Exhibit 10.1
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 31, 2000
among
WILSONS LEATHER HOLDINGS INC.
as Borrower,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent, Lender and Swing Line Lender
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT.......................................................2
1.1 Credit Facilities.............................................................2
1.2 Letters of Credit.............................................................5
1.3 Prepayment....................................................................5
1.4 Use of Proceeds...............................................................6
1.5 Interest......................................................................6
1.6 Applicable Margins............................................................8
1.7 Eligible Inventory............................................................9
1.8 Cash Management Systems......................................................10
1.9 Fees.........................................................................10
1.10 Receipt of Payments..........................................................10
1.11 Application and Allocation of Payments.......................................10
1.12 Loan Account and Accounting..................................................11
1.13 Indemnity....................................................................11
1.14 Access.......................................................................13
1.15 Taxes........................................................................13
1.16 Capital Adequacy: Increased Costs: Illegality................................14
1.17 Single Loan..................................................................16
1.18 Effect On Prior Loans; Prior Credit Agreement................................16
2. CONDITIONS PRECEDENT............................................................16
2.1 Conditions to the Initial Loans..............................................16
2.2 Further Conditions to Each Loan..............................................18
3. REPRESENTATIONS AND WARRANTIES..................................................19
3.1 Corporate Existence; Compliance with Law.....................................19
3.2 Executive Offices; FEIN......................................................19
3.3 Corporate Power, Authorization, Enforceable Obligations......................19
3.4 Financial Statements and Projections.........................................20
3.5 Material Adverse Effect......................................................20
3.6 Ownership of Property; Liens.................................................20
3.7 Labor Matters................................................................20
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness....21
3.9 Government Regulation........................................................21
3.10 Margin Regulations...........................................................21
3.11 Taxes........................................................................22
3.12 ERISA........................................................................22
3.13 No Litigation................................................................23
3.14 Brokers......................................................................23
3.15 Intellectual Property........................................................23
3.16 Full Disclosure..............................................................23
3.17 Hazardous Materials..........................................................24
3.18 Insurance....................................................................24
3.19 Deposit and Disbursement Accounts............................................24
3.20 Government Contracts.........................................................24
3.21 Landlords and Trade Relations................................................24
3.22 Agreements and Other Documents...............................................24
3.23 Solvency.....................................................................25
3.24 WWT..........................................................................25
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4. FINANCIAL STATEMENTS AND INFORMATION............................................25
4.1 Reports and Notices..........................................................25
4.2 Communication with Accountants...............................................25
5. AFFIRMATIVE COVENANTS...........................................................26
5.1 Maintenance of Existence and Conduct of Business.............................26
5.2 Payment of Obligations.......................................................26
5.3 Books and Records............................................................26
5.4 Insurance: Damage to or Destruction of Collateral............................27
5.5 Compliance With Laws.........................................................28
5.6 Employee Plans...............................................................28
5.7 Environmental Matters........................................................28
5.8 Landlords' Agreements and Bailee Letters.....................................29
5.9 Ownership of Inventory.......................................................29
5.10 Additional Pledges...........................................................29
6. NEGATIVE COVENANTS..............................................................29
6.1 Mergers, Subsidiaries, Etc...................................................29
6.2 Investments; Loans and Advances..............................................32
6.3 Indebtedness.................................................................32
6.4 Employee Loans and Affiliate Transactions....................................33
6.5 Capital Structure and Business...............................................33
6.6 Guaranteed Indebtedness......................................................33
6.7 Liens........................................................................34
6.8 Sale of Stock and Assets.....................................................34
6.9 ERISA........................................................................34
6.10 Financial Covenants..........................................................35
6.11 Hazardous Materials..........................................................35
6.12 Sale-Leasebacks..............................................................35
6.13 Cancellation of Indebtedness.................................................35
6.14 Restricted Payments..........................................................35
6.15 Change of Corporate Name or Location; Change of Fiscal Year..................35
6.16 No Impairment of Upstreaming.................................................36
6.17 Changes Relating to Senior Notes.............................................36
6.18 Eligible Trade L/Cs..........................................................36
7. TERM............................................................................37
7.1 Termination..................................................................37
7.2 Survival of Obligations Upon Termination of Financing Arrangements...........37
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES..........................................38
8.1 Events of Default............................................................38
8.2 Remedies.....................................................................39
8.3 Waivers by Credit Parties....................................................40
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.............................40
9.1 Assignment and Participations................................................40
9.2 Appointment of Agent.........................................................42
9.3 Agent's Reliance, Etc........................................................43
9.4 GE Capital and Affiliates....................................................43
9.5 Lender Credit Decision.......................................................43
9.6 Indemnification..............................................................44
9.7 Successor Agent..............................................................44
9.8 Setoff and Sharing of Payments...............................................45
9.9 Advances; Payments; Information; Non-Funding Lender..........................45
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10. SUCCESSORS AND ASSIGNS..........................................................49
10.1 Successors and Assigns.......................................................49
11. MISCELLANEOUS...................................................................49
11.1 Complete Agreement; Modification of Agreement................................49
11.2 Amendments and Waivers.......................................................49
11.3 Fees and Expenses............................................................51
11.4 No Waiver....................................................................52
11.5 Remedies.....................................................................52
11.6 Severability.................................................................52
11.7 Conflict of Terms............................................................52
11.8 Authorized Signature.........................................................52
11.9 GOVERNING LAW................................................................53
11.10 Notices......................................................................53
11.11 Section Titles...............................................................54
11.12 Counterparts.................................................................54
11.13 WAIVER OF JURY TRIAL.........................................................54
11.14 Press Releases...............................................................55
11.15 Reinstatement................................................................55
11.16 Advice of Counsel............................................................55
11.17 No Strict Construction.......................................................55
11.18 Confidentiality..............................................................55
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INDEX OF EXHIBITS AND SCHEDULES
Schedule A (Recitals) - Definitions
Schedule B (Section 1.2) - Letters of Credit
Schedule C - Intentionally Omitted
Schedule D - Intentionally Omitted
Schedule E (Section 1.9) - Cash Management System
Schedule F (Section 2.1(b)) - Schedule of Additional Closing Documents
Schedule G (Section 4.1(a)) - Financial Statements and Projections - Reporting
Schedule H (Section 4.1(b)) - Collateral Reports
Schedule I (Section 6y.10) - Financial Covenants
Schedule J (Section 11.10) - Notice Addresses
Schedule 1.1 - Responsible Individual
Schedule 3.2 - Executive Offices
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding
Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.18 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 6.18 - Form of Transportation Certificate
Schedule 11.8 - Authorized Signatures
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(i) - Form of Notice of Swing Line Advance
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
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This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
October 31, 2000 among WILSONS LEATHER HOLDINGS INC., a Minnesota corporation
("BORROWER"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (in
its individual capacity, "GE CAPITAL"), for itself, as Lender, as Swing Line
Lender and as Agent for Lenders, and the other Lenders signatory hereto from
time to time.
RECITALS
WHEREAS, Borrower and Agent, certain of the Lenders signatory
hereto, and the Credit Parties, are parties to a Credit Agreement dated as of
May 25, 1996 (the "Initial Credit Agreement") pursuant to which the Agent and
the other Lenders party thereto provided to Borrower a Revolving Loan Commitment
of $150,000,000;
WHEREAS, pursuant to an Amended and Restated Credit Agreement
dated as of May 24, 1999, (the "Prior Credit Agreement"), the Revolving Loan
Commitment was reduced to $125,000,000, and Borrower has outstanding certain
Loans, Letters of Credit and Eligible Trade L/Cs (the "Prior Loans").
WHEREAS, Borrower desires that the terms governing the
outstanding Prior Loans be amended and restated in accordance herewith;
WHEREAS, the Credit Parties intend to cause a newly formed
indirect Subsidiary of Third Intermediate Parent to merge with and into El
Portal Group, Inc., a Nevada corporation on the date hereof and to cause El
Portal to become a Subsidiary Guarantor hereunder;
WHEREAS, Borrower desires that Lenders increase the prior
revolving credit facility to Borrower to One Hundred Sixty-Five Million Dollars
($165,000,000), and Lenders are willing to provide Borrower with Revolving Loan
Commitments in that amount upon the terms and conditions set forth herein;
WHEREAS, Borrower desires to secure all of its obligations
under the Loan Documents by continuing its prior grant of a security interest to
Agent and granting to Agent, for the benefit of Agent and Lenders, a
supplemental security interest in and lien upon all of its existing and
after-acquired personal property other than equipment and fixtures as set forth
in the Security Agreement and the Supplemental Security Agreement;
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in SCHEDULE A. All Schedules, Disclosure
Schedules, Exhibits and other attachments (collectively, "APPENDICES") hereto,
or expressly identified to this Agreement, are incorporated herein by reference,
and taken together, shall constitute but a single agreement. These Recitals
shall be construed as part of the Agreement.
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:
1. AMOUNT AND TERMS OF CREDIT
1.1 CREDIT FACILITIES.
(a) REVOLVING CREDIT FACILITY.
(i) Subject to the terms and conditions hereof, each
Lender agrees to make available from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a "REVOLVING CREDIT
ADVANCE"). The obligations of each Lender hereunder shall be several and not
joint. The aggregate amount of Revolving Credit Advances outstanding shall not
exceed at any time the lesser of (A) the Maximum Amount LESS the sum of 100% of
the Letter of Credit Obligations, 100% of the Eligible Trade L/C Obligations and
the Swing Line Loan outstanding and (B) the Borrowing Base, LESS the sum of 100%
of the Letter of Credit Obligations, 35% of the Eligible Trade L/C Obligations
for the period of September 1 to October 31 of each year, 40% of the Eligible
Trade L/C Obligations at all other times and 100% of the Swing Line Loan
outstanding at such time ("BORROWING Availability"). Furthermore, the Pro Rata
Share of the Revolving Loan of any Lender shall not at any time exceed its
separate Revolving Loan Commitment. Until the Commitment Termination Date,
Borrower may from time to time borrow, repay and reborrow under this SECTION
1.1(A). Each Revolving Credit Advance shall be made on notice by Borrower to the
representative of the Agent identified on SCHEDULE 1.1 at the address specified
thereon. Those notices must be given no later than (1) 11:00 a.m. (Chicago time)
on the Business Day of the proposed Revolving Credit Advance, in the case of an
Index Rate Loan, or (2) 10:00 a.m. (Chicago time) on the date which is two (2)
Business Days prior to the proposed Revolving Credit Advance, in the case of a
LIBOR Loan. Each such notice (a "NOTICE OF REVOLVING CREDIT ADVANCE") must be
substantially in the form of EXHIBIT 1.1(A)(I), and must specify the requested
date, the amount and type of the requested Revolving Credit Advance, and such
other information as may be required by Agent and must be given in writing (by
telecopy or overnight courier) or by telephone confirmed immediately in writing.
Revolving Credit Advances in the form of Index Rate Loans must be in a minimum
amount of $25,000 and multiples of $10,000 in excess of such amount; minimum
advances and integral multiples for LIBOR Loans are set forth in SECTION 1.5(E).
In the case of a Revolving Credit Advance that is not to be funded by a Swing
Line Advance, Agent shall promptly notify each Lender of the Notice of Revolving
Credit Advance. Notwithstanding the foregoing, any Revolving Credit Advance to
Borrower which is to be used solely to repay the Swing Line Loan to Borrower may
be in the aggregate principal amount of the Swing Line Loan even if less than
the foregoing minimums. If Borrower desires to have the Revolving Loan bear
interest by reference to a LIBOR Rate, it must comply with SECTION 1.5(E).
(ii) Borrower shall execute and deliver to each
Lender a promissory note to evidence the Revolving Loan and all Revolving Loan
Notes outstanding under the Prior Credit Agreement shall thereupon cease to be
of any force or effect. Each note shall be in the principal amount of the
Revolving Loan Commitment of the applicable Lender, dated the Closing Date and
substantially in the form of EXHIBIT 1.1(A)(II) (each a "REVOLVING NOTE" and,
collectively, the "REVOLVING NOTES"). The Revolving Notes shall represent the
obligation of Borrower to pay the amount of the Revolving Loan Commitment or, if
less, the applicable Lender's Pro Rata Share of the aggregate unpaid principal
amount of all Revolving Credit Advances made by the applicable Lender to
Borrower together with interest thereon as
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prescribed in SECTION 1.5. The entire unpaid balance of the Revolving Loan and
all other non-contingent Obligations shall be immediately due and payable in
full in immediately available funds in Dollars on the Commitment Termination
Date.
(iii) In its discretion the Agent may (but shall have
absolutely no obligation to) make Revolving Credit Advances to Borrower on
behalf of the Lenders in amounts which cause the outstanding principal balance
of the aggregate Revolving Credit Advances to exceed Borrowing Availability (any
such excess Revolving Credit Advances are herein referred to collectively as
"OVERADVANCES"), and no such event or occurrence shall cause or constitute a
waiver by Agent or Lenders of any Default or Event of Default that may result
therefrom or of their right to refuse to make any further Overadvances,
Revolving Credit Advances or Swing Line Advances or incur any Letter of Credit
Obligations or Eligible Trade L/C Obligations at any time that an Overadvance
exists or would result therefrom. In addition, Overadvances may be made even if
the conditions to lending set forth in SECTION 2 have not been met. The
authority of the Agent to make Overadvances is limited to an aggregate amount
not to exceed $1,500,000 at any time, shall not cause the sum of the Revolving
Loan PLUS the Swing Line Loan to exceed the Maximum Amount, and may be revoked
prospectively by a written notice to Agent signed by Lenders holding fifty-one
percent (51%) or more of the Revolving Loan Commitments. The aggregate principal
balance of all Overadvances shall bear interest at the Default Rate then
applicable to Index Rate Loans. Each Overadvance shall be payable by Borrower as
and when specified by Agent at the time that such Overadvance is made or, if not
so specified by Agent, shall be payable on demand.
(b) SWING LINE FACILITY.
(i) Subject to the terms and conditions hereof, the
Swing Line Lender agrees to make available from time to time until the
Commitment Termination Date advances (each, a "SWING LINE ADVANCE"); PROVIDED
that, except as set forth in Section 2.2, no Swing Line Advance may be made
after the occurrence and during the continuance of an Event of Default unless
such Swing Line Advance is approved by Requisite Lenders. The aggregate amount
of Swing Line Advances outstanding shall not exceed the lesser of (A) the Swing
Line Commitment and (B) the Borrowing Base less the sum of the outstanding
balance of the Revolving Credit Advances plus 100% of outstanding Letter of
Credit Obligations and 35% of Eligible Trade L/C Obligations for the period of
September 1 to October 31 of each year and 40% of Eligible Trade L/C Obligations
at all other times ("SWING LINE AVAILABILITY"). Until the Commitment Termination
Date, Borrower may from time to time borrow, repay and reborrow under this
SECTION 1.1(b). In order to minimize fluctuations in the Revolving Loan balance,
it is intended that the Swing Line Loan shall be the first Loan borrowed and the
first Loan repaid. Each Swing Line Advance shall be made on notice by Borrower
to the representative of the Agent identified on SCHEDULE 1.1 at the address
specified thereon. Those notices must be given no later than 11:00 a.m. (Chicago
time) on the Business Day of the proposed Swing Line Advance. Each such notice
(a "NOTICE OF SWING LINE ADVANCE") must be substantially in the form of EXHIBIT
1.1(B)(I), and must specify the requested date, the amount of the requested
Swing Line Advance, and such other information as may be required by Agent or
the Swing Line Lender and must be given in writing (by telecopy or overnight
courier) or by telephone confirmed immediately in writing.
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(ii) Borrower shall execute and deliver to the Swing
Line Lender a promissory note to evidence the Swing Line Loan. Such note shall
be in the principal amount of the Swing Line Commitment of the Swing Line
Lender, dated the Closing Date and substantially in the form of EXHIBIT
1.1(B)(II) (the "SWING LINE NOTE"). The Swing Line Note shall represent the
obligation of Borrower to pay the amount of the Swing Line Commitment or, if
less, the aggregate unpaid principal amount of all Swing Line Advances made to
Borrower together with interest thereon as prescribed in SECTION 1.5. The entire
unpaid balance of the Swing Line Loan and all other non-contingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date if not sooner paid in full.
(iii) REFUNDING OF SWING LINE LOANS. The Swing Line
Lender, at any time and from time to time in its sole and absolute discretion,
but not less frequently than once weekly, shall on behalf of Borrower (and
Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its
behalf) request by telephone or telecopy each Lender (including the Swing Line
Lender) to make a Revolving Credit Advance to Borrower (which initially shall be
an Index Rate Loan, but may be converted to a LIBOR Loan) in an amount equal to
such Lender's Pro Rata Share of the principal amount of the Swing Line Loan (the
"REFUNDED SWING LINE LOAN") outstanding on the date such notice is given. Unless
any of the events described in SECTIONS 8.1(H) or 8.L(I) shall have occurred (in
which event the procedures of SECTION 1.1(B)(IV) shall apply) and regardless of
whether the conditions precedent set forth in this Agreement to the making of a
Revolving Credit Advance are then satisfied, each Revolving Lender shall
disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on
behalf of the Swing Line Lender, prior to 1:00 p.m. (Chicago time), in
immediately available funds on the Business Day that such notice is given. The
proceeds of such Revolving Credit Advances shall be immediately applied to repay
the Refunded Swing Line Loan.
(iv) PARTICIPATION IN SWING LINE LOANS. If, prior to
refunding a Swing Line Loan with a Revolving Credit Advance pursuant to SECTION
1.1(B)(III), one of the events described in SECTIONS 8.1 (H) or 8.1(I) shall
have occurred with respect to Borrower, then, subject to the provisions of
SECTION 1.1(B)(V) below, each Lender will, on the date such Revolving Credit
Advance was to have been made to Borrower, purchase from the Swing Line Lender
an undivided participation interest in the Swing Line Loan in an amount equal to
its Pro Rata Share of such Swing Line Loan. Upon request, each Lender will
promptly transfer to the Swing Line Lender, in immediately available funds, the
amount of its participation and upon receipt thereof the Swing Line Lender will
deliver to such Lender a Swing Line Loan participation certificate, in form and
substance reasonably satisfactory to Agent, dated the date of receipt of such
funds and in such amount.
(v) LENDERS' OBLIGATIONS UNCONDITIONAL. Each
Revolving Lender's obligation to make Revolving Credit Advances in accordance
with SECTION 1.1(B)(III) and to purchase participating interests in accordance
with SECTION 1.1(B)(IV) shall be absolute and unconditional and shall not be
affected by any of the following circumstances: (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, Borrower or any other Person for any reason whatsoever; (B) the
occurrence or continuance of any Default or Event of Default; (C) any inability
of Borrower to satisfy the conditions precedent to borrowing set forth in this
Agreement on the date upon which such participating interest is to be purchased
or (D) any other circumstance, happening or event
4
whatsoever, whether or not similar to any of the foregoing. If any Revolving
Lender does not make available to the Swing Line Lender the amount required
pursuant to SECTION 1.1(B)(III) or 1.1(B)(IV), as the case may be, the Swing
Line Lender shall be entitled to recover such amount on demand from such Lender,
together with interest thereon for each day from the date of non-payment until
such amount is paid in full at the federal funds rate for the first two Business
Days and at the Index Rate thereafter.
(c) RELIANCE ON NOTICES. Agent shall be entitled to rely upon,
and shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation, Notice of Swing Line Advance or
similar notice believed by Agent to be genuine. Agent may assume that each
Person executing and delivering such a notice was duly authorized, unless the
responsible individual acting thereon for Agent has actual knowledge to the
contrary.
1.2 LETTERS OF CREDIT. Subject to and in accordance with the
terms and conditions contained herein and in SCHEDULE B, Borrower shall have the
right to request, and the Lenders agree to incur, Eligible Trade L/C Obligations
and Letter of Credit Obligations in respect of Borrower. The aggregate Letter of
Credit Obligations and Eligible Trade L/C Obligations outstanding at any time
shall not exceed as of any date of determination, the lesser of (A) $85,000,000
and (B) $165,000,000 less the then outstanding Revolving Credit Advances and
Swing Line Loan. In addition, 100% of the Letter of Credit Obligations and 35%
of Eligible Trade L/C Obligations for the period of September 1 to October 31 of
each year and 40% of Eligible Trade L/C Obligations at all other times shall not
exceed the Borrowing Base, less the then outstanding Revolving Credit Advances
and Swing Line Loan. The determination of availability described in the
preceding two sentences is herein referred to as "L/C Availability."
1.3 PREPAYMENT.
(a) If at any time Borrowing Availability or L/C Availability
is less than zero, Borrower shall immediately repay the aggregate outstanding
Revolving Credit Advances and Swing Line Advances (in such order as shall
minimize the aggregate of LIBOR breakage costs and the interest costs on the
Revolving Loan and/or Swing Line Loan that remains outstanding) to the extent
required to eliminate such deficit. If any deficit remains after repayment in
full of the aggregate outstanding Revolving Credit Advances and Swing Line
Advances, Borrower shall provide cash collateral for the Letter of Credit
Obligations and Eligible Trade L/C Obligations in the manner set forth in
SCHEDULE B to the extent required to eliminate such deficit. Notwithstanding the
foregoing, the repayment requirements of any Overadvance made pursuant to
SECTION 1.1(A)(III) shall be determined as set forth therein.
(b) If Ultimate Parent issues Stock, no later than the
Business Day following the date of receipt of the proceeds thereof, Borrower
shall prepay the Loans in an amount equal to 50% of such proceeds if requested
by Requisite Lenders, net of underwriting discounts and commissions and other
reasonable costs paid to non-Affiliates in connection therewith. Any such
prepayment shall be applied in accordance with CLAUSE (D) below.
(c) Borrower may at any time on at least five (5) days'
(thirty (30) days' in the case of prepayment in full of the Loans) prior written
notice to Agent voluntarily prepay all
5
or part of the Revolving Loan and/or the Swing Line Loan and permanently reduce
or terminate the Revolving Loan Commitment or the Swing Line Commitment, as
applicable; PROVIDED that (a) any such prepayments or reductions shall be in a
minimum amount of $1,000,000 and integral multiples of $250,000 in excess of
such amount, (b) such voluntary prepayments or reductions may be made or
effected no more frequently than once per year following the Closing Date, (c)
any partial reduction of the Revolving Loan Commitment shall result in a ratable
reduction in the Swing Line Commitment and (d) any partial reduction of the
Revolving Loan Commitment to $100,000,000 or less shall result in a ratable
reduction in the L/C Sublimit. Any such voluntary prepayment and any such
reduction or termination of the Revolving Loan Commitment must be accompanied by
the payment of any LIBOR funding breakage costs in accordance with SECTION
1.13(B). Upon any such prepayment in full and termination in full of the
Revolving Loan Commitment and the Swing Line Commitment, Borrower's right to
request Revolving Credit Advances, request that Letter of Credit Obligations or
Eligible Trade L/C Obligations be incurred on its behalf, or request Swing Line
Advances shall simultaneously be permanently terminated.
(d) Any prepayments made by Borrower pursuant to CLAUSE (B)
above or pursuant to SECTION 5.4(C) shall be applied in the following order of
priority, in each instance until all Obligations having a higher priority have
been paid in full: FIRST, to accrued Fees and expenses reimbursable hereunder;
SECOND, to accrued interest on the Swing Line Loan; THIRD, to the principal
balance of the Swing Line Loan; FOURTH, to the accrued interest on the Index
Rate Loans; FIFTH, to the principal balance of the Index Rate Loans; and SIXTH,
if L/C Availability is less than zero, to any Letter of Credit Obligations and
Eligible Trade L/C Obligations of Borrower to provide cash collateral therefor
in the manner set forth in SCHEDULE B, until all such Letter of Credit
Obligations and Eligible Trade L/C Obligations have been cash collateralized to
the extent so required. If an Event of Default shall have occurred and be
continuing, the remainder of any such prepayments shall be applied to
outstanding Obligations in such order as Agent may deem appropriate, including
the cash collateralization of Letter of Credit Obligations and Eligible Trade
L/C Obligations. Otherwise the remainder of such prepayments shall be returned
to Borrower. Neither the Revolving Loan Commitment nor the Swing Line Commitment
shall be permanently reduced by the amount of any prepayments applied to the
Revolving Loan or the Swing Line Loan pursuant to the foregoing.
1.4 USE OF PROCEEDS. Borrower shall utilize the proceeds of
the Revolving Credit Advances and the Swing Line Advances solely for the
financing of Borrower's ordinary working capital needs, including Capital
Expenditures, repurchases of Senior Notes in accordance with SECTION 6.17 and
Permitted Investments in accordance with SECTION 6.1 (but excluding in any event
the making of any Restricted Payment not specifically permitted by SECTION
6.14).
1.5 INTEREST.
(a) Borrower shall pay interest to Agent, for the ratable
benefit of Lenders, in arrears on each applicable Interest Payment Date, at the
following rates: (i) with respect to the Revolving Credit Advances bearing
interest at the Index Rate, at a per annum rate equal to the Index Rate plus the
Applicable Index Margin, or at the election of Borrower, at a per annum rate
equal to the applicable LIBOR Rate plus the Applicable LIBOR Margin, based on
the aggregate
6
Revolving Credit Advances outstanding from time to time; and (ii) with respect
to the Swing Line Loan at a per annum rate equal to the Commercial Paper Rate
plus the Applicable Swing Line Margin.
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of interest with respect to LIBOR Loans
and the Swing Line Loan shall be made by Agent on the basis of a three hundred
sixty (360) day year, for the actual number of days occurring in the period for
which such interest is payable. All computations of interest with respect to
Index Rate Loans, shall be made by Agent on the basis of a three hundred
sixty-five (365) day year for the actual number of days elapsed. The Index Rate
shall be determined each day based upon the Index Rate as in effect each day.
Each determination by Agent of an interest rate hereunder shall be conclusive,
absent manifest error.
(d) So long as any Event of Default shall have occurred and be
continuing, and at the election of Agent (or upon the written request of
Requisite Lenders) after written notice from Agent to Borrower, the interest
rates applicable to the Revolving Loan, the Swing Line Loan and the Letter of
Credit Fees shall be increased by two percentage points (2%) per annum above the
rate of interest or the rate of such Fees otherwise applicable hereunder
("DEFAULT RATE"), and all outstanding Obligations shall bear interest at the
Default Rate applicable to such Obligations. If such notice is issued, interest
and Letter of Credit Fees at the Default Rate shall accrue from the initial date
of such Event of Default for so long as that Event of Default shall continue and
shall be payable upon demand.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, Borrower shall have the option to (i) request that
any Revolving Credit Advance (other than an Overadvance) be made as a LIBOR
Loan, (ii) convert at any time all or any part of outstanding Revolving Credit
Advances (including a Refunded Swing Line Loan) from Index Rate Loans to LIBOR
Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of
LIBOR breakage costs in accordance with SECTION 1.13(B) if such conversion is
made prior to the expiration of the LIBOR Period applicable thereto, or (iv)
continue all or any portion of any LIBOR Loan as a LIBOR Loan upon the
expiration of the applicable LIBOR Period and the succeeding LIBOR Period of
that continued Loan shall commence on the last day of the LIBOR Period of the
Loan to be continued. Any Loan to be made or continued as, or converted into, a
LIBOR Loan must be in a minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of such amount. Any such election must be made by 10:00
a.m. (Chicago time) on the second (2nd) Business Day prior to (1) the date of
any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of
each LIBOR Period with respect to any LIBOR Loans to be continued as such, or
(3) the date on which Borrower wishes to convert any Index Rate Loan to a LIBOR
Loan for a LIBOR Period designated by Borrower in such election. If no election
is received with respect to a LIBOR Loan by 10:00 a.m. (Chicago time) on the
second (2nd) Business Day prior to the end of the LIBOR Period with respect
thereto (or if a Default or an Event of Default shall have occurred and be
continuing), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its
7
LIBOR Period. Borrower must make such election by notice to Agent in writing, by
telecopy or overnight courier. In the case of any conversion or continuation,
such election must be made pursuant to a written notice (a "NOTICE OF
CONVERSION/CONTINUATION") in the form of EXHIBIT 1.5(E). Borrower shall not be
entitled to request or continue any Revolving Loan as, or convert any Revolving
Loan into, a LIBOR Loan unless at the time of such request, conversion or
continuation, the aggregate outstanding principal balance of the Revolving
Credit Advances plus the amount of the Swing Line Advances equals or exceeds
$5,000,000. Not more than ten (10) LIBOR Loans shall be outstanding at any time.
(f) Notwithstanding anything to the contrary set forth in this
SECTION 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "MAXIMUM LAWFUL RATE"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, the interest rate payable hereunder
shall be the rate(s) of interest provided in SECTIONS 1.5(A) through (E) above,
unless and until the rate of interest again exceeds the Maximum Lawful Rate, and
at that time this paragraph shall again apply. In no event shall the total
interest received by any Lender pursuant to the terms hereof exceed the amount
which such Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate. If the
Maximum Lawful Rate is calculated pursuant to this paragraph, such interest
shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by
the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this SECTION 1.5(F), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in SECTION 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.6 APPLICABLE MARGINS. The Applicable Swing Line Margin,
Applicable Index Margin, Applicable LIBOR Margin and Applicable L/C Margin will
be adjusted (up or down) quarterly based on Ultimate Parent's consolidated
financial performance for the trailing four quarters as evidenced by its
quarterly consolidated Financial Statements in accordance with the following
grid:
8
----------------------------------------------------------------------------------------------------------------------
IF EBIT/CASH INTEREST APPLICABLE SWING APPLICABLE INDEX APPLICABLE LIBOR APPLICABLE L/C
---------------------- ----------------- ----------------- ----------------- --------------
COVERAGE IS: LINE MARGIN IS: MARGIN IS: MARGIN IS: MARGIN IS:
------------ --------------- ---------- ---------- ----------
----------------------------------------------------------------------------------------------------------------------
less than 2.0 2.25% 0.50% 2.25% 1.25%
----------------------------------------------------------------------------------------------------------------------
2.0 up to but not 2.00% 0.25% 2.00% 1.25%
including 3.0
----------------------------------------------------------------------------------------------------------------------
3.0 up to but not 1.75% 0.25% 1.75% 1.00%
including 4.0
----------------------------------------------------------------------------------------------------------------------
4.0 up to but not 1.50% 0.0% 1.50% 0.75%
including 5.0
----------------------------------------------------------------------------------------------------------------------
5.0 or more 1.25% 0.0% 1.25% 0.75%
----------------------------------------------------------------------------------------------------------------------
The Applicable Swing Line Margin, Applicable Index Margin,
Applicable LIBOR Margin and Applicable L/C Margin will be 1.25%, 0.0%, 1.25% and
0.75%, respectively, as of the Closing Date and will first be subject to
adjustment prospectively on the first day of the calendar month that is more
then five (5) days following delivery to Lenders of Ultimate Parent's quarterly
consolidated Financial Statements for the Fiscal Quarter ending October 28,
2000.
Adjustments in the Applicable Swing Line Margin, Applicable
Index Margin, Applicable LIBOR Margin and Applicable L/C Margin shall be
prospective only and shall be based on Ultimate Parent's consolidated financial
performance for the trailing four quarters as of the last day of each Fiscal
Quarter as evidenced by Ultimate Parent's unaudited consolidated Financial
Statements for the first three Fiscal Quarters of each Fiscal Year and Ultimate
Parent's audited consolidated Financial Statements for each Fiscal Year. Each
increase or decrease in the above-referenced margins shall become effective
starting (i) in the case of the Swing Line Loan, Index Rate Loans and Letter of
Credit Fees on the first day of the first calendar month commencing at least
five (5) days after delivery of the applicable Financial Statements and (ii) in
the case of LIBOR Loans on the first day of each LIBOR Period commencing after
delivery of the applicable Financial Statements.
The Seasonal Over-Advances shall bear interest (i) at the
LIBOR Rate or the Index Rate, PLUS the Applicable Margin(s) or (ii) the
Applicable L/C Margin, PLUS, in each case, 100 basis points per annum. For
purposes of this Section, Advances, Letter of Credit Obligations or Eligible
Trade L/C Obligations constituting Seasonal Over-Advances shall be deemed to
constitute the last Advances made (or Letter of Credit Obligations or Eligible
Trade L/C Obligations incurred) and the first Advances repaid (or Letter of
Credit Obligations or Eligible Trade L/C Obligations discharged).
1.7 ELIGIBLE INVENTORY. Agent reserves the right, at any time
and from time to time after the Closing Date, subject to Section 11.2, to adjust
the advance rates against Eligible
9
Inventory contained in the definition of Borrowing Base and to establish
Reserves against the Borrowing Base in its reasonable credit judgment based on
changes in the salability of Inventory, shrinkage, Liens, unpaid liabilities or
other changed circumstances arising after the Closing Date.
1.8 CASH MANAGEMENT SYSTEMS. Borrower will maintain its
existing cash management systems as described on SCHEDULE E (the "CASH
MANAGEMENT SYSTEMS").
1.9 FEES.
(a) Borrower shall pay to GE Capital, individually, the Fees
specified in the GE Capital Fee Letter at the times specified for payment
therein.
(b) As additional compensation for the Lenders having
Revolving Loan Commitments, Borrower agrees to pay to Agent, for the ratable
benefit of such Lenders, in arrears, on the first Business Day of each month
prior to the Commitment Termination Date and on the Commitment Termination Date,
a fee for Borrower's non-use of funds (the "NON-USE FEE") in an amount equal to
three-tenths of one percent (.30%) per annum (calculated on the basis of a 360
day year for actual days elapsed) of the difference between (x) the Maximum
Amount (as it may be reduced from time to time) and (y) the average for the
period of the daily closing balances of the Revolving Loan and the Swing Line
Loan outstanding during the period for which the Non-Use Fee is due.
1.10 RECEIPT OF PAYMENTS. Payments in the form of immediately
available funds received in Agent's Collection Account before 2:00 p.m. (Chicago
time) on any Business Day will be applied against the Obligations on that day.
Payments received after 2:00 p.m. (Chicago time) on any Business Day shall be
deemed to have been received on the next Business Day.
1.11 APPLICATION AND ALLOCATION OF PAYMENTS.
(a) Borrower hereby irrevocably waives as to all payments from
and after the Commitment Termination Date, the right to direct the application
of such payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to apply
any and all such payments against the Obligations as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or any other
books and records. In the absence of a specific determination by Agent with
respect thereto after the Commitment Termination Date and in all other instances
(except as otherwise expressly provided herein), payments shall be applied in
the following order of priority, in each instance until all Obligations having a
higher priority have been paid in full: (1) to Fees and Agent's expenses
reimbursable hereunder; (2) to accrued interest on the Swing Line Loan; (3) to
the outstanding principal balance of the Swing Line Loan; (4) to accrued
interest on the Index Rate Loans; (5) to the principal balance of Index Rate
Loans; (6) to accrued interest on LIBOR Rate Loans; (7) to the principal balance
of LIBOR Rate Loans; (8) if the Commitment Termination Date has occurred or if
L/C Availability is less than zero, to cash collateralize Letter of Credit
Obligations and Eligible Trade L/C Obligations in the manner described in
SCHEDULE B and (9) to all other Obligations then due and payable including
expenses of Lenders reimbursable under SECTION 11.3.
10
(b) Agent is authorized to, and at its sole election may,
charge to the Swing Line Loan to the extent such charge would not cause the
Swing Line Loan balance to exceed the Swing Line Commitment and then to the
Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
SECTION 5.4(A)) and interest owing by Borrower under this Agreement or any of
the other Loan Documents if and to the extent Borrower fails to promptly pay any
such amounts within three (3) days after the date on which such payment is due,
even if such charges would cause the Revolving Loan to exceed Borrowing
Availability. At Agent's option and to the extent permitted by law, any charges
so made shall constitute part of the Swing Line Loan or Revolving Loan
hereunder.
(c) If a Default or an Event of Default has occurred and is
continuing, Agent may in its sole and absolute discretion, impose a Reserve
against Borrowing Availability for interest, Fees and expenses due and payable
or which will become due and payable hereunder on the next respective payment
dates therefor.
(d) If Borrower pays less than all of the interest due
hereunder on any Interest Payment Date, Agent shall apply such partial payment
ratably to all interest then due hereunder.
1.12 LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a loan
account (the "LOAN ACCOUNT") on its books to record: (a) all Advances (b) all
payments made by Borrower, and (c) all other debits and credits as provided in
this Agreement with respect to the Loans or any other Obligations. All entries
in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall be presumptive evidence of the amounts due and owing to Agent and Lenders
by Borrower; PROVIDED that any failure to so record or any error in so recording
shall not limit or otherwise affect Borrower's duty to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions with respect
to the Loans setting forth the balance of the Loan Account. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the date
thereof, each and every such accounting shall (absent manifest error) be deemed
final, binding and conclusive upon Borrower in all respects as to all matters
reflected therein. Only those items expressly objected to in such notice shall
be deemed to be disputed by Borrower.
1.13 INDEMNITY.
(a) Borrower shall indemnify and hold harmless each of Agent,
Lenders and their respective Affiliates, and each such Person's respective
officers, directors, employees, attorneys, agents and representatives (each, an
"INDEMNIFIED PERSON"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including attorneys' fees and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other Loan
Documents, and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures to act in
connection therewith, including any and all Environmental Liabilities and Costs
and legal costs
11
and expenses arising out of or incurred in connection with disputes between or
among any parties to any of the Loan Documents; PROVIDED, that Borrower shall
not be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results solely from that Indemnified Person's gross negligence or
willful misconduct, as finally determined by a court of competent jurisdiction.
NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE To ANY OTHER PARTY TO ANY
LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON
OR ANY OTHER PERSON ASSERTING CLAIMS DERiVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACtiON CONTEMPLATED HEREUNDER OR
THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
is the result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall default in making any borrowing of, conversion
into or continuation of LIBOR Loans after Borrower has given notice requesting
the same in accordance herewith; or (iv) Borrower shall fail to make any
prepayment of a LIBOR Loan after Borrower has given a notice thereof in
accordance herewith, Borrower shall indemnify and hold harmless each Lender from
and against all losses, costs and expenses resulting from or arising from any of
the foregoing. Such indemnification shall include, without limitation, any loss
(including, without limitation, loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained. For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be deemed to have
actually funded its relevant LIBOR Loan through the purchase of a deposit
bearing interest at the LIBOR Rate in an amount equal to the amount of that
LIBOR Loan and having a maturity comparable to the relevant Interest Period;
PROVIDED, HOWEVER, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower and Agent with its written
calculation of all amounts payable pursuant to this SECTION 1.13(B), and such
calculation shall be binding on the parties hereto unless Borrower shall object
in writing within ten (10) Business Days of receipt thereof, specifying the
basis for such objection in detail. All amounts payable pursuant to this SECTION
1.13(B) shall be made payable to Agent for the benefit of the requesting Lender
and shall then be funded by Agent to such Lender.
1.14 ACCESS.
(a) Borrower shall, and in accordance with the Guaranties,
shall cause each other Credit Party who is a signatory thereto to, during normal
business hours, from time to time upon one (1) Business Day's prior notice as
frequently as Agent reasonably determines to be
12
appropriate: (a) provide Agent and any of its officers, employees and agents
access to its properties, facilities, advisors and employees (including
officers) of each Credit Party and to the Collateral, (b) permit Agent, and any
of its officers, employees and agents, to inspect, audit and make extracts from
any Credit Party's books and records, and (c) permit Agent, and its officers,
employees and agents, to inspect, review and evaluate the Accounts, Inventory
and other Collateral of any Credit Party. If a Default or Event of Default shall
have occurred and be continuing, Borrower, Ultimate Parent, First Intermediate
Parent, Second Intermediate Parent and Third Intermediate Parent shall provide
such access at all times and without advance notice. Borrower, Ultimate Parent,
First Intermediate Parent, Second Intermediate Parent and Third Intermediate
Parent shall make available to Agent and its counsel, as quickly as is possible
under the circumstances, originals or copies of all books and records which
Agent may request. Borrower, Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent shall deliver any document or
instrument necessary for Agent, as it may from time to time request, to obtain
records from any service bureau or other Person which maintains records for the
Credit Parties. Borrower, Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent shall maintain duplicate
records or supporting documentation on media, including computer tapes and discs
owned by Borrower, Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent.
(b) Borrower shall pay Agent a Fee of $575 per day per
individual (plus all out-of-pocket costs and expenses) in connection with
Agent's field examinations permitted under SECTION 1.14(A) above and SECTION
4(C) of the Security Agreement and the Supplemental Security Agreement,
including the cost of verifying Eligible In-Transit Inventory in the possession
of Approved Shippers; provided that such Fees and expenses shall not be
reimbursable by Borrower with respect to more than two field examinations during
any period of twelve consecutive months unless an Event of Default shall have
occurred and be continuing at the time of those field examinations that exceed
two during any period of twelve consecutive months.
1.15 TAXES.
(a) Any and all payments by Borrower hereunder or under the
Notes shall be made, in accordance with this SECTION 1.15, free and clear of and
without deduction for any and all present or future Taxes. Except as provided in
SECTION 1.16(D), if Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder under the Notes, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this SECTION 1.15) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made, (ii)
Borrower shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Within thirty (30) days after the date of any payment of Taxes,
Borrower shall furnish to Agent the original or a certified copy of a receipt
evidencing payment thereof.
(b) Borrower shall indemnify and, within ten (10) days of
demand therefor, pay, Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this
SECTION 1.15) paid by Agent or such Lender, as
13
appropriate, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.
1.16 CAPITAL ADEQUACY: INCREASED COSTS: ILLEGALITY.
(a) If any Lender shall have determined that the adoption
after the date hereof of any law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law) from any central bank or
other Governmental Authority increases or would have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by such Lender to
Borrower and to Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any Loan, then Borrower shall from time to time, upon demand by such
Lender (with a copy such demand to Agent), pay to Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted
to Borrower and to Agent by such Lender, shall be conclusive and binding on
Borrower for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this SECTION 1.16(B).
(c) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by Borrower to such Lender,
together with interest accrued thereon (but without LIBOR breakage costs),
unless Borrower, within five (5) Business Days after the delivery of such notice
and demand, converts
14
all such Loans into a Loan bearing interest based on the Index Rate (which
conversion shall be without LIBOR breakage costs).
(d) FOREIGN LENDERS. Each Lender organized under the laws of a
jurisdiction outside the United States (a "FOREIGN LENDER") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Form 4224 or Form 1001
or other applicable form, certificate or document prescribed by the IRS or the
United States certifying as to such Foreign Lender's entitlement to such
exemption (a "CERTIFICATE OF EXEMPTION"). Prior to becoming a Lender under this
Agreement and within fifteen (15) days after a reasonable written request of
Agent or Borrower from time to time thereafter, each Foreign Lender that becomes
a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent. No Person may become a Lender hereunder if such Person is
unable to deliver a Certificate of Exemption. If a Foreign Lender does not
provide a Certificate of Exemption to Agent and Borrower within the time periods
set forth above, Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rate and Borrower shall not be required to
pay any additional amounts as a result of such withholding; provided, that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Agent and Borrower.
(e) REPLACEMENT OF LENDER IN RESPECT OF INCREASED COSTS.
Within fifteen (15) days after receipt by Borrower of written notice and demand
from any Lender or a participant that has purchased a participation from such
Lender (an "AFFECTED LENDER") for payment of taxes, additional amounts or
increased costs as provided in SECTION 1.15 or SECTION 1.16(A) or (B), Borrower
may, at its option, notify Agent and such Affected Lender of its intention to
replace the Affected Lender as follows: So long as no Default or Event of
Default shall have occurred and be continuing, Borrower, with the consent of
Agent, may obtain, at Borrower's expense, a replacement Lender ("REPLACEMENT
LENDER") for the Affected Lender, which Replacement Lender must be reasonably
satisfactory to Agent. If Borrower obtains a Replacement Lender within ninety
(90) days following notice of its intention to do so, the Affected Lender must
sell and assign its Loans and Revolving Loan Commitments to such Replacement
Lender provided that Borrower reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under this Agreement
through the date of such sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the
right to obtain a Replacement Lender, if the Affected Lender rescinds its demand
for increased costs or additional amounts within fifteen (15) days following its
receipt of Borrower's notice of intention to replace such Affected Lender.
Furthermore, if Borrower gives a notice of intention to replace and does not so
replace such Affected Lender within ninety (90) days thereafter, Borrower's
rights under this SECTION 1.16(E) shall terminate and Borrower shall promptly
pay all increased costs or additional amounts demanded by such Affected Lender
pursuant to SECTIONS 1.15, 1.16(B) and (C).
1.17 SINGLE LOAN. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower and Guarantors
secured, until the Termination Date, by all of the Collateral.
15
1.18 EFFECT ON PRIOR LOANS; PRIOR CREDIT AGREEMENT. The Prior
Loans and Liens securing payment thereof shall in all respects be continuing,
and this Agreement shall not be deemed to evidence or result in a novation or
repayment and reborrowing of the Prior Loans. This Agreement shall supersede the
Prior Credit Agreement. From and after the Closing Date, this Agreement shall
govern the terms of the Prior Loans. To the extent not replaced by Loan
Documents dated as of the Closing Date, Loan Documents executed in connection
with the Prior Credit Agreement or the Initial Credit Agreement (other than any
such Loan Document that is specifically terminated by the parties thereto) shall
continue to be effective, and all references in those prior Loan Documents to
the "Credit Agreement" shall be deemed to refer to this Agreement without
further amendment thereof.
2. CONDITIONS PRECEDENT
2.1 CONDITIONS TO THE INITIAL LOANS. No Lender shall be
obligated to make any Loan or maintain or incur any Eligible Trade L/C
Obligations or Letter of Credit Obligations on the Closing Date, or to take,
fulfill, or perform any other action hereunder, until the following conditions
have been satisfied, in Agent's sole discretion, or waived in writing by Agent
and those Lenders present at the closing on the Closing Date:
(a) CREDIT AGREEMENT: LOAN DOCUMENTS. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including all those listed in the Schedule of Documents attached
hereto as SCHEDULE F, each in form and substance satisfactory to Agent.
(b) GOVERNMENTAL APPROVALS. Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including, but not limited to, all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement, the other Loan Documents and the Acquisition Agreements or
(ii) an officer's certificate in form and substance satisfactory to Agent
affirming that no such consents or approvals are required.
(c) PAYMENT OF FEES. Borrower shall have paid or reimbursed
Agent for all fees, costs and expenses of closing to the extent statements
therefor are presented at closing (including fees of consultants and special
loan counsel to Agent presented as of the Closing Date).
(d) COMPLIANCE WITH LAWS. Each Credit Party shall be in
compliance in all material respects with all applicable foreign, federal, state
and local laws and regulations, including those specifically referenced in
SECTION 5.5.
(e) LEASES. Evidence supporting the fact that each of the
Distribution Center leases are in full force and effect and have a remaining
term of not less than six (6) months past the Termination Date.
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(f) CONSIGNMENT AGREEMENT. As of the Closing Date, the
Consignment Agreement shall be in full force and effect and shall have been
executed by all Store Guarantors, including El Portal, subject in the case of El
Portal to consummation of the Acquisition.
(g) FINANCIAL STATEMENTS. Agent shall have received Ultimate
Parent's unaudited financial statements for the Fiscal Month ending in September
of 2000.
(h) RELATED TRANSACTIONS. As of the Closing Date, the
Acquisition shall have been consummated in accordance with the terms of the
Acquisition Agreements (except for the payment of the merger consideration), and
all material conditions set forth in Section 11.01 of the Merger Agreement (as
part of the Acquisition Agreements) shall have been met or satisfied; all of the
Inventory owned by El Portal immediately prior to the Closing Date shall have
been sold and assigned to Borrower subject to consummation of the Acquisition;
and Agent shall have received a payoff letter with respect to all Indebtedness
of El Portal in form and substance reasonably satisfactory to Agent.
(i) ACQUISITION FINANCIAL STATEMENTS. Agent and Lenders shall
have received with respect to El Portal:
(i) audited balance sheets, income statements and
cash flow statements for the latest fiscal year of El Portal ending prior to the
Closing Date; and
(ii) unaudited balance sheets, income statements and
cash flow statements of El Portal as of the last calendar month preceding the
Closing Date by more than 30 days and for the year to date then ended.
(j) ACQUISITION AGREEMENTS. Agent and Lenders shall have
received full and complete copies of the Acquisition Agreements.
(k) ACQUISITION PRICE. The aggregate cash consideration paid
for the Acquisition including escrow amounts, payments of El Portal's
Indebtedness, signing bonuses and premium payments shall not exceed
[$32,800,000].
(l) Borrowers shall pay to each Lender an amendment fee equal
to .125% of its Commitment as such Commitment existed immediately prior to the
execution and delivery of this Agreement and a closing fee equal to .25% of the
increase in its Commitment effected by this Agreement.
2.2 FURTHER CONDITIONS TO EACH LOAN. It shall be a further
condition to the initial and each subsequent Advance and to the incurrence of
the initial and any subsequent Letter of Credit Obligations or Eligible Trade
L/C Obligations that the following statements shall be true on the date of each
such Advance or incurrence, as the case may be:
(a) All of each Credit Party's representations and warranties
contained herein or in any of the other Loan Documents shall be true and correct
in all material respects as though made on and as of such date, except to the
extent that any such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or expressly
contemplated by this Agreement.
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(b) No Event of Default shall have occurred and be continuing
or would result from the making of any Advance (or the incurrence of any Letter
of Credit Obligations or Eligible Trade L/C Obligations) or, if an Event of
Default shall have occurred and be continuing or would result from the making of
any Advance (or the incurrence of any Letter of Credit Obligations or Eligible
Trade L/C Obligations), Lenders having 60% or more of the Commitments shall not
have determined by affirmative vote to cease making further Advances or
incurring additional Letter of Credit Obligations or Eligible Trade L/C
Obligations as a result of such Event of Default.
(c) After giving effect to any Revolving Credit Advance or
Swing Line Advance, Borrowing Availability shall be greater than zero. After
giving effect to the incurrence of any Letter of Credit Obligations or Eligible
Trade L/C Obligations, L/C Availability shall be greater than zero.
(d) No event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof as reasonably determined by the
Requisite Lenders and Agent or, if such a Material Adverse Effect shall have
occurred, Requisite Lenders shall not have determined by affirmative vote to
cease making Advances, or incurring additional Letter of Credit Obligations and
Eligible Trade L/C Obligations as a result of the fact that such event or
circumstance has occurred.
The request and acceptance by Borrower of the proceeds of any Loan or the
incurrence of any Letter of Credit Obligations or Eligible Trade L/C Obligations
shall be deemed to constitute, as of the date of such request or acceptance, (i)
a representation and warranty by Borrower that the conditions in this SECTION
2.2 have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents. With respect to clauses (b) and (d) above, if an Event of
Default or event or circumstance having a Material Adverse Effect has occurred,
Agent shall call for a vote of Lenders with respect thereto within two (2)
Business Days following the date on which Agent learns of the occurrence
thereof.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of
Credit Obligations and Eligible Trade L/C Obligations, the Loan Parties, jointly
and severally, make the following representations and warranties to Agent and
each Lender, each and all of which shall survive the execution and delivery of
this Agreement.
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Credit
Party (a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation; (b) is duly qualified to
conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification except where the failure to so qualify would not have a Material
Adverse Effect; (c) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (d) has all material
licenses, permits, consents or approvals from or by, and has made
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all filings with, and has given all notices to, all Governmental Authorities
having jurisdiction, to the extent required for such ownership, operation and
conduct; (e) is in compliance with its charter and by-laws; and (f) is in
compliance with all applicable provisions of law to the extent required by
SECTION 5.5.
3.2 EXECUTIVE OFFICES; FEIN. As of the Closing Date, the
current location of each Credit Party's chief executive office and principal
place of business is set forth in DISCLOSURE SCHEDULE 3.2. In addition, the
DISCLOSURE SCHEDULE 3.2 lists the federal employer identification number of each
Credit Party.
3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS.
The execution, delivery and performance by each Credit Party of the Loan
Documents to which it is a party and the creation of Liens provided for therein:
(a) are within such Person's corporate power; (b) have been duly authorized by
all necessary or proper corporate and shareholder action; (c) do not contravene
any provision of such Person's charter or bylaws; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate any performance required by, any indenture,
mortgage, or deed of trust, or any material lease, agreement or other instrument
to which such Person is a party or by which such Person or any of its property
is bound; (f) do not result in the creation or imposition of any Lien upon any
of the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in SECTION 2.1(b), all of which will have been duly obtained,
made or complied with prior to the Closing Date. On or prior to the Closing
Date, each of the Loan Documents shall have been duly executed and delivered by
each Credit Party thereto and each such Loan Document shall then constitute a
legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms.
3.4 FINANCIAL STATEMENTS AND PROJECTIONS. Except for the
Projections, all Financial Statements concerning Ultimate Parent and its
Subsidiaries which have been delivered to Agent have been prepared in accordance
with GAAP consistently applied throughout the periods covered (except as
disclosed therein and except, with respect to unaudited Financial Statements,
for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the financial condition of the Persons covered
thereby as at the dates thereof and the results of their operations for the
periods then ended. The Projections delivered to Agent and Lenders on or prior
to the date hereof have been prepared by Ultimate Parent in light of the past
operations of its Subsidiaries' businesses, but including future payments of
known contingent liabilities, and reflect projections for the Fiscal Years
ending in January 2000, 2001 and 2002. The Projections are based upon estimates
and assumptions stated therein, all of which, as of the Closing Date, Ultimate
Parent believes to be reasonable and fair in light of current conditions and
current facts known to Ultimate Parent and, as of the Closing Date, reflect
Ultimate Parent's good faith and reasonable estimates of the future financial
performance of Ultimate Parent and its Subsidiaries and of the other information
projected therein for the period set forth therein.
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3.5 MATERIAL ADVERSE EFFECT. Between the date hereof and the
last day of the Fiscal Year ending in January, 2000, (a) no Credit Party has
incurred any obligations, contingent or non-contingent liabilities, liabilities
for Charges, long-term leases or unusual forward or long-term commitments which,
alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has been
entered into by any Credit Party or has become binding upon any Credit Party's
assets and no law or regulation applicable to any Credit Party has been adopted
which has had or could reasonably be expected to have a Material Adverse Effect,
(c) no Credit Party is in default and to the best of the Credit Parties'
knowledge no third party is in default under any material contract, lease or
other agreement or instrument, which alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect and (d) there has been no changes
in the Credit Party's business or financial condition, the industry in which the
Credit Parties operate or the Collateral, which alone or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
3.6 OWNERSHIP OF PROPERTY; LIENS. DISCLOSURE SCHEDULE 3.6 sets
forth all locations owned or leased by any Credit Party as of the Closing Date.
Each Credit Party has good and marketable title to, or valid leasehold interests
in, all of its personal properties and assets. As of the Closing Date, none of
the properties and assets of any Credit Party are subject to any Liens, except
Permitted Encumbrances.
3.7 LABOR MATTERS. As of the Closing Date: (a) no strikes or
other material labor disputes against any Credit Party are pending or, to any
Credit Party's knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party in all material respects comply with the Fair
Labor Standards Act and each other federal, state, local or foreign law
applicable to such matter; (c) all material payments due from any Credit Party
for employee health and welfare insurance have been paid or accrued as a
liability on the books of such Credit Party; (d) except as set forth in
DISCLOSURE SCHEDULE 3.7, no Credit Party is a party to or bound by any
collective bargaining agreement; (e) there is no organizing activity involving
any Credit Party pending or, to any Credit Party's knowledge, threatened by any
labor union or group of employees; (f) there are no representation proceedings
pending or, to any Credit Party's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Credit
Party has made a pending demand for recognition; and (g) except as set forth in
DISCLOSURE SCHEDULE 3.7, there are no complaints or charges against any Credit
Party pending or threatened to be filed with any Governmental Authority or
arbitrator relating to the employment or termination of employment by any Credit
Party of any employee, other than routine, non-material claims by individual
employees or former employees.
3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK
AND INDEBTEDNESS. Except as set forth in DISCLOSURE SCHEDULE 3.8, as of the
Closing Date no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. DISCLOSURE SCHEDULE 3.8 sets forth the corporate organizational chart as
of the Closing Date for Ultimate Parent and its Subsidiaries. Except as set
forth on DISCLOSURE SCHEDULE 3.8, as of the Closing Date Ultimate Parent owns,
directly or indirectly, all of the outstanding capital stock of each of its
Subsidiaries.
3.9 GOVERNMENT REGULATION. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment
20
company," as such terms are defined in the Investment Company Act of 1940 as
amended. No Credit Party is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or any other federal or
state statute that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations and the Eligible
Trade L/C Obligations on behalf of Borrower, the application of the proceeds
thereof and repayment thereof will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10 MARGIN REGULATIONS. No Credit Party is engaged, nor will
it engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Board of Governors of
the Federal Reserve System (the "FEDERAL RESERVE BOARD") as now and from time to
time hereafter in effect (such securities being referred to herein as "MARGIN
STOCK"). No Credit Party owns any Margin Stock, and none of the proceeds of the
Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a "purpose credit" within the meaning of Regulation T, U or X
of the Federal Reserve Board. No Credit Party will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.11 TAXES. All material tax returns, reports and statements,
including, but not limited to, information returns, required by any Governmental
Authority to be filed by any Credit Party have been filed with the appropriate
Governmental Authority and all material Charges have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof (or any such fine, penalty, interest, late charge or loss has
been paid), excluding Charges or other amounts being contested in accordance
with SECTION 5.2(B). Proper and accurate amounts have been withheld by each
Credit Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities.
DISCLOSURE SCHEDULE 3.11 sets forth, as of the Closing Date, those taxable years
for which any Credit Party's tax returns are currently being audited by the IRS
or any other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audits or otherwise currently outstanding.
Except as described on DISCLOSURE SCHEDULE 3.11, as of the Closing Date, no
Credit Party has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for any Charges: (a)
under any agreement (including, without limitation, any tax sharing agreements)
or (b) to the best of each Credit Party's knowledge, as a transferee. As of the
Closing Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method
or otherwise, which would have a Material Adverse Effect.
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3.12 ERISA.
(a) DISCLOSURE SCHEDULE 3.12 lists and separately identifies
all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans in
effect as of the Closing Date. Each Plan is in compliance in all material
respects with the applicable provisions of ERISA and the IRC, including the
filing of reports required under the IRC or ERISA. No Credit Party or ERISA
Affiliate has failed to make any material contribution or pay any material
amount due as required by either Section 412 of the IRC or Section 302 of ERISA
or the terms of any Plan subject to such sections. No Credit Party or ERISA
Affiliate has engaged in a prohibited transaction, as defined in Section 4975 of
the IRC, in connection with any Plan, which would subject any Credit Party to a
material tax on prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in DISCLOSURE SCHEDULE 3.12, as of the
Closing Date: (i) no Title IV Plan has any Unfunded Pension Liability; (ii) no
material ERISA Event or event described in Section 4062(e) of ERISA with respect
to any Title IV Plan has occurred or is reasonably expected to occur; (iii)
there are no pending, or to the knowledge of any Credit Party, threatened claims
(other than claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any plan or any person as fiduciary or
sponsor of any Plan; and (iv) no Credit party or ERISA Affiliate has incurred or
reasonably expects to incur any material liability as a result of a complete or
partial withdrawal from a Multiemployer Plan.
3.13 NO LITIGATION. No action, claim or proceeding is now
pending or, to the knowledge of any Credit Party, threatened against any Credit
Party, before any court, board, commission, agency or instrumentality of any
federal, state, local or foreign government or of any agency or subdivision
thereof, or before any arbitrator or panel of arbitrators (collectively,
"LITIGATION"), (a) which challenges any Credit Party's right or power to enter
into or perform any of its obligations under the Loan Documents to which it is a
party, or the validity or enforceability of any Loan Document or any action
taken thereunder, or (b) which is reasonably likely to be determined adversely
to any Credit Party and which, if so determined, would have a Material Adverse
Effect. Except as set forth on DISCLOSURE SCHEDULE 3.13, as of the Closing Date
there is no Litigation pending or threatened which seeks damages in excess of
$500,000 or injunctive relief.
3.14 BROKERS. No broker or finder acting on behalf of any
Credit Party brought about the obtaining, making or closing of the Loans. No
Credit Party has any obligation to any Person in respect of any finder's or
brokerage fees in connection therewith.
3.15 INTELLECTUAL PROPERTY. As of the Closing Date, each
Credit Party owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now or heretofore conducted by it or
proposed to be conducted by it, and each material Patent, Trademark, Copyright
and License for which, as of the Closing Date, a U.S. registration has been
obtained or for which an application to register in the U.S. has been filled is
listed, together with application or registration numbers, as applicable, in
DISCLOSURE SCHEDULE 3.15 hereto. Each Credit Party conducts and will continue to
conduct its business and affairs without infringement of or interference with,
in any material respect, any Intellectual Property of any other Person.
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3.16 FULL DISCLOSURE. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other reports from time to time delivered
hereunder or any written statement furnished by any Material Credit Party with
respect to any Credit Party to Agent or any Lender pursuant to the terms of this
Agreement contains any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
The Liens granted to Agent, on behalf of itself and Lenders, pursuant to the
Collateral Documents will at all times be fully perfected first priority Liens
in and to the Collateral described therein, subject only to Permitted
Encumbrances with respect to the Collateral.
3.17 HAZARDOUS MATERIALS.
(a) Except as set forth in DISCLOSURE SCHEDULE 3.17, as of the
Closing Date, the Real Estate is free of contamination from any Hazardous
Material in such form and quantity so as to create any material unpaid liability
for any of the Loan Parties. In addition, DISCLOSURE SCHEDULE 3.17 discloses
material environmental liabilities of any Credit Party existing as of the
Closing Date (i) that could result in Environmental Liabilities and Costs, or
(ii) associated with the Real Estate. No Credit Party has caused or suffered to
occur any Release with respect to any Hazardous Material at, under, above or
upon any of its Real Estate. No Credit Party is involved in operations that are
likely to result in the imposition of any Lien on its assets or any material
liability under any Environmental Law, and no Credit Party has permitted any
tenant or occupant of such premises to engage in any such operations.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party's conduct with respect to the ownership, operation or management of
any of its Real Estate.
3.18 INSURANCE. DISCLOSURE SCHEDULE 3.18 lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19 DEPOSIT AND DISBURSEMENT ACCOUNTS. DISCLOSURE SCHEDULE
3.19 lists all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20 GOVERNMENT CONTRACTS. Except as set forth in DISCLOSURE
SCHEDULE 3.20, as of the Closing Date, no Credit Party is a party to any
contract or agreement with the federal government and no Credit Party's Accounts
are subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727).
23
3.21 LANDLORDS AND TRADE RELATIONS. As of the Closing Date,
there exists no actual or threatened termination or cancellation of, or any
material adverse modification or change in the business relationship of any
Credit Party with any supplier material to its operations.
3.22 AGREEMENTS AND OTHER DOCUMENTS. Each Credit Party has
provided to Agent or its counsel, on behalf of Lenders, accurate and complete
copies (or summaries) of all of the following agreements or documents to which
it is subject as of the Closing Date and each of which are listed on DISCLOSURE
SCHEDULE 3.22: (a) instruments or documents evidencing Indebtedness of such
Credit Party and any security interest granted by such Credit Party with respect
thereto; and (b) instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity securities of
each Credit Party (other than Ultimate Parent).
3.23 SOLVENCY. Both before and after giving effect to (a) the
Revolving Loan, Eligible Trade L/C Obligations and Letter of Credit Obligations,
including the Prior Loans outstanding, (b) the disbursement of the proceeds of
such Loan pursuant to the instructions of Borrower, (c) the payment and accrual
of all transaction costs in connection with the foregoing, each Material Credit
Party is Solvent.
3.24 WWT. WWT is a wholly-owned Subsidiary of Third
Intermediate Parent and as of the Closing Date, owns no assets except the Stock
of El Portal.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 REPORTS AND NOTICES.
(a) Borrower hereby agrees that from and after the Closing
Date and until the Termination Date, it shall deliver or cause to be delivered
to Agent and/or Lenders, as required, Financial Statements, notices, Projections
and other information at the times, to the Persons and in the manner set forth
in SCHEDULE G.
(b) Borrower hereby agrees that from and after the Closing
Date and until the Termination Date, it shall deliver or cause to be delivered
to Agent and/or Lenders, as required, the various Collateral Reports (including,
without limitation, Borrowing Base Certificates in the form of EXHIBIT 4.1(B) at
the times, to the Persons and in the manner set forth in SCHEDULE H.
4.2 COMMUNICATION WITH ACCOUNTANTS. Ultimate Parent authorizes
Agent, so long as an Event of Default has occurred and is continuing, to
communicate directly with its independent certified public accountants,
including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP and authorizes and shall instruct those
accountants and advisors to disclose and make available to Agent any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including, without limitation, copies
of any issued management letters) with respect to the business, financial
condition and other affairs of any Credit Party. On or before the Closing Date,
the Credit Parties shall obtain a letter from such accountants, on which the
Agent shall be designated as a recipient, acknowledging that Lenders may rely
upon such certification.
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5. AFFIRMATIVE COVENANTS
Each Loan Party jointly and severally agrees that it shall and
shall cause all Credit Parties from and after the date hereof and until the
Termination Date to do the following:
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each
Credit Party shall: (a) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and its rights and
franchises (except for mergers, sales, dispositions and other transactions
permitted in SECTION 6 hereof and liquidations of Store Guarantors that are not
Material Credit Parties following such dispositions and transactions); (b)
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; (c) except as permitted in SECTION 6.8 hereof, at all times
maintain, preserve and protect all of its assets and properties used or useful
in the conduct of its business, and keep the same in good repair, working order
and condition (taking into consideration ordinary wear and tear) and from time
to time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices; and
(d) transact business only in such corporate and trade names as are set forth in
DISCLOSURE SCHEDULE 5.1 and as otherwise disclosed to Agent in accordance with
the Loan Documents.
5.2 PAYMENT OF OBLIGATIONS.
(a) Subject to SECTION 5.2(B), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (A) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, and (B)
lawful claims for storage and shipping charges payable to Approved Shippers.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges or claims
described in SECTION 5.2(A); PROVIDED, that (i) the imposition of such Charge
does not otherwise constitute an Event of Default under SECTION 8.1 hereof, (ii)
adequate reserves with respect to such contest are maintained on the books of
such Credit Party, in accordance with GAAP, (iii) such contest is maintained and
prosecuted continuously and with diligence, (iv) none of the Collateral becomes
subject to forfeiture or loss as a result of such contest, (v) no Lien shall be
filed or imposed to secure payment of such Charges or claims which would, with
the passage of time or otherwise, have priority over Agent's Liens with respect
to the Collateral, (vi) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable to Agent of
such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this
SECTION 5.2(B) are no longer met, and (vii) Agent has not advised Borrower in
writing that Agent reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
5.3 BOOKS AND RECORDS. Each Credit Party shall keep adequate
books and records with respect to its business activities in which proper
entries, reflecting all financial
25
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements delivered to Agent.
5.4 INSURANCE: DAMAGE TO OR DESTRUCTION OF COLLATERAL.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on DISCLOSURE SCHEDULE 3.18 or
substantially equivalent coverage with reputable insurers. If Borrower at any
time or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay all premiums relating thereto, Agent may at
any time or times thereafter obtain and maintain such policies of insurance and
pay such premium and take any other action with respect thereto which Agent
deems reasonably advisable. Agent shall have no obligation to obtain insurance
for any Credit Party or pay any premiums therefor. By doing so, Agent shall not
be deemed to have waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral. Borrower must
provide Agent fifteen (15) days prior written notice of any non-renewal,
cancellation or amendment of the insurance policies required above.
(b) INTENTIONALLY OMITTED.
(c) Borrower shall deliver or cause to be delivered to Agent,
in form and substance satisfactory to Agent, endorsements to (i) all "All Risk"
and business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional insured.
Each Loan Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent) as its true and lawful agent
and attorney-in-fact for the purpose of making, settling and adjusting claim
under such "All Risk" policies of insurance, endorsing the name of each such
Credit Party on any check or other item of payment for the proceeds of such "All
Risk" policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance; provided that so long as no
Event of Default shall have occurred and be continuing, Borrower shall have the
right to direct any such settlements and adjustments. The Credit Parties that
are signatories hereto shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $1,000,000 or more, whether or
not covered by insurance. If an Event of Default shall have occurred and be
continuing, Agent is hereby authorized to collect all insurance proceeds
relating to the Collateral. After deducting from such proceeds the expenses, if
any, incurred by Agent or any Credit Party in the collection or handling
thereof, Agent may, at its option, apply all net proceeds to the reduction of
the Obligations in accordance with SECTION 1.3(D), or permit or require Borrower
to use such money, or any part thereof, to replace the Collateral in a diligent
and expeditious manner. Notwithstanding the foregoing, if the casualty giving
rise to such insurance proceeds would not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds do not exceed $5,000,000 in
the aggregate, Agent shall permit Borrower to replace the Collateral so long as
no Event of Default shall have occurred and be continuing at the time of any
requested release of funds; PROVIDED THAT, if Borrower shall not have completed
the replacement of the Collateral within 270 days of such casualty, Agent may
apply such insurance
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proceeds to the Obligations in accordance with SECTION 1.3(D). Except as
otherwise provided in this Section, all insurance proceeds which are to be made
available to Borrower to replace the Collateral shall first be applied by Agent
in accordance with SECTION 1.3(D) (which application in accordance with SECTION
1.3(D) shall not result in a permanent reduction of the Revolving Loan
Commitments), and any excess shall be released to Borrower. Upon any application
in accordance with SECTION 1.3(D), Agent shall establish a Reserve against the
Borrowing Base in an amount equal to the amount of such proceeds so applied.
Thereafter, such funds shall be made available to Borrower to provide funds to
replace the Collateral as follows: (i) Borrower shall request a Swing Line
Advance or Revolving Credit Advance be made to Borrower in the amount requested
to be released; (ii) so long as the conditions set forth in SECTION 2.2 have
been met, Agent shall make such Swing Line Advance or Revolving Credit Advance;
and (iii) the Reserve established with respect to such insurance proceeds shall
be reduced by the amount of such Swing Line Advance or Revolving Credit Advance.
5.5 COMPLIANCE WITH LAWS. Each Credit Party shall comply with
all federal, state and local laws and regulations applicable to it, including
those relating to ERISA, customs import and export laws and labor matters and
Environmental Laws, except to the extent that the failure to so comply would not
have a Material Adverse Effect.
5.6 EMPLOYEE PLANS. Each Credit Party shall promptly notify
Agent of (a) any violation of ERISA or the IRC with respect to any Plan which
results in a material increase in any Credit Party's obligations with respect
thereto; (b) the occurrence or likely occurrence of an ERISA Event resulting in
a material increase in Borrower's fixed liabilities under ERISA; (c) the filing
for a funding waiver under Section 412 of the IRC with respect to any Plan; (d)
the occurrence of an "accumulated funding deficiency" under Section 412 of the
IRC with respect to any Plan; (e) a material increase in the Unfunded Pension
Liability of any Title IV Plan or a material increase in the aggregate Unfunded
Pension Liability of all Title IV Plans, but only taking into account Title IV
Plans with Unfunded Pension Liability at the time of reference; and (f) a
material increase in any Credit Party's obligations under any Retiree Welfare
Plan. For purposes of CLAUSES (E) and (F) above and SECTIONS 6.9(D) and (e), a
"material increase" shall mean the lesser of (i) 50% or (ii) $500,000, in each
case measured from the Closing Date. In addition, the Credit Parties shall
promptly furnish to the Agent copies of the annual form 5500 filed for each
Title IV Plan.
5.7 ENVIRONMENTAL MATTERS. Each Credit Party shall (a) notify
Agent promptly after such Credit Party becomes aware of any Release upon or at
any Real Estate which is reasonably likely to result in Environmental
Liabilities and Costs in excess of $200,000, and (b) promptly forward to Agent a
copy of any order, notice, permit, application or any communication or report
received by such Credit Party in connection with any such Release, its
compliance with Environmental Laws and Environmental Permits or any other matter
relating to the Environmental Laws that may affect such premises or such Credit
Party, in each case whether or not the Environmental Protection Agency, any
other federal agency or any state, local or foreign environmental agency has
taken or threatened any action in connection with any such Release or other
matter. So long as any Event of Default shall have occurred and be continuing,
Borrower shall permit Agent or its representatives to have access to all
premises owned or occupied by it for the purpose of conducting such
environmental audits and testing as Agent reasonably deems appropriate,
including Phase II environmental testing. Borrower shall
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reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.8 LANDLORDS' AGREEMENTS AND BAILEE LETTERS. Borrower shall
obtain a landlord's agreement, or bailee letter, from Bermans with respect to
the Distribution Center located in Brooklyn Park, Minnesota and from each other
lessor of a warehouse or bailee in possession of collateral property or with
respect to any other warehouse where Collateral is located. After the Closing
Date, no warehouse space shall be leased or acquired by any Credit Party, unless
and until a landlord agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location. Although the Credit Parties
are not required to obtain landlord waivers as to Store locations, (i) if an
Event of Default shall have occurred and be continuing, Agent may impose a
Reserve against Borrowing Availability equal to one month's rent as to all Store
locations and (ii) if any Store Guarantor shall default in the payment of rent
under its Store Lease, Agent may impose a Reserve against Borrowing Availability
in the amount of those defaulted rent obligations (which may exceed one month's
rent). All such landlord and bailee letters shall be in form and substance
satisfactory to Agent. Each Credit Party shall timely and fully pay and perform
its obligations under all leases and other agreements with respect to each
leased location or public warehouse where any Collateral is or may be located.
5.9 OWNERSHIP OF INVENTORY. Borrower shall purchase directly
from suppliers and pay for all Inventory from time to time held for sale by all
Store Guarantors. Borrower shall own all Inventory held for sale by each Store
Guarantor. The Loan Parties shall not and shall not cause or permit any Store
Guarantor to execute any agreement or take any action inconsistent with the
foregoing.
5.10 ADDITIONAL PLEDGES. The Credit Parties signatory hereto
shall pledge or cause to be pledged to Agent for the benefit of Lenders the
Stock of all Store Guarantors created or acquired after the Closing Date.
6. NEGATIVE COVENANTS
The Loan Parties jointly and severally covenant and agree that
without the prior written consent of Agent and the Requisite Lenders, from and
after the date hereof until the Termination Date they shall not, and shall not
cause or permit the other Credit Parties to do the following :
6.1 MERGERS, SUBSIDIARIES, ETC. No Credit Party shall directly
or indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person, except (i) Bermans may be merged with and into Borrower or another Loan
Party, (ii) one or more Store Guarantors may be merged with any other Store
Guarantor or any Loan Party so long as such Loan Party is the survivor in any
merger involving a Loan Party; (iii) cash and financial assets may be
transferred among the Loan Parties so long as no Event of Default has occurred
and is continuing; (iv) the Stock or fixed assets, Trademarks and Trademark
Licenses of Store Guarantors may be transferred to other Store Guarantors or to
any Loan Party; (v) the Credit Parties may form new wholly-owned domestic
Subsidiaries; PROVIDED
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THAT (x) the aggregate initial cash investment in each new domestic Subsidiary
in the form of equity shall not exceed $300,000 and (y) the Credit Parties and
each new domestic Subsidiary shall execute and deliver to Agent forms of the
Loan Documents executed by or with respect to the Loan Parties as of the Closing
Date; and (vi) Ultimate Parent or any of its Subsidiaries may (x) form or enter
into Joint Ventures, (y) create or acquire Foreign Subsidiaries or (z) acquire
all or substantially all of the assets or capital Stock of any Person (the
"TARGET") and form Subsidiaries in connection therewith (in each case, a
"Permitted Investment") subject to the satisfaction of each of the following
conditions:
(1) Agent shall receive at least twenty (20) days'
prior written notice of such proposed Permitted Investment,
which notice shall include a reasonably detailed description
of that proposed Permitted Investment;
(2) all Permitted Investments shall only involve
assets located or to be located in the United States; provided
that assets owned by Joint Ventures or Foreign Subsidiaries
may be located outside of the United States so long as the
investment in such Joint Ventures or Foreign Subsidiaries, and
in their respective assets, is in compliance with clause (4)
below;
(3) at the time of the Permitted Investment and after
giving effect thereto, the Loan Parties shall be in compliance
with Section 6.19;
(4) the aggregate amount invested in Joint Ventures
and Foreign Subsidiaries shall not exceed $5,000,000 in any
Fiscal Year;
(5) such Permitted Investment shall be consensual
and, if applicable, shall have been approved by the Target's
board of directors;
(6) no additional Indebtedness, Guaranteed
Indebtedness, contingent obligations or other liabilities
shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of the Credit Parties and Target
after giving effect to such Permitted Investment, except (A)
Loans made hereunder (B) ordinary course trade payables,
accrued expenses and Indebtedness of the Target within the
limits permitted by Section 6.3 and (C) contingent obligations
consisting of indemnities given to sellers with respect to
assumed liabilities, assumed letter of credit obligations, and
nonmaterial contingent liabilities so long as no Event of
Default would result after giving effect thereto;
(7) the sum of all amounts payable in connection with
all Permitted Investments (including all transaction costs and
all Indebtedness, liabilities and contingent obligations
incurred or assumed in connection therewith or otherwise
reflected on a consolidated balance sheet of the Credit
Parties and Target) shall not exceed $40,000,000, during the
Fiscal Year ending in January, 2001, and $20,000,000 during
any Fiscal Year thereafter (including, in each case,
$5,000,000 of Permitted Investments involving assets outside
the United States and investments in Joint Ventures).
(8) the business and assets acquired in each
Permitted Investment shall be free and clear of all Liens
(other than Permitted Encumbrances);
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(9) except for Foreign Subsidiaries and Joint
Ventures, at or prior to the closing of any Permitted
Investment, Agent will be granted a first priority perfected
Lien (subject to Permitted Encumbrances) in all assets
acquired pursuant thereto or in the assets and capital stock
of the Target and the Target shall have become a Guarantor and
each Target that is a Store Guarantor shall have become a
party to the Consignment Agreement, and the Credit Parties and
the Target shall have executed such documents and taken such
actions as may be reasonably required by Agent in connection
therewith; and in the case of Foreign Subsidiaries and Joint
Ventures Agent will be granted, as applicable, a pledge of
100% of any domestic Joint Venture equity owned directly or
indirectly by Ultimate Parent, sixty-five percent (65%) of the
stock of any Foreign Subsidiary and/or the maximum percentage
of any foreign Joint Venture equity as will not result in tax
liability under IRC ss. 956;
(10) on or prior to the date of such Permitted
Investment, Agent shall have received, in form and substance
reasonably satisfactory to Agent in all material respects,
copies of the acquisition agreement and related agreements and
instruments, and all opinions, certificates, lien search
results and other material documents reasonably requested by
Agent;
(11) at the time of such Permitted Investment and
after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing;
(12) After giving effect to a Permitted Investment,
Ultimate Parent and Target, on a consolidated basis ( if
consolidation is required under GAAP), or Ultimate Parent
alone (if consolidation is not required under GAAP) shall have
a Fixed Chrge Coverage Ratio that complies with Schedule I for
the 12 months preceding and the 12 months following the
Permitted Investment; and
(13) if the Target has incurred an operating loss for
the trailing twelve month period preceding the date of the
Permitted Investments, as determined based upon the Target's
Financial Statements for its most recent interim financial
period completed not more than ninety (90) days prior to the
date of the consummation of such Permitted Investment,
Borrower shall have Borrowing Availability of at least $10
million (excluding Seasonal Over-Advances), on a pro forma
basis after giving effect to that Permitted Investment.
Notwithstanding the foregoing, the Inventory of the Target
shall not be included in Eligible Inventory prior to completion of a successful
field audit with respect thereto.
6.2 INVESTMENTS; LOANS AND ADVANCES. No Credit Party shall
make any investment in, or make or accrue loans or advances of money to, any
Person, through the direct or indirect lending of money, holding of securities
or otherwise, except that (a) any Loan Party may, so long as no Default or Event
of Default has occurred and is continuing, make investments in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one year from
the date of creation thereof and having an investment rating of A-2 or P-2 or
better from either Standard & Poor's Corporation or
30
▇▇▇▇▇'▇ Investors Service, Inc., (iii) time deposits, demand deposits and
certificates of deposit, maturing no more than one year from the date of
creation thereof, issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior secured rating of "A"
or better by a nationally recognized rating agency (an "A BANK"), (iv) time
deposits, maturing no more than 30 days from the date of creation thereof with
an A Bank; (v) overnight repurchase obligations issued by an A Bank; (b) any
Loan Party may, so long as no Default or Event of Default has occurred and is
continuing and no Revolving Credit Advances are outstanding, make investments in
(i) asset-backed securities and taxable or tax-exempt municipal bonds, in each
case rated "AAA" or better by Standard & Poor's Corporation and maturing in six
months or less and (ii) corporate bonds maturing in six months or less and rated
"A" or better by Standard & Poor's Corporation; and (c) each Credit Party may
(i) maintain its existing investments in its Subsidiaries as of the Closing
Date, (ii) make unlimited investments in Borrower, (iii) make investments in new
Subsidiaries and Permitted Investments in accordance with SECTION 6.1, (iv) upon
prior written notice to Agent, maintain equity investments in Store Guarantors
necessary to maintain them as Solvent in an aggregate amount not to exceed
$1,000,000, (v) make intercompany loans as permitted under Section 6.3, and (vi)
make other investments not exceeding $500,000 in the aggregate at any time
outstanding.
6.3 INDEBTEDNESS. No Credit Party shall create, incur, assume
or permit to exist any Indebtedness, except (a) Indebtedness secured by
Permitted Encumbrances, (b) the Loans and the other Obligations, (c)
reimbursement obligations owed by Borrower to the L/C Issuer with respect to
Letters of Credit and Eligible Trade L/Cs, (d) the Senior Notes, (e) deferred
taxes, (f) unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under applicable
law, (g) existing Indebtedness set forth in DISCLOSURE SCHEDULE 6.3 and
refinancings thereof or amendments or modifications thereto on terms and
conditions no less favorable to any Credit Party, Agent or any Lender, as
determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (h) intercompany loans among the Loan Parties for operating
expenses incurred in the ordinary course of business, (i) intercompany loans by
any Loan Party in the ordinary course of business, to Store Guarantors and
intercompany loans by Store Guarantors to any Loan Party in the ordinary course
of business, (j) intercompany loans to Foreign Subsidiaries or Joint Ventures
not to exceed $2,000,000 in the aggregate; PROVIDED THAT at the time any such
intercompany loan is made to a Foreign Subsidiary or Joint Venture no Event of
Default shall have occurred and be continuing or would result after giving
effect thereto and Borrower shall have Borrowing Availability of at least
$1,000,000 after giving effect thereto, (k) an unsecured $100,000 customs bond
line from Barclays Bank for the Foreign Subsidiaries, (l) obligations under
interest rate swaps on an unsecured basis, and (m) unsecured Indebtedness not to
exceed $2,000,000 in the aggregate assumed, incurred or reflected on the balance
sheet of a Target in connection with Permitted Investments (but not incurred in
anticipation of any such Permitted Investment).
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS.
(a) No Credit Party shall enter into or be a party to any
transaction with any Affiliate thereof (other than another Credit Party) except
in the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable
31
terms that are no less favorable to such Credit Party that would be obtained in
a comparable arm's length transaction with a Person not an Affiliate of such
Credit Party, except intercompany loans permitted in CLAUSES (H) and (I) of
SECTION 6.3 and the Consignment Agreement. In addition, if any such transaction
or series of related transactions involves payments in excess of $1,000,000 in
the aggregate, the terms of these transactions must be disclosed in advance to
Agent (which disclosure may be in the form of a request for issuance of an
Eligible Trade L/C). All such transactions existing as of the date hereof are
described on DISCLOSURE SCHEDULE 6.4(A).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employee of any Credit Party, except loans to their
respective employees on an arm's length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $200,000 to any employee and up to a maximum of
$1,000,000 in the aggregate at any one time outstanding.
6.5 CAPITAL STRUCTURE AND BUSINESS. No Credit Party shall make
any changes in any of its business objectives, purposes or operations which
could in any way adversely affect the repayment of the Loans or any of the other
Obligations or could have or result in a Material Adverse Effect. No Credit
Party other than Ultimate Parent shall (i) make any change its capital structure
as described on DISCLOSURE SCHEDULE 3.8 (including a change in capital structure
effected through the issuance of any shares of Stock, warrants or other
securities convertible into Stock or any revision of the terms of its
outstanding Stock, or (ii) amend its charter or bylaws in a manner which would
adversely affect the Agent or Lenders or Borrower's, First Intermediate Parent's
or Store Guarantors' duty or ability to repay the Obligations; provided,
however, that nothing herein shall prohibit a merger or consolidation otherwise
permitted by SECTION 6.1 hereof.
6.6 GUARANTEED INDEBTEDNESS. No Credit Party shall incur any
Guaranteed Indebtedness except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Credit Party, (b) for
Guaranteed Indebtedness incurred for the benefit of any other Credit Party
consisting of payments under the Store leases or if the primary obligation is
otherwise expressly permitted by this Agreement, (c) the Barclays customs bond
for the Foreign Subsidiaries described in Section 6.3(k), and (d) guaranties of
the Senior Notes; provided that if any Person shall guarantee payment of the
Senior Notes that is not a guarantor or direct obligor with respect to the
Obligations, the Credit Parties shall cause such Person to guarantee payment of
the Obligations and grant to Agent a security interest in such Person's assets
in a manner consistent with the terms of the Loan Documents executed and
delivered by the other Credit Parties.
6.7 LIENS. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired) except for
Permitted Encumbrances and those existing Liens set forth on SCHEDULE 6.7. In
addition, no Credit Party shall become a party to any agreement, note, indenture
or instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases, purchase money obligations, or Licenses which
prohibit Liens upon the assets that are subject thereto.
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6.8 SALE OF STOCK AND ASSETS. No Credit Party shall sell,
transfer, convey, assign or otherwise dispose of any of its properties or other
assets, including the capital Stock of any of its Subsidiaries, or any of their
Accounts, other than as permitted under SECTION 6.1 and (a) the sale of
Inventory in the ordinary course of business, (b) the sale, transfer, conveyance
or other disposition by a Credit Party of equipment, fixtures or Real Estate
that are obsolete or no longer used or useful in such Credit Party's business
and having a value not exceeding $2,000,000 in any single transaction or
$5,000,000 in the aggregate in any Fiscal Year, (c) the sale of other equipment
and fixtures having a value not exceeding $1,000,000 in any single transaction
or $4,000,000 in the aggregate in any Fiscal Year, (d) the sale of all of the
stock or substantially all of the assets of one or more Subsidiaries or Joint
Ventures in an arms'-length transaction in an amount not to exceed $5,000,000 in
the aggregate (and in connection with such sale, such Subsidiary or Subsidiaries
shall be released from all obligations hereunder and under the other Loan
Documents to which it is subject), and (e) the sale of the Distribution Center
located in Brooklyn Park, Minnesota by Bermans to Borrower in an arms'-length
transaction. No Credit Party, other than Ultimate Parent, shall sell or issue
any of its capital Stock (other than directors' qualifying shares) to any Person
other than a Credit Party.
6.9 ERISA. No Credit Party shall cause or permit (a) the
occurrence of an ERISA Event which results, or could reasonably be expected to
result, in a distress termination of a Title IV Plan under Section 4041 of
ERISA, an involuntary termination of a Title IV Plan by the PBGC under Section
4042 of ERISA, a Lien on any property of a Credit Party or ERISA Affiliate or a
liability in excess of $500,000 being assessed against any Credit Party or ERISA
Affiliate; (b) any Title IV Plan to incur an "accumulated funding deficiency"
under Section 412 of the IRC in excess of $500,000, regardless of any waiver;
(c) any Credit Party or ERISA Affiliate to apply for a material funding waiver
under Section 412(d) of the IRC; (d) a material increase in the aggregate
Unfunded Pension Liability of all Title IV Plans, but only taking into account
Title IV Plans with Unfunded Pension Liability at the time of reference; or (e)
a material increase in any Credit Party's obligations under any Retiree Welfare
Plan.
6.10 FINANCIAL COVENANTS. Ultimate Parent shall not breach or
fail to comply with any of the Financial Covenants (the "FINANCIAL COVENANTS")
set forth in SCHEDULE I.
6.11 HAZARDOUS MATERIALS. No Credit Party shall cause or
permit a Release of any Hazardous Material on, at, in, under, above, to, from or
about any of the Real Estate where such Release would violate in any material
respect, or form the basis for any material Environmental Liabilities under any
Environmental Laws or Environmental Permits or would otherwise materially and
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral.
6.12 SALE-LEASEBACKS. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets; provided that Bermans may engage in a sale-leaseback transaction with
regard to its Brooklyn Park, Minnesota Distribution Center; provided that Agent
shall have received copies of all documents governing or evidencing such
transaction, including a landlord waiver, in form and substance reasonably
satisfactory to Agent, prior to the consummation of such transaction.
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6.13 CANCELLATION OF INDEBTEDNESS. No Credit Party shall
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis or in the ordinary course of its business
consistent with past practices.
6.14 RESTRICTED PAYMENTS. No Credit Party shall make any
Restricted Payment, except (a) asset or Stock transfers permitted under SECTION
6.1; (b) intercompany loans permitted under SECTION 6.3; (c) restricted payments
consisting of cash dividends paid to any Store Guarantor or to First
Intermediate Parent, Second Intermediate Parent, Third Intermediate Parent or
Ultimate Parent; and (d) redemptions or repurchases of fractional shares not to
exceed $100,000 per year.
6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL
YEAR. No Credit Party shall (a) change its corporate name, or (b) change its
chief executive office, principal place of business, corporate offices or
warehouses or Collateral locations, or the location of its records concerning
the Collateral, or merge with any other Credit Party in any case without at
least twenty (20) days prior written notice to Agent and completion by the
Credit Parties of any action reasonably requested by Agent in connection
therewith, including, without limitation, to continue the perfection of any
Liens in favor of Agent, on behalf of Lenders, in any Collateral has been
completed or taken, and PROVIDED that any such new location shall be in the
continental United States. Without limiting the foregoing, no Credit Party shall
change its name, identity or corporate structure in any manner which might make
any financing or continuation statement filed in connection herewith seriously
misleading within the meaning of Section 9.402(7) of the Code or any other then
applicable provision of the Code except upon prior written notice to Agent and
Lenders and completion by the Credit Parties of any action reasonably requested
by Agent in connection therewith, including, without limitation, any action
necessary to continue the perfection of any Liens in favor of Agent, on behalf
of Lenders, in any Collateral.
6.16 NO IMPAIRMENT OF UPSTREAMING. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) which could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making of intercompany loans by a Subsidiary of First Intermediate Parent
to any other Subsidiary of First Intermediate Parent.
6.17 CHANGES RELATING TO SENIOR NOTES. No Credit Party shall
(a) change or amend the terms of any Senior Notes Documents if the effect of
such amendment is to: (i) increase the interest rate on such Senior Notes; (ii)
change the dates upon which payments of principal or interest are due on the
Senior Notes other than to extend such dates; (iii) change any default or event
of default other than to delete or make less restrictive any default provision
therein, or add any covenant with respect to the Senior Notes; (iv) change the
redemption or prepayment provisions of the Senior Notes other than to extend the
dates therefor or to reduce the premiums payable in connection therewith; (v)
grant any security or collateral to secure payment of the Senior Notes; or (vi)
change or amend any other term of the Senior Notes Documents if such change or
amendment would materially increase the obligations of any obligor or confer
additional material rights to the holder of a Senior Note in a manner adverse to
any Credit Party, Agent or any Lender, or (b) prepay, defease or purchase any
Senior Note;
34
except that Ultimate Parent may repurchase an aggregate of $30,590,000 of Senior
Notes at any time or from time to time after the Closing Date so long as no
Event of Default has occurred and is continuing or would result after giving
effect thereto.
6.18 ELIGIBLE TRADE L/CS. Borrower shall not request any
documentary letter of credit for the purchase of finished goods unless each of
the following documents are required as conditions to any draw thereon, unless
Agent shall otherwise consent, and such deliveries must constitute conditions to
drawing for a documentary letter of credit to constitute an Eligible Trade L/C.
(i) the original Eligible Trade L/C, if only one draw
is permitted thereunder or if multiple draws are permitted and the subject draw
is the final draw thereunder;
(ii) all drafts and pre-approved forms of
certificates executed by Borrower's supplier, certifying that it has met the
conditions for a draw under the Eligible Trade L/C;
(iii) an inspection certificate substantially in the
form attached hereto as SCHEDULE 6.18, executed by Borrower's employee or agent
at the point of origin of the finished goods;
(iv) a commercial invoice with respect to the
purchase order(s) against which such finished goods are being delivered and a
packaging list with respect to such goods;
(v) a non-negotiable ocean ▇▇▇▇ of lading, freight
forwarders cargo receipt, a house ▇▇▇▇ of lading or a copy of an airway ▇▇▇▇ of
lading (a "DOCUMENT OF TITLE") issued by an Approved Shipper with respect to the
finished goods being shipped and providing for the delivery thereof to Borrower;
and
(vi) a certificate of origin.
6.19 NON-CORE BUSINESSES. The Loan Parties shall not permit
(x) the aggregate revenue attributable to all Non-Core Businesses or (y) the
EBITDA attributable to all Non-Core Businesses, to exceed 10% of Ultimate
Parent's consolidated revenue or EBITDA, respectively, for any twelve fiscal
month period. No Permitted Investment shall be made unless at the time of such
Permitted Investment and after giving effect thereto, the requirements of this
section would be met on a pro forma basis for the trailing twelve Fiscal Months
ending on the Fiscal Month end preceding the effective date of any such
Permitted Investment.
7. TERM
7.1 TERMINATION. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the Loans
and all other Obligations shall be automatically due and payable in full on such
date.
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this
35
Agreement shall in any way affect or impair the obligations, duties and
liabilities of Borrower or the rights of Agent and Lenders relating to any
unpaid portion of the Loans or any other Obligations, due or not due,
liquidated, contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of which
is required after the Commitment Termination Date. Except as otherwise expressly
provided herein or in any other Loan Document, all undertakings, agreements,
covenants, warranties and representations of or binding upon any Credit Party,
and all rights of Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events (regardless of the reason therefor) shall constitute an
"EVENT OF DEFAULT" hereunder:
(a) (i) Borrower shall fail to make any payment of principal
of, or interest on, or Fees owing in respect of, the Revolving Loan, when due
and payable, or (ii) Borrower shall fail to pay or reimburse Agent or Lenders
for any expense reimbursable hereunder or under any other Loan Document or any
other Obligations within ten (10) days following Agent's demand for such
reimbursement or payment thereof.
(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of SECTIONS 1.4, 1.8, 5.4 or 6, or any of the
provisions set forth in SCHEDULES E or I, respectively.
(c) Borrower shall fail or neglect to perform, keep or
preserve any of the provisions of SECTION 4 or any provisions set forth in
SCHEDULES G or H, respectively, and the same shall remain unremedied for ten
(10) days or more.
(d) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this SECTION 8.1) and the same shall remain unremedied for twenty (20) days
or more following notice to such Credit Party.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $2,000,000 in the aggregate,
or (ii) causes, or such permits any holder of such Indebtedness or a trustee to
cause, Indebtedness or a portion thereof in excess of $2,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, regardless of whether such right is exercised, by
such holder or trustee.
(f) Any representation or warranty herein or in any Loan
Document or in any written statement, report, financial statement or certificate
made or delivered to Agent or any Lender by any Credit Party shall be untrue or
incorrect in any material respect as of the date when made or deemed made.
36
(g) Assets of any Credit Party with a fair market value of
$1,000,000 or more shall be attached, seized, levied upon or subjected to a writ
or distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any
Material Credit Party a decree or order in respect of any Material Credit Party
(i) under Title 11 of the United States Code, as now constituted or hereafter
amended or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for any Material Credit Party or
any substantial part of any such Person's assets, or (iii) ordering the
winding-up or liquidation of the affairs of any Material Credit Party, and such
case or proceeding shall remain undismissed or unstayed for sixty (60) days or
more or such court shall enter a decree or order granting the relief sought in
such case or proceeding.
(i) Any Material Credit Party shall (i) file a petition
seeking relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) consent to the institution of proceedings thereunder
or to the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of any Material Credit Party or of any
substantial part of any such Person's assets, (iii) make an assignment for the
benefit of creditors, or (iv) take any corporate action in furtherance of any of
the foregoing.
(j) A final judgment or judgments for the payment of money in
excess of $1,000,000 in the aggregate at any time outstanding shall be rendered
against any Credit Party and the same shall not, within thirty (30) days after
the entry thereof, have been discharged or execution thereof stayed or bonded
pending appeal, or shall not have been discharged prior to the expiration of any
such stay.
(k) Any provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby other than as a result of Agent's failure to take any action
within its control.
(l) Any "Change of Control" shall occur.
8.2 REMEDIES.
(a) (i) If any Event of Default or Material Adverse Effect
shall have occurred and be continuing, Agent may, in accordance with Section
2.2, suspend this facility with respect to further Advances and/or the
incurrence of further Letter of Credit Obligations and Eligible
37
Trade L/C Obligations and (ii) if any Event of Default shall have occurred and
be continuing, Agent may (and at the request of the Requisite Lenders shall),
following notice, increase the rate of interest applicable to the Loans and the
Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, (i) terminate this facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations and Eligible
Trade L/C Obligations; (ii) declare all or any portion of the Obligations,
including all or any portion of any Loan to be forthwith due and payable, and
require that the Letter of Credit Obligations and Eligible Trade L/C Obligations
be cash collateralized as provided in SCHEDULE B, all without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by Borrower and each Credit Party that is a signatory hereto; and (iii) exercise
any rights and remedies provided to Agent under the Loan Documents and/or at law
or equity, including all remedies provided under the Code; PROVIDED, HOWEVER,
that upon the occurrence of an Event of Default specified in SECTIONS 8.1(G),
(H) or (i), Revolving Loan Commitments to make further Advances or the
incurrence of further Letter of Credit Obligations and Eligible Trade L/C
Obligations shall automatically terminate and all of the Obligations, including
the Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
8.3 WAIVERS BY CREDIT PARTIES. Except as otherwise provided
for in this Agreement or by applicable law, each Credit Party waives (a)
presentment, demand and protest and notice of presentment, dishonor, notice of
intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent on which any Credit Party may in
any way be liable, and hereby ratifies and confirms whatever Agent may do in
this regard, (b) all rights to notice and a hearing prior to Agent's taking
possession or control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior to
allowing Agent to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 ASSIGNMENT AND PARTICIPATIONS.
(a) Any Lender may assign at any time or times, any of the
Loan Documents, any Revolving Loan Commitment or any portion thereof or interest
therein, including, without limitation, any Lender's rights, title, interests,
remedies, powers or duties thereunder, whether evidenced by a writing or not,
with Borrower's consent which shall not be unreasonably withheld or delayed;
provided that so long as any Event of Default shall have occurred and be
continuing Borrower's consent shall not be required. Any assignment by a Lender
shall (i) require the consent of Agent (which consent shall not be unreasonably
withheld or delayed) and the execution of an assignment agreement (a "Lender
Assignment Agreement") substantially in form attached hereto as EXHIBIT 9.1(A)
and otherwise in form and substance satisfactory to, and acknowledged by, Agent;
(ii) be conditioned on such assignee Lender representing to the
38
assigning Lender and the Agent that it is purchasing the applicable Loans to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; (iii) if a partial assignment, be in an amount at
least equal to $5,000,000 and, after giving effect to any such partial
assignment, the assigning Lender shall have retained Revolving Loan Commitments
in an amount at least equal to $5,000,000; and (iv) include a payment by the
assigning Lender to the Agent of an assignment fee of $3,000. In the case of an
assignment by a Lender under this SECTION 9.1, the assignee shall have, to the
extent of such assignment, the same rights, benefits and obligations as it would
if it were a Lender hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Revolving Loan Commitments or assigned
portion thereof from and after the date of such assignment. Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender's
Pro Rata Share of the Revolving Loan Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of a Note, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes being
assigned.
(b) Borrower consents to any Lender's sale of a participation,
at any time or times, in all or part of its Revolving Loan Commitment. Any sale
of a participation by a Lender of all or any part of its Revolving Loan
Commitments shall be made with the understandings that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, except as provided in the following sentence, and that the holder
of any such participation shall not be entitled to require such Lender to take
or omit to take any action hereunder except actions directly affecting (i) any
reduction in the principal amount of, or interest rate or Fees payable with
respect to, any Loan in which such holder participates, (ii) any extension of
the final scheduled maturity date of the principal amount of any Loan in which
such holder participates, and (iii) any release of all or substantially all of
the Collateral (other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Solely for purposes of
SECTIONS 1.13, 1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a
participation shall give rise to a direct obligation of Borrower to the
participant and the participant shall be considered to be a "Lender". Except as
set forth in the preceding sentence neither Borrower nor any Credit Party shall
have any obligation or duty to any participant. Neither Agent nor any Lender
(other than the Lender selling a participation) shall have any duty to any
participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Revolving Loan Commitments to a potential Lender or participant, if, as
of the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy or similar requirements under
SECTION 1.16(A), increased costs under SECTION 1.16(B), an inability to fund
LIBOR Loans under SECTION 1.16(C), or withholding taxes in accordance with
SECTION 1.16(D).
(d) Except as expressly provided in this SECTION 9.1, no
Lender shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its
39
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.
(e) Borrower shall assist any Lender permitted to sell
assignments under this SECTION 9.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment, including the
execution and delivery of any and all agreements, notes and other documents and
instruments as shall be requested, and the participation of management in
meetings with, potential assignees at Borrower's headquarters. Borrower shall
certify the correctness, completeness and accuracy of all descriptions of
Borrower and its affairs contained in any selling materials provided by it and
all other information provided by it and included in such materials, except that
any Projections delivered by Borrower shall only be certified by Borrower as
having been prepared by Borrower in compliance with the representations
contained in SECTION 3.4.
(f) A Lender may furnish any information concerning Borrower
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained herein.
9.2 APPOINTMENT OF AGENT. GE Capital is hereby appointed to
act on behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this SECTION 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor any of its Affiliates nor any of their
respective officers, directors, employees, agents or representatives shall be
liable to any Lender for any action taken or omitted to be taken by it hereunder
or under any other Loan Document, or in connection herewith or therewith, except
for damages solely caused by its or their own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
If Agent shall request instructions from Requisite Lenders
with respect to any act or action (including failure to act) in connection with
this Agreement or any other Loan Document, then Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from Requisite Lenders, and Agent shall not incur
liability to any Person by reason of so refraining. Agent shall be fully
justified in failing or refusing to take any action hereunder or under any other
Loan Document (a) if such action would, in the opinion of Agent, be contrary to
law or the terms of this Agreement or any other Loan Document, (b) if such
action would, in the opinion of Agent, expose Agent to Environmental Liabilities
and Costs or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the foregoing,
no Lender shall
40
have any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of Requisite Lenders.
9.3 AGENT'S RELIANCE, ETC. Neither Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages solely caused by its or their own gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction. Without limitation
of the generality of the foregoing, Agent: (a) may treat the payee of any Note
as the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE CAPITAL AND AFFILIATES. With respect to its Revolving
Loan Commitments hereunder, GE Capital shall have the same right and powers
under this Agreement and the other Loan Documents as any other Lender and may
exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include GE Capital in its
individual capacity. GE Capital and its Affiliates may lend money to, invest in,
and generally engage in any kind of business with, any Credit Party, any of
their Affiliates and any Person who may do business with or own securities of
any Credit Party or any such Affiliate, all as if GE Capital were not Agent and
without any duty to account therefor to Lenders. GE Capital and its Affiliates
may accept fees and other consideration from any Credit Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
9.5 LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and based
on the Financial Statements referred to in SECTION 3.4 and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest
41
of each other Lender as a result of the Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
9.6 INDEMNIFICATION. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower and without limiting the obligations of
Borrower hereunder), ratably according to their respective Pro Rata Shares, 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
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
PROVIDED, HOWEVER, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from Agent's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction. Without limiting the foregoing, each Lender agrees to reimburse
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that Agent is not reimbursed for such
expenses by Borrower.
9.7 SUCCESSOR AGENT. Agent may resign at any time by giving
not less than thirty (30) days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation, the Requisite Lenders shall have the right
to appoint a successor Agent which shall be reasonably acceptable to Borrower.
If no successor Agent shall have been so appointed by the Requisite Lenders and
shall have accepted such appointment within 30 days after the resigning Agent's
giving notice of resignation, then the resigning Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is
willing to accept such appointment, or otherwise shall be a commercial bank or
financial institution organized under the laws of the United States of America
or of any State thereof having a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent
(which shall be reasonably acceptable to Borrower) as provided above. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent, and the resigning Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this SECTION 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
9.8 SETOFF AND SHARING OF PAYMENTS. In addition to any rights
now or hereafter granted under applicable law and not by way of limitation of
such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender and each holder of any Note is
42
hereby authorized at any time or from time to time, without notice to Borrower
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all balances held by it at any of
its offices for the account of Borrower (regardless of whether such balances are
then due to Borrower) and any other properties or assets any time held or owing
by that Lender or that holder to or for the credit or for the account of
Borrower against and on account of any of the Obligations which are not paid
when due. Any Lender or holder of any Note exercising a right to set off shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
set off with each other Lender or holder in accordance with their respective Pro
Rata Shares. Borrower agrees, to the fullest extent permitted by law, that (a)
any Lender or holder may exercise its right to set off with respect to amounts
in excess of its Pro Rata Share of the Obligations and may sell participations
in such amount so set off to other Lenders and holders and (b) any Lender or
holders so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the set-off amount is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.
9.9 ADVANCES; PAYMENTS; INFORMATION; NON-FUNDING LENDER.
(a) ADVANCES; PAYMENTS; FEE PAYMENTS.
(i) The parties hereto agree that, whenever possible,
the Swing Line Loan shall be the first Loan advanced and the first Loan repaid
so as to minimize fluctuations in the Revolving Loan balance. Furthermore, for
ease of administration, Agent may, on behalf of Lenders, disburse funds to
Borrower for requested Revolving Credit Advances and the Revolving Loan balance
may fluctuate from day to day through Agent's disbursement of funds to, and
receipt of funds from, Borrower. In order to minimize the frequency of transfers
of funds between Agent and each Lender, Revolving Credit Advances and payments
in respect thereof will be settled according to the procedures described in
SECTIONS 9.9(A)(II) and 9.9(A)(III) below. Notwithstanding these procedures,
each Lender's obligation to fund its portion of any Revolving Credit Advances
made by Agent to Borrower will commence on the date such Advances are made by
Agent. Such payments will be made by each Lender without setoff, counterclaim or
reduction of any kind.
(ii) Not later than 11:00 a.m. (Chicago time) on the
second (2nd) and fifth (5th) Business Day of each week, or more frequently
(including daily) if Agent so elects (each such day being a "SETTLEMENT DATE"),
Agent will advise each Lender by telephone or telecopy of the amount of such
Lender's Pro Rata Share of the balance of the Revolving Loan as of the close of
business on the first (1st) Business Day immediately preceding the Settlement
Date. In the event that payments from Agent are necessary to adjust the amount
of such Lender's portion of the Revolving Loan to such Lender's Pro Rata Share
of the Revolving Loan as of any Settlement Date, Agent will pay each Lender, in
same day funds, by wire transfer to its account not later than 2:00 p.m.
(Chicago time) on the Settlement Date. Agent may allocate
43
payments among the Lenders so as to cause the principal amount of the Loans
outstanding from each Lender to match that Lender's Pro Rata Share. If Agent so
elects, Agent may require that each Lender make its Pro Rata Share of any
requested Revolving Credit Advance available to Agent for disbursement prior to
the funding of such Advance. If Agent elects to require that such funds be so
made available, Agent shall advise each Lender by telephone or telecopy of the
amount of such Lender's Pro Rata Share of the requested Revolving Credit Advance
no later than noon (Chicago time) on the date of funding of each Index Rate Loan
and no later that 11:00 a.m. (Chicago Time) on the date that is two (2) Business
Days prior to the proposed funding date of any LIBOR Loan, and each such Lender
shall pay Agent such amount in same day funds, by wire transfer to the
Collection Account not later than 2:00 p.m. (Chicago time) on the date of
funding such Advance.
(iii) For purposes of this SECTION 9.9(A)(III), the
following terms will have the following meanings:
(A) "DAILY LOAN BALANCE" means, with respect
to the Revolving Credit Advances, an amount
calculated as of the end of each calendar day by
subtracting (i) the cumulative principal amount paid
by Agent to a Lender with respect to the Revolving
Credit Advances from the Closing Date through and
including such calendar day, from (ii) the cumulative
principal amount of the Revolving Credit Advances
advanced by such Lender to Agent from the Closing
Date through and including such calendar day.
(B) "DAILY INTEREST RATE" means, with
respect to the Revolving Credit Advances, an amount
calculated by dividing the interest rate payable to a
Lender on the Revolving Credit Advances (as
determined pursuant to SECTION 1.5 and 1.6) as of
each calendar day by three hundred sixty (360) days
in the case of LIBOR Loans and three hundred
sixty-five (365) days in the case of Index Rate
Loans.
(C) "DAILY INTEREST AMOUNT" means, with
respect to the Revolving Loan, an amount calculated
by multiplying the Daily Loan Balance of the
Revolving Credit Advances by the associated Daily
Interest Rate applicable to such Revolving Credit
Advances.
(D) "INTEREST RATIO" means, with respect to
the Revolving Credit Advances, a number calculated by
dividing the total amount of interest on the
Revolving Credit Advances received by Agent during
the immediately preceding month by the total amount
of interest on the Revolving Credit Advances due from
Borrower during the immediately preceding month.
On the first (1st) Business Day of each calendar month (an "INTEREST SETTLEMENT
DATE"), Agent will advise each Lender by telephone or telecopy of the amount of
such Lender's Pro Rata Share of interest and Fees paid for the benefit of
Lenders with respect to the Revolving Credit Advances as of the end of the last
day of the immediately preceding month. Provided that such Lender has made all
payments required to be made by it under this Agreement and the other Loan
Documents, Agent will pay to such Lender such Lender's Pro Rata Share of
principal,
44
interest and Fees paid for the benefit of Lenders on the Revolving Loans. Such
payments shall be made by wire transfer to such Lender's account (as specified
by such Lender to Agent in writing, as amended by such Lender from time to time
after the date hereof pursuant to the notice provisions contained herein or in
the applicable Lender Assignment Agreement) not later than 12:00 noon (Chicago
time) on the next Business Day following the Interest Settlement Date. Such
Lender's Pro Rata Share of interest on Revolving Credit Advances will be
calculated by adding together such Lender's Pro Rata Share of the Daily Interest
Amounts for each calendar day of the prior month for the Revolving Credit
Advances and multiplying the total thereof by the Interest Ratio for the
Revolving Credit Advances. Consistent with the foregoing, during those periods
between Settlement Dates in which Agent has advanced more than its Pro Rata
Share of the Revolving Credit Advances, the Daily Interest Amount allocable to
the Lenders will be reduced and the interest accrued on such amounts shall be
for the account of Agent.
(b) AVAILABILITY OF LENDER'S PRO RATA SHARE. Agent may assume
that each Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each Settlement Date. If such Pro Rata Share is not, in
fact, paid to Agent by such Lender when due, Agent will be entitled to recover
such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent's demand, Agent shall promptly notify Borrower and
Borrower shall immediately repay such amount to Agent. Nothing in this SECTION
9.9 or elsewhere in this Agreement or the other Loan Documents shall be deemed
to require Agent to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its Revolving Loan Commitments hereunder
or to prejudice any rights that Borrower may have against any Lender as a result
of any default by such Lender hereunder.
(c) RETURN OF PAYMENTS.
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to Borrower or such other Person,
without set-off, counterclaim or deduction of any kind.
(d) NON-FUNDING LENDERS.
The failure of any Lender (such Lender, a "NON-FUNDING
LENDER") to make any Revolving Credit Advance to be made by it on the date
specified therefor shall not relieve any other Lender (each such other Lender,
an "OTHER LENDER") of its obligations to make a Revolving Credit Advance on such
date, but neither any Other Lender nor Agent shall be responsible for the
45
failure of any Non-Funding Lender to make a Revolving Credit Advance to be made
by such Non-Funding Lender, and no Other Lender shall have any obligation to
Agent or any Other Lender for the failure by such Non-Funding Lender.
Notwithstanding anything set forth herein to the contrary so long as any Lender
continues to be a Non-Funding Lender, such Non-Funding Lender shall not have any
voting or consent rights under or with respect to any Loan Document or
constitute a "Lender" (or be included in the calculation of "Requisite Lenders"
hereunder) for any voting or consent rights under or with respect to any Loan
Document.
(e) DISSEMINATION OF INFORMATION.
Agent will use reasonable efforts to provide Lenders with any
notice of Default or Event of Default received by Agent from, or delivered by
Agent to, any Credit Party, with notice of any Event of Default of which Agent
has actually become aware and with notice of any action taken by Agent following
any Event of Default; provided, however, that Agent shall not be liable to any
Lender for any failure to do so, except to the extent that such failure is
attributable solely to Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Lenders acknowledge that
Borrower is required to provide Financial Statements and Collateral Reports to
certain of the Lenders in accordance with SCHEDULES G and H hereto and agree
that Agent shall have no duty to provide the same to Lenders.
(f) ACTIONS IN CONCERT.
Anything in this Agreement to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any
action to protect or enforce its rights arising out of this Agreement or the
Notes (including, without limitation, exercising any rights of set-off) without
first obtaining the prior written consent of Agent or Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of the Agent.
(g) REGULATION A.
Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or a
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
10. SUCCESSORS AND ASSIGNS
10.1 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party signatory hereto, Agent, Lenders and their respective successors and
assigns (including, in the case of any Credit Party, a debtor-in-possession on
behalf of such Credit Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Agent and Requisite
Lenders. Any such purported assignment, transfer, hypothecation or other
conveyance by any Credit Party signatory hereto without the prior express
written consent of Agent and Requisite Lenders shall be void. The terms and
46
provisions of this Agreement are for the purpose of defining the relative rights
and obligations of each Credit Party signatory hereto, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in SECTION 11.2 below. Any letter of interest, commitment letter, fee
letter (other than the GE Capital Fee Letter) or confidentiality agreement
between any Credit Party and Agent or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2 AMENDMENTS AND WAIVERS.
(a) Except as otherwise provided below, no amendment,
modification, termination or waiver of any provision of this Agreement or any of
the Notes, or any consent to any departure by any Credit Party therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Agent and each Credit Party signatory hereto, and by Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of Borrowing Base, shall be
effective unless the same shall be in writing and signed by Agent, all Lenders
and each Credit Party signatory hereto.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby,
do any of the following: (i) increase the principal amount of the Revolving Loan
Commitment of any Lender (and all Lenders shall be deemed to be affected
thereby) or amend the definition of Borrowing Base or any component thereof
which would have the effect of increasing the credit available to Borrower
hereunder; (ii) reduce the principal of, rate of interest on or Fees payable
with respect to any Loan, Letter of Credit Obligations or Eligible Trade L/C
Obligations of any affected Lender; (iii) extend the final scheduled maturity
date of the principal amount of any Loan of any affected Lender; (iv) waive,
forgive, defer, extend or postpone any payment of interest or Fees as to any
affected Lender; (v) release any Guaranty of a Material Credit Party; (vi)
except as otherwise permitted herein or in the other Loan Documents, release the
Agent's Liens upon, or permit any Credit Party to sell or otherwise dispose of,
any Collateral with a value exceeding $5,000,000 in the aggregate other than
sales of Inventory in the ordinary course; (vii) increase the L/C Sublimit (and
all Lenders shall be deemed to be affected thereby); (viii) change the
percentage of the Revolving Loan Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for Lenders or any of them
to take any action hereunder; and (ix) amend or waive this SECTION 11.2 or the
definitions of the terms used in this SECTION 11.2 insofar as the definitions
affect the substance of this SECTION 11.2. Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under this Agreement
47
or any other Loan Document shall be effective unless in writing and signed by
Agent, in addition to Lenders required hereinabove to take such action. Each
amendment, modification, termination or waiver shall be effective only in the
specific instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required for Agent to
take additional Collateral pursuant to any Loan Document. No notice to or demand
on any Credit Party in any case shall entitle such Credit Party or any other
Credit Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this SECTION 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, waiver or
termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders,
the consent of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (each such Lender whose consent is not
obtained as described in this CLAUSE (I) or in CLAUSE (II) below being referred
to as a "NON CONSENTING LENDER"), or
(ii) requiring the consent of Requisite Lenders, the
consent of Lenders holding 50.1% of the aggregate Revolving Loan Commitments is
obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, Agent shall have the
right in its sole discretion (but shall be under no obligation) to purchase from
such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they
shall, upon Agent's request, sell and assign to Agent, all of the Revolving Loan
Commitments of such Non-Consenting Lender for an amount equal to the principal
balance of all Loans held by the Non-Consenting Lender and all accrued interest
and Fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Lender Assignment Agreement.
(e) Upon indefeasible payment in full in cash and performance
of all of the Obligations (other than indemnification Obligations under SECTION
1.13) and termination of the Revolving Loan Commitments, and so long as no
suits, actions, proceedings or claims are pending or threatened against any
Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements,
termination letters regarding bailee agreements and blocked account agreements
and other documents necessary or appropriate to evidence the termination of the
Liens securing payment of the Obligations.
11.3 FEES AND EXPENSES. Borrower shall reimburse Agent for all
out-of-pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in connection with the Loan
Documents and advice in connection therewith). Borrower shall reimburse Agent
(and, with respect to CLAUSES (C), (D) and (E) below, each Lender) for all fees,
costs and expenses, including the fees, costs and expenses of counsel (including
the allocated cost of in-house counsel) or other advisors (including
environmental and management consultants) for advice, assistance, or other
representation in connection with:
48
(a) the forwarding to Borrower or any other Person on behalf
of Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, Borrower or any other Person)
in any way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against Borrower or any other Person that
may be obligated to Agent by virtue of the Loan Documents;
(d) any attempt to enforce any rights of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default, but only as to Persons who are
Lenders as of the Closing Date and who continue to hold 7.5% or more of the
total Revolving Loan Commitments;
(f) efforts to (i) consistent with the terms of the Loan
Documents, monitor the Loans or any of the other Obligations, (ii) consistent
with the terms of the Loan Documents verify, observe or assess any of the Credit
Parties or their respective affairs, and (iii) protect, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, without limitation, all the attorneys' and other professional and
service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
SECTION 11.3 shall be payable, on demand, by Borrower to Agent. Without limiting
the generality of the foregoing, such expenses, costs, charges and fees may
include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4 NO WAIVER. Agent's or any Lender's failure, at any time
or times, to require strict performance by the Credit Parties of any provision
of this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. None of the
49
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by Agent or any Lender, unless such waiver or suspension is
by an instrument in writing signed by an officer of or other authorized employee
of Agent and Requisite Lenders and directed to Borrower specifying such
suspension or waiver.
11.5 REMEDIES. Agent's and Lenders' rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other rights and
remedies which Agent or any Lender may have under any other agreement, including
the other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 SEVERABILITY. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7 CONFLICT OF TERMS. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.8 AUTHORIZED SIGNATURE. Until Agent shall be notified by
Borrower to the contrary, the signature upon any Notice of Revolving Credit
Advance, Notice of Swing Line Advance, Notice of Continuation/Conversion or
other notice or certificate delivered in accordance herewith delivered pursuant
hereto of an officer of Borrower listed on SCHEDULE 11.8 shall bind Borrower and
be deemed to be the act of Borrower affixed pursuant to and in accordance with
resolutions duly adopted by Borrower's Board of Directors.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICT OF
LAW PROVISIONS) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
▇▇▇▇ COUNTY, CITY OF CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE
50
HEARD BY A COURT LOCATED OUTSIDE OF ▇▇▇▇ COUNTY, CITY OF CHICAGO, ILLINOIS AND,
PROVIDED, FURTHER NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SCHEDULE J OF THIS AGREEMENT
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
11.10 NOTICES. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this SECTION
11.10), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges, prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the parry to be notified and sent
to the address or facsimile number indicated on SCHEDULE J or to such other
address (or facsimile number) as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated on
SCHEDULE J to receive copies shall in no way adversely affect the effectiveness
of such notice, demand, request, consent, approval, declaration or other
communication.
11.11 SECTION TITLES. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
51
11.12 COUNTERPARTS. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND BORROWER
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 PRESS RELEASES. Each Credit Party agrees that neither it
nor its Affiliates will in the future issue any press release or other public
disclosure using the name of GE Capital or its affiliates or referring to this
Agreement or the other Loan Documents without at least two (2) Business Days'
prior notice to GE Capital and without the prior written consent of GE Capital
unless (and only to the extent that) such Credit Party or Affiliate is required
to do so by law or regulation and then, in any event, such Credit Party or
Affiliate will consult with GE Capital before issuing such press release or
other public disclosure. Each Credit Party consents to the publication by Agent
of a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement and after such publication, Borrower
may make public disclosure of the same information set forth in the tombstone.
Furthermore, Borrower may make private disclosures to its suppliers of the
existence of this Agreement, the Maximum Amount hereunder, and the fact that GE
Capital acts as Agent hereunder. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.
11.15 REINSTATEMENT. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Borrower for liquidation or reorganization, should Borrower become
insolvent or make an assignment of the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of
Borrower'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.
52
11.16 ADVICE OF COUNSEL. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of SECTIONS 11.9 and 11.13, with its counsel.
11.17 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
11.18 CONFIDENTIALITY. Agent and Lenders shall maintain as
confidential all nonpublic information provided to them by the Credit Parties
for a period of two (2) years following the Commitment Termination Date,
PROVIDED THAT, Agent and Lenders may disclose such information (i) to Persons
employed or engaged by Agent or any Lender in evaluating, approving. structuring
or administering the Loans and the Revolving Loan Commitments, (ii) to any bona
fide assignee or participant that has agreed to comply with the covenant
contained in this SECTION 11.18 (and any such bona fide assignee or participant
may disclose such information to Persons employed or engaged by them as
described in CLAUSE (I) above), (iii) as required or requested by any
Governmental Authority, (iv) pursuant to legal process, or (v) in connection
with the exercise of any remedy under the Loan Documents; provided, further
that, the foregoing restrictions shall cease to apply to any information that
becomes publicly available other than by the actions of Agent, Lenders or any
Persons described in CLAUSES (I) or (II) above.
[signature pages follow]
53
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
WILSONS LEATHER HOLDINGS INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: TREASURER
------------------------------
Revolving Loan Commitment: GENERAL ELECTRIC CAPITAL
$64,200,000 (including $10,000,000 CORPORATION, as Agent, Lender and
Swing Line Commitment) Swing Line Lender
By: /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Title: DULY AUTHORIZED SIGNATORY
------------------------------
Revolving Loan Commitment: FLEET BANK, as Lender
$26,400,000
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: VICE PRESIDENT
------------------------------
Revolving Loan Commitment: THE CIT GROUP/BUSINESS CREDIT, INC.,
$13,200,000 as Lender
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: ASSISTANT VICE PRESIDENT
------------------------------
Revolving Loan Commitment: FIRST UNION NATIONAL BANK, as Lender
$26,400,000
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Title: VICE PRESIDENT
------------------------------
S-1
Revolving Loan Commitment: U.S. BANK NATIONAL ASSOCIATION,
$19,800,000 as Lender
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: RELATIONSHIP MANAGER
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Revolving Loan Commitment ▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
$15,000,000 as Lender
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: VICE PRESIDENT
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The undersigned are executing this Credit Agreement in their
capacity as Credit Parties, but only as to the representations, warranties and
covenants contained in SECTIONS 3, 5 and 6:
Wilsons The Leather Experts Inc.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: TREASURER
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Wilsons Center, Inc.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: TREASURER
------------------------------
Rosedale Wilsons, Inc.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: TREASURER
------------------------------
River Hills Wilsons, Inc.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: TREASURER
------------------------------
Bermans The Leather Experts Inc.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: TREASURER
------------------------------
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SCHEDULE A
DEFINITIONS
-----------
Capitalized terms used in the Agreement shall have (unless
otherwise provided elsewhere in the Agreement) the following respective meanings
and all section references in the following definitions shall refer to Sections
of the Agreement:
"ACCOUNT DEBTOR" shall mean any Person who may become
obligated to any Credit Party under, with respect to, or on account of, an
Account.
"ACCOUNTS" shall mean all accounts, as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party and, in any event,
including, without limitation, (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter
received or acquired by or belonging or owing to any Credit Party, whether
rising out of goods sold or services rendered by it or from any other
transaction (including, without limitation, any such obligations which may be
characterized as an account or contract right under the Code), (b) all of each
Credit Party's rights in, to and under all purchase orders or receipts now owned
or hereafter acquired by it for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including,
without limitation, unpaid sellers' right of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including, without limitation, all rights to receive the
proceeds of said purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"ACQUISITION" shall mean the merger of Wilsons Acquisition
with and into El Portal Group, Inc. with El Portal Group, Inc. as the surviving
entity in such merger.
"ACQUISITION AGREEMENTS" shall mean collectively the Agreement
and Plan of Merger among WWT, Wilsons Acquisition, El Portal Group, Inc., a
Nevada corporation, and the Stockholders of El Portal Group, Inc. dated as of
September 18, 2000 (the "Merger Agreement") and all related escrow, employment
and other agreements entered into in connection therewith.
"ADVANCE" shall mean any Revolving Credit Advance or Swing
Line Advance, as the context may require.
"AFFILIATE" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, five percent (5%) or more of the
Stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with
such Person or (c) each of such Person's officers, directors, joint venturers
and partners. For the purposes of this definition, "control" of a Person shall
mean the possession, directly or indirectly,
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of the power to direct or cause the direction of its management of policies,
whether through the ownership of voting securities, by contract or otherwise;
PROVIDED, HOWEVER, that the term "AFFILIATE" shall specifically exclude Agent
and each Lender.
"AGENT" shall mean GE or its successor appointed pursuant to
SECTION 9.7.
"AGREEMENT" shall mean the Second Amended and Restated Credit
Agreement by and among Borrower, GE Capital, as Lender, Swing Line Lender and
Agent and the other Lenders signatory, as amended, modified, restated or
extended from time to time.
"APPENDICES" shall have the meaning assigned to it in the
recitals to the Agreement.
"APPLICABLE MARGINS" shall mean the Applicable Index Margin,
Applicable LIBOR Margin, Applicable L/C Margin and Applicable Swing Line Margin.
"APPLICABLE INDEX MARGIN" shall mean a per annum rate of
interest payable in addition to the Index Rate on Index Rate Loans, determined
by reference to SECTION 1.6.
"APPLICABLE LIBOR MARGIN" shall mean a per annum rate of
interest payable in addition to the LIBOR Rate on LIBOR Rate Loans, determined
by reference to SECTION 1.6.
"APPLICABLE L/C MARGIN" shall mean the per annum letter of
credit fee payable with respect to Letter of Credit Obligations and Eligible
Trade L/C Obligations, determined by reference to SECTION 1.6.
"APPLICABLE SWING LINE MARGIN" shall mean the per annum rate
of interest payable in addition to the Commercial Paper Rate on Swing Line
Loans, determined by reference to SECTION 1.6.
"APPROVED SHIPPER" shall mean any reputable and creditworthy
shipper or freight forwarder that has entered into a bailee letter with Agent on
terms acceptable to Agent regarding in-transit Inventory and which transports
finished goods Inventory from overseas to Borrower's Distribution Centers or, at
Borrower's direction, to Store Guarantors' Stores.
"ASSIGNMENT AGREEMENT" shall mean an agreement substantially
in form attached hereto as EXHIBIT 9.1(A) and otherwise in form and substance
satisfactory to, and acknowledged by, Agent whereby a portion of any or all of
the Revolving Loan Commitments are assigned to a Lender after the Closing Date.
"BERMANS" means Bermans The Leather Experts Inc., a Delaware
corporation.
"BORROWER" shall have the meaning assigned thereto in the
recitals to the Agreement.
"BORROWING AVAILABILITY" shall have the meaning assigned to it
in SECTION 1.1(A).
"BORROWING BASE" shall mean, as of any date of determination,
the sum of:
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(a) 60% of the book value of Eligible Inventory-Apparel during
the period of the Fiscal Months of November of each Fiscal Year through August
of the following year.
(b) 65% of the book value of Eligible Inventory-Apparel during
the Fiscal Months of September through October of each Fiscal Year; PLUS
(c) 60% of the book value of Eligible Inventory-Luggage PLUS
(d) $20,000,000 during the Fiscal Month of November, 2000 (a
"Seasonal Over-Advance"); or
(e) $7,500,000 during the Fiscal Months of September and
October, 2001 and, during the Fiscal Months of September and October of each
year thereafter (a "Seasonal Over-Advance").
"BORROWING BASE CERTIFICATE" shall mean a certificate to be
executed and delivered from time to time by Borrower in the form attached to the
Agreement as EXHIBIT 4.1(B).
"BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of Illinois or the State of Minnesota and in reference to LIBOR Loans
shall mean any such day that is also a LIBOR Business Day.
"CAPITAL EXPENDITURES" shall mean all payments during any
measuring period (including the principal portion of payments under Capital
Leases, installment purchase agreements and other similar purchase money
financing arrangements) for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"CAPITAL LEASE" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet.
"CAPITAL LEASE OBLIGATION" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.
"CASH MANAGEMENT SYSTEMS" shall have the meaning assigned to
it in SECTION 1.8.
"CHANGE OF CONTROL" shall mean any event, transaction or
occurrence as a result of which (a) Ultimate Parent shall cease to own and
control all of the economic and voting rights associated with all of the
outstanding capital stock of First Intermediate Parent or (b) First Intermediate
Parent shall cease to own and control all of the economic and voting rights
associated with all of the outstanding capital stock of each of its direct and
indirect Subsidiaries, except as permitted under SECTION 6.1 and SECTION 6.8 of
the Agreement and except for the Joint Ventures and Foreign Subsidiaries or (c)
a "Change of Control" (as such term is defined in the
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Senior Notes Documents) shall occur or (d) any person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended, shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended) of 30% or more of the issued and outstanding shares of capital
Stock of Ultimate Parent having the right to vote for the election of directors
of Ultimate Parent under ordinary circumstances or (e) during any period of
twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Ultimate Parent (together with any
new directors whose election by the board of directors of Ultimate Parent or
whose nomination for election by stockholders of Ultimate Parent was approved by
a vote of at least a majority of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason other than death
or disability to constitute a majority of the directors then in office.
"CHARGES" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including, without
limitation, taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or relating to (a) the
Collateral, (b) the Obligations, (c) the employees, payroll, income or gross
receipts of any Credit Party, (b) any Credit Party's ownership or use of any
properties or other assets, or (e) any other aspect of any Credit Party's
business.
"CHATTEL PAPER" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"CLOSING DATE" shall mean October 31, 2000.
"CODE" shall mean the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of Illinois; PROVIDED,
HOWEVER, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of Agent's or any Lender's security
interest in any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of Illinois, the term
"Code" shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"COLLATERAL" shall mean the property covered by the Security
Agreement and the Supplemental Security Agreement and the other Collateral
Documents and any other personal property, tangible or intangible, now existing
or hereafter acquired, that may at any time be or become subject to a security
interest or Lien in favor of Agent, on behalf of itself and Lenders, to secure
the Obligations.
"COLLATERAL DOCUMENTS" shall mean the Security Agreement, the
Supplemental Security Agreement, the Consignment Agreement, the Pledge
Agreements, the Guaranties, the Patent Security Agreement, the Trademark
Security Agreement, the Copyright Security Agreement and all similar agreements
entered into guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.
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"COLLATERAL REPORTS" shall mean the reports with respect to
the Collateral referred to in SCHEDULE H.
"COLLECTION ACCOUNT" shall mean that certain account of Agent,
account number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Bankers Trust Company in New
York or any substitute Collection Account established in accordance with
SCHEDULE E hereto.
"COMMERCIAL PAPER RATE" shall mean the month-end published
rate for 30-day Dealer Commercial Paper (high grade unsecured notes sold through
dealers by major corporations in multiples of $1,000) as from time to time
reported in the "Money Rates" column in THE WALL STREET JOURNAL. The rate of
interest applicable to the Swing Line Loan shall for each month be based upon
the Commercial Paper Rate as of the last Business Day of the preceding month.
"COMMITMENT TERMINATION DATE" shall mean the earliest of (a)
May 24, 2002, (b) the date of termination of Lenders' obligations to make
Advances and/or incur Letter of Credit Obligations and Eligible Trade L/C
Obligations or permit existing Loans to remain outstanding pursuant to SECTION
8.2(B), and (c) the date of indefeasible prepayment in full by Borrower of the
Loans and the cancellation and return of all Letters of Credit or the cash
collateralization of all Letter of Credit Obligations and Eligible Trade L/C
Obligations pursuant to SCHEDULE B, and the permanent reduction of the Revolving
Loan Commitment and the Swing Line Commitment to zero dollars ($0), in
accordance with the provisions of SECTION 1.3(C).
"CONCENTRATION ACCOUNT" shall have the meaning assigned to it
on SCHEDULE E.
"CONSIGNMENT AGREEMENT" shall mean the Master Consignment
Agreement dated May 25, 1996 among Borrower and all of the Store Guarantors, as
amended.
"CONTRACTS" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, in any
event, including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including,
without limitation, any and all agreements relating to the terms of payment or
the terms of performance of any Account.
"CREDIT PARTIES" shall mean Ultimate Parent, First
Intermediate Parent, Second Intermediate Parent, Third Intermediate Parent,
Borrower, and each other Store Guarantor.
"DEFAULT" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"DEFAULT RATE" shall have the meaning assigned to it in
SECTION 1.5(D).
"DISTRIBUTION CENTER" shall mean the warehouse and
distribution center owned by Borrower or owned by Bermans and leased to and
operated by Borrower, located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or the distribution center owned by OIRE Minnesota, L.L.C., as
successor-in-interest to Opus Northwest, L.L.C., and leased to and operated by
Borrower, located in Maple Grove, Minnesota, and the warehouse and distribution
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center leased or operated by El Portal at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ #▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, and "DISTRIBUTION CENTERS" shall mean both of the foregoing,
collectively.
"DOCUMENTS" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"DOLLARS OR $" shall mean lawful currency of the United States
of America.
"EBIT" shall mean, with respect to Ultimate Parent for any
fiscal period or periods, without duplication, consolidated net income from
operations before Interest Charges and income taxes determined in accordance
with GAAP.
"EBIT/CASH INTEREST COVERAGE" shall mean with respect to
Ultimate Parent, as of the last day of any Fiscal Quarter for the four Fiscal
Quarters then ended (x) EBIT divided by (y) cash Interest Charges for such
period.
"EBITDA" shall mean, with respect to Ultimate Parent for any
fiscal period or periods (without duplication), consolidated net income from
operations before Interest Charges, income taxes, depreciation and amortization
determined in accordance with GAAP.
"ELIGIBLE IN-TRANSIT INVENTORY" shall mean Inventory owned by
Borrower consisting of leather apparel and accessories and luggage and
accessories and related products, which is in-transit from the manufacturer
thereof to the Distribution Centers or by drop ship to one or more Stores
operated by a Store Guarantor and reflected on Borrower's monthly balance sheet
as in-transit inventory. In furtherance of and without limiting the foregoing:
Eligible In-Transit Inventory shall be limited to finished goods (i) in the
possession of an Approved Shipper under contract with Borrower and in which
Borrower has good title; (ii) as to which Agent for the benefit of Lenders has a
first priority security interest through constructive possession by means of a
bailee agreement with an Approved Shipper; (iii) which have been accepted by
Borrower (F.O.B. shipping point) as conforming goods and as to which the L/C
Issuer has received an inspection certificate signed by Borrower's agent or
employee; (iv) which are fully insured against loss under insurance naming Agent
as loss payee for the benefit of Lenders; and (v) as to which the purchase price
has been paid by a draw under a corresponding Eligible Trade L/C or otherwise.
"ELIGIBLE INVENTORY" shall mean Eligible Inventory-Apparel and
Eligible Inventory-Luggage.
"ELIGIBLE INVENTORY-APPAREL" shall mean finished goods
Inventory owned by Borrower consisting of apparel, luggage, accessories and
products held for sale through Store Guarantors, historically bearing the
"Wilsons" or "Bermans" names valued on a last-in, first-out basis in accordance
with GAAP, net of Reserves, in which Agent, on behalf of Lenders, has a first
priority security interest, PLUS Eligible In-Transit Inventory that is otherwise
Eligible Inventory-Apparel valued at book value in accordance with GAAP.
"ELIGIBLE INVENTORY-LUGGAGE" shall mean finished goods
Inventory owned by Borrower consisting of luggage, accessories and related
products other than luggage, accessories, and related products historically held
for sale through Store Guarantors bearing the "Wilsons" or
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"Bermans" names valued on a last-in, first-out basis in accordance with GAAP,
net of Reserve, in which Agent, on behalf of Lenders, has a first priority
security interest, PLUS Eligible In-Transit Inventory that is otherwise Eligible
Inventory-Luggage valued at book value in accordance with GAAP.
"ELIGIBLE TRADE L/C'S" shall mean, subject to the further
conditions contained in SECTION 6.19 of the Agreement, documentary letters of
credit issued by an L/C Issuer for the account of Borrower for payment of the
purchase price of finished goods inventory which will be Eligible In-Transit
Inventory upon presentation of a draft under that documentary letter of credit.
"ELIGIBLE TRADE L/C OBLIGATIONS" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of Eligible Trade L/Cs by Agent or a Subsidiary thereof or a
reimbursement agreement or guaranty by Agent with respect to Eligible Trade
L/Cs. The amount of any such Eligible Trade L/C Obligations shall equal the
maximum amount which may be payable by Agent or Lenders thereupon or pursuant
thereto.
"EL PORTAL" shall mean, El Portal Group, Inc., a Nevada
corporation.
"ENVIRONMENTAL LAWS' shall mean all federal, state, local and
foreign laws, statutes, ordinances and regulations, now or hereafter in effect,
and in each case as amend or supplemented from time to time, and any applicable
judicial or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree or judgment, relative to the
applicable real estate, relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include, but are
not limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C.ss.ss.9601 ET SEQ.) ("CERCLA"); the
Hazardous Material Transportation Act, as amended (49 U.S.C.ss.ss.1801 ET SEQ.);
the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C.ss.ss.136 ET SEQ.); the Resource Conservation and Recovery Act, as amended
(42 U.S.C.ss.ss.6901 ET SEQ.) ("RCRA"); the Toxic Substance Control Act, as
amended (15 U.S.C.ss.ss.2601 ET SEQ.); the Clean Air Act, as amended (42
U.S.C.ss.ss.740 ET SEQ.); the Federal Water Pollution Control Act, as amended
(33 U.S.C.ss.ss.1251 ET SEQ.); the Occupational Safety and Health Act, as
amended (29 U.S.C.ss.ss.651 ET SEQ.) ("OSHA"); and the Safe Drinking Water Act,
as amended (42 U.S.C.ss.ss.300(f) ET SEQ.), and any and all regulationS
promulgated thereunder, and all analogous state, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval statutes.
"ENVIRONMENTAL LIABILITIES AND COSTS" shall mean all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any person or entity, whether based in contract, tort,
implied or, express warranty, strict liability, criminal or civil statute or
common law (including any thereof arising under any Environmental Law, permit,
order or agreement with any Governmental Authority) and which relate to any
health or
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safety condition regulated under any Environmental Law or in connection with any
other environmental matter or Release, threatened Release or the presence of a
Hazardous Material or threatened Release of a Hazardous Material.
"ENVIRONMENTAL PERMITS" shall mean all permits, licenses,
administrative orders, consent orders, consent decrees, governmental agency
agreements, or other written documents detailing required environmental
performance expected of or permitted by any Credit party by Governmental
Authority.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) which, together with
such Credit Party, are treated as s single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the IRC with respect to any period after the
Closing Date.
"ERISA EVENT" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041 of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"EVENT OF DEFAULT" shall have the meaning assigned to it in
Section 8.1.
"FEES" shall mean any and all fees payable to Agent or any
Lender pursuant to the Agreement or any of the other Loan Documents.
"FINANCIAL STATEMENTS" shall mean the consolidated income
statement, statements of cash flows and balance sheets of Ultimate Parent and/or
its Subsidiaries delivered in accordance with SECTION 3.4 of the Agreement and
SCHEDULE G to the Agreement.
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"FIRST INTERMEDIATE PARENT" shall mean Wilsons Center, Inc., a
Minnesota corporation.
"FISCAL MONTH" shall mean any of the monthly accounting
periods of Ultimate Parent.
"FISCAL QUARTER" shall mean any of the four 13 calendar week
accounting periods of Ultimate Parent ending on or about the last day of
January, April, July and October of each year.
"FISCAL YEAR" shall mean any of the annual accounting periods
of Ultimate Parent ending on the Saturday closest to the last day of January of
each year.
"FIXED CHARGES" shall mean, for any fiscal period with respect
to Ultimate Parent and its Subsidiaries on a consolidated basis, the aggregate
of all Interest Charges paid in cash during such period, plus (a) scheduled
payments of principal with respect to Indebtedness during such period, plus (b)
lease payments with respect to Stores (including base rent, percentage rent,
common area payments and real estate taxes) during such period, plus (c) the
provision for income taxes with respect to such period.
"FIXED CHARGES COVERAGE RATIO" shall mean, with respect to
Ultimate Parent and its Subsidiaries on a consolidated basis for any fiscal
period, the ratio of (x) the sum of EBITDA, PLUS lease payments with respect to
Stores (including base rent, percentage rent, common area payments and real
estate taxes) during such period, LESS the unfinanced portion of Capital
Expenditures during such period to (y) Fixed Charges.
"FOREIGN SUBSIDIARIES" shall mean Wilsons (UK) Limited,
Wilsons Leather Gatsland Limited, Wilsons Leather Gatsair Limited, Wilsons
Leather of Hong Kong Limited, and any other Subsidiary of the Ultimate Parent
incorporated in a jurisdiction outside of the United States.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect, consistently
applied.
"GE CAPITAL" shall mean General Electric Capital Corporation,
a New York corporation.
"GE CAPITAL FEE LETTER" shall mean that certain letter, dated
as of May 24, 1999 and supplemented as of the Closing Date, between GE Capital
and Borrower with respect to certain Fees to be paid from time to time by
Borrower to GE Capital.
"GENERAL INTANGIBLES" shall mean any "general intangibles" as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party and in any event including without limitation all right, title and
interest which such Credit Party may now or hereafter have in or under any
Contract (including the Consignment Agreement, as amended or modified from time
to time), any Licenses, including, without limitation, all customer lists,
Trademarks, service marks, tradenames, business names, corporate names, trade
styles, logos and other source or business identifiers, and all applications
therefor and reissues, extensions or
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renewals thereof, rights in intellectual property, interests in partnerships,
joint ventures and other business associations, licenses, permits, copyrights,
trade secrets, proprietary or confidential information, inventions (whether or
not patented or patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records, goodwill (including all
goodwill associated with any Trademark registration, or Trademark licensed under
any Trademark License), all rights and claims in or under insurance policies
(including, without limitation, insurance for fire, damage, loss and casualty,
whether covering personal property, tangible rights or intangibles, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, tax refunds, rights to receive tax refunds and other
payments and rights of indemnification.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executing, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTEED INDEBTEDNESS" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("PRIMARY OBLIGATION") of any other Person (the "PRIMARY
OBLIGOR") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof. The amount of any Guaranteed Indebtedness at any time
shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is made or (y) the maximum amount for which such Person
may be liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.
"GUARANTIES" shall mean, collectively, the Parent Guaranty,
the Store Guarantors' Guaranty and any other guaranty executed by any Guarantor
in favor of Agent and Lenders in respect of the Obligations.
"GUARANTORS" shall mean Ultimate Parent, First Intermediate
Parent, Second Intermediate Parent, Third Intermediate Parent, each other Store
Guarantor, and each other Person, if any, which executes a guarantee or other
similar agreement in favor of Agent in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
"HAZARDOUS MATERIAL" shall mean any substance, material or
waste, the generation, handling, storage, treatment or disposal of which is
regulated by or forms the basis of liability now or hereafter under, any
Governmental Authority in any jurisdiction in which Borrower or any Subsidiary
thereof has owned, leased, or operated real property or disposed of
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hazardous materials, or by any Federal government authority, including, without
limitation, any material or substance which is (a) defined as a "solid waste,"
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste" or "restricted hazardous waste" or other similar term or phrase
under any Environmental Laws, (b) petroleum, or any fraction or by-product
thereof, asbestos, polychlorinated biphenyls (PCB's), any radioactive substance,
methane, volative hydrocarbons or any industrial solvent, (c) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
▇▇.▇▇. 1251 ET SEQ. (33 U.S.C. ▇▇.▇▇. 1321) or listed pursuant to Section 307 of
the Clean Water Act (33 U.S.C. ss. 1317), (d) defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901, ET SEQ. (42 U.S.C. ss. 6903), or (e) defined as a "hazardous
substance" pursuant to Section 1012 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 ET SEQ. (42 U.S.C. ss.
9601).
"INDEBTEDNESS" of any Person shall mean without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or more,
but excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property ), (e) all Capital Lease Obligations, (f) all obligations of such
Person under commodity purchase or option agreements or other commodity price
hedging arrangements, in each case whether contingent or matured, (g) all
obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"INDEX RATE" shall mean the higher of (a) the highest of the
most recently published or announced prime, corporate, base, reference or
similar benchmark rate, however designated, announced by any of the five (5)
largest member banks of the New York Clearing House Association and (b) one half
of one percent (.5%) per annum over the Federal funds rate, in each case as of
the date of determination. Changes in the rate of interest applicable to Index
Rate Loans shall occur simultaneously with changes in the Index Rate.
"INDEX RATE LOAN" shall mean the Revolving Loan or any portion
thereof bearing interest by reference to the Index Rate.
"INSTRUMENTS" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, including, without limitation, all certificated securities,
all certificates of deposit, and all notes and other evidences
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of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"INTELLECTUAL PROPERTY" shall mean any and all Licenses,
Trademarks, trade secrets and customer lists.
"INTEREST CHARGES" shall mean, with respect to any Person for
any fiscal period, the amount which, in conformity with GAAP, would be set forth
opposite the caption "Interest Expense" (or any like caption) on a consolidated
income statement of such Person and all other Persons with which such Person's
Financial Statements are to be consolidated in accordance with GAAP for the
relevant period ended on such date, including without limitation, in the case of
Ultimate Parent and its Subsidiaries, the L/C Fee and Non-Use Fee, net of
interest income and investment income.
"INTEREST PAYMENT DATE" means (a) as to any Index Rate Loan
and the Swing Line Loan, the first Business Day of each month to occur while
such Loan is outstanding, and (b) as to each LIBOR Loan, the last day of the
LIBOR Period applicable thereto; PROVIDED, HOWEVER, that, in addition to the
foregoing, each of (x) the date upon which all of the Revolving Loan Commitments
have been terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with respect
to any interest which is then accrued under the Agreement.
"INVENTORY" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any Credit Party,
wherever located, and in any event including, without limitation, all inventory,
merchandise, goods and other personal property which are held by or on behalf of
any Credit Party for sale or lease or are furnished or are to be furnished under
a contract of service, or which constitute raw materials, work in process or
materials used or consumed or to be used or consumed in such Credit Party's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including, without limitation, all other supplies.
"INVESTMENT PROPERTY" shall mean all "investment property," as
such term is defined in the Code, now or hereafter owned or acquired by, any
Credit Party, wherever located an, in any event, including, without limitation:
(a) all securities, whether certificated or uncertificated, including, without
limitation, stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit and mutual funds shares; (b) all
securities entitlements of any Credit Party, including, without limitation, all
rights of any Credit Party to any securities account and any free credit balance
or other money owing by any securities intermediary with respect to any such
account; (c) all securities accounts held by any Credit Party; (d) all commodity
contracts held by any Credit Party and (e) all commodity accounts held by any
Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
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"JOINT VENTURE" shall mean any business enterprise, regardless
of form, domestic or foreign, in which Ultimate Parent or any of its
Subsidiaries has an equity interest which constitutes less than 100% of the
total equity thereof (other than any directors qualifying shares or similar de
minimus ownership interests required by the laws of any state or country), which
business enterprise is formed or acquired for business purposes permitted hereby
(including a Non-Core Business).
"L/C AVAILABILITY" shall have the meaning ascribed thereto in
SECTION 1.2 of the Agreement.
"L/C ISSUER" shall have the meaning assigned to such term in
SCHEDULE B and shall mean, initially, GE Capital or a subsidiary of GE Capital.
"L/C FEE" shall have the meaning ascribed thereto in SCHEDULE
B to the Agreement.
"L/C SUBLIMIT" shall mean $85,000,000.
"LENDERS" shall mean GE Capital, the other Lenders named on
the signature page of the Agreement including without limitation the Swing Line
Lender, and, if any such Lender shall decide to assign all or any portion of the
Obligations, such term shall include such assignee.
"LETTER OF CREDIT OBLIGATIONS" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance Letters of Credit by Agent or a Subsidiary thereof or a
reimbursement agreement or guaranty by Agent with respect to a Letter of Credit
issued by any other L/C Issuer. The amount of such Letter of Credit Obligations
shall equal the maximum amount which may be payable by Agent or Lenders pursuant
thereto. This term expressly excludes Eligible Trade L/C Obligations.
"LETTERS OF CREDIT" shall mean documentary or standby letters
of credit other than Eligible Trade L/Cs issued for the account of Borrower by
L/C Issuer, and bankers' acceptances issued by Borrower, for which Agent and
Lenders have incurred Letter of Credit Obligations.
"LIBOR BUSINESS DAY" shall mean a Business Day on which banks
in the city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR LOAN" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR PERIOD" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower pursuant to
this Agreement and ending seven (7) days or, one, two or three months
thereafter, as selected by Borrower in an irrevocable notice to Agent as set
forth in SECTION 1.5(E); PROVIDED that the foregoing provision relating to LIBOR
Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day
that is not a LIBOR Business Day, such LIBOR Period shall be extended
to the next succeeding
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LIBOR Business Day unless the result of such extension would be to
carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend
beyond the Commitment Termination Date shall end two (2) LIBOR Business
Days prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan for
one month or more that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower shall select LIBOR Periods so that there
shall be no more than ten (10) separate LIBOR Loans outstanding at any
one time.
"LIBOR RATE" shall mean for each LIBOR Period, a rate of
interest equal to:
(a) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period which appears on Telerate Page
3750 as of 11:00 a.m., London time, two (2) LIBOR Business Days prior
to the beginning of each LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 MINUS the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day which is two (2) LIBOR
Business Days prior to the beginning of such LIBOR Period (including,
without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal
Reserve system or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) which are required to be
maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available
from Telerate News Service, the LIBOR Rate shall be determined from
such financial reporting service or other information as shall be
mutually acceptable to Agent and Borrower.
"LICENSE" shall mean any Trademark License or other written
license of rights or interests in Trademarks now held or hereafter acquired by
any Credit Party.
"LIEN" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any synthetic lease or title retention agreement, any
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financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).
"LITIGATION" shall have the meaning assigned to it in SECTION
3.13.
"LOAN ACCOUNT" shall have the meaning assigned to it in
SECTION 1.12.
"LOAN DOCUMENTS" shall mean the Agreement, the Notes, the
Collateral Documents and all other agreement, instruments, documents and
certificates identified in the Schedule of Documents executed and delivered to,
or in favor of, Agent and/or Lenders and including (without limitation) all
other pledges, powers of attorney, consents, assignments, contracts, notices,
and all other written matter whether heretofore, now or hereafter executed by or
on behalf of any Material Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated hereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative.
"LOAN PARTIES" shall mean Ultimate Parent, First Intermediate
Parent, Borrower, Second Intermediate Parent, and Third Intermediate Parent.
"LOANS" shall mean the Revolving Loan and the Swing Line Loan.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the business, assets, operations or financial or other condition of the
Loan Parties considered as a whole, (b) Borrower's ability to pay any of the
Loans or any of the other Obligations in accordance with the terms thereof, (c)
any material part of the Collateral or Agent's Liens, on behalf of itself and
Lenders, on such Collateral or the priority of such Liens, or (d) Agent's or any
Lender's rights and remedies under the Agreement and the other Loan Documents.
For purposes of the foregoing, any event or occurrence which results or could
reasonably be expected to result in uninsured losses, costs or liabilities in
excess of 15% of the Borrowing Base as of any date of determination shall be
deemed to have a Material Adverse Effect.
"MATERIAL CREDIT PARTY" shall mean Ultimate Parent, First
Intermediate Parent, Second Intermediate Parent, Third Intermediate Parent,
Borrower and each other Store Guarantor that operates more than twelve (12)
Stores.
"MAXIMUM AMOUNT" shall mean, at any particular time, an amount
equal to the Revolving Loan Commitment (including as a subpart thereof the Swing
Line Commitment) of all Lenders.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA
Affiliate is making or is obligated to make contributions on behalf of
participants who are or were employed by any of them after the Closing Date.
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"NON-CORE BUSINESS" shall mean any retail or wholesale
business other than the retail leather apparel and accessories business and the
retail luggage and accessories business and the wholesale business consisting of
selling goods against firm purchase orders.
"NON-USE FEE" shall have the meaning assigned to it in SECTION
1.9(B).
"NOTES" shall mean the Revolving Notes and the Swing Line
Note, collectively.
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning
assigned to it in SECTION 1.5(E).
"NOTICE OF REVOLVING CREDIT ADVANCE" shall have the meaning
assigned to it in SECTION 1.1(A).
"NOTICE OF SWING LINE ADVANCE" shall have the meaning assigned
to it in SECTION 1.1(B)(I).
"OBLIGATIONS" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing by
any Credit Party to Agent or any Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether or not evidenced
by any note, agreement or other instrument, arising under the Agreement or any
of the other Loan Documents. This term includes all principal, interest
(including, without limitation, all interest which accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of, or
for the reorganization of any Credit Party, whether or not allowed in such
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"OVERADVANCE" shall have the meaning assigned to it in SECTION
1.1(A)(III).
"PARENT GUARANTY" shall mean the Amended and Restated Guaranty
executed and delivered by Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent, as amended, modified or
restated from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"PERMITTED ENCUMBRANCES" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental Charges
not yet due and payable or which are being contested in accordance with SECTION
5.2; (b) pledges or deposits securing obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation; (c) pledges or deposits securing bids, tenders, contracts, other
than contracts for the payment of money) or leases to which any Credit Party is
a party as lessee made in the ordinary course of business; (d) deposits securing
statutory obligations of any Credit Party; (e) workers', mechanics' suppliers'
or similar liens arising in the ordinary course of business; (f) carriers',
warehousemen's or other similar possessory liens arising in the ordinary course
of business; (g) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to
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which any Credit Party is a party; (h) any attachment or judgment lien not
constituting an Event of Default under SECTION 8.1(J) of the Agreement; (i)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (j) Liens existing on the Closing Date and
listed on SCHEDULE 6.7 hereto; (k) presently existing or hereinafter created
Liens in favor of Agent, on behalf of Lenders; and (l) Liens created after the
date hereof, by conditional sale or other title retention agreements (including,
without limitation, Capital Leases) or in connection with purchase money
Indebtedness with respect to assets acquired by any Credit Party in the ordinary
course of business, involving the incurrence of an aggregate amount of purchase
money Indebtedness and Capital Lease Obligations of not more than $10,000,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within thirty (30) days following such purchase and does not exceed
100% of the purchase price of the subject assets and including purchase money
Indebtedness and Capital Leases incurred or assumed in connection with a
Permitted Acquisition).
"PERMITTED INVESTMENT" shall have the meaning assigned to it
in Section 6.1.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"PLAN" shall mean, at any time after the Closing Date, an
employee benefit plan, as defined in Section 3(3) of ERISA, which any Credit
Party maintains, contributes to or has an obligation to contribute to on behalf
of participants who are or were employed by any Credit Party.
"PLEDGE AGREEMENTS" shall mean the separate Pledge Agreements,
executed by each of Ultimate Parent, First Intermediate Parent and Second
Intermediate Parent with respect to the Stock of their respective Subsidiaries
and by Third Intermediate Parent with respect to the Stock of Borrower, the
Store Guarantors, Bermans and Wilsons International, Inc., as amended, modified
or restated from time to time.
"PRIOR CREDIT AGREEMENT" shall have the meaning assigned
thereto in the recitals of the Agreement.
"PRIOR LOANS" shall have the meaning assigned thereto in the
recitals of the Agreement.
"PROCEEDS" shall mean "proceeds," as such term is defined in
the Code and, in any event, shall include (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to any Credit Party from time
to time with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to any Credit Party from time to time
in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all
A-17
or any part of the Collateral by any Governmental Authority (or any Person
acting under color of governmental authority), (c) any claim of any Credit Party
against third parties for past, present or future infringement of any Trademark
or Trademark License, or for injury to the goodwill associates with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, (e) dividends, distributions, interest, and Instruments received or
receivable with respect to pledged Stock or Investment Property; and (f) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral upon disposition or otherwise.
"PROJECTIONS" shall mean (i) for the Fiscal Year ending in
January of 2001, Ultimate Parent's forecasted consolidated (a) balance sheets,
(b) profit and loss statements, (c) cash flow statements, and (d) capitalization
statements; and (ii) for the Fiscal Years ending in January of 2002 and 2003,
Ultimate Parent's forecasted consolidated profit and loss statements, in each
case prepared in a manner consistent with the historical Financial Statements of
Ultimate Parent together with appropriate supporting details and a statement of
underlying assumptions.
"PRO RATA SHARE" shall mean with respect to all matters
relating to any Lender, or with respect to the Revolving Loan, the percentage
obtained by dividing (i) the Revolving Loan Commitment and Swing Line Commitment
of that Lender by (ii) the aggregate Revolving Loan Commitments and Swing Line
Commitment of all Lenders.
"QUALIFIED PLAN" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC maintained by a Credit Party after
the Closing Date.
"REAL ESTATE" shall have the meaning assigned to it in SECTION
3.6.
"REFUNDED SWING LINE LOAN" shall have the meaning assigned to
it in SECTION 1.1(B)(III).
"RELEASE" shall mean, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
dumping of, leaching or migration of Hazardous Materials in the indoor or
outdoor environment by such person, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property, which, in
any event, has resulted in the creation of any material unpaid liability for
such Person.
"REQUISITE LENDERS" shall mean (a) Lenders having more than
sixty-six and two-thirds percent 66 2/3%) of the Revolving Loan Commitments of
all Lenders, or (b) if the Revolving Loan Commitments have been terminated, more
than sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding
amount of the Loans (with Swing Line Loans being attributed to the Lenders
participating therein) and Letter of Credit Obligations and Eligible Trade L/C
Obligations.
"RESERVES" shall mean, for purposes of calculating the
Borrowing Base, (a) reserves established by Agent from time to time against the
Borrowing Base pursuant to SECTION 5.9 of the Agreement, (b) reserves
established pursuant to SECTION 5.4(C) of the Agreement, (c) reserves
established pursuant to SECTION 1.11(C) of the Agreement and (d) subject to
SECTION 1.7 of the Agreement, such other reserves which Agent may, in its
reasonable credit judgment,
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establish from time to time. Without limiting the generality of the foregoing,
shrinkage Reserves consistent with those established by Borrower under GAAP,
Reserves established to ensure the payment of accrued and unpaid customs duties,
customs and shipping charges with respect to Eligible In-Transit Inventory,
Reserves for differences between LIFO and FIFO, and a sales and use tax Reserve
for sales and use taxes due within ninety (90) days shall be deemed to be a
reasonable exercise of Agent's credit judgment.
"RESTRICTED PAYMENT" shall mean (a) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the Purchase, redemption, defeasance, sinking fund
or other retirement or a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages, or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person; and (g) any payment of management fees (or other
fees of a similar nature) by such Person to any Stockholder of such Person or
their Affiliates.
"RETIREE WELFARE PLAN" shall mean, at any time, a Plan that is
a "welfare plan" as defined in Section 3(2) of ERISA, that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant which is
maintained by a Credit Party, after the Closing Date.
"REVOLVING CREDIT ADVANCE" shall have the meaning assigned to
it in SECTION 1.1(A)(I).
"REVOLVING LOAN" shall mean as the context may require, at any
time, the sum of (i) the aggregate amount of Revolving Credit Advances
outstanding to Borrower PLUS (ii) the aggregate Letter of Credit Obligations and
Eligible Trade L/C Obligations incurred on behalf of Borrower.
"REVOLVING LOAN COMMITMENT" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Revolving Credit Advances, Swing
Line Advances and/or incur Letter of Credit Obligations and Eligible Trade L/C
Obligations as set forth in the signature page to the Agreement or in the most
recent Lender Assignment Agreement executed by such Lender (as of the Closing
Date, each Lender's Revolving Loan Commitment is set forth on the Signature
Pages hereto) and (b) as to all Lenders, the aggregate commitment of all Lenders
to make Revolving Credit Advances, Swing Line Advances and/or incur Letter of
Credit Obligations and Eligible Trade L/C Obligations, which aggregate
commitment shall be One
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Hundred Sixty-Five Million Dollars ($165,000,000) on the Closing Date, as such
amount may be adjusted, if at any, from time to time in accordance with the
Agreement.
"REVOLVING NOTE" shall have the meaning assigned to it in
SECTION 1.1(A)(II).
"SCHEDULE OF DOCUMENTS" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as SCHEDULE F.
"SEASONAL OVER-ADVANCES" shall mean the seasonal
over-advance(s) described in the definition of the term "Borrowing Base."
"SECOND INTERMEDIATE PARENT" shall mean Rosedale Wilsons,
Inc., a Minnesota corporation.
"SECURITY AGREEMENT" shall mean the Security Agreement dated
May 25, 1996 entered into among Agent, on behalf of itself and Lenders, and each
Credit Party thereto, as amended, modified or restated from time to time and
each Supplemental Security Agreement entered into thereafter.
"SENIOR NOTES" shall mean senior unsecured notes issued by
Ultimate Parent and guaranteed by Borrower, and all of the Guarantors (other
than Ultimate Parent), in the initial principal amount of $75,000,000, bearing
interest at the rate of 11-1/4% per annum and maturing on August 15, 2004.
"SENIOR NOTES DOCUMENTS" shall mean the Senior Notes, the
Indenture dated as of August 18, 1997 between Ultimate Parent and Norwest Bank,
Minnesota, N.A., as trustee, governing the terms and issuance of the Senior
Notes, and all guaranties executed and delivered by Subsidiaries of Ultimate
Parent with respect to the Senior Notes as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"SOLVENT" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person on a going concern basis is greater than the total amount of liabilities,
including contingent liabilities, of such Person; (b) the present fair salable
value of the assets of such Person on a going concern basis is not less than the
amount that will be required to pay the probably liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person's property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pensions plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably expected to
become an actual or matured liability.
"STOCK" shall mean all shares, options, warrants, general or
limited partnership interest or other equivalents (regardless of how designated)
of or in a corporation, partnership or
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equivalent entity whether voting or nonvoting, including common stock, preferred
stock or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"STORE" shall mean a location at which goods are sold at
retail operated by a Store Guarantor and shall include kiosks and holiday stores
temporarily operated by any Store Guarantor during the Christmas holiday season
and located in the United States.
"STORE GUARANTOR" shall mean any Subsidiary of Ultimate Parent
other than (i) First Intermediate Parent, (ii) Borrower, (iii) Foreign
Subsidiaries and (iv) Joint Ventures (in each case, whether or not such Person
operates a retail store), and "STORE GUARANTORS" shall mean all of the
foregoing, collectively.
"STORE GUARANTORS' GUARANTY" shall mean the Amended and
Restated Guaranty executed by the Store Guarantors (excluding the Second
Intermediate Parent and Third Intermediate Parent) in favor of the Lenders, as
amended, modified or restated from time to time.
"SUBORDINATED DEBT" shall mean any Indebtedness of any Credit
Party subordinated to the Obligations in a manner and form satisfactory to the
Agent and the Lenders in their sole discretion, as to right and time of payment
and as to any other rights and remedies thereunder.
"SUBSIDIARY" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person and/or one
or more Subsidiaries of such Person, or with respect to which any such Person
has the right to vote or designate the vote of fifty percent (50%) or more of
such Stock whether by proxy, agreement, operation of law or otherwise, and (B)
any partnership or limited liability company in which such Person and/or one ore
more Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner. Unless the context otherwise requires all
references to Subsidiaries in the Agreement or in the other Loan Documents shall
be deemed to refer to Subsidiaries of First Intermediate Parent.
"SUPPLEMENTAL SECURITY AGREEMENT" shall mean the Supplemental
Security Agreements dated as May 24, 1999 and each Supplemental Security
Agreement entered into thereafter among Agent, on behalf of itself and Lenders,
and each Credit Party thereto, as amended, modified or restated from time to
time.
"SUPPORTING OBLIGATIONS" has the meaning ascribed thereto in
the Code.
"SWING LINE ADVANCE" has the meaning assigned to it in SECTION
1.1(B)(I).
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"SWING LINE AVAILABILITY" has the meaning assigned to it in
SECTION 1.1(B)(I).
"SWING LINE COMMITMENT" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Loans as set
forth on the signature page to the Agreement, which commitment constitutes a
part of the Revolving Loan Commitment of the Swing Line Lender.
"SWING LINE LENDER" shall mean GE Capital.
-----------------
"SWING LINE LOAN" shall mean as the context may require, at
any time, the aggregate amount of Swing Line Advances outstanding to Borrower.
"SWING LINE LOAN PARTICIPATION CERTIFICATE" shall mean a
certificate delivered pursuant to SECTION 1.1(B)(IV).
"SWING LINE NOTE" has the meaning assigned to it in SECTION
1.1(B)(II).
"TAXES" shall mean taxes, levies, imposes, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Agent or a Lender by the federal
government or any State or political subdivision thereof.
"TERMINATION DATE" shall mean the date on which the Loans have
been indefeasibly repaid in full and all other Obligations under the Agreement
and the other Loan Document have been completely discharged and Borrower shall
not have any further right to borrow any monies thereunder.
"THIRD INTERMEDIATE PARENT" shall mean River Hills Wilsons,
Inc., a Minnesota corporation.
"TITLE IV PLAN" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to after the
Closing Date on behalf of participants who are or were employed by any of them.
"TRADEMARK" or "TRADEMARKS" shall mean any and all of the
following now owner or hereafter acquired by any Credit Party: (a) all
trademarks, trade names, corporate names, business names, trade styles, service
marks, logos, other source or business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles of
like nature (whether registered or unregistered), now owned or existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, all
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
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"TRADEMARK LICENSE" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Trademark.
"TRADEMARK SECURITY AGREEMENTS" shall mean the Trademark
Security Agreements made in favor of Agent, on behalf of Lenders, by each
applicable Credit Party, as amended, modified or restated from time to time.
"UNFUNDED PENSION LIABILITY" shall mean, at any time after the
Closing Date, the aggregate amount, if any, of the sum of (a) the amount by
which the present value of all accrued benefits under each Title IV Plan exceeds
the fair market value of all assets of such Title IV Plan allocable to such
benefits in accordance with Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of
five (5) years following a transaction which might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
"ULTIMATE PARENT" shall mean Wilsons The Leather Experts Inc.,
a Minnesota corporation.
"WILSONS ACQUISITION" shall mean Wilsons Acquisition
Corporation, a Nevada corporation.
"WWT" shall mean WWT, Inc., a Delaware corporation and wholly
owned subsidiary of Third Intermediate Parent.
All other undefined terms contained in any of the Loan
Documents shall, unless the context indicates otherwise, have the meanings
provided for by the Code as in effect in the State of Illinois to the extent the
same are used or defined therein. The words "herein," "hereof" and "hereunder"
and other words of similar import refer to the Agreement as a whole, including
all Exhibits and Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons, and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations.
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SCHEDULE B
LETTERS OF CREDIT
-----------------
(a) ISSUANCE. Subject to the terms and conditions of the
Agreement, Agent agrees to incur from time to time, upon the request of Borrower
on behalf of Borrower and for Borrower's account, Letter of Credit Obligations
and Eligible Trade L/C Obligations by causing Letters of Credit and Eligible
Trade L/Cs to be issued on terms acceptable to Agent and by Agent, a subsidiary
of Agent or a bank or other legally authorized Person acceptable to Agent and
Borrower (each, an "L/C ISSUER") for Borrower's account and guaranteed by Agent;
PROVIDED, HOWEVER, that the aggregate amount of the sum of all such Letter of
Credit Obligations PLUS Eligible Trade L/C Obligations shall not at any time
exceed the lesser of (i) Eighty-Five Million Dollars ($85,000,000) (the "L/C
SUBLIMIT"), or (ii) the Maximum Amount LESS the aggregate outstanding principal
balance of the Revolving Credit Advances; PROVIDED FURTHER that Letter of Credit
Obligations plus 35% of Eligible Trade L/C Obligations during the period of
September 1 through October 31 of each year or 40% of Eligible Trade L/C
Obligations at all other times shall not exceed the Borrowing Base LESS the
outstanding balance of the Revolving Credit Advances and Swing Line Advances. No
such Letter of Credit Obligation or Eligible Trade L/C Obligation shall have an
expiry date which is more than one year following the date of issuance thereof,
and Agent and the Lenders shall be under no obligation to incur Letter of Credit
Obligations or Eligible Trade L/C Obligations in respect of any Letter of Credit
or Eligible Trade L/C having an expiry date which is later than the Commitment
Termination Date. The Borrower may request to change the LC Issuer, subject to
consent by Agent, which consent shall not be unreasonably withheld.
(b) (i) ADVANCES AUTOMATIC; PARTICIPATIONS. When Agent
makes any payment on or pursuant to any Letter of Credit Obligation or Eligible
Trade L/C Obligation, such payment shall then be deemed automatically to
constitute a Swing Line Advance to the extent of Swing Line Availability (and if
Swing Line Availability is zero, a Revolving Credit Advance) to Borrower under
the Agreement regardless of whether a Default or Event of Default shall have
occurred and be continuing and notwithstanding Borrower's failure to satisfy the
conditions precedent set forth in SECTION 2 of the Agreement, and, in the case
of a Revolving Credit Advance, each Lender shall be obligated to pay its Pro
Rata Share thereof in accordance with the Agreement. The failure of any Lender
to make available to Agent for Agent's own account its Pro Rata Share of any
such Revolving Credit Advance or payment by Agent under or in respect of a
Letter of Credit or Eligible Trade L/C shall not relieve any other Lender of its
obligation hereunder to make available to Agent its Pro Rata Share thereof, but
no Lender shall be responsible for the failure of any other Lender to make
available such other Lender's Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for Borrower
to incur Revolving Credit Advances as contemplated by paragraph (b)(i) above
because of an Event of Default described in SECTION 8.1(H) or (I) or otherwise
or if it shall be illegal or unlawful for any Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
then (i) immediately and without further action whatsoever, such Lender shall be
deemed to have irrevocably and unconditionally purchased from Agent an undivided
interest and participation equal to such Lender's Pro Rata Share (based on the
Revolving Loan
B-1
Commitments) of the Letter of Credit Obligations or Eligible Trade L/C
Obligations in respect of all Letters of Credit or Eligible Trade L/Cs then
outstanding and (ii) thereafter, immediately upon issuance of any Letter of
Credit or Eligible Trade L/C, each Lender shall be deemed to have irrevocably
and unconditionally purchased from Agent an undivided interest and participation
in such Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the
Letter of Credit Obligations or Eligible Trade L/C Obligations with respect to
such Letter of Credit or Eligible Trade L/C on the date of such issuance. Each
Lender shall fund its participation in all payments or disbursements made under
the Letters of Credit or Eligible Trade L/Cs in the same manner as provided in
the Agreement with respect to Revolving Credit Advances.
(c) CASH COLLATERAL. If any Letter of Credit Obligations or
Eligible Trade L/C Obligations, whether or not then due and payable, shall for
any reason be outstanding on the Commitment Termination Date, or if L/C
Availability is less than zero or would be reduced to less than zero upon the
incurrence of additional Letter of Credit Obligations or Eligible Trade L/C
Obligations (an "L/C Availability Short-Fall"), Borrower will pay to Agent for
the benefit of the Lenders cash or cash equivalents acceptable to Agent ("CASH
EQUIVALENTS") in an amount equal to the greater of (1) 100% of the maximum then
available to be drawn under each applicable Letter of Credit or Eligible Trade
L/C outstanding for the benefit of Borrower, PLUS such amount as Agent may
request to cover fees, costs and expenses (including attorneys' fees and
expenses) which may be incurred with respect thereto in the case of cash
collateral to be provided on the Commitment Termination Date or (2) in the
amount of the L/C Availability Short-Fall in the case where L/C Availability is
or would be reduced to less than zero. Such funds or Cash Equivalents shall be
held by Agent in a cash collateral account (the "CASH COLLATERAL ACCOUNT")
maintained at a bank or financial institution acceptable to agent. The Cash
Collateral Account shall be in the name of Agent (as a cash collateral account),
and shall be under the sole dominion and control of Agent and subject to the
terms of this SCHEDULE B. Borrower hereby pledges and grants to Agent, on behalf
of Lenders, a security interest in all such funds and Cash Equivalents held in
the Cash Collateral Account from time to time and all proceeds thereof, as
security for the payment of all amounts due in respect of the Letter of Credit
Obligations, Eligible Trade L/C Obligations and other Obligations, whether or
not then due. The Agreement, including this SCHEDULE B, shall constitute a
security agreement under applicable law.
From time to time after funds or cash equivalents are
deposited in the Cash Collateral Account by Borrower, Agent may apply such funds
or Cash Equivalents then held in the Cash Collateral account to the payment of
any amounts, in such order as Agent may elect, as shall be or shall become due
and payable by Borrower to the Lenders with respect to such Letter of Credit
Obligations or Eligible Trade L/C Obligations and, upon the satisfaction in full
of all Letter of Credit Obligations or Eligible Trade L/C Obligations of
Borrower outstanding at the Commitment Termination Date or otherwise upon
elimination of the L/C Availability Short-Fall, to any other Obligations of
Borrower then due and payable. All sums remaining after application of funds
from the Cash Collateral Account as herein provided shall be returned to
Borrower.
Agent shall at the direction of Borrower invest the funds in
the Cash Collateral Account in short term investments issued or fully guaranteed
by the United States government or
B-2
an agency thereof, and to the extent not applied to the Obligations as provided
herein, interest and earnings thereon, if any, shall be the property of
Borrower.
(d) FEES AND EXPENSES. Borrower agrees to pay to Agent for the
benefit of the Lenders, as compensation to such Lenders for Letter of Credit
Obligations and Eligible Trade L/C Obligations incurred hereunder, (x) all costs
and expenses incurred by Agent or any Lender on account of such Letter of Credit
Obligations or Eligible Trade L/C Obligations, and (y) commencing with the month
in which any such Letter of Credit Obligations or Eligible Trade L/C Obligation
is incurred by the Lenders and on the first day of each month in arrears for
each month during which such Letter of Credit Obligation or Eligible Trade L/C
Obligation shall remain outstanding, a fee (the "L/C FEE") in an amount equal to
the Applicable L/C Margin per annum multiplied by the daily average of the
maximum amount available to be drawn under the applicable Letters of Credit and
Eligible Trade L/C's outstanding during each month. In addition, Borrower agrees
that Borrower (and not Agent or any Lender) shall be responsible for the payment
of all L/C Issuer fees, costs, and expenses in connection with the issuance of
Letters of Credit and Eligible Trade L/Cs at such times and in such amounts as
Borrower and L/C issuer shall agree, pursuant to the application and related
documentation under which any Letter of Credit or Eligible Trade L/C is issued.
The L/C Fees due under this PARAGRAPH (D) shall be calculated on the basis of a
360-day year for the actual number of days elapsed (except as may be otherwise
specified in any agreement between Borrower and the L/C Issuer) and shall be
paid to Agent for the benefit of the applicable Lenders.
(e) REQUESTS FOR LETTERS OF CREDIT. Borrower shall be deemed
to request the incurrence of all documentary Letter of Credit Obligations and
Eligible Trade L/C Obligations by electronically forwarding to Agent at its
address as set forth in the Agreement an application for issuance of a Letter of
Credit or Eligible Trade L/C in the form approved by the L/C Issuer or its
processor. Provided that all other criteria for incurrence of Letter of Credit
Obligations or Eligible Trade L/C Obligations are met, such application shall be
electronically forwarded to the L/C Issuer with Agent's authorization to issue
the requested Letter of Credit or Eligible Trade L/C (i) the same day as the
application is received by Agent, if such application is forwarded to Agent on
or before 12:00 noon (Chicago time) on any Business Day, or (ii) the Business
Day following the Business Day that the application is received by Agent, in all
other cases. All standby Letter of Credit Obligations shall be incurred upon
Borrower's submission of a completed written Application for Standby Letter of
Credit in the form provided by Agent. Each standby Letter of Credit shall be
issued within two Business Days following finalization of mutually satisfactory
letter of credit and drawing certificate provisions.
(f) OBLIGATION ABSOLUTE. The obligation of Borrower to
reimburse Agent and Lenders for payments made with respect to any Letter of
Credit Obligation or Eligible Trade L/C Obligation shall be absolute,
unconditional and irrevocable, without necessity of presentment, demand, protest
or other formalities, and the obligations of each Lender to make payments to
Agent with respect to Letters of Credit and Eligible Trade L/Cs shall be
unconditional and irrevocable. Such obligations of Borrower and Lenders shall be
paid strictly in accordance with the terms hereof under all circumstances
including the following circumstances:
B-3
(i) any lack of validity or enforceability of any
Letter of Credit or Eligible Trade L/C or the Agreement or the other
Loan Documents or any other agreement;
(ii) the existence of any claim, set-off, defense or
other right which Borrower or any of its Affiliates or any Lender may
at any time have against a beneficiary or any transferee of any Letter
of Credit or Eligible Trade L/C (or any Persons or entities for whom
any such transferee may be acting), Agent, any Lender, or any other
Person, whether in connection with the Agreement, the Letter of Credit
or Eligible Trade L/C, the transactions contemplated herein or therein
or any unrelated transaction (including any underlying transaction
between Borrower and the beneficiary for which the Letter of Credit or
Eligible Trade L/C was procured);
(iii) any draft, demand, certificate or any other
document presented under any Letter of Credit or Eligible Trade L/C
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 L/C Issuer under any Letter of Credit
or Eligible Trade L/C against presentation of a demand, draft or
certificate or other document which does not comply with the terms of
such Letter of Credit or Eligible Trade L/C;
(v) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default
shall have occurred and be continuing.
(g) INDEMNIFICATION: NATURE OF LENDER'S DUTIES. In addition to
amounts payable as elsewhere provided in the Agreement, Borrower hereby agrees
to pay and protect, indemnify, and save harmless Agent and each Lender from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including attorneys' fees and allocated costs of internal
counsel) which Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit or Eligible
Trade L/C, or (ii) the failure of Agent, any Lender or such L/C Issuer seeking
indemnification to honor a demand for payment under any Letter of Credit
Obligation or Eligible Trade L/C Obligation as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority, in each case other than to the extent
solely as a result of the gross negligence or willful misconduct of Agent or
such Lender (as finally determined by a court of competent jurisdiction).
Nothing herein contained shall be deemed to limit or expand the scope of any
indemnity or release contained in any agreement between Borrower and the L/C
Issuer.
As between Agent and any Lender and Borrower, Borrower assumes
all risks of the acts and omissions of, or misuse of any Letter of Credit or
Eligible Trade L/C by beneficiaries of any Letter of Credit or Eligible Trade
L/C. In furtherance and not in limitation of the foregoing, to the fullest
extent permitted by law neither Agent nor any Lender shall be
B-4
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document issued by any party in connection with the
application for and issuance of any Letter of Credit or Eligible Trade L/C, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged, (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or Eligible Trade L/C or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of any Letter
of Credit or Eligible Trade L/C to comply fully with conditions required in
order to demand payment under such Letter of Credit or Eligible Trade L/C or the
failure of the L/C Issuer to require strict compliance with such conditions;
PROVIDED that, in the case of any payment by Agent of any Letter of Credit
Obligation or Eligible Trade L/C Obligation, Agent shall be liable to the extent
such payment was made solely as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction) in
determining that the demand for payment of such Letter of Credit Obligation or
Eligible Trade L/C Obligation thereof complies on its face with any applicable
requirements for a demand for payment thereof; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for
errors in interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a payment
under any Letter of Credit or Eligible Trade L/C or of the proceeds thereof;
(vii) for the credit of the proceeds of any drawing under any Letter of Credit
or Eligible Trade L/C; and (viii) for any consequences arising from causes
beyond the control of Agent. None of the above shall affect, impair, or prevent
the vesting of any of Agent's or any Lender's rights or powers hereunder or
under the Agreement.
Nothing herein contained shall be deemed to waive or release
any right or claim that Borrower may have against the L/C Issuer in its capacity
as such.
B-5
SCHEDULE C
INTENTIONALLY OMITTED
C-1
SCHEDULE D
INTENTIONALLY OMITTED
D-1
SCHEDULE E
CASH MANAGEMENT SYSTEMS
-----------------------
Borrower shall, and shall cause the Credit Parties to,
establish and maintain the Cash Management Systems described below:
(a) Until the Termination Date, each Credit Party
which maintains a depository account (each, a "CREDIT PARTY ACCOUNT") with any
bank (each, a "RELATIONSHIP BANK") shall instruct each of its Relationship Banks
to transfer all good funds on deposit in such Credit Party Account (less
reserves for returned items and account fees) by wire transfer or automated
clearing house procedures on a daily basis into a bank account in Borrower's
name (the "Concentration Account") at ▇▇▇▇▇▇ Trust and Savings Bank or another
bank mutually agreed upon in advance by Agent and Borrower (the "Concentration
Account Bank").
(b) Borrower may maintain, in its name, accounts
(each a "Disbursement Account" and collectively, the "Disbursement Accounts")
into which, Agent shall, from time to time, deposit proceeds of Revolving Credit
Advances and Swing Line Advances made to Borrower pursuant to SECTION 1.1 of the
Agreement.
(c) On or before the Closing Date, the Concentration
Account Bank shall enter into a new tri-party blocked account agreement or
modify its existing tri-party blocked account agreement with Agent with respect
to the Concentration Account, for the benefit of itself and Lenders, and
Borrower, in form and substance acceptable to Agent, which shall become
operative on the Closing Date. Such blocked account agreement shall provide,
among other things, that (i) all items of payment and funds deposited in the
Concentration Account and proceeds thereof deposited in such account are held by
such bank, as agent or bailee-in-possession for the Agent, on behalf of Lenders,
(ii) the bank executing such agreement has no rights of setoff or recoupment or
any other claim against such account other than for payment of its service fees
and other charges directly related to the administration of such account and for
returned checks or other items of payment and (iii) from and after the
Concentration Account Bank's receipt of a notice (an "Activation Notice") from
Agent (which Activation Notice may be given by Agent at any time at which an
Event of Default has occurred and is continuing), to immediately forward all
amounts received in the Concentration Account to the Collection Account through
daily sweeps from such Concentration Account into the Collection Account. From
and after the date Agent has delivered an Activation Notice to the Concentration
Account Bank, Borrower shall not, and shall not cause or permit any Guarantor
to, accumulate or maintain cash in any disbursement accounts and payroll
accounts as of any date of determination in excess of checks outstanding against
such accounts as of that date and amounts necessary to meet minimum balance
requirements. Absent the issuance of an Activation Notice, Borrower shall be
entitled to transfer funds from the Concentration Account to any place it may
elect.
(d) So long as no Event of Default has occurred and
is continuing, any Store Guarantor may act to add or replace a Relationship Bank
or Credit Party Account and Borrower may replace any Concentration Account Bank
or Concentration Account; PROVIDED, HOWEVER, (i) in the case of a replacement
Concentration Account Bank, prior to the time of the opening of an account with
such new Concentration Account Bank, Borrower and such bank
E-1
shall have executed and delivered to Agent a tri-party blocked account
agreement, in form and substance satisfactory to Agent. Borrower shall close any
Concentration Account (and establish a replacement Concentration Account in
accordance with the foregoing sentence) promptly and in any event within thirty
(30) days of notice from Agent that the creditworthiness of any Concentration
Account Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within sixty (60) days of notice from
Agent that the operating performance, funds transfer and/or availability
procedures or performance with respect to the Concentration Account or the
Agent's liability under any tri-party blocked account agreement with such bank
is no longer acceptable in Agent's reasonable judgment.
(e) The Concentration Account shall be a cash
collateral account, with all cash and other items of payment in such accounts
securing payment of the Loans and all other Obligations, and in which Borrower
shall have granted a Lien to Agent, on behalf of itself and Lenders, pursuant to
the Security Agreement and the Supplemental Security Agreement.
(f) All amounts deposited in the Collection Account
shall be deemed received by Agent in accordance with the Agreement and shall be
applied (and allocated) by Agent in accordance with the Agreement.
(g) Each Store Guarantor and its respective officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "Related Person") agrees to (i) hold in trust for the Agent,
for the benefit of itself and Lenders, all checks, cash and other items of
payment received by such Store Guarantor or any such Related Person, and (ii)
within one (1) Business Day after receipt by such Store Guarantor or any such
Related Person of any checks, cash or other items or payment, deposit the same
into the appropriate Credit Party Account. Each Store Guarantor acknowledges and
agrees that all cash, checks or items of payment constituting proceeds of
Collateral are pledged to Agent for the benefit of Lenders.
E-2
SCHEDULE F
SCHEDULE OF ADDITIONAL
----------------------
CLOSING DOCUMENTS
-----------------
See Attached
F-1
SCHEDULE G
FINANCIAL STATEMENTS AND PROJECTIONS - REPORTING
------------------------------------------------
Borrower shall deliver or cause to be delivered to Agent or to
Agent and to each Lender which a signatory to the Loan Agreement as of the
Closing Date or which holds 10 % or more of the Revolving Loan Commitments, as
indicated, the following:
(a) MONTHLY FINANCIALS. To Agent and Lenders, within thirty
(30) days after the end of each Fiscal Month, financial information regarding
Ultimate Parent and its Subsidiaries, certified by the Chief Financial Officer
of Ultimate Parent, consisting of consolidated (i) unaudited balance sheets as
of the close of such Fiscal Month and the related statements of income and cash
flow for that portion of the Fiscal Year ending as of the close of such Fiscal
Month; (ii) unaudited statements of income and cash flows for such Fiscal Month,
setting forth in comparative form the figures for the corresponding period in
the prior year and the figures contained in the most recent annual Projections
for such Fiscal Year, all prepared in accordance with GAAP (subject to normal
year-end adjustments). Such financial information shall be accompanied by the
certification of the Chief Financial Officer of Ultimate Parent that (x) such
financial information presents fairly in accordance with GAAP (subject to normal
year-end adjustments) the financial position and results of operations of First
Intermediate Parent and its Subsidiaries, on a consolidated basis, in each case
as at the end of such month and for the period then ended and (y) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.
(b) QUARTERLY FINANCIALS. To Agent and Lenders, within
forty-five (45) days after the end of each Fiscal Quarter, copies of the
Ultimate Parent's 10-Q. Such financial information shall be accompanied by (A) a
statement in reasonable detail showing the calculations used in determining
compliance with the financial covenants set forth on Schedule I and (B) the
Certification of the Chief Financial Officer of Ultimate Parent that (i) such
financial information presents fairly in accordance with GAAP (subject to normal
year-end adjustments) the financial position, results of operations and
statements of cash flows of First Intermediate Parent and its Subsidiaries, on a
consolidated basis, as at the end of such Fiscal Quarter and for the period then
ended, (ii) any other information presented is true, correct and complete in all
material respects and that there was no Default or Event of Default in existence
as of such time or, if a Default or Event of Default shall have occurred and be
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default. In addition, Borrower shall deliver to Agent
and Lenders, within forty-five (45) days after the end of each Fiscal Quarter, a
management discussion and analysis which includes a comparison to budget for
that Fiscal Quarter and a comparison of performance for that Fiscal Quarter to
the corresponding period in the prior year;
(c) OPERATING PLAN. To Agent and Lender, as soon as available,
but not later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan, approved by the Board of Directors of Ultimate Parent, for the
following Year, which will include a statement of all of the material
assumptions on which such plan is based, will include monthly balance sheets
G-1
and a monthly budget for the following year and will integrate sales, gross
profits, operating expenses, operating profit, cash flow projections and
borrowing availability projections all prepared on the same basis and in similar
detail as that on which operating results are reported (and in the case of cash
flow projections, representing management's good faith estimates of future
financial performance based on historical performance), and including plans for
personnel, Capital Expenditures and Stores;
(d) ANNUAL AUDITED FINANCIALS. To Agent and Lenders, within
ninety (90) days after the end of each Fiscal Year, copies of the Ultimate
Parent's 10-K. Such Financial Statements shall be accompanied by (i) a statement
prepared in reasonable detail by Ultimate Parent's Chief Financial Officer
showing the calculations used in determining compliance with each of the
financial covenants set forth on SCHEDULE I, (ii) a report from such accounting
firm to the effect that, in connection with their audit examination, nothing has
come to their attention to cause them to believe that a Default or Event of
Default has occurred (or specifying those Defaults and Events of Default that
they became aware of), it being understood that such audit examination extended
only to accounting matters and that no special investigation was made with
respect to the existence of Defaults or Events of Default, (iii) a letter
addressed to Agent, on behalf of itself and Lenders, in form and substance
reasonably satisfactory to Agent and subject to standard qualifications taken by
nationally recognized accounting firms, signed by such accounting firm
acknowledging that Agent and Lenders are entitled to rely upon such accounting
firm's certification of such audited Financial Statements, and (iv) the annual
letters to such accountants in connection with their audit examination detailing
contingent liabilities and material litigation matters;
(e) MANAGEMENT LETTERS. To Agent and Lenders, within (10)
Business Days after receipt of by any Credit Party, copies of all management
letters, exception reports or similar letters or reports received by such Credit
Party from its independent certified public accountants;
(f) DEFAULT NOTICES. To Agent and Lenders, as soon as
practicable, and in any event within five (5) Business Days after an executive
officer of Borrower has actual knowledge of the existence of any Default, Event
of Default or other event which has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business Day;
(g) SEC FILINGS AND PRESS RELEASES. To Agent, promptly upon
their becoming available, copies of: (i) all Statements, reports, notices and
proxy statements made publicly available by any Credit Party to its security
holders; (ii) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by any Credit Party with any securities exchange
or with the Securities and Exchange Commission or any governmental or private
regulatory authority, and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material adverse changes
or developments in the business of any such Person.
(h) SENIOR NOTES NOTICE. To Agent and Lenders, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to the Senior Notes, and, within two (2) Business Days
after any executive officer of Ultimate Parent or
G-2
Borrower obtains knowledge of any matured or unmatured event of default with
respect to the Senior Notes, notice of such event of default;
(i) LITIGATION. To Agent in writing, promptly upon any
executive officer of Ultimate Parent or Borrower learning thereof, notice of any
Litigation commenced or threatened against any Credit Party that (i) seeks
damages in excess of $500,000, (ii) seeks injunctive relief, (iii) is asserted
or instituted against any Plan, its fiduciaries or its assets or against any
Credit Party or ERISA Affiliate in connection with any Plan and seeks remedies
in excess of $500,000, (iv) alleges criminal misconduct by any Credit Party, or
(v) alleges the violation of any law regarding, or seeks remedies in excess of
$500,000 in connection with, any Environmental Liabilities and Costs,
(j) INSURANCE NOTICE. To Agent, disclosure of losses or
casualties required by SECTION 5.4 of the Agreement.
(k) DEFAULT NOTICES. To Agent, copies of (i) any and all
default notices received under or with respect to any leased location or public
warehouse where Collateral is located (other than Leased Stores), and (ii) such
other notices or documents as Agent may request in its reasonable discretion;
and
(l) OTHER DOCUMENTS. To Agent and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as Agent or any Lender shall, from time to time, reasonably
request.
G-3
SCHEDULE H
COLLATERAL REPORTS
------------------
(a) To Agent (and to any Lender requesting a copy of the same
in writing after the Closing Date) at the times set forth below or more
frequently if an Event of Default shall have occurred and be continuing, each of
the following:
(i) monthly (or more frequently if Borrower so elects
or if an Event of Default has occurred and is continuing and Agent
requests the same), on the fifteenth (15th) day of each month (or the
next Business Day if such day is not a Business Day) as of the last day
of the prior month end, a Borrowing Base Certificate with respect to
Borrower; and
(ii) monthly press releases regarding consolidated
sales.
(b) To Agent, at request of Agent or following an Event of
Default, a reconciliation of the Accounts trial balance and month-end Inventory
reports of Borrower to Borrower's general ledger and to such monthly Financial
Statements delivered pursuant to such SCHEDULE G, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(c) To Agent, at the time of delivery of each of the quarterly
Financial Statements delivered pursuant to SCHEDULE G, a list of any
applications for the registration of any Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency which any Credit Party thereof has flied in the
prior Fiscal Quarter;
(d) Borrower, at its own expense, shall deliver to Agent, for
Agent's inspection, the results of each physical verification, if any, which
Borrower or any of its Subsidiaries may in their discretion have made, or caused
any other Person to have made on their behalf, of all or any portion of their
Inventory (and, if an Event of Default shall have occurred and be continuing,
Borrower shall, upon the request of Agent, conduct, and deliver the results of,
such physical verifications as Agent may require);
(e) Borrower, at its own expense shall deliver to Agent and
Lenders, if requested by Agent or Requisite Lenders, not more frequently than
once each Fiscal Year, a review of Inventory owned by Borrower and held by
Borrower and each Store Guarantor, prepared by Universal Asset-Based Services,
Inc. or another appraiser acceptable to Agent, and Borrower, at its own expense,
shall deliver to Agent such appraisals of its assets as Agent may request at any
time after the occurrence and during the continuance of an Event of Default,
such appraisals to be conducted by an appraiser, and in form and substance,
satisfactory to Agent; and
H-1
SCHEDULE I
FINANCIAL COVENANTS
-------------------
The Credit Parties shall not breach or fail to comply with any
of the following financial covenants, each of which shall be calculated in
accordance with GAAP consistently applied:
(a) MAXIMUM CAPITAL EXPENDITURES. The Credit Parties on a
consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods:
Maximum Capital
Period Expenditures per Period
Fiscal Year ending in January of 2001 $44,000,000
Fiscal Year ending in January of 2002 $44,000,000
provided, however, in the event the Credit Parties on a consolidated basis do
not expend the entire amount of Maximum Capital Expenditures Per Period in any
Fiscal Year, the Credit Parties may carry forward to the immediately succeeding
Fiscal Year any unutilized portion, but not more than $3,000,000. All Capital
Expenditures in any Fiscal Year shall first be applied against the then Current
Maximum Capital Expenditure limit and then to the carry-forward amount.
(b) MINIMUM FIXED CHARGES COVERAGE RATIO. Ultimate Parent
shall have on a consolidated basis at the end of each Fiscal Quarter for the
four Fiscal Quarters then ended, commencing with the Fiscal Quarter ending in
October, 1999, a Fixed Charges Coverage Ratio of not less than 1.0 to 1.0;
provided that for the four Fiscal Quarters ending in July and October, 2000, the
Fixed Charges Coverage ratio shall be not less than 0.9 to 1.0.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a material change in the calculation of
the financial covenants, standards or terms used in the Agreement or any other
Loan Document, then the Credit Parties, Agent and Lenders agree to enter into
negotiations in order to amend such provisions of the Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Ultimate Parent and its Subsidiaries' financial
condition shall be the same after such Accounting Changes as if such Accounting
Changes had not been made; provided, however, that the agreement of Requisite
Lenders to any required amendments of such provisions shall be sufficient to
bind all Lenders. "Accounting Changes" mean (a)
I-1
changes in accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or successor thereto
or any agency with similar functions), (b) changes in accounting principles
concurred in by Borrower's certified public accountants; (c) purchase accounting
adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (d) the reversal (but not the use) of any reserves
established as a result of purchase accounting adjustments. If Agent, the Credit
Parties and Requisite Lenders agree upon the required amendments, then after
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within thirty (30) days
following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change.
I-2
SCHEDULE J
NOTICE ADDRESSES
----------------
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Wilsons Leather Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
AND
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower, at
Wilsons Leather Holdings Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
J-1
With copies to:
Faegre & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
J-2
EXHIBIT 1.1(a)(i)
FORM OF
NOTICE OF REVOLVING CREDIT ADVANCE
----------------------------------
----------, ------
General Electric Capital Corporation,
for itself, as Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: REVOLVING CREDIT ADVANCE
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"),
refers to the Second Amended and Restated Credit Agreement, dated as of October
31, 2000 (the "Credit Agreement", the terms defined therein being used herein as
therein defined), by and among Borrower, General Electric Capital Corporation,
for itself, as Lender, Swing Line Lender and as Agent for Lenders, and Lenders,
and hereby gives you notice, irrevocably, pursuant to Section 1.1 (a) of the
Credit Agreement, that the undersigned hereby requests a Revolving Credit
Advance under the Credit Agreement, and in that connection sets forth below the
information relating to such Revolving Credit Advance as required by Section
1.1(a) of the Credit Agreement:
I. NEW REVOLVING CREDIT ADVANCES
(i) The date of the requested Revolving Credit Advance is
________, _____.
(ii) The amount of the requested Revolving Credit Advance is
$________.
(iii) The requested Revolving Credit Advance is [an Index Rate Loan]
[a LIBOR Loan with a LIBOR Period of ____ days/months].
The undersigned acknowledges that unless the undersigned shall also
have complied with the requirements of Section 1.5(e) of the Credit
Agreement, the requested Revolving Credit Advance shall bear interest
by reference to the Index Rate.
II. The requested Revolving Credit Advance is to be sent to:
[Name of Bank]
[City of Bank]
Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
The undersigned hereby certifies that all of the conditions
contained in SECTION 2.2 of the Credit Agreement have been satisfied on the date
hereof, and will continue to be satisfied before and after giving effect to the
Revolving Credit Advance and to the application of the proceeds therefrom.
Very truly yours,
WILSONS LEATHER HOLDINGS INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT 1.1(a)(ii)
FORM OF
REVOLVING NOTE
--------------
$ October 31, 2000
--------------------------
FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS
INC., a Minnesota corporation (hereinafter referred to as "Borrower"), hereby
PROMISES TO PAY to the order of at the offices of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, as agent, (in such capacity, "Agent"), at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other
place as Agent may designate from time to time in writing, in lawful money of
the United States of America and in immediately available funds, the amount of
__________________________________ DOLLARS ($ ), or, if less, the aggregate
unpaid principal amount of all advances made to Borrower by Agent pursuant to
Section 1.1(A) of the Credit Agreement (as hereinafter defined) and represented
by this Note together with interest on the unpaid principal amount of this
Revolving Credit Note outstanding from time to time from the date hereof at the
rate or rates provided in the Credit Agreement.
This Revolving Credit Note is issued pursuant to that certain
Second Amended and Restated Credit Agreement dated as of October 31, 2000 among
Borrower, Agent, and the Lenders named therein (as the same from time to time
may be amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), and is entitled to the benefit and security of the Loan Documents
provided for therein, to which reference is hereby made for a statement of all
of the terms and conditions under which the Revolving Credit Loan evidenced
hereby is made and is to be repaid and for a statement of Agent's and Lenders'
remedies upon the occurrence and during the continuance of an Event of Default.
All capitalized terms, unless otherwise defined herein, shall have the meanings
ascribed to them in SCHEDULE A to the Credit Agreement.
The principal amount of the indebtedness evidenced hereby
shall be payable on May 24, 2002 and in the amounts and on the dates specified
in the Credit Agreement. Interest thereon shall be paid until such principal
amount is paid in full at such interest rates and at such times as are specified
in the Credit Agreement.
To the extent that this Revolving Credit Note evidences
Obligations outstanding under the Amended and Restated Credit Agreement dated as
of May 24, 1999, this Revolving Credit Note does not evidence a repayment and
refunding or novation of such Obligations, and such Obligations are in all
respects continuing.
Upon and after the occurrence of an Event of Default, this
Revolving Credit Note may, as provided in the Credit Agreement, and without
demand, notice or legal process of any kind, be declared, and, upon such
declaration, immediately shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by Borrower to the fullest extent permitted by law.
This Revolving Credit Note shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of Illinois,
without regard to conflict of law provisions.
WILSONS LEATHER HOLDINGS INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT 1.1(b)(i)
FORM OF
NOTICE OF SWING LINE ADVANCE
----------------------------
--------, -----
General Electric Capital Corporation,
for itself as Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: SWING LINE ADVANCE
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"),
refers to the Second Amended and Restated Credit Agreement dated as of October
31, 2000 (the "CREDIT AGREEMENT", the terms defined therein being used herein as
therein defined), by and among Borrower, General Electric Capital Corporation,
for itself, as Lender, Swing Line Lender and as Agent for Lenders, and Lenders,
and hereby gives you notice, irrevocably, pursuant to SECTION 1.1(B) of the
Credit Agreement, that the undersigned hereby requests a Swing Line Advance
under the Credit Agreement, and in that connection sets forth below the
information relating to such Swing Line Advance as required by SECTION 1.1(B) of
the Credit Agreement:
I. New Swing Line Advances
(i) The date of the requested Swing Line Advance is ________,
____.
(ii) The amount of the requested Swing Line Advance is $_________.
II. The requested Swing Line Advance is to be sent to:
[Name of Bank]
[City of Bank] Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
The undersigned hereby certifies that all of the conditions
contained in SECTION 2.2 of the Credit Agreement have been satisfied on the date
hereof, and will continue to be
satisfied before and after giving effect to the Swing Line Advance and to the
application of the proceeds therefrom.
Very truly yours,
WILSONS LEATHER HOLDINGS INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT 1.1(b)(ii)
FORM OF
SWING LINE NOTE
---------------
$10,000,000 October 31, 2000
FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS
INC., a Minnesota corporation (hereinafter referred to as "Borrower"), hereby
PROMISES TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, as swing line lender, (in such capacity, "Swing Line Lender"), at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other
place as Swing Line Lender may designate from time to time in writing, in lawful
money of the United States of America and in immediately available funds, the
amount of TEN MILLION DOLLARS ($10,000,000), or, if less, the aggregate unpaid
principal amount (with any refunding of such amounts as provided in the Credit
Agreement being deemed a repayment) of all advances made to Borrower by Agent
pursuant to SECTION 1.1(B) of the Credit Agreement (as hereinafter defined)
together with interest on the unpaid principal amount of this Swing Line Note
outstanding from time to time from the date hereof at the rate or rates provided
in the Credit Agreement
This Swing Line Note is issued pursuant to that certain Second
Amended and Restated Credit Agreement dated as of October 31, 2000 among
Borrower, Agent, and the Lenders named therein (as the same from time to time
may be amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), and is entitled to the benefit and security of the Loan Documents
provided for therein, to which reference is hereby made for a statement of all
of the terms and conditions under which the Swing Line Loan evidenced hereby is
made and is to be repaid and for a statement of Agent's and Lenders' remedies
upon the occurrence and during the continuance of an Event of Default. All
capitalized terms, unless otherwise defined herein, shall have the meanings
ascribed to them in SCHEDULE A to the Credit Agreement.
The principal amount of the indebtedness evidenced hereby
shall be payable on May 24, 2002 and in the amounts and on the dates specified
in the Credit Agreement. Interest thereon shall be paid until such principal
amount is paid in full at such interest rates and at such times as are specified
in the Credit Agreement.
To extent that this Swing Line Note evidences Obligations
outstanding under the Amended and Restated Credit Agreement dated as of May 24,
1999, this Swing Line Note does not evidence a repayment and refunding or
novation of such Obligations, and such Obligations are in all respects
continuing.
Upon and after the occurrence of an Event of Default, this
Swing Line Note may, as provided in the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and, upon such declaration,
immediately shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by Borrower to the fullest extent permitted by law.
This Swing Line Note shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Illinois, without
regard to conflict of law provisions.
WILSONS LEATHER HOLDINGS INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT 1.5(e)
FORM OF NOTICE OF
CONVERSION/CONTINUATION
-----------------------
------------, -----
General Electric Capital Corporation,
for itself, as Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: CONTINUATION/CONVERSION NOTICE
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"),
refers to the Second Amended and Restated Credit Agreement, dated as of October
31, 2000 (the "Credit Agreement", the terms defined therein being used herein as
therein defined), by and among Borrower, General Electric Capital Corporation,
for itself, as Lender, Swing Line Lender and as Agent for Lenders, and Lenders,
and hereby gives you notice, irrevocably, pursuant to SECTION 1.5(E) of the
Credit Agreement.
Subject to the terms and conditions of the Credit Agreement
and all other Loan Documents, please:
_____ convert for the benefit of Borrower on ________, _____,
$_____________ of the outstanding principal amount of the
Revolving Loan, currently a [Index][LIBOR] Rate Loan, into a
[Index](LIBOR) Rate Loan [having an Interest Period of ______
days/month(s)];
_____ continue for the benefit of Borrower on ___________, ______,
$__________ of the outstanding principal amount of the
Revolving Loan, currently a LIBOR Rate Loan, as a LIBOR Rate
Loan having an Interest Period of _____ days/month(s);
The undersigned hereby certifies that all of the statements
contained in SECTION 2.2 of the Credit Agreement have been satisfied on the date
hereof, and will continue to be satisfied before and after giving effect to
conversion/continuation described herein and to the application of the proceeds
therefrom.
IN WITNESS WHEREOF, this Conversion/Continuation Notice has
been duly executed as of ___________, ______.
WILSONS LEATHER HOLDINGS INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT 4.1(B)
FORM OF
WILSONS LEATHER HOLDINGS INC.
BORROWING BASE CERTIFICATE
--------------------------
1. Eligible Inventory - Apparel $
---------------
2. Borrowing Base - Apparel (line 1 multiplied by .60 or .65, depending
on season) $
---------------
3. Eligible Inventory - Luggage $
---------------
x.60_
4. Borrowing Base-Luggage (line 3 multiplied by .60) $
---------------
5. Total Borrowing Base (line 2 + line 4) $
---------------
6. Seasonal Over-Advances, if applicable $
---------------
6. Total Borrowing Base $
---------------
7. Lesser of Total Borrowing Base or $165,000,000 $
---------------
8. Revolving Credit Advances outstanding $
---------------
9. Letters of Credit outstanding * $
---------------
10. 35% or 40% of Eligible Trade L/Cs outstanding (depending on season) * $
---------------
11. Total outstandings (total of lines 9, 10 and 11) $
---------------
12. Borrowing Availability (line 8 minus line 12) $
---------------
Wilsons Leather Holdings, Inc. hereby certifies that the foregoing
accurately reflects its Borrowing Availability as of the date hereof in
accordance with the Second Amended and Restated Credit Agreement dated as of
October 31, 2000 among it, General Electric Capital Corporation and the other
parties thereto.
Date: WILSONS LEATHER HOLDINGS INC.
----------------------
By:
----------------------------------
Title:
-------------------------------
* Total Letters of Credit and Eligible Trade L/Cs outstanding shall not
exceed $85,000,000.
EXHIBIT 9.1(a)
ASSIGNMENT AGREEMENT
--------------------
This Assignment Agreement (this "Agreement") is made as of
___________ __, ____ by and between __________________________________
("Assignor Lender") and ________________________ ("Assignee Lender") and
acknowledged and consented to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent
("Agent"). All capitalized terms used in this Agreement and not otherwise
defined herein will have the respective meanings set forth in the Credit
Agreement as hereinafter defined.
RECITALS:
--------
WHEREAS, Wilsons Leather Holdings Inc., a Minnesota
corporation, (the "Borrower"), the Credit Parties, Agent, Assignor Lender and
other Persons signatory thereto as Lenders have entered into that certain Second
Amended and Restated Credit Agreement dated as of October 31, 2000 (as amended,
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT") pursuant to which Assignor Lender has agreed to make certain Loans
to, and incur certain Letter of Credit Obligations and Eligible Trade L/C
Obligations for Borrower;
WHEREAS, Assignor Lender desires to assign to Assignee Lender
[all/a portion] of its interest in the Loans (as described below), the Letter of
Credit Obligations and Eligible Trade L/C Obligations and the Collateral and to
delegate to Assignee Lender [all/a portion] of its Revolving Loan Commitments
and other duties with respect to such Loans, Letter of Credit Obligations,
Eligible Trade L/C Obligations and Collateral;
WHEREAS, Assignee Lender desires to become a Lender under the
Credit Agreement and to accept such assignment and delegation from Assignor
Lender; and
WHEREAS, Assignee Lender desires to appoint Agent to serve as
agent for Assignee Lender under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions, and covenants herein contained, Assignor Lender and
Assignee Lender agree as follows:
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 ASSIGNMENT. Assignor Lender hereby transfers and assigns
to Assignee Lender, without recourse and without representations or warranties
of any kind (except as set forth in SECTION 3.2), [all/such percentage] of
Assignor Lender's right, title, and interest in [the Revolving Loan ], [the
Loans], [Letter of Credit Obligations], [Eligible Trade L/C Obligations], Loan
Documents and Collateral as will result in Assignee Lender having as of the
Effective Date (as hereinafter defined) a Pro Rata Share thereof, as follows:
ASSIGNEE LENDER'S LOANS PRINCIPAL AMOUNT PRO RATA SHARE
----------------------- ---------------- --------------
Revolving Loan $ %
------------ ----
1.2 DELEGATION. Assignor Lender hereby irrevocably assigns and
delegates to Assignee Lender [all/a portion] of its Revolving Loan Commitments
and its other duties and obligations as a Lender under the Loan Documents
equivalent to [100%/___%] of Assignor Lender's Revolving Loan Commitment (such
percentage representing a commitment of $ ___________).
1.3 ACCEPTANCE BY ASSIGNEE LENDER. By its execution of this
Agreement, Assignee Lender irrevocably purchases, assumes and accepts such
assignment and delegation and agrees to be a Lender with respect to the
delegated interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, Assignor Lender agrees,
to the extent provided herein, to relinquish its rights and be released from its
obligations and duties under the Credit Agreement.
1.4 EFFECTIVE DATE. Such assignment and delegation by Assignor
Lender and acceptance by Assignee Lender will be effective and Assignee Lender
will become a Lender under the Loan Documents as of [the date of this Agreement]
("Effective Date") and upon payment of the Assigned Amount and the Assignment
Fee (as each term is defined below). [Interest and Fees accrued prior to the
Effective Date are for the account of Assignor Lender, and Interest and Fees
accrued from and after the Effective Date are for the account of Assignee
Lender.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 PAYMENT OF THE ASSIGNED AMOUNT. Assignee Lender will pay
to Assignor Lender, in immediately available funds, not later than 12:00 noon
(New York time) on the Effective Date, an amount equal to its Pro Rata Share of
the then outstanding principal amount of the Loans as set forth above in SECTION
1.1 [together with accrued interest, fees and other amounts as set forth on
Schedule 2.1] (the "Assigned Amount").
2.2 PAYMENT OF ASSIGNMENT FEE. [Assignor Lender and/or
Assignee Lender] will pay to Agent, for its own account in immediately available
funds, not later than 12:00 noon (New York time) on the Effective Date, the
assignment fee in the amount of $3,500 (the "Assignment Fee") as required
pursuant to Section 9.1(a) of the Credit Agreement.
2.3 EXECUTION AND DELIVERY OF NOTES. Following payment of the
Assigned Amount and the Assignment Fee, Assignor Lender will deliver to Agent
the Notes previously delivered to Assignor Lender for redelivery to Borrower and
Agent will obtain from Borrower for delivery to [Assignor Lender and] Assignee
Lender, new executed Notes evidencing Assignee Lender's [and Assignor Lender's
respective] Pro Rata Share[s] in the Loans after giving effect to the assignment
described in SECTION 1. Each new Note will be issued in the aggregate maximum
principal amount of the [applicable] Revolving Loan Commitments [of the Lender
to whom such Note is issued] OR [the Assignee Lender].
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 ASSIGNEE LENDER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. Assignee Lender hereby represents, warrants, and covenants the
following to Assignor Lender and Agent:
(a) This Agreement is a legal, valid, and binding agreement of
Assignee Lender, enforceable according to its terms;
(b) The execution and performance by Assignee Lender of its
duties and obligations under this Agreement and the Loan Documents will not
require any registration with, notice to, or consent or approval by any
Governmental Authority;
(c) Assignee Lender is familiar with transactions of the kind
and scope reflected in the Loan Documents and in this Agreement;
(d) Assignee Lender has made its own independent investigation
and appraisal of the financial condition and affairs of each Credit Party, has
conducted its own evaluation of the Loans and Letter of Credit Obligations, the
Loan Documents and each Credit Party's creditworthiness, has made its decision
to become a Lender to Borrower under the Credit Agreement independently and
without reliance upon Assignor Lender or Agent, and will continue to do so;
(e) Assignee Lender is entering into this Agreement in the
ordinary course of its business, and is acquiring its interest in the Loans, the
Letter of Credit Obligations and the Eligible Trade L/C Obligations for its own
account and not with a view to or for sale in connection with any subsequent
distribution; provided, however, that at all times the distribution of Assignee
Lender's property shall, subject to the terms of the Credit Agreement, be and
remain within its control;
(f) No future assignment or participation granted by Assignee
Lender pursuant to Section 9.1 of the Credit Agreement will require Assignor
Lender, Agent, or Borrower to file any registration statement with the
Securities and Exchange Commission or to apply to qualify under the blue sky
laws of any state;
(g) Assignee Lender has no loans to, written or oral
agreements with, or equity or other ownership interest in any Credit Party;
(h) Assignee Lender will not enter into any written or oral
agreement with, or acquire any equity or other ownership interest in, any Credit
Party without the prior written consent of Agent; and
(i) As of the Effective Date, Assignee Lender (i) is entitled
to receive payments of principal and interest in respect of the Obligations
without deduction for or on account of any taxes imposed by the United States of
America or any political subdivision thereof, (ii) is not subject to capital
adequacy or similar requirements under Section 1.16(a) of the Credit Agreement,
(iii) does not require the payment of any increased costs under Section 1.16(b)
of the Credit Agreement, (iv) is not unable to fund LIBOR Loans under Section
1.16(c) of the Credit Agreement, and (v) is not subject to any withholding taxes
in accordance with Section 1.16(d) and Assignee Lender will indemnify Agent from
and against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, or expenses that result
from Assignee Lender's failure to fulfill its obligations under the terms of
Section 1.15(c) of the Credit Agreement or from any other inaccuracy in the
foregoing.
3.2 ASSIGNOR LENDER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. Assignor Lender hereby represents, warrants and covenants the
following to Assignee Lender:
(a) Assignor Lender is the legal and beneficial owner of the
Assigned Amount;
(b) This Agreement is a legal, valid and binding agreement of
Assignor Lender, enforceable according to its terms;
(c) The execution and performance by Assignor Lender of its
duties and obligations under this Agreement and the Loan Documents will not
require any registration with, notice to or consent or approval by any
Governmental Authority;
(d) Assignor Lender has full power and authority, and has
taken all action necessary to execute and deliver this Agreement and to fulfill
the obligations hereunder and to consummate the transactions contemplated
hereby;
(e) Assignor Lender is the legal and beneficial owner of the
interests being assigned hereby, free and clear of any adverse claim, lien,
encumbrance, security interest, restriction on transfer, purchase option, call
or similar right of a third party; and
(f) This Assignment by Assignor Lender to Assignee Lender
complies, in all material respects, with the terms of the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in SECTION 3.2)
nor Agent makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Loans, Letter
of Credit Obligations or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the Collateral, or (e) the financial condition of
any Credit Party or other obligor or the performance or observance by any Credit
Party of its obligations under any of the Loan Documents. Neither Assignor
Lender nor Agent has or will have any duty, either initially or on a continuing
basis, to make any investigation, evaluation, appraisal of, or any
responsibility or liability with respect to the accuracy or completeness of, any
information provided to Assignee Lender which has been provided to Assignor
Lender or Agent by any Credit Party. Nothing in this Agreement or in the Loan
Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in
the exercise of any power, right, or privilege hereunder or under any Loan
Document will impair such power, right,
or privilege or be construed to be a waiver of any default or acquiescence
therein. No single or partial exercise of any such power, right, or privilege
will preclude further exercise thereof or of any other right, power, or
privilege. All rights and remedies existing under this Agreement are cumulative
with, and not exclusive of, any rights or remedies otherwise available.
6. NOTICES
Unless otherwise specifically provided herein, any notice or
other communication required or permitted to be given will be in writing and
addressed to the respective party as set forth below its signature hereunder, or
to such other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any
provision of this Agreement will be effective without the written concurrence of
Assignor Lender, Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. In
the event any provision of this Agreement is or is held to be invalid, illegal,
or unenforceable under applicable law, such provision will be ineffective only
to the extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement. In addition, in the event any provision of or obligation under this
Agreement is or is held to be invalid, illegal, or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations in any other jurisdictions will not in any way be
affected or impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included
for convenience of reference only, do not constitute a part of this Agreement
for any other purpose, and have no substantive effect.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE.
12. COUNTERPARTS
This Agreement and any amendments, waivers, consents, or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which, when so executed and
delivered, will be deemed an original and all of which shall together constitute
one and the same instrument.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
ASSIGNEE LENDER: ASSIGNOR LENDER:
--------------------------------- ---------------------------------
By: By:
------------------------------ ------------------------------
Title: Title:
--------------------------- ---------------------------
Notice Address: Notice Address:
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
ACKNOWLEDGED AND CONSENTED TO:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
------------------------------
Title:
---------------------------
ACKNOWLEDGED AND CONSENTED TO:
WILSONS LEATHER HOLDINGS INC.
By:
------------------------------
Title:
---------------------------
SCHEDULE 2.1
Assignor Lender's Loans
PRINCIPAL AMOUNT
Revolving Loan $
----------------
Subtotal $
================
Accrued Interest $
----------------
Unused Line Fee $
----------------
Other + or - $
----------------
Total $
================
All determined as of the Effective Date.