT / IS
▇▇▇▇▇, Inc.
27
SCHEDULE 8.7
CAPITALIZATION OF LOAN PARTIES
AS OF THE EFFECTIVE DATE
ISSUED & AUTHORIZED, ISSUED
AUTHORIZED OUTSTANDING & OUTSTANDING LLC
ENTITY COMMON STOCK PREFERRED STOCK COMMON STOCK INTERESTS
------ ------------ --------------- ------------ ------------------
▇▇▇▇▇ ▇▇▇▇▇, Inc 10,000 0 5,000 --
Distribution Fulfillment Services, Inc. (DFS) 1,000 0 1,000 --
▇▇▇▇▇ ▇▇▇▇▇ Services, LLC -- -- -- 1 (100%)
▇▇▇▇▇ ▇▇▇▇▇ Holdings, Inc. 100,000,000 5,000,000 30,000,000 --
▇▇▇▇▇ ▇▇▇▇▇ Information Technology, LLC -- -- -- 1 (100%)
28
SCHEDULE 8.8
DEBT
ESCROW AGREEMENTS
(i) CHASE MERCHANT SERVICES $500,000 OF ▇▇▇▇▇ ▇▇▇▇▇'▇ DEPOSITS
HELD IN CHASE MERCHANT RESERVE ACCOUNT SPIEGEL GROUP $ 500,000
(ii) EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND
LASALLE BANK NATIONAL ASSOCIATION
1 ESCROW ACCOUNTS
▇▇▇▇▇ ▇▇▇▇▇ $1MM $1,000,000
(iii) ▇▇▇▇ International Hong Kong Limited
Held in connection with Vendor Payment Services
Agreement with ▇▇▇▇▇ ▇▇▇▇▇, Inc.* $ 500,000
BONDS
(i) Customs Bond $7,500,000 Spiegel/▇▇▇▇▇ ▇▇▇▇▇ customs bond LOAN AGREEMENTS
required to clear goods.
CDN $3,970,000 Loan
(ii) Customs Bond $ 800,000 ▇▇▇▇▇ ▇▇▇▇▇ Canadian customs bond Agreement dated as of
required to clear goods. August 16, 2002, between
Her Majesty the Queen in
(iii) Self Insurance Bond $ 325,000 Illinois workers compensation insurance Right of the Province of
bond New Brunswick and Spiegel
Group Teleservices-Canada,
(iv) Self Insurance Bond $ 460,000 Washington workers compensation self Inc.
insurance bond
----------
* This debt will be paid off on the Closing Date or shortly thereafter.
29
LETTERS OF CREDIT
Letters of Credit issued by Bank of America, N.A. in connection with the
purchase of inventory in an aggregate amount of $734,873 with the following
as beneficiaries: South Service Trading (Strada Shoes) (Letter of Credit
no. 1117827, exp. July 26, ▇▇▇▇), ▇▇▇▇▇▇ International (Letter of Credit
no. 1117825, exp. July 11, 2005) and ▇▇▇▇▇▇▇ SRL (Letter of Credit no.
117831, exp. July 8, 2005).
PROMISSORY NOTE
The Plan Note and any other indebtedness under the Plan of Reorganization.
30
SCHEDULE 8.10
OWNED REAL PROPERTY
LOCATION CITY STATE
--------------------- --------- -------
Distribution Fulfillment Services, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
Inc. Facility
EBIT Facility ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
31
SCHEDULE 8.12
PROPRIETARY RIGHTS
See the disclosures set forth in Schedule 6.15, which are incorporated herein
and included in this Schedule 8.12 by this reference.
32
SCHEDULE 8.13
TRADE NAMES
LOAN PARTY OR SUBSIDIARY TRADE NAME
------------------------ ----------
▇▇▇▇▇ ▇▇▇▇▇, Inc. "▇▇▇▇▇ ▇▇▇▇▇"
"▇▇▇▇▇ ▇▇▇▇▇, Inc."
"▇▇▇▇▇ ▇▇▇▇▇ Home"
"▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"
"▇▇▇▇▇ ▇▇▇▇▇ of Canada, Inc."
"▇▇▇▇▇ ▇▇▇▇▇ Services, LLC"
"▇▇▇▇▇ ▇▇▇▇▇ Diversified Sales, LLC"
"▇▇▇▇▇ ▇▇▇▇▇ International Development, LLC"
"▇▇▇▇▇▇▇▇▇▇.▇▇▇"
"▇▇▇▇▇ ▇▇▇▇▇ Outlet"
"▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"
33
SCHEDULE 8.14
LITIGATION
1. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ et al vs. ▇▇▇▇▇ ▇▇▇▇▇, Inc., et al, Superior Court of CA,
Santa ▇▇▇▇▇▇▇, Case #01132654
2. Potential patent infringement claim by ▇▇▇▇▇▇ ▇. ▇▇▇▇ Technology Licensing,
L.P.
3. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ & Associates, Inc. v. ▇▇▇▇▇▇.▇▇▇, Inc., et al., Civil Action
No. 2-02-CV-186 (settled and stipulation signed; pending filing with and
approval of bankruptcy court).
4. Carousel Center Company L.P., et al. v. ▇▇▇▇▇ ▇▇▇▇▇, Inc., Case No.:
02-CV-669 (NAM/GLS)(N.D.N.Y.)
Inclusion of any item in this Schedule (1) does not represent a determination by
any of the Loan Parties that such item (a) is material, nor shall it be deemed
to establish a standard of materiality, or (b) did not arise in the ordinary
course of business and (2) shall not constitute, or be deemed to be, an
admission to any third party concerning such item by any of the Loan Parties.
34
SCHEDULE 8.16
LABOR DISPUTES
None.
35
SCHEDULE 8.17
ENVIRONMENTAL ISSUES
NONE.
36
SCHEDULE 8.18
VIOLATIONS OF LAW
NONE.
37
SCHEDULE 8.20
ERISA ISSUES
None.
38
SCHEDULE 8.25
MATERIAL ADVERSE CHANGE
Any change of a type that customarily occurs as a result of events occurring
during the pendency of a proceeding under Chapter 11 of the Bankruptcy Code and
under the Companies' Creditors Arrangement Act (Canada)
In addition, as part of the Plan of Reorganization filed in the Cased, ▇▇▇▇▇
▇▇▇▇▇, Inc. plans to close approximately 34 ▇▇▇▇▇ ▇▇▇▇▇ HOME stores.
39
SCHEDULE 8.27
MATERIAL AGREEMENTS
Aurora Sourcing, Inc.: Buying Agency Agreement dated August 20, 2003 between
Aurora Sourcing, Inc. and ▇▇▇▇▇ ▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ International (Americas), Inc.: Buying Agency Agreement dated March
1, 1998 between ▇▇▇▇▇ ▇▇▇▇▇ International (Americas), Inc. and ▇▇▇▇▇ ▇▇▇▇▇, Inc.
A new agreement is currently being negotiated; originally, this agreement was
assumed. ▇▇▇▇▇ ▇▇▇▇▇ International (Americas), Inc. ▇▇▇▇▇ ▇▇▇▇▇, Inc. has
implicitly consented to the use by ▇▇▇▇▇ ▇▇▇▇▇ International (Americas), Inc.
("EBIA") of "▇▇▇▇▇ ▇▇▇▇▇" in its corporate title, and in connection with EBIA's
performance of its obligations.
▇▇▇▇▇ ▇▇▇▇▇ International Ltd.: Buying Agency Agreement dated January 1, 1994
between ▇▇▇▇▇ ▇▇▇▇▇, Inc. and ▇▇▇▇▇ ▇▇▇▇▇ International Ltd. ▇▇▇▇▇ ▇▇▇▇▇
International Ltd.: ▇▇▇▇▇ ▇▇▇▇▇, Inc. has implicitly consented to the use by
▇▇▇▇▇ ▇▇▇▇▇ International Ltd. ("EBI") of "▇▇▇▇▇ ▇▇▇▇▇" in its corporate title,
and in connection with EBI's performance of its obligations under the agreement.
A new agreement is currently being negotiated; originally, this agreement was
assumed.
Fry, Inc.: Web Site Hosting Agreement dated March 1, 2005 between Fry, Inc. and
▇▇▇▇▇ ▇▇▇▇▇, Inc.
▇▇▇▇ International (Hong Kong) Limited: Vendor Payment Services Agreement dated
September 30, 2002 between ▇▇▇▇ International (Hong Kong) Limited and ▇▇▇▇▇
▇▇▇▇▇, Inc. The agreement is being negotiated; originally, this agreement was
not assumed.
R.R. ▇▇▇▇▇▇▇▇ & Sons Company: ▇▇▇▇▇ ▇▇▇▇▇ Agreement for Printing and Electronic
Publishing Services dated July 7, 2004 between R.R. ▇▇▇▇▇▇▇▇ & Sons Company and
▇▇▇▇▇ ▇▇▇▇▇, Inc.
Scan Thor UK: Buying Agency Agreement dated April 26, 2004 between Scan Thor UK
and ▇▇▇▇▇ ▇▇▇▇▇, Inc.
Shira Trading Ltd.: Amended & Restated Buying Agency Agreement dated April 24,
2004 between Shira Trading Ltd. and ▇▇▇▇▇ ▇▇▇▇▇, Inc.
United Parcel Service of America, Inc.: Carrier Agreement dated as of August 25,
2004.
40
Bank of America, N.A. Merchant Services Agreement/Fee Schedule: Agreement dated
as of September 1, 2003 between Bank of America, N.A. and ▇▇▇▇▇ ▇▇▇▇▇, Inc.
The Chase Manhattan Bank: Agreement by and among Spiegel, Inc., ▇▇▇▇▇ ▇▇▇▇▇,
Inc. and Newport News, Inc., The Chase Manhattan Bank (as successor to First
Financial Bank) and Chase Merchant Services L.L.C., dated June 18, 1999, as
amended on October 8, 2002. This agreement has been assumed by ▇▇▇▇▇ ▇▇▇▇▇, Inc.
World Financial Network National Bank: Private Label Credit Card Program
Agreement dated May 2, 2003 between World Financial Network National Bank and
Spiegel, Inc. and ▇▇▇▇▇ ▇▇▇▇▇, Inc.
Aljoy Trading Limited: First Amended and Restated Buying Agency Agreement dated
August 20, 2003 between ▇▇▇▇▇ ▇▇▇▇▇, Inc. and Aljoy Trading Limited.
Plan of Reorganization, the Term Loan Agreement, the Guarantee and Collateral
Agreement and any and all Loan Documents and other instruments executed in
connection therewith.
SCHEDULE 8.27
MATERIAL AGREEMENTS (CON'T)
See also the agreements, intellectual property licenses and leases set forth in
Schedules 1.1(c), 6.15 and 8.11, respectively, which are incorporated herein and
included in this Schedule 8.27 by this reference.
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SCHEDULE 9.3
COMPLIANCE WITH LAWS
NONE.
42
SCHEDULE 9.10
EXISTING GUARANTIES
None.
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SCHEDULE 9.13
TRANSACTIONS WITH AFFILIATES
JOINT VENTURE AGREEMENTS
LOAN PARTY JOINT VENTURE PARTNER TRANSACTION
---------- --------------------------------------- -------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Inc. Handelsgesellschaft ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ GmbH Formation of ▇▇▇▇▇ ▇▇▇▇▇ GmbH &
("▇▇▇▇▇"), Sport-▇▇▇▇▇▇ GmbH Co. (Effective June 6, 1995)
▇▇▇▇▇ ▇▇▇▇▇, Inc. Otto-Sumisho Inc. Formation of ▇▇▇▇▇ ▇▇▇▇▇ Japan,
Inc. (Effective September 28,
1993)
LICENSE AGREEMENTS
LICENSEE LICENSOR EFFECTIVE DATE
-------- ----------------- -----------------
▇▇▇▇▇ ▇▇▇▇▇ GmbH & Co. ▇▇▇▇▇ ▇▇▇▇▇, Inc. June 6, 1995
▇▇▇▇▇ ▇▇▇▇▇ Japan, Inc. ▇▇▇▇▇ ▇▇▇▇▇, Inc. December 28, 1998
GUARANTIES AND LOAN AGREEMENTS
Any purchase, sale, transfer, distribution, payment, loan, advancement, or
investment of money or property, or incurrence of liability, that is
contemplated to take place pursuant to the Plan of Reorganization, including,
without limitation, the Term Debt.
In addition, ▇▇▇▇▇ ▇▇▇▇▇ of Canada, Inc. and Spiegel Group
Teleservices-Canada, Inc. may maintain cash management arrangements with the
Borrower in the ordinary course of business consistent with past practice and in
accordance with applicable law.
44
SCHEDULE 9.16
EXISTING LIENS
Loan Party State UCC No. Holder of Lien Collateral Description
---------- ----- ------------------------------------ ------------------------------ ----------------------------------
DISTRIBUTION
FULFILLMENT
SERVICES,
INC. (DFS) DE File No. 31010886, filed 4/17/03 IOS Capital, LLC Leased equipment
DE File No. 33005363, filed 11/14/03* Deutsche Bank AG Various assets as specified in the
financing statement.
▇▇▇▇▇ ▇▇▇▇▇,
INC. CA File No. 0034760633, filed 12/4/00 Balboa Capital Leased equipment
CO File No. 20002103194, filed 12/4/00 Balboa Capital Leased equipment
CT File No. 2234022, filed 11/3/03 Town of Waterford Tax assessment in the amount of
$285.09 plus interest
CO File No. 2002F029033, filed 3/19/02* Polar Refrigeration Company Leased equipment
DE File No. 30606163, filed 3/12/03* ▇▇▇▇ International (Hong Kong) Certain goods specified in the
Limited financing statement.
IL File No. 4304795, filed 12/5/00 Balboa Capital Leased equipment
MI File No. D719556, filed 12/4/00 Balboa Capital Leased equipment
MN File No. 2279658, filed 12/4/00 Balboa Capital Leased equipment
MO File No. 4111530, filed 12/4/00 Balboa Capital Leased equipment
NY File No. 232717, filed 12/4/000 Balboa Capital Leased equipment
WA File No. ▇▇▇▇-▇▇▇-▇▇▇▇, filed 9/7/00 OCE Printing Systems USA, Inc. Pagestream 154 plus printer with
S/370 primary pnterface
WA File No. ▇▇▇▇-▇▇▇-▇▇▇▇, US Bank National 2 Cisco computer WS
45
Loan Party State UCC No. Holder of Lien Collateral Description
---------- ----- ------------------------------------ ------------------------------ ----------------------------------
filed 9/21/00 Association X5225R Modules
WA File No. ▇▇▇▇-▇▇▇-▇▇▇▇, filed US Bank National Association Cisco equipment
11/06/00
WA File No. ▇▇▇▇-▇▇▇-▇▇▇▇, filed American Equipment Leasing Leased equipment
11/13/00, amended 1/19/01, assigned (assigned from Balboa Capital)
2/21/01
WA File No. ▇▇▇▇-▇▇▇-▇▇▇▇, filed IBM Credit Corporation Computers, information processing
11/20/00 and other peripheral equipment
WA File No. ▇▇▇▇-▇▇▇-▇▇▇▇, filed IBM Credit Corporation Computers, information processing
3/28/01 and other peripheral equipment
In addition, Liens securing the Plan Note, the Agent's Liens and Liens securing
the Term Debt.
* These financing statements will be terminated on the Closing Date or
shortly thereafter.
46