========================================================
LOAN AND SECURITY AGREEMENT
========================================================
BANKBOSTON RETAIL FINANCE INC.
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
SYNDICATION AGENT
FOOTHILL CAPITAL CORPORATION
DOCUMENTATION AGENT
========================================================
HOMEBASE, INC.
THE LEAD BORROWER
FOR
HOMEBASE, INC.
HOMECLUB INC., OF TEXAS
HOMECLUB, INC.
THE BORROWERS
========================================================
December 3, 1999
========================================================
SOLE LEAD ARRANGER:
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
========================================================
TABLE OF CONTENTS
ARTICLE 1: - DEFINITIONS:
ARTICLE 2: - THE REVOLVING CREDIT:
2-1. Establishment of Revolving Credit.......................31 ..
2-2. Initial Reserves. Changes to Reserves....................32 ..
2-3. Advances in Excess of Borrowing Base (Overloans).........33 ..
2-4. Risks of Value of Collateral.............................33 ..
2-5. Commitment to Make Revolving Credit Loans and
Support Letters of Credit..............................33 ..
2-6. Revolving Credit Loan Requests...........................33 ..
2-7. Making of Revolving Credit Loans.........................35 ..
2-8. SwingLine Loans..........................................35 ..
2-9. The Loan Account.........................................36 ..
2-10. The Revolving Credit Notes...............................37 ..
2-11. Payment of The Loan Account..............................37 ..
2-12. Interest on Revolving Credit Loans.......................38 ..
2-13. Revolving Credit Commitment Fee..........................38 ..
2-14. Agent's Fee..............................................39 ..
2-15. Unused Line Fee..........................................39 ..
2-16. Revolving Credit Early Termination Fee...................39 ..
2-17 Concerning Fees..........................................39 ..
2-18. Agent's and Revolving Credit Lenders' Discretion.........40 ..
2-19. Procedures For Issuance of L/C's.........................40 ..
2-20. Fees For L/C's And Acceptances...........................41 ..
2-21. Concerning L/C's and Acceptances.........................42 ..
2-22. Changed Circumstances....................................44 ..
2-23. Designation of Lead Borrower as Borrowers' Agent........44 ..
2-24 Lenders' Commitments.....................................45 ..
ARTICLE 3: - CONDITIONS PRECEDENT:
3-1 Corporate Due Diligence..................................46 ..
3-2. Opinion..................................................47 ..
3-3. Officers' Certificates...................................47 ..
3-4. Additional Documents.....................................47 ..
3-5. Representations and Warranties...........................47 ..
3-6. Minimum Day One Excess Availability......................48 ..
3-7. All Fees and Expenses Paid...............................48 ..
3-8. No Suspension Event......................................48 ..
3-9. No Adverse Change........................................48 ..
ARTICLE 4: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
4-1. Payment and Performance of Liabilities...................48 ..
4-2. Due Organization. Corporate Authorization.
No Conflicts...........................................48 ..
4-3. Trade Names..............................................49 ..
4-4. Infrastructure...........................................50 ..
4-5. Year 2000 Compliance.....................................50 ..
4-6. Locations................................................50 ..
4-7. Title to Assets..........................................51 ..
4-8. Indebtedness.............................................52 ..
4-9. Insurance................................................52 ..
4-10. Licenses.................................................53 ..
4-11. Leases...................................................53 ..
4-12. Requirements of Law......................................53 ..
4-13. Labor Relations..........................................54 ..
4-14. Maintain Properties......................................54 ..
4-15. Taxes....................................................55 ..
4-16. No Margin Stock..........................................56 ..
4-17. ERISA....................................................56 ..
4-18. Hazardous Materials......................................56 ..
4-19. Litigation...............................................57 ..
4-20. Dividends. Investments. Corporate Action.................57 ..
4-21 Loans....................................................58 ..
4-22. Protection of Assets.....................................58 ..
4-23. Line of Business.........................................58 ..
4-24. Affiliate Transactions...................................59 ..
4-25. Further Assurances.......................................59 ..
4-26. Adequacy of Disclosure...................................59 ..
4-27. No Restrictions on Liabilities...........................60 ..
4-28. Other Covenants..........................................60 ..
ARTICLE 5: - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5-1. Maintain Records.........................................60 ..
5-2. Access to Records........................................61 ..
5-3. Notice to Agent..........................................61 ..
5-4. Borrowing Base Certificate...............................62 ..
5-5. Collateral Reporting Requirements........................63 ..
5-6. Monthly Statement........................................63 ..
5-7. Quarterly Report.........................................63 ..
5-8. Annual Reports...........................................63 ..
5-9. Officers' Certificates...................................64 ..
5-10. Inventories. Appraisals. Audits.........................64 ..
5-11. Additional Financial Information.........................65 ..
5-12. Financial Performance Covenants..........................66 ..
ARTICLE 6: - USE AND COLLECTION OF COLLATERAL:
6-1. Inventory Collateral.....................................66 ..
6-2. Notification to Account Debtors..........................67 ..
ARTICLE 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7-1 The Blocked Account......................................67 ..
7-2. The Concentration and Disbursement Accounts..............68 ..
7-3. Payment of Liabilities...................................68 ..
7-4. The Disbursement Account.................................69 ..
ARTICLE 8: - GRANT OF SECURITY INTEREST:
8-1. Grant of Security Interest...............................70 ..
8-2. Extent and Duration of Security Interest.................70 ..
ARTICLE 9: - AGENT AS BORROWER'S ATTORNEY-IN-FACT:
9-1. Appointment as Attorney-In-Fact..........................71 ..
9-2. No Obligation to Act.....................................72 ..
ARTICLE 10: - EVENTS OF DEFAULT:
10-1. Failure to Pay Revolving Credit..........................73 ..
10-2. Failure To Make Other Payments...........................73 ..
10-3. Failure to Perform Covenant or Liability
(No Grace Period)......................................73 ..
10-4. Financial Reporting Requirements.........................73 ..
10-5. Failure to Perform Covenant or Liability
(Grace Period).........................................73 ..
10-6. Misrepresentation........................................74 ..
10-7. Acceleration of Other Debt. Breach of Lease..............74 ..
10-8. Default Under Other Agreements...........................74 ..
10-9. Uninsured Loss...........................................74 ..
10-10. Attachment. Judgment. Restraint of Business..............74 ..
10-11. Business Failure.........................................75 ..
10-12. Bankruptcy...............................................75 ..
10-13. Default by Guarantor or Affiliate........................75 ..
10-14. Indictment - Forfeiture..................................75 ..
10-15. Termination of Guaranty..................................76 ..
10-16. Challenge to Loan Documents..............................76 ..
10-17. Change in Control........................................76 ..
ARTICLE 11: - RIGHTS AND REMEDIES UPON DEFAULT:
11-1. Rights of Enforcement....................................76 ..
11-2. Sale of Collateral.......................................77 ..
11-3. Occupation of Business Location..........................78 ..
11-4. Grant of Nonexclusive License............................78 ..
11-5. Assembly of Collateral...................................78 ..
11-6. Rights and Remedies......................................78 ..
ARTICLE 12: REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
12-1. Revolving Credit Funding Procedures......................79 ..
12-2. SwingLine Loans..........................................79 ..
12-3. Agent's Covering of Fundings:............................80 ..
12-4 Ordinary Course Distributions............................82 ..
ARTICLE 13: ACCELERATION AND LIQUIDATION:
13-1. Acceleration Notices.....................................83 ..
13-2. Acceleration.............................................83 ..
13-3. Initiation of Liquidation................................83 ..
13-4. Actions At and Following Initiation of Liquidation......84 ..
13-5. Agent's Conduct of Liquidation...........................84 ..
13-6. Distribution of Liquidation Proceeds:....................84 ..
13-7. Relative Priorities To Proceeds of Liquidation ..........85 ..
ARTICLE 14:. THE AGENT:
14-1. Appointment of Agent ..................................85 ..
14-2. Responsibilities of Agent ...............................86 ..
14-3. Concerning Distributions By the Agent....................87 ..
14-4. Dispute Resolution:......................................87 ..
14-5. Distributions of Notices and of Documents................88 ..
14-6. Confidential Information.................................88 ..
14-7. Reliance by Agent .......................................88 ..
14-8. Non-Reliance on Agent and Other Revolving
Credit Lenders.........................................88 ..
14-9. Indemnification..........................................89 ..
14-10. Resignation of Agent.....................................90 ..
ARTICLE 15:. ACTION BY AGENT - CONSENTS - AMENDMENTS - WAIVERS:
15-1. Administration of Credit Facilities......................90 ..
15-2. Actions Requiring or On Direction of
Majority Lenders.......................................91 ..
15-3. Actions Requiring or On Direction of
SuperMajority Lenders..................................91 ..
15-4. Action Requiring Certain Consent ........................92 ..
15-5. Actions Requiring or Directed By Unanimous Consent.......92 ..
15-6. Actions Requiring SwingLine Lender Consent...............93 ..
15-7. Actions Requiring Agent's Consent........................93 ..
15-8. Miscellaneous Actions....................................94 ..
15-9. Actions Requiring Lead Borrower Consent..................94 ..
15-10. NonConsenting Revolving Credit Lender....................95 ..
15-11. Replacement of Delinquent Revolving Credit Lender........96 ..
ARTICLE 16:. ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16-1. Assignments and Assumptions:.............................98 ..
16-2. Assignment Procedures....................................98 ..
16-3. Effect of Assignment.....................................99 ..
ARTICLE 17: - NOTICES:
17-1. Notice Addresses........................................100 ..
17-2. Notice Given............................................102 ..
ARTICLE 18: - TERM:
18-1. Termination of Revolving Credit.........................102 ..
18-2. Actions On Termination..................................102 ..
ARTICLE 19: - GENERAL:
19-1. Protection of Collateral................................103 ..
19-2. Publicity...............................................103 ..
19-3. Successors and Assigns..................................103 ..
19-4. Severability............................................103 ..
19-5. Amendments. Course of Dealing..........................104 ..
19-6. Power of Attorney.......................................104 ..
19-7. Increased Costs.........................................104 ..
19-8. Costs and Expenses of the Agent ........................105 ..
19-9. Copies and Facsimiles...................................106 ..
19-10. Massachusetts Law.......................................106 ..
19-11. Consent to Jurisdiction.................................106 ..
19-12. Indemnification.........................................107 ..
19-13. Rules of Construction...................................107 ..
19-14. Intent..................................................108 ..
19-15. Participations:.........................................109 ..
19-16. Right of Set-Off........................................109 ..
19-17. Pledges To Federal Reserve Banks: ......................109 ..
19-18. Maximum Interest Rate...................................109 ..
19-19. Waivers. ...............................................110 ..
EXHIBITS
1:1-0 : Real Estate Subsidiaries
2:2-8(c) : Swingline Note
2:2-10 : Revolving Credit Note
2:2-24 : Revolving Credit Lenders' Commitments
4:4-2 : Affiliates
4:4-3 : Trade Names
4:4-6 : Locations, Leases, and Landlords
4:4-7 : Encumbrances
4:4-8 : Indebtedness
4:4-9 : Insurance Policies
4:4-11 : Capital Leases
4:4-15 : Taxes
4:4-19 : Litigation
5:5-4 : Borrowing Base Certificate
5:5-5 : Collateral Reporting Requirements
16:16-2 : Assignment / Assumption
..3 ..
LOAN AND SECURITY AGREEMENT BankBoston Retail Finance Inc.
AGENT
December 3, 1999
THIS AGREEMENT is made between
BankBoston Retail Finance Inc. ,as Administrative Agent and
Collateral Agent (in such capacity, herein the "Agent"), a Delaware
corporation with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, as agent for the ratable benefit of the "Revolving Credit
Lenders", who are, at present, those financial institutions identified
on the signature pages of this Agreement and who in the future are
those Persons (if any) who become "Revolving Credit Lenders" in
accordance with the provisions of Section 2:2-24, below,
and
American National Bank and Trust Company of Chicago (in such
capacity, herein the "Syndication Agent"), with offices at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
Foothill Capital Corporation (in such capacity, herein the
"Documentation Agent"), with offices at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
HomeBase, Inc. (in such capacity, the "Lead Borrower"), a
Delaware corporation with its principal executive offices at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as agent for the following
(individually, a "Borrower" and collectively, the "Borrowers"):
HomeBase, Inc.;
HomeClub, Inc. of Texas, a Delaware corporation with
its principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
HomeClub, Inc., a Nevada corporation with its
principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
ARTICLE 1: - DEFINITIONS:
As herein used, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"1997 Subordinated Notes": The 5.25% Convertible Subordinated Notes
due 2004 issued by the Borrower on or about November 10, 1997
in the aggregate principal amount of up to $100,000,000.
"Acceleration": The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and
payable; provided that such demand or declaration is
authorized under the Loan Documents. Derivations of the word
"Acceleration" (such as "Accelerate") are used with like
meaning in this Agreement.
"Acceleration Notice": Written notice as follows:
(a) From the Agent to the Revolving Credit Lenders,
as provided in Section 13:13-1(a)(i)
(b) From the Agent, with the consent of the Majority
Lenders, to the Revolving Credit Lenders as provided in
Section 13:13-1(a)(ii).
(b) From the SuperMajority Lenders, as provided in
Section 13:13-1(b).
"Acceptance": A time draft presented under an L/C and accepted by the
Issuer.
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, credit card receivables, notes, drafts,
acceptances, and other forms of obligations and receivables
and rights to payment for credit extended and for goods sold
or leased, or services rendered, whether or not yet earned by
performance; all "contract rights" as formerly defined in the
UCC; all Inventory which gave rise thereto, and all rights
associated with such Inventory, including the right of
stoppage in transit; all reclaimed, returned, rejected or
repossessed Inventory (if any) the sale of which gave rise to
any Account.
"ACH": Automated clearing house.
"Account Debtor": Has the meaning given that term in the UCC.
"Affiliate": (a) Each Subsidiary.
(b) With respect to any two Persons, a relationship
in which (i) one holds, directly or indirectly, not less than
Twenty Five Percent (25%) of the capital stock, beneficial
interests, partnership interests, or other equity interests of
the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a
majority of the directors (or other body or Person who has
those powers customarily vested in a board of directors of a
corporation); or (iii) not less than Twenty Five Percent (25%)
of their respective ownership is directly or indirectly held
by the same third Person.
(c) Any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise which:
is a parent, brother-sister, subsidiary, or affiliate, of a
Borrower; could have such enterprise's tax returns or
financial statements consolidated with that Borrower's; could
be a member of the same controlled group of corporations
(within the meaning of Section 1563(a)(1), (2) and (3) of the
Internal Revenue Code of 1986, as amended from time to time)
of which any Borrower is a member; controls or is controlled
by any Borrower.
"Agent": refers solely to BankBoston Retail Finance Inc. in its
capacity as Administrative Agent and Collateral Agent.
" Agent's Cover": Defined in Section 12:12-3(c)(i).
" Agent's Fee": Is defined in Section 2:2-14.
" Agent's Rights and Remedies": Is defined in Section 11:11-6.
"Appraised Inventory Liquidation Value": The net recovery, as reflected
on an Inventory Appraisal, as recoverable on the Borrowers'
Inventory in the event of the conduct of a liquidation of the
Borrowers' Inventory pursuant to an in-store liquidation.
"Assigning Revolving Credit Lender": Defined in Section 16:16-1(a).
"Assignment and Acceptance": Defined in Section 16:16-2.
"Availability": The lesser of (a) or (b), where
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
(ii) The aggregate unpaid balance of
the Loan Account
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/C's and
Acceptances.
(b) is the result of
(i) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of
the Loan Account
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/C's and
Acceptances.
Minus
(iv) The aggregate of the Availability
Reserves
"Availability Reserves": Such reserves as the Agent from time to time
determines in the Agent's discretion as being appropriate to
reflect the impediments to the Agent's ability to realize upon
the Collateral. Without limiting the generality of the
foregoing, Availability Reserves may include (but are not
limited to) reserves based on the following:
(i) Rent (based upon past due rent and
whether or not a Landlord's Waiver,
acceptable to the Agent, has been
received by the Agent for Stores in
Pennsylvania, Virginia, and
Washington in which more than a de
minimis amount of the Borrower's
Inventory is located).
(ii) Customer Credit Liabilities.
(iii) Taxes and other governmental
charges, including, ad valorem,
personal property, and other taxes
which might have priority over the
Collateral Interests of the Agent in
the Collateral.
(iv) L/C Landing Costs.
(v) Year 2000 compliance.
"Availability Trigger Cure: The Borrowers having Excess Availability of
at least $75 Million for five (5) consecutive Business Days.
"Availability Trigger Event:": The Borrowers not having Excess
Availability of at least $40 Million for five (5) consecutive
Business Days.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": The Base Rate announced from time to time by BankBoston, N.A.
(or any successor in interest to BankBoston, N.A.). In the
event that said bank (or any such successor) ceases to
announce such a rate, "Base" shall refer to that rate or index
announced or published from time to time as the Agent, in good
faith, designates as the functional equivalent to said Base
Rate. Any change in "Base" shall be effective, for purposes of
the calculation of interest due hereunder, when such change is
made effective generally by the bank on whose rate or index
"Base" is being set.
"Base Margin Loan": Each Revolving Credit Loan while bearing interest
at the Base Margin Rate.
"Base Margin Rate": Base.
"Blocked Account Agreement": An agreement, in form satisfactory to the
Agent, with the Lock Box Bank, which agreement recognizes the
Agent's security interest in all Receivables Collateral and
provides that, on notice from the Agent, the Lock Box Bank
will forward directly to the Agent proceeds of all Receivables
Collateral from time to time received by the Lock Box Bank.
"BBRF": BankBoston Retail Finance Inc.
"Borrower" and "Borrowers": Defined in the Preamble.
"Borrowing Base": The result of the following:
(a) The product of the Cost of Eligible Inventory
(net of Inventory Reserves) multiplied by the
Inventory Advance Rate.
Plus
(b) 85% of the face amount of Eligible Credit Card
Receivables.
"Borrowing Base Certificate": Is defined in Section 5:5-4.
"Boston Concentration Account": Is defined in Section 7:7-2.
"Business Day": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts or in Los Angeles,
California, generally are not open to the general public for
the purpose of conducting commercial banking business; or (c)
a day on which the principal office of the Agent is not open
to the general public to conduct business.
"Business Plan": The business plan provided to the Agent on or about
October 22, 1999, and the business plans from time to time
provided to the Agent as provided in Section 5:5-11(c).
"Capital Expenditures": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
"Capital Lease": Any lease which may be capitalized in accordance with
GAAP.
"Change in Control": The occurrence of any of the following:
(a) The failure of the Parent to own, beneficially
and of record, 100% of the capital stock of all other
Borrowers.
(b) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission) of 40% or more of the issued and outstanding
capital stock of the Parent having the right, under ordinary
circumstances, to vote for the election of directors of the
Parent.
(c) More than half of the persons who were directors
of the Parent on the first day of any period consisting of
Twelve (12) consecutive calendar months (the first of which
Twelve (12) month periods commencing with the first day of the
month during which this Agreement was executed), cease, for
any reason other than death or disability, to be directors of
the Parent and are not replaced by Directors approved by vote
of not less than two thirds of the Directors who are then in
office and who either were Directors on the date on which this
Agreement was executed or whose election to the Parent's Board
was likewise so approved.
"Chattel Paper": Has the meaning given that term in the UCC.
"Collateral": Is defined in Section 8:8-1.
"Collateral Interest": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"Consent": Actual consent given by the Revolving Credit Lender from
whom such consent is sought; or the passage of Seven (7)
Business Days from receipt of written notice to a Revolving
Credit Lender from the Agent of a proposed course of action to
be followed by the Agent without such Revolving Credit
Lender's giving the Agent written notice of that Revolving
Credit Lender's objection to such course of action, provided
that the Agent may rely on such passage of time as consent by
a Revolving Credit Lender only if such written notice states
that consent will be deemed effective if no objection is
received within such time period.
"Consolidated": When used to modify a financial term, test, statement,
or report, refers to the application or preparation of such
term, test, statement, or report (as appropriate) based upon
the consolidation, in accordance with GAAP, of the financial
condition or operating results of the Borrowers.
"Core Collateral": Goods, Credit Card Receivables, and Investment
Property.
"Cost": The lower of
(a) the calculated cost of purchases, as determined
from invoices/ received by the Borrower, the Borrower's
purchase journal or stock ledger, based upon the Borrower's
accounting practices, known to the Agent, which practices are
in effect on the date on which this Agreement was executed; or
(b) market.
"Cost" does not include inventory capitalization used in the
Borrower's calculation of cost of goods sold.
"Costs of Collection": Includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred
by the Agent's attorneys, and all reasonable costs incurred by
the Agent in the administration of the Liabilities and/or the
Loan Documents, including, without limitation, reasonable
costs and expenses associated with travel on behalf of the
Agent, where such costs and expenses are directly or
indirectly related to or in respect of the Agent's:
administration and management of the Liabilities; negotiation,
documentation, and amendment of any Loan Document; or efforts
to preserve, protect, collect, or enforce the Collateral, the
Liabilities, and/or the Agent's Rights and Remedies and/or any
of the rights and remedies of the Agent against or in respect
of any guarantor or other person liable in respect of the
Liabilities (whether or not suit is instituted in connection
with such efforts). "Costs of Collection" shall also include
the reasonable fees and expenses of Lenders' Special Counsel.
The Costs of Collection are Liabilities, and at the Agent's
option may bear interest at the then effective Base Margin
Rate.
"Credit Card Receivables": Amounts due from credit card issuers and
processors.
"Customer Credit Liability": Gift certificates, merchandise credits,
layaway obligations, frequent shopping programs, and similar
liabilities of any Borrower to its retail customers and
prospective customers.
"DDA": Any checking or other demand daily depository account
maintained by the Borrowers.
"Delinquent Revolving Credit Lender": Defined in Section 12:12-3(c).
"Deposit Account": Has the meaning given that term in the UCC.
"Disbursement Account": Is defined in Section 7:7-2.
"Documents": Has the meaning given that term in the UCC.
"Documents of Title": Has the meaning given that term in the UCC.
"EBITDA": The Borrower's earnings before interest, taxes, depreciation,
and amortization, each as determined in accordance with GAAP.
"Eligible Assignee": A bank, insurance company, or company engaged in
the business of making commercial loans having a combined
capital and surplus in excess of $600,000,000.00, or any
Affiliate of any Revolving Credit Lender.
"Eligible Credit Card Receivables": Under 7 business day accounts due
on a non-recourse basis from major credit card processors
(which, if due on account of a private label credit card
program, is deemed in the discretion of the Agent to be
eligible).
"Eligible Inventory": The following:
(a) Such of a Borrower's Inventory (without
duplication of Eligible L/C Inventory ), as to which the Agent
has a perfected security interest which is prior and superior
to all security interests, claims, and all Encumbrances other
than Permitted Encumbrances. "Eligible Inventory" does not
include: any non-merchandise inventory (such as labels, bags,
and packaging materials); damaged goods; return to vendor
merchandise; packaways; consigned inventory; and other similar
categories of Goods.
(b) Eligible L/C Inventory.
"EligibleL/C Inventory": Inventory (without duplication of Eligible
Inventory), the purchase of which is supported by a
documentary L/C then having an initial expiry of Sixty (60) or
less days (as determined either empirically or through a
commercially reasonable estimation process), provided that the
Agent has received a Customs Brokers Agreement in form
reasonably satisfactory to the Agent.
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": Any security interest, mortgage, pledge, hypothecation,
lien, attachment, or charge of any kind (including any
agreement to give any of the foregoing); the interest of a
lessor under a Capital Lease; conditional sale or other title
retention agreement; sale of accounts receivable or chattel
paper; or other arrangement pursuant to which any Person is
entitled to any preference or priority with respect to the
property or assets of another Person or the income or profits
of such other Person or which constitutes an interest in
property to secure an obligation; each of the foregoing
whether consensual or non-consensual and whether arising by
way of agreement, operation of law, legal process or
otherwise.
"End Date": The date upon which both (a) all Liabilities have been paid
in full and (b) all obligations of any Revolving Credit
Lender to make loans and advances and to provide other
financial accommodations to the Borrower hereunder shall have
been irrevocably terminated.
"Environmental Laws": All of the following:
(a) Any and all federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements which regulate or relate to, or impose
any standard of conduct or liability on account of or in
respect to environmental protection matters, including,
without limitation, Hazardous Materials, as are now or
hereafter in effect.
(b) The common law relating to damage to Persons or
property from Hazardous Materials.
"Equipment": Includes, without limitation, "equipment" as defined in
the UCC, and also all motor vehicles, rolling stock,
machinery, office equipment, plant equipment, tools, dies,
molds, store fixtures, furniture, and other goods, property,
and assets which are used and/or were purchased for use in the
operation or furtherance of a Borrower's business, and any and
all accessions or additions thereto, and substitutions
therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": Any Person which is under common control with a
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes the Borrower and which would be
treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
"Eurodollar Business Day": Any day which is both a Business Day and a
day on which the principal market in Eurodollars in which
BankBoston, N.A. participates is open for dealings in United
States Dollar deposits.
"Eurodollar Loan": Any Revolving Credit Loan which bears interest at a
Eurodollar Rate.
"Eurodollar Margin": (a) Until Paragraph (b) of this Definition
applies, the "Eurodollar Margin" shall be as provided in Tier
III.
(b) Commencing with the Borrowers' fiscal
month, January 2000, the Eurodollar Margin shall be
set as of the first day of each fiscal month and
shall be based on Usage during the fiscal month then
just completed, as follows:
------------- ----------------------------------------- ---------------------------------
TIER USAGE EURODOLLAR MARGIN
------------- ----------------------------------------- ---------------------------------
I Equal to or greater than 66.667% 200 Basis Points
------------- ----------------------------------------- ---------------------------------
II Greater than 33.333% and less than 175 Basis Points
66.667%
------------- ----------------------------------------- ---------------------------------
III Equal to or less than 33.333% 150 Basis Points
------------- ----------------------------------------- ---------------------------------
"Eurodollar Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the Agent to
be the highest prevailing rate per annum at which deposits on
U.S. Dollars are offered to BankBoston, N.A., by first-class
banks in the Eurodollar market in which BankBoston, N.A.
participates at or about 10:00AM (Boston Time) Two (2)
Eurodollar Business Days before the first day of the Interest
Period for the subject Eurodollar Loan, for a deposit
approximately in the amount of the subject loan for a period
of time approximately equal to such Interest Period.
"Eurodollar Rate": That per annum rate (calculated on a 360 day year
and actual days elapsed) which is the aggregate of the
Eurodollar Offer Rate plus the Eurodollar Margin except that,
in the event that it is determined by the Agent that any
Revolving Credit Lender may be subject to the Reserve
Percentage, the "Eurodollar Rate" shall mean, as to such
Revolving Credit Lender, with respect to any Eurodollar Loans
then outstanding (from the date on which that Reserve
Percentage first became applicable to such loans), and with
respect to all Eurodollar Loans thereafter made, an interest
rate per annum equal the sum of (a) plus (b), where:
(a) is the decimal equivalent of the following
fraction:
Eurodollar Offer Rate
--------------------------
1 minus Reserve Percentage
(b) the applicable Eurodollar Margin.
"Events of Default": Is defined in Article 10:.
"Excess Availability": The result of Availability minus: all then held
checks (if any); accounts payable which are beyond credit
terms then accorded the Borrowers; overdrafts; any then unpaid
charges to the Loan Account.
"Farm Products": As defined in the UCC.
"Federal Funds Effective Rate": For any day, a fluctuating per annum
interest rate equal to the weighted average of the rates on
overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published on that date (or on the then next succeeding
Business Day, if not one) by the Federal Reserve Bank of New
York, provided that if such a rate is not so published for a
day which is a Business Day, Federal Funds Effective Rate
shall be the average of quotations for such day on such
transactions received by the Agent from three federal funds
brokers of recognized standing selected by the Agent.
"Fee Letter": That letter, styled the "Fee Letter" between the Borrower
and the Agent, as such letter may from time to time be amended
"Fixtures": Has the meaning given that term in the UCC.
"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is
being made, provided, however, in the event of a Material
Accounting Change, then unless otherwise specifically agreed
to by the Agent, (a) the Borrowers' compliance with the
financial performance covenants imposed pursuant to Section
5:5-12 (if applicable) shall be determined as if such Material
Accounting Change had not taken place and (b) the Borrowers
shall include, with its monthly, quarterly, and annual
financial statements a schedule, certified by the Parent's
chief financial officer, on which the effect of such Material
Accounting Change to the statement with which provided shall
be described.
"General Intangibles": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
Borrower; credit memoranda in favor of any Borrower; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of any Borrower to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and other manuals and materials; trade
names, trademarks, service marks, and all goodwill relating
thereto; applications for registration of the foregoing; and
all other general intangible property of any Borrower in the
nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected
with, the design, development, manufacture, sale, marketing,
leasing, or use of any or all property produced, sold, or
leased, by any Borrower or credit extended or services
performed, by any Borrower, whether intended for an individual
customer or the general business of any Borrower, or used or
useful in connection with research by any Borrower.
"Goods": Has the meaning given that term in the UCC.
"Hazardous Materials": Any (a) hazardous materials, hazardous waste,
hazardous or toxic substances or petroleum products, which
(as to any of the foregoing) are defined or regulated as a
hazardous material in or under any Environmental Law and (b)
oil in any physical state.
"Indebtedness": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:
(a) In respect of money borrowed (including any
indebtedness which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on any asset of
such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or
acceptance transaction (including, without limitation, the
face amount of all letters of credit and acceptances issued
for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(d) On account of deposits or advances which create
an obligation, on the part of a Borrower, to repay or credit
such deposit or advance.
(e) As lessee under Capital Leases.
(f) In connection with any sale and leaseback
transaction which results in a Capital Lease.
"Indebtedness" also includes:
(x) Indebtedness of others secured by an
Encumbrance on any asset of such Person, whether or
not such Indebtedness is assumed by such Person.
(y) Any guaranty, endorsement, suretyship or
other undertaking pursuant to which that Person may
be liable on account of any obligation of any third
party.
(z) The Indebtedness of a partnership or
joint venture in which such Person is a general
partner or joint venturer.
"Indemnified Person": Is defined in Section 19:19-12.
"Instruments": Has the meaning given that term in the UCC.
"Interest Payment Date": With reference to:
Each Eurodollar Loan: The last day of the Interest
Period relating thereto; the last day of the third month of
any six month Interest Period; the Termination Date; and the
End Date.
Each Base Margin Loan: the first day of each month;
the Termination Date; and the End Date.
"Interest Period": (a) With respect to each Eurodollar Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of, or conversion to, the subject
Eurodollar Loan and ending one, two, three, or six months
thereafter, as the Lead Borrower may elect by notice (pursuant
to Section 2:2-6) to the Agent
(b) With respect to each Base Margin Loan:
Subject to Subsection (c), below, the period commencing on the
date of the making or continuation of or conversion to such
Base Margin Loan and ending on that date (i) as of which the
subject Base Margin Loan is converted to a Eurodollar Loan, as
the Lead Borrower may elect by notice (pursuant to Section
2:2-6) to the Agent, or (ii) on which the subject Base Margin
Loan is paid by the Lead Borrower.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Margin
Loan which would otherwise end on a day which is not
a Business Day shall be extended to the next
succeeding Business Day.
(ii) Any Interest Period for a Eurodollar
Loan which would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is
in the next calendar month, in which event such
Interest Period shall end on the last Business Day of
the month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any
Interest Period applicable to a Eurodollar Loan,
which Interest Period begins on a day for which there
is no numerically corresponding day in the calendar
month during which such Interest Period ends, shall
end on the last Business Day of the month during
which that Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall end on
the Termination Date.
(v) The number of Interest Periods in effect
at any one time is subject to Section 2:2-12(d)
hereof.
"Inventory": Includes, without limitation, "inventory" as defined in
the UCC and also all: packaging, advertising, and shipping
materials related to any of the foregoing, and all names or
marks affixed or to be affixed thereto for identifying or
selling the same; Goods held for sale or lease or furnished or
to be furnished under a contract or contracts of sale or
service by a Borrower, or used or consumed or to be used or
consumed in a Borrower's business; Goods of said description
in transit: returned, repossessed and rejected Goods of said
description; and all documents (whether or not negotiable)
which represent any of the foregoing.
"Inventory Advance Rate": Initially, 70%.
Following the Agent's obtaining of an Inventory
Appraisal conducted after the date of this Agreement, pursuant
to Section 5:5-10(c), 85% of the Inventory Recovery Percentage
as calculated from such Inventory Appraisal.
"Inventory Appraisal": An appraisal of the Borrowers' Inventory
undertaken at the request of the Agent, by a Nationally
Recognized Inventory Appraiser, using a methodology comparable
to that employed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the preparation of its
appraisal of the Borrowers' Inventory dated on or about
November 1, 1999.
"Inventory Recovery Percentage": The decimal equivalent of that
fraction, determined from an Inventory Appraisal, in which the
numerator is the Appraised Inventory Liquidation Value and the
denominator is the Cost of the Borrowers' Inventory.
" Inventory Reserves": Such Reserves as may be established from
time to time by the Agent in the Agent's discretion with
respect to the determination of the saleability, at retail, of
the Eligible Inventory or which reflect such other factors as
affect the market value of the Eligible Inventory.
"Investment Property": Has the meaning given that term in the UCC.
"Issuer": The issuer of any L/C.
"L/C": Any letter of credit, the issuance of which is procured by the
Agent for the account of a Borrower and any Acceptance made on
account of such letter of credit.
"L/C Fee Letter": That letter, styled the "L/C Fee Letter" among
the Borrower, the Agent, and the Issuer, as such letter may
from time to time be amended.
"L/C Landing Costs": To the extent not included in the Stated
Amount of an L/C, customs, duty, freight, and other
out-of-pocket costs and expenses which will be expended to
"land" the Inventory, the purchase of which is supported by
such L/C.
"Lead Borrower": Is defined in the Preamble.
"Lease": Any lease or other agreement, no matter how styled or
structured, pursuant to which a Borrower is entitled to the
use or occupancy of any space.
"Lenders'Special Counsel": A single counsel, selected by the Majority
Lenders following the occurrence of an Event of Default, to
represent the interests of the Revolving Credit Lenders in
connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any
other Loan Document, as well as in connection with any
"workout", forbearance, or restructuring of the credit
facility contemplated hereby.
"Liabilities": Includes, without limitation, the following:
(a) All and each of the following, whether now
existing or hereafter arising under this Agreement or under
any of the other Loan Documents:
(i) Any and all direct and indirect liabilities,
debts, and obligations of each Borrower to the Agent or any
Revolving Credit Lender, each of every kind, nature, and
description.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by each Borrower to the Agent or any Revolving
Credit Lender (including all future advances whether or not
made pursuant to a commitment by the Agent or any Revolving
Credit Lender), whether or not any of such are liquidated,
unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, contingent, or of any other type, nature,
or description, or by reason of any cause of action which the
Agent or any Revolving Credit Lender may hold against any
Borrower.
(iii) All notes and other obligations of any Borrower
now or hereafter assigned to or held by the Agent or any
Revolving Credit Lender, each of every kind, nature, and
description.
(iv) All interest, fees, and charges and other
amounts which may be charged by the Agent or any Revolving
Credit Lender to any Borrower and/or which may be due from any
Borrower to the Agent or any Revolving Credit Lender from time
to time.
(v) All costs and expenses incurred or paid by the
Agent or any Revolving Credit Lender in respect of any
agreement between any Borrower and Agent or any Revolving
Credit Lender or instrument furnished by any Borrower to the
Agent or any Revolving Credit Lender (including, without
limitation, Costs of Collection, attorneys' reasonable fees,
and all court and litigation costs and expenses).
(vi) Any and all covenants of any Borrower to or with
the Agent or any Revolving Credit Lender and any and all
obligations of any Borrower to act or to refrain from acting
in accordance with any agreement between any Borrower and the
Agent or any Revolving Credit Lender or instrument furnished
by any Borrower to the Agent or any Revolving Credit Lender.
(vii) Each of the foregoing as if each reference to
the " Agent and each Revolving Credit Lender " therein were to
each Affiliate of the Agent or any Revolving Credit Lender.
(b) Any and all liabilities, debts, and obligations
of each Borrower to the Agent or any Affiliate of the Agent,
each of every kind, nature, and description owing on account
of any service or accommodation provided to, or for the
account of any Borrower pursuant to this or any other Loan
Document, including cash management services and the issuances
of L/C's and Acceptances.
"Liquidation": The exercise, by the Agent, of those rights accorded to
the Agent under the Loan Documents as a creditor of the
Borrowers following and on account of the occurrence of an
Event of Default looking towards the realization on the
Collateral. Derivations of the word "Liquidation" (such as
"Liquidate") are used with like meaning in this Agreement.
"Lock Box Bank": That bank to which the Borrowers concentrate proceeds
of the Borrowers' sales.
"Loan Account": Is defined in Section 2:2-9.
"Loan Commitment": With respect to each Revolving Credit Lender, that
respective Revolving Credit Lender's Revolving Credit Dollar
Commitment.
"Loan Documents": This Agreement, each instrument and document
executed and/or delivered as contemplated by Article 3:,
below, and each other instrument or document from time to time
executed and/or delivered in connection with the arrangements
contemplated hereby.
"Majority Lenders": Revolving Credit Lenders (other than Delinquent
Revolving Credit Lenders) holding 51% or more of the Loan
Commitments (other than any Loan Commitments held by
Delinquent Revolving Credit Lenders).
"Material Accounting Change": Any change in GAAP applicable to
accounting periods subsequent to the Borrowers' fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the
Borrowers' financial condition or operating results, as
reflected on financial statements and reports prepared by or
for the Borrowers, when compared with such condition or
results as if such change had not taken place or where
preparation of the Borrowers' statements and reports in
compliance with such change results in the breach of a
financial performance covenant imposed pursuant to Section
5:5-12 (if applicable) where such a breach would not have
occurred if such change had not taken place or visa versa.
"Material Adverse Change": Any event, fact, circumstance, change in, or
effect on, the business of, any Borrower which, individually
or in the aggregate or on a cumulative basis with any other
circumstances, changes in, or effects on, the Borrowers or the
Collateral, taken as a whole which:
(a) Is, or would reasonably be expected to be,
materially adverse to the business, operations, assets or
liabilities (including, without limitation, contingent
liabilities), results of operations or the financial condition
of the Borrowers, when taken as a whole.
(b) Would reasonably be expected to materially
adversely affect the ability of the Borrowers taken as a whole
to operate or conduct business in all material respects in the
manner in which they are currently operated or conducted by
the Borrowers taken as a whole or to perform their obligations
under the Loan Documents .
(c) Would reasonably be expected to have a material
adverse effect or result in a material adverse change in the
value, enforceability, collectability or the nature of the
Collateral.
"Material Adverse Effect": A result, consequence, or outcome with
respect to the Borrowers which constitutes a Material Adverse
Change.
"Maturity Date": November 30, 2004.
"National Rating Service": Standard and Poor's Corporation, ▇▇▇▇▇'▇
Investors Service Inc. and any other rating service which is
nationally recognized for its rating of investments of the
type to which reference is being made.
"Nationally Recognized Inventory Appraiser:" An inventory appraiser
which engages in a national practice of the appraisal of
retail inventory, nominated, at the request of the Agent, by
the Lead Borrower, and acceptable to the Agent, provided
however, if an Event of Default has occurred and is
continuing, "Nationally Recognized Inventory Appraiser" shall
be an inventory appraiser which engages in a national practice
of the appraisal of retail inventory which is nominated by the
Agent.
"Nominee": A business entity (such as a corporation or limited
partnership) formed by the Agent to own or manage any Post
Foreclosure Asset.
"Operating Subsidiary": Each Borrower (other than the Parent) and any
Subsidiary which is formed with a view towards the operation
of one or more Stores.
"Overloan": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, at the time it is
made (a) it is in excess of the Borrowing Base or (b) exceeds
Availability immediately prior to the making of such loan,
advance, or providing of credit support.
"Parent": HomeBase, Inc.
"Participant": Is defined in Section 19:19-15, hereof.
"Payment Default": Any event described in Section 10:10-1 or Section
10:10-2.
"Permissible Overloans": Revolving Credit Loans which are Overloans,
but are both (a) Protective Advances and (b) when aggregated
with all other Permissible Overloans, do not aggregate more
than 10% of the aggregate of the Borrowing Base.
"Permitted Acquisition": A transaction which satisfies each of the
following criteria:
(a) Not less than Thirty (30) days prior written
notice of the transaction has been given to the Agent (which
notice shall be in reasonable detail as to the facts and
circumstances relating to such proposed transaction).
(b) The Board of Directors of the Target have
approved the terms of the subject transaction.
(c) The purchase price for the acquisition of which
Permitted Acquisition, when aggregated with the purchase price
of all Permitted Acquisitions previously completed, does not
exceed $40 Million (such purchase price to include the
following:
(i) All cash paid on account of such
acquisition.
(ii) All assumed liabilities.
(iii) Deferred compensation.
(iv) The present value of any non-compete
and earn out payments)
(d) If the Surviving Entity was not a Borrower
immediately prior to the initiation of the subject
transaction, the Surviving Entity has assumed and has agreed
to discharge all of the Liabilities strictly in accordance
with their terms, which assumption is undertaken pursuant to
documentation which is satisfactory to the Agent.
(e) The Surviving Entity will be engaged solely in
the business in which the Borrowers had been engaged
immediately prior to the initiation of the subject transaction
or in a business which is reasonably related to that business.
(f) All assets of the Surviving Entity will
constitute "Collateral" as to which there is compliance with
all relevant provisions of the Loan Documents (including, but
not limited to, Section 4:4-25 of this Agreement), except to
the extent that such compliance is relaxed as provided in
Sections 8:8-2(a) and 4:4-27(a).
(g) If the purchase price for the subject acquisition
(calculated in a manner consistent with Paragraph (c) of this
Definition) equals or exceeds $7.5 Million, the Agent shall
have been provided with an opinion of counsel to the Surviving
Entity, subject only to such qualifications as reasonably may
be satisfactory to the Agent, concerning the Surviving Entity,
the Permitted Acquisition, compliance with Section 4:4-20 and
such other matters as the Agent reasonably may request.
(h) The Threshold Conditions shall have been
satisfied.
"Permitted Affiliate Transactions":Each of the following:
(a) The sale of goods and services for a price and on
terms which are
(i) competitive and fully deductible as an
"ordinary and necessary business expense" and/or fully
depreciable under the Internal Revenue Code of 1986 and the
Treasury Regulations, each as amended; and
(ii) no less favorable to that Borrower than
those which would have been charged and imposed in an arms
length transaction.
(b) A transaction in which there is no Consolidated
gain or loss to any party to such transaction.
"Permitted Encumbrances": The following:
(a) Encumbrances in favor of the Agent.
(b) Those Encumbrances (if any) listed on EXHIBIT
4:4-7, annexed hereto.
(c) Liens securing the payment of taxes, either not
yet overdue or the validity of which are being contested as
permitted by Section 4:4-15(a);
(d) Non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course
of a Borrowers' business to the extent: such liens secure
obligations which are not overdue or such liens secure
obligations relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at
the sole risk of the insurer or are being contested in good
faith by appropriate proceedings diligently pursued and
available to a Borrower, in each instance prior to the
commencement of foreclosure or other similar proceedings and
with respect to which adequate reserves have been set aside on
the Borrowers' books.
(e) Zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of real
property.
(f) Deposits under workmen's compensation,
unemployment insurance and social security laws, or to secure
the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or to secure
statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds arising in the
ordinary course of business.
(g) Landlord's liens by operation of law where
waivers have not been obtained.
(h) Purchase money security interests (as defined
in the UCC) in Equipment.
(i) Interests of lessors under Capital Leases.
(j) Encumbrances, other than on Inventory,
extant on assets of any Operating Subsidiary acquired
after the date of this agreement pursuant to a Permitted
Acquisition.
(k) Liens which secure a Permitted Real Estate
Financing.
(l) Liens arising on account of the transfer of an
interest in Accounts or notes receivable, which transfer
qualifies as a sale under GAAP.
(m) Liens consisting of security deposits made by a
Borrower.
(n) Liens granted by one Borrower to another
Borrower.
(o) Encumbrances on Inventory which, when aggregated
with the Cost of Inventory consigned to any Borrower, do not
exceed two percent (2%) of the Cost of all of the Borrowers'
Inventory at any time.
(p) Liens not otherwise described in this Definition,
which secure up to $5 Million in the aggregate at any one time
outstanding.
The inclusion of any of the foregoing as a "Permitted Encumbrance"
shall not affect its relative priority vis a vis any Collateral
Interest created by a Borrower in favor of the Agent.
"Permitted Indebtedness": The following:
(a) Indebtedness under this Agreement.
(b) Indebtedness described on EXHIBIT 4:4-8, annexed
hereto.
(c) Indebtedness on account of a Permitted Real
Estate Transaction.
(d) Indebtedness secured solely by a Permitted
Encumbrance.
(e) Contingent obligations on account of endorsements
of instruments for deposit or collection in the ordinary
course.
(f) Contingent obligations consisting of unsecured
guaranties, and other arrangements which have the functional
effect of a guaranty, of another Borrower or of any Subsidiary
of any Borrower.
(e) Permitted SubDebt.
(f) Indebtedness to any Affiliate.
(g) Capitalized Lease obligations, not to exceed $30
Million outstanding at any one time.
"Permitted Investments": Each of the following, provided that it is
held by the Parent; is subject to the prior perfected security
interest of the Agent; and is denominated in United States
Dollars:
(a) Short-term obligations of, or fully guaranteed
by, the United States of America; or its agencies.
(b) Commercial paper rated A-2 or better by Standard
and Poor's Corporation or P-2 or better by ▇▇▇▇▇'▇ Investors
Service, Inc. and securities commonly known as "short-term
bank notes" issued by any Revolving Credit Lender denominated
in United States dollars which at the time of purchase have
been rated and the ratings for which are not less than P-2 if
rated by ▇▇▇▇▇'▇ Investors Services, Inc., and not less than
A-2 if rated by Standard and Poor's Corporation.
(c) Demand deposit accounts maintained in the
ordinary course of business.
(d) Certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000.
(e) Municipal securities rated "A" or better as rated
by Standard and Poor's Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc. and municipal securities mutual funds which have
a weighted average life of less than two (2) years.
(f) Corporate debt securities rated "A" or better as
rated by Standard and Poor's Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc. which mature within two (2) years from the date
the Investment is made by the Borrower or any of its
Subsidiaries.
(g) Asset or mortgage backed securities rated "A" or
better as rated by Standard and Poor's Corporation or ▇▇▇▇▇'▇
Investors Service, Inc. with an average life less than two (2)
years; provided that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(h) Auction rate securities rated "A" or better as
rated by Standard and Poor's Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc.; provided that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(i) Repurchase agreements relating to a security
which is rated "A" or better as rated by Standard and Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc. that mature
within two (2) years from the date the Investment is made by
the Borrower or any of its Subsidiaries; provided that after
giving effect to any such Investment, the aggregate cost of
all such Investments does not exceed $25,000,000.
(j) Municipal securities rated "SP2" or better by
Standard and Poor's Corporation or "MIG2" or better by ▇▇▇▇▇'▇
Investors Service, Inc. with an average life of less than two
(2) years; provided, that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(k) Money market mutual funds regulated by SEC rule
2a-7 (17 CFR 270.2a-7) under the Investment Company Act of
1940.
(l) Insurance company guaranteed investment contracts
or funding agreements with insurers rated A-2 or better by
Standard and Poor's Corporation.
(m) Bond mutual funds investing in securities rated
"A" or better by Standard and Poor's Corporation which have a
weighted average life of two (2) years or less.
"Permitted Merger": A transaction which satisfies each of the following
criteria:
(a) Not less than Thirty (30) days prior written
notice of the transaction has been given to the Agent (which
notice shall be in reasonable detail as to the facts and
circumstances relating to such proposed transaction).
(b) If any of the parties to the transaction is a
Borrower, each of the following criteria is satisfied:
(i) If the Surviving Entity was not a
Borrower immediately prior to the initiation of the
subject transaction, the Surviving Entity has assumed
and has agreed to discharge all of the Liabilities
strictly in accordance with their terms, which
assumption is undertaken pursuant to documentation
which is satisfactory to the Agent.
(ii) The Surviving Entity will be engaged
solely in the business in which the Borrowers had
been engaged immediately prior to the initiation of
the subject transaction or in a business which is
reasonably related to that business.
(iii) All assets of the Surviving Entity
will constitute "Collateral" as to which there is
compliance with all relevant provisions of the Loan
Documents (including, but not limited to, Section
4:4-25 of this Agreement), except to the extent that
such compliance is relaxed as provided in Sections
8:8-2(a) and 4:4-27(a).
(iv) If the purchase price for the subject
acquisition (calculated in a manner consistent with
Paragraph (c) of the Definition of "Permitted
Acquisition") equals or exceeds $7.5 Million, the
Agent shall have been provided with an opinion of
counsel to the Surviving Entity, subject only to such
qualifications as reasonably may be satisfactory to
the Agent, concerning the Surviving Entity, the
Permitted Merger, compliance with Section 4:4-20 and
such other matters as the Agent reasonably may
request.
(v) The Threshold Conditions shall have been
satisfied.
(c) If no party to the subject transaction is or
becomes a Borrower, all parties to the subject transaction
were Affiliates immediately prior to the initiation of the
subject transaction.
"Permitted Real Estate Financing": Any loan secured by a Collateral
Interest in, or consisting of a sale and leaseback of, real
estate owned by any Borrower or any Real Estate Subsidiary of
any Borrower, the cumulative proceeds of which (net of the
cost of the transaction) from all of such loans and sales and
leasebacks closed on or after October 1, 1999, does not exceed
$75 Million.
"Permitted Repurchase"
(a) A purchase or repurchase, by the Parent of
its capital stock as follows:
(i) With proceeds received from the issuance
of new shares of the Parent's capital stock.
(ii) Pursuant to a program adopted by the
Parent's Directors to repurchase stock options issued
by the Parent.
(b) A purchase or repurchase, by the Parent, or any
of its capital stock or of any of the 1997 Subordinated Notes,
provided that the Threshold Conditions are satisfied in each
instance.
"Permitted SubDebt": The following Indebtedness:
(a) Indebtedness evidenced by the 1997 Subordinated
Notes.
(b) Indebtedness subordinated to the Liabilities
pursuant to written agreement satisfactory to the Agent.
"Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"Post Foreclosure Asset": All or any part of the Collateral, ownership
of which is acquired by the Agent or a Nominee on account of
the "bidding in" at a disposition as part of a Liquidation or
by reason of a "deed in lieu" type of transaction.
"Proceeds": Includes, without limitation, "Proceeds" as defined in the
UCC (defined below), and each type of property described in
Section 8:8-1 hereof.
"Pro-Rata": A proportional distribution based upon a Revolving Credit
Lender's percentage claim to the overall aggregate amount
being distributed.
"Protective Advances": The aggregate of Revolving Credit Loans and
expenditures and incurrences of obligations by the Agent which
are made or undertaken in the Agent's discretion to: protect
or preserve the Collateral Interests which secure the
Liabilities and the Agent's rights upon default or otherwise
or which the Agent determine in the Agent's discretion (such
as preservation of the Borrower's infrastructure), are
appropriate to facilitate a Liquidation, provided, however,
"Protective Advances" shall not exceed $10 Million in the
aggregate at any one time outstanding.
"Real Estate Subsidiary": Each Person listed on EXHIBIT 1:1-0,
annexed hereto, and any Person which, after the date of this
Agreement, becomes a Subsidiary of the Parent, 25% or more of
whose assets constitute real estate or interests in real
estate.
"Receipts": All cash, cash equivalents, checks, and credit card slips
and receipts as arise out of the sale of the Collateral.
"Receivables Collateral": That portion of the Collateral which consists
of the Borrowers' Accounts, Accounts Receivable, General
Intangibles, Chattel Paper, Instruments, Documents of Title,
Documents, Investment Property, letters of credit for the
benefit of the Borrowers, and bankers' acceptances held by the
Borrowers, and any rights to payment.
"Register": Is defined in Section 16:16-2(c).
"Requirement of Law": As to any Person:
(a)(i) All statutes, rules, regulations, orders, or
other requirements having the force of law and (ii) all court
orders and injunctions, arbitrator's decisions, and/or similar
rulings, in each instance ((i) and (ii)) of or by any federal,
state, municipal, and other governmental authority, or court,
tribunal, panel, or other body which has or claims
jurisdiction over such Person, or any property of such Person,
or of any other Person for whose conduct such Person would be
responsible.
(b) That Person's charter, certificate of
incorporation, articles of organization, and/or other
organizational documents, as applicable; and
(c) that Person's by-laws and/or other instruments
which deal with corporate or similar governance, as
applicable.
"Reserve Percentage": The decimal equivalent of that rate applicable to
a Revolving Credit Lender under regulations issued from time
to time by the Board of Governors of the Federal Reserve
System for determining the maximum reserve requirement of that
Revolving Credit Lender with respect to "Eurocurrency
liabilities" as defined in such regulations. The Reserve
Percentage applicable to a particular Eurodollar Loan shall be
based upon that in effect during the subject Interest Period,
with changes in the Reserve Percentage which take effect
during such Interest Period to take effect (and to
consequently change any interest rate determined with
reference to the Reserve Percentage) if and when such change
is applicable to such loans.
"Reserves": The following: Availability Reserves and Inventory Reserves
"Revolving Credit": Is defined in Section 2:2-1.
"Revolving Credit Ceiling": $250,000,000.00.
"Revolving Credit Commitment Fee": Is defined in Section 2:2-13.
"Revolving Credit Dollar Commitment": As set forth on EXHIBIT 2:2-24,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"Revolving Credit Early Termination Fee": Is defined in Section 2:2-16.
"Revolving Credit Lenders": Each Revolving Credit Lender to which
reference is made in the Preamble of this Agreement and any
other Person who becomes a "Revolving Credit Lender" in
accordance with the provisions of to this Agreement.
"Revolving Credit Loans": Loans made under the Revolving Credit, except
that where the term "Revolving Credit Loan" is used with
reference to available interest rates applicable to the loans
under the Revolving Credit, it refers to so much of the unpaid
principal balance of the Loan Account as bears the same rate
of interest for the same Interest Period. (See Section
2:2-12(c)).
"Revolving Credit Note": Is defined in Section 2:2-10.
"Revolving Credit Obligations": The aggregate of the Borrower's
liabilities, obligations, and indebtedness of any character
on account of or in respect to the Revolving Credit.
"Revolving Credit Percentage Commitment": As set forth on EXHIBIT
2:2-24, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"Senior Officer": President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer, and any other
Person or officer reasonably so designated by the Agent,
written notice of which designation is provided by the Agent
to the Lead Borrower.
"Stated Amount": The maximum amount for which an L/C or an Acceptance
may be honored.
"Store": A place at which a Borrower offers its Inventory for sale to
the public.
"Subsidiary": Any Person (a) 50% of whose stock or other divisible
ownership interests having ordinary voting power, are owned or
controlled, directly or indirectly by another Person or (b) of
which another Person is the general partner or managing
partner or the like.
"SuperMajority Lenders": Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% or more
the Loan Commitments (other than Loan Commitments held by a
Delinquent Revolving Credit Lender).
"Surviving Entity": The Person which is the surviving entity of a
Permitted Merger or of a Permitted Acquisition.
"Suspension Event": Any occurrence, circumstance, or state of facts
which (a) is an Event of Default; or (b) would become an Event
of Default if any requisite notice were given and/or any
requisite period of time were to run and such occurrence,
circumstance, or state of facts were not absolutely cured
within any applicable grace period.
"SwingLine": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine
Loan Ceiling.
"SwingLine Lender": BBRF.
"SwingLine Loan Ceiling": $35,000,000.00 (subject to increase as
provided in Section 15:15-4).
"SwingLine Loans": Defined in Section 2:2-8.
"TangibleNet Worth": The difference between (a) the aggregate of the
Borrowers' Consolidated assets as reflected on its balance
sheet prepared in accordance with GAAP, other than any of its
assets reflected thereon which are generally regarded as
"intangible" and (b) the aggregate of the Borrowers'
Consolidated liabilities as reflected on its balance sheet.
"Target": The Person which is being acquired in connection with a
Permitted Acquisition.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10:10-12, below;
or (c) the Agent's notice to the Lead Borrower setting the
Termination Date on account of the occurrence of any Event of
Default other than as described in Section 10:10-12, below.
"Threshold Excess Availability": Forty Million Dollars ($40,000,000.00)
"Threshold Conditions": The satisfaction of each of the following
conditions:
(a) For the thirty (30) days immediately prior to the
subject transaction, Availability has not been less than
Threshold Excess Availability.
(b) The Agent was provided, not less than ten (10)
days prior to the closing on the subject transaction, with a
forecast (prepared in accordance with the standards of Section
5:5-11(c)) which reflects that there will be Threshold Excess
Availability at all times during the twelve (12) month period
following the subject transaction.
(c) No Event of Default has occurred and is
continuing and none will occur in consequence of such
transaction.
"Transfer": Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed to from time to time by
the Agent making such Transfer and the subject Revolving
Credit Lender. Wire instructions may be changed in the same
manner that Notice Addresses may be changed (Section 17:17-1),
except that no change of the wire instructions for Transfers
to any Revolving Credit Lender shall be effective without the
consent of the Agent.
"UCC": The Uniform Commercial Code as presently in effect in
Massachusetts (Mass. Gen. Laws, Ch. 106).
"Unanimous Consent": Consent of Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 100% or more the
Loan Commitments (other than Loan Commitments held by a
Delinquent Revolving Credit Lender).
"Unused Line Fee": Is defined in Section 2:2-15.
"Usage": The decimal equivalent of a fraction, determined with respect
to a fiscal month, in which (a) the numerator is the aggregate
of (i) the average unpaid principal balance of the Loan
Account plus (ii) the average Stated Amount of all L/C's and
Acceptances, and (b) the denominator is $250,000,000.00.
"Year 2000 Compliant": Computer applications, imbedded microchips,
and other systems and subsystems which properly recognize and
perform their intended function without any adverse effect on
account of their respective inability to recognize certain
dates prior to, on, and after December 31, 1999 or on account
of their treating any date prior to, on, or after December 31,
1999 other than as the specific date in question.
ARTICLE 2: - THE REVOLVING CREDIT:
2-1. ESTABLISHMENT OF REVOLVING CREDIT
(a The Revolving Credit Lenders hereby establish a revolving
line of credit (the "Revolving Credit") in the Borrowers' favor pursuant to
which each Revolving Credit Lender, subject to, and in accordance with, this
Agreement, acting through the Agent, shall make loans and advances and otherwise
provide financial accommodations to and for the account of the Borrowers as
provided herein.
(b Loans, advances, and financial accommodations under the
Revolving Credit shall be made with reference to the Borrowing Base and shall be
subject to Availability. The Borrowing Base and Availability shall be determined
by the Agent by reference to Borrowing Base Certificates furnished as provided
in Section 5:5-4, below, and shall be subject to the following:
(i Such determination shall take into account those
Reserves as the Agent may determine as being applicable thereto.
(ii The Cost of Eligible Inventory will be determined
as follows:
(A Unless the Lead Borrower is required to
provide the Agent with a Borrowing Base Certificate on a
weekly basis in accordance with Section 5:5-4(b), the Cost of
Eligible Inventory shall be based on the Borrowers' net book
value inventory.
(B If the Lead Borrower is obliged to
provide the Agent with a Borrowing Base Certificate on a
weekly basis in accordance with Section 5:5-4(b), the Cost of
Eligible Inventory shall be based on the Borrower's stock
ledger inventory.
(iii Changes to the Inventory Advance Rate, as
provided in the Definition of that term, shall take effect on not less
than seven (7) days written notice by the Agent to the Lead Borrower.
(c). The commitment of each Revolving Credit Lender to
provide such loans, advances, and financial accommodations is subject to Section
2:2-24.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely for the following:
(i) To retire the Parent's working capital facilities
in effect at the execution of this Agreement.
(ii) For on-going working capital and general
corporate requirements of the Borrowers.
(iii) For Permitted Repurchases.
(iv) For Permitted Acquisitions.
2-2. INITIAL RESERVES. CHANGES TO RESERVES.
(a) At the execution of this Agreement, the only Reserves are
as follows:
(i) Availability Reserves:
(A) Customer Credit Liabilities.
(I) 50% of the aggregate outstanding
merchandise vouchers and gift certificates.
(II) 100% of the aggregate of
deposits on special orders. (B) 3 months
rent for Stores in Virginia, Pennsylvania,
and Washington in which more than a de
minimis amount of the Borrower's Inventory
is located).
(ii) Inventory Reserves:
(A) The Cost of the Borrowers' Inventory
located at any "return center" maintained by the Borrower.
(B) Capitalized Inventory Costs: As
calculated from the Borrowers' general ledger.
(b) The Agent shall provide not less than seven (7) days prior
notice to the Lead Borrower of the establishment of any Reserve (other than
those established at the execution of this Agreement) except that the following
may be undertaken without such prior notice:
(i) a change to the amount of a then existing Reserve
(as distinguished from a change by which such Reserve is measured or
determined), which change reflects changed circumstances (e.g. the
amount of the Reserve for Customer Credit Liability will change based
on the aggregate of Customer Credit Liability at any one time); and
(ii) the creation of, or a change to an existing
Reserve on account of circumstances which the Agent determines as
having a Material Adverse Change on the maintenance of loan to
collateral values.; and
(iii) the creation of Reserves in concert with the
Lead Borrower's becoming obliged to provide a Borrowing Base
Certificate on a weekly basis in accordance with Section 5:5-4(b)
2-3. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any
loan or advance, or otherwise to provide any credit to or for the benefit of the
Borrowers where the result of such loan, advance, or credit is an Overloan.
(b) The Revolving Credit Lenders' obligations, among
themselves, are subject to Section 12:12-3(a) (which relates to each Revolving
Credit Lender's making amounts available to the Agent) and to Sections
15:15-3(a) and 15:15-3(a) (which relate to Permissible Overloans).
(c) The Revolving Credit Lenders' providing of an Overloan on
any one occasion does not affect the obligations of the Borrowers hereunder
(such as the Borrowers' obligation to immediately repay any amount which
otherwise constitutes an Overloan) nor obligate the Revolving Credit Lenders to
do so on any other occasion.
2-4. The Agent's reference to a given asset in connection with the
making of loans, credits, and advances and the providing of financial
accommodations under the Revolving Credit and/or the monitoring of compliance
with the provisions hereof shall not be deemed a determination by the Agent or
any Revolving Credit Lender relative to the actual value of the asset in
question. All risks concerning the value of the Collateral are and remain upon
the Borrowers. All Collateral secures the prompt, punctual, and faithful
performance of the Liabilities whether or not relied upon by the Agent in
connection with the making of loans, credits, and advances and the providing of
financial accommodations under the Revolving Credit.
2-5. Subject to the provisions of this Agreement, the Revolving Credit
Lenders shall make a loan or advance under the Revolving Credit and the Agent
shall endeavor to have an L/C issued for the account of the Borrower, in each
instance if duly and timely requested by the Lead Borrower as provided herein,
provided that:
(a) Borrowing Base will not be exceeded.
(b) The amount of the loan or advance or L/C so requested does
not exceed Availability. (c) The Revolving Credit has not been
suspended as provided in Section 2:2-6(g).
2-6. REVOLVING CREDIT LOAN REQUESTS
(a) Requests for loans and advances under the Revolving Credit
may be requested by the Lead Borrower in such manner as may from time to time be
acceptable to the Agent.
(b) Subject to the provisions of this Agreement, the Lead
Borrower may request a Revolving Credit Loan and elect an interest rate and
Interest Period to be applicable to that Revolving Credit Loan by giving notice
to the Agent by no later than the following:
(i) If such Revolving Credit Loan is to be or is to
be converted to a Base Margin Loan: By 2:30PM on the Business Day on
which the subject Revolving Credit Loan is to be made or is to be so
converted. Base Margin Loans requested by the Borrower, other than
those resulting from the conversion of a Eurodollar Loan, shall not be
less than $500,000.00.
(ii) If such Revolving Credit Loan is to be, or is to
be continued as, or converted to, a Eurodollar Loan: By 1:00PM Three
(3) Eurodollar Business Days before the commencement of any new
Interest Period or the end of the then applicable Interest Period.
Eurodollar Loans and conversions to Eurodollar Loans shall each be not
less than $1,000,000.00 and in increments of $500,000.00 in excess of
such minimum.
(iii) Any Eurodollar Loan which matures while a
Suspension Event is extant shall be converted, at the option of the
Agent, to a Base Margin Loan notwithstanding any notice from the
Borrower that such Loan is to be continued as a Eurodollar Loan.
(c) Any request for a Revolving Credit Loan which is made
after the applicable deadline therefor, as set forth above, shall be deemed to
have been made at the opening of business on the then next Business Day or
Eurodollar Business Day, as applicable. Each request for a Revolving Credit Loan
or for the conversion of a Revolving Credit Loan shall be made in such manner as
may from time to time be acceptable to the Agent.
(d) The Lead Borrower may request that the Agent cause the
issuance of L/C's for the account of the Borrowers as provided in Section
2:2-19.
(e) The Agent may rely on any request for a loan or advance,
or other financial accommodation under the Revolving Credit which the Agent, in
good faith, believes to have been made by a Person duly authorized to act on
behalf of the Lead Borrower and may decline to make any such requested loan or
advance, or issuance, or to provide any such financial accommodation pending the
Agent's being furnished with such documentation concerning that Person's
authority to act as may be satisfactory to the Agent.
(f) A request by the Lead Borrower for loan or advance, or
other financial accommodation under the Revolving Credit shall be irrevocable
and shall constitute certification by the Lead Borrower that as of the date of
such request, each of the following is true and correct:
(i) There has been no material adverse change in the
Borrowers' Consolidated financial condition from the most recent
financial information furnished Agent or any Revolving Credit Lender
pursuant to this Agreement.
(ii) The Borrowers are in compliance with, and have
not breached any of, their covenants contained in this Agreement.
(iii) Each representation which is made herein or in
any of the Loan Documents (defined below) is then true and complete as
of and as if made on the date of such request (other than any
representation which is made only as of a specific date), it being
understood that any representation which is made by reference to an
EXHIBIT hereto shall be deemed a representation as of the date of this
Agreement).
(iv) No Suspension Event is then extant. (g) Upon the
occurrence from time to time of any Suspension Event:
(i) The Agent may suspend the Revolving Credit
immediately.
(ii) Neither the Agent nor any Revolving Credit
Lender shall be obligated, during such suspension, to make any loans or
advance, or to provide any financial accommodation hereunder or to seek
the issuance of any L/C.
(iii) The Agent may suspend the right of the Lead
Borrower to request any Eurodollar Loan or to convert any Base Margin
Loan to a Eurodollar Loan.
2-7. MAKING OF REVOLVING CREDIT LOANS
(a) A loan or advance under the Revolving Credit shall be made
by the transfer of the proceeds of such loan or advance to the Disbursement
Account or as otherwise instructed by the Lead Borrower.
(b) A loan or advance shall be deemed to have been made under
the Revolving Credit (and the Borrowers shall be indebted to the Agent and the
Revolving Credit Lenders for the amount thereof immediately) at the following:
(i) The Agent's initiation of the transfer of the
proceeds of such loan or advance in accordance with the Lead Borrower's
instructions (if such loan or advance is of funds requested by the Lead
Borrower).
(ii) The charging of the amount of such loan to the
Loan Account (in all other circumstances).
(c) There shall not be any recourse to or liability of the
Agent or any Revolving Credit Lender, on account of any delay in the receipt,
and/or any loss, of funds which constitute a loan or advance under the Revolving
Credit, the wire transfer of which was properly initiated by the Agent in
accordance with wire instructions provided to the Agent by the Lead Borrower.
2-8. SWINGLINE LOANS
(a) For ease of administration, Base Margin Loans may be made
by the SwingLine Lender (in the aggregate, the "SwingLine Loans") in accordance
with the procedures set forth in this Agreement for the making of loans and
advances under the Revolving Credit. The unpaid principal balance of the
SwingLine Loans shall not at any one time be in excess of the SwingLine Loan
Ceiling.
(b) The aggregate unpaid principal balance of SwingLine Loans
shall bear interest at the rate applicable to Base Margin Loans and shall be
repayable as a loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall
be evidenced by a Note in the form of EXHIBIT 2:2-8(c), annexed hereto, executed
by the Borrowers, and payable to the SwingLine Lender. Neither the original nor
a copy of that Note shall be required, however, to establish or prove any
Liability. The Borrowers shall execute a replacement of any SwingLine Note which
has been lost, mutilated, or destroyed thereof and deliver such replacement to
the SwingLine Lender.
(d) For all purposes of this Loan Agreement, the SwingLine
Loans and the Borrowers' obligations to the SwingLine Lender constitute
Revolving Credit Loans and are secured as "Liabilities".
(e) SwingLine Loans may be subject to periodic settlement with
the Revolving Credit Lenders as provided in this Agreement.
2-9. THE LOAN ACCOUNT
(a) An account ("Loan Account") shall be opened on the books
of the Agent in which a record shall be kept of all loans and advances made
under the Revolving Credit.
(b) The Agent shall also keep a record (either in the Loan
Account or elsewhere, as the Agent may from time to time elect) of all interest,
fees, service charges, costs, expenses, and other debits owed to the Agent and
each Revolving Credit Lender on account of the Liabilities and of all credits
against such amounts so owed.
(c) All credits against the Liabilities shall be conditional
upon final payment to the Agent for the Account of each Revolving Credit Lender
of the items giving rise to such credits. The amount of any item credited
against the Liabilities which is charged back against the Agent or any Revolving
Credit Lender for any reason or is not so paid shall be a Liability and shall be
added to the Loan Account, whether or not the item so charged back or not so
paid is returned.
(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which the Borrowers are obligated hereunder are
payable within fifteen days after demand. In the determination of Availability,
the Agent may deem fees, service charges, accrued interest, and other payments
which will be due and payable between the date of such determination and the
first day of the then next succeeding month as having been advanced under the
Revolving Credit whether or not such amounts are then due and payable.
(e) The Agent, without the request of the Lead Borrower, may
advance under the Revolving Credit any interest, fee, service charge, or other
payment to which the Agent or any Revolving Credit Lender is entitled from the
Borrowers pursuant hereto and may charge the same to the Loan Account
notwithstanding that such amount so advanced may result in Borrowing Base's
being exceeded. Such action on the part of the Agent shall not constitute a
waiver of the Agent's rights and Borrowers' obligations under Section 2:2-11(b).
Any amount which is added to the principal balance of the Loan Account as
provided in this Section 2:2-9(e) shall bear interest , at the interest rate
then and thereafter applicable to Base Margin Loans.
(f) Any statement rendered by the Agent or any Revolving
Credit Lender to the Lead Borrower concerning the Liabilities shall be
considered correct and accepted by the Lead Borrower and shall be conclusively
binding upon the Borrowers unless the Lead Borrower provides the Agent with
written objection thereto within Sixty (60) from the mailing of such statement,
which written objection shall indicate, with particularity, the reason for such
objection. The Loan Account and the Agent's books and records concerning the
loan arrangement contemplated herein and the Liabilities shall be prima facie
evidence and proof of the items described therein.
2-10. THE REVOLVING CREDIT NOTES. The Borrowers' Obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by Notes (each, a "Revolving Credit Note") in the form of
EXHIBIT 2:2-10, annexed hereto, executed by the Borrowers, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, however, to establish or prove any Liability. In the
event that any Revolving Credit Note is ever lost, mutilated, or destroyed, the
Borrowers shall execute a replacement thereof and deliver such replacement to
the Agent.
2-11. PAYMENT OF THE LOAN ACCOUNT
(a) The Borrowers may repay all or any portion of the
principal balance of the Loan Account from time to time until the Termination
Date.
(b) The Borrowers, without notice or demand from the Agent or
any Revolving Credit Lender, shall pay the Agent that amount, from time to time,
which is necessary so that there is no Overloan outstanding.
(c) The Agent shall endeavor to cause those application of
payments (if any), pursuant to Sections 2:2-11(a) and 2:2-11(b) against
Eurodollar Loans then outstanding in such manner as results in the least cost to
the Borrowers, but shall not have any affirmative obligation to do so nor
liability on account of the Agent's failure to have done so. In no event shall
action or inaction taken by the Agent excuse the Borrowers from any
indemnification obligation under Section 2:2-11(e).
(d) The Borrowers shall repay the then entire unpaid balance
of the Loan Account and all other Liabilities on the Termination Date.
(e) The Borrowers shall indemnify the Agent and each Revolving
Credit Lender and hold the Agent and each Revolving Credit Lender harmless from
and against any loss, cost or expense which the Agent or such Revolving Credit
Lender may sustain or incur (including, without limitation, by virtue of
acceleration after the occurrence of any Event of Default) as a consequence of
the following:
(i) Default by any Borrower in making a borrowing or
conversion after the Lead Borrower has given (or is deemed to have
given) a request for a Revolving Credit Loan or a request to convert a
Revolving Credit Loan from one applicable interest rate to another.
(ii) The making of any payment on a Eurodollar Loan
or the making of any conversion of any such Loan to a Base Margin Loan
on a day that is not the last day of the applicable Interest Period
with respect thereto, including interest or fees payable by such
Revolving Credit Lender as "breakage fees" (so-called).
2-12. INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the Base
Margin Rate unless timely notice is given (as provided in Section 2:2-6) that
the subject Revolving Credit Loan (or a portion thereof) is, or is to be
converted to, a Eurodollar Loan.
(b) Each Revolving Credit Loan which consists of a Eurodollar
Loan shall bear interest at the applicable Eurodollar Rate.
(c) Subject to, and in accordance with, the provisions of this
Agreement, the Lead Borrower may cause all or a part of the unpaid principal
balance of the Loan Account to bear interest at the Base Margin Rate or the
Eurodollar Rate as specified from time to time by the Lead Borrower.
(d) The Lead Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that, in addition to interest at
the Base Margin Rate, there are more than six (6) Eurodollar Rates applicable to
the Revolving Credit Loans at any one time.
(e) The Borrowers shall pay accrued and unpaid interest on
each Revolving Credit Loan in arrears as follows:
(i) On the applicable Interest Payment Date for
that Revolving Credit Loan.
(ii) On the Termination Date and on the End Date.
(iii) If an Event of Default has occurred and is
continuing, with such frequency as may be determined by the
Agent.
(f) At the option of the Agent or at the instruction of the
SuperMajority Lenders, if an Event of Default has occurred and is continuing and
following the earlier of (i) the giving of a notice exercising its rights under
this section, or (ii) Acceleration, all Revolving Credit Loans shall bear
interest at a rate which is the aggregate of the rate applicable to Base Margin
Loans plus Two Percent (2%) per annum.
2-13. REVOLVING CREDIT COMMITMENT FEE
(a) As compensation for the respective commitments of those
Persons who are Revolving Credit Lenders at the execution of this Agreement to
make loans and advances to the Borrowers under the Revolving Credit and as
compensation for such Revolving Credit Lenders' respective maintenance of
sufficient funds available for such purpose, such Revolving Credit Lenders have
earned the "Revolving Credit Commitment Fee" (so referred to herein) payable at
the times and in the amounts as set forth in the Fee Letter.
2-14. AGENT'S FEE. In addition to any other fee or expense to be
paid by the Borrower on account of the Revolving Credit, the Borrowers shall pay
the Agent the "Agent's Fee" at the times and in the amounts as set forth the Fee
Letter.
2-15. UNUSED LINE FEE. In addition to any other fee to be paid
by the Borrowers on account of the Revolving Credit, the Borrowers shall pay
the Agent the "Unused Line Fee" (so referred to herein) of 0.375% per annum of
the average difference, during the quarter just ended (or relevant period with
respect to the payments being made in respect of the first fiscal quarter after
the closing and on the Termination Date) between the Revolving Credit Ceiling
and the aggregate, during such period of (a) the average unpaid principal
balance of the Loan Account plus (b) the average Stated Amount of all L/C's and
Acceptances . The Unused Line Fee shall be paid in arrears, on the first day of
each quarter after the execution of this Agreement and on the Termination Date.
2-16. REVOLVING CREDIT EARLY TERMINATION FEE.
(a) Except as provided in Section 2:2-16(b), in the event that
the Termination Date occurs, for any reason, prior to December 1, 2000, the
Borrowers shall pay to the Agent , for the benefit of the Revolving Credit
Lenders, the "Revolving Credit Early Termination Fee" (so referred to herein)
equal to 0.5 percent of the Revolving Credit Ceiling.
(b) No Early Termination Fee shall be due and payable in the
event of the early termination of the Revolving Credit in concert with a
refinancing of the Revolving Credit agented or provided by BBRF or any affiliate
of BBRF, it being understood that neither any Revolving Credit Lender nor any
affiliate of any Revolving Credit Lender has agreed to provide or to entertain a
request to provide any such refinancing.
2-17. CONCERNING FEES. The Borrowers shall not be entitled to
any credit, rebate or repayment of the Revolving Credit Commitment Fee, Agent's
Fee, Unused Line Fee, Revolving Credit Early Termination Fee, or other fee
earned by the Agent or any Revolving Credit Lender pursuant to this Agreement
or any Loan Document notwithstanding any termination of this Agreement or
suspension or termination of the Agent's and any Revolving Credit Lender's
respective obligation to make loans and advances hereunder.
2-18. AGENT'S AND REVOLVING CREDIT LENDERS' DISCRETION
(a) Each reference in the Loan Documents to the exercise of
discretion or the like by the Agent or any Revolving Credit Lender shall be to
that Person's exercise of its judgment, in good faith, based upon that Person's
consideration of any such factor as the Agent or that Revolving Credit Lender,
taking into account information of which that Person then has actual knowledge,
believes:
(i) Will or reasonably could be expected to affect
the value of the Collateral, the enforceability of the Agent's
Collateral Interests therein, or the amount which the Agent would
likely realize therefrom (taking into account delays which may possibly
be encountered in the Agent's realizing upon the Collateral and likely
Costs of Collection).
(ii) Indicates that any report or financial
information delivered to the Agent or any Revolving Credit Lender by or
on behalf of any Borrower is incomplete, inaccurate, or misleading in
any material manner or was not prepared in accordance with the
requirements of this Agreement.
(iii) Constitutes a Suspension Event.
(b) In the exercise of such judgement, the Agent and each
Revolving Credit Lender also may take into account any of the following factors:
(i) Those included in, or tested by, the definitions
of "Eligible Inventory," and "Cost".
(ii) Material changes in or to the mix of the
Borrower's Inventory.
(iii) Seasonality with respect to the Borrower's
Inventory and patterns of retail sales.
(iv) Such other factors as the Agent and each
Revolving Credit Lender determines as having a material bearing on
credit risks associated with the providing of loans and financial
accommodations to the Borrowers.
2-19. PROCEDURES FOR ISSUANCE OF L/C'S
(a) The Lead Borrower may request that the Agent cause the
issuance of L/C's for the account of the Borrowers. Each such request shall be
in such manner as may from time to time be acceptable to the Agent.
(b) The Agent will cause the issuance of any L/C so requested
by the Lead Borrower, provided that , at the time that the request is made, the
Revolving Credit has not been suspended as provided in Section 2:2-6(g) and if
so issued:
(i) The aggregate Stated Amount of all L/C's then
outstanding, does not exceed Seventy-five Million Dollars and No Cents
($75,000,000.00).
(ii) The expiry of the L/C is not later than the
earlier of Thirty (30) days prior to the Maturity Date (unless the
Borrowers provide cash collateral reasonably satisfactory to the Agent
in an amount equal to not less than 105% of the Stated Amount of any
L/C which has an expiry after that date) or the following:
(A) Standby's: One (1) year from initial
issuance.
(B) Documentary's:180 days from issuance.
(iii) Borrowing Base would not be exceeded.
(c) The Borrowers shall execute such documentation to apply
for and support the issuance of an L/C as may be required by the Issuer.
(d) There shall not be any recourse to, nor liability of, the
Agent or any Revolving Credit Lender on account of the following to the extent
that any of the following occurs for reasons not within the reasonable control
of the Issuer:
(i) Any delay of the Issuer to issue an L/C or
Acceptance.
(ii) Any action or inaction of an Issuer on account
of or in respect to, any L/C or Acceptance.
(e) The Borrowers shall reimburse the Issuer for the amount of
any honoring of a drawing under an L/C on the same day on which such honoring
takes place, unless such honoring results in the issuance of an Acceptance (in
which event, the Borrowers shall reimburse the Issuer for the amount of any
honoring of such Acceptance on the same day on that Acceptance is honored). The
Agent, without the request of the Borrowers or the Lead Borrower, may advance
under the Revolving Credit (and charge to the Loan Account) the amount of any
honoring of any L/C and other amount for which the Borrowers, the Issuer, or the
Revolving Credit Lenders become obligated on account of, or in respect to, any
L/C. Such advance shall be made whether or not a Suspension Event is then extant
or such advance would result in Borrowing Base's being exceeded. Such action
shall not constitute a waiver of the Agent's rights under Section 2:2-11(b)
hereof.
2-20. FEES FOR L/C'S AND ACCEPTANCES
(a) The Borrowers shall pay to the Agent the following fees,
on account of L/C's and Acceptances, the issuance of which had been procured by
the Agent, quarterly in arrears, and on the Termination Date and on the End
Date, equal to the following percentage per annum of the weighted average Stated
Amount o the subject L/C's outstanding during the period in respect of which
such fee is being paid except that, if an Event of Default has occurred and is
continuing, such fee shall be increased by two percent (2%) per annum:
(i) Standby L/C's: The Eurodollar Margin(s) in
effect during the subject quarter.
(ii) Documentary L/C's: The Eurodollar Margin(s)
in effect during the subject quarter minus Fifty (50) basis points.
(iii) Acceptances: The Eurodollar Margin(s) in effect
during the subject quarter minus Fifty (50) basis points.
(b) In addition to the fee to be paid as provided in
Subsection 2:2-20(a), above, the Borrowers shall pay to the Agent (or to the
Issuer, if so requested by Agent), those fees associated with the issuance,
processing, negotiation, amendment, and administration of the L/C's and the
Acceptances as set forth in the L/C Fee Letter.
(c) If any change in any law, executive order or regulation,
or any directive of any administrative or governmental authority (whether or not
having the force of law), or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration
thereof, shall either:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against letters of credit
heretofore or hereafter issued by any Issuer or with respect to which
any Revolving Credit Lender or any Issuer has an obligation to lend to
fund drawings under any L/C or any Acceptance; or
(ii) impose on any Issuer any other condition or
requirements relating to any such L/C's or Acceptances;
and the result of any event referred to in Section 2:2-20(c)(i) or
2:2-20(c)(ii), above, shall be to increase the cost to any Revolving Credit
Lender any Issuer of issuing or maintaining any L/C or Acceptance (which
increase in cost shall be the result of such Issuer's reasonable allocation
among that Issuer's letter of credit customers of the aggregate of such cost
increases resulting from such events), then, upon demand by the Agent and
delivery by the Agent to the Lead Borrower of a certificate of an officer of the
subject Revolving Credit Lender or the subject Issuer describing such change in
law, executive order, regulation, directive, or interpretation thereof, its
effect on such Issuer, and the basis for determining such increased costs and
their allocation, the Borrowers, shall pay to the Agent, from time to time,
within fifteen (15) days of when so specified by the Agent, such amounts as
shall be sufficient to compensate the subject Revolving Credit Lender or the
subject Issuer for such increased cost. Any Issuer's determination of costs
incurred under Section 2:2-20(c)(i) or 2:2-20(c)(ii), above, and the allocation,
if any, of such costs among the Borrowers and other letter of credit customers
of such Issuer, if done in good faith and made on an equitable basis and in
accordance with such officer's certificate, shall be conclusive and binding on
the Borrowers.
2-21. CONCERNING L/C'S AND ACCEPTANCES
(a) None of the Issuer, the Issuer's correspondents, or any
advising, negotiating, or paying bank with respect to any L/C or Acceptance
shall be responsible in any way for:
(i) The performance by any beneficiary under any L/C
or payee under any Acceptance of that beneficiary's and/or payee's
obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of;
any documents called for under any L/C or Acceptance if (with respect
to the foregoing) such documents on their face appear to be in order.
(b) The Issuer may honor, as complying with the terms of any
L/C or Acceptance and of any drawing thereunder, any drafts or other documents
otherwise in order, but signed or issued by an administrator, executor,
conservator, trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, liquidator, receiver, or other legal representative of the
party authorized under such L/C to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance,
each Borrower hereby authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(d) All directions, correspondence, and funds transfers
relating to any L/C and of any Acceptance are at the risk of the Borrowers. The
Issuer shall have discharged the Issuer's obligations under any L/C and under
any Acceptance which, or the drawing under which, includes payment instructions,
by the initiation of the method of payment called for in, and in accordance
with, such instructions (or by any other commercially reasonable and comparable
method). None of the Agent, any Revolving Credit Lender, or the Issuer shall
have any responsibility for any inaccuracy, interruption, error, or delay in
transmission or delivery by post, telegraph or cable, or for any inaccuracy of
translation.
(e) The Agent's, each Revolving Credit Lender's, and the
Issuer's rights, powers, privileges and immunities specified in or arising under
this Agreement are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the Issuer and the Borrower, documentary
L/C's will be governed by the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce, Publication No. 500 and standby
L/C's will be governed by International Standby Practices ISP98 (adopted by the
International Chamber of Commerce on April 6, 1998) and any subsequent
respective revisions thereof.
(g) The obligations of the Borrowers under this Agreement with
respect to L/C's are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all circumstances,
whatsoever including, without limitation, the following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of this Agreement,
any L/C, or any other agreement or instrument relating thereto.
(ii) The Borrowers' consent to any amendment or
waiver of, or consent to the departure from, any L/C.
(iii) The existence of any claim, set-off, defense,
or other right which any Borrower may have at any time against the
beneficiary of any L/C.
(iv) Any good faith honoring of a drawing under any
L/C, which drawing possibly could have been dishonored based upon a
strict construction of the terms of the L/C.
2-22. CHANGED CIRCUMSTANCES
(a) The Agent may advise the Lead Borrower that the Agent has
made the good faith determination (which determination shall be final and
conclusive) of any of the following:
(i) Adequate and fair means do not exist for
ascertaining the rate for Eurodollar Loans.
(ii) The continuation of or conversion of any
Revolving Credit Loan to a Eurodollar Loan has been made impracticable
or unlawful by the occurrence of a contingency that materially and
adversely affects the applicable market or compliance by the Agent or
any Revolving Credit Lender the Agent or any Revolving Credit Lender in
good faith with any applicable law or governmental regulation,
guideline or order or interpretation or change thereof by any
governmental authority charged with the interpretation or
administration thereof or with any request or directive of any such
governmental authority (whether or not having the force of law).
(iii) The indices on which the interest rates for
Eurodollar Loans are based shall no longer represent the effective cost
to the Agent or any Revolving Credit Lender for U.S. dollar deposits in
the interbank market for deposits in which it regularly participates.
(b) In the event that the Agent advises the Lead Borrower of
an occurrence described in Section 2:2-22(a), then, until the Agent notifies the
Lead Borrower that the circumstances giving rise to such notice no longer apply:
(i) The obligation of each affected Revolving Credit
Lender to make loans of the type affected by such changed circumstances
or to permit the Lead Borrower to select the affected interest rate as
otherwise applicable to any Revolving Credit Loans shall be suspended.
(ii) Any notice which the Lead Borrower had given the
Agent with respect to any Eurodollar Loan, the time for action with
respect to which has not occurred prior to the Agent's having given
notice pursuant to Section 2:2-22(a), shall be deemed at the option of
the Agent to not having been given.
2-23. DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.
(a) Each Borrower hereby designates the Lead Borrower as that
Borrower's agent to obtain loans and advances under the Revolving Credit, the
proceeds of which shall be available to each Borrower for those uses as those
set forth in Section 2:2-1(d). As the disclosed principal for its agent, each
Borrower shall be obligated to the Agent and the Revolving Credit Lenders on
account of loans and advances so made under the Revolving Credit as if made
directly by the Revolving Credit Lenders to that Borrower, notwithstanding the
manner by which such loans and advances are recorded on the books and records of
the Lead Borrower and of any Borrower.
(b) The Lead Borrower shall act as a conduit for the Borrower
(including itself, as a "Borrower") on whose behalf the Lead Borrower has
requested a Revolving Credit Loan..
(c) The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Lead Borrower shall be deposited into
the Disbursement Account or as otherwise indicated by the Lead Borrower, which
shall cause the transfer of the proceeds thereof to the (those) Borrower(s) on
whose behalf such loan and advance was obtained. Neither the Agent nor any
Revolving Credit Lender shall have any obligation to see to the application of
such proceeds.
2-24 LENDERS' COMMITMENTS
(a) Subject to Section 16:16-1 (which Section 16:16-1 provides
for assignments and assumptions of commitments), each Revolving Credit Lender's
"Revolving Credit Percentage Commitment", and "Revolving Credit Dollar
Commitment" (respectively so referred to herein) is set forth on EXHIBIT 2:2-24,
annexed hereto.
(b) The obligations of each Revolving Credit Lender are
several and not joint. No Revolving Credit Lender shall have any obligation to
make any loan or advance under the Revolving Credit in excess of the lesser of
the following:
(i) That Revolving Credit Lender's Revolving Credit
Commitment Percentage of the subject loan or advance or of
Availability.
(ii) That Revolving Credit Lender's Revolving Credit
Dollar Commitment.
(c) No Revolving Credit Lender shall have any liability
to any Borrower on account of the failure of any other Revolving Credit Lender
to provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
(d) The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit Lenders may be
changed, from time to time by the reallocation or assignment of Revolving Credit
Dollar Commitments and Revolving Credit Commitment Percentages amongst the
Revolving Credit Lenders or with other Persons who determine to become
"Revolving Credit Lenders", provided, however unless an Event of Default has
occurred and is continuing (in which event, no consent of the Borrower is
required) any assignment to a Person not then a Revolving Credit Lender shall be
subject to the prior consent of the Lead Borrower (not to be unreasonably
withheld), which consent will be deemed given unless the Lead Borrower provides
the Agent with written objection, not more than Five (5) Business Days after the
Agent shall have given the Lead Borrower written notice of a proposed
assignment).
(e) Upon written notice given the Lead Borrower from time to
time by the Agent, of any assignment or allocation referenced in Section
2:2-24(d):
(i) The Borrowers shall execute one or more
replacement Revolving Credit Notes to reflect such changed Revolving
Credit Dollar Commitments, Revolving Credit Commitment Percentages, and
identities and shall deliver such replacement Revolving Credit Notes to
the Agent (which promptly thereafter shall deliver to the Lead Borrower
the Revolving Credit Notes so replaced) provided however, in the event
that a Revolving Credit Note is to be exchanged following its
acceleration or the entry of an order for relief under the Bankruptcy
Code with respect to any Borrower, the Agent, in lieu of causing the
Borrowers to execute one or more new Revolving Credit Notes, may issue
the Agent's Certificate confirming the resulting Revolving Credit
Dollar Commitments and Revolving Credit Percentage Commitments.
(ii) Such change shall be effective from the
effective date specified in such written notice and any Person added as
a Revolving Credit Lender shall have all rights and privileges of
Revolving Credit Lender hereunder thereafter as if such Person had been
a signatory to this Agreement and any other Loan Document to which a
Revolving Credit Lender is a signatory and any person removed as a
Revolving Credit Lender shall be relieved of any obligations or
responsibilities of a Revolving Credit Lender hereunder thereafter.
ARTICLE 3: - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, the
establishment of the Revolving Credit, and the making of the first loan under
the Revolving Credit, each of the documents respectively described in Sections
3:3-1 through and including 3:3-3, (each in form and substance satisfactory to
the Agent) shall have been delivered to the Agent, and the conditions
respectively described in Sections 3:3-5 through and including 3:3-9, shall have
been satisfied:
3-1. CORPORATE DUE DILIGENCE.
(a) Certificates of corporate good standing issued by the
respective Secretaries of States for the States under whose laws each of the
Borrowers is organized.
(b) Certificates of due qualification, in good standing,
issued by the Secretaries of State of each State in which the nature of a
Borrower's business conducted or assets owned could require such qualification.
(c) Certificates of the Borrowers' respective Secretaries of
the due adoption, continued effectiveness, and setting forth the texts of, each
corporate resolution adopted in connection with the establishment of the loan
arrangement contemplated by the Loan Documents and attesting to the true
signatures of each Person authorized as a signatory to any of the Loan
Documents.
3-2. OPINION. An opinion of counsel to the Borrowers in form and
substance satisfactory to the Agent.
3-3. OFFICERS' CERTIFICATES. Certificates executed by the Chief
Financial Officer and Executive Vice President of the Lead Borrower and stating
that the representations and warranties made by the Borrowers to the Agent and
the Revolving Credit Lenders in the Loan Documents are true and complete as of
the date of such Certificate, and that no event has occurred which is or which,
solely with the giving of notice or passage of time (or both) would be an Event
of Default.
3-4. ADDITIONAL DOCUMENTS. Such additional instruments and
documents as the Agent or its counsel reasonably may require or request
including, without limitation, the following:
(a) A Pledge Agreement, executed by the Parent, pursuant to
which the Parent has created a security interest in and pledged to the Agent all
capital stock of each Borrower (other than the Parent) and of all other
Subsidiaries.
(b) A Security Agreement pursuant to which security interests
are created in all trademarks owned by any Borrower or any Subsidiary.
(c) The Blocked Account Agreement (as to which, see Section
7:7-1(a)(i)).
(d) The Notifications to Credit Card Processors (as to which,
see Section 7:7-1(a)(ii)).
(e) The Notification to the Borrowers' depositories described
in Section 7:7-1(a)(iii).
(f) Notice to the Borrowers' accountants that:
(i) One reason for the engagement of such accountants
is to satisfy the financial reporting requirements set forth in Article 5: of
this Agreement.
(ii) The Borrowers have been advised that the Agent
and each Revolving Credit Lender will rely thereon with
respect to the administration of, and transactions under, the
credit facility contemplated by this Agreement.
(g) Agreements (each in form reasonably satisfactory to the
Agent) with the Borrowers' lumber unloading service, warehousemen, and inventory
consolidator(s).
(h) Evidence (in form reasonably satisfactory to the Agent) of
the release, by General Electric Credit Corporation, of any Encumbrance created
by any Borrower in favor of General Electric Credit Corporation.
3-5. REPRESENTATIONS AND WARRANTIES. Each of the representations
made by or on behalf of any Borrower in this Agreement or in any of the other
Loan Documents or in any other report, statement, document, or paper provided
by or on behalf of any Borrower shall be true and complete as of the date as of
which such representation or warranty was made.
3-6. MINIMUM DAY ONE EXCESS AVAILABILITY. After giving effect to
the first funding under the Revolving Credit and L/C to be issued at or
promptly following such funding, Excess Availability shall not be less than
$150 Million.
3-7. ALL FEES AND EXPENSES PAID. All fees due at or immediately
after the first funding under the Revolving Credit and all costs and expenses
incurred by the Agent in connection with the establishment of the credit
facility contemplated hereby (including the fees and expenses of counsel to the
Agent) shall have been paid in full.
3-8. NO SUSPENSION EVENT. No Suspension Event shall then exist.
3-9. NO ADVERSE CHANGE. No event shall have occurred or failed to
occur, which occurrence or failure is or could have a Material Adverse Effect
upon the Borrowers when compared with the Borrowers' condition at October 31,
1999.
No document shall be deemed delivered to the Agent or any Revolving Credit
Lender until received and accepted by the Agent at its head offices in Boston,
Massachusetts. Under no circumstances shall this Agreement take effect until
executed and accepted by the Agent at said head office.
ARTICLE 4: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Revolving Credit Lender to establish the credit facility
contemplated herein and to induce the Revolving Credit Lenders to provide loans
and advances under the Revolving Credit (each of which loans shall be deemed to
have been made in reliance thereupon) each Borrower, in addition to all other
representations, warranties, and covenants made by any Borrower in any other
Loan Document, makes those representations, warranties, and covenants included
in this Agreement.
4-1. PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrowers shall
pay each Liability when due and shall promptly, punctually, and faithfully
perform each other Liability.
4-2. DUE ORGANIZATION. CORPORATE AUTHORIZATION. NO CONFLICTS.
(a) Each Borrower presently is and shall hereafter remain in
good standing as a corporation under the laws of the State of its incorporation,
as set forth in the Preamble to this Agreement, and is and shall hereafter
remain duly qualified and in good standing in every other State in which, by
reason of the nature or location of that Borrower's assets or operation of that
Borrower's business, such qualification may be necessary, except where the
failure to so qualify would have a Material Adverse Effect.
(b) Each Affiliate of any Borrower, on the date of this
Agreement , is listed on EXHIBIT 4:4-2, annexed hereto. The Lead Borrower shall
provide the Agent with prior written notice of any entity's becoming or ceasing
to be an Affiliate.
(c) Each Affiliate listed on EXHIBIT 4:4-2 (except for the
Parent) is a Subsidiary of the Parent. No Borrower (except for the Parent) will
create any Subsidiary nor will the Parent permit any Subsidiary to create any
Subsidiary other than in compliance with all applicable requirements of this
Agreement.
(d) No Borrower shall change its State of incorporation or its
taxpayer identification number other than pursuant to a Permitted Merger.
(e) Each Borrower has all requisite corporate power and
authority to execute and deliver all Loan Documents to which that Borrower is a
party and has and will hereafter retain all requisite corporate power to perform
all Liabilities.
(f) The execution and delivery by each Borrower of each Loan
Document to which it is a party; each Borrower's consummation of the
transactions contemplated by such Loan Documents (including, without limitation,
the creation of Collateral Interests by that Borrower to secure the
Liabilities); each Borrower's performance under those of the Loan Documents to
which it is a party; the borrowings hereunder; and the use of the proceeds
thereof:
(i) Have been duly authorized by all necessary
corporate action.
(ii) Do not, and will not, contravene in any material
respect any provision of any Requirement of Law or obligation of any
Borrower.
(iii) Will not result in the creation or imposition
of, or the obligation to create or impose, any Encumbrance upon any
assets of any Borrower pursuant to any Requirement of Law or
obligation, except pursuant to the Loan Documents.
(g) The Loan Documents have been duly executed and delivered
by each Borrower and are the legal, valid and binding obligations of each
Borrower, enforceable against that Borrower in accordance with their respective
terms except as enforceability is limited by bankruptcy, insolvency, or other
laws relating to or affecting generally the enforcement of creditors' rights and
except to the extent that the availability of the remedy of specific performance
or injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
4-3. TRADE NAMES.
(a) EXHIBIT 4:4-3, annexed hereto, is a listing of:
(i) All names under which each Borrower conducted its
business during the past five (5) years.
(ii) All entities and/or persons with whom any
Borrower ever consolidated or merged, or from whom any Borrower ever
acquired in a single transaction or in a series of related transactions
substantially all of such entity's or person's assets, in each
instance, during the past five (5) years.
(b) The Lead Borrower will provide the Agent with not less
than twenty-one (21) days prior written notice (with reasonable particularity)
of any change to any Borrower's name from that under which that Borrower is
conducting its business at the execution of this Agreement and will not effect
such change unless that Borrower is then in compliance with all provisions of
this Agreement.
4-4. INFRASTRUCTURE.
(a) Each Borrower has and will maintain a sufficient
infrastructure to conduct its business as presently conducted and as
contemplated to be conducted.
(b) Each Borrower owns and possesses, or has the right to use
(and will hereafter own, possess, or have such right to use) all patents,
industrial designs, trademarks, trade names, trade styles, brand names, service
marks, logos, copyrights, trade secrets, know-how, confidential information, and
other intellectual or proprietary property of any third Person necessary for
that Borrower's conduct of that Borrower's business.
(c) The conduct by each Borrower of that Borrower's business
does not presently infringe (nor will any Borrower conduct its business in the
future so as to infringe) the patents, industrial designs, trademarks, trade
names, trade styles, brand names, service marks, logos, copyrights, trade
secrets, know-how, confidential information, or other intellectual or
proprietary property of any third Person except where any such conflict would
not reasonably be expected to have a Material Adverse Effect.
4-5. YEAR 2000 COMPLIANCE.
(a) Based upon a diligent inquiry undertaken by the Lead
Borrower, it appears that, the Borrowers are Year 2000 Compliant in all material
respects.
(b) The Borrower will not suffer or permit its operations
thereafter to cease to be Year 2000 Compliant in any manner which reasonably
could be expected to have a Material Adverse Effect.
4-6. LOCATIONS.
(a) As of the date of this agreement, the Collateral, and the
books, records, and papers of Borrowers pertaining thereto, are kept and
maintained solely at the following locations:
(i) The Borrowers' chief executive offices at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(ii) Those locations which are listed on EXHIBIT
4:4-6, annexed hereto, which EXHIBIT includes, with respect to each
such location, the name and address of the landlord on the Lease which
covers such location (or an indication that a Borrower owns the subject
location) and of all service bureaus with which any such records are
maintained and the names and addresses of each landlord of each
Borrower.
(b) The Borrower shall not remove any of the Collateral from
said chief executive office or those locations listed on EXHIBIT 4:4-6 except
for the following purposes:
(i) To move Inventory from one such location to
another such location.
(ii) To accomplish sales of Inventory in the ordinary
ordinary course of business.
(iii) To utilize such of the Collateral as is removed
from such locations in the ordinary course of business (such as motor
vehicles).
(iv) To Stores opened after the execution of this
Agreement, but only where there is compliance with the Section 4:4-6(c)
(v) In connection with any disposition of Collateral
permitted by Section 4:4-14(d).
(vi) To other locations, not less than Thirty (30)
days prior written notice of which is provided to the Agent, and
provided that there is compliance with all relevant provisions of the
Loan Documents (including, but not limited to, Section 4:4-25) in
connection therewith.
(c) No Borrower will execute any Lease other than in the
ordinary course of business, not otherwise in violation of the Agreement, nor
open any new Store on less than thirty (30) days prior written notice(with
reasonable particularity) to the Agent (and then, only if such opening is in
compliance with Section 4:4-25).
(d) Each Borrower may alter, modify, or amend any Lease;
provided that no such amendment shall result in a violation of this Agreement
nor in any Borrower's granting a landlord an Encumbrance on any Borrower's
Inventory or Equipment.
(e) The Borrowers may permanently close up to a cumulative
total of twenty two (22) Stores, provided that, in each instance, the Agent is
given not less than ten (10) days prior notice thereof. (f) Except as otherwise
disclosed pursuant to, or permitted by, this Section 4:4-6, no tangible personal
property of any Borrower is in the care or custody of any third party or stored
or entrusted with a bailee or other third party and none shall hereafter be
placed under such care, custody, storage, or entrustment.
4-7. TITLE TO ASSETS.
(a) At the execution of this Agreement, the Borrowers are the
owners of the Collateral free and clear of any Encumbrances other than Permitted
Encumbrances.
(b) Each Borrower, while the owner of any Collateral, shall
keep that Collateral free and clear of all Encumbrances other than Permitted
Encumbrances.
(c) No Borrower has, and none shall have possession of, any
property on consignment to that Borrower the Cost of which, when aggregated with
the Cost of Inventory on which there is an Encumbrance, exceeds two percent (2%)
of the Cost of all of the Borrowers' Inventory at that time.
(d) No Borrower, nor any Subsidiary of a Borrower, may obtain
any loan secured by real estate or enter into any sale and leaseback transaction
other than a Permitted Real Estate Financing.
4-8. INDEBTEDNESS. The Borrowers do not and shall not hereafter
have any Indebtedness other than Permitted Indebtedness.
4-9. INSURANCE.
(a) EXHIBIT 4:4-9, annexed hereto, is a schedule of all
property, liability, and business interruption insurance policies owned by the
Borrowers or under which any Borrower is the named insured. Each of such
policies is in full force and effect. Neither the issuer of any such policy nor
any Borrower is in default or violation of any such policy.
(b) The Borrowers shall have and maintain at all times
insurance covering the Collateral for such risks, in such amounts, containing
such terms, in such form, for such periods, and written by such companies as is
consistent with sound and prudent industry practices.
(c) All insurance carried by any Borrower shall provide for a
minimum of thirty (30) days' written notice of cancellation to the Agent and all
such insurance which covers the Collateral shall include an endorsement in favor
of the Agent, which endorsement shall provide that the insurance, to the extent
of the Agent's interest therein, shall not be impaired or invalidated, in whole
or in part, by reason of any act or neglect of any Borrower or by the failure of
any Borrower to comply with any warranty or condition of the policy.
(d) The coverage reflected on EXHIBIT 4:4-9 presently
satisfies the foregoing requirements, it being recognized by the Borrowers,
however, that such requirements may change hereafter to reflect changing
circumstances.
(e) The Lead Borrower shall furnish the Agent from time to
time with certificates or other evidence satisfactory to the Agent regarding
compliance by the Borrowers with the foregoing requirements.
(f) In the event of the failure by the Borrowers to maintain
insurance as required herein, the Agent, at its option, may obtain such
insurance, provided, however, the Agent's obtaining of such insurance shall not
constitute a cure or waiver of any Event of Default occasioned by the Borrowers'
failure to have maintained such insurance.
(g) The Lead Borrower shall advise the Agent of each claim in
excess of $1,000,000.00 made by any Borrower under any policy of insurance which
covers the Collateral and at any time a Suspension Event is extant will permit
the Agent, at the Agent's option in each instance, to the exclusion of the
Borrowers, to conduct the adjustment of each such claim (and of all claims at
any time a Suspension Event is extant). The Borrowers hereby appoint the Agent
as the Borrowers' attorney in fact, effective at any time a Suspension Event is
extant, to obtain, adjust, settle, and cancel any insurance described in this
section and to endorse in favor of the Agent any and all drafts and other
instruments with respect to such insurance. The within appointment, being
coupled with an interest, is irrevocable until this Agreement is terminated by a
written instrument executed by a duly authorized officer of the Agent. The Agent
shall not be liable on account of any exercise pursuant to said power except
where there has been a final judicial determination (in a proceeding in which
the Agent had an opportunity to be heard) that such exercise was grossly
negligent manner or in willful misconduct. The Agent may apply any proceeds of
such insurance against the Liabilities, whether or not such have matured, in
such order of application as the Agent may determine.
4-10. LICENSES. Except for matters which individually and in the
aggregate would not reasonably be expected to have a Material Adverse Effect,
(a) each license, distributorship, franchise, and similar
agreement issued to, or to which any Borrower is a party is in full force and
effect; and
(b) no party to any such license or agreement is in default or
violation thereof; and
(c) no Borrower has received any notice or threat of
cancellation of any such license or agreement.
4-11. LEASES. EXHIBIT 4:4-11, annexed hereto, is a schedule of all
presently effective Capital Leases as of the date of this Agreement. (Exhibit
4:4-6 includes a list of all other presently effective Leases). Each of such
Leases and Capital Leases is in full force and effect as of the date hereof. As
of the date hereof no party to any such Lease or Capital Lease is in default
or violation of any such Lease or Capital Lease and no Borrower has received
any notice or threat of cancellation of any such Lease or Capital Lease except
for matters which individually and in the aggregate would not reasonably be
expected to have a Material Adverse Effect. Each Borrower hereby authorizes the
Agent at any time and from time to time while a Suspension Event is extant, to
contact any of that Borrower's landlords in order to confirm that Borrower's
continued compliance with the terms and conditions of the Lease(s) between that
Borrower and that landlord and to discuss such issues, concerning that
Borrower's occupancy under such Lease(s), as the Agent may determine.
4-12. REQUIREMENTS OF LAW. Each Borrower is in compliance with,
and shall hereafter comply with and use its assets in compliance with, all
Requirements of Law except where the failure of such compliance will not
reasonably be expected to have a Material Adverse Effect. No Borrower has
received any notice of any violation of any Requirement of Law (other than of
a violation which has no more than a de minimus adverse effect on that
Borrower's business or assets), which violation reasonably could be expected to
have a Material Adverse Effect.
4-13. LABOR RELATIONS
(a) As of the date of this Agreement, no Borrower is party to
any collective bargaining or other labor contract.
(b) There is not presently pending and, to the Borrower's
knowledge, there is not threatened. any of the following which reasonably could
be expected to have a Material Adverse Effect.
(i) Any strike, slowdown, picketing, work stoppage,
or employee grievance process.
(ii) Any proceeding against or affecting any Borrower
relating to the alleged violation of any Requirement of Law pertaining
to labor relations or National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable governmental
body, organizational activity, or other labor or employment dispute
against or affecting any Borrower, which, if determined adversely to
that Borrower could have a Material Adverse Effect.
(iii) Any lockout of any employees by any Borrower,
(and no such action is contemplated by any Borrower).
(iv) Any application for the certification of a
collective bargaining agent.
(c) No event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute which reasonably
could be expected to have a Material Adverse Effect.
(d) Each Borrower:
(i) Has complied in all material respects with all
Requirements of Law relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing.
(ii) Is not liable for the payment of a material
amount of compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for any Borrower's failure to comply with
any Requirement of Law referenced in Section 4:4-13(d)(i).
4-14. MAINTAIN PROPERTIES. Each Borrower shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any policy
of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than any of the following:
(i) The sale Inventory in compliance with this
Agreement (as to which, in general, see Section 6:6-1 of this
Agreement).
(ii) The sale of Collateral by one Borrower to
another, which sale or other disposition is otherwise in conformity
with this Agreement.
(iii) The disposal of Equipment which is obsolete,
worn out, or damaged beyond repair, which Equipment is replaced to the
extent necessary to preserve or improve the operating efficiency of the
Borrowers.
(iv) The disposal of Equipment in concert with Store
closures permitted pursuant to Section 4:4-6(e).
(v) The turning over to the Agent of Receipts as
provided herein.
(vi) The disposition of any non-merchandise
inventory (such as labels, bags, and packaging materials); damaged
goods; return to vendor merchandise; packaways; consigned inventory;
and other similar categories of Goods otherwise in compliance with this
Agreement.
4-15. TAXES.
(a) The Lead Borrower has received written notice from the
Internal Revenue Service that the Internal Revenue Service has completed its
examination of the Borrowers' federal income tax returns for all tax years
through and including the Borrower's taxable year referenced on EXHIBIT 4:4-15,
annexed hereto, and that all deficiencies, assessments, and other amounts
asserted as a result of such examinations have been fully paid or settled .
(b) Each Borrower has, and hereafter shall: pay, as they
become due and payable, all taxes and unemployment contributions and other
charges of any kind or nature levied, assessed or claimed against that Borrower
or the Collateral by any person or entity whose claim could result in an
Encumbrance upon any asset of that Borrower or by any governmental authority;
properly exercise any trust responsibilities imposed upon that Borrower by
reason of withholding from employees' pay or by reason of that Borrower's
receipt of sales tax or other funds for the account of any third party; timely
make all contributions and other payments as may be required pursuant to any
Employee Benefit Plan now or hereafter established by that Borrower; and timely
file all tax and other returns and other reports with each governmental
authority to whom that Borrower is obligated to so file, provided, however, the
Lead Borrower, after establishing proper reserves, may in good faith and by
appropriate proceedings contest any tax, assessment, or other governmental
charge, subject however, to Section 4:4-15(c).
(c) No borrower shall suffer or permit any tax lien to be
filed against it, which tax lien includes any Inventory, Account, or right to
payment of that Borrower.
(d) At its option, if an Event of Default has occurred and is
continuing, or prior to such occurrence if the Agent in good faith determines
that an Encumbrance, having priority over the Agent's Collateral Interests,
otherwise might arise, the Agent may, but shall not be obligated to, pay any
taxes, unemployment contributions, and any and all other charges levied or
assessed upon any Borrower or the Collateral by any person or entity or
governmental authority, and make any contributions or other payments on account
of any Borrower's Employee Benefit Plan as the Agent, in the Agent's discretion,
may deem necessary or desirable, to protect, maintain, preserve, collect, or
realize upon any or all of the Collateral or the value thereof or any right or
remedy pertaining thereto, provided, however, the Agent's making of any such
payment shall not constitute a cure or waiver of any Event of Default occasioned
by any Borrower's failure to have made such payment.
4-16. NO MARGIN STOCK. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the United States). No part of the proceeds of any
borrowing hereunder will be used at any time to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock other than in compliance with all Requirements of
Law.
4-17. ERISA. Except for matters which individually or in the
aggregate are not reasonably expected to have a Material Adverse Effect, no
Borrower nor any ERISA Affiliate ever has or hereafter shall:
(a) Fail to be in compliance with that Borrower's Employee
Benefit Plan.
(b) Fail timely to file all reports and filings required by
ERISA to be filed by any Borrower.
(c) Engage in any "prohibited transactions" or "reportable
events" (respectively as described in ERISA).
(d) Engage in, or commit, any act such that a tax or penalty
could be imposed upon any Borrower on account thereof pursuant to ERISA.
(e) Accumulate any material funding deficiency within the
meaning of ERISA.
(f) Terminate any Employee Benefit Plan such that a lien could
be asserted against any assets of any Borrower on account thereof pursuant to
ERISA.
(g) Be a member of, contribute to, or have any obligation
under any Employee Benefit Plan which is a multiemployer plan within the meaning
of Section 4001(a) of ERISA.
4-18. HAZARDOUS MATERIALS
(a) Except for matters which individually or in the aggregate
are not reasonably expected to have a Material Adverse Effect, no Borrower has
ever:
(i) Been legally responsible for any release or
threat of release of any Hazardous Material.
(ii) Received notification of any release or threat
of release of any Hazardous Material from any site or vessel occupied
or operated by that Borrower and/or of the incurrence of any expense or
loss in connection with the assessment, containment, or removal of any
release or threat of release of any Hazardous Material from any such
site or vessel.
(b) Each Borrower shall:
(i) Dispose of any Hazardous Material only in
compliance in all material respects with all Environmental Laws.
(ii) Not store on any site or vessel occupied or
operated by that Borrower and not transport or arrange for the
transport of any Hazardous Material, except if such storage or
transport is in the ordinary course of that Borrower's business and is
in compliance in all material respects with all Environmental Laws.
(c) The Lead Borrower shall provide the Agent with written
notice upon the Borrower's obtaining knowledge of any incurrence of any expense
or loss by any governmental authority or other Person in connection with the
assessment, containment, or removal of any Hazardous Material, for which expense
or loss any Borrower may be liable, where such expense or loss reasonably could
be expected to have a Material Adverse Effect.
4-19. LITIGATION. Except as described in EXHIBIT 4:4-19, annexed
hereto, there is not presently pending or threatened by or against any Borrower
any suit, action, proceeding, or investigation which, if determined adversely
to that Borrower, reasonably could be expected to have a Material Adverse Effect
4-20. DIVIDENDS. INVESTMENTS. CORPORATE ACTION
(a) No Borrower shall:
(i) Pay any cash dividend or make any other
distribution in respect of any class of that Borrower's capital stock,
except that the Parent may declare and issue dividends of its own
capital stock.
(ii) Except for a Permitted Repurchase, own, redeem,
retire, purchase, or acquire any of that Borrower's capital stock.
(iii) Invest in or purchase any stock or securities
or rights to purchase any such stock or securities, of any corporation
or other entity other than the following:
(A) A Permitted Repurchase.
(B) A Permitted Investment.
(iv) Merge or consolidate or be merged or
consolidated with or into any other corporation or other entity or
consolidate any operations of that Borrower with those of any other
corporation or other entity other than a Permitted Merger.
(v) Subordinate any debts or obligations owed to that
Borrower by any third party to any other debts owed by such third party
to any other Person.
(vi) Acquire any assets other than in the ordinary
course and conduct of that Borrower's business as conducted at the
execution of this Agreement other than as a Permitted Acquisition.
(b) The Parent shall not permit any Subsidiary to undertake
any of the foregoing actions unless, if that Affiliate were a Borrower, that
Affiliate could have done so.
4-21 LOANS. No Borrower shall make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the foregoing does
not prohibit any of the following:
(a) Advance payments made to that Borrower's suppliers in the
ordinary course.
(b) Advances to that Borrower's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of that Borrower, which
expenses are properly substantiated by the person seeking such advance and
properly reimbursable by that Borrower.
(c) Loans to Affiliates which, when aggregated with all loans
by the Borrowers to their Affiliates, does not exceed $1,000,000.00.
4-22. PROTECTION OF ASSETS. The Agent, in the Agent's discretion
if an Event of Default has occurred and is continuing, may discharge any tax
or Encumbrance on any of the Collateral, or take any other action which the
Agent reasonably may deem necessary or desirable to repair, insure, maintain,
preserve, collect, or realize upon any of the Collateral. The Agent shall not
have any obligation to undertake any of the foregoing and shall have no
liability on account of any action so undertaken except where there is a
specific finding in a judicial proceeding (in which the Agent has had an
opportunity to be heard), from which finding no further appeal is available,
that the Agent had acted in actual bad faith or in a grossly negligent manner.
The Borrowers shall pay to the Agent, on demand, or the Agent, in its
discretion, may add to the Loan Account, all amounts paid or incurred by the
Agent pursuant to this section 4:4-22.
4-23. LINE OF BUSINESS. No Borrower shall engage in any business
other than the business in which it is currently engaged or a business
reasonably related thereto.
4-24. AFFILIATE TRANSACTIONS. No Borrower shall make any payment,
nor give any value to any Affiliate except for Permitted Affiliate Transactions.
4-25. FURTHER ASSURANCES
(a) No Borrower is the owner of, nor has it any interest in,
any Core Collateral which, immediately upon the satisfaction of the conditions
precedent to the effectiveness of the credit facility contemplated hereby
(Article 3:) will not be subject to perfected Collateral Interests in favor of
the Agent (subject only to Permitted Encumbrances and except as contemplated by
Section 4:4-27(a)) to secure the Liabilities.
(b) No Borrower will hereafter acquire ownership of, or any
interest in, any Core Collateral which is not, immediately upon such
acquisition, subject to such a perfected Collateral Interest in favor of the
Agent to secure the Liabilities (subject only to Permitted Encumbrances and
except as contemplated by Section 4:4-27(a)).
(c) Each Borrower shall execute and deliver to the Agent such
instruments, documents, and papers, and shall do all such things from time to
time hereafter as the Agent may request to carry into effect the provisions and
intent of this Agreement; to protect and perfect the Agent's Collateral
Interests in the Collateral; and to comply with all applicable statutes and
laws, and facilitate the collection of the Receivables Collateral. Each Borrower
shall execute all such instruments as may be required by the Agent with respect
to the recordation and/or perfection of the Collateral Interests created or
contemplated herein.
(d) Each Borrower hereby designates the Agent as and for that
Borrower's true and lawful attorney, with full power of substitution, to sign
and file any financing statements in order to perfect or protect the Agent's
Collateral Interests in the Collateral.
(e) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section 4:4-25 shall be sufficient for filing to perfect the security
interests granted herein.
4-26. ADEQUACY OF DISCLOSURE
(a) All financial statements furnished to the Agent and to
each Revolving Credit Lender by each Borrower have been prepared in accordance
with GAAP consistently applied and present fairly the condition of the Borrowers
at the date(s) thereof and the results of operations and cash flows for the
period(s) covered. There has been no change in the financial condition, results
of operations, or cash flows of any Borrower since the date(s) of such financial
statements, other than changes in the ordinary course of business, which changes
have not been materially adverse, either singularly or in the aggregate.
(b) As of the date of this agreement, no Borrower has any
contingent obligations or obligation under any Lease or Capital Lease which is
not noted in the Borrowers' financial statements furnished to the Agent and to
each Revolving Credit Lender prior to the execution of this Agreement.
(c) To the best knowledge of the Borrower, no document,
instrument, agreement, or paper now or hereafter given the Agent and to each
Revolving Credit Lender by or on behalf of any Borrower or any guarantor of the
Liabilities in connection with the execution of this Agreement by the Agent and
to each Revolving Credit Lender contains or will contain any untrue statement of
a material fact or omits or, when taken as a whole, will omit to state a
material fact necessary in order to make the statements therein not misleading.
There is no fact known to any Borrower (other than risks disclosed by the Parent
to the Agent or in its filings with the SEC) which in the foreseeable future
could reasonably be expected to have a Material Adverse Effect.
4-27. NO RESTRICTIONS ON LIABILITIES. No Borrower shall enter into
or permit any Affiliate or Subsidiary to become subject to any Agreement which
prohibits or restricts, in any manner, that Borrower's or that Borrower's
Subsidiaries':
(a) Creation of, and granting of Collateral Interests in favor
of the Agent (other than in documentation which evidences Indebtedness secured
solely by a purchase money security interest in Equipment otherwise permitted by
this Agreement).
(b) Incurrence of Liabilities.
4-28. OTHER COVENANTS. No Borrower shall indirectly do or cause
to be done any act which, if done directly by the Borrower, would breach any
covenant contained in this Agreement.
ARTICLE 5: - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5-1. MAINTAIN RECORDS. The Borrowers shall:
(a) At all times, keep proper books of account, in which full,
true, and accurate entries shall be made of all of the Borrowers' transactions,
all in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrowers at the close of, and its
results of operations for, the periods in question.
(b) Timely provide the Agent with those financial reports,
statements, and schedules required by this Article 5: or otherwise, each of
which reports, statements and schedules shall be prepared, to the extent
applicable, in accordance with GAAP applied consistently with prior periods to
fairly reflect the financial condition of the Borrowers at the close of, and its
results of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current stock, cost, and
sales records of its Inventory, accurately and sufficiently itemizing and
describing the kinds, types, and quantities of Inventory and the cost and
selling prices thereof.
(d) At all times retain independent certified public
accountants who are reasonably satisfactory to the Agent and instruct such
accountants to fully cooperate with, and be available to, the Agent to discuss
the Borrowers' financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such
accountants, as may be raised by the Agent.
(e) Not change any Borrower's fiscal year.
5-2. ACCESS TO RECORDS
(a) Each Borrower shall accord the Agent with access, at
reasonable times, on reasonable notice, from time to time as the Agent may
require to all properties owned by or over which that Borrower has control. The
Agent shall have the right, and each Borrower will permit the Agent from time to
time as Agent may request, to examine, inspect, copy, and make extracts from any
and all of the Borrowers' books, records, electronically stored data, papers,
and files. Each Borrower shall make all of that Borrower's copying facilities
available to the Agent.
(b) Each Borrower hereby authorizes the Agent to:
(i) Inspect, copy, duplicate, review, cause to be
reduced to hard copy, run off, draw off, and otherwise use any and all
computer or electronically stored information or data which relates to
that Borrower, or any service bureau, contractor, accountant, or other
person, and directs any such service bureau, contractor, accountant, or
other person fully to cooperate with the Agent with respect thereto.
(ii) Verify, in a manner consistent with customary
commercial financing standards, the Collateral or any portion thereof,
including verification with Account Debtors, and/or with that
Borrower's computer billing companies, collection agencies, and
accountants and if an Event of Default has occurred and is continuing,
to sign the name of that Borrower on any notice to that Borrower's
Account Debtors or verification of the Collateral.
(c) The Agent from time to time may designate one or more
representatives to exercise the Agent's rights under this Section 5:5-2 as fully
as if the Agent were doing so.
5-3. NOTICE TO AGENT
(a) The Lead Borrower shall provide the Agent with written
notice promptly upon the occurrence of any of the following events, which
written notice shall be with reasonable particularity as to the facts and
circumstances in respect of which such notice is being given:
(i) Any change in any Borrower's Senior Officers.
(ii) Any ceasing of any Borrower's making of payment,
in the ordinary course, to any of its creditors (other than its ceasing
of making of such payments on account of a good faith dispute).
(iii) Any failure by any Borrower to pay rent at any
of that Borrower's locations, which failure continues for more than ten
(10) days following the last day on which such rent was payable, where
the result of such failure is a Material Adverse Effect.
(iv) Any Material Adverse Change.
(v) The occurrence of any Suspension Event.
(vi) Any intention on the part of the Parent to
discharge the Parent's present independent accountants or any
withdrawal or resignation by such independent accountants from their
acting in such capacity (as to which, see Subsection 5:5-1(d)).
(vii) Any litigation which, if determined adversely
to any Borrower, could reasonably be expected to have a Material
Adverse Effect.
(viii) Any difficulties in the Borrowers' maintaining
their operations as Year 2000 Compliant, where such difficulties could
reasonably be expected to have a Material Adverse Effect.
(b) The Lead Borrower shall:
(i) Provide the Agent, promptly after being so
distributed, with copies of any materials distributed to the
shareholders of any Borrower (qua such shareholders).
(ii) Provide the Agent, promptly after being filed
with the SEC, all registration statements, annual, quarterly, and other
reports filed by the Parent.
(iii) At the request of the Agent, from time to time,
provide the Agent with copies of all advertising (including copies of
all print advertising and duplicate tapes of all video and radio
advertising).
(iv) Provide the Agent, promptly following receipt by
the Parent, with a copy of any management letter or similar
communications from any accountant of the Parent.
5-4. BORROWING BASE CERTIFICATE
(a) Subject to Section 5:5-4(b), the Lead Borrower shall
provide the Agent, by facsimile transmission, by no later than 2:30p.m. on the
eleventh Business Day of each month, with a Borrowing Base Certificate (in the
form of EXHIBIT 5:5-4 annexed hereto, as such form may be revised from time to
time by the Agent) as of the last day of the then immediately prior month.
(b) Following the occurrence of any Availability Trigger
Event, the Lead Borrower shall provide the Agent with such a Borrowing Base
Certificate by no later than 2:30p.m. on each Wednesday (as of the then
immediately prior Saturday) unless and until the occurrence thereafter of any
Availability Trigger Cure (in which event, the weekly obligation imposed by this
Section 5:5-4(b) shall revert to a monthly obligation under, and subject to, the
conditions of Section 5:5-4(a)).
5-5. COLLATERAL REPORTING REQUIREMENTS. The Lead Borrowers shall
provide the Agent with those collateral reports described and within the time
frames provided for by EXHIBIT 5:5-5, annexed hereto.
5-6. MONTHLY STATEMENT. Within Thirty (30) days of the end of the
then previous month, commencing with the Borrowers' fiscal November as the first
such previous month, the Lead Borrower shall provide the Agent with the
following:
(a) An internally prepared financial statement of the
Borrowers' financial condition and the results of its operations for the period
ending with the end of the subject month, which financial statement shall
include, at a minimum, a balance sheet, income statement, cash flow and
comparison of same Store sales for the corresponding period of the then
immediately previous year, as well as to the Business Plan.
(b) The officer's compliance certificate described in Section
5:5-9.
5-7. QUARTERLY REPORT. Quarterly, within Forty Five (45) days
following the end of each of the Borrowers' first three fiscal quarters of its
fiscal year, the Lead Borrower shall provide the Agent with the following:
(a) A management prepared financial statement of the Borrowers
for the period from the beginning of the Borrowers' then current fiscal year
through the end of the subject quarter, with comparative information for the
same period of the previous fiscal year, which statement shall include, at a
minimum, a balance sheet, income statement, statement of changes in
shareholders' equity, and cash flows and comparisons of same Store sales for the
corresponding quarter of the then immediately previous year, as well as to the
Business Plan.
(b) The officer's compliance certificate described in Section
5:5-9.
5-8. ANNUAL REPORTS. Annually, within ninety (90) days following
the end of the Borrowers' fiscal year, the Lead Borrower shall furnish the Agent
with the following:
(a) A 10-K report for the Borrowers filed, or to be filed with
the SEC, which shall have been prepared by, and bear the unqualified opinion of,
the Borrowers' independent certified public accountants (i.e. said statement
shall be "certified" by such accountants) and shall include, at a minimum (with
comparative information for the then prior fiscal year) a balance sheet, income
statement, statement of changes in shareholders' equity, and cash flows.
(b) The officer's compliance certificate described in Section
5:5-9.
5-9. OFFICERS' CERTIFICATES. The Lead Borrower shall cause a
Senior Officer to provide such Person's Certificate with those monthly,
quarterly, and annual statements to be furnished pursuant to this Agreement,
which Certificate shall:
(a) Indicate that the subject statement was prepared in
accordance with GAAP or the requirements of this Agreement and presents fairly
the financial condition of the Borrowers at the close of, and the results of the
Borrowers' operations and cash flows for, the period(s) covered, subject,
however to the following:
(i) Usual year end adjustments (this exception shall
not be included in the Certificate which accompanies such annual
statement).
(ii) Material Accounting Changes (in which event,
such Certificate shall include a schedule (in reasonable detail) of the
effect of each such Material Accounting Change) not previously
specifically taken into account in the determination of the financial
performance covenant imposed pursuant to Section 5:5-12.
(b) Indicate either that (i) no Suspension Event has occurred
or (ii) if such an event has occurred, its nature (in reasonable detail) and the
steps (if any) being taken or contemplated by the Borrowers to be taken on
account thereof.
(c) Include calculations concerning the Borrowers' compliance
(or failure to comply) at the date of the subject statement with each of the
financial performance covenants included in Section 5:5-12 hereof.
5-10. INVENTORIES. APPRAISALS. AUDITS
(a) The Agent, at the expense of the Borrowers, may
participate in and/or observe each count and/or physical inventory of so much of
the Collateral as consists of Inventory which is undertaken on behalf of the
Borrowers.
(b) The Borrowers, shall cause physical inventories to be
undertaken as follows:
(i) Subject to Section 5:5-10(b)(ii), the Borrowers,
at their own expense, shall cause at least one (1) physical inventory
to be undertaken in each fiscal year during which this Agreement is in
effect (the scheduling of which inventory shall be subject to the
Agent's discretion after the occurrence and continuance of any Event
of Default) conducted by such inventory takers as are satisfactory
to the Agent and the Parent and which employs a methodology consistent
with that which had been employed in physical inventories taken prior
to November 1, 1999.
(ii) The Agent may cause or require additional
inventories to be undertaken (in each instance, at the expense of the
Borrowers) if an Event of Default or an Availability Trigger Event has
occurred and is continuing.
(c) Upon the Agent's reasonable request from time to time, the
Borrowers shall permit the Agent to obtain an appraisal, from time to time, of
the Borrowers' Inventory conducted by a Nationally Recognized Inventory
Appraiser.
(i) Subject to Section 5:5-10(c)(ii) , the Borrowers
shall reimburse the Agent for the Agent's out-of-pocket cost of up to
two (2) such appraisals in any Twelve (12) month period during which
this Agreement is in effect.
(ii) If such expense obligation arose while an Event
of Default or an Availability Trigger Event has occurred and is
continuing, the Borrowers shall reimburse the Agent for all such
appraisals.
(iii) From time to time on fifteen (15) days request
of the Agent, the Lead Borrower shall nominate an inventory appraiser
to serve as a Nationally Recognized Inventory Appraiser.
(d) The Borrowers shall reimburse the Agent for the Agent's
out-of-pocket cost of commercial finance audits of the Borrowers' books and
records as follows:
(i) Subject to Section 5:5-10(d)(ii), the Borrowers
shall reimburse the Agent for the Agent's out-of-pocket cost of up to
two (2) such audits in any Twelve (12) month period during which this
Agreement is in effect.
(ii) If such expense obligation arose while an Event
of Default or an Availability Trigger Event has occurred and is
continuing, the Borrowers shall reimburse the Agent for all such
appraisals.
Revolving Credit Lenders, at their respective own expense, may accompany and
observe any commercial finance audit of the Borrower's books which the Agent
causes to be undertaken.
5-11. ADDITIONAL FINANCIAL INFORMATION
(a) In addition to all other information required to be
provided pursuant to this Article 5:, the Lead Borrower promptly shall provide
the Agent (and any guarantor of the Liabilities), with such other and additional
information concerning the Borrowers, the Collateral, the operation of the
Borrowers' business, and the Borrowers' financial condition, including original
counterparts of financial reports and statements, as the Agent from time to time
reasonably may request from the Lead Borrower.
(b) The Lead Borrower may provide the Agent, from time to time
hereafter, with updated forecasts of the Borrowers' anticipated performance and
operating results.
(c) In all events, the Lead Borrower, annually, no earlier
than Ninety (90) prior to the end of its fiscal year nor later than the last day
of the first fiscal quarter of the Borrower's fiscal year, shall furnish the
Agent with an updated and extended forecast which shall go out at least through
the end of the subject fiscal year and shall include an income statement,
balance sheet, and statement of cash flow, by month, each prepared in conformity
with GAAP and consistent with the Borrowers' then current practices.
(d) The Agent and each of the Revolving Credit Lenders agrees
that, except with the prior consent of the Lead Borrower, it will not disclose
any confidential information with respect to the Borrowers which is now or in
the future furnished pursuant to this Agreement or any other Loan Document ,
provided, however, that the Agent and each Revolving Credit Lender may disclose
any such information as follows:
(i) To the following (but only if the Person to whom
so disclosed is instructed to treat the such information as
confidential):
(A) To its employees, Affiliates, advisors
or counsel.
(B) To any prospective or actual transferee
or participant in connection with any contemplated transfer
or participation of this Agreement, the Liabilities, or any
interest therein by the Agent or any Revolving Credit Lender,
which transfer or participation is permitted by the terms of
this Agreement.
(C) To the Agent and other Revolving Credit
Lenders.
(ii) As has become generally available to the public.
(iii) As may be required or appropriate in any
report, statement or testimony submitted to any municipal, state, or
federal regulatory body having or claiming to have jurisdiction over
the Agent or any Revolving Credit Lender.
(iv) As may be required or appropriate in respect to
any summons or subpoena or in connection with any litigation.
(v) In order to comply with any law, order,
regulation or ruling applicable to the Agent or any Revolving Credit
Lender.
5-12. FINANCIAL PERFORMANCE COVENANTS
(a) Except as provided in Section 5:5-12(b), the Borrowers
shall not be subject to any financial performance covenants under this
Agreement.
(b) In the event that an Availability Trigger Event has
occurred, the Borrowers, commencing with that day on which the Agent shall have
given written notice to the Lead Borrower which invokes this Section 5:5-12(b),
shall at all times thereafter maintain Tangible Net Worth of not less than Two
Hundred Fifty Million Dollars ($250,000,000.00) unless and until thereafter an
Availability Trigger Cure occurs.
ARTICLE 6: - USE AND COLLECTION OF COLLATERAL:
6-1. INVENTORY COLLATERAL
(a) All Inventory now owned or hereafter acquired by the
Borrowers is and will be of good and merchantable quality and free from defects
(other than (x) quality problems and defects within customary trade tolerances
and (y) subject to insured casualties).
(b) No Borrower shall engage in any sale of the Inventory
other than for fair consideration in the conduct of the Borrowers' business in
the ordinary course and shall not engage in sales or other dispositions to
creditors; sales or other dispositions in bulk; and any use of any of the
Inventory in breach of any provision of this Agreement.
(c) No sale of Inventory by any Borrower shall be on
consignment, approval, or under any other circumstances such that, with the
exception of a Borrower's customary return policy applicable to the return of
inventory purchased by that Borrower's retail customers in the ordinary course,
such Inventory may be returned to a Borrower without the consent of the Agent.
6-2. NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall have the
right at any time while of an Event of Default has occurred and is continuing
to notify any Account Debtors of any Borrower to make payment directly to the
Agent and to collect all amounts due on account of the Collateral.
ARTICLE 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7-1. THE BLOCKED ACCOUNT
(a) As a condition to the effectiveness of this Agreement, the
Lead Borrower shall deliver the following to the Agent:
(i) The Blocked Account Agreement, duly executed by
the Lock Box Bank to which the Borrowers concentrate proceeds of their
sales.
(ii) Notices to each processor of any of credit card
receipts of any of the Borrowers, each in form satisfactory to the
Agent.
(iii) A notice, addressed generally to the
depositories at which any Borrower maintains a DDA into which proceeds
of the Borrower's sales are deposited, which notice is in form
satisfactory to the Agent.
(b) Upon the occurrence of any Event of Default or an
Availability Trigger Event, then, in addition to any other rights to which the
Agent is then entitled, the Agent may (and on instructions of the SuperMajority
Lenders shall undertake the following (subject in all events to Section
7:7-1(c)).
(i) Give notice to the Lock Box Bank to forward to
the Boston Concentration Account, by ACH or wire transfer, the proceeds
of all Receivables Collateral from time to time received by the Lock
Box Bank.
(ii) Give notice to each of the Borrowers' credit
card processors to forward to the Boston Concentration Account, by ACH
or wire transfer, the proceeds of all Receivables Collateral which such
credit card processors otherwise would forward to or for the account of
the Borrower.
(iii) Send a copy of the notice furnished pursuant to
Section 7:7-1(a)(iii) to each depository at which any Borrower
maintains a DDA into which proceeds of the Borrower's sales are
deposited as described and to take such other steps as the Agent
reasonably determines as appropriate to cause the Agent's dominion and
control of Receipts, proceed, and collections.
(iv) Give notice to the Lead Borrower of the Agent's
having exercised its rights pursuant to this Section 7:7-1(b).
Following the occurrence of any event described in this Section 7:7-1(b), all
Receipts, proceeds, and collections shall be held in trust by the Borrowers for
the Agent and shall not be commingled with any of the Borrowers' other funds or
deposited in any account of any Borrower other than as instructed by the Agent.
(c) If, following the Agent's exercise of any of its rights
described in Section 7:7-1(b),
(i) If such exercise was on account of the occurrence
of an Event of Default and the subject Event of Default is no longer
continuing; or
(ii) If such exercise was on account of the
occurrence of an Availability Trigger Event and an Availability Trigger
Cure occurs thereafter, then the Agent, subject to its continuing
rights thereafter under Section 7:7-1(b), shall take steps to reverse those
actions which it had so taken pursuant to that Section.
(d) The Borrower will not change its cash concentration
procedures from those in place at the execution of this Agreement unless such
change is coordinated with the Agent with a view towards the preservation and
protection of the Agent's rights included in this Article 7:.
7-2. THE CONCENTRATION AND DISBURSEMENT ACCOUNTS
(a) The following checking accounts have been or will be
established (and are so referred to herein):
(i) The "Boston Concentration Account" (so referred
to herein): Established by the Agent with BankBoston, N.A.
(ii) The "Disbursement Account" (so referred to
herein): One more accounts established by the Lead Borrower with
BankBoston, N.A.
(b) The Borrowers shall pay all fees and charges of, and
maintain such impressed balances as may be required by the depository in which
any account is opened as required hereby (even if such account is opened by
and/or is the property of the Agent.
7-3. PAYMENT OF LIABILITIES
(a) On each Business Day, the Agent shall apply the then
collected balance of the Boston Concentration Account (net of fees charged, and
of such impressed balances as may be required by the bank at which the Boston
Concentration Account is maintained): First, towards the SwingLine Loans and
Second, towards the unpaid balance of the Loan Account and all other
Liabilities.
(b) The following rules shall apply to deposits and payments
under and pursuant to this Agreement:
(i) Funds shall be deemed to have been deposited to
the Boston Concentration Account on the Business Day on which
deposited, provided that notice of such deposit is available to the
Agent by 2:00PM on that Business Day.
(ii) Funds paid to the Agent, other than by deposit
to the Boston Concentration Account, shall be deemed to have been
received on the Business Day when they are good and collected funds,
provided that notice of such payment is available to the Agent by
2:00PM on that Business Day.
(iii) If notice of a deposit to the Boston
Concentration Account (Section 7:7-3(b)(i)) or payment (Section
7:7-3(b)(ii)) is not available to the Agent until after 2:00PM on a
Business Day, such deposit or payment shall be deemed to have been made
at 9:00AM on the then next Business Day.
(iv) All deposits to the Boston Concentration Account
and other payments to the Agent are subject to clearance and
collection.
(c) The Agent shall transfer to the Disbursement Account any
surplus in the Boston Concentration Account remaining after the application
towards the Liabilities referred to in Section 7:7-3(a), above (less those
amount which are to be netted out, as provided therein) provided, however, in
the event that
(i) a Suspension Event has occurred and is
continuing; and
(ii) one or more L/C's are then outstanding,
then the Agent may establish a funded reserve of up to 105% of the aggregate
Stated Amounts of such L/C's. Such funded reserve shall either be (i) returned
to the Borrowers in the event that no Suspension Event is then continuing or
(ii) applied towards the Liabilities following the occurrence of any Event of
Default described in Section 10:10-12 or Acceleration.
7-4. THE DISBURSEMENT ACCOUNT. Except as otherwise specifically
provided in, or permitted by, this Agreement, all checks shall be drawn by
the Borrower upon, and other disbursements shall be made by the Borrower
solely from, the Disbursement Account or from its payroll account.
ARTICLE 8: - GRANT OF SECURITY INTEREST:
8-1. GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual, and faithful performance of all and each of the Liabilities, each
Borrower hereby grants to the Agent, for the ratable benefit of the Revolving
Credit Lenders, a continuing security interest in and to, and assigns to the
Agent, for the ratable benefit of the Revolving Credit Lenders, the following,
and each item thereof, whether now owned or now due, or in which any Borrower
has an interest, or hereafter acquired, arising, or to become due, or in which
any Borrower obtains an interest, and all products, Proceeds, substitutions,
and accessions of or to any of the following (all of which, together with any
other property in which the Agent may in the future be granted a security
interest, is referred to herein as the "Collateral"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All Farm Products
(d) All General Intangibles.
(e) All Equipment.
(f) All Goods.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All books, records, and information relating to the
Collateral and/or to the operation of any Borrower's
business, and all rights of access to such books,
records, and information, and all property in which
such books, records, and information are stored,
recorded, and maintained.
(j) All Investment Property, Instruments, Documents,
Deposit Accounts, policies and certificates of
insurance, deposits, impressed accounts, compensating
balances, money, cash, or other property.
(k) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and
credit insurance, whether any of such proceeds,
refunds, and premium rebates arise out of any of the
foregoing. (8:8-1(a) through 8:8-1(j)) or otherwise.
(l) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the foregoing
(8:8-1(a) through 8:8-1(j)), including the right of
stoppage in transit.
8-2. EXTENT AND DURATION OF SECURITY INTEREST
(a) The security interest created herein is subject to the
following:
(i) Any agreement, license, permit, or instrument in
which any Borrower has an interest shall be subject to the security
interest created hereby to the fullest extent permitted by applicable
law, provided, however, if the creation of such a security interest
would give any party to such agreement, license, permit or instrument
(other than a Borrower) an enforceable right, solely on account of such
creation, to (x) terminate, (y) recover damages, or (z) declare that
Borrower in material breach of such agreement, license, permit, or
instrument, then the creation of such security interest shall be
limited so as to not to give rise to such a right.
(ii) The Collateral includes all Equipment and
interests therein except to the extent that the creation of a security
interest in such Equipment or interest therein would give any Person
(other than any Borrower) an enforceable right, solely on account of
the creation of a security interest therein in favor of the Agent, to
declare a Borrower in material breach of an agreement between a
Borrower and such Person, which agreement the Borrower is not
prohibited by this Agreement to have entered into or become subject.
(b) The security interest created and granted herein is in
addition to, and supplemental of, any security interest previously granted by
any Borrower to the Agent and shall continue in full force and effect applicable
to all Liabilities until both (a) all Liabilities have been paid and/or
satisfied in full and (b) the security interest created herein is specifically
terminated in writing by a duly authorized officer of the Agent.
ARTICLE 9: - AGENT AS BORROWER'S ATTORNEY-IN-FACT:
9-1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby
irrevocably constitutes and appoints the Agent as that Borrower's true and
lawful attorney, with full power of substitution, following the occurrence
and during the continuance of an Event of Default, to convert the Collateral
into cash at the sole risk, cost, and expense of the Borrowers, but for the sole
benefit of the Agent and the Revolving Credit Lenders. The rights and powers
granted the Agent by this appointment include but are not limited to the right
and power to:
(a) Prosecute, defend, compromise, or release any action
relating to the Collateral.
(b) Sign change of address forms to change the address to
which any Borrower's mail is to be sent to such address as the Agent shall
designate; receive and open that Borrower's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Lead Borrower or to any trustee in bankruptcy, receiver,
assignee for the benefit of creditors of that Borrower, or other legal
representative of that Borrower whom the Agent determines to be the appropriate
person to whom to so turn over such mail.
(c) Endorse the name of that Borrower in favor of the Agent
upon any and all checks, drafts, notes, acceptances, or other items or
instruments; sign and endorse the name of that Borrower on, and receive as
secured party, any of the Collateral, any invoices, schedules of Collateral,
freight or express receipts, or bills of lading, storage receipts, warehouse
receipts, or other documents of title respectively relating to the Collateral.
(d) Sign the name of that Borrower on any notice to that
Borrower's Account Debtors or verification of the Receivables Collateral; sign
that Borrower's name on any Proof of Claim in Bankruptcy against Account
Debtors, and on notices of lien, claims of mechanic's liens, or assignments or
releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the
payment of any letter of credit and/or banker's acceptance of which that
Borrower is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of that Borrower.
(g) Use, license or transfer any or all General Intangibles of
that Borrower.
9-2. NO OBLIGATION TO ACT. The Agent shall not be obligated to
do any of the acts or to exercise any of the powers authorized by Section 9:9-1
herein, but if the Agent elects to do any such act or to exercise any of such
powers, it shall not be accountable for more than it actually receives as a
result of such exercise of power, and shall not be responsible to any Borrower
for any act or omission to act except for any act or omission to act as to
which there is a final determination made in a judicial proceeding (in which
proceeding the Agent has had an opportunity to be heard) which determination
includes a specific finding that the subject act or omission to act had been
in bad faith or constituted gross negligence.
ARTICLE 10: - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 10: respectively
shall constitute an "Event of Default" herein. Upon the occurrence of any Event
of Default described in Section 10:10-12, any and all Liabilities shall become
due and payable without any further act on the part of the Agent. Upon the
occurrence of any other Event of Default which consists of a Payment Default,
the Agent may, and on the instruction of the SuperMajority Lenders as provided
in Section 13:13-1(b) shall, declare any and all Liabilities shall become
immediately due and payable. Upon the occurrence of any other Event of Default,
the Agent with the Consent of the Majority Lenders may, and on the instruction
of the SuperMajority Lenders as provided in Section 13:13-1(b) shall, declare
any and all Liabilities shall become immediately due and payable. The occurrence
of any Event of Default shall also constitute, without notice or demand, a
default under all other agreements between the Agent or any Revolving Credit
Lender and the Borrower and instruments and papers heretofore, now or hereafter
given the Agent or any Revolving Credit Lender by the Borrower.
10-1. FAILURE TO PAY REVOLVING CREDIT. The failure by any Borrower
to pay any principal or interest when due under the Revolving Credit.
10-2. FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower
to pay within five (5) days of when due, any, fee, or other payment Liability
under any of the Loan Documents.
10-3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD).
The failure by any Borrower to promptly, punctually, faithfully and timely
perform, discharge, or comply with any covenant or Liability not otherwise
described in Section 10:10-1 or Section 10:10-2 hereof, and included in any of
the following provisions hereof:
Section Relates to:
--------------------------------------------------------
4:4-6 Location of Collateral
4:4-7 Title to Assets
4:4-8 Indebtedness
4:4-9 Insurance Policies
4:4-15(c) Tax Liens
4:4-20 Dividends. Investments. Other Corporate Actions
4:4-24 Affiliate Transactions
5:5-12 (If applicable: Financial Performance)
6:6-1 Use of Inventory Collateral
Article 7: Cash Management
10-4. FINANCIAL REPORTING REQUIREMENTS. The failure by the Lead
Borrower or any Borrower to promptly, punctually, faithfully and timely perform
discharge, or comply with the financial reporting requirements included in
Article 5:, subject, however, to the following limited number of grace periods
applicable to certain of those requirements:
===================================== ================== ========================== ================================
REPORT / STATEMENT REQUIRED BY GRACE PERIOD NUMBER OF GRACE PERIODS
SECTION
===================================== ================== ========================== ================================
Monthly Collateral Report 5:5-5 Six Business Days Three in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
Monthly Reports (30 Days) 5:5-6 Six Business Days Three in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
Retain Accountants 5:5-1(d) Twenty Days Once
------------------------------------- ------------------ -------------------------- --------------------------------
Notice of Change in Senior Officers 5:5-3(a)(i) Twenty Days One in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
Notice of Material Adverse Change 5:5-3(a)(iv) Twenty Days One in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
10-5. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The
failure by any Borrower, twenty (20) days following the earlier, with respect
to that Borrower's failure to promptly, punctually and faithfully perform,
discharge, or comply with any covenant or Liability not described in any of
Sections or 10:10-1, 10:10-2, 10:10-3, or 10:10-4 hereof, to have cured such
failure:
(a) That Borrower's knowledge of such failure to perform,
discharge, or comply.
(b) Written notice from the Agent to the Lead Borrower of such
failure to perform, discharge or comply.
10-6. MISREPRESENTATION. Any representation or warranty at any
time made by any Borrower to the Agent or any Revolving Credit Lender was not
true or complete in all material respects when given.
10-7. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence
of any event such that any Indebtedness of any Borrower in excess of $5 Million
to any creditor other than the Agent or any Revolving Credit Lender could be
accelerated or, without the consent of any Borrower, any Leases with monthly
base rent aggregating not less than $200,000.00 could be terminated prior to
their stated termination date (whether or not the subject creditor or lessor
takes any action on account of such occurrence).
10-8. DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach
or default under any agreement, including any Loan Document, between the Agent
or any Revolving Credit Lender and any Borrower or under any instrument or
any paper heretofore, now, or hereafter given the Agent or any Revolving Credit
Lender and the expiry of any applicable grace period without such breach
or default's being cured (notwithstanding that the subject Agent or Revolving
Credit Lender may not have exercised its rights upon default under any such
other agreement, instrument, or paper).
10-9. UNINSURED LOSS. If an Availability Trigger Event has
occurred and is then continuing (i.e. no Availability Cure has thereafter
occurred), the occurrence, in consequence of any single event or series of
connected events, of the uninsured loss, theft, damage, or destruction in excess
of $5 Million of or to Collateral.
10-10. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS
(a) The service of process upon the Agent or any Revolving
Credit or any Participant seeking to attach, by trustee, mesne, or other
process, any of funds of any Borrower on deposit with, or assets of any Borrower
in the possession of, the Agent or that Revolving Credit Lender or such
Participant.
(b) The entry of any judgment against any Borrower, which
judgment is not satisfied (if a money judgment) or appealed from (with execution
or similar process stayed) within thirty (30) days of its entry and which
judgment, when added to all other money judgments, aggregates in excess of
$100,000.00.
(c) The occurrence of any Material Adverse Effect.
10-11. BUSINESS FAILURE. Any act by, against, or relating to any
Borrower, or its property or assets, which act constitutes the determination, by
any Borrower, to initiate a program of partial or total self-liquidation not
otherwise permitted by this Agreement; application for, consent to, or
sufferance of the appointment of a receiver, trustee, or other person, pursuant
to court action or otherwise, over all, or any part of any Borrower's property;
the execution of an assignment for the benefit of the creditors of any Borrower,
or the occurrence of any other voluntary or involuntary liquidation or extension
of debt agreement for any Borrower generally; the offering by or entering
into by any Borrower of any composition, extension, or any other arrangement
seeking relief from or extension of the debts of that Borrower generally; and/or
the initiation by or on behalf of any Borrower of the liquidation or winding
up of all or any substantial part of the Borrower's business or operations, and
if such action is initiated against any Borrower, it is not timely contested,
or if so timely contested, is not dismissed within sixty (60) days of when
initiated.
10-12. BANKRUPTCY. The failure by any Borrower to generally pay the
debts of that Borrower as they mature; adjudication of bankruptcy or insolvency
relative to any Borrower; the entry of an order for relief or similar order with
respect to any Borrower in any proceeding pursuant to the Bankruptcy Code or
any other federal bankruptcy law; the filing of any complaint, application, or
petition by any Borrower initiating any matter in which any Borrower is or may
be granted any relief from the debts of any Borrower pursuant to the Bankruptcy
Code or any other insolvency statute or procedure; the filing of any complaint,
application, or petition against any Borrower initiating any matter in which
that Borrower is or may be granted any relief from the debts of that Borrower
pursuant to the Bankruptcy Code or any other insolvency statute or procedure,
which complaint, application, or petition is not timely contested in good faith
by that Borrower by appropriate proceedings or, if so contested, is not
dismissed within sixty (60) days of when filed.
10-13. DEFAULT BY GUARANTOR OR AFFILIATE. The occurrence of any of
the foregoing Events of Default with respect to any guarantor of the
Liabilities, or the occurrence of any of the foregoing Events of Default
with respect to any such guarantor as if such guarantor were a "Borrower"
described therein.
10-14. INDICTMENT-FORFEITURE. The indictment of, or institution
of any legal process or proceeding against, any Borrower, under any federal,
state, municipal, and other civil or criminal statute, rule, regulation, order,
or other requirement having the force of law where the relief, penalties, or
remedies sought or available include the forfeiture of any property of that
Borrower and/or the imposition of any stay or other order, the effect of which,
could reasonably be expected to have a Material Adverse Effect.
10-15. TERMINATION OF GUARANTY. The termination or attempted
termination of any guaranty by any guarantor of the Liabilities.
10-16. CHALLENGE TO LOAN DOCUMENTS
(a) Any challenge by or on behalf of any Borrower or any
guarantor of the Liabilities to the validity of any Loan Document or the
applicability or enforceability of any Loan Document strictly in accordance with
the subject Loan Document's terms or which seeks to void, avoid, limit, or
otherwise adversely affect any security interest created by or in any Loan
Document or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.
10-17. CHANGE IN CONTROL. Any Change in Control.
ARTICLE 11: - RIGHTS AND REMEDIES UPON DEFAULT:
Upon the occurrence of any Event of Default described in Section
10:10-12 and upon Acceleration, and at all times thereafter, the Agent shall
have the following rights and remedies in addition to all of the rights,
remedies, powers, privileges, and discretions available to Agent prior to the
occurrence of an Event of Default. No stay which otherwise might be imposed
pursuant to Section 362 of the Bankruptcy Code or otherwise shall stay, limit,
prevent, hinder, delay, restrict, or otherwise prevent the Agent's exercise of
any of such rights and remedies.
11-1. RIGHTS OF ENFORCEMENT. The Agent shall have all of the rights
and remedies of a secured party upon default under that part of Article 9 of
the UCC entitled "Default" (at the execution of this Agreement, Part 5 of
Article 9 of the UCC and in the event of the adoption and effectiveness of the
1998 Revisions to Article 9 of the UCC, Part 6 thereof), in addition to which
the Agent shall have all and each of the following rights and remedies:
(a) To give notice to any bank at which any Deposit Account or
Blocked Account is maintained and in which Proceeds of Collateral are deposited,
to turn over such Proceeds directly to the Agent.
(b) To give notice to any customs brokers of any Borrower to
follow the instructions of the Agent as provided in any written agreement or
undertaking of such broker in favor of the Agent.
(c) To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.
(d) To take possession of all or any portion of the
Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Agent deems advisable and with or without the taking of possession of any of
the Collateral.
(f) To conduct one or more going out of business sales which
include the sale or other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
11-2. SALE OF COLLATERAL
(a) Any sale or other disposition of the Collateral may be at
public or private sale upon such terms and in such manner as the Agent deems
advisable, having due regard to compliance with any statute or regulation which
might affect, limit, or apply to the Agent's disposition of the Collateral.
(b) The Agent, in the exercise of the Agent's rights and
remedies upon default, may conduct one or more going out of business sales, in
the Agent's own right or by one or more agents and contractors. Such sale(s) may
be conducted upon any premises owned, leased, or occupied by any Borrower. The
Agent and any such agent or contractor, in conjunction with any such sale, may
augment the Inventory with other goods (all of which other goods shall remain
the sole property of the Agent or such agent or contractor). Any amounts
realized from the sale of such goods which constitute augmentations to the
Inventory (net of an allocable share of the costs and expenses incurred in their
disposition) shall be the sole property of the Agent or such agent or contractor
and neither any Borrower nor any Person claiming under or in right of any
Borrower shall have any interest therein.
(c) Unless the Collateral is perishable or threatens to
decline speedily in value, or is of a type customarily sold on a recognized
market (in which event the Agent shall provide the Lead Borrower with such
notice as may be practicable under the circumstances), the Agent shall give the
Lead Borrower at least seven (7) days prior written notice of the date, time,
and place of any proposed public sale, and of the date after which any private
sale or other disposition of the Collateral may be made. Each Borrower agrees
that such written notice shall satisfy all requirements for notice to the
Borrowers which are imposed under the UCC or other applicable law with respect
to the exercise of the Agent's rights and remedies upon default.
(d) The Agent and any Revolving Credit Lender may purchase the
Collateral, or any portion of it at any sale held under this Article.
(e) If any of the Collateral is sold, leased, or otherwise
disposed of by the Agent on credit, the Liabilities shall not be deemed to have
been reduced as a result thereof unless and until payment is finally received
thereon by the Agent.
(f) The Agent shall apply the proceeds of any exercise of the
Agent's Rights and Remedies under this Article 11: towards the Liabilities in
such manner, and with such frequency, as the Agent determines.
11-3. OCCUPATION OF BUSINESS LOCATION. In connection with the
Agent's exercise of the Agent's rights under this Article 11:, the Agent may
enter upon, occupy, and use any premises owned or occupied by any Borrower,
and may exclude any Borrowers from such premises or portion thereof as may
have been so entered upon, occupied, or used by the Agent. The Agent shall not
be required to remove any of the Collateral from any such premises upon the
Agent's taking possession thereof, and may render any Collateral unusable to
the Borrowers. In no event shall the Agent be liable to any Borrower for use
or occupancy by the Agent of any premises pursuant to this Article 11:,
nor for any charge (such as wages for the Borrowers' employees and
utilities) incurred in connection with the Agent's exercise of the Agent's
Rights and Remedies.
11-4. GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants
to the Agent a royalty free nonexclusive irrevocable license to use, apply,
and affix any trademark, trade name, logo, or the like in which that Borrower
now or hereafter has rights, such license being with respect to the Agent's
exercise of the rights hereunder including, without limitation, in connection
with any completion of the manufacture of Inventory or sale or other disposition
of Inventory.
11-5. ASSEMBLY OF COLLATERAL. The Agent may require each Borrower
to assemble the Collateral and make it available to the Agent at that Borrower's
sole risk and expense at a place or places which are reasonably convenient to
both the Agent and that Borrower.
11-6. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
and discretions of the Agent hereunder (herein, the "Agent's Rights and
Remedies") shall be cumulative and not exclusive of any rights or remedies which
it would otherwise have. No delay or omission by the Agent in exercising or
enforcing any of the Agent's Rights and Remedies shall operate as, or
constitute, a waiver thereof. No waiver by the Agent of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Agent's Rights or Remedies, and no express or implied agreement or
transaction of whatever nature entered into between the Agent and any person, at
any time, shall preclude the other or further exercise of the Agent's Rights and
Remedies. No waiver by the Agent of any of the Agent's Rights and Remedies on
any one occasion shall be deemed a waiver on any subsequent occasion, nor shall
it be deemed a continuing waiver. The Agent's Rights and Remedies may be
exercised at such time or times and in such order of preference as the Agent may
determine. The Agent's Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Liabilities.
ARTICLE 12: REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
12-1. REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section
12:12-2:
(a) The Agent shall advise each Revolving Credit Lender, no
later than 2:00PM (Boston Time) on a date on which any Revolving Credit Loan
(other than a SwingLine Loan) is to be made on that date. Such advice, in each
instance, may be by telephone or facsimile transmission, provided that if such
advice is by telephone, it shall be confirmed in writing. Advice of a Revolving
Credit Loan shall include the amount of and interest rate applicable to the
subject Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit
Dollar Commitment, each Revolving Credit Lender, by no later than the end of
business on the day on which the subject Revolving Credit Loan is to be made,
shall Transfer that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the subject Revolving Credit Loan to the Agent.
12-2. SWINGLINE LOANS.
(a) In the event that, when a Revolving Credit Loan is
requested, the aggregate unpaid balance of the SwingLine Loan is less than the
SwingLine Loan Ceiling, then the SwingLine Lender may advise the Agent that the
SwingLine Lender has determined to include up to the amount of the requested
Revolving Credit Loan as part of the SwingLine Loan. In such event, the
SwingLine Lender shall Transfer the amount of the requested Revolving Credit
Loan to the Agent.
(b) The SwingLine Loan shall be converted to a Revolving
Credit Loan in which all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the SwingLine
Lender may advise the Agent that all, or any part, of the SwingLine
Loan is to be converted to a Revolving Credit Loan in which all
Revolving Credit Lenders participate.
(ii) At the initiation of a Liquidation, the then
entire unpaid principal balance of the SwingLine Loan shall be
converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate.
In either such event, the Agent shall advise each Revolving Credit Lender of
such conversion as if, and with the same effect as if such conversion were the
making of a Revolving Credit Loan as provided in Section 12:12-1.
(c) The SwingLine Lender, in separate capacities, may also be
the Agent and a Revolving Credit Lender.
(d) The SwingLine Lender, in its capacity as SwingLine Lender,
is not a "Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided in the
relevant Section, any distribution pursuant to Section 13:13-6.
(ii) Determination of whether the requisite Loan
Commitments have Consented to action requiring such Consent.
12-3. AGENT'S COVERING OF FUNDINGS:
(a) Each Revolving Credit Lender shall make available to the
Agent, as provided herein, that Revolving Credit Lender's Revolving Credit
Percentage Commitment of the following:
(i) Each Revolving Credit Loan, up to the maximum
amount of that Revolving Credit Lender's Revolving Credit Dollar
Commitment of the Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving
Credit Lender's Revolving Credit Dollar Commitment of each L/C Drawing
(to the extent that such L/C Drawing is not "covered" by a Revolving
Credit Loan as provided herein).
(b) In all circumstances, the Agent may:
(i) Assume that each Revolving Credit Lender, subject
to Section 12:12-3(a), timely shall make available to the Agent that
Revolving Credit Lender's Revolving Credit Percentage Commitment of
each Revolving Credit Loan, notice of which is provided pursuant to
Section 12:12-1.
(ii) In reliance upon such assumption, make available
the corresponding amount to the Borrowers.
(iii) Assume that each Revolving Credit Lender timely
shall pay, and shall make available, to the Agent all other amounts
which that Revolving Credit Lender is obligated to so pay and/or make
available hereunder or under any of the Loan Documents.
(c) In the event that, in reliance upon any of such
assumptions, the Agent makes available, a Revolving Credit Lender's Revolving
Credit Percentage Commitment of one or more Revolving Credit Loans, or any other
amount to be made available hereunder or under any of the Loan Documents, which
amount a Revolving Credit Lender (a "Delinquent Revolving Credit Lender") fails
to provide to the Agent within One (1) Business Day of written notice of such
failure, then:
(i) The amount which had been made available by the
Agent is an " Agent's Cover" (and is so referred to herein).
(ii) All interest paid by the Borrowers on account of
the Revolving Credit Loan or coverage of the subject L/C Drawing which
consist of the Agent's Cover shall be retained by the Agent until the
Agent's Cover, with interest, has been paid.
(iii) The Delinquent Revolving Credit Lender shall
pay to the Agent, on demand, interest at a rate equal to the prevailing
federal funds rate on any Agent's Cover in respect of that Delinquent
Revolving Credit Lender
(iv) The Agent shall have succeeded to all rights to
payment to which the Delinquent Revolving Credit Lender otherwise would
have been entitled hereunder in respect of those amounts paid by or in
respect of the Borrowers on account of the Agent's Cover together with
interest until it is repaid. Such payments shall be deemed made first
towards the amounts in respect of which the Agent's Cover was provided
and only then towards amounts in which the Delinquent Revolving Credit
Lender is then participating. For purposes of distributions to be made
pursuant to Section 12:12-4(a) (which relates to ordinary course
distributions) or Section 13:13-6 (which relates to distributions of
proceeds of a Liquidation) below, amounts shall be deemed distributable
to a Delinquent Revolving Credit Lender (and consequently, to the Agent
to the extent to which the Agent is then entitled) at the highest level
of distribution (if applicable) at which the Delinquent Revolving
Credit Lender would otherwise have been entitled to a distribution.
(v) Subject to Subsection 12:12-3(c)(iv), the
Delinquent Revolving Credit Lender shall be entitled to receive any
payments from the Borrowers to which the Delinquent Revolving Credit
Lender is then entitled, provided however there shall be deducted from
such amount and retained by the Agent any interest to which the Agent
is then entitled on account of Section 12:12-3(c)(ii), above.
(d) A Delinquent Revolving Credit Lender shall not be relieved
of any obligation of such Delinquent Revolving Credit Lender hereunder (all and
each of which shall constitute continuing obligations on the part of any
Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status
as a Delinquent Revolving Credit Lender by paying the Agent the aggregate of the
following:
(i) The Agent's Cover (to the extent not
previously repaid by the Borrower and
retained by the Agent in accordance with
Subsection 12:12-3(c)(iv), above) with
respect to that Delinquent Revolving Credit
Lender.
Plus
(ii) The aggregate of the amount payable under
Subsection 12:12-3(c)(iii), above (which
relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be
incurred by the Agent in the enforcement of
the Agent's rights against such Delinquent
Revolving Credit Lender.
12-4 ORDINARY COURSE DISTRIBUTIONS. This Section 12:12-4 applies
unless the provisions of Section 13:13-6 (which relates to distributions in the
event of a Liquidation) becomes operative.
(a) Weekly, on such day as may be set from time to time by the
Agent (or more frequently at the Agent's option) the Agent and each Revolving
Credit Lender shall settle up on amounts advanced under the Revolving Credit and
collected funds received in the Boston Concentration Account.
(b) The Agent shall distribute to the SwingLine Lender and to
each Revolving Credit Lender, such Person's respective Pro-Rata share of
interest payments on the Revolving Credit Loans when actually received and
collected by the Agent. For purposes of calculating interest due to a Revolving
Credit Lender, that Revolving Credit Lender shall be entitled to receive
interest on the actual amount contributed by that Revolving Credit Lender
towards the principal balance of the Revolving Credit Loans outstanding during
the applicable period covered by the interest payment made by the Borrowers. Any
net principal reductions to the Revolving Credit Loans received by the Agent in
accordance with the Loan Documents during such period shall not reduce such
actual amount so contributed, for purposes of calculation of interest due to
that Revolving Credit Lender, until the Agent has distributed to that Revolving
Credit Lender its Pro-Rata share thereof.
(c) The Agent shall distribute fees paid on account of the
Revolving Credit, as follows:
(i) Revolving Credit Commitment Fee: As provided by
separate agreement between the Agent and each respective Revolving
Credit Lender.
(ii) Agent's Fee: Retained by and for the account of
the Agent.
(iii) Fees described in Section 2:2-20(b) (which
relates to fees associated with, among other things, the issuance of
L/C's): Retained by the Issuer.
(iv) All other fees: To the Revolving Credit Lenders,
based on their respective Revolving Credit Percentage Commitments.
(d) No Revolving Credit Lender shall have any interest in, or
right to receive any part of, the Agent's Fee to be paid by the Borrower to the
Agent pursuant to this Agreement.
(e) Any amount received by the Agent as reimbursement for any
cost or expense (including without limitation, attorneys' reasonable fees) shall
be distributed by the Agent to that Person which is entitled to such
reimbursement as provided in this Agreement (and if such Person(s) is (are) the
Revolving Credit Lenders, Pro-Rata based upon their respective Revolving Credit
Commitment Percentages at the date on which the expense, in respect of which
such reimbursement is being made, was incurred).
(f) Each distribution pursuant to this Section 12:12-4 is
subject to Section 12:12-3(c), above.
ARTICLE 13: ACCELERATION AND LIQUIDATION:
13-1. ACCELERATION NOTICES
(a) The Agent may give the Revolving Credit Lenders an
Acceleration Notice:
(i) At any time following the occurrence of an Event
of Default which consists of a Payment Default.
(ii) With the Consent of the Majority Lenders, may
give the Revolving Credit Lenders an Acceleration Notice at any time
following the occurrence of any Event of Default other than a Payment
Default.
(b) The SuperMajority Lenders may give the Agent an
Acceleration Notice at any time following the occurrence of an Event of Default.
Such notice may be by multiple counterparts, provided that counterparts executed
by the requisite Revolving Credit Lenders are received by the Agent within a
period of five (5) consecutive Business Days.
13-2. ACCELERATION
(a) Unless stayed by judicial or statutory process, the Agent
shall Accelerate the Revolving Credit Obligations within a commercially
reasonable time following:
(i) The Agent's giving of an Acceleration Notice the
Revolving Credit Lenders as provided in Section 13:13-1(a).
(ii) The Agent's receipt of an Acceleration Notice
from the SuperMajority Lenders, in compliance with Section 13:13-1(b) .
(b) The Liabilities shall be Accelerated, without further act
on the part of the Agent or any Revolving Credit Lender, upon the occurrence of
any Event of Default described in Section 10:10-12.
13-3. Unless stayed by judicial or statutory process, a Liquidation
shall be initiated by the Agent within a commercially reasonable time following
Acceleration of the Revolving Credit Obligations.
13-4. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine
Loan (if any) shall be converted, pursuant to Section 12:12-2(b)(ii),
to a Revolving Credit Loan in which all Revolving Credit Lenders
participate.
(ii) The Agent and the Revolving Credit Lenders shall
"net out" each Revolving Credit Lender's respective contributions
towards the Revolving Credit Loans, so that each Revolving Credit
Lender holds that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the Revolving Credit Loans and advances.
(b) Following the initiation of a Liquidation, each Revolving
Credit Lender shall contribute, towards any L/C thereafter honored and not
immediately reimbursed by the Borrower, that Revolving Credit Lender's Revolving
Credit Percentage Commitment of such honoring.
13-5. AGENT'S CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Agent, with the
advice and assistance of the Revolving Credit Lenders.
(b) The Agent may establish one or more Nominees to "bid in"
or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Agent shall manage the Nominee and manage and dispose
of any Post Foreclosure Assets with a view towards the realization of the
economic benefits of the ownership of the Post Foreclosure Assets and in such
regard, the Agent and/or the Nominee may operate, repair, manage, maintain,
develop, and dispose of any Post Foreclosure Asset in such manner as the Agent
determines as appropriate under the circumstances.
(d) The Agent may decline to undertake or to continue taking a
course of action or to execute an action plan (whether proposed by the Agent or
any Revolving Credit Lender) unless indemnified to the Agent's satisfaction by
the Revolving Credit Lenders against any and all liability and expense which may
be incurred by the Agent by reason of taking or continuing to take that course
of action or action plan.
(e) Each Revolving Credit Lender shall execute all such
instruments and documents not inconsistent with the provisions of this Agreement
as the Agent and/or the Nominee reasonably may request with respect to the
creation and governance of any Nominee, the conduct of the Liquidation, and the
management and disposition of any Post Foreclosure Asset.
13-6. DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Agent may establish one or more reasonably funded
reserve accounts into which proceeds of the conduct of any Liquidation may be
deposited in anticipation of future expenses which may be incurred by the Agent
in the exercise of rights as a secured creditor of the Borrowers and prior
claims which the Agent anticipates may need to be paid.
(b) The Agent shall distribute the net proceeds of Liquidation
in accordance with the relative priorities set forth in Section 13:13-7.
(c) Each Revolving Credit Lender, on the written request of
the Agent and/or any Nominee, not more frequently than once each month, shall
reimburse the Agent and/or any Nominee, Pro-Rata, for any cost or expense
reasonably incurred by the Agent and/or the Nominee in the conduct of a
Liquidation, which amount is not covered out of current proceeds of the
Liquidation, which reimbursement shall be paid over to and distributed by the
Agent.
13-7. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION. The relative
priorities to the proceeds of a Liquidation are as follows:
(a) To the Agent as reimbursement for all reasonable
third party costs and expenses incurred by the Agent
and to any funded reserve established pursuant to
Section 13:13-6(a); and then
(b) To the SwingLine Lender, on account of any SwingLine
loans not converted to Revolving Credit Loans
pursuant to Section 13:13-4(a)(i); and then
(c) To the Revolving Credit Lenders, Pro-Rata, to the
principal balance of Revolving Credit Obligations;
and then
(d) To the Revolving Credit Lenders, Pro-Rata, to accrued
interest which constitutes Revolving Credit
Obligations; and then
(e) To the Revolving Credit Lenders, Pro-Rata, to the
extent of the aggregate of all Revolving Credit Fees;
and then
(f) To any other Liabilities.
ARTICLE 14: THE AGENT:
14-1. APPOINTMENT OF AGENT
(a) Each Revolving Credit Lender appoints and designates
BankBoston Retail Finance Inc. as the "Agent" hereunder and under the Loan
Documents and titles the following in addition to their respective status as
Revolving Credit Lenders: American National Bank and Trust Company of Chicago as
the "Syndication Agent" and Foothill Capital Corporation as the "Documentation
Agent".
(b) Each Revolving Credit Lender authorizes the Agent:
(i) To execute those of the Loan Documents and all
other instruments relating thereto to which the Agent is a party.
(ii) To take such action on behalf of the Revolving
Credit Lenders and to exercise all such powers as are expressly
delegated to the Agent hereunder and in the Loan Documents and all
related documents, together with such other powers as are reasonably
incident thereto.
(c). No Revolving Credit Lender designated as an agent
hereunder, other than the Agent, shall have any duties or liabilities
hereunder whatsoever other than as a Revolving Credit Lender.
14-2. RESPONSIBILITIES OF AGENT
(a) The Agent shall not have any duties or responsibilities
to, or any fiduciary relationship with, any Revolving Credit Lender except for
those expressly set forth in this Agreement.
(b) Neither the Agent nor any of its Affiliates shall be
responsible to any Revolving Credit Lender for any of the following:
(i) Any recitals, statements, representations or
warranties made by the Borrower, or any other person.
(ii) Any appraisals or other assessments of the
assets of the Borrower or of anyone else responsible for or on account
of the Liabilities.
(iii) The value, validity, effectiveness,
genuineness, enforceability, or sufficiency of the Loan Agreement, the
Loan Documents or any other document referred to or provided for
therein.
(iv) Any failure by any Borrower, or any other person
(other than the Agent) to perform its obligations under the Loan
Documents.
(c) The Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such attorneys, accountants, and other
professionals or agents or attorneys-in-fact selected by the Agent with
reasonable care. No such attorney, accountant, other professional, agent, or
attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.
(d) Neither the Agent, nor any of its directors, officers, or
employees shall be responsible for any action taken or omitted to be taken or
omitted to be taken by any of them in connection herewith in reliance upon
advice of its counsel nor, in any other event except for any action taken or
omitted to be taken as to which a final judicial determination has been or is
made (in a proceeding in which such person has had an opportunity to be heard)
that such Person had acted in bad faith or in a grossly negligent manner.
(e) The Agent shall not have any responsibility in any event
for more funds than the Agent actually receives and collects.
(f) The Agent, in its separate capacity as a Revolving Credit
Lender, shall have the same rights and powers hereunder as any other Revolving
Credit Lender.
14-3. CONCERNING DISTRIBUTIONS BY THE AGENT
(a) The Agent in the Agent's reasonable discretion based upon
the Agent's determination of the likelihood that additional payments will be
received, expenses incurred, and/or claims made by third parties to all or a
portion of such proceeds, may delay the distribution of any payment received on
account of the Liabilities.
(b) The Agent may disburse funds prior to determining that the
sums which the Agent expects to receive have been finally and unconditionally
paid to the Agent. If and to the extent that the Agent does disburse funds and
it later becomes apparent that the Agent did not then receive a payment in an
amount equal to the sum paid out, then any Revolving Credit Lender to whom the
Agent made the funds available, on demand from the Agent, shall refund to the
Agent the sum paid to that person.
(c) If, in the opinion of the Agent, the distribution of any
amount received by the Agent might involve the Agent in liability, or might be
prohibited hereby, or might be questioned by any Person, then the Agent may
refrain from making distribution until the Agent's right to make distribution
has been adjudicated by a court of competent jurisdiction.
(d) The proceeds of any Revolving Credit Lender's exercise of
any right of, or in the nature of, set-off shall be deemed, First, to the extent
that a Revolving Credit Lender is entitled to any distribution hereunder, to
constitute such distribution and Second, shall be shared with the other
Revolving Credit Lenders as if distributed pursuant to (and shall be deemed as
distributions under Section 13:13-7).
(e) Each Revolving Credit Lender recognizes that the crediting
of the Borrowers with the "proceeds" of any transaction in which a Post
Foreclosure Asset is acquired is a non-cash transaction and that, in
consequence, no distribution of such "proceeds" will be made by the Agent to any
Revolving Credit Lender.
(f) In the event that (x) a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Agent is to be
repaid or disgorged or (y) the SuperMajority Lenders determine to effect such
repayment or disgorgement, then each Revolving Credit Lender to which any such
distribution shall have been made shall repay, to the Agent which had made such
distribution, that Revolving Credit Lender's Pro-Rata share of the amount so
adjudged or determined to be repaid or disgorged.
14-4. DISPUTE RESOLUTION. Any dispute among the Revolving Credit
Lenders and/or the Agent concerning the interpretation, administration, or
enforcement of the financing arrangements contemplated by this or any other Loan
Agreement or the interpretation or administration of this or any other Loan
Agreement which cannot be resolved amicably shall be resolved in the United
States District Court for the District of Massachusetts, sitting in Boston or in
the Superior Court of Suffolk County, Massachusetts, to the jurisdiction of
which courts all parties hereto hereby submit.
14-5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS. The Agent will
forward to each Revolving Credit Lender, promptly after the Agent's receipt
thereof, a copy of each notice or other document furnished to the Agent pursuant
to this Agreement, including monthly, quarterly, and annual financial statements
received from the Lead Borrower pursuant to Article 5: of this Agreement, other
than any of the following:
(a) Routine communications associated with requests for Revolving
Credit Loans and/or the issuance of L/C's.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan Documents to be
furnished directly to the Revolving Credit Lenders by any Borrower.
(d) Any notice or document of which the Agent has knowledge that such
notice or document had been forwarded to the Revolving Credit Lender other than
by the Agent.
14-6. CONFIDENTIAL INFORMATION
(a) Each Revolving Credit Lender will maintain, as
confidential, all of the following:
(i) Proprietary approaches, techniques, and methods
of analysis which are applied by the Agent in the administration of the
credit facility contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the
Agent in providing reports to the Revolving Credit Lenders pursuant
hereto, which forms or formats are not of general currency.
(b) Nothing included herein shall prohibit the disclosure
of any such information as may be required to be provided by judicial process or
by regulatory authorities having jurisdiction over any party to this Agreement.
14-7. RELIANCE BY AGENT. The Agent shall be entitled to rely upon
any certificate, notice or other document (including any cable, telegram, telex,
or facsimile) reasonably believed by the Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts selected
by the Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, the Agent shall
in all events be fully protected in acting, or in refraining from acting, in
accordance with the applicable Consent required by this Agreement. Instructions
given with the requisite Consent shall be binding on all Revolving Credit
Lenders.
14-8. NON-RELIANCE ON AGENT AND OTHER REVOLVING CREDIT LENDERS
(a) Each Revolving Credit Lender represents to all other
Revolving Credit Lenders and to the Agent that such Revolving Credit Lender:
(i) Independently and without reliance on any
representation or act by Agent or by any other Revolving Credit Lender,
and based on such documents and information as that Revolving Credit
Lender has deemed appropriate, has made such Revolving Credit Lender's
own appraisal of the financial condition and affairs of the Borrowers
and decision to enter into this Agreement.
(ii) Has relied upon that Revolving Credit Lender's
review of the Loan Documents by that Revolving Credit Lender and by
counsel to that Revolving Credit Lender as that Revolving Credit Lender
deemed appropriate under the circumstances.
(b) Each Revolving Credit Lender agrees that such Revolving
Credit Lender, independently and without reliance upon Agent or any other
Revolving Credit Lender, and based upon such documents and information as such
Revolving Credit Lender shall deem appropriate at the time, will continue to
make such Revolving Credit Lender's own appraisals of the financial condition
and affairs of the Borrowers when determining whether to take or not to take any
discretionary action under this Agreement.
(c) The Agent, in the discharge of that Agent's duties
hereunder, shall not be required to make inquiry of, or to inspect the
properties or books of, any Person.
(d) Except for notices, reports, and other documents and
information expressly required to be furnished to the Revolving Credit Lenders
by the Agent hereunder (as to which, see Section 14:14-5), the Agent shall not
have any affirmative duty or responsibility to provide any Revolving Credit
Lender with any credit or other information concerning any Person, which
information may come into the possession of Agent or any Affiliate of the Agent.
(e) Each Revolving Credit Lender, at such Revolving Credit
Lender's request, shall have reasonable access to all nonpriviledged documents
in the possession of the Agent, which documents relate to the Agent's
performance of its duties hereunder.
14-9. INDEMNIFICATION. Without limiting the liabilities of the
Borrowers under this or any of the other Loan Documents, each Revolving Credit
Lender shall indemnify the Agent, Pro-Rata, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including attorneys'
reasonable fees and expenses and other out-of-pocket expenditures) which may at
any time be imposed on, incurred by, or asserted against the Agent and in any
way relating to or arising out of this Agreement or any other Loan Document or
any documents contemplated by or referred to therein or the transactions
contemplated thereby or the enforcement of any of terms hereof or thereof or of
any such other documents, provided, however, no Revolving Credit Lender shall be
liable for any of the foregoing to the extent that any of the foregoing arises
from any action taken or omitted to be taken by the Agent as to which a final
judicial determination has been or is made (in a proceeding in which the Agent
has had an opportunity to be heard) that the Agent had acted in bad faith or in
a grossly negligent manner.
14-10. RESIGNATION OF AGENT
(a) The Agent may resign at any time by giving 60 days prior
written notice thereof to the Revolving Credit Lenders. Upon receipt of any such
notice of resignation, the SuperMajority Lenders shall have the right to appoint
a successor to such Agent (and unless an Event of Default has occurred and is
continuing, with the consent of the Lead Borrower not to be unreasonably
withheld and, in any event, deemed given by the Lead Borrower if no written
objection is provided by the Lead Borrower to the (resigning) Agent within seven
(7) Business Days notice of such proposed appointment). If a successor Agent
shall not have been so appointed and shall have accepted such appointment within
30 days after the giving of notice by the resigning Agent, then the resigning
Agent may appoint a successor Agent, which shall be a financial institution
having a combined capital and surplus in excess of $1 Billion. The consent of
the Lead Borrower otherwise required by this Section 14:14-10(a) shall not be
required if an Event of Default has occurred and is continuing.
(b) Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor shall thereupon succeed to, and become
vested with, all the rights, powers, privileges, and duties of the (resigning)
Agent so replaced, and the (resigning) Agent shall be discharged from the
(resigning) Agent's duties and obligations hereunder, other than on account of
any responsibility for any action taken or omitted to be taken by the
(resigning) as to which a final judicial determination has been or is made (in a
proceeding in which the (resigning) Person has had an opportunity to be heard)
that such Person had acted in bad faith or in a grossly negligent manner.
(c) After any retiring Agent's resignation, the provisions of
this Agreement and of all other Loan Documents shall continue in effect for the
retiring Person's benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Agent.
ARTICLE 15: ACTION BY AGENT - CONSENTS - AMENDMENTS - WAIVERS:
15-1. ADMINISTRATION OF CREDIT FACILITIES
(a). Except as otherwise specifically provided in this
Agreement, the Agent may take any action with respect to the credit facility
contemplated by the Loan Documents as the Agent determines to be appropriate ,
provided, however, the Agent is not under any affirmative obligation to take any
action which it is not required by this Agreement or the Loan Documents
specifically to so take.
(b) Except as specifically provided in the following Sections
of this Agreement, whenever a Loan Document or this Agreement provides that
action may be taken or omitted to be taken in an Agent's discretion, the Agent
shall have the sole right to take, or refrain from taking, such action without,
and notwithstanding, any vote of the Revolving Credit Lender:
Actions Described in Section Type of Consent Required
---------------------------- ---------------------------
15:15-2 Majority Lenders
15:15-3 SuperMajority Lenders
15:15-4 Certain Consent
15:15-5 Unanimous Consent
15:15-6 Consent of SwingLine Lender
15:15-7 Consent of the Agent
(c) The rights granted to the Revolving Credit Lenders in
those sections referenced in Section 15:15-1(b) shall not otherwise limit or
impair the Agent's exercise of its discretion under the Loan Documents.
15-2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS.
Except as otherwise provided in this Agreement, the Consent or direction of the
Majority Lenders is required for any amendment, waiver, or modification of any
Loan Document and for the Agent to give an Acceleration Notice upon the
occurrence of any Event of Default other than a Payment Default or an Event of
Default described in Section 10:10-12.
15-3. ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS
(a) The Revolving Credit Lenders agree that any loan or
advance under the Revolving Credit which results in a Permissible Overloan may
be made by the Agent in its discretion without the Consent of the Revolving
Credit Lenders and that each Revolving Credit Lender shall be bound thereby,
provided, however, the Consent or direction of the SuperMajority Lenders is
required to permit Permissible Overloans to be outstanding for more than 45
consecutive Business Days or more than twice in any twelve month period.
(b) If a Suspension Event shall have occurred and be
continuing, the SuperMajority Lenders may direct the Agent to suspend the
Revolving Credit (including the making of any Permissible Overloans), whereupon,
as long as such Suspension Event exists and is continuing, the only Revolving
Credit Loans which may be made are either
(i) Protective Advances (subject, however, to the
time frames provided for in Section 15:15-3(a)); or
(ii) are made with Consent of the SuperMajority
Lenders.
(c) Upon the occurrence of any Event of Default or an
Availability Trigger Event, the SuperMajority Lenders may instruct the Agent to
take that action described in Section 7:7-1(b), which action is subject, in any
event, to Section 7:7-1(c).
(d) If an Event of Default has occurred and not been duly
waived, the SuperMajority Lenders may give the Agent an Acceleration Notice in
accordance with Section 13:13-1(b).
15-4. ACTION REQUIRING CERTAIN CONSENT. The consent of the SwingLine
Lender and Revolving Credit Lenders (other than Delinquent Revolving Credit
Lenders) holding 51% or more of the Loan Commitments or the Revolving Credit
Lenders (other than any Loan Commitments held by Delinquent Revolving Credit
Lenders) shall be required to increase the SwingLine Loan Ceiling.
15-5. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT. None of
the following may take place except with Unanimous Consent:
(a) Any increase in any Revolving Credit Lender's Revolving
Credit Dollar Commitment or Revolving Credit Percentage Commitment (other than
by reason of the application of Section 15:15-10 (which deals with NonConsenting
Revolving Credit Lenders) or Section 16:16-1 (which deals with assignments and
participations)).
(b) Any decrease in any interest rate or fee payable to the
Revolving Credit Lenders.
(c) Any extension of the Maturity Date.
(d) Any forgiveness of all or any portion of any payment
Liability consisting of principal or interest under the Revolving Credit or any
fee which is distributable to the Revolving Credit Lenders.
(e) Any decrease in any interest rate or fee payable under any
of the Loan Documents (other than any Agent's Fee (for which the consent of the
Agent shall also be required)) and of any fee provided for by the Fee Letter
(which may be amended by written agreement between the Lead Borrower on the one
hand, and the Agent on the other).
(f) Any release of a material portion of the Collateral not
otherwise required or provided for in the Loan Documents or to facilitate a
Liquidation.
(g) Any amendment of the definition of the terms "Borrowing
Base" or "Availability" or of any Definition of any component thereof, such that
more credit would be available to any Borrower, based on the same assets, as
would have been available to the Borrowers immediately prior to such amendment ,
it being understood, however, that:
(i) The foregoing shall not limit the adjustment by
the Agent of any Reserve in the Agent's administration of the Revolving
Credit as otherwise permitted by this Agreement.
(ii) The foregoing shall not prevent the Agent, in
its administration of the Revolving Credit, from restoring any
component of Borrowing Base which had been lowered by the Agent back to
the value of such component, as stated in this Agreement or to an
intermediate value.
(h) Any release of any Person obligated on account of the
Liabilities.
(i) The making of any Revolving Credit Loan which, when
made, exceeds Availability and is not a Permissible Overloan, provided, however,
(i) no Consent shall be required in connection with
the making of any Revolving Credit Loan to "cover" any honoring of a
drawing under any L/C; and
(ii) each Revolving Credit Lender recognizes that
subsequent to the making of a Revolving Credit Loan which does not
constitute a Permissible Overloan, the unpaid principal balance of the
Loan Account may exceed Borrowing Base on account of changed
circumstances beyond the control of the Agent (such as a drop in
collateral value).
(j) The waiver of the obligation of the Borrowers to reduce
the unpaid principal balance of loans under the Revolving Credit to an amount
which does not exceed a Permissible Overloan or, subject to the time limits
included in Section 15:15-3(a) (which places time and frequency limits on
Permissible Overloans), to eliminate an Overloan.
(k) Any amendment of this Article 15:.
(l) Amendment of any of the following Definitions:
"Appraised Inventory Liquidation Value"
"Inventory Advance Rate"
"Inventory Recovery Percentage"
"Majority Lender"
"Permissible Overloan"
"Protective Advances"
"SuperMajority Lenders
"Unanimous Consent"
15-6. ACTIONS REQUIRING SWINGLINE LENDER CONSENT. No action,
amendment, or waiver of compliance with, any provision of the Loan Documents or
of this Agreement which affects the SwingLine Lender may be undertaken without
the Consent of the SwingLine Lender.
15-7. ACTIONS REQUIRING AGENT'S CONSENT
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects the Agent in
its capacity as Agent may be undertaken without the written consent of the
Agent.
(b) No action referenced herein which affects the rights,
duties, obligations, or liabilities of the Agent shall be effective without the
written consent of the Agent.
15-8. MISCELLANEOUS ACTIONS
(a) Notwithstanding any other provision of the within
Agreement, no single Revolving Credit Lender independently may exercise any
right of action or enforcement against or with respect to any Borrower.
(b) The Agent shall be fully justified in failing or refusing
to take action under this Agreement or any Loan Document on behalf of any
Revolving Credit Lender unless the Agent shall first
(i) receive such clear, unambiguous, written
instructions as the Agent deems appropriate; and
(ii) be indemnified to the Agent's satisfaction by
the Revolving Credit Lenders against any and all liability and expense
which may be incurred by the Agent by reason of taking or continuing to
take any such action, unless such action had been in bad faith or had
been grossly negligent.
(c) The Agent may establish reasonable procedures for the
providing of direction and instructions from the Revolving Credit Lenders to the
Agent, including its reliance on multiple counterparts, facsimile transmissions,
and time limits within which such direction and instructions must be received in
order to be included in a determination of whether the requisite Loan
Commitments has provided its direction, Consent, or instructions.
15-9. ACTIONS REQUIRING LEAD BORROWER CONSENT
(a) Subject to Section 15:15-9(b) the provisions of this
Agreement which are included in the following Articles may be amended without
the consent of any Borrower, but only if the subject amendment relates to the
relationships of the Revolving Credit Lenders and the Agent inter se and neither
creates any additional nor augment any existing obligation on any Borrower under
any Loan Document nor relieve the Agent or any Revolving Credit Lender from any
commitment or undertaking to any Borrower.
Article Title of Article
------- -------------------------------------------------
12: Revolving Credit Fundings and Distributions
13: Acceleration and Liquidation
14: The Agent
15: Action By Agent - Consents - Amendments - Waivers
16: Assignments and Participations
(b) Subject to Section 15:15-9(c), the following provisions of
this Agreement may not be amended without the consent of the Lead Borrower:
Section Relates To
------- ------------------------------------
15:15-3 SuperMajority Lenders
15:15-5 Unanimous Consent
15:15-9 Actions Requiring Borrower's Consent
(c) The Lead Borrower's consent to the amendment of those
provisions referenced in Section 15:15-9(b) shall be deemed given unless written
objection is made, within Seven (7) Business Days following the Agent's giving
notice to the Borrower of the proposed amendment thereof, provided that the
Agent may rely on such passage of time as consent by the Lead Borrower only if
such written notice states that consent will be deemed effective if no objection
is received within such time period.
15-10. NONCONSENTING REVOLVING CREDIT LENDER
(a) In the event that a Revolving Credit Lender (in this
Section 15:15-10, a "NonConsenting Revolving Credit Lender") does not provide
its Consent to a proposal by the Agent to take action which requires consent
under this Article 15:, then one or more Revolving Credit Lenders who provided
Consent to such action may require the assignment, without recourse and in
accordance with the procedures outlined in Section 16:16-1, below, of the
NonConsenting Revolving Credit Lender's commitment hereunder on fifteen (15)
days written notice to the Agent and to the NonConsenting Revolving Credit
Lender.
(b) At the end of such fifteen (15) days, the Revolving Credit
Lenders who have given such written notice shall Transfer the following to the
NonConsenting Revolving Credit Lender, but only if the NonConsenting Revolving
Credit Lender delivers the Revolving Credit Note held by the NonConsenting
Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit Lender's
Pro-Rata share of the principal and interest of the Revolving Credit
Loans to the date of such assignment.
(ii) All Fees due to the NonConsenting Revolving
Credit Lender to the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which
the NonConsenting Revolving Credit Lender is entitled to reimbursement
from any Borrower.
(c) In the event that the NonConsenting Revolving Credit
Lender fails to deliver to the Agent the Revolving Credit Note held by the
NonConsenting Revolving Credit Lender as provided in Section 15:15-10(b),
15:15-11(f), then:
(i) The amount otherwise to be Transferred to the
NonConsenting Revolving Credit Lender shall be Transferred to the Agent
and held by the Agent, without interest, to be turned over to the
NonConsenting Revolving Credit Lender upon delivery of the Revolving
Credit Note held by that NonConsenting Revolving Credit Lender.
(ii) The Revolving Credit Note held by the
NonConsenting Revolving Credit Lender shall have no force or effect
whatsoever.
(iii) The NonConsenting Revolving Credit Lender shall
cease to be a "Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have
Transferred the amount to the Agent as described above shall have
succeeded to all rights and become subject to all of the obligations of
the NonConsenting Revolving Credit Lender as "Revolving Credit Lender".
(d) In the event that more than One (1) Revolving Credit
Lender wishes to require such assignment, the NonConsenting Revolving Credit
Lender's commitment hereunder shall be divided among such Revolving Credit
Lenders, Pro-Rata based upon their respective Commitments, with the Agent
coordinating such transaction.
(e) The Agent shall coordinate the retirement of the Revolving
Credit Note held by the NonConsenting Revolving Credit Lender and the issuance
of Revolving Credit Notes to those Revolving Credit Lenders which "take-out"
such NonConsenting Revolving Credit Lender, provided, however, no processing fee
otherwise to be paid as provided in Section 16:16-2(b) shall be due under such
circumstances.
15-11. REPLACEMENT OF DELINQUENT REVOLVING CREDIT LENDER
(a) In the event that a Delinquent Revolving Credit Lender
fails to cure its status as a Delinquent Revolving Credit Lender (as to which,
see Section 12:12-3(e)) within Thirty (30) days following its having become a
Delinquent Revolving Credit Lender, then, subject to, and in accordance with the
procedures outlined and referred to in this Section 15:15-11, the Delinquent
Revolving Credit Lender's commitment hereunder may be assigned without recourse
or consent of the Delinquent Revolving Credit Lender.
(b) Any one or more Revolving Credit Lenders which are not
Delinquent Revolving Credit Lenders may require such assignment by written
notice given to the Agent and the Lead Borrower, at any time during the fifteen
(15) day period which commences after the expiry of the thirty (30) days
referenced in Section 15:15-11(a).
(c) In the event that no Revolving Credit Lenders provide its
written notice prior to the expiry of the fifteen (15) days referenced in
Section 15:15-11(b), then the Agent may require such assignment to one or more
Eligible Assignees (subject to the consent of the any consent of the Lead
Borrower required by Section 2:2-24(d)) by giving notice of its nomination of
one or more replacements for the Delinquent Revolving Credit Lender at any time
during the then next following fifteen (15) days.
(d) In the event that neither any Revolving Credit Lender
provides its written notice as provided in Section 15:15-11(b) nor the Agent
nominates a replacement for the Delinquent Revolving Credit Lender to which the
Lead Borrower consents, as provided in Section 15:15-11(c), then the Lead
Borrower, at any time thereafter may nominate a replacement for the Delinquent
Revolving Credit Lender by written notice to the Agent, provided that:
(i) Such nominee is an Eligible Assignee.
(ii) The Agent shall have given its written consent
to such nomination, which consent shall not be unreasonably withheld or
delayed.
(e) Within fifteen (15) days following the designation (and
the consent, if applicable, of the Agent or of the Lead Borrower) or one or more
replacements for the Delinquent Revolving Credit Lender, those replacements
shall Transfer to the Agent, the aggregate of the Delinquent Revolving Credit
Lender's Pro-Rata share of the principal and interest of the Revolving Credit
Loans to the date of such assignment.
(f) Following the Agent's receipt of the aggregate described
in Section 15:15-11(e), the Agent shall Transfer such aggregate to the
Delinquent Revolving Credit Lender, net of the amounts set forth below (which
shall be distributed to, and retained by, the Agent), but only if the Delinquent
Revolving Credit Lender delivers the Revolving Credit Note held by the
Delinquent Revolving Credit Lender:
(i) The Agent's Cover (to the extent not
previously repaid by the Borrower and
retained by the Agent in accordance with
Subsection 12:12-3(c)(iv), above) with
respect to that Delinquent Revolving Credit
Lender.
Plus
(ii) The aggregate of the amount payable under
Subsection 12:12-3(c)(iii), above (which
relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be
incurred by the Agent in the enforcement of
the Agent's rights against such Delinquent
Revolving Credit Lender.
The Delinquent Revolving Credit Lender shall remain liable for any deficiency
remaining after the above application.
(g) In the event that the Delinquent Revolving Credit Lender
fails to deliver to the Agent the Revolving Credit Note held by the Delinquent
Revolving Credit Lender,
(i) The amount otherwise to be Transferred to the
Delinquent Revolving Credit Lender shall be Transferred to the Agent
and held by the Agent, without interest, to be turned over to the
Delinquent Revolving Credit Lender upon delivery of the Revolving
Credit Note held by that Delinquent Revolving Credit Lender.
(ii) The Revolving Credit Note held by the Delinquent
Revolving Credit Lender shall have no force or effect whatsoever.
(iii) The Delinquent Revolving Credit Lender shall
cease to be a "Revolving Credit Lender".
(h) Immediately upon its (or their) transfer of the aggregate
referred to in Section 15:15-11(e), the Persons who have made such Transfer(s)
shall have succeeded to all rights and become subject to all of the obligations
of the Delinquent Revolving Credit Lender as "Revolving Credit Lender".
(i) The Agent shall coordinate the retirement of the Revolving
Credit Note held by the Delinquent Revolving Credit Lender and the issuance of
Revolving Credit Notes to those Persons who have become Revolving Credit Lenders
pursuant to this Section 15:15-11, provided, however, no processing fee
otherwise to be paid as provided in Section 16:16-2(b) shall be due under such
circumstances.
ARTICLE 16: ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16-1. ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender
(in this Section 16:16-1(a), an "Assigning Revolving Credit Lender") may assign
to one or more Eligible Assignees (in this Section 16:16-1(a), each an "Assignee
Revolving Credit Lender") all or a portion of that Revolving Credit Lender's
interests, rights and obligations under this Agreement and the Loan Documents
(including all or a portion of its Commitment) and the same portion of the
Revolving Credit Loans at the time owing to it, and of the Revolving Credit Note
held by the Assigning Revolving Credit Lender, provided that:
(i) The Agent shall have given its prior written
consent to such assignment, which consent shall not be unreasonably
withheld, but need not be given if the proposed assignment would result
in any resulting Revolving Credit Lender's having a Dollar Commitment
of less than the "minimum hold" amount specified in Section
16:16-1(a)(iii) or if there would be more than Eight (8) Revolving
Credit Lenders. (For provisions dealing with any required consent of
the Borrowers, see Section 2:2-24(d)).
(ii) Each such assignment shall be of a constant, and
not a varying, percentage of all the Assigning Revolving Credit
Lender's rights and obligations under this Agreement.
(iii) Following the effectiveness of such assignment,
the Assigning Revolving Credit Lender's Dollar Commitment (if not an
assignment of all of the Assigning Revolving Credit Lender's
Commitment) shall not be less than $10,000,000.00 Million.
16-2. ASSIGNMENT PROCEDURES. This Section 16:16-2 describes the
procedures to be followed in connection with an assignment effected pursuant to
this Article 16: and permitted by Section 16:16-1.
(a) The parties to such an assignment shall execute and
deliver to the Agent, for recording in the Register, an Assignment and
Acceptance substantially in the form of EXHIBIT 16:16-1, annexed hereto.
(b) The Assigning Revolving Credit Lender shall deliver to the
Agent, with such Assignment and Acceptance, the Revolving Credit Note held by
the subject Assigning Revolving Credit Lender and the Agent's processing fee of
$3,500.00, provided, however, no such processing fee shall be due where the
Assigning Revolving Credit Lender is one of the Revolving Credit Lenders at the
initial execution of this Agreement.
(c) The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Revolving Credit Lenders and
of the Revolving Credit Percentage Commitment and Revolving Credit Percentage
Commitment of each Revolving Credit Lender. The Register shall be available for
inspection by the Revolving Credit Lenders and by the Lead Borrower at any
reasonable time and from time to time upon reasonable prior notice. In the
absence of manifest error, the entries in the Register shall be conclusive and
binding on all Revolving Credit Lenders. The Agent and the Revolving Credit
Lenders may treat each Person whose name is recorded in the Register as a
"Revolving Credit Lender" hereunder for all purposes of this Agreement.
(d) The Assigning Revolving Credit Lender and Assignee
Revolving Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an Assignment
and Assumption.
16-3. EFFECT OF ASSIGNMENT.
(a) From and after the effective date specified in an
Assignment and Acceptance which has been executed, delivered, and recorded
(which effective date the Agent may delay by up to Five (5) Business Days after
the delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
(A) Shall be a party to this Agreement and
the Loan Documents (and to any amendments thereof) as fully as
if the Assignee Revolving Credit Lender had executed each.
(B) Shall have the rights of a Revolving
Credit Lender hereunder to the extent of the Revolving Credit
Percentage Commitment and Revolving Credit Percentage
Commitment assigned by such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be
released from the Assigning Revolving Credit Lender's obligations under
this Agreement and the Loan Documents to the extent of the Commitment
assigned by such Assignment and Acceptance.
(iii) The Agent shall undertake to obtain and
distribute replacement Revolving Credit Notes to the subject Assigning
Revolving Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance,
the parties thereto confirm to and agree with each other and with all parties to
this Agreement as to those matters which are set forth in the subject Assignment
and Acceptance.
ARTICLE 17: NOTICES:
17-1. NOTICE ADDRESSES. All notices, demands, and other
communications made in respect of this Agreement (other than a request for a
loan or advance or other financial accommodation under the Revolving Credit)
shall be made to the following addresses, each of which may be changed upon
seven (7) days written notice to all others given by certified mail, return
receipt requested:
If to the Agent:
BankBoston Retail Finance Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention :▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Director
Fax :▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention :▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Fax :▇▇▇-▇▇▇-▇▇▇▇
If to the Lead Borrower
and all Borrowers:
HomeBase, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention :▇▇▇▇▇ ▇▇▇▇
Vice President and Treasurer
Fax :▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
HomeBase, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention :▇▇▇▇ ▇▇▇▇▇
Vice President and General Counsel
Fax :▇▇▇-▇▇▇-▇▇▇▇
17-2. NOTICE GIVEN
(a) Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times being
local to the place of delivery or receipt):
(i) By mail: the sooner of when actually received or
Three (3) days following deposit in the United States mail, as
certified mail, return receipt requested, with postage prepaid.
(ii) By recognized overnight express delivery: the
Business Day following the day when sent.
(iii) By Hand: If delivered on a Business Day after
9:00 AM and no later than Three (3) hours prior to the close of
customary business hours of the recipient, when delivered. Otherwise,
at the opening of the then next Business Day.
(iv) By Facsimile transmission (which must include a
header on which the party sending such transmission is indicated): If
sent on a Business Day after 9:00 AM and no later than Three (3) hours
prior to the close of customary business hours of the recipient, one
(1) hour after being sent. Otherwise, at the opening of the then next
Business Day.
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due notice
was given shall each be deemed receipt of the notice sent.
ARTICLE 18: TERM:
18-1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2:2-6(g) hereof)
until the Termination Date.
18-2. ACTIONS ON TERMINATION. On the Termination Date, the Borrowers
shall pay the Agent (whether or not then due), in immediately available funds,
all then Liabilities including, without limitation: the entire balance of the
Loan Account (including the unpaid principal balance of the Revolving Credit
Loans and the SwingLine Loan ); any then remaining installments of the Revolving
Credit Commitment Fee; any then remaining installments of the Agent's Fee; any
payments due on account of the indemnification obligations included in Section
2:2-11(e); any accrued and unpaid Unused Line Fee; and all unreimbursed costs
and expenses of Agent and of Lenders' Special Counsel for which any Borrower is
responsible; and shall make such arrangements concerning any L/C's then
outstanding are reasonably satisfactory to the Agent. Until such payment, all
provisions of this Agreement, other than those contained in Article 2: which
place an obligation on the Agent or any Revolving Credit Lender to make any
loans or advances or to provide financial accommodations under the Revolving
Credit or otherwise, shall remain in full force and effect until all Liabilities
shall have been paid in full. The release by the Agent of the Collateral
Interests granted the Agent by the Borrower hereunder may be upon such
conditions and indemnifications as the Agent reasonably may require.
ARTICLE 19: GENERAL:
19-1. PROTECTION OF COLLATERAL. The Agent has no duty as to the
collection or protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of the Agent.
19-2. PUBLICITY. The Agent may issue a "tombstone" notice of the
establishment of the credit facility contemplated by this Agreement and may make
reference to the Borrowers (and may utilize any logo or other distinctive symbol
associated with the Borrowers) in connection with any advertising, promotion, or
marketing undertaken by the Agent.
19-3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon each Borrower and each Borrower's representatives, successors, and assigns
and shall enure to the benefit of the Agent and each Revolving Credit Lender and
their respective successors and assigns, provided, however, no trustee or other
fiduciary appointed with respect to any Borrower shall have any rights
hereunder. In the event that the Agent or any Revolving Credit Lender assigns or
transfers its rights under this Agreement, the assignee shall thereupon succeed
to and become vested with all rights, powers, privileges, and duties of such
assignor hereunder and such assignor shall thereupon be discharged and relieved
from its duties and obligations hereunder.
19-4. SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
19-5. AMENDMENTS. COURSE OF DEALING
(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between the Borrowers and the Agent and each
Revolving Credit, either express or implied, concerning the matters included
herein and in such other instruments, any custom, usage, or course of dealings
to the contrary notwithstanding. No such discussions, negotiations, custom,
usage, or course of dealings shall limit, modify, or otherwise affect the
provisions thereof. No failure by the Agent or any Revolving Credit Lender to
give notice to the Lead Borrower or any Borrower of any Borrower's having failed
to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the amendment
of the subject Loan Document. No change made by the Agent to the manner by which
Borrowing Base is determined shall obligate the Agent to continue to determine
Borrowing Base in that manner.
(b) Any Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Agent. No consent, modification,
amendment, or waiver of any provision of any Loan Document shall be effective
unless executed in writing by or on behalf of the party to be charged with such
modification, amendment, or waiver (and if such party is the Agent then by a
duly authorized officer thereof). Any modification, amendment, or waiver
provided by the Agent shall be in reliance upon all representations and
warranties theretofore made to the Agent by or on behalf of each Borrower (and
any guarantor, endorser, or surety of the Liabilities) and consequently may be
rescinded in the event that any of such representations or warranties was not
true and complete in all material respects when given.
19-6. POWER OF ATTORNEY. In connection with all powers of
attorney included in this Agreement, each Borrower hereby grants unto the Agent
full power to do any and all things necessary or appropriate in connection with
the exercise of such powers as fully and effectually as the Borrower might or
could do, hereby ratifying all that said attorney shall do or cause to be done
by virtue of this Agreement. No power of attorney set forth in this Agreement
shall be affected by any disability or incapacity suffered by any Borrower and
each shall survive the same. All powers conferred upon the Agent by this
Agreement, being coupled with an interest, shall be irrevocable until this
Agreement is terminated by a written instrument executed by a duly authorized
officer of the Agent.
19-7. INCREASED COSTS. If, as a result of the adoption of or any
change to any requirement of law, or of the interpretation or application
thereof by any court or by any governmental or other authority or entity charged
with the administration thereof, whether or not having the force of law, which:
(a) subjects any Revolving Credit Lender to any taxes or
changes the basis of taxation, or increases any existing taxes, on
payments of principal, interest or other amounts payable by any
Borrower to the Agent or any Revolving Credit Lender under this
Agreement (except for taxes on the Agent or any Revolving Credit Lender
based on net income or capital imposed by the jurisdiction in which the
principal or lending offices of the Agent or that Revolving Credit
Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by,
or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of any Revolving
Credit Lender (other than reserves and assessments taken into account
in determining the interest rate applicable Eurodollar Loans);
(c) imposes on any Revolving Credit Lender any other condition
with respect to any Loan Document; or
(d) imposes on any Revolving Credit Lender a requirement to
maintain or allocate capital in relation to the Liabilities;
and the result of any of the foregoing, in such Revolving Credit Lender's
reasonable opinion, is to increase the cost to that Revolving Credit Lender of
making or maintaining any loan, advance or financial accommodation or to reduce
the income receivable by that Revolving Credit Lender in respect of any loan,
advance or financial accommodation by an amount which that Revolving Credit
Lender deems to be material, then upon written notice from the Agent, from time
to time, to the Lead Borrower (such notice to set out in reasonable detail the
facts giving rise to and a summary calculation of such increased cost or reduced
income), the Borrowers shall pay to the Agent, for the benefit of the subject
Revolving Credit Lender, within fifteen (15) days of receipt of such notice,
that amount which shall compensate the subject Revolving Credit Lender for such
additional cost or reduction in income, provided, however, no Borrower shall be
liable for any such increased expense incurred or reduction in amount received
by a Revolving Credit Lender where such notice is not given to the Lead Borrower
within 120 days following that date on which the subject Revolving Credit Lender
knew or reasonably should have known of such effect.
19-8. COSTS AND EXPENSES OF THE AGENT
(a) The Borrowers shall pay from time to time on demand all
Costs of Collection and all reasonable costs, expenses, and disbursements
(including attorneys' reasonable fees and expenses) which are incurred by the
Agent in connection with the preparation, negotiation, execution, and delivery
of this Agreement and of any other Loan Documents, and all other reasonable
costs, expenses, and disbursements which may be incurred by the Agent connection
with or in respect to the credit facility contemplated hereby or which otherwise
are incurred with respect to the Liabilities. The Borrowers shall not have any
responsibility to reimburse any Person on account of costs, expenses, and
disbursements (including attorneys' fees and expenses) incurred or paid on
account of a dispute solely amongst and between the Agent and the Revolving
Credit Lenders.
(b) The Borrowers shall pay from time to time on demand all
reasonable costs and expenses (including attorneys' reasonable fees and
expenses) incurred, following the occurrence of any Event of Default, by the
Revolving Credit Lenders to Lenders' Special Counsel.
(c) The Borrowers authorize the Agent, on fifteen (15) days
prior notice (with reasonable particularity) to pay all such fees and expenses
and in the Agent's discretion, to add such fees and expenses to the Loan
Account.
(d) The undertaking on the part of the Borrowers in this
Section 19:19-8 shall survive payment of the Liabilities and/or any termination,
release, or discharge executed by the Agent in favor of any Borrower, other than
a termination, release, or discharge which makes specific reference to this
Section 19:19-8.
19-9. COPIES AND FACSIMILIES. This Agreement and all documents which
relate thereto, which have been or may be hereinafter furnished the Agent or any
Revolving Credit Lender may be reproduced by that Revolving Credit Lender or by
the Agent by any photographic, microfilm, xerographic, digital imaging, or other
process, and such Person making such reproduction may destroy any document so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made in the
regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such
transmission was received.
19-10. MASSACHUSETTS LAW. This Agreement and all rights and
obligations hereunder, including matters of construction, validity, and
performance, shall be governed by the law of The Commonwealth of Massachusetts.
19-11. CONSENT TO JURISDICTION
(a) Each Borrower agrees that any legal action, proceeding,
case, or controversy against any Borrower with respect to any Loan Document may
be brought in the Superior Court of Suffolk County Massachusetts or in the
United States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Agent may elect in the Agent's sole discretion. By
execution and delivery of this Agreement, each Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Borrower WAIVES any objection based on forum non
conveniens and any objection to venue of any action or proceeding instituted
under any of the Loan Documents and consents to the granting of such legal or
equitable remedy as is deemed appropriate by the Court.
(c) Nothing herein shall affect the right of the Agent to
bring legal actions or proceedings in any other competent jurisdiction.
(d) Each Borrower agrees that any action commenced by any
Borrower asserting any claim arising under or in connection with this Agreement
or any other Loan Document shall be brought solely in the Superior Court of
Suffolk County Massachusetts or in the United States District Court, District of
Massachusetts, sitting in Boston, Massachusetts, and that such Courts shall have
exclusive jurisdiction with respect to any such action.
9-12. INDEMNIFICATION. Each Borrower shall indemnify, defend, and
hold the Agent and each Revolving Credit Lender and any of their respective
employees, officers, or agents (each, an "Indemnified Person") harmless of and
from any claim brought or threatened against any Indemnified Person by any
Person (as well as from attorneys' reasonable fees, expenses, and disbursements
in connection therewith) on account of the relationship of any Borrower or of
any other guarantor or endorser of the Liabilities (each of claims which may be
defended, compromised, settled, or pursued by the Indemnified Person with
counsel of the Lender's selection, but at the expense of each Borrower) other
than any claim as to which a final determination is made in a judicial
proceeding (in which the Agent and any other Indemnified Person has had an
opportunity to be heard), which determination includes a specific finding that
the Indemnified Person seeking indemnification had acted bad faith or in a
grossly negligent manner. This indemnification shall survive payment of the
Liabilities and/or any termination, release, or discharge executed by the Agent
in favor of any Borrower, other than a termination, release, or discharge duly
executed on behalf of the Agent which makes specific reference to this Section
19:19-12.
19-13. RULES OF CONSRUCTION. The following rules of construction
shall be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
(a) Unless otherwise specifically provided for herein,
interest and any fee or charge which is stated as a per annum percentage shall
be calculated based on a 365 / 366 day year and actual days elapsed.
(b) Words in the singular include the plural and words in the
plural include the singular.
(c) Each warranty and representation made by any Borrower
which includes reference to an EXHIBIT is made as of the date of this Agreement.
(d) Cross references to Sections in this Agreement begin with
the Article in which that Section appears, followed by a colon, and then the
Section to which reference is made. (For example, a reference to "Section 5:5-6"
is to Section 5-6, which appears in Article 5 of this Agreement).
(e) Titles, headings (indicated by being underlined or shown
in SMALL CAPITALS) and any Table of Contents are solely for convenience of
reference; do not constitute a part of the instrument in which included; and do
not affect such instrument's meaning, construction, or effect.
(f) The words "includes" and "including" are not limiting.
(g) Text which follows the words "including, without
limitation" (or similar words) is illustrative and not limitational.
(h) Text which is shown in italics, shown in bold, shown IN
ALL CAPITAL LETTERS, or in any combination of the foregoing, shall be deemed to
be conspicuous.
(i) The words "may not" are prohibitive and not permissive.
(j) The word "or" is not exclusive.
(k) Any reference to the Borrower's "knowledge" (or words of
similar import) is to the knowledge of the Borrower's Senior Officers.
(l) Terms which are defined in one section of any Loan
Document are used with such definition throughout the instrument in which so
defined.
(m) The symbol "$" refers to United States Dollars.
(n) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(o) References to "this Agreement" or to any other Loan
Document is to the subject instrument as amended to the date on which
application of such reference is being made.
(p) Except as otherwise specifically provided, all references
to time are to Boston time.
(q) In the determination of any notice, grace, or other period
of time prescribed or allowed hereunder:
(i) Unless otherwise provided (I) the day of the act,
event, or default from which the designated period of time begins to
run shall not be included and the last day of the period so computed
shall be included unless such last day is not a Business Day, in which
event the last day of the relevant period shall be the then next
Business Day and (II) the period so computed shall end at 5:00 PM on
the relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but
excluding". (iv) The word "through" means "to and
including".
(r) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section
19:19-14 hereof, provided, however, in the event of any inconsistency between
the provisions of this Agreement and any other Loan Document, the provisions of
this Agreement shall govern and control.
19-14. INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of the security interests created by this
Agreement be broadly construed in favor of the Agent.
(c) The security interests created by this Agreement secure
all Liabilities, whether now existing or hereafter arising.
(d) All reasonable costs, expenses, and disbursements incurred
by the Agent and, to the extent provide in Section 19:19-8 each Revolving Credit
Lender, in connection with such Person's relationship(s) with any Borrower shall
be borne by the Borrowers.
19-15. PARTICIPATIONS. Each Revolving Credit Lender may sell
participations to one or more financial institutions (a "Participant") all or a
portion of such Revolving Credit Lender's rights and obligations under this
Agreement, provided that no such participation shall include any provision which
accords the Person purchasing such participation with the right, vis a vis the
Agent, to consent to any action, amendment, or waiver which is subject to any
requirement herein for approval by all or a requisite number or proportion of
the Revolving Credit Lenders. No such sale of a participation shall relieve a
Revolving Credit Lender from that Revolving Credit Lender's obligations
hereunder nor obligate the Agent to any Person other than a Revolving Credit
Lender.
19-16. RIGHT OF SET-OFF. Any and all deposits or other sums at any
time credited by or due to each Borrower from the Agent or any Revolving Credit
Lender or any Participant or from any Affiliate of any of the foregoing, and any
cash, securities, instruments or other property of each Borrower in the
possession of any of the foregoing, whether for safekeeping or otherwise
(regardless of the reason such Person had received the same) shall at all times
constitute security for all Liabilities and for any and all obligations of each
Borrower to the Agent and such Revolving Credit Lender or any Participant or
such Affiliate and may be applied or set off against the Liabilities and against
such obligations at any time, the same are due and whether or not other
collateral is then available to the Agent or that Revolving Credit Lender.
19-17. PLEDGES TO FEDERAL RESERVE BANKS. Nothing included in this
Agreement shall prevent or limit any Revolving Credit Lender, to the extent that
such Revolving Credit Lender is subject to any of the twelve Federal Reserve
Banks organized under ss.4 of the Federal Reserve Act (12 U.S.C. ss.341) from
pledging all or any portion of that Lender's interest and rights under this
Agreement, provided, however, neither such pledge nor the enforcement thereof
shall release the pledging Revolving Credit Lender from its obligations
hereunder or under any of the Loan Documents.
19-18. MINIMUM INTEREST RATE. Regardless of any provision of any Loan Document,
neither the Agent nor any Revolving Credit Lender shall be entitled to contract
for, charge, receive, collect, or apply as interest on any Liability, any amount
in excess of the maximum rate imposed by applicable law. Any payment which is
made which, if treated as interest on a Liability, would result in such
interest's exceeding such maximum rate shall be held, to the extent of such
excess, as additional collateral for the Liabilities as if such excess were
"Collateral."
19-19. WAIVERS.
(a) Each Borrower (and all guarantors, endorsers, and sureties
of the Liabilities) makes each of the waivers included in Section 19:19-19(b),
below, knowingly, voluntarily, and intentionally, and understands that Agent and
each Revolving Credit Lender, in establishing the facilities contemplated hereby
and in providing loans and other financial accommodations to or for the account
of each Borrower as provided herein, whether not or in the future, is relying on
such waivers.
(b) EACH BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND
SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby,
notice of non-payment, demand, presentment, protest and all forms of
demand and notice, both with respect to the Liabilities and the
Collateral.
(ii) Except as otherwise specifically required
hereby, the right to notice and/or hearing prior to the Agent's
exercising of the Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE AGENT OR ANY REVOLVING CREDIT LENDER IS OR
BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR
AGAINST THE AGENT OR ANY REVOLVING CREDIT LENDER OR IN WHICH THE AGENT
OR ANY REVOLVING CREDIT LENDER IS JOINED AS A PARTY LITIGANT), WHICH
CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP
AMONGST OR BETWEEN ANY BORROWER OR ANY OTHER PERSON AND THE AGENT OR
EACH REVOLVING CREDIT LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY
TRIAL OF ANY SUCH CASE OR CONTROVERSY).
(iv) The benefits or availability of any stay,
limitation, hindrance, delay, or restriction (including, without
limitation, any automatic stay which otherwise might be imposed
pursuant to Section 362 of the Bankruptcy Code) with respect to any
action which the Agent may or may become entitled to take hereunder.
(v) Any defense, counterclaim, set-off, recoupment,
or other basis on which the amount of any Liability, as stated on the
books and records of the Agent, could be reduced or claimed to be paid
otherwise than in accordance with the tenor of and written terms of
such Liability.
(vi) Any claim to consequential, special, or punitive
damages.
The "Lead Borrower and the Borrowers"
HOMEBASE, INC.
(The "LEAD BORROWER" and a "BORROWER")
By___/s/▇▇▇▇▇▇▇ ▇. LANGSDORF_______
Print Name:__William B. Langsdorf__________
Title:__Executive VP and CFO__________
HOMECLUB INC., OF TEXAS
By___/s/▇▇▇▇▇▇▇ ▇. LANGSDORF_______
Print Name:__William B. Langsdorf__________
Title:__Executive VP and CFO__________
HOMECLUB, INC.
By___/s/▇▇▇▇▇▇▇ ▇. LANGSDORF_______
Print Name:__William B. Langsdorf__________
Title:__Executive VP and CFO__________
The "Agent":
BANKBOSTON RETAIL FINANCE INC.
By___/s/▇▇▇▇▇▇▇ MURRAY_____________
Print Name:__Michael Murray________________
Title:__Director______________________
The "Revolving Credit Lenders":
BANKBOSTON RETAIL FINANCE INC.
By___/s/▇▇▇▇▇▇▇ MURRAY_____________
Print Name:__Michael Murray________________
Title:__Director______________________
FOOTHILL CAPITAL CORPORATION
(and as "Documentation Agent")
By___/s/▇▇▇▇ NAKAMOTO______________
Print Name:__Todd Nakamoto_________________
Title:__Vice President________________
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
(and as "Syndication Agent")
By___/s/▇▇▇▇▇▇▇ JONSCHER___________
Print Name:__Richard Jonscher______________
Title:__Vice President________________
CONGRESS FINANCIAL CORPORATION (WESTERN)
By___/s/▇▇▇▇▇▇▇▇▇ ▇. KIEHNE________
Print Name:__Frederick P. Kiehne___________
Title:__Vice President________________
BANK OF AMERICA, N.A.
By___/s/▇▇▇▇ WHITAKER______________
Print Name:__Gary Whitaker_________________
Title:__Vice President________________
UNION BANK OF CALIFORNIA, N.A.
By___/s/▇▇▇▇ ▇. ENNIS______________
Print Name:__Greg F. Ennis_________________
Title:__Vice President________________
LASALLE BUSINESS CREDIT, INC.
By___/s/▇▇▇▇▇ ▇. WILSON____________
Print Name:__David G. Wilson_______________
Title:__Vice President________________