Exhibit 10.1
[EXECUTION COPY]
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CREDIT AGREEMENT
dated as of
MARCH 21, 2007
among
NEW ENGLAND AUDIO CO., INC.
as Lead Borrower for:
NEW ENGLAND AUDIO CO., INC.
SOUND ADVICE OF ARIZONA INC.
NEA DELAWARE, INC.
THEG USA, L.P.
HILLCREST HIGH FIDELITY, INC.
SOUND ADVICE, INC.
SUMARC ELECTRONICS INCORPORATED
As Borrowers
TWEETER HOME ENTERTAINMENT GROUP, INC.,
As Facility Guarantor
The LENDERS Party Hereto,
GENERAL ELECTRIC CAPITAL CORPORATION
as Administrative Agent, Lender and Issuing Bank
and
GE CAPITAL MARKETS, INC.
as Lead Arranger and Bookrunner
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS............................................... 2
SECTION 1.01 Defined Terms......................................... 2
SECTION 1.02 Terms Generally....................................... 23
SECTION 1.03 Accounting Terms; GAAP................................ 23
ARTICLE II AMOUNT AND TERMS OF CREDIT................................ 24
SECTION 2.01 Commitment of the Revolving Credit Lenders............ 24
SECTION 2.02 Reserves; Changes to Reserves......................... 24
SECTION 2.03 Making of Revolving Credit Loans...................... 25
SECTION 2.04 Overadvances.......................................... 27
SECTION 2.05 Swingline Loans....................................... 27
SECTION 2.06 Letters of Credit..................................... 28
SECTION 2.07 Settlements Amongst Revolving Credit Lenders.......... 31
SECTION 2.08 Notes; Repayment of Revolving Credit Loans............ 32
SECTION 2.09 Interest on Revolving Credit Loans.................... 33
SECTION 2.10 Default Interest...................................... 33
SECTION 2.11 Certain Fees.......................................... 33
SECTION 2.12 Unused Commitment Fee................................. 33
SECTION 2.13 Letter of Credit Fees................................. 33
SECTION 2.14 Intentionally Omitted................................. 34
SECTION 2.15 Nature of Fees........................................ 34
SECTION 2.16 Termination or Reduction of Revolving Credit
Commitments........................................... 34
SECTION 2.17 Alternate Rate of Interest............................ 34
SECTION 2.18 Conversion and Continuation of Revolving Credit
Loans................................................. 34
SECTION 2.19 Mandatory Prepayment; Commitment Termination;
Cash Collateral....................................... 35
SECTION 2.20 Optional Prepayment of Revolving Credit Loans;
Reimbursement of Lenders.............................. 37
SECTION 2.21 Maintenance of Loan Account; Statements of Account.... 38
SECTION 2.22 Cash Receipts......................................... 39
SECTION 2.23 Application of Payments............................... 41
SECTION 2.24 Increased Costs....................................... 41
SECTION 2.25 Change in Legality.................................... 42
SECTION 2.26 Payments; Sharing of Setoff........................... 43
SECTION 2.27 Taxes................................................. 44
SECTION 2.28 Security Interests in Collateral...................... 46
SECTION 2.29 Mitigation Obligations; Replacement of Lenders........ 46
SECTION 2.30 Single Loan........................................... 47
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TABLE OF CONTENTS
(continued)
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ARTICLE III REPRESENTATIONS AND WARRANTIES............................ 47
SECTION 3.01 Organization; Powers.................................. 47
SECTION 3.02 Authorization; Enforceability......................... 47
SECTION 3.03 Governmental Approvals; No Conflicts.................. 47
SECTION 3.04 Financial Condition................................... 47
SECTION 3.05 Properties............................................ 48
SECTION 3.06 Litigation and Environmental Matters.................. 48
SECTION 3.07 Compliance with Laws and Agreements................... 48
SECTION 3.08 Investment and Holding Company Status................. 49
SECTION 3.09 Taxes................................................. 49
SECTION 3.10 ERISA................................................. 49
SECTION 3.11 Disclosure............................................ 49
SECTION 3.12 Subsidiaries.......................................... 49
SECTION 3.13 Insurance............................................. 49
SECTION 3.14 Labor Matters......................................... 50
SECTION 3.15 Security Documents.................................... 50
SECTION 3.16 Federal Reserve Regulations........................... 50
SECTION 3.17 Solvency.............................................. 50
ARTICLE IV CONDITIONS................................................ 50
SECTION 4.01 Effective Date........................................ 50
SECTION 4.02 Conditions Precedent to Each Revolving Credit Loan and
Each Letter of Credit................................. 53
ARTICLE V AFFIRMATIVE COVENANTS..................................... 54
SECTION 5.01 Financial Statements and Other Information............ 54
SECTION 5.02 Notices of Material Events............................ 56
SECTION 5.03 Information Regarding Collateral...................... 57
SECTION 5.04 Existence; Conduct of Business........................ 57
SECTION 5.05 Payment of Obligations................................ 57
SECTION 5.06 Maintenance of Properties............................. 58
SECTION 5.07 Insurance............................................. 58
SECTION 5.08 Casualty and Condemnation............................. 59
SECTION 5.09 Books and Records; Inspection and Audit Rights;
Appraisals; Accountants............................... 59
SECTION 5.10 Physical Inventories.................................. 60
SECTION 5.11 Compliance with Laws.................................. 60
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TABLE OF CONTENTS
(continued)
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SECTION 5.12 Use of Proceeds and Letters of Credit................. 60
SECTION 5.13 Additional Collateral; Additional Subsidiaries........ 60
SECTION 5.14 Further Assurances.................................... 61
SECTION 5.15 Third Party Agreements................................ 61
SECTION 5.16 Agency Agreement...................................... 62
ARTICLE VI NEGATIVE COVENANTS........................................ 62
SECTION 6.01 Indebtedness and Other Obligations.................... 62
SECTION 6.02 Liens................................................. 63
SECTION 6.03 Fundamental Changes................................... 64
SECTION 6.04 Investments, Loans, Advances, Guarantees and
Acquisitions.......................................... 64
SECTION 6.05 Asset Sales........................................... 65
SECTION 6.06 Restricted Payments; Certain Payments of
Indebtedness.......................................... 66
SECTION 6.07 Transactions with Affiliates.......................... 66
SECTION 6.08 Restrictive Agreements................................ 67
SECTION 6.09 Amendment of Material Documents....................... 67
SECTION 6.10 Additional Subsidiaries............................... 67
SECTION 6.11 Fiscal Year........................................... 67
SECTION 6.12 Environmental Laws.................................... 67
SECTION 6.13 Store Openings and Closings........................... 67
SECTION 6.14 Tivoli Agreement...................................... 68
ARTICLE VII EVENTS OF DEFAULT......................................... 68
SECTION 7.01 Events of Default..................................... 68
SECTION 7.02 When Continuing....................................... 71
SECTION 7.03 Intentionally Omitted................................. 71
SECTION 7.04 Remedies on Default................................... 71
SECTION 7.05 Application of Proceeds............................... 71
ARTICLE VIII THE ADMINISTRATIVE AGENT.................................. 71
SECTION 8.01 Administration by Administrative Agent................ 71
SECTION 8.02 Intentionally Omitted................................. 71
SECTION 8.03 Sharing of Excess Payments............................ 72
SECTION 8.04 Agreement of Required Revolving Credit Lenders........ 72
SECTION 8.05 Liability of Administrative Agent..................... 72
SECTION 8.06 Notice of Default..................................... 73
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TABLE OF CONTENTS
(continued)
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SECTION 8.07 Lenders' Credit Decisions............................. 74
SECTION 8.08 Reimbursement and Indemnification..................... 74
SECTION 8.09 Rights of Administrative Agent........................ 74
SECTION 8.10 Independent Lenders and Issuing Bank.................. 75
SECTION 8.11 Notice of Transfer.................................... 75
SECTION 8.12 Successor Administrative Agent........................ 75
SECTION 8.13 Reports and Financial Statements...................... 75
SECTION 8.14 Delinquent Lender..................................... 75
SECTION 8.15 Arranger.............................................. 76
ARTICLE IX MISCELLANEOUS............................................. 77
SECTION 9.01 Notices............................................... 77
SECTION 9.02 Waivers; Amendments................................... 77
SECTION 9.03 Intentionally Omitted................................. 79
SECTION 9.04 Expenses; Indemnity; Damage Waiver.................... 79
SECTION 9.05 Designation of Lead Borrower as Borrowers' Agent...... 80
SECTION 9.06 Successors and Assigns................................ 82
SECTION 9.07 Survival.............................................. 84
SECTION 9.08 Counterparts; Integration; Effectiveness.............. 84
SECTION 9.09 Severability.......................................... 85
SECTION 9.10 Right of Setoff....................................... 85
SECTION 9.11 Governing Law; Jurisdiction; Consent to Service
of Process............................................ 85
SECTION 9.12 WAIVER OF JURY TRIAL.................................. 85
SECTION 9.13 Headings.............................................. 86
SECTION 9.14 Interest Rate Limitation.............................. 86
SECTION 9.15 Additional Waivers.................................... 86
SECTION 9.16 Press Releases and Related Matters.................... 87
SECTION 9.17 Patriot Act........................................... 87
SECTION 9.18 Foreign Asset Control Regulations..................... 88
ARTICLE X CROSS-GUARANTY............................................ 88
SECTION 10.01 Cross-Guaranty........................................ 88
SECTION 10.02 Waivers by Borrowers.................................. 89
SECTION 10.03 Benefit of Guaranty................................... 89
SECTION 10.04 Waiver of Subrogation, Etc............................ 89
SECTION 10.05 Election of Remedies.................................. 89
SECTION 10.06 Limitation............................................ 90
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TABLE OF CONTENTS
(continued)
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SECTION 10.07 Contribution with Respect to Guaranty Obligations..... 90
SECTION 10.08 Liability Cumulative.................................. 91
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EXHIBITS
A. Form of Assignment and Acceptance
B-1. Form of Revolving Note
B-2. Form of Swingline Note
C. Opinion of Counsel to Loan Parties
D. Form of Compliance Certificate
E. Form of Borrowing Base Certificate
2.03(b) Notice of Revolving Credit Extension
2.06(h)A Application for Standby Letter of Credit
2.06(h)B Application for Documentary Letter of Credit
2.06(h)C Application and Agreement for Documentary Letters of Credit
Annex A Administrative Agent's Wire Transfer Information
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SCHEDULES
A. Permitted Store Closings
1.01 Lenders and Revolving Credit Commitments
2.22(a) DDAs
2.22(b) Credit Card Arrangements
2.22(c) Blocked Accounts
2.22(f) Disbursement Accounts
3.05(c)(i) Title to Properties; Real Estate Owned
3.05(c)(ii) Leased Properties
3.06 Disclosed Matters
3.12 Subsidiaries
3.13 Insurance
5.01(j) Financial Reporting Requirements
6.01 Indebtedness
6.02 Liens
6.04 Investments
6.07 Affiliate Transactions
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CREDIT AGREEMENT dated as of March 21, 2007 among
NEW ENGLAND AUDIO CO., INC., a Massachusetts corporation, having its
principal place of business at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
as Lead Borrower for the Borrowers, being
said NEW ENGLAND AUDIO CO., INC., and
SOUND ADVICE OF ARIZONA INC., a Florida corporation, having a mailing
address at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
NEA DELAWARE, INC., a Delaware corporation, having a mailing address
at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
THEG USA, L.P., a Delaware limited partnership, having a mailing
address at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
HILLCREST HIGH FIDELITY, INC., a Texas corporation, having a mailing
address at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
SOUND ADVICE, INC., a Florida corporation, having a mailing address at
▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
SUMARC ELECTRONICS INCORPORATED, a North Carolina corporation, having
a mailing address at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
TWEETER HOME ENTERTAINMENT GROUP, INC., a Delaware corporation, having a
mailing address at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Facility
Guarantor; and
the LENDERS party hereto; and
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, having its
principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
as administrative agent, (in such capacity, the "Administrative Agent") for
its own benefit and the ratable benefit of the other Secured Parties (as
defined below).
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
RECITALS
WHEREAS, the Borrowers and the Facility Guarantors have previously entered
into a Credit Agreement dated as of July 25, 2005 (as amended and in effect
prior to the date hereof, the "Prior Credit Agreement") among Borrowers, the
facility guarantors party thereto and identified therein, the financial
institutions party thereto from time to time and Bank of America, N.A. as
administrative agent and issuing bank; and
WHEREAS, the Borrowers have requested that the Lenders extend a revolving
credit facility to Borrowers of up to $75,000,000 in the aggregate for the
purpose of refinancing the Prior Credit Agreement and to provide (a) working
capital financing for the Borrowers, (b) funds for other general corporate
purposes of the Borrowers and (c) funds for the purposes permitted hereunder;
and for these
purposes, Lenders are willing to make certain loans and other extensions of
credit to the Borrowers of up to such amount upon the terms and conditions set
forth herein; and
WHEREAS, the Borrowers have agreed to secure all of their obligations under
the Loan Documents (as defined below) by granting to the Administrative Agent,
for the benefit of the Administrative Agent and the Secured Parties (as defined
below), a security interest in and lien upon substantially all of its existing
and after-acquired personal property; and
WHEREAS, the Facility Guarantors are willing to guarantee all of the
obligations of the Borrowers to the Administrative Agent and the Secured Parties
under the Loan Documents; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ACH" means automated clearing house transfers.
"Account" means "accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment (whether or not earned
by performance) for: property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of; services rendered or to be rendered; a
policy of insurance issued or to be issued; a secondary obligation incurred or
to be incurred; or arising out of the use of a credit or charge card or
information contained on or used with that card.
"Adjusted LIBO Rate" means, with respect to any LIBO Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period divided
by (b) a percentage equal to 100% minus the Statutory Reserve Rate.
"Administrative Agent" has the meaning provided in the preamble to this
Agreement.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified or is a
director or officer of such Person.
"Agency Agreement" means that certain agency or consulting agreement
entered into by the Parent and/or certain of the Borrowers in connection with
the Permitted Store Closings described in clause (a) of such definition in form
and substance reasonably satisfactory to the Administrative Agent.
"Agreement" means this Credit Agreement, as modified, amended, supplemented
or restated, and in effect from time to time.
"Applicable Law" means as to any Person: (a) all statutes, rules,
regulations, orders, or other requirements having the force of law and
applicable to such Person, and (b) all court orders and injunctions, and/or
similar rulings and applicable to such Person, in each instance ((a) and (b)) of
or by
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any Governmental Authority, or court, or tribunal which has jurisdiction over
such Person, or any property of such Person.
"Applicable Margin" means with respect to the rate for LIBO Loans and
Letters of Credit, 1.75%. Upon the occurrence, and during the continuance, of an
Event of Default, at the option of the Administrative Agent or upon the
direction of the Required Revolving Credit Lenders, interest shall accrue in the
manner set forth in SECTION 2.10.
"Appraised Value" means the net appraised liquidation value (expressed as a
percentage of Cost of such Inventory) of the Borrowers' Inventory as calculated
by reference to the table set forth below for the period identified below and as
reasonably determined from time to time by the Administrative Agent in
accordance with its standard procedures and with the assistance of an
independent appraiser satisfactory to the Administrative Agent:
PERIOD APPRAISED VALUE
------------------------------------ -----------------------------------------------------------
September 1 through September 30 of The Blended Monthly Inventory Value for September, October,
each year November and December of the applicable year.
October 1 through October 31 of each The Blended Monthly Inventory Value for October, November
year and December of the applicable year.
November 1 through August 31 of each The net appraised liquidation value of the Borrowers'
year Inventory for the corresponding month of the applicable
year.
For Purposes of this definition, "Blended Monthly Inventory Value" means the (a)
sum of, for each applicable month reflected in the Appraised Value column of the
above chart for the applicable period, the monthly net appraised liquidation
value of the Borrowers' Inventory for each applicable month, divided by (b) the
number of months used to calculate clause (a).
"Arranger" means GE Capital Markets, Inc. in its capacity as lead Arranger
and Bookrunner.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by SECTION 9.06), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability" means the lesser of (a) the aggregate of the Revolving
Credit Commitments minus the aggregate unpaid balance of the Credit Extensions
or (b) the Borrowing Base minus Reserves minus the aggregate unpaid balance of
the Credit Extensions.
"Availability Reserves" means such reserves as the Administrative Agent
from time to time determines in the Administrative Agent's reasonable discretion
(after consultation with the Lead Borrower (whose consent to any Availability
Reserve shall not be required)) as being appropriate to reflect the impediments
to the Administrative Agent's ability to realize upon the Collateral. Without
3
limiting the generality of the foregoing, Availability Reserves may include (but
are not limited to) reserves based on (i) rent; (ii) Gift Certificates and
Merchandise Credit Liability; (iii) Minimum Excess Availability; (iv) customs,
duties, and other costs to release Inventory which is being imported into the
United States; (v) outstanding customer deposits and liabilities of the
Borrowers on account of layaways; (vi) liabilities related to or arising from
frequent shoppers' programs; (vii) the GE Capital Credit Card Reserve; and
(viii) outstanding taxes and other governmental charges, including, ad valorem,
real estate, personal property, and other taxes which might have priority over
the interests of the Administrative Agent in the Collateral. Availability
Reserves shall be established and calculated in a manner and methodology
consistent with the Administrative Agent's practices as of the Effective Date
with other similarly situated borrowers.
"Blocked Account Agreements" has the meaning provided therefor in SECTION
2.22(c).
"Blocked Account Banks" means the banks with whom the Borrowers have
entered into Blocked Account Agreements.
"Blocked Accounts" has the meaning set forth in SECTION 2.22(c).
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrowers" means collectively, New England Audio Co., Inc., a
Massachusetts corporation, Sound Advice of Arizona, Inc., a Florida corporation,
NEA Delaware, Inc., a Delaware corporation, THEG USA, L.P., Hillcrest High
Fidelity, Inc., a Texas corporation, Sound Advice, Inc., a Florida corporation,
and Sumarc Electronics Incorporated a North Carolina corporation.
"Borrowing" means (a) the incurrence of Revolving Credit Loans of a single
Type, on a single date and having, in the case of LIBO Loans, a single Interest
Period, or (b) a Swingline Loan.
"Borrowing Base" means, at any time of calculation, an amount equal to
(a) 95% of the face amount of Eligible Credit Card Receivables, plus
(b) 102.5% of the Appraised Value of Eligible Inventory (net of
Inventory Reserves).
"Borrowing Base Certificate" has the meaning provided therefor in SECTION
5.01(f).
"Borrowing Request" means a request by the Lead Borrower on behalf of the
Borrowers for a Borrowing in accordance with SECTION 2.03(b).
"Breakage Costs" shall have the meaning set forth in SECTION 2.20(d).
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required by
law to remain closed, provided that, when used in connection with a LIBO Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market. Except as
otherwise provided herein, if any day on which a payment is due is not a
Business Day, then the payment shall be
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due on the next day following which is a Business Day and such extension of time
shall be included in computing interest and fees in connection with such
payment.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Cash Collateral Account" means an account established by the Borrowers
with the Administrative Agent for its own benefit and the ratable benefit of the
other Secured Parties, under the sole and exclusive dominion and control of the
Administrative Agent, in the name of the Administrative Agent or as the
Administrative Agent shall otherwise direct and designated as the "Tweeter Cash
Collateral Account" and in which deposits are required to be made in accordance
with SECTION 2.06(j).
"Cash Receipts" has the meaning provided therefor in SECTION 2.22(c).
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq.
"Change in Control" means, at any time, (a) occupation of a majority of the
seats (other than vacant seats) on the board of directors of the Parent by
Persons who were neither (i) nominated by the board of directors of the Parent
nor (ii) appointed by directors so nominated; or (b) any person (within the
meaning of the Securities and Exchange Act of 1934, as amended) is or becomes
the beneficial owner (within the meaning of Rule 13d-3 and 13d-5 of the
Securities and Exchange Act of 1934, as amended, except that such person shall
be deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time) directly or indirectly of forty percent (40%) or more of
the total voting power of the Voting Stock of the Parent on a fully diluted
basis, whether as a result of the issuance of securities of the Parent, any
merger, consolidation, liquidation or dissolution of the Parent, any direct or
indirect transfers of securities or otherwise, or (c) the failure of the Parent
to own, directly or indirectly, 100% of the capital stock or other equity
interests of all of the Borrowers.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of SECTION 2.24(b), by any lending office of such Lender or by
such Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority that has become effective and is made or issued after the
date of this Agreement.
"Charges" has the meaning provided therefor in SECTION 9.14.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended from time to time.
"Collateral" means any and all "Collateral" as defined in any applicable
Security Document.
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"Collection Account" means that certain account of the Administrative
Agent, account number ▇▇▇▇▇▇▇▇ in the name of the Administrative Agent at
Deutsche Bank Trust Company, or such other account as may be specified in
writing by the Administrative Agent as the "Collection Account."
"Commercial Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Borrowers in the ordinary
course of business of the Borrowers.
"Commitment Fee" has the meaning provided therefor in SECTION 2.12.
"Concentration Account" has the meaning provided therefor in SECTION
2.22(c).
"Consent" means actual consent given by a Lender from whom such consent is
sought; or the passage of fifteen (15) Business Days from receipt of written
notice to a Lender from the Administrative Agent of a proposed course of action
to be followed by the Administrative Agent without such Lender's giving the
Administrative Agent written notice of that Lender's objection to such course of
action.
"Consolidated" means, when used to modify a financial term, test,
statement, or report of a Person, refers to the application or preparation of
such term, test, statement or report (as applicable) based upon the
consolidation, in accordance with GAAP, of the financial condition or operating
results of such Person and its Subsidiaries.
"Control" means the possession, directly or indirectly, of the power (a) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of a Person, or (b) to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. The terms "Controlling" and "Controlled"
have meanings correlative thereto.
"Cost" means the lesser of (a) the cost of purchases, as reported on the
Borrowers' stock ledger, based upon the Borrowers' accounting practices which
are in effect on the date of this Agreement, and (b) the cost equivalent of the
lowest ticketed price at which the subject Inventory is offered for sale to the
public after all ▇▇▇▇-▇▇▇▇▇ (whether or not such price is then reflected on the
Borrowers' accounting system), which cost equivalent is determined in accordance
with the retail method of accounting reflecting the Borrowers' historical
business practices. "Cost" does not include inventory capitalization costs or
other non-purchase price charges (such as freight) used in the Borrowers'
calculation of cost of goods sold.
"Credit Card Notifications" has the meaning provided therefor in SECTION
2.22(c).
"Credit Extensions" as of any day, shall be equal to the sum of (a) the
principal balance of all Revolving Credit Loans then outstanding, and (b) the
then amount of the Letter of Credit Outstandings.
"DDAs" means any checking or other demand deposit account maintained by any
Loan Party, including, without limitation, as of the Effective Date those listed
on Schedule 2.22(a). All funds in such DDAs shall be conclusively presumed to be
Collateral and proceeds of Collateral and the Administrative Agent and the
Lenders shall have no duty to inquire as to the source of the amounts on deposit
in the DDAs.
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"Default" means any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"Delinquent Lender" has the meaning therefor provided in SECTION 8.14.
"Disbursement Account" has the meaning provided therefor in SECTION
2.03(b).
"dollars" or "$" refers to lawful money of the United States of America.
"Effective Date" means the date on which the conditions specified in
SECTION 4.01 are satisfied (or waived in accordance with SECTION 9.02).
"Eligible Assignee" means a bank, insurance company, or company engaged in
the business of making commercial loans having a combined capital and surplus in
excess of $500,000,000 or any Affiliate of any Revolving Credit Lender, or any
Person to whom a Revolving Credit Lender assigns its rights and obligations
under this Agreement as part of a programmed assignment and transfer of such
Revolving Credit Lender's rights in and to a material portion of such Lender's
portfolio of asset based credit facilities.
"Eligible Credit Card Receivables" means Accounts due to a Borrower on a
non-recourse basis from Visa, Mastercard, American Express Co., and other major
credit card processors reasonably acceptable to the Administrative Agent as
arise in the ordinary course of business, which have been earned by performance
and are deemed by the Administrative Agent in its reasonable discretion to be
eligible for inclusion in the calculation of the Borrowing Base. Without
limiting the foregoing, unless otherwise approved in writing by the
Administrative Agent, none of the following shall be deemed to be Eligible
Credit Card Receivables:
(a) Accounts that have been outstanding for more than five (5)
Business Days from the date of sale;
(b) Accounts with respect to which a Borrower does not have good,
valid and marketable title thereto, free and clear of any Lien (other than
Liens granted to the Administrative Agent, for its benefit and the ratable
benefit of the Secured Parties, pursuant to the Security Documents);
(c) Accounts that are not subject to a first priority security
interest in favor of the Administrative Agent, for its benefit and the
ratable benefit of the Secured Parties, subject to Permitted Encumbrances
of the type described in clause (a) of such definition only;
(d) Accounts which are disputed, are with recourse, or with respect to
which a claim, counterclaim, offset or chargeback has been asserted (to the
extent of such claim, counterclaim, offset or chargeback) other than any
credit card processors' standard or fixed monthly percentage chargeback
amount instituted in the ordinary course of business by such credit card
processors;
(e) Accounts which the Administrative Agent determines in its
reasonable discretion to be uncertain of collection.
"Eligible In-Transit Inventory" means, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory (a) which
has been shipped from a foreign location for
7
receipt by a Borrower within 25 days of the date of determination, but which has
not yet been delivered to a Borrower, (b) for which payment has been made by a
Borrower and title has passed to a Borrower, (c) for which the document of title
reflects a Borrower as consignee (along with delivery to a Borrower of the
documents of title with respect thereto), (d) as to which the Administrative
Agent has control over the documents of title which evidence ownership of the
subject Inventory (such as by the delivery of a customs broker agency agreement,
satisfactory to the Administrative Agent), and (e) which otherwise would
constitute Eligible Inventory.
"Eligible Inventory" means, as of the date of determination thereof, (a)
Eligible In-Transit Inventory, (b) Eligible L/C Inventory, (c) items of
Inventory of the Borrowers that are finished goods, merchantable and readily
saleable to the public in the ordinary course deemed by the Administrative Agent
in its reasonable discretion to be eligible for inclusion in the calculation of
the Borrowing Base, and (d) Inventory that is in transit from vendors located in
the United States of America in the ordinary course of business to a warehouse
facility used by a Borrower or a property owned or leased by a Borrower.
Notwithstanding anything to the contrary herein, Inventory in transit from
vendors located in the United States of America included in clause (d) above,
shall only be included in the Borrowing Base if (i) the Administrative Agent has
completed a review of such Inventory, the results of which shall be satisfactory
to the Administrative Agent in its reasonable discretion, (ii) the
Administrative Agent has notified the Lead Borrower in writing of its consent to
such inclusion and the amount of any Reserves which shall be taken in connection
with such inclusion, and (iii) the terms for payment of such Inventory is at all
times "cash in advance". Without limiting the foregoing, unless otherwise
approved in writing by the Administrative Agent, none of the following shall be
deemed to be Eligible Inventory:
(i) Inventory that is not owned solely by the Borrowers, or is
leased or on consignment (as defined in Section 9-102 of the Uniform
Commercial Code as in effect in the State of New York) or the
Borrowers do not have good and valid title thereto;
(ii) Inventory (other than Eligible In-Transit Inventory,
Eligible Inventory or Inventory in transit from vendors as described
in clause (d) of the definition of Eligible Inventory) that is not
located at a warehouse facility used by a Borrower in the ordinary
course or at a property that is owned or leased by a Borrower;
(iii) Inventory that represents (A) goods damaged, defective or
otherwise unmerchantable, (B) goods that do not conform in all
material respects to the representations and warranties contained in
this Agreement or any of the Security Documents, or (C) goods to be
returned to the vendor;
(iv) Inventory that is not located in the United States of
America (excluding territories and possessions thereof) other than
Eligible In-Transit Inventory and Eligible L/C Inventory;
(v) Inventory that is not subject to a perfected first-priority
security interest in favor of the Administrative Agent for its benefit
and the ratable benefit of the Secured Parties, subject to Permitted
Encumbrances of the type described in clauses (a) and (b) of such
definition only;
(vi) Inventory which consists of salesman's samples, labels,
bags, packaging, installation inventory, and other similar
non-merchandise categories; and
8
(vii) Inventory as to which insurance in compliance with the
provisions of SECTION 5.07 hereof is not in effect.
"Eligible L/C Inventory" means, as of the date of determination thereof,
without duplication of other Eligible Inventory, Inventory (a) not yet delivered
to a Borrower or carrier contracted for shipment of such Inventory, (b) the
purchase of which is supported by a Commercial Letter of Credit having an expiry
within twenty-five (25) days of such date of determination (c) for which a
condition to any drawing under such Commercial Letter of Credit is the
presentation of an original document of title which reflects a Borrower or the
Issuing Bank as consignee (along with delivery to a Borrower or the Issuing
Bank, as applicable, of the documents of title with respect thereto), (d) as to
which the Administrative Agent has control over the documents of title which
evidence ownership of the subject Inventory (such as by the delivery of a
customs broker agency agreement, satisfactory to the Administrative Agent), and
(e) which otherwise would constitute Eligible Inventory.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
handling, treatment, storage, disposal, Release or threatened Release of any
Hazardous Material or to health matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of any Person directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Parent, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Parent or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Parent or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Parent or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Parent or any ERISA
9
Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Parent or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Event of Default" has the meaning provided therefor in SECTION 7.01. An
"Event of Default" shall be deemed to have occurred and to be continuing unless
and until that Event of Default has been duly waived or cured as provided
herein.
"Excess Availability" means, as of any date of determination the Borrowing
Base minus Reserves minus the aggregate unpaid balance of the Credit Extensions.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrowers hereunder, (a) income or franchise
taxes imposed on (or measured by) its gross or net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by a Borrower
under SECTION 2.29(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with SECTION 2.27(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
SECTION 2.27(a).
"Facility Guarantee" means collectively, (a) Article X herein, (b) the
Guarantee of even date herewith executed by the Facility Guarantors in favor of
the Administrative Agent, the Issuing Bank and the Lenders as such Guarantee may
be amended, restated, supplemented or otherwise modified and in effect from time
to time and (c) any other Guarantee of the Obligations executed by the Parent,
the Borrowers and any of their respective Subsidiaries which hereafter become
Facility Guarantors in favor of the Secured Parties.
"Facility Guarantors" means the Parent and each of its Subsidiaries, now
existing or hereafter created, other than Foreign Subsidiaries and any other
Person executing a Facility Guarantee.
"Facility Guarantors Collateral Documents" means all security agreements,
mortgages (if any), pledge agreements, deeds of trust, and other instruments,
documents or agreements executed and delivered by any Facility Guarantor to
secure the Facility Guarantee.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
as determined by the Administrative Agent in its sole discretion which
determination shall be final, binding and conclusive (absent manifest error).
"Fee Letter" means the letter entitled "Fee Letter" among the Facility
Guarantor and the Administrative Agent dated as of the Effective Date, as such
letter may from time to time hereafter be, amended, restated, supplemented or
otherwise modified and in effect.
10
"Financial Officer" means, with respect to any Borrower, the chief
financial officer, vice president of finance, director of finance, controller or
assistant controller of such Borrower.
"FIRREA" means The Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended, and the rules and regulations adopted pursuant thereto.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
"Future Commitment" has the meaning therefor provided in SECTION 8.14.
"GAAP" means principles which are (a) consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its predecessors (or
successors) in effect and applicable to that accounting period in respect of
which reference to GAAP is being made, and (b) consistently applied with past
financial statements of the Parent and its Subsidiaries adopting the same
principles.
"GE Capital" means General Electric Capital Corporation, a Delaware
corporation and its Subsidiaries.
"GE Capital Credit Card Reserve" means an Availability Reserve in such
amount as may be required to be delivered as collateral security, to or in favor
of GE Money at any time and from time to time under the Private Label Consumer
Credit Card Program Agreement, as determined by the Administrative Agent in its
reasonable discretion less the face amount (as may be reduced from time to time
of any Letters of Credit issued in favor of GE Money pursuant to such
agreement).
"GE Money" means GE Money Bank.
"GE Business" means GE Business Properties.
"GE Subordination Agreement" means that certain subordination agreement
dated as of the Effective Date by and among the Administrative Agent and GE
Money, as the same may be amended from time to time with the consent of the
Administrative Agent.
"Gift Certificates and Merchandise Credit Liability" means, at any time,
the aggregate face value at such time of (a) outstanding gift certificates and
gift cards of the Borrowers entitling the holder thereof to use all or a portion
of the certificate to pay all or a portion of the purchase price for any
Inventory, and (b) outstanding merchandise credits of the Borrowers.
"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational or governing
documents of such Person.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government, in each case having jurisdiction over one or more of the Loan
Parties.
11
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"Guarantor Payment" has the meaning provided therefor in SECTION 10.07.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement, interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, foreign currency exchange agreement, commodity price protection
agreement, or other interest or currency exchange rate or commodity price
hedging arrangement designed to hedge against fluctuations in interest rates or
foreign exchange rates.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money (including any obligations which
are without recourse to the credit of such Person) or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others (including, without limitation, under any Synthetic
Leases), (h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances, (k) all
obligations under Hedging Agreements, and (l) the principal and interest
portions of all rental obligations of such Person under any Synthetic Lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing where such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in accordance with GAAP.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or
12
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning provided therefor in SECTION 9.04(b).
"Interest Payment Date" means (a) with respect to any Prime Rate Loan
(including a Swingline Loan), the first day of each calendar month for the
immediately preceding calendar month, and (b) with respect to any LIBO Loan, the
last day of the Interest Period applicable to the Borrowing of which such
Revolving Credit Loan is a part.
"Interest Period" means, with respect to any LIBO Borrowing, the period
commencing on the date of such Borrowing and ending on the day that is, as the
case may be, seven (7) days thereafter (if available) or the numerically
corresponding day in the calendar month that is one, two or three months
thereafter, as the Lead Borrower may elect by notice to the Administrative Agent
in accordance with the provisions of this Agreement, provided that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, and (b) with
respect to an Interest Period of one, two or three months, any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month
during which such Interest Period ends) shall end on the last Business Day of
the calendar month of such Interest Period, and (c) any Interest Period which
would otherwise end after the Termination Date shall end on the Termination
Date. For purposes hereof, the date of a Borrowing initially shall be the date
on which such Borrowing is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the Security
Agreement.
"Inventory Reserves" means such reserves as may be established from time to
time by the Administrative Agent in the Administrative Agent's reasonable
discretion (after consultation with the Lead Borrower (whose consent to any
Inventory Reserve shall not be required)) with respect to the determination of
the saleability, at retail, of the Eligible Inventory or which reflect such
other factors as affect the market value of the Eligible Inventory and are not
already taken into consideration in the determination of Eligible Inventory.
Without limiting the generality of the foregoing, Inventory Reserves may include
(but are not limited to) reserves based on (a) obsolescence; (b) seasonality;
(c) imbalance; (d) change in Inventory character; (e) change in Inventory
composition; (f) change in Inventory mix; (g) markdowns (both permanent and
point of sale); (h) retail markdowns and markups inconsistent with prior period
practice and performance; industry standards; current business plans; or
advertising calendar and planned advertising events. Inventory Reserves shall be
established and calculated in a manner and methodology consistent with the
Administrative Agent's practices as of the Effective Date with other similarly
situated borrowers.
"Investment" means (a) any stock, evidence of Indebtedness or other
security of another Person, (b) any loan, advance, contribution to capital,
extension of credit (except for current trade and customer accounts receivable
for inventory sold or services rendered in the ordinary course of business and
payable in accordance with customary trade terms) to another Person, (c) any
purchase of (i) stock or other
13
securities of another Person, or (ii) any business or undertaking of any Person
(whether by purchase of assets or securities), (d) any commitment or option to
make any such purchase, or (e) any other investment, in all cases whether now
existing or hereafter made.
"Issuing Bank" means GE Capital in its capacity as the issuer of Letters of
Credit hereunder, and any successor of GE Capital in such capacity. The Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of the Issuing Bank or other legally authorized Person
selected by or acceptable to the Administrative Agent in its sole discretion, in
which case the term "Issuing Bank" shall include any such Affiliate or other
authorized Person with respect to Letters of Credit issued by such Affiliate or
authorized Person.
"L/C Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"Lead Borrower" means New England Audio Co., Inc., a Massachusetts
corporation.
"Lease" means any agreement, whether written or oral, no matter how styled
or structured, pursuant to which a Borrower is entitled to the use or occupancy
of any space in a structure, land, improvements or premises for any period of
time.
"Lenders" means the Revolving Credit Lenders identified on Schedule 1.01
hereto and each assignee that becomes a party to this Agreement as set forth in
SECTION 9.06(b).
"Letter of Credit" means a letter of credit that is (a) issued pursuant to
this Agreement for the account of any Borrower, (b) a Standby Letter of Credit
or Commercial Letter of Credit, (c) issued in connection with the purchase of
Inventory by any Borrower and for other purposes for which a Borrower has
historically obtained letters of credit, or for any other purpose set forth in
SECTION 5.12 hereof or that is reasonably acceptable to the Administrative
Agent, and (d) in form and substance reasonably satisfactory to the Issuing
Bank.
"Letter of Credit Fees" means the fees payable in respect of Letters of
Credit pursuant to SECTION 2.13.
"Letter of Credit Outstandings" means, at any time, the sum of (a) with
respect to Letters of Credit outstanding at such time, the aggregate maximum
amount that then is or at any time thereafter may become available for drawing
or payment thereunder plus (b) all amounts theretofore drawn or paid under
Letters of Credit for which the Issuing Bank has not then been reimbursed.
"LIBO Borrowing" means a Borrowing comprised of LIBO Loans.
"LIBO Loan" means any Revolving Credit Loan while bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of ARTICLE II.
"LIBO Rate" means, with respect to any LIBO Borrowing for any Interest
Period, the rate appearing on Reuters Screen LIBOR01 Page (or other commercially
available source providing quotations of the British Bankers Association LIBOR
Rate), as determined by the Administrative Agent from time to time for purposes
of providing quotations of interest rates applicable to dollar deposits in the
London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits with a maturity comparable to such Interest Period. In the event
that such rate is not available at such time for any reason, then the "LIBO
14
Rate" with respect to such LIBO Borrowing for such Interest Period shall be that
rate of interest (rounded upwards, if necessary to the next 1/100 of 1%)
determined by the Administrative Agent to be the highest prevailing rate per
annum at which deposits in dollars are offered to GE Capital by first class
banks in the London interbank market in which GE Capital participates at 11:00
a.m. (London time) not less than two Business Days before the first day of the
Interest Period for the subject LIBO Borrowing, for a deposit approximately in
the amount of the subject Borrowing and for a period of time approximately equal
to such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Liquidation" means the exercise by the Administrative Agent of those
rights and remedies accorded to the Administrative Agent under the Loan
Documents and Applicable Law as a creditor of the Loan Parties following and on
account of the occurrence of an Event of Default looking towards the realization
on the Collateral.
"Loan Account" has the meaning provided therefor in SECTION 2.21(a).
"Loan Documents" means this Agreement, the Notes, the Letters of Credit,
the Fee Letter, all Borrowing Base Certificates, the Blocked Account Agreements,
the Concentration Account Agreement, the Credit Card Notifications, the Security
Documents, the Facility Guarantee, the GE Subordination Agreement, the Master
Documentary Agreement, the Master Standby Agreement and any other instrument or
agreement now or hereafter executed and delivered in connection herewith, or in
connection with any transaction which arising out of any cash management,
depository, investment, letter of credit, Hedging Agreement, equipment leasing
or other banking or financial services provided by the Administrative Agent or
any of its respective Affiliates, each as amended, supplemented, restated or
otherwise modified and in effect from time to time.
"Loan Party" or "Loan Parties" means the Borrowers and the Facility
Guarantors.
"Margin Stock" has the meaning assigned to such term in Regulation U.
"Master Documentary Agreement" means the Master Agreement for Documentary
Letters of Credit dated as of the Effective Date between Borrowers, as
Applicant, and Issuing Bank.
"Master Standby Agreement" means the Master Agreement for Standby Letters
of Credit dated as of the Effective Date between Borrowers, as Applicant, and
Issuing Bank.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, assets, or condition, financial or otherwise, of
the Parent and its Subsidiaries taken as a whole, (b) the ability of the Loan
Parties to perform any material obligation or to pay any Obligations under this
Agreement or any of the other Loan Documents, or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or any of
the material rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder. In determining whether any individual event would
result in a Material Adverse Effect, notwithstanding that such event in and of
itself does not have such effect, a
15
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events would result in a
Material Adverse Effect.
"Material Indebtedness" means Indebtedness (other than the Revolving Credit
Loans and Letters of Credit or Indebtedness described in SECTION 6.01(a)(vii))
of any one or more of the Borrowers in an aggregate principal amount exceeding
$250,000. For purposes of determining the amount of Material Indebtedness at any
time, the "principal amount" of the obligations in respect of any Hedging
Agreement at such time shall be the maximum aggregate amount that a Borrower
would be required to pay if such Hedging Agreement were terminated at that time.
"Maturity Date" means March 21, 2012.
"Maximum Rate" has the meaning provided therefor in SECTION 9.14.
"Minimum Excess Availability" means as of any date of determination an
amount equal to 10% of the Borrowing Base or such lesser amount as may be
established by the Administrative Agent in its reasonable discretion.
"Minority Lenders" has the meaning provided therefore in SECTION 9.02(d).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Parent or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within the preceding five
(5) plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent
or any of its Subsidiaries or any ERISA Affiliate and at least one Person other
than the Parent, any Subsidiary or the ERISA Affiliate or (b) was so maintained
and in respect of which the Parent, any Subsidiary or any ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"Notes" means (a) the promissory notes of the Borrowers substantially in
the form of Exhibit B-1, each payable to the order of a Revolving Credit Lender,
evidencing the Revolving Credit Loans and (b) the promissory note of the
Borrowers substantially in the form of Exhibit B-2, payable to the Swingline
Lender, evidencing the Swingline Loans, as each may be amended, supplemented or
modified from time to time.
"Notice of Revolving Credit Extension" has the meaning provided therefor in
SECTION 2.03(b).
"Obligations" means (a) the due and punctual payment by the Loan Parties of
(i) the principal of, and interest (including all interest that accrues after
the commencement of any case or proceeding by or against any Loan Party under
any federal or state bankruptcy, insolvency, receivership or similar law,
whether or not allowed in such case or proceeding) on, the Revolving Credit
Loans and Facility Guarantees, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Loan Parties under this Agreement in respect
of any Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary,
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direct, contingent, fixed or otherwise, of the Loan Parties to the Secured
Parties under this Agreement and the other Loan Documents, including all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Loan Party in bankruptcy, whether or
not allowed in such case or proceeding) obligations in respect of any Letter of
Credit Obligations, and (b) the due and punctual payment and performance of all
the covenants, agreements, obligations and liabilities of each Loan Party under
or pursuant to this Agreement, and the other Loan Documents, (c) any Hedging
Agreements which are permitted pursuant to SECTION 6.01(a)(vii) hereof, and (d)
Other Liabilities.
"Other Liabilities" means any obligations under any transaction with GE
Capital, or any of its Affiliates (including, without limitation, GE Money and
GE Business) which arises out of any cash management, credit card, depository,
investment, letter of credit, Hedging Agreement, equipment leasing or other
banking or financial services provided by any such Person.
"Other Taxes" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Overadvance" means a loan, advance or providing of credit support (such as
the issuance of a Letter of Credit) to the extent that, immediately after its
having been made, Availability is less than zero.
"Parent" means Tweeter Home Entertainment Group, Inc., a Delaware
corporation.
"Payment Conditions" means, at the time of determination, that (a) no
Default or Event of Default then exists or would arise as a result of the making
of the subject payment, and (b) for the three (3) months prior to, as of, and,
on a pro forma twelve months basis after giving effect to, the subject payment,
average Excess Availability shall be equal to or greater than $15,000,000.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Annex 1 to the
Security Agreement or any other form approved by the Administrative Agent.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with SECTION 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than sixty
(60) days or are being contested in compliance with SECTION 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
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(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under SECTION 7.01(k); and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrowers or any Subsidiary;
provided that, except as provided in any one or more of clauses (a) through (f)
above, the term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
"Permitted Investments" means each of the following:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one (1) year from the date of acquisition thereof;
(b) Investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) Investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and demand deposit and money market
deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or
any State thereof that has a combined capital and surplus and undivided
profits of not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of not more
than thirty (30) days for securities described in clause (a) above (without
regard to the limitation on maturity contained in such clause) and entered
into with a financial institution satisfying the criteria described in
clause (c) above or with any primary dealer;
provided that, notwithstanding the foregoing, no such Investments shall be
permitted unless (i) no Revolving Credit Loans are then outstanding on the date
such Investment is made, and (ii) such Investments are pledged to the
Administrative Agent as additional collateral for the Obligations pursuant to
such agreements as may be reasonably required by the Administrative Agent.
"Permitted Overadvance" means a Revolving Credit Loan made while there is,
or which creates, an Overadvance determined by the Administrative Agent, in its
reasonable discretion, (a) which is made to maintain, protect or preserve the
Collateral and/or the Lenders' rights under the Loan Documents, or (b) which is
otherwise in the Lenders' interests; provided that Permitted Overadvances shall
not (i) exceed, in the aggregate outstanding at any time, five percent (5%) of
the Borrowing Base, or (ii) remain outstanding for more than thirty (30)
consecutive Business Days, unless in case of clause (ii), the
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Required Revolving Credit Lenders otherwise agree; and provided, further that
the foregoing shall not (1) modify or abrogate any of the provisions of SECTION
2.06(f) hereof regarding the Revolving Credit Lenders' obligations with respect
to L/C Disbursements, or (2) result in any claim or liability against the
Administrative Agent (regardless of the amount of any Overadvance) for
"inadvertent Overadvances" (i.e. where an Overadvance results from changed
circumstances beyond the control of the Administrative Agent (such as a
reduction in the collateral value)), and further provided that in no event shall
the Administrative Agent make an Overadvance, if after giving effect thereto,
the principal amount of the Credit Extensions would exceed the Revolving Credit
Commitment.
"Permitted Store Closings" means (a) the closure of up to 52 retail stores
listed on Schedule A attached hereto pursuant to the terms of the Agency
Agreement (which includes the sale or disposition of any real property,
fixtures, equipment, Inventory (including, without limitation, certain Inventory
from non-closing stores; provided that such Inventory from non-closing stores is
limited to Inventory consisting of first quality overstock and discontinued
goods with a Cost value of no greater than $20,000,000) and other property and
assets related thereto in an entirety) operated by any Loan Party, (b) the
termination, assignment, sublease or other disposition of the leases for the
stores described in clause (a) above, plus an additional seventeen (17) leases
related to distribution centers and non-operating retail locations and listed on
Schedule A attached hereto, and (c) the termination, assignment or other
disposition of the venue agreements described on Schedule A attached hereto.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledge Agreement" means the Pledge Agreement dated as of the Effective
Date among the Loan Parties and the Administrative Agent, for the benefit of the
Secured Parties, each as amended, supplemented, restated or otherwise modified
and in effect from time to time.
"Prime Rate" means, for any day, a floating rate equal to the higher of (a)
the rate publicly quoted from time to time by The Wall Street Journal as the
"prime rate" (or if The Wall Street Journal ceases quoting a prime rate, the
highest per annum rate of interest published by the Board in Federal Reserve
statistical release H.15(519) entitled "Selected Interest Rates" as the Bank
prime loan rate or its equivalent) and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1% (0.50%) per annum. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations thereof in accordance with the terms hereof, the Prime
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, until the circumstances giving rise to such inability no longer
exist. Any change in the Prime Rate or Federal Funds Effective Rate for purposes
herein shall be effective on the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively, as announced or determined by
the Administrative Agent.
"Prime Rate Loan" means any Revolving Credit Loan while bearing interest at
a rate determined by reference to the Prime Rate in accordance with the
provisions of ARTICLE II.
"Prior Credit Agreement" has the meaning provided therefor in the recitals.
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"Real Estate" means all land, together with the buildings, structures,
parking areas, and other improvements thereon, now or hereafter owned by any
Loan Party, including all easements, rights-of-way, and similar rights relating
thereto and all leases, tenancies, and occupancies thereof.
"Register" has the meaning provided therefor in SECTION 9.06(c).
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" has the meaning provided therefor in Section 101(22) of CERCLA.
"Required Revolving Credit Lenders" means, subject to the provisions of
SECTION 8.14, at any time, Revolving Credit Lenders having Revolving Credit
Commitments at least equal to 51% of the Total Revolving Credit Commitments, or
if the Revolving Credit Commitments have been terminated, Revolving Credit
Lenders whose percentage of the outstanding Obligations (after settlement and
repayment of all Swingline Loans by the Revolving Credit Lenders) aggregate not
less than 51% of all such Obligations, it being understood, for avoidance of
doubt, that any provision hereof that requires the vote of the Required
Revolving Credit Lenders shall not require the consent of the holders of the
Obligations described in clauses (c) or (d) (in their capacity as such holders)
of such definition (as such definition is in effect on the Effective Date).
"Reserves" means, without duplication, all (if any) Inventory Reserves, and
Availability Reserves (including, without limitation, the GE Capital Credit Card
Reserve).
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of any Loan Party or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of any Loan
Party or any Subsidiary or any option, warrant or other right to acquire any
such shares of capital stock of any Loan Party or any Subsidiary. Without
limiting the foregoing, "Restricted Payments" with respect to any Person shall
also include all payments made by such Person with respect to any stock
appreciation rights, plans, equity incentive or achievement plans or any similar
plans and all proceeds of a dissolution or liquidation of such Person.
"Revolving Credit Commitment" means, with respect to each Revolving Credit
Lender, the commitment of such Revolving Credit Lender hereunder set forth as
its Revolving Credit Commitment opposite its name on Schedule 1.01 hereto or as
may subsequently be set forth in the Register from time to time, as the same may
be reduced from time to time pursuant to SECTION 2.16.
"Revolving Credit Commitment Percentage" means, at any time, with respect
to each Revolving Credit Lender, the percentage obtained by dividing its
Revolving Credit Commitment at such time by all Revolving Credit Commitments at
such time.
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"Revolving Credit Lenders" means the Persons identified on Schedule 1.01
hereto and each assignee that becomes a party to this Agreement as a Revolving
Credit Lender by assuming all or a portion of the Revolving Credit Commitments
as set forth in SECTION 9.06(b).
"Revolving Credit Loans" means all revolving credit loans at any time made
by any Revolving Credit Lender pursuant to SECTION 2.03 and, to the extent
applicable, shall include Swingline Loans made by the Swingline Lender pursuant
to SECTION 2.05.
"Revolving Credit Obligations" means the aggregate of the Borrowers'
liabilities, obligations, and indebtedness of any character on account of or in
respect to the Credit Extensions.
"S&P" means Standard & Poor's.
"SEC" means the Securities and Exchange Commission.
"Secured Parties" has the meaning assigned to such term in the Security
Agreement.
"Security Agreement" means the Security Agreement dated as of the Effective
Date among the Loan Parties and the Administrative Agent, for the benefit of the
Secured Parties, as amended, supplemented, restated or otherwise modified and in
effect from time to time.
"Security Documents" means the Security Agreement, the Pledge Agreement,
the Facility Guarantors Collateral Documents, and each other security agreement
or other instrument or document executed and delivered pursuant to SECTION 5.13
to secure any of the Obligations.
"Settlement Date" has the meaning provided in SECTION 2.07(b) hereof.
"Single Employer Plan" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent or any
of its Subsidiaries or any ERISA Affiliate and no Person other than the Parent,
its Subsidiaries or the ERISA Affiliate or (b) was so maintained and in respect
of which the Parent, any Subsidiary or any ERISA Affiliate could have liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one (1) and the denominator of which is the
number one (1) minus the aggregate of the maximum
21
reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which the
Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. LIBO Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's Consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Swingline Lender" means GE Capital, in its capacity as lender of Swingline
Loans hereunder.
"Swingline Loan" means a Revolving Credit Loan made by the Swingline Lender
to the Borrowers pursuant to SECTION 2.05 hereof.
"Synthetic Lease" means any lease or other agreement for the use or
possession of property creating obligations which do not appear as Indebtedness
on the balance sheet of the lessee thereunder but which, upon the insolvency or
bankruptcy of such Person, may be characterized as Indebtedness of such lessee
without regard to the accounting treatment.
"Taxes" means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Termination Date" means the earliest to occur of (i) the Maturity Date, or
(ii) the date on which the maturity of the Revolving Credit Loans are
accelerated and the Revolving Credit Commitments and the obligation to issue
Letters of Credit are irrevocably terminated, or (iii) the date of the
occurrence of any Event of Default pursuant to SECTION 7.01(h) or SECTION
7.01(i) hereof.
"Tivoli" means Tivoli Audio LLC, a Delaware limited liability company.
"Tivoli Agreement" means the Amended and Restated Limited Liability Company
Agreement dated as of February 15, 2001 among ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and the
Parent, as in effect on the Effective Date.
"Total Revolving Credit Commitments" means, at any time, the sum of the
Revolving Credit Commitments at such time. As of the Effective Date, the Total
Revolving Credit Commitments aggregate $75,000,000.
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"Type", when used in reference to any Revolving Credit Loan or Borrowing,
refers to whether the rate of interest on such Revolving Credit Loan, or on the
Revolving Credit Loans comprising such Borrowing, is determined by reference to
the Adjusted LIBO Rate or the Prime Rate.
"Unused Commitment" means, on any day, (a) the then Total Revolving Credit
Commitments minus (b) the sum of (i) the principal amount of Revolving Credit
Loans then outstanding (including the principal amount of Swingline Loans then
outstanding) and (ii) the then Letter of Credit Outstandings.
"Voting Stock" means, with respect to any corporation, the outstanding
stock of all classes (or equivalent interests) which ordinarily, in the absence
of contingencies, entitles holders thereof to vote for the election of directors
(or Persons performing similar functions) of such corporation, even though the
right so to vote has been suspended by the happening of such contingency.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect on the Effective Date, provided that, if the
Borrowers notify the Administrative Agent that the Borrowers request an
amendment to any provision hereof to reflect the effect of any change occurring
after the date hereof in GAAP or in the application thereof on the operation of
such provision (or if the Administrative Agent notifies the Borrowers that the
Required Revolving Credit Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such provision shall have
been amended in accordance herewith.
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ARTICLE II
Amount and Terms of Credit
SECTION 2.01 Commitment of the Revolving Credit Lenders.
(a) Each Revolving Credit Lender severally and not jointly with any other
Revolving Credit Lender, agrees, upon the terms and subject to the conditions
herein set forth, to extend credit to the Borrowers on a revolving basis, in the
form of Revolving Credit Loans and Letters of Credit and in an amount not to
exceed the lesser of such Revolving Credit Lender's Revolving Credit Commitment
or such Revolving Credit Lender's Revolving Credit Commitment Percentage of the
Borrowing Base, subject to the following limitations:
(i) The aggregate outstanding amount of the Credit Extensions and
Swingline Loans shall not at any time exceed the lower of (A)
$75,000,000 or, in each case, any lesser amount to which the Revolving
Credit Commitments have then been reduced by the Borrowers pursuant to
SECTION 2.16, or (B) the then amount of the Borrowing Base minus
Reserves.
(ii) Intentionally Omitted.
(iii) No Revolving Credit Lender shall be obligated to issue any
Letter of Credit, and Letters of Credit shall be available from the
Issuing Bank, subject to the ratable participation of all Revolving
Credit Lenders, as set forth in SECTION 2.06. The Borrowers will not
at any time permit the aggregate Letter of Credit Outstandings to
exceed $20,000,000.
(iv) Subject to all of the other provisions of this Agreement,
Revolving Credit Loans that are repaid may be reborrowed prior to the
Termination Date. No new Revolving Loan Credit Extension, however,
shall be made to the Borrowers after the Termination Date.
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) Each Borrowing of Revolving Credit Loans (other than Swingline Loans)
shall be made by the Revolving Credit Lenders pro rata in accordance with their
respective Revolving Credit Commitment Percentages. The failure of any Revolving
Credit Lender to make any Revolving Credit Loan shall neither relieve any other
Revolving Credit Lender of its obligation to fund its Revolving Credit Loan in
accordance with the provisions of this Agreement nor increase the obligation of
any such other Revolving Credit Lender.
SECTION 2.02 Reserves; Changes to Reserves.
(a) The initial Reserves as of the Effective Date are the following:
(i) Reserve for rents (an Availability Reserve): In an amount
equal to one (1) month's rent for all of the Borrowers' Leased
locations in Pennsylvania and Virginia
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as to which a landlord's waiver reasonably satisfactory to the
Administrative Agent has not been delivered.
(ii) Gift Certificate and Merchandise Credit Liability (an
Availability Reserve): In an amount equal to 50% of the outstanding
amount thereof from time to time.
(iii) Minimum Excess Availability (an Availability Reserve).
(iv) Customer deposit and layaway liabilities (an Availability
Reserve): In an amount equal to 40% of the outstanding amount thereof
from time to time.
(v) GE Capital Credit Card Reserve (an Availability Reserve) in
an amount equal to $2,500,000.
(vi) Reserve in connection with accounts payable to certain
vendors (an Inventory Reserve) in an amount equal to $1,000,000 (it
being understood that the Administrative Agent shall evaluate in its
reasonable discretion the continuance of such Reserves to the extent
subordination agreements are delivered pursuant to SECTION 5.15(c)).
(b) The Administrative Agent may hereafter establish additional Reserves or
change any of the foregoing Reserves, in the exercise of the reasonable judgment
of the Administrative Agent, after furnishing one (1) Business Day's notice to
the Lead Borrower; including without limitation, an Availability Reserves based
on 100% of the outstanding amount of customer deposit and layaway liabilities of
the Borrowers during the immediately preceding thirty (30) days.
SECTION 2.03 Making of Revolving Credit Loans.
(a) Except as set forth in SECTION 2.17 and SECTION 2.25, Revolving Credit
Loans (other than Swingline Loans) by the Revolving Credit Lenders shall be
either Prime Rate Loans or LIBO Loans as the Lead Borrower on behalf of the
Borrowers may request subject to and in accordance with this SECTION 2.03,
provided, that all Swingline Loans shall be only Prime Rate Loans. All Revolving
Credit Loans made pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, be Revolving Credit Loans of the same Type. Each
Revolving Credit Lender may fulfill its Revolving Credit Commitment with respect
to any Revolving Credit Loan by causing any lending office of such Revolving
Credit Lender to make such Revolving Credit Loan; but any such use of a lending
office shall not affect the obligation of the Borrowers to repay such Revolving
Credit Loan in accordance with the terms of the applicable Note. Each Revolving
Credit Lender shall, subject to its overall policy considerations, use
reasonable efforts (but shall not be obligated) to select a lending office which
will not result in the payment of increased costs by the Borrowers pursuant to
SECTION 2.24. Subject to the other provisions of this SECTION 2.03 and the
provisions of SECTION 2.25, Borrowings of Revolving Credit Loans of more than
one Type may be incurred at the same time, but no more than six (6) Borrowings
of LIBO Loans may be outstanding at any time.
(b) The Lead Borrower shall give the Administrative Agent written notice in
the form of Exhibit 2.03(b) a "Notice of Revolving Credit Extension") of each
Borrowing. Any such notice, to be effective, must be received by the
Administrative Agent not later than 2:00 p.m., New York time, on (i) the third
Business Day in the case of LIBO Loans, and (ii) the Business Day of a proposed
Borrowing of
25
Prime Rate Loans. Such notice shall be irrevocable and shall specify the amount
of the proposed Borrowing (which shall be in an integral multiple of $500,000,
but not less than $1,000,000 in the case of LIBO Loans and not less than
$100,000 in the case of Prime Rate Loans) and the date thereof (which shall be a
Business Day) and shall contain disbursement instructions. Such notice shall
specify whether the Borrowing then being requested is to be a Borrowing of Prime
Rate Loans or LIBO Loans and, if LIBO Loans, the Interest Period with respect
thereto. If no election of Interest Period is specified in any such notice for a
Borrowing of LIBO Loans, such notice shall be deemed a request for an Interest
Period of one (1) month. If no election is made as to the Type of Loan, such
notice shall be deemed a request for Borrowing of Prime Rate Loans. The
Administrative Agent shall promptly notify each Revolving Credit Lender of its
proportionate share of such Borrowing, the date of such Borrowing, the Type of
Borrowing being requested and the Interest Period or Interest Periods applicable
thereto, as appropriate. On the borrowing date specified in such notice, each
Revolving Credit Lender shall make its share of the Borrowing available at the
office of the Administrative Agent at ▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
no later than 1:00 p.m., New York time, in immediately available funds. Unless
the Administrative Agent shall have received notice from a Revolving Credit
Lender prior to the proposed date of any Borrowing that such Revolving Credit
Lender will not make available to the Administrative Agent such Revolving Credit
Lender's share of such Borrowing, the Administrative Agent may assume that such
Revolving Credit Lender has made such share available on such date in accordance
with this SECTION 2.03 and may, in reliance upon such assumption, make available
to the Borrowers a corresponding amount. In such event, if a Revolving Credit
Lender has not in fact made its share of the applicable Borrowing available to
the Administrative Agent, then the applicable Revolving Credit Lender and the
Borrowers severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and
including, the date such amount is made available to the Borrowers to but
excluding the date of payment to the Administrative Agent, at (i) in the case of
such Revolving Credit Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrowers,
the interest rate applicable to Prime Rate Loans. If such Revolving Credit
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Revolving Credit Lender's Revolving Credit Loan included in such
Borrowing. Upon receipt of the funds made available by the Revolving Credit
Lenders to fund any Borrowing hereunder, the Administrative Agent shall disburse
such funds into an account (each a "Disbursement Account") maintained by a
Borrower, in its name, at a bank acceptable to the Administrative Agent into
which the Administrative Agent shall, from time to time deposit proceeds of
Revolving Credit Loans made to the Borrowers in accordance with the provisions
of SECTION 5.12 or otherwise in the manner specified in the Notice of Revolving
Credit Extension delivered by the Lead Borrower. The Administrative Agent shall
use reasonable efforts to make the funds so received from the Revolving Credit
Lenders available to the Borrowers no later than 4:00 p.m., New York time.
(c) The Administrative Agent, without the request of the Lead Borrower, may
advance any interest, fee, service charge, or other payment to which the
Administrative Agent or its Affiliates or any Lender is entitled from any
Borrower pursuant hereto or any other Loan Document and may charge the same to
the Loan Account notwithstanding that an Overadvance may result thereby. The
Administrative Agent shall advise the Lead Borrower of any such advance or
charge promptly after the making thereof and will endeavor, but not be
obligated, to furnish one (1) Business Day's notice prior to making any such
advance or charge. Such action on the part of the Administrative Agent shall not
constitute a waiver of the Administrative Agent's rights and each Borrower's
obligations under SECTION 2.19(a). Any amount which is added to the principal
balance of the Loan Account as provided in this SECTION 2.03(c) shall bear
interest at the interest rate then and thereafter applicable to Prime Rate
Loans.
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SECTION 2.04 Overadvances.
(a) The Administrative Agent and the Lenders have no obligation to make any
Revolving Credit Loan or to provide any Letter of Credit if an Overadvance would
result. The Administrative Agent may, in its discretion, make Permitted
Overadvances without the Consent of the Revolving Credit Lenders, and each
Revolving Credit Lender shall be bound thereby. Any Permitted Overadvances may
constitute Swingline Loans. The making of any Permitted Overadvance is for the
benefit of the Borrowers; such Permitted Overadvances constitute Prime Rate
Loans made by the Revolving Credit Lenders and Obligations, shall bear interest
at the Default Rate and shall be payable on the earlier of demand or the
Termination Date; provided, however that notwithstanding the provisions of
SECTION 7.01(a), the failure of any Loan Party to repay any Overadvance that
arose solely as a result of a change to the then existing Reserves by the
Administrative Agent pursuant to SECTION 2.02(b) shall not be deemed an Event of
Default until such Overadvance exists for a period of two (2) Business Days. The
making of any such Permitted Overadvances on any one occasion shall not obligate
the Administrative Agent or any Revolving Credit Lender to make or permit any
Permitted Overadvances on any other occasion or to permit such Permitted
Overadvances to remain outstanding.
(b) The making by the Administrative Agent of an Overadvance shall not
modify or abrogate any of the provisions of (i) SECTION 2.06(g) regarding
Revolving Credit Lenders obligations to purchase participations with respect to
L/C Disbursements or (ii) SECTION 2.07 regarding Revolving Credit Lenders'
obligations to purchase participations with respect to Swingline Loans.
SECTION 2.05 Swingline Loans.
(a) The Swingline Lender is authorized by the Revolving Credit Lenders, but
is not obligated, to make Swingline Loans up to (i) $5,000,000 plus (ii) the
Permitted Overadvance, in the aggregate outstanding at any time, consisting only
of Prime Rate Loans, upon a notice of Borrowing received by the Administrative
Agent and the Swingline Lender (which notice, at the Swingline Lender's
discretion, may be submitted prior to 1:00 p.m., New York time, on the Business
Day on which such Swingline Loan is requested). Swingline Loans shall be subject
to periodic settlement with the Revolving Credit Lenders under SECTION 2.07
below.
(b) Swingline Loans may be made only in the following circumstances: (A)
for administrative convenience, the Swingline Lender may, but is not obligated
to, make Swingline Loans in reliance upon the Borrowers' actual or deemed
representations under SECTION 4.02, that the applicable conditions for borrowing
are satisfied or (B) for Permitted Overadvances. If the conditions for borrowing
under SECTION 4.02 cannot be fulfilled, the Required Revolving Credit Lenders
may direct the Swingline Lender to, and the Swingline Lender thereupon shall,
cease making Swingline Loans (other than Permitted Overadvances) until such
conditions can be satisfied or are waived in accordance with SECTION 9.02
hereof. Unless the Required Revolving Credit Lenders so direct the Swingline
Lender, the Swingline Lender may, but is not obligated to, continue to make
Swingline Loans notwithstanding that the conditions for borrowing under SECTION
4.02 cannot be fulfilled. No Swingline Loans shall be made pursuant to this
subsection (b) (other than Permitted Overadvances) if after giving effect
thereto, the aggregate outstanding amount of the Credit Extensions and Swingline
Loans would result in Availability being less than zero.
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SECTION 2.06 Letters of Credit.
(a) Upon the terms and subject to the conditions herein set forth, the Lead
Borrower on behalf of the Borrowers may request the Issuing Bank, at any time
and from time to time after the date hereof and prior to the Termination Date,
to issue, and subject to the terms and conditions contained herein, the Issuing
Bank shall issue, for the account of the Borrowers one or more Letters of
Credit; provided that no Letter of Credit shall be issued if after giving effect
to such issuance (i) the aggregate Letter of Credit Outstandings shall exceed
$20,000,000, or (ii) the aggregate Credit Extensions (including Swingline Loans)
would exceed the Total Revolving Credit Commitments or would cause Availability
to be less than zero; and provided, further, that no Letter of Credit shall be
issued if the Issuing Bank shall have received notice from the Administrative
Agent or the Required Revolving Credit Lenders that the conditions to such
issuance have not been met.
(b) Each Standby Letter of Credit shall expire at or prior to the close of
business on the earlier of (i) the date one (1) year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one (1) year after such renewal or extension) and (ii) the date that is
five (5) Business Days prior to the Maturity Date, provided that each Standby
Letter of Credit may, upon the request of the Lead Borrower, include a provision
whereby such Letter of Credit shall be renewed automatically for additional
consecutive periods of twelve (12) months or less (but not beyond the date that
is five (5) Business Days prior to the Maturity Date) unless the Issuing Bank
notifies the beneficiary thereof at least thirty (30) days prior to the
then-applicable expiration date that such Letter of Credit will not be renewed.
(c) Each Commercial Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date 120 days after the date of the
issuance of such Commercial Letter of Credit and (ii) the date that is five (5)
Business Days prior to the Maturity Date.
(d) Drafts drawn under each Letter of Credit shall be reimbursed by the
Borrowers in dollars upon demand by the Issuing Bank by paying to the
Administrative Agent an amount equal to such drawing not later than 12:00 noon,
New York time, on (i) the date that the Borrowers shall have received notice of
such drawing, if such notice is received prior to 10:00 a.m., New York time, on
such date, or (ii) the Business Day immediately following the day that the
Borrowers receive such notice, if such notice is received after 10:00 a.m., New
York time on the day of drawing, provided that the Lead Borrower may, subject to
the conditions to borrowing set forth herein, request in accordance with SECTION
2.03 that such payment be financed with a Revolving Credit Loan consisting of a
Prime Rate Loan or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrowers' obligation to make such payment shall be discharged and
replaced by the resulting Prime Rate Loan or Swingline Loan. The Issuing Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The Issuing Bank
shall promptly notify the Administrative Agent and the Borrowers by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make payment thereunder, provided that any failure to give or
delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Revolving Credit Lenders with respect to
any such payment.
(e) If the Issuing Bank shall make any L/C Disbursement, then, unless the
Borrowers shall reimburse the Issuing Bank in full on the date such payment is
made, the unpaid amount thereof shall bear interest, for each day from and
including the date such payment is made to and including, if such reimbursement
is received after 2:00 p.m., New York time, the date that the Borrowers
reimburse the
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Issuing Bank therefor, at the rate per annum then applicable to
Prime Rate Loans, provided that, if the Borrowers fail to reimburse such Issuing
Bank when due pursuant to paragraph (d) of this SECTION 2.06, then SECTION 2.10
shall apply. Interest accrued pursuant to this paragraph shall be for the
account of the Issuing Bank, except that interest accrued on and after the date
of payment by any Revolving Credit Lender pursuant to paragraph (g) of this
SECTION 2.06 to reimburse the Issuing Bank shall be for the account of such
Revolving Credit Lender to the extent of such payment.
(f) Immediately upon the issuance of any Letter of Credit by the Issuing
Bank (or the amendment of a Letter of Credit increasing the amount thereof), and
without any further action on the part of the Issuing Bank, the Issuing Bank
shall be deemed to have sold to each Revolving Credit Lender, and each such
Revolving Credit Lender shall be deemed unconditionally and irrevocably to have
purchased from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Revolving Credit Lender's
Revolving Credit Commitment Percentage, in such Letter of Credit, each drawing
thereunder and the obligations of the Borrowers under this Agreement and the
other Loan Documents with respect thereto. Upon any change in the Revolving
Credit Commitments pursuant to SECTION 9.06, it is hereby agreed that with
respect to all Letter of Credit Outstandings, there shall be an automatic
adjustment to the participations hereby created to reflect the new Revolving
Credit Commitment Percentages of the assigning and assignee Revolving Credit
Lenders. Any action taken or omitted by the Issuing Bank under or in connection
with a Letter of Credit, if taken or omitted in the absence of gross negligence
or willful misconduct, shall not create for the Issuing Bank any resulting
liability to any Revolving Credit Lender.
(g) In the event that the Issuing Bank makes any L/C Disbursement and the
Borrowers shall not have reimbursed such amount in full to the Issuing Bank
pursuant to this SECTION 2.06, the Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each Revolving Credit Lender
of such failure. Such unreimbursed amount shall be deemed to be a Borrowing
hereunder, and each Revolving Credit Lender shall promptly and unconditionally
pay to the Administrative Agent for the account of the Issuing Bank the amount
of such Revolving Credit Lender's Revolving Credit Commitment Percentage of such
unreimbursed payment in dollars and in same day funds. If the Issuing Bank so
notifies the Administrative Agent, and the Administrative Agent so notifies the
Revolving Credit Lenders prior to 11:00 a.m., New York time, on any Business
Day, each such Revolving Credit Lender shall make available to the Issuing Bank
such Revolving Credit Lender's Revolving Credit Commitment Percentage of the
amount of such payment on such Business Day in same day funds (or if such notice
is received by the Revolving Credit Lenders after 11:00 a.m., New York time on
the day of receipt, payment shall be made on the immediately following Business
Day). If and to the extent such Revolving Credit Lender shall not have so made
its Revolving Credit Commitment Percentage of the amount of such payment
available to the Issuing Bank, such Revolving Credit Lender agrees to pay to the
Issuing Bank, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the
Administrative Agent for the account of the Issuing Bank at the Federal Funds
Effective Rate. Each Revolving Credit Lender agrees to fund its Revolving Credit
Commitment Percentage of such unreimbursed payment notwithstanding a failure to
satisfy any applicable lending conditions or the provisions of SECTION 2.01 or
SECTION 2.06, or the occurrence of the Termination Date. The failure of any
Revolving Credit Lender to make available to the Issuing Bank its Revolving
Credit Commitment Percentage of any payment under any Letter of Credit shall
neither relieve any Revolving Credit Lender of its obligation hereunder to make
available to the Issuing Bank its Revolving Credit Commitment Percentage of any
payment under any Letter of Credit on the date required, as specified above, nor
increase the obligation of such other Revolving Credit Lender. Whenever any
Revolving Credit Lender has made payments to the Issuing Bank in respect of any
reimbursement
29
obligation for any Letter of Credit, such Revolving Credit Lender
shall be entitled to share ratably, based on its Revolving Credit Commitment
Percentage, in all payments and collections thereafter received on account of
such reimbursement obligation.
(h) Whenever the Borrowers desire that the Issuing Bank issue a Letter of
Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit), the Lead Borrower shall give to the Issuing Bank and the Administrative
Agent at least two (2) Business Days' prior written (including telegraphic,
telex, facsimile or cable communication) notice (or such shorter period as may
be agreed upon in writing by the Issuing Bank and the Lead Borrower) and a
completed Application for Standby Letter of Credit, or Application and Agreement
for Letter of Credit, or Application for Letter of Credit, or Application for
Banker's Acceptance in the forms of Exhibit 2.06(h)A, or 2.06(h)B, or 2.06(h)C
attached hereto specifying the date on which the proposed Letter of Credit is to
be issued, amended, renewed or extended (which shall be a Business Day), the
stated amount of the Letter of Credit so requested, the expiration date of such
Letter of Credit, the name and address of the beneficiary thereof, and the
provisions thereof.
(i) The obligations of the Borrowers to reimburse the Issuing Bank for any
L/C Disbursement shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation: (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, setoff, defense or other
right which the Borrowers may have at any time against a beneficiary of any
Letter of Credit or against the Issuing Bank or any of the Lenders, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; (iii) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) payment by the Issuing Bank of any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit; (v) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this SECTION 2.06, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrowers' obligations hereunder; or (vi) the fact that any Event of Default
shall have occurred and be continuing. None of the Administrative Agent, the
Lenders, the Issuing Bank or any of their Affiliates shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank, provided that the foregoing
provisions of this subparagraph (i) shall not be construed to excuse the Issuing
Bank from liability to the Borrowers to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrowers to the extent permitted by Applicable Law) suffered by the
Borrowers that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation,
30
regardless of any notice or information to the contrary, or refuse to accept and
make payment upon such documents if such documents are not in strict compliance
with the terms of such Letter of Credit.
(j) If any Event of Default shall occur and be continuing, on the Business
Day that the Borrowers receive notice from the Administrative Agent or the
Required Revolving Credit Lenders demanding the deposit of cash collateral
pursuant to this paragraph, the Borrowers shall deposit in the Cash Collateral
Account an amount in cash equal to 105% of the Letter of Credit Outstandings as
of such date plus any accrued and unpaid interest thereon. Each such deposit
shall be held by the Administrative Agent as collateral for the payment and
performance of the Obligations of the Borrowers under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such Cash Collateral Account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent at the
request of the Borrowers and at the Borrowers' risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such Cash Collateral Account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for payments
on account of drawings under Letters of Credit for which it has not been
reimbursed and, to the extent not so applied, shall be held first for the
satisfaction of the reimbursement obligations of the Borrowers for the Letter of
Credit Outstandings at such time and thereafter be applied to satisfy other
Obligations of the Borrowers under this Agreement.
SECTION 2.07 Settlements Amongst Revolving Credit Lenders.
(a) The Swingline Lender may (but shall not be obligated to), at any time,
on behalf of the Borrowers (which hereby authorize the Swingline Lender to act
on its behalf in that regard) request the Administrative Agent to cause the
Revolving Credit Lenders to make a Revolving Credit Loan (which shall be a Prime
Rate Loan) in an amount equal to such Revolving Credit Lender's Revolving Credit
Commitment Percentage of the outstanding amount of Swingline Loans made in
accordance with SECTION 2.05, which request may be made regardless of whether
the conditions set forth in ARTICLE IV have been satisfied. Upon such request,
each Revolving Credit Lender shall make available to the Administrative Agent
the proceeds of such Revolving Credit Loan for the account of the Swingline
Lender. If the Swingline Lender requires a Revolving Credit Loan to be made by
the Revolving Credit Lenders and the request therefor is received prior to 12:00
Noon, New York time, on a Business Day, such transfers shall be made in
immediately available funds to the Administrative Agent's account as set forth
in Annex A no later than 3:00 p.m., New York time, that day; and, if the request
therefor is received after 12:00 Noon, New York time, then no later than 3:00
p.m., New York time, on the next Business Day. The obligation of each Revolving
Credit Lender to transfer such funds is irrevocable, unconditional and without
recourse to or warranty by the Administrative Agent or the Swingline Lender. If
and to the extent any Revolving Credit Lender shall not have so made its
transfer to the Administrative Agent, such Revolving Credit Lender agrees to pay
to the Administrative Agent, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent at the Federal Funds Effective Rate.
(b) The amount of each Revolving Credit Lender's Revolving Credit
Commitment Percentage of outstanding Revolving Credit Loans (excluding Swingline
Loans) shall be computed weekly (or more frequently in the Administrative
Agent's discretion) and shall be adjusted upward or downward based on all
Revolving Credit Loans (excluding Swingline Loans) and repayments of Revolving
Credit Loans (excluding Swingline Loans) received by the Administrative Agent as
of 3:00
31
p.m., New York time, on the first Business Day following the end of the period
specified by the Administrative Agent (such date, the "Settlement Date").
(c) Following each Settlement Date, the Administrative Agent shall advise
each of the Revolving Credit Lenders by telephone, or telecopy of the amount of
outstanding Revolving Credit Loans (excluding Swingline Loans) for the period
and the amount of repayments received for the period. Each Revolving Credit
Lender shall transfer to the Administrative Agent (as provided below), or the
Administrative Agent shall transfer to each Revolving Credit Lender, such
amounts as are necessary to insure that, after giving effect to all such
transfers, the amount of Revolving Credit Loans made by each Revolving Credit
Lender with respect to Revolving Credit Loans (excluding Swingline Loans) shall
be equal to such Revolving Credit Lender's applicable Revolving Credit
Commitment Percentage of Revolving Credit Loans (excluding Swingline Loans)
outstanding as of such Settlement Date. In the event notice of the transfers to
be made to the Administrative Agent by the Revolving Credit Lenders is received
prior to 12:00 Noon, New York time, on a Business Day, such transfers shall be
made in immediately available funds to the Administrative Agent's account as set
forth in Annex A no later than 3:00 p.m., New York time, that day; and, if
received after 12:00 Noon, New York time, then no later than 3:00 p.m., New York
time, on the next Business Day. The obligation of each Revolving Credit Lender
to transfer such funds is irrevocable, unconditional and without recourse to or
warranty by the Administrative Agent. If and to the extent any Revolving Credit
Lender shall not have so made its transfer to the Administrative Agent, such
Revolving Credit Lender agrees to pay to the Administrative Agent, forthwith on
demand such amount, together with interest thereon, for each day from such date
until the date such amount is paid to the Administrative Agent at the Federal
Funds Effective Rate.
SECTION 2.08 Notes; Repayment of Revolving Credit Loans.
(a) The Revolving Credit Loans made by each Revolving Credit Lender (and to
the Swingline Lender, with respect to Swingline Loans) shall be evidenced by a
Note duly executed on behalf of the Borrowers, dated the Effective Date, in
substantially the form attached hereto as Exhibit B-1 or B-2, as applicable,
payable to the order of each such Revolving Credit Lender (or the Swingline
Lender, as applicable) in an aggregate principal amount equal to such Revolving
Credit Lender's Revolving Credit Commitment (or, in the case of the Note
evidencing the Swingline Loans, $5,000,000).
(b) The outstanding principal balance of all Swingline Loans shall be
repaid on the earlier of the Termination Date or, on the date otherwise
requested by the Swingline Lender in accordance with the provisions of SECTION
2.07(a). The outstanding principal balance of all other Obligations shall be
payable on the Termination Date (subject to earlier repayment as provided
below). Each Note shall bear interest from the date thereof on the outstanding
principal balance thereof as set forth in this ARTICLE II. Each Lender is hereby
authorized by the Borrowers to endorse on a schedule attached to each Note
delivered to such Lender (or on a continuation of such schedule attached to such
Note and made a part thereof), or otherwise to record in such Lender's internal
records, an appropriate notation evidencing the date and amount of each
Revolving Credit Loan from such Lender, each payment and prepayment of principal
of any such Revolving Credit Loan, each payment of interest on any such
Revolving Credit Loan and the other information provided for on such schedule;
provided, however, that the failure of any Lender to make such a notation or any
error therein shall not affect the obligation of the Borrowers to repay the
Revolving Credit Loans made by such Lender in accordance with the terms of this
Agreement and the applicable Notes.
32
(c) Upon receipt of an affidavit of a Lender as to the loss, theft,
destruction or mutilation of such Lender's Note (which affidavit shall include
an indemnity in favor of the Borrowers) and upon cancellation of such Note, the
Borrowers will issue, in lieu thereof, a replacement Note in favor of such
Lender, in the same principal amount thereof and otherwise of like tenor.
SECTION 2.09 Interest on Revolving Credit Loans.
(a) Subject to SECTION 2.10, each Prime Rate Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as applicable) at a rate per annum that shall be equal to the then
Prime Rate.
(b) Subject to SECTION 2.10, each LIBO Loan shall bear interest (computed
on the basis of the actual number of days elapsed over a year of 360 days) at a
rate per annum equal, during each Interest Period applicable thereto, to the
Adjusted LIBO Rate for such Interest Period, plus the Applicable Margin for LIBO
Loans.
(c) Each Note shall bear interest from the date thereof on the outstanding
principal balance thereof as set forth in this Article II. Accrued interest on
all Revolving Credit Loans shall be payable in arrears on each Interest Payment
Date applicable thereto, at maturity (whether by acceleration or otherwise),
after such maturity on demand and (with respect to LIBO Loans) upon any
repayment or prepayment thereof (on the amount prepaid).
SECTION 2.10 Default Interest. Effective upon the occurrence of any Event
of Default and at all times thereafter while such Event of Default is
continuing, at the option of the Administrative Agent or upon the direction of
the Required Revolving Credit Lenders, interest shall accrue on all outstanding
Revolving Credit Loans (including Swingline Loans) and other Obligations (after,
as well as before, judgment, as and to the extent permitted by Applicable Law)
at a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the rate (including by reference to the
Applicable Margin) in effect from time to time plus 2.00% per annum (the
"Default Rate"), and such interest shall be payable on demand.
SECTION 2.11 Certain Fees. The Borrowers shall pay to the Administrative
Agent, for the account of the Administrative Agent, the fees set forth in the
Fee Letter as and when payment of such fees is due as therein set forth.
SECTION 2.12 Unused Commitment Fee. The Borrowers shall pay to the
Administrative Agent for the account of the Revolving Credit Lenders, a
commitment fee (the "Commitment Fee") equal to 0.25% per annum (on the basis of
actual days elapsed in a year of 360 days) of the average daily balance of the
Unused Commitment for each day commencing on and including the Effective Date
and ending on but excluding the Termination Date. The Commitment Fee so accrued
in any calendar month shall be payable on the first Business Day of each
calendar month after execution of this Agreement and on the Termination Date.
SECTION 2.13 Letter of Credit Fees.
The Borrowers shall pay the Administrative Agent, for the account of the
Revolving Credit Lenders, on the first day of each calendar month, in arrears, a
fee calculated on the basis of a 360-day year and actual number of days elapsed)
(each, a "Letter of Credit Fee") at a per annum rate equal to the then
Applicable Margin for LIBO Loans on the average face amount of Letters of Credit
outstanding
33
during the subject month. After the occurrence and during the continuance of an
Event of Default, at the option of the Administrative Agent or upon the
direction of the Required Revolving Credit Lenders, the Letter of Credit Fee
shall be increased by an amount equal to the Default Rate.
SECTION 2.14 Intentionally Omitted.
SECTION 2.15 Nature of Fees. All fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent, for the respective
accounts of the Administrative Agent, the Issuing Bank and the Revolving Credit
Lenders, as provided herein. All fees shall be fully earned on the date when due
and shall not be refundable under any circumstances.
SECTION 2.16 Termination or Reduction of Revolving Credit Commitments. Upon
at least two (2) Business Days' prior written notice to the Administrative
Agent, the Borrowers may permanently terminate in whole, or from time to time in
part permanently reduce, the Revolving Credit Commitments, provided that the
aggregate of all partial reductions of the Revolving Credit Commitments from and
after the Effective Date may not exceed $20,000,000. Each such reduction shall
be in the principal amount of $5,000,000 or any integral multiple of $1,000,000
in excess thereof. Each such reduction or termination shall (a) be applied
ratably to the Revolving Credit Commitments of each Revolving Credit Lender and
(b) be irrevocable when given. At the effective time of each such reduction or
termination, the Borrowers shall pay to the Administrative Agent for application
as provided herein (i) all Commitment Fees accrued on the amount of the
Revolving Credit Commitments so terminated or reduced through the date thereof
and (ii) any amount by which the Credit Extensions outstanding on such date
exceed the amount to which the Revolving Credit Commitments are to be reduced
effective on such date, in each case pro rata based on the amount prepaid.
SECTION 2.17 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a LIBO Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Revolving
Credit Lenders that the Adjusted LIBO Rate for such Interest Period will
not adequately and fairly reflect the cost to such Revolving Credit Lenders
of making or maintaining their Revolving Credit Loans included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Revolving Credit Lenders by telephone or telecopy as promptly as practicable
thereafter and, until the Administrative Agent notifies the Borrowers and the
Revolving Credit Lenders that the circumstances giving rise to such notice no
longer exist, (i) any Borrowing Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a LIBO Borrowing shall be
ineffective and (ii) if any Borrowing Request requests a LIBO Borrowing, such
Borrowing shall be made as a Borrowing of Prime Rate Loans.
SECTION 2.18 Conversion and Continuation of Revolving Credit Loans. The
Lead Borrower on behalf of the Borrowers shall have the right at any time, on
three (3) Business Days' prior irrevocable notice to the Administrative Agent
(which notice, to be effective, must be received by the Administrative Agent not
later than 11:00 a.m., New York time, on the third Business Day preceding the
date of any
34
conversion), (x) to convert any outstanding Borrowing of Revolving
Credit Loans (but in no event Swingline Loans) of the other Type or (y) to
continue an outstanding Borrowing of LIBO Loans for an additional Interest
Period, subject to the following:
(a) no Borrowing of Revolving Credit Loans may be converted into, or
continued as, LIBO Loans at any time when an Event of Default has occurred
and is continuing;
(b) if less than a full Borrowing of Revolving Credit Loans is
converted, such conversion shall be made pro rata among the Revolving
Credit Lenders, based upon their Revolving Credit Commitment Percentages,
in accordance with the respective principal amounts of the Revolving Credit
Loans comprising such Borrowing held by such Revolving Credit Lenders
immediately prior to such refinancing;
(c) the aggregate principal amount of Revolving Credit Loans being
converted into or continued as LIBO Loans shall be in an integral of
$500,000 and at least $1,000,000;
(d) each Revolving Credit Lender shall effect each conversion by
applying the proceeds of its new LIBO Loan or Prime Rate Loan, as the case
may be, to its Revolving Credit Loan being so converted;
(e) the Interest Period with respect to a Borrowing of LIBO Loans
effected by a conversion or in respect to the Borrowing of LIBO Loans being
continued as LIBO Loans shall commence on the date of conversion or the
expiration of the current Interest Period applicable to such continuing
Borrowing, as the case may be;
(f) a Borrowing of LIBO Loans may be converted only on the last day of
an Interest Period applicable thereto;
(g) each request for a conversion or continuation of a Borrowing of
LIBO Loans which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one (1) month; and
(h) no more than six (6) Borrowings of LIBO Loans may be outstanding
at any time.
If the Lead Borrower does not give notice to convert any Borrowing of LIBO
Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as LIBO Loans, in each case as provided above, such
Borrowing shall automatically be converted to a Borrowing of Prime Rate Loans at
the expiration of the then-current Interest Period. The Administrative Agent
shall, after it receives notice from the Lead Borrower, promptly give each
Lender notice of any conversion, in whole or part, of any Revolving Credit Loan
made by such Revolving Credit Lender.
SECTION 2.19 Mandatory Prepayment; Commitment Termination; Cash Collateral.
The outstanding Obligations shall be subject to mandatory prepayment as follows:
(a) If at any time the amount of the Credit Extensions (A) exceeds
$75,000,000 or, in each case, any lesser amount to which the Total
Revolving Credit Commitments have then been reduced by the Borrowers
pursuant to SECTION 2.16, or (B) causes the Availability to become less
than zero, the Borrowers will immediately upon notice from the
Administrative Agent (w) prepay the Revolving Credit Loans in an amount
necessary to eliminate such excess, and (x) if,
35
after giving effect to the prepayment in full of all outstanding Revolving
Credit Loans, such excess has not been eliminated, deposit cash into the
Cash Collateral Account in an amount equal to 105% of the Letters of Credit
Outstanding until such excess has been eliminated.
(b) The Revolving Credit Loans shall be repaid daily in accordance
with (and to the extent required under) the provisions of SECTIONS 2.22 and
2.23 hereof.
(c) Subject to the provisions of SECTION 2.19(a) and SECTION 2.19(b),
outstanding Prime Rate Loans shall be prepaid before outstanding LIBO Loans
are prepaid. Each partial prepayment of LIBO Loans shall be in an integral
multiple of $500,000. Any prepayment of LIBO Loans made pursuant to this
SECTION 2.19 other than on the last day of an Interest Period applicable
thereto shall be accompanied by a payment by the Borrowers of all "Breakage
Costs" (as defined in SECTION 2.20(d) below) associated therewith. In order
to avoid such Breakage Costs, as long as no Event of Default has occurred
and is continuing, unless otherwise requested by the Lead Borrower, the
Administrative Agent shall hold all amounts required to be applied to LIBO
Loans in the Cash Collateral Account (or, at the Lead Borrower's option, in
Permitted Investments in which the Administrative Agent has a first
perfected Lien) and will apply such funds to the applicable LIBO Loans at
the end of the then pending Interest Period therefor (provided that the
foregoing shall in no way limit or restrict the Administrative Agent's
rights upon the subsequent occurrence of an Event of Default). No partial
prepayment of a Borrowing of LIBO Loans shall result in the aggregate
principal amount of the LIBO Loans remaining outstanding pursuant to such
Borrowing being less than $1,000,000. Any prepayment of the Revolving
Credit Loans shall not permanently reduce the Revolving Credit Commitments.
(d) All amounts required to be applied to all Revolving Credit Loans
hereunder (other than Swingline Loans) shall be applied ratably in
accordance with each Revolving Credit Lender's Commitment. If any item
credited to the Loan Account is dishonored or returned unpaid for any
reason, whether or not such return is rightful or timely, the
Administrative Agent shall have the right to reverse such credit and charge
the amount of such item to the Loan Account and the Borrowers shall
indemnify the Secured Parties against all claims and losses resulting from
such dishonor or return.
(e) Upon the Termination Date, the Revolving Credit Commitments and
the credit facility provided hereunder shall be terminated in full and the
Borrowers shall pay, in full and in cash, all outstanding Revolving Credit
Loans and all other outstanding Obligations. If there are any Letter of
Credit Outstandings on the Termination Date, the Borrowers shall either (1)
deliver to the Issuing Bank a stand-by letter (or letters) of credit in
guarantee of such Letter of Credit Outstandings, which stand-by letter (or
letters) of credit shall be of like tenor and duration (plus fifteen (15)
additional days) as, and in an amount equal to 105% of the Letter of Credit
Outstandings and shall be issued by a Person, and shall be subject to such
terms and conditions, as are satisfactory to the Administrative Agent and
the Issuing Bank in their respective reasonable discretion or (2)
immediately deposit in the Cash Collateral Account an amount equal to 105%
of the Letter of Credit Outstandings as of such date, plus any accrued and
unpaid interest thereon. Upon such payment, the Notes shall be cancelled
and the Administrative Agent shall release and terminate its Liens in the
Collateral.
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SECTION 2.20 Optional Prepayment of Revolving Credit Loans; Reimbursement
of Lenders.
(a) The Borrowers shall have the right at any time and from time to time to
prepay outstanding Revolving Credit Loans in whole or in part, (x) with respect
to LIBO Loans, upon at least two (2) Business Days' prior written, telex or
facsimile notice to the Administrative Agent prior to 11:00 a.m., New York time,
and (y) with respect to Prime Rate Loans, on the same Business Day if written,
telex or facsimile notice is received by the Administrative Agent prior to 1:00
p.m., New York time, subject to the following limitations:
(i) Subject to SECTION 2.19, all prepayments shall be paid to the
Administrative Agent for application, first, to the prepayment of
outstanding Swingline Loans, second, to the prepayment of other
outstanding Revolving Credit Loans ratably in accordance with each
Revolving Credit Lender's Revolving Credit Commitment Percentage, and
third, to the funding of a cash collateral deposit in the Cash
Collateral Account in an amount equal to 105% of all Letter of Credit
Outstandings.
(ii) Subject to the foregoing, outstanding Prime Rate Loans shall
be prepaid before outstanding LIBO Loans are prepaid. Each partial
prepayment of LIBO Loans shall be in an integral multiple of $500,000.
No prepayment of LIBO Loans shall be permitted pursuant to this
SECTION 2.20 other than on the last day of an Interest Period
applicable thereto, unless the Borrowers simultaneously reimburse the
Revolving Credit Lenders for all "Breakage Costs" (as defined in
SECTION (d) below) associated therewith. No partial prepayment of a
Borrowing of LIBO Loans shall result in the aggregate principal amount
of the LIBO Loans remaining outstanding pursuant to such Borrowing
being less than $1,000,000.
(iii) Each notice of prepayment shall specify the prepayment
date, the principal amount and Type of the Revolving Credit Loans to
be prepaid and, in the case of LIBO Loans, the Borrowing or Borrowings
pursuant to which such Revolving Credit Loans were made. Each notice
of prepayment shall be irrevocable and shall commit the Borrowers to
prepay such Revolving Credit Loan by the amount and on the date stated
therein. The Administrative Agent shall, promptly after receiving
notice from the Borrowers hereunder, notify each Revolving Credit
Lender of the principal amount and Type of the Revolving Credit Loans
held by such Revolving Credit Lender which are to be prepaid, the
prepayment date and the manner of application of the prepayment.
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) The Borrowers shall reimburse each Lender on demand for any loss
(including any loss of margin), costs and expenses (herein, collectively,
"Breakage Costs") incurred or to be incurred by it in the reemployment of the
funds or from fees payable to terminate deposits from which such funds were
obtained (i) resulting from any prepayment (for any reason whatsoever,
including, without limitation, conversion to Prime Rate Loans, acceleration by
operation of law or otherwise) of any LIBO Loan required or permitted under this
Agreement, if such Revolving Credit Loan is prepaid other than on the last day
of the Interest Period for such Revolving Credit Loan, (ii) resulting from the
Borrowers failure to pay when due the principal amount of or interest on any
LIBO Loans, (iii) in the event that after the Lead
37
Borrower delivers a notice of borrowing under SECTION 2.03 in respect of LIBO
Loans, such Revolving Credit Loans are not made on the first day of the Interest
Period specified in such notice of borrowing for any reason other than a breach
by such Lender of its obligations hereunder, or (iv) in the event that after the
Lead Borrower delivers a notice of prepayment under SECTION 2.20 in respect of
LIBO Loans and the Borrowers shall fail to make such prepayment specified in
such notice of prepayment for any reason. For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be deemed to have
actually funded its relevant LIBO Loan through the purchase of a deposit bearing
interest at the LIBO Rate in an amount equal to the amount of that LIBO Loan and
having a maturity comparable to the relevant Interest Period; provided, that
each Lender may fund each of its LIBO Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under this subsection. Any Lender demanding reimbursement for such loss
shall deliver to the Lead Borrower from time to time one or more certificates
setting forth the amount of such loss as determined by such Lender and setting
forth in reasonable detail the manner in which such amount was determined.
(e) In the event the Borrowers fail to prepay any Revolving Credit Loan on
the date specified in any prepayment notice delivered pursuant to SECTION
2.20(a), the Borrowers on demand by any Lender shall pay to the Administrative
Agent for the account of such Lender any amounts required to compensate such
Lender for any loss incurred by such Lender as a result of such failure to
prepay, including, without limitation, any loss, cost or expenses incurred by
reason of the acquisition of deposits or other funds by such Lender to fulfill
deposit obligations incurred in anticipation of such prepayment. Any Lender
demanding such payment shall deliver to the Borrowers from time to time one or
more certificates setting forth the amount of such loss as determined by such
Lender and setting forth in reasonable detail the manner in which such amount
was determined.
(f) Whenever any partial prepayment of Revolving Credit Loans are to be
applied to LIBO Loans, such LIBO Loans shall be prepaid in the chronological
order of their Interest Payment Dates.
SECTION 2.21 Maintenance of Loan Account; Statements of Account.
(a) The Administrative Agent shall maintain an account on its books in the
name of the Borrowers (the "Loan Account") which will reflect (i) all Swingline
Loans and all Revolving Credit Loans and other advances made by the Revolving
Credit Lenders to the Borrowers or for the Borrowers' account, (ii) all L/C
Disbursements, fees and interest that have become payable as herein set forth,
and (iii) any and all other Obligations that have become payable. All entries in
the Loan Account shall be made in accordance with the Administrative Agent's
customary accounting practices as in effect from time to time.
(b) The Loan Account will be credited with all amounts received by the
Administrative Agent from the Borrowers or otherwise for the Borrowers' account,
including all amounts received in the Concentration Account from the Blocked
Account Banks, and the amounts so credited shall be applied as set forth in
SECTION 2.23.
(c) Any statement rendered by the Administrative Agent or any Lender
concerning the Obligations shall, absent manifest error, be an account stated,
which is final, conclusive and binding on the Borrowers. The Loan Account and
the Administrative Agent's books and records concerning the loan arrangement
contemplated herein shall be prima facie evidence and proof of the items
described therein.
38
Any failure to so record or any error in so recording shall not limit or
otherwise affect any Borrower's duty to pay the Obligations.
(d) All credits against the Obligations shall be conditional upon final
payment to the Administrative Agent for the account of each Secured Party of the
items giving rise to such credits. The amount of any item credited against the
Obligations which is charged back against the Administrative Agent or any other
Secured Party or is disgorged for any reason or is not so paid shall be an
Obligations and shall be added to the Loan Account or otherwise recorded by the
Administrative Agent, as applicable, whether or not the item so charged back or
not so paid is returned.
(e) Except as otherwise provided herein, all fees, service charges, costs,
and expenses for which any Loan Party is obligated are payable on demand.
(f) The Administrative Agent, without the request of the Lead Borrower, may
make a Revolving Credit Loan to make any interest, fee, service charge, or other
payment to which any Secured Party is entitled pursuant hereto, when due, and
may charge the same to the Loan Account notwithstanding that an Overadvance may
result thereby. Such action on the part of the Administrative Agent shall not
constitute a waiver of the Administrative Agent's rights and, except to the
extent so charged, each Borrower's obligations to pay the Obligations. Any
amount which is added to the principal balance of the Loan Account as provided
in this SECTION 2.21(f) shall bear interest at the interest rate then and
thereafter applicable to Prime Rate Loans.
SECTION 2.22 Cash Receipts.
(a) Annexed hereto as Schedule 2.22(a) is a list of all present DDAs, which
Schedule includes, with respect to each depository (i) the name and address of
that depository; (ii) the account number(s) maintained with such depository; and
(iii) to the extent known, a contact person at such depository.
(b) Annexed hereto as Schedule 2.22(b) is a list describing all
arrangements to which any Borrower is a party with respect to the payment to any
Borrower of the proceeds of all credit card charges for sales by any Borrower.
(c) On or prior to a date forty-five (45) days following the Effective
Date, the Borrowers shall have (i) delivered to the Administrative Agent
notifications executed on behalf of the Borrowers to each of the Borrower's
credit card clearinghouses and processors of notice in form satisfactory to the
Administrative Agent, consistent with the notifications given under the Prior
Credit Agreement (each, a "Credit Card Notification"), (ii) entered into agency
agreements with the banks maintaining the DDAs identified on Schedule 2.22(c)
(collectively, the "Blocked Accounts"), which agreements (the "Blocked Account
Agreements") shall be in form and substance satisfactory to the Administrative
Agent, and (iii) entered into an agency agreement with the Concentration Account
Bank, which agreement (the "Concentration Account Agreement") shall be in form
and substance satisfactory to the Administrative Agent. The Credit Card
Notifications and Blocked Account Agreements shall require the sweep on each
Business Day of all available cash receipts from the sale of Inventory and other
assets, all collections of Accounts, and all other cash payments received by the
Borrowers from any Person or from any source or on account of any sale or other
transaction or event (including, without limitation, any casualty and
condemnation proceeds and proceeds from any equity issuances) (all such cash
receipts and collections, "Cash Receipts"), to a concentration account (the
"Concentration Account") at a bank that shall be
39
designated as the Concentration Account Bank for the Loan Parties on Schedule
2.22(a) (the "Concentration Account Bank") which bank shall be satisfactory to
the Administrative Agent. The Concentration Account Agreement shall require the
sweep on each Business Day of all amounts received in the Concentration Account
to the Collection Account to be applied as provided in SECTION 2.23. In that
regard, the Loan Parties shall cause the ACH or wire transfer to a Blocked
Account or to the Concentration Account, no less frequently than daily (and
whether or not there is then an outstanding balance in the Loan Account) of (A)
the then contents of each DDA, each such transfer to be net of any minimum
balance, not to exceed (1) $20,000 with respect to the Loan Parties' ▇▇▇▇▇ cash
accounts described on Schedule 2.22(a) as "Regional Checking Accounts" and (2)
$5,000 with respect to any other DDA; and (B) the proceeds of all credit card
charges not otherwise provided for pursuant hereto. Further, whether or not any
Obligations are then outstanding, the Loan Parties shall cause the ACH or wire
transfer to the Concentration Account, no less frequently than daily, of the
then entire ledger balance of each Blocked Account, net of such minimum balance,
not to exceed $2,500, as may be required to be maintained in the subject Blocked
Account by the bank at which such Blocked Account is maintained. In the event
that, notwithstanding the provisions of this SECTION 2.22, the Loan Parties
receive or otherwise have dominion and control of any such proceeds or
collections, such proceeds and collections shall be held in trust by the Loan
Parties for the Administrative Agent and shall not be commingled with any of the
Loan Parties' other funds or deposited in any account of any Loan Party other
than as instructed by the Administrative Agent.
(d) The Loan Parties shall accurately report to the Administrative Agent
all amounts deposited in the Blocked Accounts to ensure the proper transfer of
funds as set forth above. If at any time any cash or cash equivalents owned by
the Loan Parties are deposited to any account, or held or invested in any
manner, otherwise than in a Blocked Account that is subject to a Blocked Account
Agreement, the Administrative Agent shall require the Loan Parties to close such
account and have all funds therein transferred to an account maintained at a
bank satisfactory to the Administrative Agent and all future deposits made to a
Blocked Account which is subject to a Blocked Account Agreement. Without
limiting the foregoing, the Loan Parties shall cause all proceeds from the sale,
transfer or other disposition of any of their assets, all casualty and
condemnation proceeds, all proceeds from equity issuances and the incurrence of
Indebtedness for borrowed money (excluding Indebtedness permitted under SECTION
6.01(a)) to be deposited into a Blocked Account as and when received for
repayment of the Obligations in accordance with SECTION 2.19. The Revolving
Credit Commitments shall not be reduced by any payments made pursuant to the
foregoing sentence and the amounts so paid shall be available to be reborrowed
in accordance with the terms hereof.
(e) The Loan Parties may close DDAs or Blocked Accounts and/or open new
DDAs or Blocked Accounts subject to the execution and delivery to the
Administrative Agent of appropriate Blocked Account Agreements (unless expressly
waived by the Administrative Agent) consistent with the provisions of this
SECTION 2.22 and otherwise satisfactory to the Administrative Agent. Unless
consented to in writing by the Administrative Agent, the Loan Parties may not
maintain any bank accounts or enter into any agreements with credit card
processors other than the ones expressly contemplated herein unless
contemporaneously therewith, a Credit Card Notification is executed and
delivered to the Administrative Agent.
(f) The Loan Parties may also maintain the Disbursement Accounts to be used
by the Loan Parties for disbursements and payments (including payroll) in the
ordinary course of business or as otherwise permitted hereunder. The only
Disbursement Accounts as of the Effective Date are those described in Schedule
2.22(f).
40
(g) Following the date which is thirty (30) days after the Effective Date,
the Concentration Account shall be and remain under the sole dominion and
control of the Administrative Agent. Each Loan Party acknowledges and agrees
that (i) such Loan Party has no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall continue
to be collateral security for all of the Obligations and (iii) the funds on
deposit in the Concentration Account shall be applied as provided in SECTION
2.23.
SECTION 2.23 Application of Payments. If the Obligations have been
accelerated, all amounts received in the Concentration Account from any source,
including the Blocked Account Banks, shall be applied, on the day immediately
following receipt, as provided in Section 6.2 of the Security Agreement. In all
other events, all amounts received in the Concentration Account from any source,
including the Blocked Account Banks, shall be applied, except as otherwise
permitted pursuant to SECTION 2.20, on the day immediately following receipt, in
the following order: first, to pay interest due and payable on the Credit
Extensions and to pay fees and expense reimbursements and indemnification then
due and payable to the Administrative Agent, the Issuing Bank and the Revolving
Credit Lenders; second, to repay outstanding Swingline Loans; third, to repay
other outstanding Revolving Credit Loans that are Prime Rate Loans and all
outstanding reimbursement obligations under Letters of Credit; fourth, if no
Event of Default has occurred and is then continuing, to fund a cash collateral
deposit to the Cash Collateral Account (or, at the Lead Borrower's option, to
make Permitted Investments in which the Administrative Agent has a first
perfected Lien) sufficient to pay, and with direction to pay, all such
outstanding Revolving Credit Loans that are LIBO Loans on the last day of the
then-pending Interest Period therefor, or if an Event of Default then exists, to
repay outstanding Revolving Credit Loans that are LIBO Loans and all Breakage
Costs due in respect of such repayment; fifth, if an Event of Default exists and
during the continuance thereof, to fund a cash collateral deposit in the Cash
Collateral Account in an amount equal to 105% of all Letter of Credit
Outstandings; sixth, if all outstanding Revolving Credit Loans and Letter of
Credit Outstandings and all amounts due to GE Money have been repaid or secured
by cash collateral deposits as set forth above, and all Revolving Credit
Commitments under this Agreement of the Swingline Lender, the Issuing Bank or
any Revolving Credit Lender have been terminated, to repay all other Obligations
that are then outstanding and then due and payable. If all Obligations are paid,
any excess amounts shall be deposited in a separate cash collateral account, and
as long as no Event of Default then exists, shall be released to the Borrowers
and utilized by the Borrowers prior to any further Revolving Credit Loans being
made. Any other amounts received by the Administrative Agent, the Issuing Bank,
or any Lender as contemplated by SECTION 2.22 shall also be applied in the order
set forth above in this SECTION 2.23.
If any item deposited to the Concentration Account and credited to the Loan
Account is dishonored or returned unpaid for any reason, whether or not such
return is rightful or timely, the Administrative Agent shall have the right to
reverse such credit and charge the amount of such item to the Loan Account and
the Borrowers shall indemnify the Administrative Agent, the Issuing Bank and the
Lenders against all claims and losses resulting from such dishonor or return.
SECTION 2.24 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit
41
extended by, any Lender or any holding company of any Lender (except
any such reserve requirement reflected in the Adjusted LIBO Rate) or
the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or LIBO
Loans made by such Lender or any Letter of Credit or participation
therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBO Loan (or of maintaining its obligation
to make any such LIBO Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then, as
long as the Borrowers are treated in the same manner as all similarly situated
customers, the Borrowers will pay to such Lender or the Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
the Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank reasonably determines in good faith
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender's or the Issuing Bank's
capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Revolving Credit
Loans made by, or participations in Letters of Credit held by, such Lender, or
the Letters of Credit issued by the Issuing Bank, to a level below that which
such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company could have achieved but for such Change in Law (taking into
consideration such Lender's or the Issuing Bank's policies and the policies of
such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then, as long as the Borrowers are treated in the same manner as all
similarly situated customers, from time to time the Borrowers will pay to such
Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank or such Lender's or
the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this SECTION 2.24 and setting forth in reasonable detail the manner in which
such amount or amounts were determined shall be delivered to the Borrowers and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
or the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within ten (10) Business Days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this SECTION 2.24 shall not constitute a waiver
of such Lender's or the Issuing Bank's right to demand such compensation,
provided that no compensation shall be required to be paid for any amounts
incurred more than 180 days prior to the date of such demand.
SECTION 2.25 Change in Legality.
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (x) any Change in Law shall make it unlawful for a Lender to make
or maintain a LIBO Loan or to give effect to its obligations as contemplated
hereby with respect to a LIBO Loan or (y) at any time any Lender determines that
the making or continuance of any of its LIBO Loans has become impracticable as
42
a result of a contingency occurring after the date hereof which adversely
affects the London interbank market or the position of such Lender in the London
interbank market, then, by written notice to the Borrowers, such Lender may (i)
declare that LIBO Loans will not thereafter be made by such Lender hereunder,
whereupon any request by the Borrowers for a LIBO Borrowing shall, as to such
Lender only, be deemed a request for a Prime Rate Loan unless such declaration
shall be subsequently withdrawn; and (ii) require that all outstanding LIBO
Loans made by it be converted to Prime Rate Loans, in which event all such LIBO
Loans shall be automatically converted to Prime Rate Loans as of the effective
date of such notice as provided in paragraph (b) below. In the event any Lender
shall exercise its rights under clause (i) or (ii) of this paragraph (a), all
payments and prepayments of principal which would otherwise have been applied to
repay the LIBO Loans that would have been made by such Lender or the converted
LIBO Loans of such Lender shall instead be applied to repay the Prime Rate Loans
made by such Lender in lieu of, or resulting from the conversion of, such LIBO
Loans.
(b) For purposes of this SECTION 2.25, a notice to the Borrowers by any
Lender pursuant to paragraph (a) above shall be effective, if any LIBO Loans
shall then be outstanding, on the last day of the applicable then-current
Interest Period; and otherwise such notice shall be effective on the date of
receipt by the Borrowers.
SECTION 2.26 Payments; Sharing of Setoff.
(a) The Borrowers shall make each payment required to be made by them
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of drawings under Letters of Credit, or of amounts payable
under SECTION 2.20(d), SECTION 2.24 or SECTION 2.27, or otherwise) prior to
12:00 noon, New York time, on the date when due, in immediately available funds,
without setoff or counterclaim. Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, except payments to be
made directly to the Issuing Bank or Swingline Lender as expressly provided
herein and except that payments pursuant to SECTION 2.20(d), SECTION 2.24,
SECTION 2.27 and SECTION 9.03 shall be made directly to the Persons entitled
thereto and payments pursuant to other Loan Documents shall be made to the
Persons specified therein. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment under any Loan
Document shall be due on a day that is not a Business Day, except with respect
to LIBO Borrowings, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
under each Loan Document shall be made in dollars.
(b) All funds received by and available to the Administrative Agent to pay
principal, unreimbursed drawings under Letters of Credit, interest and fees then
due hereunder, shall be applied in accordance with the provisions of SECTION
2.23 ratably among the parties entitled thereto in accordance with the amounts
of principal, unreimbursed drawings under Letters of Credit, interest, and fees
then due to such respective parties. For purposes of calculating interest due to
a Lender, that Lender shall be entitled to receive interest on the actual amount
contributed by that Lender towards the principal balance of the Revolving Credit
Loans outstanding during the applicable period covered by the interest payment
made by the Borrowers. Any net principal reductions to the Revolving Credit
Loans received by the Administrative Agent in accordance with the Loan Documents
during such period shall not reduce such actual amount so contributed, for
purposes of calculation of interest due to that Lender, until the
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Administrative Agent has distributed to the applicable Lender its Revolving
Credit Commitment Percentage thereof.
(c) If any Lender shall, by exercising any right of setoff or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Revolving Credit Loans or participations in drawings under Letters of
Credit or Swingline Loans resulting in such Lender's receiving payment of a
greater proportion of the aggregate amount of its Revolving Credit Loans and
participations in drawings under Letters of Credit and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Revolving Credit Loans and participations in
drawings under Letters of Credit and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Credit Loans and participations
in drawings under Letters of Credit and Swingline Loans, provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Revolving Credit
Loans or participations in drawings under Letters of Credit to any assignee or
participant, other than to the Borrowers or any Affiliate thereof (as to which
the provisions of this paragraph shall apply). The Borrowers consent to the
foregoing and agree, to the extent they may effectively do so under Applicable
Law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrowers rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrowers in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrowers will not make such payment, the Administrative Agent may assume that
the Borrowers have made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders or the Issuing
Bank, as the case may be, the amount due. In such event, if the Borrowers have
not in fact made such payment, then each of the Lenders or the Issuing Bank, as
the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to this Agreement, then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
SECTION 2.27 Taxes.
(a) Any and all payments by or on account of any obligation of the
Borrowers hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any
44
Indemnified Taxes or Other Taxes, provided that if the Borrowers shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this SECTION 2.27) the Administrative Agent, such Lender or the Issuing
Bank (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrowers shall make such
deductions, and (iii) the Borrowers shall pay the full amount deducted to the
relevant Governmental Authority in accordance with Applicable Law.
(b) In addition, the Borrowers shall pay any Other Taxes to the relevant
Governmental Authority in accordance with Applicable Law.
(c) The Borrowers shall jointly and severally indemnify the Administrative
Agent, each Lender and the Issuing Bank, within 15 Business Days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Administrative Agent, such Lender or the Issuing Bank, as the case
may be, on or with respect to any payment by or on account of any obligation of
the Borrowers hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this SECTION 2.27) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrowers by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank setting forth in reasonable detail the manner in which such amount was
determined, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrowers to a Governmental Authority, the Borrowers shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction
in withholding tax shall deliver to the Borrowers and the Administrative Agent
two (2) copies of either United States Internal Revenue Service Form W-8BEN or
Form W-8ECI, or any subsequent versions thereof or successors thereto, or, in
the case of a Foreign Lender's claiming exemption from or reduction in U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a (i) Form W-8BEN, or any subsequent
versions thereof or successors thereto and (ii) if such Foreign Lender delivers
a Form W-8BEN, a certificate representing that such Foreign Lender is not (A) a
bank for purposes of Section 881(c) of the Code, (B) is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrowers and (C) is not a controlled foreign corporation related to the
Borrowers (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Foreign Lender claiming complete exemption
from or reduced rate of, U.S. Federal withholding tax on payments by the
Borrowers under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Foreign Lender on or before the date it becomes a party to
this Agreement (or, in the case of a transferee that is a participation holder,
on or before the date such participation holder becomes a transferee hereunder)
and on or before the date, if any, such Foreign Lender changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, each Foreign Lender shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
Foreign Lender. Notwithstanding any other provision
45
of this SECTION 2.27(e), a Foreign Lender shall not be required to deliver any
form pursuant to this SECTION 2.27(e) that such Foreign Lender is not legally
able to deliver.
(f) The Borrowers shall not be required to indemnify any Foreign Lender or
to pay any additional amounts to any Foreign Lender in respect of U.S. Federal
withholding tax pursuant to paragraphs (a) or (c) above to the extent that the
obligation to pay such additional amounts would not have arisen but for a
failure by such Foreign Lender to comply with the provisions of paragraph (e)
above. Should a Lender become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrowers shall, at such Lender's expense, take
such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
SECTION 2.28 Security Interests in Collateral. To secure their Obligations
under this Agreement and the other Loan Documents, the Loan Parties shall grant
to the Administrative Agent, for their benefit and the ratable benefit of the
other Secured Parties, a first-priority security interest in all of the
Collateral pursuant hereto and to the Security Documents; provided that the
Collateral shall secure the Other Liabilities solely to the extent that there is
sufficient Collateral following satisfaction of the Obligations (exclusive of
Other Liabilities).
SECTION 2.29 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under SECTION 2.24, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to SECTION
2.27(e), then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Revolving Credit Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to SECTION
2.24 or SECTION 2.27, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment; provided, however, that the Borrowers shall not be
liable for such costs and expenses of a Lender requesting compensation if (i)
such Lender becomes a party to this Agreement on a date after the Effective Date
and (ii) the relevant Change in Law occurs on a date prior to the date such
Lender becomes a party hereto.
(b) If any Lender requests compensation under SECTION 2.24, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to SECTION 2.27,
or if any Lender defaults in its obligation to fund Revolving Credit Loans
hereunder, then the Borrowers may, so long as no Default or Event of Default has
occurred and is continuing, at their sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in SECTION 9.06), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that (i) the
Borrowers shall have received the prior written consent of the Administrative
Agent, the Issuing Bank and Swingline Lender, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Revolving Credit Loans and
participations in unreimbursed drawings under Letters of Credit and Swingline
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the
46
Borrowers (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under SECTION 2.24 or
payments required to be made pursuant to SECTION 2.27, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrowers to require such assignment and delegation cease to apply.
SECTION 2.30 Single Loan. All Revolving Credit Loans to each Borrower and
all of the other Obligations of each Borrower arising under this Agreement and
the other Loan Documents shall constitute one general obligation of that
Borrower secured, until the Termination Date, by all of the Collateral.
ARTICLE III
Representations and Warranties
Each Loan Party represents and warrants to the Administrative Agent and the
Lenders that:
SECTION 3.01 Organization; Powers. Each Loan Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
SECTION 3.02 Authorization; Enforceability. The transactions contemplated
hereby and by the other Loan Documents to be entered into by each Loan Party are
within such Loan Party's corporate, partnership and other powers and have been
duly authorized by all necessary corporate and, if required, stockholder action.
This Agreement has been duly executed and delivered by each Loan Party that is a
party hereto and constitutes, and each other Loan Document to which any Loan
Party is a party, when executed and delivered by such Loan Party will
constitute, a legal, valid and binding obligation of such Loan Party (as the
case may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03 Governmental Approvals; No Conflicts. The transactions to be
entered into contemplated by the Loan Documents (a) do not require any consent
or approval of, registration or filing with, or any other action by, any
Governmental Authority, except for such as have been obtained or made and are in
full force and effect and except filings and recordings necessary to perfect
Liens created under the Loan Documents, (b) will not violate any Applicable Law
or the charter, by-laws or other organizational documents of any Loan Party, (c)
will not violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or its assets, or give rise to a right
thereunder to require any payment to be made by any Loan Party, and (d) will not
result in the creation or imposition of any Lien on any asset of any Loan Party,
except Liens created under the Loan Documents.
SECTION 3.04 Financial Condition. The Parent has heretofore furnished to
the Administrative Agent the Consolidated balance sheet, and statements of
income, stockholders' equity, and cash flows for the Parent and its Subsidiaries
as of and for the fiscal year ending September 30, 2006 and as of and for
47
the fiscal month ending January 31, 2007, certified by a Financial Officer of
the Borrowers. Such financial statements present fairly, in all material
respects, the financial position, results of operations and cash flows of the
Parent and its Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year end audit adjustments and the absence of footnotes.
Since September 30, 2006 there have been no changes in the assets, liabilities,
financial condition, or business of the Parent and its Subsidiaries other than
changes (a) in the ordinary course of business, (b) changes contained in the
Form 10-Q of the Parent filed with the SEC on February 14, 2007, or (c) those
which have not had a Material Adverse Effect.
SECTION 3.05 Properties. Except as disclosed in Schedules 3.05(c)(i) and
3.05(c)(ii), each Loan Party has good title to, or valid leasehold interests in,
all its real and personal property material to its business, except for defects
which could not reasonably be expected to have a Material Adverse Effect.
(b) Each Loan Party owns, or is licensed to use, all trademarks, trade
names, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Loan Parties does not infringe upon the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
(c) Schedule 3.05(c)(i) sets forth the address (including county) of all
Real Estate that is owned by the Loan Parties, together with a list of the
holders of any mortgage or other Lien thereon (other than Permitted
Encumbrances). Schedule 3.05(c)(ii) sets forth the address (including county) of
all Leases of the Loan Parties, together with a list of the holders of any
mortgage or other Lien on the Borrowers' interest in such Lease. To the
knowledge of the Loan Parties, except as set forth on Schedule A, each of such
Leases is in full force and effect and the Loan Parties are not in default of
the terms thereof.
SECTION 3.06 Litigation and Environmental Matters. There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending against or, to the knowledge of any Borrower, threatened against or
affecting any Loan Party (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than those set forth on Schedule 3.06) or (ii) that involve any of
the Loan Documents.
(b) Except for the matters set forth on Schedule 3.06 and except with
respect to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, no Loan Party (i)
has failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the matters set forth on Schedule 3.06 that, individually or in the
aggregate, has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.
SECTION 3.07 Compliance with Laws and Agreements. Each Loan Party is in
compliance with all Applicable Law and all indentures, material agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default has occurred and is continuing.
48
SECTION 3.08 Investment and Holding Company Status. No Loan Party is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" or an "affiliate" of a
"holding company" as such terms are, or subject to regulation under, the Public
Utility Holding Company Act of 2005.
SECTION 3.09 Taxes. Each Loan Party has timely filed or caused to be filed
all tax returns and reports required to have been filed and has paid or caused
to be paid all taxes required to have been paid by it, except (a) taxes that are
being contested in good faith by appropriate proceedings, for which such Loan
Party has set aside on its books adequate reserves, and as to which no Lien has
been filed, or (b) to the extent that the failure to do so could not reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans.
SECTION 3.11 Disclosure. The Borrowers have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which any Loan
Party is subject, and all other matters known to any of them, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of any of the reports, financial statements, certificates
or other information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading in any material respect.
SECTION 3.12 Subsidiaries.
(a) Schedule 3.12 sets forth the name of, and the ownership interest of
each Loan Party in each Subsidiary. There is no other capital stock or ownership
interest of any class outstanding. Other than the Tivoli Agreement, the Loan
Parties are not party to any joint venture, general or limited partnership, or
limited liability company, agreements or any other business ventures or
entities.
(b) The Parent and its Subsidiaries have received the consideration for
which the capital stock and other ownership interests was authorized to be
issued and have otherwise complied with all legal requirements relating to the
authorization and issuance of shares of stock and other ownership interests, and
all such shares and ownership interests are validly issued, fully paid, and
non-assessable.
SECTION 3.13 Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrowers and their Subsidiaries.
Each of such policies is in full force and effect. All premiums in respect of
such insurance that are due and payable have been paid.
49
SECTION 3.14 Labor Matters. There are no strikes, lockouts or slowdowns
against any Loan Party pending or, to the knowledge of the Borrowers,
threatened. The hours worked by and payments made to employees of the Loan
Parties have not been in violation of the Fair Labor Standards Act or any other
applicable federal, state, local or foreign law dealing with such matters to the
extent that any such violation could reasonably be expected to have a Material
Adverse Effect. All payments due from any Loan Party, or for which any claim may
be made against any Loan Party, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of such member. The consummation of the transactions contemplated
by the Loan Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party is bound.
SECTION 3.15 Security Documents. The Security Documents create in favor of
the Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral and the
Security Documents constitute the creation of a fully perfected (upon filing of
any financing statements with applicable Governmental Authorities) first
priority Lien on, and security interest, in, all right, title and interest of
the Loan Parties thereunder in such Collateral, in each case prior and superior
in right to any other Person, other than holders of Permitted Encumbrances
having priority over the Lien of the Administrative Agent by operation of law or
under a purchase money arrangement.
SECTION 3.16 Federal Reserve Regulations.
(a) No Loan Party is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Revolving Credit Loan or any Letter of
Credit will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to buy or carry Margin Stock or to extend credit
to others for the purpose of buying or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose or (ii) for any purpose that
entails a violation of, or that is inconsistent with, the provisions of the
Regulations of the Board, including Regulation T, U or X.
SECTION 3.17 Solvency. The Loan Parties, on a Consolidated basis, are
Solvent. No transfer of property is being made by any Loan Party and no
obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of any
Loan Party.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date. This Agreement shall not become effective
until the date on which each of the following conditions precedent have been
satisfied or waived by the Administrative Agent:
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto other than the Lenders either (i) a counterpart of this
Agreement and all other Loan Documents signed on behalf of such party or
(ii) written evidence satisfactory to the
50
Administrative Agent (which may include an electronic or telecopy
transmission of a signed signature page of this Agreement) that such party
has signed a counterpart of this Agreement and all other Loan Documents.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Goulston & Storrs, P.C., counsel for the Loan
Parties substantially in the form of Exhibit C, and covering such other
matters relating to the Loan Parties, the Loan Documents or the
transactions contemplated thereby as the Administrative Agent shall
reasonably request. The Borrowers hereby request such counsel to deliver
such opinion.
(c) The Administrative Agent shall have received the Governing
Documents of each Loan party, and such other documents and certificates as
the Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of each Loan Party, the
authorization of the transactions contemplated by the Loan Documents and
any other legal matters relating to the Loan Parties, the Loan Documents or
the transactions contemplated thereby, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(d) After giving effect to the first funding under the Revolving
Credit Loans; any charges to the Loan Account made in connection with the
establishment of the credit facility contemplated hereby; and all Letters
of Credit to be issued at, or immediately subsequent to, such
establishment, Excess Availability shall be not less than $10,000,000.00.
The Administrative Agent shall have received a Borrowing Base Certificate
dated the Effective Date, relating to the week ended on March 19, 2007, and
executed by a Financial Officer of the Lead Borrower.
(e) The Administrative Agent shall have received a certificate of a
Financial Officer of the Lead Borrower, reasonably satisfactory in form and
substance to the Administrative Agent, (i) stating that the Borrowers, on a
Consolidated basis, are Solvent as of the Effective Date, and (ii)
certifying that, as of the Effective Date, the representations and
warranties made by the Loan Parties in the Loan Documents (including any
disclosure schedules thereto) are true and complete and that no Default or
Event of Default exists.
(f) If an Agency Agreement is then in effect, the Administrative Agent
shall have received a copy certified by an executive officer of a Borrower
or the Facility Guarantor of such Agency Agreement duly executed by the
parties thereto and which shall be reasonably satisfactory in form and
substance to the Administrative Agent.
(g) All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be satisfactory to
the Administrative Agent.
(h) The Administrative Agent shall have received and reviewed evidence
of the Loan Parties' insurance and such insurance shall be in full force
and effect; and within thirty (30) days of the Effective Date, deliver to
the Administrative Agent, such endorsements as required by the Loan
Documents, each in form and substance reasonably satisfactory to the
Administrative Agent.
(i) The Administrative Agent shall be reasonably satisfied that any
financial statements delivered to them fairly present the business and
financial condition of the Parent and
51
its Subsidiaries, and that there has been no material adverse change in the
assets, business, financial condition, or income of the Parent and its
Subsidiaries since the date of the most recent financial information
delivered to the Administrative Agent.
(j) The Administrative Agent shall have received and be satisfied with
(a) monthly detailed one-year financial projections and business
assumptions for the Parent and its Subsidiaries for fiscal year 2007 and
2008, (b) evidence of the filing of federal tax returns, relating to the
Federal tax refund for tax year 1998, 1999, 2001, 2002 and 2003 in an
amount of not less than $13,000,000 and (c) such other information
(financial or otherwise) reasonably requested by the Administrative Agent.
(k) There shall not be pending any litigation or other proceeding, the
result of which could reasonably be expected to have a Material Adverse
Effect.
(l) The Administrative Agent shall have received duly executed
originals of a letter of direction from the Lead Borrower addressed to the
Administrative Agent, on behalf of itself and the Lenders with respect to
the disbursement of the initial Revolving Credit Loans on the Effective
Date.
(m) The Administrative Agent shall have received results of searches
or other evidence reasonably satisfactory to the Administrative Agent (in
each case dated as of a date reasonably satisfactory to the Administrative
Agent) indicating the absence of Liens on the assets of the Loan Parties,
except for Permitted Encumbrances and Liens for which termination
statements and releases or subordination agreements reasonably satisfactory
to the Administrative Agent are being tendered concurrently with such
extension of credit.
(n) The Administrative Agent shall have received all documents and
instruments, including Uniform Commercial Code financing statements,
required by law or reasonably requested by the Administrative Agent to be
filed, registered 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 or recorded to the
satisfaction of the Administrative Agent.
(o) Intentionally Omitted.
(p) The administrative agent under the Prior Credit Agreement shall
have furnished to the Administrative Agent a payoff letter reasonably
satisfactory to the Administrative Agent and such Prior Credit Agreement
shall be repaid in full on the Effective Date with the advances to be made
under the Revolving Credit Loans.
(q) All fees due at or immediately after the Effective Date and all
reasonable costs and expenses incurred by the Administrative Agent in
connection with the establishment of the credit facility contemplated
hereby (including the fees and expenses of counsel to the Administrative
Agent) shall have been paid in full.
(r) The consummation of the transactions contemplated hereby shall not
(a) violate any Applicable Law or (b) conflict with, or result in a default
or event of default under, any material agreement of any Loan Party (and
the Administrative Agent and the Lenders shall receive a satisfactory
opinion of Loan Parties' counsel to that effect). No event shall exist
which
52
is, or solely with the passage of time, the giving of notice or both, would
be a default under any material agreement of any Loan Party.
(s) No material changes in governmental regulations or policies
affecting the Loan Parties, the Administrative Agent, the Arranger or any
Lender involved in this transaction shall have occurred prior to the
Effective Date.
(t) All taxes in excess of $275,000 in the aggregate outstanding at
any time as of the Effective Date shall have been paid when due except
taxes which are being contested in compliance with SECTION 5.05.
(u) All representations and warranties contained in this Agreement and
the other Loan Documents or otherwise made in writing in connection
herewith or therewith shall be true and correct in all material respects.
(v) The Loan Parties shall be in compliance with all of the terms and
provisions set forth herein and in the other Loan Documents to be observed
or performed and no Default or Event of Default shall have occurred and be
continuing.
(w) The Administrative Agent shall have received a duly executed
original of a Notice of Revolving Credit Extension, dated the Effective
Date, with respect to the initial Revolving Credit Loans to be requested by
the Lead Borrower on the Effective Date.
(x) There shall have been delivered to the Administrative Agent such
additional instruments and documents as the Administrative Agent or counsel
to the Administrative Agent reasonably may require or request.
The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Revolving Credit Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived by the
Administrative Agent in writing) at or prior to 12:00 noon, New York time, on
March 21, 2007.
SECTION 4.02 Conditions Precedent to Each Revolving Credit Loan and Each
Letter of Credit. In addition to those conditions described in SECTION 4.01
(other than conditions that relate solely to an earlier date), the obligation of
the Revolving Credit Lenders to make each Revolving Credit Loan and of the
Issuing Bank to issue each Letter of Credit, is subject to the following
conditions precedent:
(a) Notice. The Administrative Agent shall have received a Notice of
Revolving Credit Extension with respect to such Borrowing or issuance, as
the case may be, as required by ARTICLE II.
(b) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Loan Documents or otherwise made
in writing in connection herewith or therewith shall be true and correct in
all material respects on and as of the date of each Borrowing or the
issuance of each Letter of Credit hereunder with the same effect as if made
on and as of such date, other than representations and warranties that
relate solely to an earlier date.
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(c) No Default. On the date of each Borrowing hereunder and the
issuance of each Letter of Credit, the Loan Parties shall be in compliance
with all of the terms and provisions set forth herein and in the other Loan
Documents to be observed or performed and no Default or Event of Default
shall have occurred and be continuing.
(d) Borrowing Base Certificate. The Administrative Agent shall have
received the timely delivery of the most recently required Borrowing Base
Certificate, with each such Borrowing Base Certificate including schedules
as required by the Administrative Agent.
The request by the Borrowers for, and the acceptance by the Borrowers of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this SECTION 4.02
have been satisfied at that time and that after giving effect to such extension
of credit the Borrowers shall continue to be in compliance with the Borrowing
Base. The conditions set forth in this SECTION 4.02 are for the sole benefit of
the Administrative Agent and each Lender and may be waived by the Administrative
Agent, in whole or in part, without prejudice to the Administrative Agent or any
Lender.
ARTICLE V
Affirmative Covenants
Until the Revolving Credit Commitments have expired or been terminated and
the principal of and interest on each Revolving Credit Loan and all fees payable
hereunder and other Obligations and all Other Liabilities shall have been paid
in full and all Letters of Credit shall have expired or terminated and all L/C
Disbursements shall have been reimbursed, each Loan Party covenants and agrees
with the Administrative Agent and the Lenders that:
SECTION 5.01 Financial Statements and Other Information. The Borrowers will
furnish to the Administrative Agent:
(a) within ninety (90) days after the end of each fiscal year of the
Parent, its Consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for
such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all audited (in the case of such Consolidated
statements) and reported on by independent public accountants of recognized
national standing (without a "going concern" or like qualification or
exception and without a qualification or exception as to the scope of such
audit) to the effect that such Consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Parent and its Subsidiaries on a Consolidated basis in
accordance with GAAP consistently applied;
(b) within forty-five (45) days after the end of each fiscal quarter
of the Parent, its Consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows, as of the end of and for
such fiscal quarter and the elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
year and the figures as set forth in the projections delivered pursuant to
SECTION 5.01(e) hereof, all certified by one of its Financial Officers as
presenting in all material respects the financial condition and results of
operations of the Parent and its Subsidiaries on a Consolidated basis in
accordance with GAAP consistently applied, subject to normal year end audit
adjustments and the absence of footnotes;
54
(c) within thirty (30) days after the end of each fiscal month of the
Parent (other than the months of September and October), and within
forty-five (45) days after the end of each September and October, its
Consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows, as of the end of and for such fiscal
month and the elapsed portion of the fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year and the
figures as set forth in the projections delivered pursuant to SECTION
5.01(e) hereof, all certified by one of its Financial Officers as
presenting in all material respects the financial condition and results of
operations of the Parent and its Subsidiaries on a Consolidated basis in
accordance with GAAP consistently applied, subject to normal year end audit
adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clauses (a), (b), or (c) above, a certificate of a Financial Officer of the
Lead Borrower in the form of Exhibit D (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
and (ii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the Parent's audited financial statements
referred to in SECTION 3.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements
accompanying such certificate;
(e) prior to the commencement of each fiscal year of the Parent (but
in no event sooner than thirty (30) days prior to the commencement of any
fiscal year), a detailed Consolidated budget by month for such fiscal year
(including a projected Consolidated balance sheet and related statements of
projected operations and cash flow as of the end of and for such fiscal
year) and, promptly when available, any significant revisions of such
budget;
(f) promptly following any request therefor and in no event less
frequently than on Thursday of each calendar week, a certificate in the
form of Exhibit E (a "Borrowing Base Certificate") showing the Borrowing
Base as of the close of business on the last day of the immediately
preceding Saturday, each such Borrowing Base Certificate to be certified as
complete and correct on behalf of the Borrowers by a Financial Officer of
the Lead Borrower; provided, however that the Administrative Agent reserves
the right to request Borrowing Base Certificates more frequently than
weekly in its reasonable discretion;
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
any Loan Party with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as the case may be;
(h) promptly upon receipt thereof, copies of all reports submitted to
any Loan Party by independent certified public accountants in connection
with each annual, interim or special audit of the books of the Loan Parties
or any of their Subsidiaries made by such accountants, including any
management letter commenting on the Loan Parties' internal controls
submitted by such accountants to management in connection with their annual
audit;
(i) subject to the prior receipt of a satisfactory confidentiality
agreement from the Administrative Agent and each Lender, promptly upon
receipt, to the Person(s) having executed such confidentiality agreements,
copies of all financial statements and other material information
55
delivered to the Parent with respect to Tivoli, whether pursuant to Section
11(b) of the Tivoli Agreement or otherwise;
(j) the financial and collateral reports described on Schedule 5.01(j)
hereto, at the times set forth in such Schedule;
(k) Intentionally Omitted.
(l) Intentionally Omitted.
(m) notice of any intended sale or other disposition of assets of any
Loan Party permitted hereunder or incurrence of any Indebtedness permitted
hereunder at least ten (10) Business Days prior to the date of consummation
such sale or disposition or incurrence of such Indebtedness; and
(n) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of any
Loan Party, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.02 Notices of Material Events. The Borrowers will furnish to the
Administrative Agent prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting any
Loan Party or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect;
(e) any change in any Loan Party's executive officers;
(f) any failure by any Loan Party to pay rent at any of such Loan
Party's locations, which failure continues for more than ten (10) days
following the day on which such rent first came due;
(g) the discharge by any Loan Party of its present independent
accountants or any withdrawal or resignation by such independent
accountants;
(h) any material adverse change in the business, operations, or
financial affairs of any Loan Party;
(i) any collective bargaining agreement or other labor contract to
which a Loan Party becomes a party, or the application for the
certification of a collective bargaining agent;
56
(j) the filing of any Lien for unpaid taxes against any Loan Party;
and
(k) the determination by any Loan Party to (i) sell, close or
otherwise liquidate more than five (5) store locations at any one time (or
in a series of related transactions), other than the Permitted Store
Closings, at least fifteen (15) Business Days before such sale, closure or
liquidation and (ii) open any store location at least thirty (30) days
prior to each such store opening.
Each notice delivered under this SECTION 5.02 shall be accompanied by a
statement of a Financial Officer or other executive officer of the Lead Borrower
setting forth the details of the event or development requiring such notice and,
if applicable, any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral.
(a) The Lead Borrower will furnish to the Administrative Agent prompt
written notice of any change (i) in any Loan Party's corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the location of any Loan Party's chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the establishment
of any such new office or facility), (iii) in any Loan Party's corporate
structure or jurisdiction of organization, or (iv) in any Loan Party's Federal
Taxpayer Identification Number or organizational identification number assigned
to it by its state of organization. The Lead Borrower also agrees promptly to
notify the Administrative Agent if any material portion of the Collateral is
damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements with
respect to the preceding fiscal year pursuant to SECTION 5.01(a), the Lead
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer of the Lead Borrower setting forth the information required pursuant to
Section 2 of the Perfection Certificate or confirming that there has been no
change in such information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent certificate
delivered pursuant to this SECTION 5.03.
SECTION 5.04 Existence; Conduct of Business. Each Loan Party will, and will
cause each of the Subsidiaries to, do or cause to be done all things necessary
to comply with its respective charter, certificate of incorporation, articles of
organization, and/or other organizational documents, as applicable; and by-laws
and/or other instruments which deal with corporate governance, and to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges, franchises, patents, copyrights, trademarks and
trade names material to the conduct of its business, provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under SECTION 6.03.
SECTION 5.05 Payment of Obligations. Each Loan Party will, and will cause
each of the Subsidiaries to, pay its Indebtedness and other obligations,
including tax liabilities, and claims for labor, materials, or supplies, before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Loan Party or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP, (c) such contest effectively
suspends collection of the contested obligation and enforcement of
57
any Lien securing such obligation, (d) no Lien has been filed with respect
thereto, and (e) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect. Nothing contained
herein shall be deemed to limit the rights of the Administrative Agent under
SECTION 2.02(b) hereof.
SECTION 5.06 Maintenance of Properties. Each Loan Party will, and will
cause each of the Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted and with the exception of storing closings and asset
dispositions permitted hereunder.
SECTION 5.07 Insurance.
(a) Each Loan Party shall (i) maintain insurance with financially sound and
reputable insurers reasonably acceptable to the Administrative Agent (or, to the
extent consistent with prudent business practice, a program of self-insurance
for ▇▇▇▇▇▇▇'▇ compensation insurance the terms of which have been disclosed to
and approved by the Administrative Agent) on such of its property and in at
least such amounts and against at least such risks as is customary with
companies in the same or similar businesses operating in the same or similar
locations, including public liability insurance against claims for personal
injury or death occurring upon, in or about or in connection with the use of any
properties owned, occupied or controlled by it (including the insurance required
pursuant to the Security Documents); (ii) maintain such other insurance as may
be required by law; and (iii) furnish to the Administrative Agent, upon written
request, full information as to the insurance carried.
(b) Fire and extended coverage policies maintained with respect to any
Collateral shall be endorsed or otherwise amended to include (i) a lenders' loss
payable clause (regarding personal property), in form and substance satisfactory
to the Administrative Agent, which endorsements or amendments shall provide that
the insurer shall pay all proceeds otherwise payable to the Loan Parties under
the policies directly to the Administrative Agent, (ii) a provision to the
effect that none of the Loan Parties, the Administrative Agent or any other
party shall be a coinsurer and (iii) such other provisions as the Administrative
Agent may reasonably require from time to time to protect the interests of the
Lenders. Commercial general liability policies shall be endorsed to name the
Administrative Agent as additional insureds. Business interruption policies
shall name the Administrative Agent as loss payees and shall be endorsed or
amended to include (i) a provision that, from and after the Effective Date, the
insurer shall pay all proceeds otherwise payable to the Loan Parties under the
policies directly to the Administrative Agent, (ii) a provision to the effect
that none of the Loan Parties, the Administrative Agent or any other party shall
be a co-insurer and (iii) such other provisions as the Administrative Agent may
reasonably require from time to time to protect the interests of the Lenders.
Each such policy referred to in this paragraph also shall provide that it shall
not be canceled, modified or not renewed (i) by reason of nonpayment of premium
except upon not less than ten (10) days' prior written notice thereof by the
insurer to the Administrative Agent (giving the Administrative Agent the right
to cure defaults in the payment of premiums) or (ii) for any other reason except
upon not less than thirty (30) days' prior written notice thereof by the insurer
to the Administrative Agent. All such insurance which covers the Collateral
shall include an endorsement in favor of the Administrative Agent, which
endorsement shall provide that the insurance, to the extent of the
Administrative Agent's interest therein, shall not be impaired or invalidated,
in whole or in part, by reason of any act or neglect of any Loan Party or by the
failure of any Loan Party to comply with any warranty or condition of the
policy. The Borrowers shall deliver to the Administrative Agent, prior to the
cancellation, modification or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously
58
delivered to the Administrative Agent) together with evidence satisfactory to
the Administrative Agent of payment of the premium therefor.
SECTION 5.08 Casualty and Condemnation. Each Borrower will furnish to the
Administrative Agent and the Lenders prompt written notice of any casualty or
other insured damage to any material portion of the Collateral or the
commencement of any action or proceeding for the taking of any material portion
of the Collateral or any part thereof or interest therein under power of eminent
domain or by condemnation or similar proceeding.
SECTION 5.09 Books and Records; Inspection and Audit Rights; Appraisals;
Accountants.
(a) Each Loan Party will, and will cause each of the Subsidiaries to, keep
proper books of record and account consistent with past practices previously
disclosed to the Administrative Agent and in which full, true and correct
entries are made of all dealings and transactions in relation to its business
and activities. Each Loan Party will, and will cause each of the Subsidiaries
to, permit any representatives designated by the Administrative Agent, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
(b) Each Loan Party will, and will cause each of the Subsidiaries to, from
time to time upon the request of the Administrative Agent or the Required
Revolving Credit Lenders, through the Administrative Agent, permit the
Administrative Agent or professionals (including investment bankers,
consultants, accountants, lawyers and appraisers) retained by the Administrative
Agent to conduct appraisals, commercial finance examinations and other
evaluations, including, without limitation, of (i) the Borrowers' practices in
the computation of the Borrowing Base and (ii) the assets included in the
Borrowing Base and related financial information such as, but not limited to,
sales, gross margins, payables, accruals and reserves, and pay the reasonable
fees and expenses of the Administrative Agent or such professionals with respect
to such evaluations and appraisals. Without limiting the foregoing, the Loan
Parties acknowledge that the Administrative Agent intend to undertake at least
three (3) inventory appraisals and three (3) commercial finance examinations
each fiscal year after the Effective Date, at the Loan Parties' expense.
Notwithstanding the foregoing, the Administrative Agent may cause additional
appraisals and commercial finance examinations to be undertaken as it, in its
discretion deems necessary or appropriate, or as may be required by Applicable
Law, provided that the Loan Parties shall not be obligated to pay for any such
additional appraisals and commercial finance examinations unless an Event of
Default has occurred and is continuing.
(c) The Loan Parties shall, at all times, retain independent certified
public accountants who are reasonably satisfactory to the Administrative Agent
and instruct such accountants to cooperate with, and be available to, the
Administrative Agent or its representatives to discuss the Loan Parties'
financial performance, financial condition, operating results, controls, and
such other matters, within the scope of the retention of such accountants, as
may be raised by the Administrative Agent. The Administrative Agent agrees that
the retention of any of the "big four" national accounting firms is satisfactory
to the Administrative Agent.
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SECTION 5.10 Physical Inventories.
(a) The Administrative Agent, at the expense of the Loan Parties, may
participate in and/or observe each physical count and/or inventory of so much of
the Collateral as consists of Inventory which is undertaken on behalf of any
Borrower so long as such participation does not disrupt the normal inventory
schedule or process.
(b) The Borrowers, at their own expense, shall cause (i) not less than one
(1) physical inventory to be undertaken in each twelve (12) month period during
which this Agreement is in effect, and (ii) periodic cycle counts consistent
with past practices, each of the foregoing using practices consistent with
practices in effect on the date hereof.
(c) The Lead Borrower shall provide the Administrative Agent with the
preliminary Inventory levels at each of the Borrowers' stores within ten (10)
days following the completion of such inventory.
(d) The Lead Borrower, within forty-five (45) days following the completion
of such inventory, shall provide the Administrative Agent with a reconciliation
of the results of each such inventory (as well as of any other physical
inventory undertaken by any Borrower) and shall post such results to the
Borrowers' stock ledger and, as applicable to the Borrowers' other financial
books and records.
(e) The Administrative Agent, in its discretion, if any Default exists, may
cause such additional inventories to be taken as the Administrative Agent
determines (each, at the expense of the Borrowers). The Administrative Agent
shall use its best efforts to schedule any such inventories so as to not
unreasonably disrupt the operation of the Borrowers' business.
SECTION 5.11 Compliance with Laws. Each Loan Party will, and will cause
each of the Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.12 Use of Proceeds and Letters of Credit. The proceeds of
Revolving Credit Loans made hereunder and Letters of Credit issued hereunder
will be used only (a) refinance existing indebtedness and related fees and
expenses, (b) to finance the acquisition of working capital assets of the
Borrowers, including the purchase of inventory and equipment, in each case in
the ordinary course of business, and (c) for general corporate purposes,
including stock repurchases, all to the extent permitted herein. No part of the
proceeds of any Revolving Credit Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X.
SECTION 5.13 Additional Collateral; Additional Subsidiaries. If any Loan
Party shall hereafter acquire any material assets or other property which, in
the judgment of the Administrative Agent, is not already subject to a perfect
first priority security interest in favor of the Administrative Agent for the
benefit of the Secured Parties, the Borrowers shall, at the Borrowers' expense,
deliver any and all Security Documents and further instruments and documents
(including, the delivery of legal opinions reasonably acceptable to the
Administrative Agent) and take all such other action as the Administrative
60
Agent may deem necessary or desirable in obtaining the full benefits of, or (as
applicable) in perfecting and preserving the Liens of, such Security Documents
and other security and pledge agreements. If any additional Subsidiary of any
Loan Party is formed or acquired after the Effective Date, the Lead Borrower
will notify the Administrative Agent and the Lenders thereof and (a) if such
Subsidiary is not a Foreign Subsidiary, the Borrowers will cause such Subsidiary
to become a Loan Party hereunder and under each applicable Security Document in
the manner provided therein within ten (10) Business 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 the Administrative
Agent or the Required Revolving Credit Lenders shall reasonably request and (b)
if any shares of capital stock or other ownership interests or Indebtedness of
such Subsidiary are owned by or on behalf of any Loan Party, the Borrowers will
cause such shares and promissory notes evidencing such Indebtedness to be
pledged within ten (10) Business Days after such Subsidiary is formed or
acquired (except that, if such Subsidiary is a Foreign Subsidiary, shares of
stock or other ownership interests of such Subsidiary to be pledged may be
limited to 65% of the outstanding shares of Voting Stock of such Subsidiary).
SECTION 5.14 Further Assurances.
(a) Each Loan Party will execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements and other
documents), that may be required under any Applicable Law, or which the
Administrative Agent or the Required Revolving Credit Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Security Documents or the validity or priority of any such Lien, all at
the expense of the Loan Parties. The Loan Parties also agree to provide to the
Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents,
including, without limitation, periodic lien searches as deemed necessary by the
Administrative Agent in its reasonable discretion.
(b) If any material assets are acquired by any Loan Party after the
Effective Date (other than assets constituting Collateral under the Security
Agreement that become subject to the Lien of the Security Agreement upon
acquisition thereof), the Lead Borrower will notify the Administrative Agent and
the Lenders thereof, and the Loan Parties will cause such assets to be subjected
to a Lien securing the Obligations and will take such actions as shall be
necessary or reasonably requested by the Administrative Agent or the Required
Revolving Credit Lenders to grant and perfect such Liens, including actions
described in paragraph (a) of this SECTION 5.14, all at the expense of the Loan
Parties.
(c) Upon the request of the Administrative Agent, the Borrowers shall cause
each of its customs brokers to deliver an agreement to the Administrative Agent
covering such matters and in such form as the Administrative Agent may
reasonably require.
SECTION 5.15 Third Party Agreements. (a) On or prior to a date which is
sixty (60) days following the Effective Date, each Borrower shall deliver to the
Administrative Agent duly executed landlord waivers in respect of each
distribution center leased or utilized by any Loan Party (other than any
distribution center which is part of the Permitted Store Closings), each such
landlord waiver to be in form, scope and substance reasonably satisfactory to
the Administrative Agent. The Borrowers may close and/or open any distribution
center, subject to the delivery to the Administrative Agent of a fully executed
landlord waiver consistent with the provisions of this SECTION 5.15.
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(b) On or prior to a date which is sixty (60) days following the Effective
Date, each Borrower shall deliver to the Administrative Agent duly executed
customs broker agency agreements, each in form, scope and substance satisfactory
to the Administrative Agent.
(c) On or prior to a date which is forty-five (45) days following the
Effective Date, Administrative Agent shall have received (or otherwise have
become the beneficiary of) subordination agreements from all vendors having
Liens on any assets of the Loan Parties, which Liens are permitted under SECTION
6.02(e)(i) and are to remain outstanding after the Effective Date.
SECTION 5.16 Agency Agreement. Promptly upon execution thereof by the
parties thereto and to the extent not delivered to the Administrative Agent
pursuant to SECTION 4.01(f), a copy certified by an executive officer of the
Lead Borrower of the Agency Agreement, which shall be reasonably satisfactory in
form and substance to the Administrative Agent.
ARTICLE VI
Negative Covenants
Until the Revolving Credit Commitments have expired or been terminated and
the principal of and interest on each Revolving Credit Loan and all fees payable
hereunder and other Obligations and all Other Liabilities shall have been paid
in full and all Letters of Credit shall have expired or terminated and all L/C
Disbursements shall have been reimbursed, each Loan Party covenants and agrees
with the Administrative Agent and the Lenders that:
SECTION 6.01 Indebtedness and Other Obligations.
(a) The Loan Parties will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness set forth in Schedule 6.01;
(iii) Indebtedness of any Loan Party to any other Loan Party;
(iv) Guarantees by any Loan Party of Indebtedness of any
Borrower;
(v) Indebtedness of any Loan Party to finance the acquisition of
any fixed or capital assets, including Capital Lease Obligations
(other than the Capital Lease Obligation described in item 2 of
Schedule 6.01) and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity
date or decreased weighted average life thereof, provided that the
aggregate principal amount of Indebtedness permitted by this clause
(v) shall not exceed $5,000,000 at any time outstanding;
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(vi) Indebtedness incurred in connection with sale-leaseback
transactions permitted hereunder, provided that the terms of such
Indebtedness are reasonably acceptable to the Administrative Agent;
(vii) Indebtedness of any Loan party incurred in connection with
any accounts payable (A) in existence on or prior to April 30, 2007
and (B) in the ordinary course and not past due for more than sixty
(60) days;
(viii) Intentionally Omitted;
(ix) Contingent liabilities under surety bonds or similar
instruments incurred in the ordinary course of business in connection
with the construction or improvement of stores in an aggregate amount
not to exceed $2,000,000; and
(x) other unsecured Indebtedness in an aggregate principal amount
not exceeding $500,000 at any time outstanding, provided that the
terms of such Indebtedness are reasonably acceptable to the
Administrative Agent.
Notwithstanding the foregoing, the Borrowers agree that the aggregate
Indebtedness outstanding from time to time under subclauses (iv), (v), (vi),
(vii), (ix) and (x) above shall not any time exceed $5,000,000.
SECTION 6.02 Liens. The Loan Parties will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of any Loan Party set forth in
Schedule 6.02, provided that (i) such Lien shall not apply to any other
property or asset of any Loan Party and (ii) such Lien shall secure only
those obligations that it secures as of the Effective Date, and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;
(d) Liens on fixed or capital assets acquired by any Loan Party,
provided that (i) such Liens secure Indebtedness permitted by clause (v) of
SECTION 6.01(a), (ii) such Liens and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring such fixed or
capital assets and (iv) such Liens shall not extend to any other property
or assets of the Loan Parties;
(e) (i) Liens in favor of vendors of the Loan Parties which, subject
to SECTION 5.15(c), are subordinated to the Liens of the Administrative
Agent and as to which a subordination agreement reasonably satisfactory in
form and substance to the Administrative Agent have been executed and
delivered in favor of the Administrative Agent by such vendors and (ii)
Liens of vendors of the Loan Parties securing an obligation of the Loan
Parties for the
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payment of the price of purchased Inventory in an aggregate amount not to
exceed $250,000 outstanding at any time for all such Liens; provided that
such Liens attach only to Inventory supplied to such vendor; and
(f) Liens to secure Indebtedness permitted by clause (vi) of SECTION
6.01(a) provided that such Liens shall not apply to any property or assets
of the Loan Parties other than the Real Estate which is the subject of a
sale-leaseback transaction.
SECTION 6.03 Fundamental Changes.
(a) The Loan Parties will not merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default or Event of Default shall have
occurred and be continuing, (i) any Subsidiary may merge into or
consolidate with a Borrower in a transaction in which a Borrower is the
surviving corporation, (ii) any Subsidiary that is not a Borrower may merge
into or consolidate with any Subsidiary that is not a Borrower or into the
Parent, and (iii) any Loan Party (other than a Borrower or the Parent) may
be dissolved or liquidated pursuant to a vote of such Loan Party's board of
directors as long as the assets of such Loan Party are transferred to a
Borrower.
(b) The Loan Parties will not engage to any material extent in any
business other than businesses of the type conducted by the Loan Parties on
the date of execution of this Agreement and businesses reasonably related
thereto.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. The
Loan Parties will not purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) any capital stock, evidences of Indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, guarantee any obligations
of, or make or permit to exist any Investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit,
except:
(a) Permitted Investments;
(b) Investments existing on the Effective Date, and set forth on
Schedule 6.04;
(c) Existing Investments in Tivoli and other Investments in Tivoli as
to which the Administrative Agent has furnished its prior written consent;
(d) loans, advances or Investments made by any Loan Party to or in any
other Loan Party;
(e) Guarantees constituting Indebtedness permitted by SECTION 6.01;
(f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
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(g) loans or advances to employees for the purpose of travel,
entertainment or relocation in the ordinary course of business in an amount
not to exceed $200,000 in the aggregate at any time outstanding, provided
that no such loans or advances shall be made if a Default or Event of
Default exists or would arise therefrom;
(h) Wholly owned Subsidiaries of the Loan Parties, the formation or
acquisition of which is otherwise permitted hereunder and as to which the
provisions of SECTION 5.13 hereof have been satisfied;
(i) Intentionally Omitted; and
(j) other Investments not to exceed $500,000 in the aggregate at any
time outstanding, provided that no such Investments shall be made if a
Default or Event of Default exists or would arise therefrom.
SECTION 6.05 Asset Sales. The Loan Parties will not, and will not permit
any of the Subsidiaries to, sell, transfer, lease or otherwise dispose of any
asset, including any capital stock or other ownership interest, nor will the
Loan Parties permit any of the Subsidiaries to issue any additional shares of
its capital stock or other ownership interest in such Subsidiary, except:
(a) (i) sales of Inventory in the ordinary course of business, or (ii)
sales of used or surplus equipment, or (iii) Permitted Investments, in each
case in the ordinary course of business;
(b) sales, transfers and dispositions among the Loan Parties and their
Subsidiaries, provided that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be made in compliance
with SECTION 6.07(a);
(c) sale-leaseback transactions entered into prior to the Effective
Date; provided that if the Administrative Agent so requests, the
Administrative Agent shall receive an intercreditor agreement executed by
the purchaser of such Real Estate on terms and conditions reasonably
satisfactory to the Administrative Agent;
(d) sales and dispositions of Inventory and other Collateral in
connection with the Permitted Store Closings; provided, however that the
Agency Agreement relating to such Permitted Store Closings, as applicable,
shall be in form and substance satisfactory to the Administrative Agent;
(e) in addition to the Permitted Store Closings, sales and
dispositions of store locations and assets located therein as an entirety,
provided that in any fiscal year of the Loan Parties, such sales or
dispositions shall not exceed more than ten percent (10%) of the stores in
operation at the commencement of such fiscal year;
provided that (i) any sales or dispositions under clause (d) hereof shall be (A)
conducted by, or in consultation with professional liquidators pursuant to the
Agency Agreement; provided, that all sales, transfers, leases and other
dispositions permitted hereby (other than sales, transfers and other
dispositions permitted under clause (b)) shall be made at arm's length and for
fair value; and further provided that the authority granted under clauses
(a)(ii), (a)(iii), (c) and (e) hereof may be terminated in whole or in part by
the Administrative Agent upon the occurrence and during the continuance of any
Event of Default.
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SECTION 6.06 Restricted Payments; Certain Payments of Indebtedness.
(a) The Loan Parties will not, and will not permit any Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except as long as no Default or Event of Default exists or would arise
therefrom (i) the Loan Parties may declare and pay dividends with respect to
their capital stock payable solely in additional shares of their common stock,
(ii) the Subsidiaries of the Lead Borrower may declare and pay cash dividends
with respect to their capital stock, (iii) only if the Payment Conditions are
then satisfied, (x) the Parent may repurchase its capital stock and/or declare
and pay cash dividends to its shareholders, and (y) the direct Subsidiaries of
the Parent may declare and pay cash dividends to the Parent, (iv) the Parent may
make payments to its employees or directors upon termination of their employment
pursuant to the Parent's Stock Option Plan (and agreements entered into
thereunder), provided that such payments do not exceed $400,000 in the aggregate
in any fiscal year, and (v) the Parent may make payments not to exceed $75,000
in any fiscal year to repurchase shares of the Parent's capital stock from
employees in connection with the termination of their employment with the
Parent.
(b) The Loan Parties will not, and will not permit any Subsidiary to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:
(i) payment of regularly scheduled interest, principal payments
and other charges, as and when due in respect of any Indebtedness
permitted hereunder; and
(ii) refinancings of Indebtedness described in clause (i), above,
to the extent permitted by SECTION 6.01.
(c) None of the Loan Parties will, nor will they permit any Subsidiary to,
issue any preferred stock (except for preferred stock (A)(i) all dividends in
respect of which are to be paid (and all other payments in respect of which are
to be made) in additional shares of such preferred stock, in lieu of cash, until
all Obligations have been repaid in full in cash, all Revolving Credit
Commitments terminated and the termination or cancellation of all Letters of
Credit, (ii) that is not subject to redemption other than redemption at the
option of the Loan Party issuing such preferred stock and (iii) all payments in
respect of which are expressly subordinated to the Obligations), or (B) issued
pursuant to the Parent's Shareholder Rights Agreement dated as of July 21, 1998
as in effect on the Effective Date, or be or become liable in respect of any
obligation (contingent or otherwise) to purchase, redeem, retire, acquire or
make any other payment in respect of (i) any shares of capital stock of any Loan
Party or (ii) any option, warrant or other right to acquire any such shares of
capital stock.
SECTION 6.07 Transactions with Affiliates. The Loan Parties will not, and
will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to the Loan Parties or
such Subsidiary than could be obtained on an arm's-length basis from unrelated
third parties, (b) licensing agreements between the Borrowers and NEA Delaware,
Inc. for the licensing and use of intellectual property, (c) salaries, fees and
bonuses to the
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directors, officers and employees of the Parent and its Subsidiaries as are
usual and customary in their businesses, including, without limitation, any
change in control payments to any of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and (d)
those described on Schedule 6.07 hereto.
SECTION 6.08 Restrictive Agreements. The Loan Parties will not, and will
not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Loan Parties or any Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets
or (b) the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or other ownership interests or
to make or repay loans or advances to the Loan Parties or any other Subsidiary
or to guarantee Indebtedness of the Loan Parties or any other Subsidiary,
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by any Loan Document, (ii) clause (a) of the foregoing shall
not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness and
(iii) clause (a) of the foregoing shall not apply to customary provisions in
leases restricting the assignment or subleasing thereof.
SECTION 6.09 Amendment of Material Documents. The Loan Parties will not,
and will not permit any Subsidiary to, amend, modify or waive any of its rights
under (a) its certificate of incorporation, by-laws or other organizational
documents, (b) except in connection with the Permitted Store Closings, any
Leases the termination of which would result in a Material Adverse Effect or (c)
any other instruments, documents or agreements, (including the Agency Agreement)
in each case to the extent that such amendment, modification or waiver would be
adverse to the interests of the Lenders.
SECTION 6.10 Additional Subsidiaries. The Loan Parties will not, and will
not permit any Subsidiary to, create any additional Subsidiary unless the
requirements of SECTION 5.13 are satisfied contemporaneously therewith.
SECTION 6.11 Fiscal Year. The Parent and its Subsidiaries shall not change
their fiscal year without furnishing prior written notice to the Administrative
Agent.
SECTION 6.12 Environmental Laws. The Loan Parties shall not (a) fail to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, or (b)
become subject to any Environmental Liability, which, in either event, is
reasonably likely to have a Material Adverse Effect.
SECTION 6.13 Store Openings and Closings. No Loan Party will commit to open
any location at which any Loan Party maintains, offers for sale or stores any of
its Inventory or other Collateral, except that the Borrowers may open up five
(5) new locations in each fiscal year. To the extent that the Loan Parties fail
to open any stores permitted hereunder in any fiscal year, the Loan Parties may
not carry over any such unutilized store openings to any subsequent fiscal year,
without first obtaining the Administrative Agent's prior written consent, which
consent shall not be unreasonably withheld or delayed. The Loan Parties shall
not close or terminate business at any locations, other than Permitted Store
Closings, at which any Loan Party maintains or offers for sale any of its
Inventory or Collateral to the extent that such closures in any fiscal year of
the Loan Parties would exceed, without duplication of store closings set forth
in SECTION 6.05, ten percent (10%) of the number of such locations in existence
on the first day of each such fiscal year and otherwise in accordance with
SECTION 6.05(e).
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SECTION 6.14 Tivoli Agreement. The Loan Parties shall not modify or amend
the Tivoli Agreement (a) to extend the time period for the Loan Parties'
commitment, or increase the Loan Parties' commitment, to make loans and advances
to Tivoli, or (b) in a manner adverse to the Lenders' interests, in each case
without the prior written consent of the Administrative Agent which consent
shall not be unreasonably withheld or delayed.
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default. If any of the following events ("Events of
Default") shall occur:
(a) the Loan Parties shall fail to pay any principal of any Revolving
Credit Loan or any reimbursement obligation in respect of any L/C
Disbursement when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or
otherwise;
(b) the Loan Parties shall fail to pay any interest on any Revolving
Credit Loan or any fee or any other amount (other than an amount referred
to in clause (a) of this SECTION 7.01) payable under this Agreement or any
other Loan Document, when and as the same shall become due and payable and
such failure continues for five (5) days;
(c) any representation or warranty made or deemed made by or on behalf
of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or
in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, shall prove to have been incorrect in any
material respect when made or deemed made;
(d) the Loan Parties shall fail to observe or perform any covenant,
condition or agreement contained in SECTION 2.22, SECTIONS 5.01(a) through
(f), SECTIONS 5.01(j) through (n), SECTION 5.02, SECTION 5.03, SECTION
5.07, SECTION 5.09, SECTION 5.12, SECTION 5.15 or in ARTICLE VI (other than
SECTION 6.12 and SECTION 6.13);
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clauses (a), (b), (c), or (d) of this SECTION 7.01), and such
failure shall continue unremedied for a period of twenty (20) days after
notice thereof from the Administrative Agent to the Lead Borrower;
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness when and as the same shall become due and payable (after
giving effect to the expiration of any grace or cure period set forth
therein);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice,
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the lapse of time or both) the holder or holders of any such Material
Indebtedness or any trustee or agent on its or their behalf to cause any
such Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity;
(h) 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 any federal or state bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, 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 sixty (60) days or an order or decree approving or ordering
any of the foregoing shall be entered;
(i) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under
any federal or state bankruptcy, insolvency, receivership 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 (h) of this SECTION 7.01, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
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;
(j) any Loan Party shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $500,000 shall be rendered against any Loan Party or
any combination thereof and the same shall remain undischarged for a period
of forty-five (45) consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any material assets of any Loan Party to
enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Revolving Credit Lenders, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in
liability of the Loan Parties in an aggregate amount exceeding $250,000;
(m) (i) any challenge by or on behalf of any Loan Party to the
validity of any Loan Document or the applicability or enforceability of any
Loan Document strictly in accordance with the subject Loan Document's terms
or which seeks to void, avoid, limit, or otherwise adversely affect any
security interest created by or in any Loan Document or any payment made
pursuant thereto;
(ii) any challenge by or on behalf of any other Person to the
validity of any Loan Document or the applicability or enforceability
of any Loan Document strictly in accordance with the subject Loan
Document's terms or which directly seeks to void,
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avoid, limit, or otherwise adversely affect any security interest
created by or in any Loan Document or any payment made pursuant
thereto;
(iii) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not
to be, a valid and perfected Lien on any Collateral, with the priority
required by the applicable Security Document, except as a result of
the sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents;
(n) a Change in Control shall occur;
(o) the occurrence of any uninsured loss to any material portion of
the Collateral;
(p) the indictment of, or institution of any legal process or
proceeding against, any Loan Party, under any federal, state, municipal,
and other civil or criminal statute, rule, regulation, order, or other
requirement having the force of law where the relief, penalties, or
remedies sought or available include the forfeiture of any material
property of any Loan Party and/or the imposition of any stay or other
order, the effect of which could reasonably be to restrain in any material
way the conduct by the Loan Parties, taken as a whole, of their business in
the ordinary course or could reasonably be likely to have a Material
Adverse Effect;
(q) except to the extent expressly permitted under this Agreement, the
determination by any Borrower, whether by vote of such Borrower's board of
directors or otherwise to: suspend the operation of such Borrower's
business in the ordinary course, liquidate all or a material portion of
such Borrower's assets or store locations, or employ an agent or other
third party to conduct any so-called store closing, store liquidation or
"Going-Out-Of-Business" sales with respect to a substantial number of
stores (other than the Permitted Store Closings); or
(r) the Parent shall be required to make any payment pursuant to the
terms of the Tivoli Agreement;
then, and in every such event (other than an event with respect to any Loan
Party described in clause (h) or (i) of this SECTION 7.01), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
(i) and at the request of the Required Revolving Credit Lenders shall, by notice
to the Lead Borrower, terminate the Revolving Credit Commitments, and thereupon
the Revolving Credit Commitments shall terminate immediately, (ii) and at the
request of the Required Revolving Credit Lenders shall, by notice to the Lead
Borrower declare the Revolving Credit Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and thereupon
the principal amount of the Revolving Credit Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Loan Parties; and in case of any event
with respect to any Loan Party described in clause (h) or (i) of this SECTION
7.01, the Revolving Credit Commitments shall automatically terminate and the
principal of the Revolving Credit Loans then outstanding, together with accrued
interest thereon and all fees and other obligations of the Borrowers accrued
hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Loan Parties, to the extent permitted under Applicable Law.
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SECTION 7.02 When Continuing. For all purposes under this Agreement, each
Default and Event of Default that has occurred shall be deemed to be continuing
at all times thereafter unless it either (a) is cured or corrected to the
reasonable written satisfaction of that percentage of the Revolving Credit
Lenders as is required by SECTION 9.02, or (b) is waived in writing by that
percentage of the Revolving Credit Lenders as is required by SECTION 9.02.
SECTION 7.03 Intentionally Omitted.
SECTION 7.04 Remedies on Default. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the maturity
of the Revolving Credit Loans shall have been accelerated pursuant hereto, the
Administrative Agent may proceed to protect and enforce its rights and remedies
under this Agreement, the Notes or any of the other Loan Documents by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations are
evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Administrative Agent or the Lenders. No remedy herein is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law.
SECTION 7.05 Application of Proceeds. After the occurrence of an Event of
Default and acceleration of the Obligations, all proceeds realized from any Loan
Party or on account of any Collateral shall be applied in the manner set forth
in Section 6.2 of the Security Agreement. All amounts required to be applied to
Revolving Credit Loans hereunder (other than Swingline Loans) shall be applied
ratably in accordance with each Revolving Credit Lender's Revolving Credit
Commitment Percentage.
ARTICLE VIII
The Administrative Agent
SECTION 8.01 Administration by Administrative Agent. Each Lender and the
Issuing Bank hereby irrevocably designate GE Capital as Administrative Agent
under this Agreement and the other Loan Documents. The general administration of
the Loan Documents shall be by the Administrative Agent. The Lenders and the
Issuing Bank each hereby irrevocably authorizes the Administrative Agent (i) to
enter into the Loan Documents to which it is a party and to perform its duties
and obligations thereunder and (ii) at its discretion, to agree and consent to
all of the provisions of the Security Documents and to take or refrain from
taking such actions as agent on its behalf and to exercise or refrain from
exercising such powers under the Loan Documents and the Notes as are delegated
by the terms hereof or thereof, as appropriate, together with all powers
reasonably incidental thereto. All Collateral shall be held or administered by
the Administrative Agent (or its duly-appointed agent) for their benefit and for
the ratable benefit of the other Secured Parties. Any proceeds received by the
Administrative Agent from the foreclosure, sale, lease or other disposition of
any of the Collateral and any other proceeds received pursuant to the terms of
the Security Documents or the other Loan Documents shall be paid over to the
Administrative Agent, for application as provided in SECTION 2.19, SECTION 2.23,
or SECTION 7.05, as applicable.
SECTION 8.02 Intentionally Omitted.
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SECTION 8.03 Sharing of Excess Payments. Each of the Lenders, the
Administrative Agent and the Issuing Bank agrees that if it shall, through the
exercise of a right of banker's lien, setoff or counterclaim against the Loan
Parties, including, but not limited to, a secured claim under Section 506 of the
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim and received by such Lender, the Administrative Agent or the
Issuing Bank under any applicable bankruptcy, insolvency or other similar law,
or otherwise, obtain payment in respect of the Obligations owed it (an "excess
payment") as a result of which such Lender, the Administrative Agent or the
Issuing Bank has received payment of any Revolving Credit Loans or other
Obligations outstanding to it in excess of the amount that it would have
received if all payments at any time applied to the Revolving Credit Loans and
other Obligations had been applied in the order of priority set forth in SECTION
7.05, then such Lender, the Administrative Agent or the Issuing Bank shall
promptly purchase at par (and shall be deemed to have thereupon purchased) from
the other Lenders, the Administrative Agent and the Issuing Bank, as applicable,
a participation in the Revolving Credit Loans and Obligations outstanding to
such other Persons, in an amount determined by the Administrative Agent in good
faith as the amount necessary to ensure that the economic benefit of such excess
payment is reallocated in such manner as to cause such excess payment and all
other payments at any time applied to the Revolving Credit Loans and other
Obligations to be effectively applied in the order of priority set forth in
SECTION 7.05 to each Revolving Credit Lender pro rata in proportion to its
Revolving Credit Commitment; provided that, if any such excess payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be correspondingly rescinded (without interest). The Loan Parties
expressly consent to the foregoing arrangements and agree that any Lender,
Administrative Agent or the Issuing Bank holding (or deemed to be holding) a
participation in any Revolving Loan or other Obligation may exercise any and all
rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by such Loan Party to such Lender, the Administrative Agent or the
Issuing Bank as fully as if such Lender, the Administrative Agent or the Issuing
Bank held a Note and was the original obligee thereon, in the amount of such
participation.
SECTION 8.04 Agreement of Required Revolving Credit Lenders.
(a) Intentionally Omitted.
(b) Upon the occurrence of an Event of Default, the Administrative Agent
shall (subject to the provisions of SECTION 9.02) take such action with respect
thereto as may be reasonably directed by the Required Revolving Credit Lenders
pursuant to SECTION 7.03; provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action as it shall deem advisable in the
best interests of the Lenders. In no event shall the Administrative Agent be
required to comply with any such directions to the extent that the
Administrative Agent believes that the Administrative Agent's compliance with
such directions would be unlawful.
SECTION 8.05 Liability of Administrative Agent.
(a) The Administrative Agent, when acting on behalf of the Lenders and the
Issuing Bank, may execute any of its respective duties under this Agreement by
or through any of its respective officers, agents and employees, and the
Administrative Agent nor its respective directors, officers, agents or employees
shall not be liable to the Lenders or the Issuing Bank or any of them for any
action taken or omitted to be taken in good faith, or be responsible to the
Lenders or the Issuing Bank or to any of them for the consequences of any
oversight or error of judgment, or for any loss, except to the extent of any
liability imposed by law by reason of such Agent's own gross negligence or
willful misconduct. The
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Administrative Agent and its respective directors, officers, agents and
employees shall in no event be liable to the Lenders or the Issuing Bank or to
any of them for any action taken or omitted to be taken by them pursuant to
instructions received by them from the Required Revolving Credit Lenders, or in
reliance upon the advice of counsel selected by it. Without limiting the
foregoing, the Administrative Agent, or any of its respective directors,
officers, employees, or agents (A) shall not be responsible to any Lender or the
Issuing Bank for the due execution, validity, genuineness, effectiveness,
sufficiency, or enforceability of, or for any recital, statement, warranty or
representation in, this Agreement, any Loan Document or any related agreement,
document or order, or (B) shall not be required to ascertain or to make any
inquiry concerning the performance or observance by any Loan Party of any of the
terms, conditions, covenants, or agreements of this Agreement or any of the Loan
Documents, or (C) shall not be responsible to any Lender or the Issuing Bank for
the state or condition of any properties of the Borrower or any other obligor
hereunder constituting Collateral for the Obligations of the Borrower hereunder,
or any information contained in the books or records of the Borrower; or (D)
shall not be responsible to any Lender or the Issuing Bank for the validity,
enforceability, collectibility, effectiveness or genuineness of this Agreement
or any other Loan Document or any other certificate, document or instrument
furnished in connection therewith; or (E) shall not be responsible to any Lender
or the Issuing Bank for the validity, priority or perfection of any lien
securing or purporting to secure the Obligations or the value or sufficiency of
any of the Collateral.
(b) The Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through its agents or
attorneys-in-fact, and shall be entitled to the advice of counsel concerning all
matters pertaining to its rights and duties hereunder or under the Loan
Documents. The Administrative Agent shall not be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by them with
reasonable care.
(c) The Administrative Agent or any of its respective directors, officers,
employees, or agents shall not have any responsibility to the Loan Parties on
account of the failure or delay in performance or breach by any Lender (other
than by the Administrative Agent in its capacity as a Revolving Credit Lender)
or the Issuing Bank of any of their respective obligations under this Agreement
or the Notes or any of the Loan Documents or in connection herewith or
therewith.
(d) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any notice, consent, certificate, affidavit, or other
document or writing believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or persons, and upon the advice and
statements of legal counsel (including, without, limitation, counsel to the Loan
Parties), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless they shall first receive such advice or concurrence of the
Required Revolving Credit Lenders as they deem appropriate or they shall first
be indemnified to their satisfaction by the Lenders against any and all
liability and expense which may be incurred by them by reason of the taking or
failing to take any such action.
SECTION 8.06 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent has actual knowledge of the same or have
received notice from a Lender or the Loan Parties referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent obtains such
actual knowledge or receive such a notice, the Administrative Agent shall give
prompt notice thereof to each of the Lenders. The
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Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Revolving
Credit Lenders. Unless and until the Administrative Agent shall have received
such direction, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to any such
Default or Event of Default as they shall deem advisable in the best interest of
the Lenders.
SECTION 8.07 Lenders' Credit Decisions. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender, and based on the financial statements prepared by the Loan Parties
and such other documents and information as it has deemed appropriate, made its
own credit analysis and investigation into the business, assets, operations,
property, and financial and other condition of the Loan Parties and has made its
own decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in determining whether or not conditions precedent to closing
any Revolving Credit Loan hereunder have been satisfied and in taking or not
taking any action under this Agreement and the other Loan Documents.
SECTION 8.08 Reimbursement and Indemnification. Each Lender agrees (a) to
reimburse (i) the Administrative Agent for such Lender's Revolving Credit
Commitment Percentage of any expenses and fees incurred by the Administrative
Agent for the benefit of the Lenders or the Issuing Bank under this Agreement,
the Notes and any of the Loan Documents, including, without limitation, counsel
fees and compensation of agents and employees paid for services rendered on
behalf of the Lenders or the Issuing Bank, and any other expense incurred in
connection with the operations or enforcement thereof not reimbursed by the Loan
Parties and (ii) the Administrative Agent for such Lender's Revolving Credit
Commitment Percentage of any expenses of the Administrative Agent incurred for
the benefit of the Lenders or the Issuing Bank that the Loan Parties have agreed
to reimburse pursuant to SECTION 9.04 and have failed to so reimburse and (b) to
indemnify and hold harmless the Administrative Agent and any of its directors,
officers, employees, or agents, on demand, in the amount of such Lender's
Revolving Credit Commitment Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against it or any of them in any way
relating to or arising out of this Agreement, the Notes or any of the Loan
Documents or any action taken or omitted by it or any of them under this
Agreement, the Notes or any of the Loan Documents to the extent not reimbursed
by the Loan Parties (except such as shall result from its gross negligence or
willful misconduct). The provisions of this SECTION 8.08 shall survive the
repayment of the Obligations and the termination of the Revolving Credit
Commitments.
SECTION 8.09 Rights of Administrative Agent. It is understood and agreed
that GE Capital shall have the same rights and powers hereunder (including the
right to give such instructions) as the other Lenders and may exercise such
rights and powers, as well as its rights and powers under other agreements and
instruments to which it is or may be party, and engage in other transactions
with the Borrowers, as though they were not the Administrative Agent of the
Lenders under this Agreement. The Administrative Agent and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
commercial or investment banking, trust, advisory or other business with the
Loan Parties and their Subsidiaries and Affiliates as if it were not the
Administrative Agent hereunder. The Administrative Agent and its Affiliates may
accept fees and other consideration from any Loan party for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
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SECTION 8.10 Independent Lenders and Issuing Bank. The Lenders and the
Issuing Bank each acknowledge that they have decided to enter into this
Agreement and to make the Revolving Credit Loans or issue the Letters of Credit
hereunder based on their own analysis of the transactions contemplated hereby
and of the creditworthiness of the Loan Parties and agrees that the
Administrative Agent shall bear no responsibility therefor.
SECTION 8.11 Notice of Transfer. The Administrative Agent may deem and
treat a Lender party to this Agreement as the owner of such Lender's portion of
the Revolving Credit Loans for all purposes, unless and until, and except to the
extent, an Assignment and Acceptance shall have become effective as set forth in
SECTION 9.06(b).
SECTION 8.12 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving five (5) Business Days' written notice thereof to
the Lenders, the Issuing Bank, and the Lead Borrower. Upon any such resignation
of the Administrative Agent, the Required Revolving Credit Lenders shall have
the right to appoint a successor Administrative Agent, which so long as there is
no Default or Event of Default, shall be reasonably satisfactory to the Lead
Borrower (whose consent shall not be unreasonably withheld or delayed). If no
successor Administrative Agent shall have been so appointed by the Required
Revolving Credit Lenders and shall have accepted such appointment, within thirty
(30) days after the retiring Agent's giving of notice of resignation, the
retiring Administrative Agent may, on behalf of the Lenders, and the Issuing
Bank, appoint a successor Administrative Agent which shall be a Person capable
of complying with all of the duties of the Administrative Agent (and the Issuing
Bank), hereunder (in the opinion of the retiring Administrative Agent and as
certified to the Lenders in writing by such successor Administrative Agent)
which, so long as there is no Default or Event of Default, shall be reasonably
satisfactory to the Lead Borrower (whose consent shall not be unreasonably
withheld or delayed). If, notwithstanding the foregoing, a successor
Administrative Agent has not been appointed within thirty (30) days after the
retiring agent's giving notice of such resignation, such resignation shall
become effective and the Required Revolving Credit Lenders shall thereafter
perform all the duties of the Administrative Agent hereunder until such time, if
any, the required Revolving Credit Lenders appoint a successor agent as provided
above. Upon the acceptance of any appointment as Administrative Agent by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent's resignation hereunder as such
Administrative Agent, the provisions of this ARTICLE VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was such
Administrative Agent under this Agreement.
SECTION 8.13 Reports and Financial Statements. Promptly after receipt
thereof from the Borrowers, the Administrative Agent shall remit to each Lender
copies of all financial statements and other notices (excluding Borrowing
Requests and other routine communications in the ordinary course of business)
required to be delivered by the Borrowers hereunder and all commercial finance
examinations and appraisals of the Collateral received by the Administrative
Agent.
SECTION 8.14 Delinquent Lender. The Administrative Agent may assume that
each lender will make its Revolving Credit Commitment Percentage of each
Revolving Credit Loan available to the Administrative Agent on each funding
date. If such Revolving Credit Commitment Percentage is not, in fact, paid to
the Administrative Agent by such Lender when due, the Administrative Agent shall
be entitled to recover such amount on demand from such Lender without setoff,
counterclaim or deduction of any kind. If for any reason any Lender shall fail
or refuse to abide by its obligations under this
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Agreement, including without limitation each Revolving Credit Lender's
obligation to make available to Administrative Agent its Revolving Credit
Commitment Percentage of any Revolving Credit Loans, expenses or setoff or
purchase its Revolving Credit Commitment Percentage of a participation interest
in the Swingline Loans (a "Delinquent Lender"), and such failure is not cured
within ten (10) days of receipt from the Administrative Agent of written notice
thereof, then, in addition to the rights and remedies that may be available to
Administrative Agent, other Lenders, the Loan Parties or any other party at law
or in equity, and not at limitation thereof the Administrative Agent shall
promptly notify the Lead Borrower and the Borrowers shall immediately pay such
amount to the Administrative Agent and, (i) such Delinquent Lender's right to
participate in the administration of, or decision-making rights related to, the
Revolving Credit Loans, this Agreement or the other Loan Documents shall be
suspended during the pendency of such failure or refusal, and (ii) a Delinquent
Lender shall be deemed to have assigned any and all payments due to it from the
Loan Parties, whether on account of outstanding Revolving Credit Loans,
interest, fees or otherwise, to the remaining non-delinquent Lenders for
application to, and reduction of, their proportionate shares of all outstanding
Revolving Credit Loans until, as a result of application of such assigned
payments the Lenders' respective Revolving Credit Commitment Percentages of all
outstanding Revolving Credit Loans shall have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency. The Delinquent Lender's decision-making and
participation rights and rights to payments as set forth in clauses (i) and (ii)
hereinabove shall be restored only upon the payment by the Delinquent Lender of
its Revolving Credit Commitment Percentage of any Revolving Credit Loans, any
participation obligation, or expenses as to which it is delinquent, together
with interest thereon at the rate set forth in SECTION 2.10 hereof from the date
when originally due until the date upon which any such amounts are actually
paid.
The non-delinquent Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to acquire for no
cash consideration, (pro rata, based on the respective Revolving Credit
Commitments of those Lenders electing to exercise such right) the Delinquent
Lender's Revolving Credit Commitment to fund future Revolving Credit Loans (the
"Future Commitment"). Upon any such purchase of the Revolving Credit Commitment
Percentage of any Delinquent Lender's Future Commitment, the Delinquent Lender's
share in future Revolving Credit Loans and its rights under the Loan Documents
with respect thereto shall terminate on the date of purchase, and the Delinquent
Lender shall promptly execute all documents reasonably requested to surrender
and transfer such interest, including, if so requested, an Assignment and
Acceptance. Each Delinquent Lender shall indemnify the Administrative Agent and
each non-delinquent Lender from and against any and all loss, damage or
expenses, including but not limited to reasonable attorneys' fees and funds
advanced by the Administrative Agent or by any non-delinquent Lender, on account
of a Delinquent Lender's failure to timely fund its Revolving Credit Commitment
Percentage of a Revolving Credit Loan or to otherwise perform its obligations
under the Loan Documents.
SECTION 8.15 Arranger. Notwithstanding the provisions of this Agreement or
any of the other Loan Documents the Arranger shall have no powers, rights,
duties, responsibilities or liabilities with respect to this Agreement and the
other Loan Documents.
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ARTICLE IX
Miscellaneous
SECTION 9.01 Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Loan Party, to it at ▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer (Telecopy No. (781)
830-3484), with a copy to Goulston & Storrs, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ (Telecopy No. (617)
574-4112);
(b) if to the Administrative Agent or the Swingline Lender to General
Electric Capital Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Tweeter Account Manager (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a
copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, Esq., (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇)
and General Electric Capital Corporation, GE Corporate Financial Services,
Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Counsel-Corporate Lending, (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to any other Lender, to it at its address (or telecopy number)
set forth on the signature pages hereto or on any Assignment and Acceptance
for such Lender.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent, the Issuing Bank or
any Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Issuing Bank and the Lenders hereunder and under
the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
SECTION 9.02, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Revolving Credit Loan or issuance
of a Letter of Credit shall not be construed as a waiver of any Default,
regardless of whether the Administrative Agent, any Lender or the Issuing Bank
may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or
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agreements in writing entered into by the Borrowers and the Required Revolving
Credit Lenders or, in the case of any other Loan Document, pursuant to an
agreement or agreements in writing entered into by the Administrative Agent and
the Loan Parties that are parties thereto, in each case with the Consent of the
Required Revolving Credit Lenders, provided that no such agreement shall (i)
increase the Revolving Credit Commitment of any Lender without the Consent of
such Lender, (ii) reduce the principal amount of any Revolving Credit Loan or
L/C Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the Consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Revolving
Credit Loan or L/C Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of the Revolving Credit Commitments or
the Maturity Date, without the Consent of each Lender affected thereby, (iv)
change SECTION 2.19, SECTION 2.22, or SECTION 2.23 or Section 6.2 of the
Security Agreement, without the Consent of each Lender, (v) change any of the
provisions of this SECTION 9.02 or the definition of the term "Required
Revolving Credit Lenders" or any other provision of any Loan Document specifying
the number or percentage of Lenders required to waive, amend or modify any
rights thereunder or make any determination or grant any consent thereunder,
without the Consent of each Lender, (vi) release any Loan Party from its
obligations under any Loan Document, or limit its liability in respect of such
Loan Document, without the Consent of each Lender, (vii) except for sales
described in SECTION 6.05 or as permitted in the Security Documents, release any
material portion of the Collateral from the Liens of the Security Documents,
without the Consent of each Lender, (viii) change the definition of the term
"Borrowing Base" or any component definition thereof if as a result thereof the
amounts available to be borrowed by the Borrowers would be increased, without
the Consent of each Lender, provided that the foregoing shall not limit the
discretion of the Administrative Agent to change, establish or eliminate any
Reserves, (ix) increase the Permitted Overadvance, without the Consent of each
Lender, (x) subordinate the Obligations hereunder, or the Liens granted
hereunder or under the other Loan Documents, to any other Indebtedness or Lien,
as the case may be without the prior Consent of each Lender, or (xi) change the
definition of "Consent" without the prior Consent of each Lender, and provided,
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent or the Issuing Bank without the
prior written consent of the Administrative Agent or the Issuing Bank, as the
case may be.
(i) Intentionally Omitted.
(c) Notwithstanding anything to the contrary contained herein, no
modification, amendment or waiver which increases the maximum amount of the
Swingline Loans to an amount in excess of $5,000,000 (or such greater amount to
which such limit has been previously increased in accordance with the provisions
of this SECTION 9.02(d)) shall be made without the Consent of the Required
Revolving Credit Lenders.
(d) Notwithstanding anything to the contrary contained in this SECTION
9.02, in the event that the Borrowers request that this Agreement or any other
Loan Document be modified, amended or waived in a manner which would require the
Consent of the Lenders pursuant to SECTION 9.02(b), SECTION 9.02(c) or SECTION
9.02(d) and such amendment is approved by the Required Revolving Credit Lenders
but not by the percentage of the Lenders set forth in said SECTION 9.02(b), or
SECTION 9.02(d), as applicable, the Borrowers, and the Required Revolving Credit
Lenders shall be permitted to amend this Agreement without the Consent of the
Lender or Lenders which did not agree to the modification or amendment requested
by the Borrowers (such Lender or Lenders, collectively the "Minority Lenders")
to provide for (w) the termination of the Revolving Credit Commitment of each of
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the Minority Lenders, (x) the addition to this Agreement of one or more other
financial institutions, or an increase in the Revolving Credit Commitment of one
or more of the Required Revolving Credit Lenders, so that the aggregate
Revolving Credit Commitments after giving effect to such amendment shall be in
the same amount as the aggregate Revolving Credit Commitments immediately before
giving effect to such amendment, (y) if any Revolving Credit Loans are
outstanding at the time of such amendment, the making of such additional
Revolving Credit Loans by such new or increasing Lender or Lenders, as the case
may be, as may be necessary to repay in full the outstanding Revolving Credit
Loans (including principal, interest, and fees) of the Minority Lenders
immediately before giving effect to such amendment and (z) such other
modifications to this Agreement or the Loan Documents as may be appropriate and
incidental to the foregoing.
(e) No notice to or demand on any Loan Party shall entitle any Loan Party
to any other or further notice or demand in the same, similar or other
circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or
consent and any consent by a Lender, or any holder of a Note, shall bind any
Person subsequently acquiring a Note, whether or not a Note is so marked. No
amendment to this Agreement or any other Loan Document shall be effective
against the Borrowers unless signed by the Borrowers or other applicable Loan
Party.
SECTION 9.03 Intentionally Omitted.
SECTION 9.04 Expenses; Indemnity; Damage Waiver.
(a) The Loan Parties shall jointly and severally pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent and the Lenders, outside consultants for the Administrative
Agent, appraisers, for commercial finance examinations in connection with the
closing of the credit facilities, to the extent applicable and as provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all reasonable out-of-pocket
expenses incurred by the Administrative Agent, the Issuing Bank or any Lender,
including the reasonable fees, charges and disbursements of any counsel and any
outside consultants for the Administrative Agent, the Issuing Bank or any
Lender, for appraisers and commercial finance examinations in connection with
the enforcement or protection of its rights in connection with the Loan
Documents, including its rights under this SECTION 9.04, or in connection with
the Revolving Credit Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Revolving Credit Loans or Letters of Credit;
provided that the Lenders who are not the Administrative Agent shall be entitled
to reimbursement for no more than one counsel representing all such Lenders
(absent a conflict of interest in which case the Lenders may engage and be
reimbursed for additional counsel) and the Administrative Agent shall be
entitled to one counsel representing itself.
(b) The Loan Parties shall, jointly and severally, indemnify the
Administrative Agent, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable and
documented fees, charges
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and disbursements of any counsel for any Indemnitee and other costs of
investigation or defense including those incurred upon any appeal, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the transactions contemplated by the Loan Documents or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Revolving Credit Issuing
Bank to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property currently or formerly owned or
operated by any Loan Party or any of the Subsidiaries, or any Environmental
Liability related in any way to any Loan Party or any of the Subsidiaries, or
(iv) any actual claim, litigation, investigation or proceeding relating to any
of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or willful misconduct of such Indemnitee or any Affiliate of such
Indemnitee (or of any officer, director, employee, advisor or agent of such
Indemnitee or any such Indemnitee's Affiliates).
(c) To the extent that any Loan Party fails to pay any amount required to
be paid by it to the Administrative Agent or the Issuing Bank under paragraph
(a) or (b) of this SECTION 9.04, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender's pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount, provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank. For purposes hereof, a Lender's "pro
rata share" shall be determined based upon its share of the Revolving Credit
Commitments at the time.
(d) To the extent permitted by Applicable Law, no Loan Party shall assert,
and each hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated by the Loan Documents, any Loan or Letter of Credit or
the use of the proceeds thereof.
(e) All amounts due under this SECTION 9.04 shall be payable promptly after
written demand therefor.
SECTION 9.05 Designation of Lead Borrower as Borrowers' Agent.
(a) Each Borrower hereby irrevocably designates and appoints the Lead
Borrower as that Borrower's agent to obtain Revolving Credit Loans and Letters
of Credit hereunder, the proceeds of which shall be available to each Borrower
for those uses as those set forth herein. As the disclosed principal for its
agent, each Borrower shall be obligated to the Administrative Agent and each
Lender on account of Revolving Credit Loans so made and Letters of Credit so
issued hereunder as if made directly by the Lenders to that Borrower,
notwithstanding the manner by which such Revolving Credit Loans and Letters of
Credit are recorded on the books and records of the Lead Borrower and of any
Borrower.
(b) Each Borrower recognizes that credit available to it hereunder is in
excess of and on better terms than it otherwise could obtain on and for its own
account and that one of the reasons therefor
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is its joining in the credit facility contemplated herein with all other
Borrowers. Consequently, each Borrower hereby assumes, guarantees, and agrees to
discharge all Obligations of all other Borrowers as if the Borrower so assuming
and guarantying were each other Borrower.
(c) The Lead Borrower shall act as a conduit for each Borrower (including
itself, as a "Borrower") on whose behalf the Lead Borrower has requested a
Revolving Credit Loan.
(i) The Lead Borrower shall cause the transfer of the proceeds of
each Revolving Credit Loan to the (those) Borrower(s) on whose behalf
such Revolving Credit Loan was obtained. Neither the Administrative
Agent nor any Lender shall have any obligation to see to the
application of such proceeds.
(ii) If, for any reason, and at any time during the term of this
Agreement,
(A) any Borrower, including the Lead Borrower, as agent for the
Borrowers, shall be unable to, or prohibited from carrying out the
terms and conditions of this Agreement (as determined by the
Administrative Agent in the Administrative Agent's sole and absolute
discretion); or
(B) the Administrative Agent deems it inexpedient (in the
Administrative Agent's sole and absolute discretion) to continue
making Revolving Credit Loans and cause Letters of Credit to be issued
to or for the account of any particular Borrower, or to channel such
Revolving Credit Loans and Letters of Credit through the Lead
Borrower,
then the Lenders may make Revolving Credit Loans directly to, and cause the
issuance of Letters of Credit directly for the account of such of the
Borrowers as the Administrative Agent determines to be expedient, which
Revolving Credit Loans may be made without regard to the procedures
otherwise included herein.
(d) In the event that the Administrative Agent determines to forgo the
procedures included herein pursuant to which Revolving Credit Loans and Letters
of Credit are to be channeled through the Lead Borrower, then the Administrative
Agent may designate one or more of the Borrowers to fulfill the financial and
other reporting requirements otherwise imposed herein upon the Lead Borrower.
(e) Each of the Borrowers shall remain liable to the Administrative Agent
and the Lenders for the payment and performance of all Obligations (which
payment and performance shall continue to be secured by all Collateral granted
by each of the Borrowers) notwithstanding any determination by the
Administrative Agent to cease making Revolving Credit Loans or causing Letters
of Credit to be issued to or for the benefit of any Borrower.
(f) The authority of the Lead Borrower to request Revolving Credit Loans on
behalf of, and to bind, the Borrowers, shall continue unless and until the
Administrative Agent acts as provided in subparagraph (c), above, or the
Administrative Agent actually receives written notice of: (i) the termination of
such authority, and (ii) the subsequent appointment of a successor Lead
Borrower, which notice is signed by the respective Presidents of each Borrower
(other than the President of the Lead Borrower being replaced) then eligible for
borrowing under this Agreement; and written notice from such successive Lead
Borrower (i) accepting such appointment; (ii) acknowledging that such removal
and appointment has been effected by the respective Presidents of such Borrowers
eligible for borrowing under this Agreement; and (iii) acknowledging that from
and after the date of such appointment, the
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newly appointed Lead Borrower shall be bound by the terms hereof, and that as
used herein, the term "Lead Borrower" shall mean and include the newly appointed
Lead Borrower.
SECTION 9.06 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that no Loan Party may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any such attempted assignment or transfer without such consent
shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of the Administrative Agent, the
Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) Any Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Revolving Credit Commitment and the Revolving Credit Loans at the
time owing to it), provided that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender, each of the Lead Borrower (but only if no
Default then exists), the Administrative Agent and the Issuing Bank must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed), (ii) except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Revolving Credit Commitment or Revolving Credit
Loans, the amount of the Revolving Credit Commitment or Revolving Credit Loans
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 unless each of
the Lead Borrower (but only if no Default then exists) and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations, (iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500. In the event the Administrative Agent
or any Lender assigns or otherwise transfers all or any part of the Obligations,
the Administrative Agent or any such Lender shall so notify the Borrowers and
the Borrowers shall, upon the request of the Administrative Agent or such
Lender, execute new Notes in exchange for the Notes, if any, being assigned.
Subject to acceptance and recording thereof pursuant to paragraph (d) of this
SECTION 9.06, from and after the effective date specified in each Assignment and
Acceptance the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of SECTION 9.04).
Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this paragraph shall be treated for purposes
of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this SECTION 9.06.
(c) The Administrative Agent, acting for this purpose as an agent of the
Loan Parties, shall maintain at one of its offices in Norwalk, Connecticut a
copy of each Assignment and Acceptance
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delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Revolving Credit Commitment of, and principal amount of the
Revolving Credit Loans and L/C Disbursements owing to, each Lender pursuant to
the terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive and the Loan Parties, the Administrative Agent, the Issuing
Bank and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Lead Borrower, the Issuing Bank and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the processing and recordation fee
referred to in paragraph (b) of this SECTION 9.06 and any written consent to
such assignment required by paragraph (b) of this SECTION 9.06, the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(e) Any Lender may, without the consent of the Loan Parties, the
Administrative Agent, and the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Revolving Credit Commitment and the Revolving Credit Loans owing to it),
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Loan Parties, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation in the Revolving Credit
Commitments, the Revolving Credit Loans and the Letters of Credit Outstandings
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents, provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to SECTION
9.02(b) that affects such Participant. Subject to paragraph (f) of this SECTION
9.06, the Loan Parties agree that each Participant shall be entitled to the
benefits of SECTION 2.24, SECTION 2.26 and SECTION 2.27 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this SECTION 9.06. To the extent permitted by law, each
Participant also shall be entitled to the benefits of SECTION 9.10 as though it
were a Lender, provided such Participant agrees to be subject to SECTION 2.26(c)
as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under SECTION 2.24 or SECTION 2.27 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Lead
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of SECTION 2.27 unless
(i) the Lead Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrowers, to comply with
SECTION 2.27(f) as though it were a Lender and (ii) such Participant is eligible
for exemption from the withholding tax referred to therein, following compliance
with SECTION 2.27(f).
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to
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secure obligations to any of the twelve Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341, and this SECTION
9.06 shall not apply to any such pledge or assignment of a security interest,
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
SECTION 9.07 Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Revolving Credit Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Administrative
Agent, the Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Revolving Credit Loan or any fee or
any other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Revolving Credit Commitments
have not expired or terminated. Furthermore, this Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Loan Party for liquidation or reorganization, should any Loan Party
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Loan Party's assets, and shall continue to be effective
or to be reinstated, as the case may be, if at any time payment and performance
of the Obligations, or any part thereof, is, pursuant to Applicable Law,
rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or performance had not
been made. In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded, reduced, restored or
returned. The provisions of SECTION 2.24, SECTION 2.27, SECTION 9.04, this
SECTION 9.07 and ARTICLE VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Revolving Credit Loans, the expiration or termination of the
Letters of Credit and the Revolving Credit Commitments or the termination of
this Agreement or any provision hereof.
SECTION 9.08 Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all contemporaneous
or previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in SECTION 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and the Lenders and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
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SECTION 9.09 Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.10 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party, each Participant and each of their
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Secured Party, Participant or
Affiliate to or for the credit or the account of the Loan Parties against any of
and all the obligations of the Loan Parties now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Secured Party under this SECTION 9.10 are in
addition to other rights and remedies (including other rights of setoff) that
such Secured Party may have. No Security Party will exercise its rights under
this SECTION 9.10 without the consent of the Administrative Agent or the
Required Revolving Credit Lenders. ANY AND ALL RIGHTS TO REQUIRE THE
ADMINISTRATIVE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS PRIOR TO THE EXERCISE BY
ANY SECURED PARTY OF ITS RIGHT OF SETOFF UNDER THIS SECTION ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
SECTION 9.11 Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK. WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK).
(b) The Loan Parties agree that any suit for the enforcement of this
Agreement or any other Loan Document may be brought in the courts of the State
of New York or any federal court sitting therein and consent to the
non-exclusive jurisdiction of such courts. The Loan Parties hereby waive any
objection which they may now or hereafter have to the venue of any such suit or
any such court or that such suit is brought in an inconvenient forum.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in SECTION 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION,
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SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.13 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.14 Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Revolving
Credit Loan, together with all fees, charges and other amounts that are treated
as interest on such Revolving Credit Loan under Applicable Law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") that may
be contracted for, charged, taken, received or reserved by the Lender holding
such Revolving Credit Loan in accordance with Applicable Law, the rate of
interest payable in respect of such Revolving Credit Loan hereunder, together
with all Charges payable in respect thereof, shall be limited to the Maximum
Rate and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Revolving Credit Loan but were not payable as a
result of the operation of this SECTION 9.14 shall be cumulated and the interest
and Charges payable to such Lender in respect of other Revolving Credit Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
SECTION 9.15 Additional Waivers.
(a) The Obligations are the joint and several obligations of each Loan
Party. To the fullest extent permitted by Applicable Law, the obligations of
each Loan Party hereunder shall not be affected by (i) the failure of the
Administrative Agent or any other Secured Party to assert any claim or demand or
to enforce or exercise any right or remedy against any other Loan Party under
the provisions of this Agreement, any other Loan Document or otherwise, (ii) any
rescission, waiver, amendment or modification of, or any release from any of the
terms or provisions of, this Agreement, any other Loan Document, or any other
agreement, including with respect to any other Borrower of the Obligations under
this Agreement, or (iii) the failure to perfect any security interest in, or the
release of, any of the security held by or on behalf of the Administrative Agent
or any other Secured Party.
(b) The obligations of each Loan Party hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Obligations after the
termination of all Revolving Credit Commitments to any Loan Party under any Loan
Document), including any claim of waiver, release, surrender, alteration or
compromise of any of the Obligations, and shall not be subject to any defense or
set-off, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each Loan
Party hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Administrative Agent or any other Secured Party to assert any
claim or demand or to enforce any remedy under this Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision
of any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of any Loan Party or that
would otherwise operate as a discharge of any Loan Party as a matter of law or
equity (other
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than the indefeasible payment in full in cash of all the Obligations after the
termination of all Revolving Credit Commitments to any Loan Party under any Loan
Document).
(c) To the fullest extent permitted by Applicable Law, each Loan Party
waives any defense based on or arising out of any defense of any other Loan
Party or the unenforceability of the Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any other Loan Party,
other than the indefeasible payment in full in cash of all the Obligations. The
Administrative Agent and the other Secured Parties may, at their election,
foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Loan Party, or exercise any other right or remedy
available to them against any other Loan Party, without affecting or impairing
in any way the liability of any Loan Party hereunder except to the extent that
all the Obligations have been indefeasibly paid in full in cash and performed in
full after the termination of all Revolving Credit Commitments to any Loan Party
under any Loan Document. Pursuant to Applicable Law, each Loan Party waives any
defense arising out of any such election even though such election operates,
pursuant to Applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Loan Party against
any other Loan Party, as the case may be, or any security.
(d) Upon payment by any Loan Party of any Obligations, all rights of such
Loan Party against any other Loan Party arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations after the
termination of all Revolving Credit Commitments to any Loan Party under any Loan
Document, as more particularly set forth in an Indemnity, Subrogation and
Contribution Agreement entered into amongst the Loan Parties. In addition, any
indebtedness of any Loan Party now or hereafter held by any other Loan Party is
hereby subordinated in right of payment to the prior payment in full of the
Obligations. None of the Loan Parties will demand, ▇▇▇ for, or otherwise attempt
to collect any such indebtedness. If any amount shall erroneously be paid to any
Loan Party on account of (a) such subrogation, contribution, reimbursement,
indemnity or similar right or (b) any such indebtedness of any Loan Party, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Administrative Agent to be credited against the payment
of the Obligations, whether matured or unmatured, in accordance with the terms
of the Loan Documents.
SECTION 9.16 Press Releases and Related Matters. Each Borrower consents to
the publication by the Administrative Agent of customary trade advertising
material in tombstone format relating to the financing transactions contemplated
by this Agreement using any Borrower's name, logo or trademark. The
Administrative Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
SECTION 9.17 Patriot Act. Each Lender hereby notifies the Borrowers 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 Borrowers, which information
includes the name and address of each Borrower and other information that will
allow such Lender to identify such Borrower in accordance with the Act. Each
Borrower is in compliance, in all material respects, with the Patriot Act. No
part of the proceeds of the Revolving Credit Loans will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in
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order to obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.
SECTION 9.18 Foreign Asset Control Regulations. Neither of the advance of
the Revolving Credit 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 Borrowers
or their 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" or in any manner violative
of any such order.
ARTICLE X
Cross-Guaranty
SECTION 10.01 Cross-Guaranty. Each Borrower hereby agrees that such
Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to the Administrative Agent and the Lenders and their
respective successors and assigns, the full and prompt payment (whether at
stated maturity, by acceleration or otherwise) and performance of, all
Obligations owed or hereafter owing to the Administrative Agent and the Lenders
by each other Borrower. Each Borrower agrees that its guaranty obligation
hereunder is a continuing guaranty of payment and performance and not of
collection, that its obligations under this ARTICLE X shall not be discharged
until payment and performance, in full, of the Obligations has occurred, and
that its obligations under this ARTICLE X shall be absolute and unconditional,
irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Document or any other
agreement, document or instrument to which any Borrower is or may become a
party;
(b) the absence of any action to enforce this Agreement (including this
ARTICLE X) or any other Loan Document or the waiver or consent by the
Administrative Agent and the Lenders with respect to any of the provisions
thereof;
(c) the existence, value or condition of, or failure to perfect its Lien
against, any security for the Obligations or any action, or the absence of any
action, by the Administrative Agent and the Lenders in respect thereof
(including the release of any such security);
(d) the insolvency of any Loan Party; or
(e) any other action or circumstances that might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor.
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Each Borrower shall be regarded, and shall be in the same position, as
principal debtor with respect to the Obligations guaranteed hereunder.
SECTION 10.02 Waivers by Borrowers. Each Borrower expressly waives all
rights it may have now or in the future under any statute, or at common law, or
at law or in equity, or otherwise, to compel the Administrative Agent or the
Lenders to marshal assets or to proceed in respect of the Obligations guaranteed
hereunder against any other Loan Party, any other party or against any security
for the payment and performance of the Obligations before proceeding against, or
as a condition to proceeding against, such Borrower. It is agreed among each
Borrower, the Administrative Agent and the Lenders that the foregoing waivers
are of the essence of the transaction contemplated by this Agreement and the
other Loan Documents and that, but for the provisions of this ARTICLE X and such
waivers, the Administrative Agent and the Lenders would decline to enter into
this Agreement.
SECTION 10.03 Benefit of Guaranty. Each Borrower agrees that the provisions
of this ARTICLE X are for the benefit of the Administrative Agent and the
Lenders and their respective successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as between any other Borrower and the
Administrative Agent or the Lenders, the obligations of such other Borrower
under the Loan Documents.
SECTION 10.04 Waiver of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in SECTION 10.07, each Borrower hereby expressly and irrevocably waives
any and all rights at law or in equity to subrogation, reimbursement,
exoneration, contribution, indemnification or set off and any and all defenses
available to a surety, guarantor or accommodation co-obligor. Each Borrower
acknowledges and agrees that this waiver is intended to benefit the
Administrative Agent and the Lenders and shall not limit or otherwise affect
such Borrower's liability hereunder or the enforceability of this ARTICLE X, and
that the Administrative Agent, the Lenders and their respective successors and
assigns are intended third party beneficiaries of the waivers and agreements set
forth in this SECTION 10.04.
SECTION 10.05 Election of Remedies. If the Administrative Agent or any
Lender may, under applicable law, proceed to realize its benefits under any of
the Loan Documents giving such Administrative Agent or such Lender a Lien upon
any Collateral, whether owned by any Borrower or by any other Person, either by
judicial foreclosure or by non-judicial sale or enforcement, the Administrative
Agent or any Lender may, at its sole option, determine which of its remedies or
rights it may pursue without affecting any of its rights and remedies under this
ARTICLE X. If, in the exercise of any of its rights and remedies, the
Administrative Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by the
Administrative Agent or such Lender and waives any claim based upon such action,
even if such action by the Administrative Agent or such Lender shall result in a
full or partial loss of any rights of subrogation that each Borrower might
otherwise have had but for such action by the Administrative Agent or such
Lender. Any election of remedies that results in the denial or impairment of the
right of the Administrative Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event the Administrative Agent or any
Lender shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Loan Documents, the Administrative Agent or such Lender
may bid all or less than the amount of the Obligations and the amount of such
bid need not be paid by the Administrative Agent or such Lender but shall be
credited against the Obligations. The amount of the
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successful bid at any such sale, whether the Administrative Agent, Lender or any
other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this ARTICLE X, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which the Administrative Agent
or any Lender might otherwise be entitled but for such bidding at any such sale.
SECTION 10.06 Limitation. Notwithstanding any provision herein contained to
the contrary, each Borrower's liability under this ARTICLE X (which liability is
in any event in addition to amounts for which such Borrower is primarily liable
under ARTICLE II) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Revolving Credit Loans advanced to any other
Borrower under this Agreement and then re-loaned or otherwise transferred to, or
for the benefit of, such Borrower; and
(b) the amount that could be claimed by the Administrative Agent and the
Lenders from such Borrower under this ARTICLE X without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law after taking into account, among
other things, such Borrower's right of contribution and indemnification from
each other Borrower under SECTION 10.07.
SECTION 10.07 Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under this ARTICLE
X of all or any of the Obligations (other than Revolving Credit Loans made to
that Borrower for which it is primarily liable) (a "Guarantor Payment") that,
taking into account all other Guarantor Payments then previously or concurrently
made by any other Borrower, exceeds the amount that such Borrower would
otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Borrower's
"Allocable Amount" (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Revolving Credit Commitments, such Borrower shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata based
upon their respective Allocable Amounts in effect immediately prior to such
Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any Borrower
shall be equal to the maximum amount of the claim that could then be recovered
from such Borrower under this SECTION 10.07 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(c) This SECTION 10.07 is intended only to define the relative rights of
the Borrowers and nothing set forth in this SECTION 10.07 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including SECTION 10.01. Nothing contained in this
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SECTION 10.07 shall limit the liability of any Borrower to pay the Revolving
Credit Loans made directly or indirectly to that Borrower and accrued interest,
fees and expenses with respect thereto for which such Borrower shall be
primarily liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Loan Parties
under this SECTION 10.07 shall be exercisable upon the full and indefeasible
payment of the Obligations and the termination of the Revolving Credit
Commitments.
SECTION 10.08 Liability Cumulative. The liability of the Borrowers under
this ARTICLE X is in addition to and shall be cumulative with all liabilities of
each Borrower to the Administrative Agent and the Lenders under this Agreement
and the other Loan Documents to which such Borrower is a party or in respect of
any Obligations or obligation of the other Borrower, without any limitation as
to amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NEW ENGLAND AUDIO CO., INC., as Lead
Borrower and Borrower
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SOUND ADVICE OF ARIZONA INC., as Borrower
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
NEA DELAWARE, INC., as Borrower
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
THEG USA, L.P., as Borrower
By: New England Audio Co., Inc., its
General Partner
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
HILLCREST HIGH FIDELITY, INC., as
Borrower
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SOUND ADVICE, INC., as Borrower
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SUMARC ELECTRONICS INCORPORATED, as
Borrower
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
TWEETER HOME ENTERTAINMENT GROUP, INC.,
as Facility Guarantor
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION, as
Administrative Agent, Issuing Bank and
Lender
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Its Duly Authorized Signatory
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Tweeter Account Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
ANNEX A
Administrative Agent's Wire Transfer Information
Name: General Electric Capital Corporation
Bank: Deutsche Bank Trust Company Americas
New York, New York
ABA No.: ▇▇▇▇▇▇▇▇▇
Account No.: ▇▇-▇▇▇-▇▇▇
Account Name: GECC CFS CIF Collection Account
Reference: Tweeter CFN5123
SCHEDULE 1.01
LENDERS AND REVOLVING CREDIT COMMITMENTS
REVOLVING CREDIT REVOLVING CREDIT
LENDERS COMMITMENT COMMITMENT PERCENTAGE
------- ---------------- ---------------------
General Electric Capital Corporation $75,000,000.00 100.00%
TOTAL: $75,000,000.00 100%
SCHEDULE 5.01(J)
TWEETER HOME ENTERTAINMENT GROUP
FINANCIAL REPORTING REQUIREMENTS
ITEM
MID MONTH (15 DAYS AFTER MONTH END)
1. Inventory Certificate
2. Stockledger (by Division, Department, and Store)
(Should include detail of Service & RTV locations)
3. Discontinued Inventory Report (and Inventory Aging, if available)
4. Open to Buy
MONTHLY (30 DAYS AFTER MONTH END)
5. Compliance Certificate
6. Store Activity (FRF Form)
7. Inventory Reconciliation
8. Gross Margin Reconciliation
9. A/R aging and reconciliation
10. Customer Deposit Analysis
11. Top Ten Vendor Concentration
12. A/P Aging (aged by due date)
13. Monthly Financial Statements
14. On Order Report
15. 4-Wall EBITDA Reports
QUARTERLY (45 DAYS AFTER MONTH END)
16. Quarterly Financial Statements
2
17. Trailing 12 Months Shrink Analysis
AT ANY TIME EXCESS AVAILABILITY IS LESS THAN $15,000,000
18. Inventory Roll Forward, from time to time upon the request of the
Administrative Agent
19. 13 Week Cash Flow Forecasts, from time to time upon the request of the
Administrative Agent
DAILY, UNTIL NOTED BELOW
20. An accounts payable and accrual report, accompanied by supporting
detail and documentation as shall be requested by the Administrative
Agent in its reasonable discretion, until the subordination agreements
are delivered in accordance with SECTION 5.15(c).
3