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Exhibit 12
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LOAN AND SECURITY AGREEMENT
AMONG
CITICORP USA, INC.
AND THE OTHER PARTIES HERETO IDENTIFIED AS LENDERS BELOW,
AS LENDERS,
CITICORP USA, INC.,
AS AGENT FOR THE LENDERS,
AND
▇▇▇ ▇▇▇▇ MARKETING, INC.,
JBM RETAIL COMPANY, INC.,
AND
MAYOR'S JEWELERS, INC.,
AS BORROWERS
CLOSING DATE: JULY 28, 1998
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS.................................................................2
1.1. Defined Terms...............................................................2
1.2. Accounting Terms...........................................................25
1.3. Other Terms................................................................25
1.4. Construction and Interpretation............................................25
SECTION 2. CREDIT FACILITY............................................................26
2.1. Revolver Facility..........................................................26
2.2. Termination of Revolver Facility...........................................29
2.3. Increase of Revolver Facility..............................................29
2.4. Periodic Reductions in Revolver Loans......................................30
2.5. One Obligation.............................................................30
SECTION 3. INTEREST, FEES AND REPAYMENT...............................................30
3.1. Interest, Fees and Charges.................................................30
3.2. Payments and Prepayments ..................................................36
SECTION 4. REPRESENTATIONS AND WARRANTIES.............................................38
4.1. General Representations and Warranties.....................................38
4.2. Reaffirmation..............................................................43
4.3. Survival of Representations and Warranties.................................43
SECTION 5. COVENANTS AND CONTINUING AGREEMENTS........................................43
5.1. Affirmative Covenants......................................................43
5.2. Negative Covenants.........................................................48
5.3. Financial Covenants........................................................52
SECTION 6. COLLATERAL.................................................................53
6.1. Grant of Security Interest.................................................53
6.2. Representations, Warranties and Covenants -- Collateral Generally..........53
6.3. Lien Perfection............................................................54
6.4. Location of Collateral.....................................................54
6.5. Insurance of Collateral....................................................55
6.6. Protection of Collateral...................................................55
6.7. Special Provisions Relating to Accounts....................................55
6.8. Special Provisions Relating to Inventory...................................57
6.9. Special Provisions Relating to Equipment...................................57
6.10. Special Provisions Relating to Realty......................................58
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SECTION 7. EVENTS OF DEFAULT AND REMEDIES ON DEFAULT..................................58
7.1. Events of Default..........................................................58
7.2. Acceleration of the Obligations............................................60
7.3. Other Remedies.............................................................61
7.4. License to Use.............................................................62
7.5. Remedies Cumulative; No Waiver.............................................62
7.6. Limitation on the Agent's Duty in Respect of Collateral....................62
SECTION 8. MISCELLANEOUS..............................................................62
8.1. Power of Attorney..........................................................62
8.2. Indemnity..................................................................63
8.3. Amendments and Waivers.....................................................64
8.4. Reimbursement of Expenses..................................................65
8.5. Indulgences Not Waivers....................................................66
8.6. Severability...............................................................66
8.7. Successors and Assigns.....................................................66
8.8. Cumulative Effect..........................................................66
8.9. Execution in Counterparts..................................................66
8.10. Notices....................................................................67
8.11. Consents...................................................................67
8.12. Time of Essence............................................................67
8.13. Entire Agreement...........................................................67
8.14. Interpretation.............................................................67
8.15. Marshalling; Payments Set Aside............................................67
8.16. Construction...............................................................68
8.17. Governing Law; Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial.......................................................68
8.18. Publicity..................................................................69
8.19. Effectiveness..............................................................69
8.20. Sole Benefit...............................................................69
8.21. General Waivers by Each Borrower...........................................69
8.22. Independence of Covenants..................................................69
8.23. Headings...................................................................69
8.24. No Fiduciary Relationship..................................................70
8.25. Limitation of Liability....................................................70
8.26. No Duty....................................................................70
8.27. Maximum Interest...........................................................70
8.28. Joint and Several Liability................................................71
8.29. Confidentiality............................................................72
8.30. Replacement of Lender......................................................72
8.31. Release....................................................................73
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SECTION 9. AGENCY.....................................................................73
9.1. Assignments and Participations in Revolver Loans and Notes.................73
9.2. Agent......................................................................74
9.3. [INTENTIONALLY NOT USED]...................................................78
9.4. Set Off and Sharing of Payments............................................78
9.5. Disbursement of Funds......................................................78
9.6. Disbursements of Advances, Payments and Information........................79
9.7. Defaulting Lender's Status.................................................81
SECTION 10. CONDITIONS PRECEDENT.......................................................82
10.1. Conditions to Initial Revolver Loans.......................................82
10.2. Conditions to All Revolver Loans...........................................84
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of the 28th day of July,
1998 (the "Closing Date"), by and among the parties hereto identified as
"Lenders" on the signature page(s) to this Agreement, and their permitted
successors and assigns (collectively, the "Lenders" and each, individually, a
"Lender"), each with an office at the address specified on its signature page to
this Agreement; CITICORP USA, INC., a Delaware corporation with an office at the
address specified on its signature page to this Agreement (herein, in its
individual capacity, called "Citicorp"), for itself, as a Lender, and as agent
for itself and each other Lender from time to time party hereto (herein, in such
capacity as agent, called "Agent"); ▇▇▇ ▇▇▇▇ MARKETING, INC., a Delaware
corporation with its chief executive office and principal place of business at
the address specified on its signature page to this Agreement ("▇▇▇ ▇▇▇▇"),
individually and as "Borrowers' Agent", as defined below; JBM RETAIL COMPANY,
INC., a Delaware corporation with its chief executive officer and principal
place of business at the address specified on the signature page to this
Agreement ("JBM"); and MAYOR'S JEWELERS, INC., a Florida corporation with its
chief executive office and principal place of business at the address specified
on its signature page to this Agreement ("Mayor's") (▇▇▇ ▇▇▇▇, JBM and Mayor's
hereinafter referred to collectively as the "Borrowers" and each individually as
a "Borrower").
PREAMBLE. Capitalized terms used in this Preamble have the meanings
assigned to them in the opening paragraph hereof or in Section 1 below. Pursuant
to the Purchase Agreement, Sellers have agreed to sell to ▇▇▇ ▇▇▇▇, and ▇▇▇ ▇▇▇▇
has agreed to purchase from Sellers, up to one hundred percent (100%) of the
Outstanding Shares, Equity Rights and Option Shares of Mayor's in exchange for
payment by ▇▇▇ ▇▇▇▇ of the Purchase Price and the Debt Settlement Amount.
Pursuant to the Merger Agreement, immediately following the consummation of such
purchase, the Merger Subsidiary will be merged with and into Mayor's with
Mayor's as the surviving corporation, and as a result of such merger the
Outstanding Shares acquired by ▇▇▇ ▇▇▇▇ pursuant to the Purchase Agreement and
any treasury shares owned by Mayor's or any of its Subsidiaries will be
canceled, any Outstanding Shares owned by Persons other than ▇▇▇ ▇▇▇▇, other
than any Dissenting Shares, will be converted into the right to receive the
Merger Consideration, any Dissenting Shares shall be entitled to the rights
described in Section 1.09 of the Merger Agreement, any outstanding Equity Rights
and Option Shares shall be cancelled and the holders thereof shall receive the
consideration described in Section 1.08 of the Merger Agreement and the
outstanding stock of the Merger Subsidiary will be converted into an equal
number of shares of the stock of Mayor's issued by Mayor's, as the surviving
corporation, immediately following consummation of such merger, such that after
giving effect to such merger, ▇▇▇ ▇▇▇▇ will be the owner of one hundred percent
(100%) of the issued and outstanding stock of Mayor's. In connection with the
consummation of such transactions, Borrowers desire to enter with the Agent and
Lenders into this Agreement pursuant to which, subject to the terms and
conditions set forth herein, Lenders will establish for Borrowers the Revolver
Facility, the proceeds of which will be used by ▇▇▇ ▇▇▇▇, initially, together
with its cash on hand, to pay the Purchase Price, the Debt Settlement Amount,
the Merger Consideration and transaction costs, and, thereafter, by Borrowers,
for working capital, capital expenditures and general corporate purposes. From
and after the consummation of the transactions contemplated by the Purchase
Agreement, Borrowers will conduct their businesses as a common
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enterprise, such that financial accommodations to one Borrower will inure to the
direct and material benefit of the other Borrowers. Therefore, Borrowers have
determined that it is in their mutual economic interests to apply to Lenders on
a joint basis for the Revolver Facility hereunder, and, in furtherance thereof,
Borrowers hereby appoint ▇▇▇ ▇▇▇▇ to act as agent for all Borrowers in
connection with requests for, the receipt, disbursement, allocation and
administration of, and the repayment of, the extensions of credit to be provided
under the Revolver Facility.
In consideration of the agreements, provisions and covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrowers, Lenders and Agent agree
as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. When used in this Agreement, the following
terms shall have the following meanings:
"Account Debtor" - any Person who is or may become obligated on or
under an Account.
"Accounts" - shall have the meaning ascribed to "accounts" under
Article 9 of the Code. The term "Accounts" is more particularly defined and
described in the Collateral Schedule.
"Active Subsidiaries" - collectively, each of the Guarantor
Subsidiaries and the Israeli Subsidiary and, when the reference is to the Active
Subsidiaries of ▇▇▇ ▇▇▇▇, Mayor's and JBM.
"Affiliate" - as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or (b)
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.
"Aged Eligible Inventory" - Inventory of ▇▇▇ ▇▇▇▇ or JBM which is more
than one year old but which is not excluded from Eligible Inventory pursuant to
the operation of clause (iv) of the definition thereof or otherwise.
"Agent" - Citicorp, acting in its capacity as agent for the Lenders
under this Agreement; and includes any successor agent acting in such capacity
appointed pursuant to Section 9.2.
"Agent's Letter Agreement" - the letter agreement, dated on or prior to
the Closing Date, between the Agent and Borrowers.
"Agreement" - this Loan and Security Agreement, as it may be modified
or amended from time to time. The term "Agreement," as used herein, shall
include all Schedules, Exhibits, Annexes
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and Appendices hereto, and all amendments or modifications hereof, and shall
refer to this Agreement as the same shall be in effect at the time such
reference becomes operative.
"Applicable Law" - all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or Loan Documents in question, including,
but not limited to, all applicable common law and equitable principles; all
provisions of all applicable federal, state, and local constitutions, statutes,
rules, regulations and orders of governmental bodies; and all orders, judgments
and decrees of all courts and arbitrators. The term "Applicable Law" shall
include all Environmental Laws and all consumer credit laws and regulations.
"Authorized Officer" as to each Borrower, means the chief executive
officer, chief operating officer or chief financial officer of such Borrower,
any vice president of such Borrower on the Closing Date and such other officers
or representatives of such Borrower as such Borrower may nominate, and Agent may
approve from time to time for purposes hereof.
"Average Leverage Ratio" - for any Fiscal Quarter of ▇▇▇ ▇▇▇▇ and its
Consolidated Subsidiaries, the quotient of (a) the average of the Consolidated
Funded Debt outstanding on each day during such Fiscal Quarter, divided by (b)
Consolidated EBITDA for the four (4) Fiscal Quarters ending with the end of such
Fiscal Quarter.
"Bank Agency Agreement" - an agreement, reasonably satisfactory in form
and substance to Agent, among Agent, a Borrower and each bank at which such
Borrower maintains depository accounts respecting the manner of receipt,
collection and disposition of funds of such Borrower constituting proceeds from
the sale of Inventory, the collection of Accounts and the disposition of other
Collateral and to include, in any event, a waiver by such bank of any rights
against funds deposited in accounts which are the subject of such agreement and
an agreement to remit funds in such accounts to such account as Agent shall
direct for application to the Obligations. Without limitation, the foregoing
shall include "blocked account" agreements, "agency" agreements and "lockbox"
agreements.
"Bankruptcy Code" - Title 11 of the United States Code entitled
"Bankruptcy," as amended from time to time and all rules and regulations related
thereto.
"Base Margined Rate" - with respect to each day on which a Base Rate
Loan is outstanding, a rate per annum equal to the Base Rate plus the applicable
Interest Margin.
"Base Rate" - a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the highest of: (i)
the rate of interest publicly announced from time to time by Citibank in New
York, New York as the base rate of Citibank; (ii) one-half of one percent (1/2%)
per annum above the Federal Funds Rate; and (iii) the sum (adjusted to the
nearest one-fourth of one percent (1/4%) per annum or, if there is no nearest
one-fourth of one percent (1/4%) per annum, to the next higher one-fourth of one
percent (1/4%) per annum) of (a) one-half of one percent (1/2%) per annum, plus
(b) the rate obtained by dividing (1) the latest three-week
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moving average of secondary market morning offering rates in the United States
for three-month certificates of deposit of major United States money center
banks, such three-week moving average (adjusted to the basis of a year of 360
days) being determined weekly on each Monday (or if any such day is not a
Business Day, on the next Business Day) for the three-week period ending on the
previous Friday by Citibank on the basis of such rates reported by certificate
of deposit dealers to and published by the Federal Reserve Bank of New York, or
if such publication shall be suspended or terminated, on the basis of quotations
for such rates received by Citibank from three (3) New York certificate of
deposit dealers of recognized standing selected by Citibank, by (2) a percentage
equal to one hundred percent (100%) minus the average of the daily percentages
specified during such three-week period by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental or other
marginal reserve requirement) of Citibank in respect of liabilities consisting
of or including (among other types of liabilities) three-month U.S. Dollar
non-personal time deposits in the United States; plus (c) the average during
such three-week period of the annual assessment rates during such three-week
period estimated by Citibank for determining the then current annual assessment
payable by Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. Dollar deposits of Citibank in the United States.
"Base Rate Loans" - Revolver Loans bearing interest at rates determined
by reference to the Base Rate.
"Borrower" or "Borrowers" - has the meaning assigned to it in the
opening paragraph of this Agreement.
Borrowers' Agent" - means ▇▇▇ ▇▇▇▇ Marketing, Inc., when acting in such
capacity hereunder.
"Borrowing Availability" - at any date, an amount equal to the sum of
(i) up to seventy-five percent (75%), of the net amount of Eligible Accounts of
Borrowers outstanding at such date plus (ii) up to sixty-five percent (65%) of
the value of Eligible Inventory of Borrowers at such date, calculated on the
basis of the lower of cost or market value, with cost calculated on a first in,
first out basis, and with the exact percentages within such range applicable to
various types of Eligible Inventory of each Borrower to be determined by the
Agent from time to time (as to which indicative initial percentages are
specified below in this definition); less (iii) Reserves. For purposes hereof,
the "net amount of Eligible Accounts" at any time shall be the face amount of
such Eligible Accounts less any and all returns, rebates, discounts (which may,
at Agent's option, may be calculated on shortest terms), credits, allowances,
sales or excise taxes of any nature at any time issued, owing, claimed, granted,
outstanding or payable in connection with such Accounts at such time. Indicative
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percentages to be applied against various types of Eligible Inventory in
determining Borrowing Availability are as follows:
Inventory Type Indicative Percentage
--------------------------------- --------------------------
Mayor's
-------
Eligible Inventory Up to 65%
(exclusive of jewelry parts and
watch parts)
Eligible Inventory Up to 55%
consisting of jewelry parts
Eligible Inventory Up to 40%
consisting of watch parts
▇▇▇ ▇▇▇▇ and JBM
----------------
Eligible Inventory Up to 60%
consisting of diamond jewelry
Eligible Inventory Up to 55%
consisting of colored stone jewelry
Eligible Inventory Up to 60%
consisting of gold jewelry
Eligible Inventory Up to 45%
consisting of watches
Eligible Inventory Up to 50%
consisting of fragrance
Eligible Inventory Up to 40%
consisting of sunglasses
Eligible Inventory Up to 45%
consisting of collectibles
Aged Eligible Inventory Up to 20%
In the event that the remaining term of the Sam's Club Agreement is
ever less than twelve (12) months (except to the extent that a provision for
unconditional and automatic renewal at expiration for a period of at least
twelve (12) months is then included in such Agreement), then, commencing on the
first day of the first calendar quarter occurring after such remaining term
becomes less than twelve (12) months and continuing on the first day of each
calendar quarter thereafter for so long as such remaining term continues to be
less than twelve (12) months, the
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advance rates against all types of Inventory of ▇▇▇ ▇▇▇▇ and JBM shall each
reduce by ten percent (10%) per calendar quarter; provided, however, that upon
▇▇▇ ▇▇▇▇'▇ and JBM's obtaining of an extension or renewal of the Sam's Club
Agreement for a term of at least twelve (12) months on terms and conditions
satisfactory to the Agent, such reductions shall be reversed (but shall be
subject to reinstatement in the event that the remaining term of the Sam's Club
Agreement is again less than twelve (12) months).
Borrowers acknowledge that the advance rates against Eligible Accounts
and Eligible Inventory provided for in this definition have been established
based upon the Agent's determination of the values of Borrowers' Eligible
Accounts and Eligible Inventory as of the Closing Date, and that, without
limitation of the other rights of the Agent regarding the establishment and
reduction of advance rates set forth herein, the Agent may, at any time or times
hereafter, based upon the Agent's customary credit considerations, reduce such
rates to reflect any material adverse change in such loan values not reflected
in the criteria for determining Eligible Account and Eligible Inventory set
forth in the definitions thereof. Any such reduction shall become effective ten
(10) days after the Agent gives written notice thereof to Borrower's Agent.
"Borrowing Base" - at any date of determination thereof, an amount
equal to the lesser of: (a) the Commitment, minus the aggregate amount of all
Letters of Credit outstanding at such date; or (b) Borrowing Availability.
"Borrowing Base Certificate" - a certificate, appropriately completed
and in substantially the form of Exhibit "A", issued by an Authorized Officer of
Borrowers' Agent in respect of the Borrowing Base pursuant to Section 5.1(I).
"Business Day" - any day that is not a Saturday, Sunday or a legal
holiday on which banks are authorized or required to be closed in New York, New
York, and, with respect to all notices, determinations, fundings and payments in
connection with LIBOR Rate Loans, any day that is a Business Day described above
and that is also a day for trading by and between banks in Dollar deposits in
the applicable interbank LIBOR market.
"Capital Expenditures" - has the meaning ascribed to it under GAAP.
"Capital Lease" - any lease of Property which would be capitalized on
the lessee's balance sheet or for which the amount of the asset or liability
thereunder, if so capitalized, should be disclosed in a note to such balance
sheet.
"Capitalized Lease Obligation" - any Indebtedness represented by
obligations under a Capital Lease, and the amount of such Indebtedness shall be
the capitalized amount of such obligations.
"Charges" - all taxes, assessments, levies, claims or charges upon a
Borrower, its income or sales, or any of its properties imposed by any
Governmental Authority.
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"Chattel Paper" - shall have the meaning ascribed to "chattel paper"
under Article 9 of the Code.
"Citibank" - means Citibank, N.A., a national banking association.
"Citicorp" - has the meaning ascribed to it in the opening paragraph of
this Agreement.
"Closing Date" - has the meaning assigned to it in the opening
paragraph of this Agreement.
"Code" - the Uniform Commercial Code as adopted and in force from time
to time in the State of New York.
"Collateral" - all of the following described types of Property and
interests in Property of each Borrower, whether now owned or existing or
hereafter created, acquired or arising and wherever located: (A) all Accounts;
(B) all Chattel Paper; (C) all Documents; (D) all Instruments; (E) all
Inventory; (F) all Equipment; (G) all General Intangibles; (H) all monies and
other Property of any kind, now or at any time or times hereafter, in the
possession or under the control of Agent or a bailee of Agent; (I) all
Investment Property; (J) all bank accounts, including, without limitation, all
bank accounts subject to blocked account agreements, lockbox account agreements
or other similar agreements; and (K) all Products and Proceeds of the Property
described in (A) through (J) above, including, without limitation, Proceeds of
and unearned premiums with respect to insurance policies insuring any of the
Collateral and claims against any Person for loss of, damage to, or destruction
of any or all of the foregoing; all as more particularly set forth and described
in the Collateral Schedule. The term "Collateral" shall also include Real
Property in which, pursuant to the requirements of Section 6.10 hereof, a Lien
has been granted to or for the benefit of Agent, all capital stock pledged to
Agent pursuant to the Stock Pledge Agreement, all Property of each Guarantor
Subsidiary in which Agent is granted a security interest pursuant to the
Subsidiary Guaranty and all other property of each Borrower or any Subsidiary in
which Agent is presently or hereafter granted a Lien as security for the
Obligations.
"Collateral Location" - means Borrowers' chief executive office and
each store, distribution center, warehouse or other location, whether owned or
leased by a Borrower or a Guarantor Subsidiary or otherwise, at which any
Collateral is situated at any time or from time to time.
"Commercial Account Debtor" - mean any Account Debtor other than a
Consumer Account Debtor.
"Commitment" or "Commitments" - means (a) as to any Lender, the
commitment of such Lender to make available its Pro Rata Share of the Revolver
Loans under the Revolver Facility and to purchase its Pro Rata Share of
participations in Letter of Credit Liability and (b) as to all Lenders, the
aggregate commitment of all Lenders to make available their Pro Rata Shares of
Revolver Loans and to purchase their Pro Rata Shares of participations in Letter
of Credit Liability.
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"Compliance Certificate" - means a certificate, appropriately completed
and substantially in the form of Exhibit "B", issued by an Authorized Officer of
Borrowers' Agent in respect of Borrowers' continuing compliance with this
Agreement pursuant to Section 5.1(H).
"Consolidated" - the consolidation of the accounts or other items as to
which such term applies.
"Consumer Account Debtor" - shall mean an individual Account Debtor who
makes purchases of Inventory from a Borrower on a revolving credit or
installment sales basis.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (a) with respect to
any Indebtedness or other liability or obligation of another Person; (b) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (c) under
Interest Rate Agreements; (d) under any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect that
Person against fluctuations in currency values; (e) under any "take or pay,"
"guaranteed purchase," "sale or return" or similar arrangement, or (f) with
respect to any employee welfare benefit plan covering retired or terminated
employees and their beneficiaries.
"Cross-Corporate Guaranty" - means, collectively, the Guaranty
Agreements, dated as of the Closing Date, pursuant to which each Borrower shall
guaranty to the Agent and Lenders the payment and performance of the Obligations
of the other Borrowers.
"Debt Settlement Amount" - shall have the meaning ascribed to such term
in the Purchase Agreement.
"Default" - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of Default.
"Default Rate" - a fluctuating rate per annum of two percent (2%) above
the Base Margined Rate.
"Dissenting Shares" - shall have the meaning ascribed to such term in
the Merger Agreement.
"Distribution" - (a) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of a Borrower or any of
its Subsidiaries now or hereafter outstanding, except a dividend payable solely
in shares of that class of stock to the holders of that class; (b) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of stock of a Borrower or any of its Subsidiaries now or hereafter
outstanding; (c) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
stock of a Borrower or any of its Subsidiaries now or hereafter outstanding; (d)
any payment by a Borrower
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or any of its Subsidiaries of any management fees or similar fees whether
pursuant to a management agreement or otherwise; and (e) any payment or
prepayment of principal of, premium (if any) or interest on, or any redemption,
conversion, exchange, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Subordinated Debt.
"Document" - shall have the meaning ascribed to "document" under
Article 9 of the Code.
"Dollars" - and the sign "$" refer to currency of the United States of
America.
"EBITDA" - as applied to any Person, means, for any period, such
Person's Net Income, plus (a) Interest Expense paid or accrued, (b) expenses for
income or franchise taxes paid or accrued, and (c) amortization and depreciation
deducted in determining Net Income, provided that in calculating Net Income of a
Person for the purpose of determining EBITDA of such Person there shall be
excluded therefrom: (i) any gain or loss arising from the sale of capital
assets; (ii) any gain or loss arising from any write-up or write-down of assets;
(iii) all earnings of any Subsidiary accrued prior to the date it became a
Subsidiary; (iv) all earnings of any entity substantially all the assets of
which have been acquired in any manner by such Person, realized by such entity
prior to the date of such acquisition; (v) all net earnings of any entity (other
than a Subsidiary) in which such Person has an ownership interest unless such
net earnings have actually been received by such Person in the form of cash
distributions; (vi) any portion of the net earnings of any Subsidiary which for
any reason is unavailable for payment of dividends to such Person; (vii) all
earnings of any other Person to which any assets of such Person have been sold,
transferred or disposed of, or into which such Person has merged, or with which
such Person has been a party to any consolidation or other form of
reorganization, prior to the date of such transaction; (viii) any gain arising
from the acquisition of any Securities of such Person; and (ix) any gain (or
loss) arising from extraordinary or nonrecurring items.
"Eligible Account" - an Account arising in the ordinary course of a
Borrower's business from the sale of Inventory or rendition of services which
Agent, in its reasonable discretion based upon customary credit considerations
of Agent, deems to be an Eligible Account. Without limiting the generality of
the foregoing, no Account of a Borrower is to be an Eligible Account if: (i) it
arises out of a sale made by such Borrower to a Subsidiary or an Affiliate of
such Borrower or to a Person controlled by an Affiliate of such Borrower; (ii)
with regard to any Account owing from a Consumer Account Debtor, more than two
(2) consecutive installments in respect of any Account of such Account Debtor
are past due; (iii) with regard to any Account owing from a Commercial Account
Debtor, it is unpaid more than ninety (90) days after the original invoice due
date; (iv) fifty percent (50%) or more of the Accounts from the Account Debtor
are not deemed Eligible Accounts hereunder; (v) any covenant, representation or
warranty contained in this Agreement with respect to such Account has been
breached; (vi) the Account Debtor is also such Borrower's creditor or supplier,
or has disputed liability with respect to such Account, or the Account otherwise
is subject to any right of setoff by the Account Debtor, to the extent of the
amount of any offset, dispute or claim; (vii) the Account Debtor has commenced a
voluntary case under the Bankruptcy Code, or made an assignment for the benefit
of creditors, or a decree or order for relief has been entered by
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a court having jurisdiction in the premises in respect of the Account Debtor in
an involuntary case under the Bankruptcy Code or any other petition or other
application for relief under the Bankruptcy Code has been filed against the
Account Debtor, or if the Account Debtor has failed, suspended business, ceased
to be Solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs; (viii) it arises from a sale to an Account Debtor outside the
United States; (ix) it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or
any other repurchase or return basis or the Account otherwise does not represent
a final sale; (x) Agent, in its reasonable discretion based upon customary
credit considerations of Agent, believes that collection of such Account is
insecure or that payment thereof is doubtful or will be delayed by reason of the
Account Debtor's financial condition; (xi) the Account Debtor is the United
States of America or any department, agency or instrumentality thereof; (xii)
the Account Debtor is located in any state in which such Borrower is deemed to
be doing business under the laws of such state and which denies creditors access
to its courts in the absence of qualification to transact business in such state
or of the filing of any reports with such state, unless such Borrower has
qualified as a foreign corporation authorized to transact business in such state
or has filed all required reports; provided, however, that Accounts which would
otherwise be excluded from eligibility pursuant to this clause (xii) shall not
be excluded (if otherwise constituting Eligible Accounts) if and to the extent
that the aggregate amount of such Accounts does not exceed One Hundred Thousand
Dollars ($100,000) at any time and the Agent has established a Reserve in regard
thereto in the amount of such Accounts; (xiii) it arises from the sale of
Inventory which is consigned to a Borrower and the consignor has or claims a
Lien therein; (xiv) Agent does not have a duly perfected first priority security
interest therein or the Account is otherwise subject to any Lien, other than a
Permitted Lien; (xv) the total unpaid Accounts of the Account Debtor exceed a
credit limit determined by Agent, in its reasonable discretion based upon
customary credit considerations of Agent, to the extent such Account exceeds
such limit; (xvi) the Account is evidenced by Chattel Paper or an Instrument, or
has been reduced to judgment; (xvii) such Borrower has made any agreement with
the Account Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for prompt payment
and which discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account; (xviii) the sale is on layaway or
other similar basis; (xix) any part of the good giving rise to such Account have
been returned, rejected, lost or damaged, but only to the extent of any credit,
discount or allowance given as a result of such return, rejection, loss or
damage; (xx) the Accounts of the Account Debtor (other than Sam's Club, if it is
an Account Debtor) exceed twenty percent (20%) of the Accounts of a Borrower
(but such Accounts shall be ineligible only to the extent by which they exceed
such twenty-percent (20%) limitation) or (xxi) the Account is due from a credit
card clearing house.
"Eligible Assignee" shall mean (A) any Federal Reserve Bank, acting as
collateral assignee in accordance with Section 9.1(B), (B) a commercial bank
organized under the laws of the United States, or any State thereof, and having
a combined capital and surplus of at least $100,000,000; (C) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ("OECD"), or a political
subdivision of any such country, and having a combined capital and surplus of at
least $1,000,000,000, provided
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that such bank is acting through a branch or agency located in OECD or the
United States, and (D) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of
a Person of which a Bank is a Subsidiary, or (iii) a Person of which a Bank is a
Subsidiary.
"Eligible Inventory" - such Inventory of a Borrower which Agent, in its
reasonable discretion based upon customary credit considerations of Agent, deems
to be Eligible Inventory. Without limiting the generality of the foregoing, no
Inventory of a Borrower is to be Eligible Inventory unless it (i) is in such
Borrower's possession and control or, in the case of Inventory of JBM, it is
located at a Sam's Club Warehouse in accordance with the provisions of the Sam's
Club Agreement, (ii) is finished goods held for sale or watch parts held by
Mayor's for use in making repairs; (iii) is readily marketable and saleable in
its current form, in the normal course of such Borrower's business at prices at
least equal to the cost thereof, (iv) is in good, new condition and is not
obsolete or unmerchantable, (v) is not goods returned to such Borrower by or
repossessed from an Account Debtor or goods taken in trade, in each case that
are not in merchantable condition, (vi) meets all standards imposed by any
Governmental Authority, (vii) conforms in all respects to the covenants,
warranties and representations set forth in this Agreement, (viii) is at all
times subject to Agent's duly perfected, first priority security interest and no
other Lien, except a Permitted Lien, (ix) is situated at a Collateral Location
within the United States of America or its territories which have adopted the
Uniform Commercial Code and which is listed and described in the Location and
Real Property Schedule or is an additional Collateral Location as to which the
applicable Borrower has complied with the requirements of Section 6.4, (x) is
not located at any Collateral Location which is leased or which belongs to any
warehouseman or other third party, unless a Lien Waiver has been executed by
such Person or the Agent has imposed a Reserve for rentals in an amount
determined by it to be appropriate in its reasonable discretion based on
customary credit considerations of Agent, (xi) is not in-transit (other than
Inventory which is in transit from one Collateral Location described in clause
(ix) hereof to another such Collateral Location), and (xii) is owned by such
Borrower and not held by it on consignment or other similar terms.
"Environmental Laws" - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to environmental clean up, pollution, toxic waste or other
environmental matters.
"Environmental Liens" - Liens in favor of any Governmental Authority
arising under or in connection with any Environmental Law.
"Equipment" - shall have the meaning ascribed to such term and the term
"fixtures" under Article 9 of the Code. The term "Equipment" is more
particularly defined and described in the Collateral Schedule.
"Equity Rights" - shall have the meaning ascribed to such term in the
Purchase Agreement.
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"Escrow Agreement" - the Escrow Agreement, dated as of July 28, 1998,
among ▇▇▇ ▇▇▇▇, Sellers and the escrow agent named therein.
"Event of Default" - as defined in Section 7 of this Agreement.
"Expiry Date" - July 28, 2003.
"Existing Mayor's Loan Agreement" - the Third Amended and Restated Loan
Agreement dated as of June 30, 1995, as amended, among Mayor's, the financial
institutions named therein, Citibank, and Citicorp North America, Inc., as
agent.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with member banks of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three (3) federal funds brokers of
recognized standing selected by it.
"Financial Statements" - the financial statements for each Borrower
described in and attached to the Financial and Contingency Schedule.
"Fiscal Year" means the 52/53 week accounting period of ▇▇▇ ▇▇▇▇ and
its Consolidated Subsidiaries ending on the Saturday closest to January 31 of
each calendar year, except that with respect to the Israeli Subsidiary and the
Mexican Subsidiary, Fiscal Year shall mean the twelve (12) month period ending
on each December 31. As used herein, "Fiscal Quarter" and "Fiscal Month" shall
have correlative meanings.
"Fixed Charge Coverage" shall mean for any Fiscal Quarter of ▇▇▇ ▇▇▇▇
and its Consolidated Subsidiaries, the quotient of (a) Consolidated EBITDA for
the four (4) Fiscal Quarters ending with the end of such Fiscal Quarter minus
Capital Expenditures made and taxes paid in cash during such period to (b)
Consolidated Interest Expense for the four (4) Fiscal Quarters ending with the
end of such Fiscal Quarter.
"Funded Debt" - for any Person, the sum of long-term debt, short-term
debt for borrowed money and Capitalized Lease Obligations shown on the balance
sheet of such Person.
"Funding Date" - the date on which a Revolver Loan is disbursed or a
Letter of Credit Liability is incurred.
"GAAP" - generally accepted accounting principles in the United States
of America in effect from time to time.
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"General Intangibles" - shall have the meaning ascribed to "general
intangibles" under Article 9 of the Code. The term "General Intangibles" is more
particularly defined and described in the Collateral Schedule.
"Governmental Authority" means any nation or government or federal,
state, county, province, canton, city, town, municipality, local or other
political subdivision thereof, and any department, commission, agency or
instrumentality exercising executive, legislative, judicial, regulatory or
administrative function of or pertaining to government.
"Guarantor" - each Guarantor Subsidiary and each Person who may
hereafter guarantee payment or performance of the whole or any part of the
Obligations pursuant to a Guaranty Agreement.
"Guarantor Subsidiaries" - collectively, each of the Subsidiaries of
▇▇▇ ▇▇▇▇ identified as such on the Corporate Information Schedule, together with
each Subsidiary of ▇▇▇ ▇▇▇▇ which executes a Subsidiary Guaranty in favor of the
Agent pursuant to Section 5.2(A) or 5.2(J) hereof. "Guarantor Subsidiary" -- any
one of the foregoing.
"Guaranty Agreement" - any contract of guaranty, endorsement or
suretyship pursuant to which any Guarantor shall oblige itself to pay or perform
all or any portion of the Obligations.
"Inactive Subsidiaries" - those subsidiaries of ▇▇▇ ▇▇▇▇ listed in
Section 1 of the Corporate Information Schedule which are not Active
Subsidiaries or Borrowers.
"Indebtedness" - as applied to a Person means, without duplication (i)
indebtedness for borrowed money; (ii) indebtedness, whether or not in any such
case the same was for borrowed money, (A) which is represented by notes payable
or drafts accepted that evidence extension of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, (C)
upon which interest charges are customarily paid (other than accounts payable)
or that was issued or assumed as full or partial payment for Property or (D)
which is secured by a Lien on any Property of the obligor; (iii) indebtedness
that constitutes a Capitalized Lease Obligation; (iv) indebtedness under any
agreement or obligation to reimburse the issuer of any letter of credit or
similar facility for amounts paid by the issuer on account of such letter of
credit or similar facility; (v) any obligation owed for all or any part of the
deferred purchase price of property or services if the purchase price is due
more than six (6) months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; (vi) all obligations under
any Interest Rate Agreement; and (vii) indebtedness under any guaranty of any
obligations that would constitute Indebtedness under clauses (i) through (vi)
hereof.
"Instrument" - shall have the meaning ascribed to "instrument" under
Article 9 of the Code.
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"Interest Expense" - the aggregate of all interest paid or accrued by a
Person, including, without limitation, all interest, fees and costs payable with
respect to Indebtedness (other than fees and costs that may be capitalized as
transaction costs in accordance with GAAP).
"Interest Margin" - an interest rate per annum, to be added to the Base
Rate or the LIBOR Rate, as the case may be, in order to determine, respectively,
the Base Margined Rate and the LIBOR Margined Rate, which, initially (i) for
Base Rate Loans, shall be one-fourth of one percent (1/4%) per annum, and (ii)
for LIBOR Rate Loans, shall be one and one-half percent (1 1/2%) per annum;
provided, however, that, commencing with ▇▇▇ ▇▇▇▇'▇ Fiscal Quarter ending on or
about January 31, 1999 and continuing at all times thereafter, the "Interest
Margin" shall be determined (and adjusted, as appropriate) by Agent quarterly
from the financial statements delivered to Agent pursuant to Section 5.1 for the
Fiscal Quarter then most recently ended, with each such determination to be
effective as of the first day of the second Fiscal Month following the end of
such Fiscal Quarter and with such determination to remain effective until the
first day of the second Fiscal Month following the next succeeding Fiscal
Quarter, i.e., for ▇▇▇ ▇▇▇▇'▇ Fiscal Quarter ending January 31, 1999, such
adjustment shall be effective on March 1, 1999; provided, however, that in the
event that any such financial statements are not delivered prior to such
adjustment date, then any such adjustment shall be made upon the delivery of
such financial statements, but shall be effective retroactive to such adjustment
date (without limitation of Lenders' rights and remedies hereunder regarding the
Event of Default resulting from Borrowers' failure to deliver financial
statements on a timely basis). If, as of any such Fiscal Quarter end, the
Average Leverage Ratio, is (A) less than 2.0:1.0, then the Interest Margin shall
be one-fourth of one percent (1/4%) per annum for Base Rate Loans and one and
one-half percent (1 1/2%) per annum for LIBOR Rate Loans; (B) greater than or
equal to 2.0:1, but less than 3.0:1, then the Interest Margin shall be one-half
of one percent (1/2%) per annum for Base Rate Loans and one and three-fourths
percent (1 3/4%) per annum for LIBOR Rate Loans; or (C) greater than or equal to
3.0:1.0, then, the Interest Margin shall be three-fourths of one percent (3/4%)
per annum for Base Rate Loans and two percent (2%) per annum for LIBOR Rate
Loans.
"Interest Period" - any interest period applicable to a Revolver Loan,
as provided in Section 3.1.
"Interest Rate Agreement" - any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect a Borrower or any of its Subsidiaries against
fluctuations in interest rates.
"Inventory" - shall have the meaning ascribed to "inventory" under
Article 9 of the Code. The term "Inventory" is more particularly defined and
described in the Collateral Schedule.
"Investment Property" - shall have the meaning ascribed to "investment
property" under Article 9 of the Code.
"Israeli Subsidiary" - collectively, Exclusive Diamond International,
Ltd. and Regal Diamond International (T.A.), Ltd.
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"Issuer" - means Citibank or any successor or assign.
"Lender" or "Lenders" - has the meaning ascribed to it in the opening
paragraph of this Agreement.
"Lender Addition Agreement" - means an agreement among Agent, a Lender
and such Lender's assignee regarding their respective rights and obligations
with respect to assignments of the Revolver Loans, the Commitments and other
interests under this Agreement and the other Loan Documents. Each Lender
Addition Agreement shall be substantially in the form of Exhibit "C", or in such
other form as Agent may accept from time to time hereafter.
"Lending Office" - means the office of each Lender specified as such on
its signature page to this Agreement opposite its name, or such other office of
such Lender as such Lender may from time to time specify in writing to the
Agent.
"Letter of Credit Liability" - as to each Letter of Credit, all
Liabilities of Agent to the Issuer thereof in respect of the Liabilities of a
Borrower thereunder, whether absolute, contingent or otherwise, including: (a)
the amount available to be drawn or which may become available to be drawn
thereunder; (b) all amounts that have been paid or made available by the Issuer
thereunder, to the extent not reimbursed; and (c) all unpaid interest, fees and
expenses arising therefrom.
"Letter of Credit" - any letter of credit at any time issued by an
Issuer for the account of Borrower for which Agent has incurred Letter of Credit
Liability hereunder.
"Leverage Ratio" - for any Fiscal Quarter of ▇▇▇ ▇▇▇▇ and its
Consolidated Subsidiaries, the quotient of (a) Consolidated Funded Debt
outstanding as of the end of such Fiscal Quarter, divided by (b) Consolidated
EBITDA for the four (4) Fiscal Quarters ending with the end of such Fiscal
Quarter.
"Liabilities" - all liabilities of a Person includable on a balance
sheet of such Person.
"LIBOR Rate" - for any Interest Period for each LIBOR Rate Loan, an
interest rate per annum equal to the rate per annum obtained by dividing (a) the
average (rounded upward to the nearest whole multiple of one-sixteenth of one
percent (1/16 of 1%) per annum, if such average is not such a multiple) of the
rates per annum at which deposits in U.S. dollars are offered by the principal
office of Citibank in London, England to prime banks in the London interbank
market at approximately 5:00 p.m. (London time) two (2) Business Days before the
first day of such Interest Period in an amount substantially equal to such LIBOR
Rate Loan and for a period equal to such Interest Period by (b) a percentage
equal to one hundred percent (100%) minus the LIBOR Rate Reserve Percentage for
such Interest Period. The LIBOR Rate for each Interest Period for each LIBOR
Rate Loan shall be determined by Agent on the basis of applicable rates
furnished to and received by Agent from Citibank two (2) Business Days before
the first day of such Interest Period, subject, however, to the provisions of
Section 3.1.
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"LIBOR Rate Reserve Percentage" - for any Interest Period for each
LIBOR Rate Loan, the reserve percentage (if any) applicable two (2) Business
Days before the first day of each Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City with deposits
exceeding $1,000,000,000 with respect to liabilities or assets consisting of or
including "Eurocurrency Liabilities" (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
LIBOR Rate Loans is determined) having a term equal to such Interest Period.
"LIBOR Margined Rate" - with respect to each day during each Interest
Period pertaining to a LIBOR Rate Loan, a rate per annum determined for such day
by Agent to be equal to the LIBOR Rate plus the applicable Interest Margin.
"LIBOR Rate Loans" - Revolver Loans bearing interest at rates
determined by reference to the LIBOR Rate.
"Lien" - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including, but not limited
to, the security interest, security title or lien arising from a security
agreement, mortgage, deed of trust, deed to secure debt, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For
purposes of this Agreement, each Borrower is deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.
"Lien Waiver" - means a written agreement, in substantially the form of
Exhibit "D" or which Agent otherwise determines to be acceptable from time to
time, pursuant to which a landlord, warehouseman, or other Person in possession
or control of any Inventory of any Borrower shall agree to waive or subordinate
its rights and claims in such Inventory, grant access to Agent for the
repossession of such Inventory and make such other agreements with Agent
relative thereto as Agent shall reasonably determine to be relevant in the
circumstances.
"Loan Account" - a loan account or loan accounts established on the
books of Agent for the purpose of recording the disbursement and collection of
Revolver Loans and the incurrence and payment of Letter of Credit Liabilities
hereunder.
"Loan Documents" - this Agreement, the Other Agreements and the
Security Documents.
"Material Adverse Effect" - the effect of any event or condition
(including, without limitation, any rescission or unwinding of the transactions
contemplated by the Purchase Agreement,
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the Merger Agreement or the other Purchase Documents) which, alone or when taken
together with other events or conditions occurring or existing concurrently
therewith, (a) has or may be reasonably expected to have a material adverse
effect upon the business, operations, Property, condition (financial or
otherwise) or business prospects of ▇▇▇ ▇▇▇▇ and its Subsidiaries, taken as a
whole, or the industry in which any Borrower operates; (b) has or may be
reasonably expected to have any material adverse effect whatsoever upon the
validity or enforceability of this Agreement or any of the other Loan Documents;
(c) has or may be reasonably expected to have any material adverse effect upon
any portion of the Collateral having a value in excess of Three Hundred Thousand
Dollars ($300,000), the Liens of Agent with respect to any portion of the
Collateral having a value in excess of Three Hundred Thousand Dollars ($300,000)
or the priority of any such Liens; or (d) materially impairs the ability of any
Borrower or any Guarantor to perform its respective obligations under this
Agreement, any Subsidiary Guaranty or any of the other Loan Documents or of
Agent to enforce or collect the obligations or realize upon any portion of the
Collateral having a value in excess of Three Hundred Thousand Dollars ($300,000)
in accordance with the Loan Documents and Applicable Law.
"Maximum Revolver Loan Amount" - means, as of any date of
determination, the lesser of (a) the Commitments; or (b) the aggregate Borrowing
Base with each such amount to be calculated as of the date of determination.
"Maximum Rate" - the maximum non-usurious rate of interest permitted by
Applicable Law that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received on the Indebtedness in question or, to the
extent that at any time Applicable Law may thereafter permit a higher maximum
non-usurious interest rate, then such higher rate. Notwithstanding any other
provision hereof, the Maximum Rate is to be calculated on a daily basis
(computed on the actual number of days elapsed over a year of 365 or 366 days,
as the case may be).
"Merger Agreement" - the Agreement and Plan of Merger, dated a of July
28, 1998, among the Merger Subsidiary, ▇▇▇ ▇▇▇▇ and Mayor's, as amended or
modified from time to time with the approval of the Requisite Lenders, to the
extent required pursuant to Section 5.2(V) hereof.
"Merger Consideration" - shall have the meaning ascribed to such term
in the Merger Agreement.
"Merger Subsidiary" - Mayor's Jewelers Acquisition Corp., a Florida
corporation and the wholly-owned subsidiary of ▇▇▇ ▇▇▇▇.
"Mexican Subsidiary" - collectively, ▇▇▇ ▇▇▇▇ de Mexico, S.A. de C.V.
and Elico Mexicana S.A. de C.V.
"Mortgages" - any mortgage, deed of trust or security deed executed by
a Borrower or a Guarantor Subsidiary in favor of the Agent with respect to such
Borrower's or Guarantor Subsidiary's Real Property, or any portion thereof
pursuant to the requirements of Section 6.10 hereof.
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"Net Proceeds" - proceeds (including cash receivable (when received) by
way of deferred payment) received by any Borrower or Guarantor Subsidiary from
the sale, lease, transfer or other disposition of any Property, including,
without limitation, insurance proceeds and awards of compensation received with
respect to the destruction or condemnation of all or part of such Property, net
of: (i) the direct costs of such sale, lease, transfer or other disposition; and
(ii) any amounts applied to repayment of Indebtedness (other than the
Obligations) secured by a Permitted Lien on the Property disposed.
"Note" - each master promissory note executed by Borrowers, jointly and
severally, in favor of each Lender to evidence the indebtedness of Borrowers to
such Lender in respect of its Pro Rata Share of any and all Revolver Loans made
by such Lender under the Revolver Facility; together with any and all renewals
and extensions thereof, and any amendments or modifications thereto.
"Notice of Borrowing" - a notice in substantially the form of Exhibit
"E" issued by an Authorized Officer of Borrowers' Agent.
"Obligations" - all indebtedness, Liabilities and obligations owing,
arising, due to or payable from each Borrower or by Borrowers, jointly and
severally, to Agent and Lenders of every kind or nature, whether absolute or
contingent, due or to become due, joint or several, liquidated or unliquidated,
matured or unmatured, primary or secondary, now existing or hereafter incurred,
purchase money or nonpurchase money, arising under this Agreement or any of the
other Loan Documents, regardless of the form or purpose of such indebtedness,
Liabilities or obligations, including, without limitation, all of the Revolver
Loans, all Liability of Borrowers in respect of Letter of Credit Liabilities and
all Liabilities of each Borrower to Agent and Lenders under the Cross-Corporate
Guaranty and under any other indemnity, reimbursement, guaranty, deposit or
other agreement heretofore or hereafter executed by such Borrower or by
Borrowers, jointly and severally, with or in favor of Agent or Lenders (whether
or not such Borrower is the account party or drawer) pursuant hereto. The term
"Obligations" includes all interest, charges, expenses, attorneys' fees and
other sums chargeable to Borrowers under any of the Loan Documents and all
obligations which each Borrower may have (under contract or Applicable Law) to
reimburse Agent and Lenders in connection with any hedge contract, foreign
exchange contract, Letter of Credit or guaranty issued by Citibank to such
Borrower or for such Borrower's benefit pursuant hereto.
"Operative Agreements" - shall have the meaning ascribed to such term
in the Purchase Agreement.
"Option Shares" - shall have the meaning ascribed to such term in the
Purchase Agreement.
"Other Agreements" - any and all agreements, instruments and documents
(other than this Agreement and the Security Documents), heretofore, now or
hereafter executed by any Borrower or all Borrowers and delivered to Agent with
respect to the transactions contemplated by this Agreement.
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"Outstanding Shares" - shall have the meaning ascribed to such term in
the Purchase Agreement.
"Overadvance" - on any date, the amount by which the total amount of
Revolver Loans outstanding to Borrowers on such date exceeds the Borrowing Base
on such date.
"Participating Lender" - any Person which is either: (i) an assignee of
a Lender hereunder; or (ii) the purchaser from a Lender of a participation
interest in any Revolver Loans or other Obligations.
"Permitted Indebtedness" - any of the following: (i) the Obligations
and the Indebtedness of the Guarantor Subsidiaries under the Subsidiary
Guaranty; (ii) Indebtedness of any Subsidiary to a Borrower or of a Borrower to
a Subsidiary if and to the extent arising from loans or advances permitted
pursuant to Section 5.2(B) hereof; (iii) obligations to pay rents on operating
leases and Capitalized Leases permitted herein; (iv) Contingent Obligations
arising out of endorsements of checks and other negotiable instruments for
deposit or collection in the ordinary course of business; (v) Subordinated Debt;
(vi) Indebtedness of Borrowers and the Active Subsidiaries which is in existence
on the date hereof and disclosed on the Financial and Contingency Schedule,
together with any extensions or renewals thereof; (vii) Indebtedness under
performance bonds and in respect of letters of credit obtained by a Borrower or
an Active Subsidiary to provide security for workers' compensation claims;
(viii) bank overdrafts arising in the ordinary course of business; (ix) so long
as at the time of the incurrence of such Indebtedness no Default or Event of
Default has occurred and is continuing or would result therefrom, Purchase Money
Indebtedness incurred by Borrowers and the Active Subsidiaries in an aggregate
amount outstanding not in excess of Two Million Dollars ($2,000,000) at any
time; and (x) so long as at the time of the incurrence of such Indebtedness, no
Default or Event of Default has occurred and is continuing or would result
therefrom, other Indebtedness incurred by Borrowers and the Active Subsidiaries
in an aggregate amount outstanding not in excess of Five Million Dollars
($5,000,000) at any time.
"Permitted Liens" - any of the following: (i) Liens at any time granted
in favor of Agent pursuant hereto or pursuant to any of the other Loan
Documents; (ii) statutory Liens of carriers, mechanics, materialmen, landlords,
warehousemen, and other similar liens imposed by law, which are incurred in the
ordinary course of business for sums not yet due or which, if due and payable,
are being Properly Contested; provided that a Lien Waiver shall have been
executed in respect thereof or a Reserve shall have been imposed as provided in
the definition thereof; (iii) Liens resulting from deposits made in the ordinary
course of business in connection with workmen's compensation, unemployment
insurance, social security and other like laws; (iv) attachment, judgment and
other similar non-tax Liens (excluding Environmental Liens) arising in
connection with court proceedings which do not constitute an Event of Default
pursuant to Section 7.1(M) hereof, but only if and for so long as the execution
or other enforcement of such Liens is and continues to be effectively stayed or
bonded in a manner reasonably satisfactory to Agent for the full amount thereof,
the validity and amount of the claims secured thereby are being Property
Contested, such Liens do not, in the aggregate, materially detract from the
value of the Property of a Borrower or materially impair the
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use thereof in the operation of a Borrower's business and such Liens are and at
all times remain junior in priority to the Liens in favor of Agent; (v) Liens of
a bank (including Citibank) or other financial institution with respect to funds
on deposit with such institution; (vi) such other Liens as appear on the Lien
Schedule; (vii) zoning restrictions, easements (including easements granted by
▇▇▇ ▇▇▇▇ for parking and related purposes in connection with its sale of the
Property Held for Sale), licenses or other restrictions on the use of Real
Property so long as the same do not materially impair the use, value or
marketability of such Real Property; (viii) rights of lessors in the property
leased under Capital Leases and operating leases, (ix) Purchase Money Liens
securing Purchase Money Indebtedness permitted hereunder; (x) Liens in favor of
Rolex Watch U.S.A., Inc. in Inventory sold by Rolex Watch U.S.A., Inc. to
Borrowers securing Borrowers' payment of the purchase price therefor provided
that such Liens are subordinated to Agent's Liens in such Inventory on a basis
satisfactory to Agent; and (xi) Liens in existence immediately prior to the
Closing Date that are paid and satisfied in full and released on the Closing
Date as a result of the application of a Borrower's cash on hand at the Closing
Date and/or, the proceeds of the Revolver Loans being made on the Closing Date.
"Permitted Proceeds Uses" - any of the following: (i) the payment
(together with cash on hand of ▇▇▇ ▇▇▇▇) of the Purchase Price, the Debt
Settlement Amount and the Merger Consideration; (ii) closing costs associated
with this transaction and the transaction contemplated by the Purchase
Agreement; and (iii) Borrowers' general operating needs to the extent not
inconsistent with the provisions of this Agreement and Applicable Law.
"Person" - an individual, partnership, corporation, joint venture,
joint stock company, limited liability company, land trust, business trust,
unincorporated organization, a government or agency or political subdivision
thereof, or any other form of entity.
"Plan" - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
"Pro Rata Share" means the percentage obtained by dividing (i) the
Commitment of a Lender by (ii) the Commitments of all Lenders, in either case as
such percentage may be adjusted by assignments permitted pursuant to subsection
9.1 or by increases in the Commitments pursuant to subsection 2.3.
"Proceeds" - shall have the meaning ascribed to "proceeds" in Article 9
of the Code. The term "Proceeds" is more particularly defined and described in
the Collateral Schedule.
"Products" - shall have the meaning ascribed to "products" in Article 9
of the Code.
"Properly Contested" - in the case of any Liability of a Borrower that
is not paid as and when due or payable by reason of such Borrower's bona fide
dispute concerning its liability to pay same or concerning the amount thereof,
shall mean that (i) such Liability and any Liens securing same are being
properly contested in good faith by appropriate proceedings promptly instituted
and diligently
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conducted; (ii) such Borrower has established appropriate reserves as shall be
required in conformity with GAAP, (iii) the non-payment of such Liability while
it is being contested will not have a Material Adverse Effect and will not
result in a forfeiture of any assets of such Borrower having a value in excess
of Three Hundred Thousand Dollars ($300,000); (iv) no Lien is imposed upon any
of such Borrower's assets with respect to such Liability unless such Lien is at
all times junior and subordinate in priority to the Liens in favor of Agent and
enforcement of such Lien is stayed during the period prior to the final
resolution or disposition of such dispute; (v) if Liability results from the
entry, rendition or issuance against such Borrower or any of its assets of a
judgment, writ, order or decree, such judgment, writ, order or decree is stayed
or bonded pending a timely appeal or other judicial review; and (vi) if such
contest is abandoned, settled or determined adversely to such Borrower, such
Borrower forthwith pays such Liabilities and all penalties and interest in
connection therewith.
"Property" - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Property Held for Sale" - ▇▇▇ ▇▇▇▇'▇ office building located at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Purchase Agreement" - the Stock Purchase Agreement, dated as of May
26, 1998, among ▇▇▇ ▇▇▇▇, Mayor's and the Sellers, as amended or modified from
time to time with the approval of the Requisite Lenders, to the extent required
pursuant to Section 5.2(V) hereof.
"Purchase Documents" - collectively, the Purchase Agreement, the Escrow
Agreement and the other Operative Agreements and the Merger Agreement.
"Purchase Money Indebtedness" - means and includes (i) any Indebtedness
(other than Obligations) for the payment of all or any part of the purchase
price of any Equipment, (ii) any Indebtedness (other than Obligations) incurred
at or after the time of the acquisition of any Equipment, for the purpose of
financing all or any part of the purchase price thereof, and (iii) any renewals,
extensions or refinancings thereof, but not increases in the principal amounts
thereof outstanding at the time.
"Purchase Money Lien" - a Lien upon Equipment (and any Proceeds
thereof) which secures Purchase Money Indebtedness incurred by a Borrower in
connection with its acquisition of such Equipment, but only if such Lien is at
all times to be confined solely to the Equipment (and any Proceeds thereof) the
purchase price of which was financed through the incurrence of the Purchase
Money Indebtedness secured by such Lien, and is released upon the payment of
such Purchase Money Indebtedness.
"Purchase Price" - has the meaning ascribed to such term in the
Purchase Agreement.
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"Real Property" - any real property owned by any Borrower or an Active
Subsidiary in fee simple or in leasehold from time to time, including any
identified as such on the Location and Property Schedule.
"Rentals" - as to any lease, as of the date of determination, all
payments which the lessee is required to make by the terms thereof.
"Requisite Lenders" means any number of Lenders having either (a)
fifty-one percent (51%) or more of the Commitments if the Commitments have not
been terminated; or (b) if all Commitments have been terminated, fifty-one
percent (51%) or more of the aggregate outstanding principal amount of the
Letter of Credit Liability, and the Revolver Loans.
"Reserves" - as of any date, an amount equal to the sum of (A) the
aggregate amount of all Letter of Credit Liability outstanding on such date, (B)
reserves for rent payments to landlords of Borrowers who have not executed Lien
Waivers in such amount as the Agent determines to be appropriate from time to
time in accordance with its customary credit considerations, (C) reserves for
costs, expenses and liabilities which the Agent is authorized to charge to
Borrowers' Loan Account pursuant to this Agreement or any other Loan Document,
and (D) such other reserves as the Agent or the Requisite Lenders shall impose
from time to time in their reasonable discretion in accordance with their
customary credit considerations.
"Restricted Investment" - any investment in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance, capital contribution, subscription
or otherwise, in any Property, except the following: (i) investments in, or
loans to, one or more Subsidiaries of a Borrower, to the extent existing on the
Closing Date or permitted pursuant to Sections 5.2(A), 5.2(B) or 5.2(J) hereof;
(ii) Property to be used in the ordinary course of business; (iii) "Current
Assets" (as defined under GAAP) arising from the sale of goods and services in
the ordinary course of business of a Borrower and its Subsidiaries; (iv)
investments in direct obligations guaranteed by the United States of America, or
any agency thereof or obligations guaranteed by the United States of America,
provided that such obligations mature within one year from the date of
acquisition thereof and repurchase agreements with respect thereto; (v)
investments in time deposits, demand deposits and certificates of deposit
maturing within one (1) year from the date of acquisition issued by a bank or
trust company organized under the laws of the United States or any state thereof
having capital and surplus and undivided profits aggregating at least
$500,000,000; (vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than two hundred seventy
(270) days from the date of creation thereof; and (vii) investments in money
market funds which invest primarily in assets of the types described in clauses
(iv), (v) and (vi) hereof.
"Revolver Facility" - the revolving credit facility established by
Lenders in favor of Borrower pursuant to Section 2 hereof.
"Revolver Loan" - a Revolver Loan made by Lenders under the Revolver
Facility.
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"Revolver Loans" - collectively, all Revolver Loans.
"Sam's Club" - the Sam's Club division of Wal-Mart, Inc.
"Sam's Club Agreement" - the agreement, dated as of July 19, 1993
between JBM and Sam's Club, providing for the operation by JBM of jewelry
departments in Sam's Club warehouses, together with all extensions and renewals
thereof and all other amendments and modifications thereto.
"Schedule of Accounts" - the detailed aged trial balance of all
Accounts of each Borrower existing as of the last day of the preceding month,
specifying the names, addresses, face value, dates of invoices and due dates for
each Account Debtor obligated on an Account so listed and any other information
Agent reasonably requests.
"Schedules" - all Schedules, together with all attachments thereto,
provided by the Borrowers and attached to this Agreement and made a part hereof.
The Schedules are listed on the first page following the signature page to this
Agreement.
"Security" - is to have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Security Documents" - the Cross-Corporate Guaranty, the Subsidiary
Guaranty, any other Guaranty Agreement, the Stock Pledge Agreement, the
Mortgages (if any), any and all other instruments and agreements now or at any
time hereafter securing the whole or any part of the Obligations, including
without limitation, this Agreement, with respect to the Security Agreement set
forth in Section 6 hereof.
"Sellers" - shall mean the "Sellers" under the Purchase Agreement, as
that term is defined therein.
"Solvent" - as to any Person, means that such Person (i) owns Property
the fair value of which is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) owns Property the
present fair salable value of which is greater than the amount that will be
required to pay the probable liability of such Person on its existing
Indebtedness as such becomes absolute and matured, (iii) is able to pay all of
its Indebtedness as such Indebtedness matures, and (iv) has capital sufficient
to carry on its business and transactions and all business and transactions in
which it is about to engage.
"Stock Pledge Agreement" - means, collectively, the Stock Pledge
Agreements, dated as of the Closing Date, executed by Borrowers and, as
applicable, the Guarantor Subsidiaries, in favor of the Agent, pursuant to which
each such Borrower or Guarantor Subsidiary shall pledge to the Agent all of the
issued and outstanding stock of each Borrower or Guarantor Subsidiary owned by
it, except
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that in the case of pledges of the stock of wholly-owned foreign Guarantor
Subsidiaries, the amount of stock so pledged shall be limited to sixty-five
percent (65%) of the issued and outstanding stock.
"Subordinated Debt" - collectively, any unsecured Indebtedness of a
Borrower or an Active Subsidiary that is or hereafter becomes expressly
subordinated to the Obligations pursuant to a Subordinated Debt Agreement.
"Subordinated Debt Agreement" - an agreement among a Borrower or an
Active Subsidiary, the holder(s) of any Subordinated Debt and Agent pursuant to
which the holders of Subordinated Debt shall subordinate all rights of payment
and claim, to the Obligations on terms reasonably acceptable to Agent.
"Subsidiary" - any corporation, association or other business entity of
which more than fifty percent (50%) of the total voting power of shares of stock
(or equivalent ownership or controlling interest) entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by a Person or one or more of the other Subsidiaries of the Person
or a combination thereof.
"Subsidiary Guaranty" - means, collectively, the Guaranty Agreements
and, except in the case of the Mexican Subsidiary, the respective other Security
Documents, dated as of the Closing Date or in the case of Guarantor Subsidiaries
acquired or created as permitted pursuant to Sections 5.2(A) and 5.2(J) hereof,
thereafter, pursuant to which each Guarantor Subsidiary shall guaranty to the
Agent and Lenders payment and performance of the Obligations, and, except in the
case of the Mexican Subsidiary, shall secure its obligations thereunder by
granting to the Agent a Lien on all or substantially all of its Property.
"Tangible Net Worth" - as to any Person, its total "assets" less all
"intangible assets" (including, but without limitation, organizational expenses,
patents, trademarks, copyrights, goodwill, covenants not to compete, research
and development costs, training costs, treasury stock and all unamortized debt
discount and deferred charges), less such Person's Liabilities. "Assets",
"intangible assets" and Liabilities shall be computed in accordance with GAAP,
except that investments in and monies due from any Person's Affiliates shall be
excluded from assets.
"Voting Stock" - Securities of any class or classes of a corporation
the holders of which are entitled to vote in the ordinary course.
"Working Estimates" - ▇▇▇ ▇▇▇▇'▇ and its Consolidated Subsidiaries'
forecasted consolidated and consolidating: (a) balance sheets; (b) profit and
loss statements; (c) cash flow statements; and (d) capitalization statements,
all prepared in a manner consistent with the Working Estimates delivered by ▇▇▇
▇▇▇▇ to the Agent prior to the Closing Date.
"Year 2000 Compliant and Ready" - means that Borrowers' and each of
their Subsidiaries' hardware and software systems with respect to the operation
of their businesses and their general
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business plan will: (i) handle information involving any and all dates before,
during and/or after January 1, 2000, including accepting input, providing output
and performing date calculations in whole or in part; (ii) operate, accurately
without interruption on and in respect of any and all dates before, during
and/or after January 1, 2000 and without any change in performance; (iii)
respond to and process two digit year input without creating any ambiguity as to
the century; and (iv) store and provide date input information without creating
any ambiguity as to the century.
"Year 2K Plan" - shall have the meaning ascribed to such term in
Section 4.1(Y).
1.2. Accounting Terms. Unless otherwise specified herein, all terms
of an accounting character used in this Agreement shall be interpreted, all
accounting determinations under this Agreement shall be made, and all financial
statements required to be delivered under this Agreement shall be prepared in
accordance with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of ▇▇▇ ▇▇▇▇ and its Subsidiaries heretofore
delivered to Agent and Lenders and using the same method for inventory valuation
as used in such audited financial statements, except for any change in which
Borrowers' independent public accountants concur or as required by GAAP unless
the Agent or the Requisite Lenders shall have objected to determining such
compliance on such basis within thirty (30) days after the date of delivery of
such financial statements to Agent and Lenders, in which event such calculations
shall be made on a basis consistent with those used in the preparation of the
latest financial statements as to which no such change was made.
1.3. Other Terms. All terms contained in this Agreement and not
otherwise specifically defined herein are to have the meanings provided for by
the Code to the extent the same are used or defined therein.
1.4. Construction and Interpretation. References herein to
"Sections", "subsections", "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.1 may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference. In this Agreement, "hereof," "herein," "hereto,"
"hereunder" and the like mean and refer to this Agreement as a whole and not
merely to the specific section, paragraph or clause in which the respective word
appears. Words importing any gender include the other genders. References to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form. The words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation."
References to the Loan Documents and all other agreements and other contractual
instruments shall be deemed to include subsequent amendments, assignments, and
other modifications thereto, but, with regard to agreements and contractual
instruments other than the Loan Documents, only to the extent such amendments,
assignments and other modifications are not prohibited by the terms of this
Agreement or any other Loan Document. References to Persons include their
respective permitted successors and assigns or, in the case of Governmental
Authorities, Persons succeeding to the relevant functions of such Persons. All
references to statutes and related regulations shall include, as to any statute,
its related regulations, any amendments of same and any
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successor statutes and regulations. Any consent, waiver, approval or
determination which, pursuant hereto or to any Loan Document, is required or
permitted to be given or made by Agent or Lenders shall be made in its or their
sole discretion, exercised in good faith and, if and where required by
Applicable Law, in a commercially reasonable manner. Any reference herein or in
any Loan Document "to the knowledge" of any Person (or words of substantially
the same import) shall mean to its knowledge after, and assuming, reasonable
investigation and diligence.
SECTION 2. CREDIT FACILITY
Subject to all of the terms and conditions of this Agreement, in
reliance upon the representations and warranties made herein and in the other
Loan Documents and so long as no Default or Event of Default then exists,
Lenders will provide credit to the Borrowers as follows:
2.1. Revolver Facility.
(A) Each Lender, severally and not jointly, agrees to
lend to Borrowers from time to time during the period from the Closing Date to
but excluding the Expiry Date, at the request of Borrowers' Agent in the manner
provided below, its Pro Rata Share of the Commitments not to exceed, however, at
any time, and in any event, each Lender's Pro Rata Share of the Maximum Revolver
Loan Amount. The aggregate amount of all Commitments shall be equal at any one
time to Eighty Million Dollars ($80,000,000). The amount of each Lender's
Commitment shall be equal at any one time to its Pro Rata Share of all
Commitments. Amounts borrowed under this subsection may be repaid and reborrowed
at any time prior to the Expiry Date; provided, however, that in the event that
any Overadvance shall ever exist Borrowers shall repay such Overadvance, in
full, immediately upon demand. No Lender shall have any obligation to make
Revolver Loans to Borrowers to the extent any Revolver Loan requested by
Borrowers' Agent on behalf of Borrowers would cause the principal balance of all
Revolver Loans then outstanding to exceed the Maximum Revolver Loan Amount,
except as provided in subsection 2.1(c) subject to the limitations set forth
therein. Each Revolver Loan shall be made (or deemed made), in the following
manner: (a) Borrowers' Agent shall give Agent written or oral notice of
Borrowers' intention to borrow (which notice shall be irrevocable) before 12:00
Noon (New York, New York time), on any Business Day specifying the amount of the
proposed borrowing and the proposed borrowing date (which notice, in the case of
any LIBOR Rate Loan shall be given not later than three (3) Business Days in
advance of the proposed borrowing date); and (b) unless payment is otherwise
timely made by Borrowers, the becoming due of any Obligation required to be paid
under this Agreement or any Loan Document shall be deemed irrevocably to be a
request by Borrowers' Agent on behalf of Borrowers for a Revolver Loan on the
due date of, and in the amount required to pay, such Obligations. The proceeds
of each Revolver Loan requested by oral or written notice of intention to borrow
given as described above are to be disbursed by Agent in lawful money of the
United States of America in immediately available funds, in the case of the
initial borrowing, in accordance with the terms of the written disbursement
letter or other instructions from Borrowers' Agent, and in the case of each
subsequent borrowing, by wire transfer to such bank account as may be agreed
upon by Borrowers'
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Agent and Agent from time to time; and the proceeds of each Revolver Loan
requested to satisfy an Obligation as described above are to be disbursed by
Agent by way of direct payment of the relevant Obligation. Each oral request for
a Revolver Loan is to be conclusively presumed to be made by a Person authorized
by Borrowers' Agent to do so; and the making of the requested Revolver Loan
shall conclusively establish Borrowers' obligation to repay such Revolver Loan
in accordance with this Agreement. Any written notice of intention to borrow
shall be in the form of a Notice of Borrowing. Any oral notice of intention to
borrow may, at Agent's option, be required to be confirmed not later than one
(1) Business Day later than the giving of oral notice. Notwithstanding the
foregoing, and in any event, all notices of intention to borrow LIBOR Rate Loans
shall be delivered by a Notice of Borrowing. The proceeds of each Revolver Loan
shall be used by Borrowers solely for Permitted Proceeds Uses. The Indebtedness
of Borrowers to Lenders arising from the making of each Revolver Loan shall be
evidenced by the Notes.
(B) Letters of Credit. The Commitment may, in addition to
obtaining Revolver Loans, be used, upon the request of Borrowers' Agent, to
support the issuance of one or more Letters of Credit, through the incurrence of
Letter of Credit Liability by Agent to the Issuer of such Letter of Credit. The
incurrence of any Letter of Credit Liability shall be subject to the following
additional terms and conditions:
(i) Requests for Incurrence of Letter of Credit
Liability. Borrowers' Agent shall give Agent at least five (5) Business
Days prior written notice specifying the date on which a Letter of
Credit is to be issued, describing the nature of the transactions
proposed to be supported thereby, and requesting that Agent incur
Letter of Credit Liability in respect thereof. The notice shall be
accompanied by the form of the Letter of Credit.
(ii) Conditions to Incurrence of Letter of Credit
Liability. In addition to all other terms and conditions set forth in
this Agreement, the incurrence by Agent of any Letter of Credit
Liability shall be subject to the conditions precedent that the Letter
of Credit shall support a transaction entered into by a Borrower in the
ordinary course of its business and be in such form and contain such
terms as shall be satisfactory to Agent. Without limitation of the
foregoing, the expiration date of each Letter of Credit shall be on a
date which is the earlier of (a) one (1) year from its date of
issuance, or (b) the Expiry Date.
(iii) Maximum Amount. The aggregate amount of all
Letters of Credit outstanding at any one time shall not exceed Ten
Million Dollars ($10,000,000).
(iv) Reimbursement. Borrowers, jointly and
severally, shall be obligated forthwith, without presentment, demand,
protest or other formalities of any kind, to reimburse Agent for any
amounts paid by Agent to an Issuer with respect to any Letter of Credit
Liability if and to the extent that Borrowers shall fail to reimburse
the Issuer on the date of any payment by the Issuer thereunder in an
amount equal to the amount of such payment. Borrowers hereby authorize
and direct Agent, at Agent's option, to debit the Loan Account (by
increasing the principal balance of the Revolver Loans then
outstanding) in the
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amount of any payment made by Agent to the Issuer with respect to any
Letter of Credit. All amounts paid by Agent to the Issuer with respect
to any Letter of Credit that are not immediately repaid by a Borrowers
either from the proceeds of a Revolver Loan or otherwise shall bear
interest at the interest rate applicable to Revolver Loans from the
date paid to the Issuer.
(v) Obligations Absolute. The obligation of
Borrowers to reimburse Agent for any amounts paid by Agent to an Issuer
with respect to Letter of Credit Liability shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of
this Agreement under any and all circumstances, including without
limitation, the following: (1) any lack of validity or enforceability
of any Letter of Credit or underlying agreement; (2) the existence of
any claim, set-off, defense or other right which a Borrower may at any
time have against any beneficiary or any transferee of any Letter of
Credit, the Issuer or any other Person, whether in connection with this
Agreement, the transactions contemplated herein, therein or in any
unrelated transaction; (3) any draft, demand, certificate or any other
document presented under or in connection with any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; or (4) any alleged wrongful payment by the Issuer under any
Letter of Credit.
(vi) Participating Interests. In the case of each
Letter of Credit issued pursuant hereto, effective as of the date of
the issuance thereof, the Agent shall allocate to each Lender, and each
Lender severally and irrevocably agrees to take, an undivided
participating interest in such Letter of Credit equal to its Pro Rata
Share thereof, and to reimburse the Agent for the amount of any payment
made by it to the Issuer pursuant hereto, to the extent that Borrowers
fail to do so as and when due in accordance with the terms of this
Agreement.
(C) Overadvances. Notwithstanding anything to the
contrary contained elsewhere in this Agreement or the other Loan Documents, and
whether or not a Default or Event of Default exists at the time, unless
otherwise notified by the Requisite Lenders, the Agent may in its sole
discretion require all Lenders to honor requests or deemed requests by the
Borrowers for Revolver Loans at a time that an Overadvance exists or which would
result in an Overadvance, and each Lender shall be obligated to continue to make
its Pro Rata Share of Revolver Loans, up to a maximum amount outstanding equal
to its Commitment so long as such Overadvance is not known by the Agent to
exceed Seven Hundred Fifty Thousand Dollars ($750,000) and so long as such
Overadvance is not outstanding for more than sixty (60) days.
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2.2. Termination of Revolver Facility.
(A) The Revolver Facility will be in effect for a period
commencing on the Closing Date and ending on the Expiry Date.
(B) The Requisite Lenders may terminate the Revolver
Facility prior to the Expiry Date, without prior notice, upon or after the
occurrence of an Event of Default and during its continuation; and the Revolver
Facility shall terminate, without notice, upon the occurrence of any Event of
Default specified in Section 7.1(G).
(C) Upon at least thirty (30) days prior written notice
to Agent, Borrowers may terminate the Revolver Facility prior to the Expiry
Date.
(D) Upon the effective date of any termination of the
Revolver Facility, whether on the Expiry Date or earlier all Revolver Loans then
outstanding, together with all other Obligations then outstanding shall become
due and payable, in full, and Lenders may discontinue making further Revolver
Loans to Borrowers. To the extent that on the effective date of any termination
any Letter of Credit Liability then exists, Borrowers shall cause Agent to be
discharged therefrom, or indemnified against any liability thereunder, either by
the depositing of cash collateral in the full amount thereof, or the issuance of
a letter of credit in the full amount thereof by a bank and in a form approved
by Agent, or in such other form or manner as shall be reasonably acceptable to
Agent. No termination (regardless of cause or procedure) of the Revolver
Facility shall in any way affect or impair the rights, powers or privileges of
Agent or any Lender or the obligations, duties or Liabilities of Borrowers
relating to (i) any transaction or event occurring prior to the effective date
of such termination or (ii) any of the undertakings, agreements, covenants,
warranties or representations of Borrowers contained in this Agreement or in any
of the other Loan Documents.
2.3. Increase of Revolver Facility. Borrowers may request at any
time or from time to time prior to the third anniversary of the Closing Date
that the amount of the Commitments be increased to an aggregate amount not in
excess of One Hundred Ten Million Dollars ($110,000,000) pursuant to an
allocation of any such increase as among the participating Lenders determined by
the Agent; provided, however that (A) no such increase shall be effected if a
Default or Event of Default has occurred and is continuing, (B) the aggregate
amount of all such increases shall not exceed Thirty Million Dollars
($30,000,000), (C) Borrowers shall have paid fees to the Agent and Lenders in
consideration of each such increase in such amounts as are established by the
Agent in accordance with then current market conditions; (D) there shall be no
more than two (2) such increases; (E) any such increase will require the prior
written consent of each Lender whose Commitment would be increased thereby and
of the Agent, and (F) no Lender will have any obligation to increase its
Commitment pursuant hereto; provided, that, whether or not any Lender consents
to an increase in its Commitment, it shall be deemed to have consented to the
increase in the Commitment of each Lender consenting thereto so long as such
increases are effected in accordance with the provisions of this Section 2.3. In
the event of any increase in the Commitments pursuant hereto Borrowers shall
execute in favor of each Lender whose Commitment is being increased Notes in the
amount of such
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increased Commitment which shall be delivered to each such Lender in replacement
for its existing Notes.
2.4. Periodic Reductions in Revolver Loans. Borrowers shall reduce
aggregate outstanding Revolver Loans to an amount equal to or less than Fifty
Million Dollars ($50,000,000) for a period of at least thirty (30) consecutive
days during the period commencing on January 1 in each calendar year and ending
on March 1 in such calendar year.
2.5. One Obligation. All Revolver Loans to Borrowers hereunder and
all obligations of Borrowers in respect of Letter of Credit Liability are to
constitute one general joint and several Obligation of Borrowers, and are to be
secured by Agent's security interest in and Lien upon all of the Collateral, and
by all other security interests and Liens heretofore, now or at any time or
times hereafter granted by Borrowers pursuant to the Security Documents.
SECTION 3. INTEREST, FEES AND REPAYMENT
3.1. Interest, Fees and Charges.
(A) Interest.
(i) Rate of Interest. The Revolver Loans shall
bear interest from the date such Revolver Loans are made to the date
such Revolver Loans are fully paid at the Base Margined Rate or the
LIBOR Margined Rate, and the applicable basis for determining the rate
of interest shall be selected by Borrowers' Agent initially at the time
a Notice of Borrowing is given; provided, however, that,
notwithstanding the foregoing, any Revolver Loans made on the Closing
Date or within three (3) Business Days thereafter shall bear interest
at the Base Margined Rate. The basis for determining the interest rate
with respect to any Revolver Loan may be changed from time to time
pursuant to subparagraph (iii) below. If on any day a Revolver Loan is
outstanding with respect to which notice has not been delivered to
Agent in accordance with the terms of this Agreement specifying the
basis for determining the rate of interest, then for that day that
Revolver Loan shall bear interest at the Base Margined Rate.
(ii) Interest Periods. In connection with each
LIBOR Rate Loan, in its Notice of Borrowing therefor, Borrowers' Agent
shall select an interest period (each an "Interest Period") to be
applicable to such Revolver Loan, which Interest Period shall be either
a one (1), two (2), three (3) or six (6) month period, provided that:
(1) the initial Interest Period for any Revolver Loan shall commence on
the Funding Date of such Loan; (2) in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the day on which the next preceding Interest Period
expires; (3) if an Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, but if any Interest Period would
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otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(4) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (5) below, end on the last Business
Day of a calendar month; (5) no Interest Period shall extend beyond the
Expiry Date; (6) no Interest Period with respect to any of the Revolver
Loans may extend beyond a date on which Borrowers are required to make
a scheduled payment of principal with respect to the Revolver Loan; (7)
the Interest Period for a Revolver Loan that is converted pursuant to
subparagraph (iii) below shall commence on the date of such conversion
and shall expire on the date on which the Interest Period for the
Revolver Loans so converted expires; (8) there shall be no more than
five (5) Interest Periods relating to LIBOR Rate Loans outstanding at
any time; and (9) the minimum amount of any LIBOR Rate Loan shall be
One Million Dollars ($1,000,000) or in integral multiples of One
Million Dollars ($1,000,000) in excess of that amount.
(iii) Conversion or Continuation. Subject to the
provisions of this subparagraph (iii) and the limitation on the number
of Interest Periods prescribed in subparagraph (ii) above, Borrowers
shall have the option to (1) convert at any time all or any part of
outstanding Revolver Loans equal to One Million Dollars ($1,000,000)
and integral multiples of One Million Dollars ($1,000,000) in excess of
that amount from Revolver Loans bearing interest at a rate determined
by reference to one basis to Revolver Loans bearing interest at a rate
determined by reference to an alternative basis, or (2) upon the
expiration of any Interest Period applicable to a LIBOR Rate Loan, to
continue all or any portion of such Revolver Loan equal to One Million
Dollars ($1,000,000) and integral multiples of One Million Dollars
($1,000,000) in excess of that amount as a LIBOR Rate Loan and the
succeeding Interest Period(s) of such continued Revolver Loan shall
commence on the last day of the Interest Period of the Revolver Loan to
be continued; provided that LIBOR Rate Loans may only be converted into
Revolver Loans bearing interest determined by reference to an
alternative basis on the expiration date of an Interest Period
applicable thereto; and provided, further, that no outstanding Revolver
Loan may be continued as, or be converted into, a LIBOR Rate Loan when
an Event of Default or Default has occurred and is continuing; and
provided, finally, that no Revolver Loan may be converted into a LIBOR
Rate Loan until at least three (3) Business Days after the Closing
Date; i.e., any Revolver Loans made on the Closing Date or within three
(3) Business Days thereafter shall be made as Base Rate Loans. Borrower
shall deliver a fully and properly completed Notice of Borrowing to
Agent no later than 12:00 Noon (New York, New York time) at least three
(3) Business Days in advance of the proposed conversion/continuation
date.
(iv) Inability to Determine Interest Rate. In the
event that (a) the Agent determines, or is advised by the Requisite
Lenders, that, by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for any requested Interest Period, (b) the
Agent is advised by any Lender
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that the interest rate determined for such Interest Period does not
accurately reflect the cost to such Lender of making or maintaining
LIBOR Rate Loans during such Interest Period or (c) the Agent is
advised by Citibank that deposits in Dollars (in applicable amounts)
are not being offered by Citibank in the London interbank market for
any requested Interest Period; then, Agent shall forthwith give notice
thereof to Borrowers' Agent. From and after Borrowers' Agent's receipt
of such notice, any then requested LIBOR Rate Loans shall be made as
Base Rate Loans, any Base Rate Loans that were to have been converted
to LIBOR Rate Loans shall be continued as Base Rate Loans and any
outstanding LIBOR Rate Loans shall be converted, on the last day of the
then current Interest Period with respect thereto, to Base Rate Loans;
and no further LIBOR Rate Loans shall be made or continued as such, nor
shall Borrowers have the right to convert Base Rate Loans to LIBOR Rate
Loans unless and until the circumstances causing such suspension of
LIBOR Rate Loans no longer exists.
(v) Illegality. Notwithstanding any other
provisions herein, if any Applicable Law or any change therein or in
the interpretation or application thereof shall make it unlawful for
any Lender to make or maintain LIBOR Rate Loans as contemplated by this
Agreement, (a) the Commitments of Lenders hereunder to make LIBOR Rate
Loans, continue LIBOR Rate Loans as such or convert Base Rate Loans to
LIBOR Rate Loans shall forthwith be canceled and (b) all Revolver Loans
then outstanding as LIBOR Rate Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last day's of the
then current Interest Periods with respect to such Revolver Loans or
within such earlier period as required by law.
(vi) Computation and Payment of Interest. In
computing interest on any Revolver Loan, the date of funding of the
Revolver Loan or the first day of an Interest Period applicable to such
Revolver Loan or, with respect to a Base Rate Loan being converted from
a LIBOR Rate Loan, the date of conversion of such LIBOR Rate Loan to
such Base Rate Loan shall be included and the date of payment of such
Revolver Loan or the expiration date of an Interest Period applicable
to such Revolver Loan, or with respect to a Base Rate Loan being
converted to a LIBOR Rate Loan, the date of conversion of such Base
Rate Loan to such LIBOR Rate Loan, shall be excluded; provided, that if
a Revolver Loan is repaid on the same day on which it is made, one
day's interest shall be paid on that Revolver Loan. All interest
(together with any fees or other charges determined on a "per annum"
basis) shall be calculated on a daily basis (computed on the actual
number of days elapsed over a year of 360 days, unless reference to a
365 or 366-day year is necessary in order not to exceed the Maximum
Rate), commencing on the date hereof. Interest on the Base Rate Loans
is to be paid monthly, in arrears, on the first day of each month.
Interest on the LIBOR Rate Loans having an Interest Period of three (3)
calendar months or less shall be paid on the last day of each Interest
Period applicable to such Revolver Loans. Interest on LIBOR Rate Loans
having an Interest Period in excess of three (3) calendar months shall
be paid on the last day of each three (3) calendar month interval
during such Interest Period and on the last day of such Interest
Period.
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(vii) Default Rate of Interest. Upon the
occurrence of an Event of Default, and during its continuance, at the
direction of the Requisite Lenders, the principal amount of all
Obligations then and thereafter shall bear interest at the Default
Rate. Interest at the Default Rate shall be paid without prejudice to
the rights of Agent to collect any other amounts provided to be paid
hereunder or under any of the other Loan Documents or to declare a
default under this Agreement or any of the other Loan Documents.
(B) Commitment Fee. From and after the Closing Date,
Borrowers, jointly and severally, agree to pay to Agent for the account of
Lenders (each to receive a Pro Rata Share thereof) an amount equal to (i) the
maximum amount of the Revolver Facility less the average daily balance of the
sum of all Revolver Loans and all outstanding Letters of Credit during the
preceding month, multiplied by (ii) the fee multiplier prescribed below, monthly
in arrears on the first day of the month following the Closing Date and the
first day of each month thereafter. The fee multiplier shall be .25% per annum
initially; provided, however, that commencing with ▇▇▇ ▇▇▇▇'▇ Fiscal Quarter
ending on or about January 31, 1999, the fee margin shall be determined by the
Agent from the financial statements delivered to Agent for each Fiscal Quarter
pursuant to Section 5.1, concurrently with Agent's determination of the Interest
Margin, as provided in the definition thereof, such that, if as of any Fiscal
Quarter end, the Average Leverage Ratio is greater than or equal to 2.0:1.0,
then the fee multiplier shall be (or remain at) .375% per annum; and if the
Average Leverage Ratio, is less than 2.0:1.0, then the fee multiplier shall be
(or remain at) .25% per annum.
(C) Letter of Credit Fees. Borrowers will pay to Agent
for the account of Lenders (each to receive a Pro Rata Share thereof), for each
Letter of Credit issued for the account of any Borrower for the period from and
including the date of issuance of such Letter of Credit to and excluding the
date of expiration or termination of such Letter of Credit, payable quarterly in
arrears on the first day of each calendar quarter, an amount equal to the
average daily amount of aggregate Letter of Credit Liability in respect thereof
multiplied by (i) in the case of standby Letters of Credit, the Interest Margin
then and from time to time thereafter in effect for LIBOR Rate Loans and (ii) in
the case of commercial or documentary Letters of Credit, such Interest Margin
minus .75%. In addition to the foregoing, Borrowers shall be obliged to pay in
regard to each Letter of Credit (i) to Agent, an up-front fee in the amount of
0.25% of the amount of such Letter of Credit and (ii) to the Issuer all fees and
charges imposed by the Issuer, for opening, administering, amending or renewing
such Letter of Credit.
(D) Agent's Fees. Concurrently with the execution of this
Agreement and thereafter as provided in the Agent's Letter Agreement, Borrowers
agree, jointly and severally, to pay to Agent, for its own account, not to be
shared with any other Lender, the fees specified in the Agent's Letter
Agreement, which fees shall be fully earned at the closing of the transactions
contemplated hereby and shall not to be subject to rebate except as may be
required by Applicable Law.
(E) Indemnity. Borrowers, jointly and severally, agree to
indemnify Agent and each Lender and to hold Agent and each Lender harmless from
any loss or expense which Agent or
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a Lender may sustain or incur as a consequence of (i) default by Borrowers in
payment when due of the principal amount of or interest on any LIBOR Rate Loans,
(ii) default by Borrowers in making, continuing or converting a borrowing after
Borrowers' Agent has given a Notice of, Borrowing in respect thereto, (iii)
default by Borrowers in making any prepayment after Borrowers' Agent has given a
voluntary prepayment notice, or (iv) the making of a prepayment of a LIBOR Rate
Loan on a day which is not the last day of the Interest Period with respect
thereto, including, without limitation, in each case, any such loss or expense
arising from the reemployment of funds obtained by any Lender to maintain the
LIBOR Rate Loans hereunder or from fees payable to terminate the deposits from
which such funds were obtained.
(F) Capital Adequacy Charge. If after the Closing Date,
any Lender determines that (i) the adoption of any Applicable Law regarding
capital requirements for banks or bank holding companies or the subsidiaries
thereof, (ii) any change in the interpretation or administration of any such
law, rule or regulation by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
(iii) compliance by any Lender or its holding company with any request or
directive of any such governmental authority, central bank or comparable agency
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on any Lender's capital to a level below that
which such Lender could have achieved (taking into consideration such Lender's
and its holding company's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that such Lender's
capital was fully utilized prior to such adoption, change or compliance) but for
such adoption, change or compliance as a consequence of such Lender's
Commitments to make the Revolver Loans pursuant hereto by any amount deemed by
such Lender to be material: (a) such Lender is promptly, after such Lender's
determination of such occurrence, to give notice thereof to Agent and Borrowers,
and (b) Borrowers, jointly and severally, shall be obliged to pay to such Lender
as an additional fee from time to time, on demand, such amount as such Lender
certifies to be the amount that will compensate such Lender for such reduction.
A certificate of such Lender claiming entitlement to such compensation, setting
forth the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be paid to such Lender, and the method by which
such amounts were determined will be conclusive in the absence of manifest
error. In determining such amount, such Lender may use any reasonable averaging
and attribution method.
(G) Taxes. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all Liabilities with respect thereto; excluding, however,
taxes imposed on the net income of a Lender or Agent by the jurisdiction under
the laws of which such Lender or Agent is organized or doing business or any
political subdivision thereof and taxes imposed on its net income by the
jurisdiction of such Lender's or Agent's applicable lending office or any
political subdivision thereof (all such taxes, levies, imposts, deductions,
charges or withholdings and all Liabilities with respect thereto, excluding such
taxes imposed on net income, herein called "Tax Liabilities"). If Borrowers
shall be required by law to deduct any such amounts from or in respect of any
sum payable hereunder to any Lender or Agent, then the sum payable hereunder
shall be increased as may be necessary so that, after making all required
deductions, all
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such Lenders or Agent receive an amount equal to the sum it would have received
had no such deductions been made. In the event that, subsequent to the Closing
Date, (1) any changes in any existing law, regulation, treaty or directive or in
the interpretation or application thereof, (2) any new law, regulation, treaty
or directive enacted or any interpretation or application thereof, or (3)
compliance by Agent or any Lender with any request or directive (whether or not
having the force of law) from any governmental authority, agency or
instrumentality: (i) does or shall subject Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement, the other Loan Documents or any
Revolver Loans made or Letters of Credit issued hereunder, or change the basis
of taxation of payments to Agent or such Lender of principal, fees, interest or
any other amount payable hereunder (except for net income taxes, or franchise
taxes imposed in lieu of net income taxes, imposed generally by federal, state
or local taxing authorities with respect to interest or commitment or other fees
payable hereunder or changes in the rate of tax on the overall net income of
Agent or such Lender); or (ii) does or shall impose on Agent or any Lender any
other condition or increased cost in connection with the transactions
contemplated hereby or participations herein; and the result of any of the
foregoing is to increase the cost to Agent or any such Lender of issuing any
Letter of Credit or making or continuing any Revolver Loan hereunder, as the
case may be, or to reduce any amount receivable hereunder, then, in any such
case, Borrowers, jointly and severally, shall be obliged to pay to Agent or such
Lender, within ten (10) days after receipt of notice or demand, any additional
amounts necessary to compensate Agent or such Lender, on an after-tax basis, for
such additional cost or reduced amount receivable, as determined by Agent or
such Lender with respect to this Agreement or the other Loan Documents. If Agent
or such Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrowers of the event by reason of which
Agent or such Lender has become so entitled. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or such
Lender to Borrowers and Agent shall, absent manifest error, be presumptive
evidence of the amount due and owing thereunder.
(H) Foreign Lenders. Each Lender (if any) organized under
the laws of a jurisdiction outside the United States (a "Foreign Lender") as to
which payments to be made under this Agreement or under the Notes are exempt
from United States withholding tax or are subject to United States withholding
tax at a reduced rate under an applicable statute or tax treaty shall provide to
Borrowers' Agent and Agent (1) a properly completed and executed Internal
Revenue Service Form 4224 or Form 1001 or other applicable form, certificate or
document prescribed by the Internal Revenue Service of the United States
certifying as to such Foreign Lender's entitlement to such exemption or reduced
rate of withholding with respect to payments to be made to such Foreign Lender
under this Agreement and under the Notes (a "Certificate of Exemption") or (2) a
letter from any such Foreign Lender stating that it is not entitled to any such
exemption or reduced rate of withholding (a "Letter of Non-Exemption"). Prior to
becoming a Lender under this Agreement and within thirty (30) days after written
request of Borrowers' Agent or Agent from time to time thereafter, each Foreign
Lender that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrowers' Agent and Agent. If a
Foreign Lender is entitled to an exemption with respect to payments to be made
to such Foreign Lender under this Agreement (or to a reduced rate of
withholding) and does not provide a Certificate of Exemption
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to Borrowers' Agent and Agent within the time periods set forth in the preceding
paragraph, Borrowers shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrowers shall not be required to pay any
additional amounts as a result of such withholding; provided, however, that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrower and Agent.
(I) Change of Lending Office. Each Lender agrees that on
the occurrence of any event giving rise to the operation of Section
3.1(A)(iv)(b), 3.1(A)(v), 3.1(F) or 3.1(G) with respect to such Lender, it will,
if requested by the Borrowers' Agent, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another Lending Office for
any Commitment, Revolver Loans or Letters of Credit affected by such event,
provided that such designation is made on such terms that such Lender and its
lending office suffer no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the operation of
such Section. Nothing in this Section 3.1(I) shall affect or postpone any of the
obligations of Borrowers or the right of any Lender provided in Sections
3.1(A)(iv)(b), 3.1(A)(v), 3.1(F) or 3.1(G).
3.2. Payments and Prepayments
(A) Manner and Time of Payment. All payments made by
Borrowers of the Obligations shall be made without deduction, defense, set-off
or counterclaim and in same day funds delivered to Agent by wire transfer to
Agent's account, ABA No. ▇▇▇▇▇▇▇▇▇, Account No. 4076-7943 at Citibank,
Reference: "Citicorp USA, Inc., as Agent, for the Account of ▇▇▇ ▇▇▇▇ Marketing,
Inc., JBM Retail Company, Inc. and Mayor's Jewelers, Inc.," or at such other
place as Agent may direct from time to time by notice to Borrowers' Agent. Funds
shall be deemed received pursuant hereto on the date received if such funds are
received by Agent by 2:00 p.m. (New York, New York time) on such day. In the
absence of timely notice and receipt, such funds shall be deemed to have been
paid by Borrowers on the next succeeding Business Day. In order to cause timely
payment to be made to Agent of all Obligations as and when due, Borrowers hereby
authorize and direct Agent, at Agent's option, to debit the Loan Account (by
increasing the principal balance of the Revolver Loans then outstanding) for any
amounts of principal, accrued interest, fees, charges or expenses at any time
owing hereunder or under any Loan Documents as and when such Obligations become
due.
(B) Lockbox Accounts. Agent and Borrowers shall establish
on or prior to the Closing Date and thereafter maintain one or more special
lockbox accounts or blocked accounts owned by a Borrower or special accounts
owned by Agent, or some combination thereof, or one concentration account owned
by Agent in lieu of the foregoing, all as Agent may elect, for the collection of
all Proceeds from the sale of Collateral, including specifically, without
limitation, all Proceeds of Accounts. Each such special account shall be opened
with a bank selected by Borrowers, but satisfactory to Agent, which bank shall
agree to a Bank Agency Agreement. All collections of Proceeds of Accounts or
other Collateral shall be received at, and deposited on a daily basis to, such
account or series of such accounts for ultimate application to the Obligations
as provided hereinbelow. To the extent that there are no Revolver Loans or
Letters of Credit
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outstanding hereunder for a period of thirty (30) consecutive days or more, then
at Borrowers' Agent's written request to Agent, shall direct the banks at which
such special lockbox accounts or blocked accounts are maintained to remit
Proceeds received in such accounts to Borrowers, which direction shall continue
in effect for so long as there are no Revolver Loans or Letters of Credit
outstanding, but shall be rescinded by Agent upon any Borrowers' obtaining of a
Revolver Loan or Letter of Credit. At the request of Agent made from time to
time hereafter to Borrowers' Agent, each Borrower shall provide Agent with
copies of all requested bank statements which it receives relative to such
accounts from any bank, as soon as practicable after such request.
(C) Credit for Collections. All payments and other
collections received by Agent, or any depository bank, from Borrowers for
application to outstanding Obligations of Borrowers shall be applied to
outstanding Obligations on the Business Day of receipt by Agent of same in
immediately available funds at its designated account during regular banking
hours, with such application to be made, first, to all expenses of Agent
incurred in effecting such collections; next, to any accrued interest or fees
otherwise then due and payable; next, to any other Obligations of Borrowers then
due and payable; next, to any Revolver Loans then outstanding (with any Revolver
Loans then constituting Base Rate Loans deemed paid first); and, lastly,
provided that no Default has occurred and is continuing, any remainder shall be
remitted to Borrowers. If a Default or an Event of Default has occurred and is
continuing, without limiting any other rights and remedies of Agent hereunder,
Agent may apply any remainder to any other Obligations then outstanding,
regardless of whether then past due, or hold the same as additional cash
Collateral pending the due dates for payment of such Obligations. Payments
applied pursuant to this subsection to outstanding Revolver Loans shall not
reduce the Commitments. To the extent that the application of payments and
collections to the Obligations provided for in this Section 3.2(c) would result
in the payment of a LIBOR Rate Loan on a day which is not the last day of the
Interest Period with respect thereto, Agent shall hold the amount which would
otherwise be applied in payment of such LIBOR Rate Loan as cash Collateral until
the last day of such Interest Period and, on such day, shall apply such amount
in payment of such LIBOR Rate Loan; provided, however, that Agent shall have the
right to apply such amount immediately in payment of such LIBOR Rate Loan upon
either (i) the occurrence of an Event of Default under subsection 7.1(A) hereof
(including as a result of Borrowers' failure to pay an Overadvance on demand) or
(ii) the acceleration of the Obligations pursuant to subsection 7.2. During such
time as Agent is holding any such amount, (i) unless a Default or Event of
Default has occurred and is continuing, Borrowers shall have the right to obtain
disbursements of all or any portion of such amount for their working capital
needs; and (ii) at Borrowers' Agent's direction, Agent shall cause such amount
to be invested in investments described in clauses (iv), (v), (vi) and (vii) of
the definition of Restricted Investment which mature on or before the last day
of the applicable Interest Period. Borrowers' Agent shall give Agent written
notice of Borrowers' request to obtain a disbursement of any such amount
pursuant to clause (i) of the preceding sentence before 12:00 noon (New York,
New York time), on the Business Day of the requested disbursement, specifying
the amount of the requested disbursement and, except to the extent that any
amount requested to be disbursed has been invested at Borrowers' Agent's
direction pursuant to clause (ii) of the preceding sentence and is not available
for disbursement, on the Business Day of its receipt
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of such notice, Agent shall cause the requested amount to be disbursed to the
bank account of Borrowers' Agent to which Revolver Loans are then being
disbursed pursuant to Section 2.1(A).
(D) Loan Account; Statements of Account. Agent shall
enter all Revolver Loans as debits to the Loan Account of Borrowers and shall
also record in the Loan Account of Borrowers all payments made by Borrowers on
Revolver Loans and all proceeds of Collateral which are finally paid to Agent,
and may record therein, in accordance with customary accounting practice, all
charges and expenses properly chargeable to Borrowers hereunder. Agent will
account to the Lenders and Borrowers monthly with a statement of Revolver Loans,
charges and payments made pursuant to this Agreement, and such account rendered
by Agent is to be deemed final, binding and conclusive upon Borrowers and each
Lender unless Agent is notified by Borrowers' Agent or a Lender in writing to
the contrary within thirty (30) days after the date each account is mailed to
Borrowers. Such notice is only to be deemed an objection to those items
specifically objected to therein.
(E) Payments on Business Days. Whenever any payment to be
made hereunder, whether of principal, interest, fees or otherwise, shall be
stated to be due on a day that is not a Business Day, the payment may be made on
the next succeeding Business Day and such extension of time shall be included in
the computation of the amount of interest or fees due hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1. General Representations and Warranties. To induce Agent and
each Lender to enter into this Agreement and make Revolver Loans, and to induce
Agent to incur Lender Reimbursement Liabilities hereunder and Lenders to
purchase participations therein, Borrowers, jointly and severally, warrant and
represent to Agent and each Lender that:
(A) Organization. Each Borrower and each Active
Subsidiary of any Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, as
provided in the Corporate Information Schedule and has duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
each other state or jurisdiction where the character of its Properties or the
nature of its activities make such qualification necessary, as set forth in the
Corporate Information Schedule, except where failure to so qualify would not
have a Material Adverse Effect.
(B) Corporate Name. During the preceding seven (7) years,
neither any Borrower nor any Guarantor Subsidiary of any Borrower has been known
as or used any corporate, fictitious or trade names, and has had no office,
place of business or agent for service of process located in any state or
county, except as disclosed in the Corporate Information Schedule.
(C) Corporate Authority. Each Borrower and each Guarantor
Subsidiary has the right and power and is duly authorized and empowered to enter
into, execute, deliver and perform (i) this Agreement and each of the other Loan
Documents to which it is a party and (ii) each Purchase
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Document to which it is a party. The execution, delivery and performance of this
Agreement and each other Loan Document to which it is a party and each Purchase
Document to which it is a party have been duly authorized by all necessary
corporate action on the part of each Borrower and each Guarantor Subsidiary and
do not and will not (i) require any consent or approval of the shareholders of
any Borrower or any Guarantor Subsidiary other than those that have been
obtained; (ii) contravene any Borrower's or Guarantor Subsidiary's articles or
certificate of incorporation or bylaws or equivalent organizational documents;
(iii) violate, or cause any Borrower or Guarantor Subsidiary to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to
such Borrower or Guarantor Subsidiary; (iv) result in a breach of or constitute
a default under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which such Borrower or Guarantor Subsidiary is
a party or by which it or its Properties may be bound or affected which breach
or default would have a Material Adverse Effect; or (v) result in, or require,
the creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by such
Borrower or Guarantor Subsidiary.
(D) Governmental Consents. The execution, delivery and
performance by each Borrower of this Agreement and each Purchase Document to
which it is a party, and by each Borrower and each Guarantor Subsidiary of each
Loan Document to which it is a party, and the consummation of the transactions
contemplated herein and therein do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
Governmental Authority except for any filings required by federal or state
securities laws (which filings, if required, have been made) and filings
required in connection with the perfection of security interests granted
pursuant to the Loan Documents.
(E) Enforceability. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding obligation of each Borrower and Guarantor Subsidiary party thereto
enforceable against it in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally or by principles of equity
pertaining to the availability of equitable remedies.
(F) Good Standing. Each Borrower and each of its Active
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, authorizations, permits, certificates, inspections, and
franchises necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it except where failure to be in good standing with
respect to any such consents, approvals, authorizations, permits, certificates,
inspections and franchises would not have a Material Adverse Effect.
(G) Intellectual Property. Each Borrower and each of its
Active Subsidiaries owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the present and
planned future conduct of its business, all of which are listed in the
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Intellectual Property Schedule attached hereto and made a part hereof, without
any known conflict with the rights of others.
(H) Capital Stock; Subsidiaries. ▇▇▇ ▇▇▇▇ is the owner,
directly or indirectly, of, and has good title to, all of the shares of the
Voting Stock of each of its Subsidiaries, free and clear in each case of any
Lien, other than Liens arising pursuant to the Stock Pledge Agreement. All such
shares have been duly issued and are fully paid and non-assessable. Other than
as set forth in the Corporate Information Schedule, there are not outstanding
any options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of any Borrower, or any agreements or instruments binding upon any of any
Borrower's shareholders relating to the ownership of its shares of capital
stock. ▇▇▇ ▇▇▇▇ has no Subsidiaries other than the Active Subsidiaries and the
Inactive Subsidiaries.
(I) Solvency. Each Borrower is now, after giving effect
to the consummation of the transactions contemplated by the Purchase Agreement
and the making of the Revolver Loans to be made hereunder on the Closing Date,
and, after giving effect to all Revolver Loans to be made hereunder, at all
times will be, Solvent.
(J) No Restrictions. No Borrower, nor any Guarantor
Subsidiary of any Borrower, is a party or subject to any contract or agreement
or charter or other corporate restriction, that restricts its right or ability
to incur Indebtedness. No Borrower, nor any Active Subsidiary of any Borrower,
has agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its Property, whether now owned or hereafter
acquired, to be subject to a Lien that is not a Permitted Lien.
(K) No Lawsuits. Except as set forth in the Financial and
Contingency Schedule, there are no actions, suits, proceedings or investigations
pending, or to the knowledge of Borrowers, threatened, against or affecting any
Borrower or any of its Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of any Borrower, or any of its Subsidiaries, in
any court or before any Governmental Authority, which, if determined adversely
to a Borrower or its Subsidiary, would have a Material Adverse Effect. No
Borrower nor any Subsidiary of any Borrower is in default with respect to any
order, writ, injunction, judgment, decree or rule of any Governmental Authority.
(L) Title. Each Borrower and each of its Active
Subsidiaries has good title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its Real Property, and good title to
all of its other Property, in each case, free and clear of all Liens, charges or
claims (including infringement claims with respect to patents, trademarks,
copyrights and the like), except Permitted Liens.
(M) Financial Statements. The Financial Statements have
been prepared in accordance with GAAP and present fairly the financial position
and the results of operations
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reflected in the Financial Statements. Since the respective dates of the
Financial Statements, there has been no material change in the condition,
financial or otherwise, of any Borrower or any of its Subsidiaries except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. Neither the Financial Statements, this
Agreement nor any other written statement of any Borrower to Agent or any Lender
(including, without limitation, any Borrower's filings, if any, with the
Securities and Exchange Commission) contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained therein
or herein not misleading. There is no fact known to any Borrower which such
Borrower has failed to disclose to Agent or any Lender in writing which has had,
or foreseeably will have, a Material Adverse Effect, other than facts which are
generally available to the public and not particular to a Borrower, such as
general economic and industry trends.
(N) Tax Returns. Each Borrower and each of its Active
Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by Applicable Law to file and has paid, or made provision
for the payment of, all Charges that are due and payable, excepting any which
are being Properly Contested. The provision for taxes on the books of each
Borrower and its Subsidiaries are adequate for all years not closed by
applicable statutes, and for its current fiscal year.
(O) Material Agreements. No Borrower nor any of its
Active Subsidiaries is a party to any collective bargaining agreement. There are
no material grievances, disputes or controversies with any union or any other
organization of any Borrower's employees, or threats of strikes, work stoppages
or any asserted pending demands for collective bargaining by any union or
organization. Each contract or other agreement of each Borrower and each Active
Subsidiary, the termination of which could have a Material Adverse Effect, is
listed or referenced in the Material Agreements Schedule.
(P) Applicable Law. Each Borrower and each of its Active
Subsidiaries has duly complied with, and its Property, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Laws, and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of its Active Subsidiaries under any
such Applicable Law.
(Q) Not a Surety. Except as provided in the Financial and
Contingency Schedule and except for Guaranty Agreements in favor of the Agent
and Lenders, no Borrower nor any Active Subsidiary is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or has
entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.
(R) No Default. No event has occurred and no condition
exists which would, upon the execution and delivery of this Agreement or each
Borrower's performance hereunder, constitute a Default or an Event of Default.
No Borrower nor any Active Subsidiaries of any Borrower is in default, and no
event has occurred and no condition exists which constitutes, or which
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with the passage of time or the giving of notice or both would constitute, a
default in the payment of any Indebtedness to any Person which default would
have a Material Adverse Effect.
(S) Brokers. Except as provided in the Financial and
Contingency Schedule, there are no claims for brokerage commissions, finder's
fees or investment banking fees in connection with the transactions contemplated
by this Agreement or the Purchase Documents.
(T) No Threatened Termination. There exists no actual or
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship between any Borrower or Active Subsidiary
and any material supplier or any customer or group of customers whose purchases
individually or in the aggregate are material to the business of such Borrower
or Active Subsidiary, whether as a result of the consummation of the
transactions contemplated by the Purchase Documents or otherwise and no present
condition or state of facts or circumstances will, after the consummation of the
transaction contemplated herein, have a Material Adverse Effect or prevent any
Borrower or Active Subsidiary from conducting such business in substantially the
same manner in which it has heretofore been conducted.
(U) Locations. The Location and Real Property Schedule
includes a complete listing of all Collateral Locations, Capital Leases and all
material operating leases of each Borrower and Guarantor Subsidiary.
(V) Insurance. The Insurance Schedule sets forth a
complete and accurate description of all policies of insurance in effect as of
the Closing Date for each Borrower and Guarantor Subsidiary. Each Borrower and
Guarantor Subsidiary is adequately insured under such policies, no notice of
cancellation has been received with respect to any of such policies. Each
Borrower and its Guarantor Subsidiaries are in compliance with all conditions
contained in such policies.
(W) Bank Accounts. The Financial and Contingency Schedule
sets forth the account numbers and location of all bank accounts of each
Borrower as of the Closing Date.
(X) Employee Benefit Plans. The Employee Benefits
Schedule sets all retirement, pension, profit-sharing, 401(K), deferred
compensation, health, disability and other employee benefit programs of each
Borrower and Active Subsidiary in existence on the Closing Date.
(Y) Year 2000 Compliance. Borrowers have developed and
have delivered to Agent a comprehensive plan (the "Y2K Plan") enabling Borrowers
and their Active Subsidiaries' software and hardware systems to be Year 2000
Compliant and Ready. Borrowers and their Active Subsidiaries have met the Y2K
Plan milestones such that all hardware and software systems will be Year 2000
Compliant and Ready in accordance with the Y2K Plan.
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(Z) Purchase Documents. All representations and
warranties of each Borrower contained in the Purchase Agreement and of Mayor's
and the Merger Subsidiary contained in the Merger Agreement are true and correct
in all material respects. All consents, waivers, approvals, filings with and
notices to Governmental Authorities or other Persons necessary to permit the
consummation of the transactions contemplated by the Purchase Agreement have
been obtained, made or given (except, in the case of consents of landlords under
real estate leases with Mayor's, to the extent that the failure to obtain the
consent of such party would not have a Material Adverse Effect), and the
transactions contemplated by the Purchase Agreement and the Merger Agreement
have been consummated. As a result thereof, all "Subordinated Debt" and the
"Revolving Credit Facility" (as such terms are defined in the Purchase
Agreement) have been paid in full, and ▇▇▇ ▇▇▇▇ is the owner of one hundred
percent (100%) of the capital stock of Mayor's.
(AA) Inactive Subsidiaries. None of the Inactive
Subsidiaries owns or leases any assets or conducts any business.
4.2. Reaffirmation. Each request for a Revolver Loan or for the
incurrence by Agent of any Letter of Credit Liability made by Borrowers' Agent
on behalf of Borrowers pursuant to this Agreement or any of the other Loan
Documents shall constitute (i) an automatic representation and warranty by
Borrowers to Agent and each Lender that there does not then exist any Default or
Event of Default and (ii) a reaffirmation by Borrowers as of the date of said
request that all of the representations and warranties of Borrowers contained in
this Agreement and the other Loan Documents are true in all material respects,
except for any changes disclosed pursuant to Section 5.1(P) and except to the
extent that such representation or warranty specifically relates to an earlier
date.
4.3. Survival of Representations and Warranties. Borrowers, jointly
and severally, covenant, warrant and represent to the Agent and each Lender that
all representations and warranties of Borrowers contained in this Agreement, or
in any of the other Loan Documents shall be true at the time of Borrowers'
execution thereof, and shall survive the execution, delivery and acceptance
hereof and thereof, and the closing of the transactions described herein or
related hereto.
SECTION 5. COVENANTS AND CONTINUING AGREEMENTS
5.1. Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations outstanding, each Borrower
shall (and shall cause each of its Active Subsidiaries, as appropriate, to):
(A) Charges. Pay and discharge all Charges prior to the
date on which such Charges become delinquent or penalties attach thereto, except
and to the extent only that such Charges are being Properly Contested that, and
that, if such contest is abandoned or determined adversely to a Borrower or an
Active Subsidiary, such Borrower or Active Subsidiary shall promptly pay all
such Charges and any penalties and interest payable in connection therewith.
Each Borrower
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and each Active Subsidiary shall pay and discharge any lawful claims which, if
unpaid, would become a Lien against any of such Borrower's or Active
Subsidiary's Properties except for Permitted Liens.
(B) Taxes. Timely file all federal, state and local tax
returns and other reports which such Borrower or such Active Subsidiary is
required by Applicable Law to file and maintain adequate reserves for the
payment of all taxes, assessments, governmental charges, and levies imposed upon
it, its income, or its profits, or upon any Property belonging to it.
(C) Transaction Costs. Pay to Agent, on demand, any and
all fees, costs or expenses which Agent pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to such
Borrower or any other Person on behalf of such Borrower, by Agent, of proceeds
of Revolver Loans and (ii) the depositing for collection of any check or item of
payment received or delivered to Agent on account of the Obligations.
(D) Corporate Existence. Preserve and maintain its
separate corporate existence and all rights, privileges, and franchises in
connection therewith, and maintain its qualification and good standing in all
states in which such qualification is necessary except to the extent that
failure to maintain such qualification and good standing would not have a
Material Adverse Effect.
(E) Properties. Maintain its Properties in good condition
and repair (ordinary wear and tear excepted), and make all necessary renewals,
repairs, replacements, additions and improvements thereto.
(F) Applicable Law. Comply in all material respects with
all Applicable Laws, including, without limitation, all Environmental Laws, and
obtain and keep in force any and all material licenses, permits, franchises, or
other governmental authorizations necessary to the ownership of its Properties
or to the conduct of its business.
(G) Books and Records. Keep, and cause each Subsidiary to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and permit representatives of Agent, from time
to time, as often as may be reasonably requested, during normal business hours,
to visit and inspect the Properties of such Borrower and each Active Subsidiary,
inspect and make extracts from its books and records, and discuss with its
officers, its employees and its independent accountants, such Borrower's and
each Active Subsidiary's business, assets, Liabilities, financial condition,
business prospects and results of operations.
(H) Financial Statements. Cause to be prepared and
furnished to Agent the following (all to be kept and prepared in accordance with
GAAP applied on a consistent basis, unless ▇▇▇ ▇▇▇▇'▇ certified public
accountants concur in any change therein and such change is disclosed to Agent
and is consistent with GAAP):
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(i) as soon as possible, but not later than
ninety (90) days after the close of each Fiscal Year of ▇▇▇ ▇▇▇▇,
unqualified audited financial statements of ▇▇▇ ▇▇▇▇ and its
Subsidiaries as of the end of such Fiscal Year, on a consolidated
basis, certified by a firm of independent certified public accountants
of recognized national standing or otherwise acceptable to Agent
(except for a qualification for a change in accounting principles with
which the independent public accountant concurs);
(ii) as soon as possible, but not later than
forty-five (45) days after the end of each Fiscal Quarter hereafter,
unaudited interim financial statements of ▇▇▇ ▇▇▇▇ and its Subsidiaries
as of the end of such Fiscal Quarter and as of the portion of ▇▇▇
▇▇▇▇'▇ Fiscal Year then elapsed, on a consolidated basis and on a
consolidating basis by line of business, certified by an Authorized
Officer as prepared in accordance with GAAP and fairly presenting the
consolidated financial position and results of operations of ▇▇▇ ▇▇▇▇
and its Subsidiaries for such Fiscal Quarter and period subject only to
changes from audit and year-end adjustments and except that such
statements need not contain notes;
(iii) as soon as possible, but not later than
thirty (30) days after the end of each Fiscal Month hereafter,
unaudited interim financial statements of ▇▇▇ ▇▇▇▇ and its Subsidiaries
as of the end of such Fiscal Month and as of the portion of ▇▇▇ ▇▇▇▇'▇
Fiscal Year then elapsed, on a consolidated basis and on a
consolidating basis by line of business, certified by an Authorized
Officer as prepared in accordance with GAAP and fairly presenting the
consolidated financial position and results of operations of ▇▇▇ ▇▇▇▇
and its Subsidiaries for such Fiscal Month and period subject only to
changes from audit and year-end adjustments and except that such
statements need not contain notes;
(iv) within forty-five (45) days after then end
of each Fiscal Quarter, a Compliance Certificate, with appropriate
insertions, signed by ▇▇▇ ▇▇▇▇'▇ Authorized Officer;
(v) promptly after approval by ▇▇▇ ▇▇▇▇'▇ board
of directors and in any event no later than March 31 in each year, an
operating plan for ▇▇▇ ▇▇▇▇ and its Subsidiaries for the then current
Fiscal Year including, without limitation, month by month Working
Estimates of ▇▇▇ ▇▇▇▇ and its Subsidiaries for such Fiscal Year;
(vi) promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements, financial
statements or reports which any Borrower has made available to its
shareholders and copies of any regular, periodic and special reports or
registration statements which any Borrower files with the Securities
and Exchange Commission or any governmental authority which may be
substituted therefor, or any national securities exchange; and
(vii) to the extent reasonably requested by the
Agent from time to time, (a) an accounts payable aging for trade
accounts payable and expense accounts payable balances with reconciling
items to the trade accounts payable and expense accounts payable
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balances shown on ▇▇▇ ▇▇▇▇'▇ Consolidated balance sheet most recently
delivered to Agent (b) a reconciliation of each Borrower's most current
Accounts agings to such balance sheet and (C) a reconciliation of each
Borrower's perpetual inventory to such balance sheet;
(viii) such other related data and information
(financial and otherwise) as Agent, from time to time, may reasonably
request.
Concurrently with the delivery of the financial statements described in this
Subsection (H)(i), Borrowers shall forward to Agent a copy of the accountants'
letter to ▇▇▇ ▇▇▇▇'▇ management that is prepared in connection with such
financial statements and also shall cause to be prepared and furnished to Agent
a certificate of the aforesaid certified public accountants certifying to Agent
and each Lender that, based upon their examination of the financial statements
of ▇▇▇ ▇▇▇▇ and its Subsidiaries, either (i) they are not aware of any Default
or Event of Default, or (ii) specifying the nature of any Default or Event of
Default.
(I) Collateral Reports. On a monthly basis, on or before
the fifteenth day of each Fiscal Month (or more frequently if requested by the
Agent), deliver to Agent a Borrowing Base Certificate for Borrowers, setting
forth a calculation of the Borrowing Base and reflecting the exclusion of
consigned inventory from Eligible Inventory, based on and accompanied by a
report on sales and collections and by a detailed schedule of all Inventory,
segregated by Collateral Location, specifically identifying all consigned
inventory and identifying all new and closed Collateral Locations since the last
Borrowing Base Certificate. If requested by the Agent from time to time, any
such Borrowing Base Certificate shall also be accompanied by copies of purchase
orders and invoices and by a Schedule of Accounts and an open accounts payable
listing, each as of the last Business Day of the preceding Fiscal Month.
(J) Physical Counts of Inventory. Conduct (or cause to be
conducted) a physical inventory and test count of its Inventory at each
Collateral Location not less often than once per year (or more frequently, in
each case, from and after the occurrence of any Event of Default, and during its
continuance, at the direction of Agent). Borrowers shall provide to Agent at its
request from time to time a schedule of the dates on which such physical
inventories will be conducted at each of Borrowers' Collateral Locations and
shall permit Agent to attend and observe such activity. In any event, Borrowers
shall provide Agent with a summary of each such physical count of Inventory
accompanied by Borrowers' report as to the value (at the lower of its cost or
its market value, with cost determined on a FIFO basis) of such Inventory and an
analysis of the book value of such Inventory in relation to the physical count
thereof.
(K) Gemological Review. Furnish to the Agent, on an
annual basis, concurrently with the delivery to the Agent of ▇▇▇ ▇▇▇▇'▇ annual
audited financial statements pursuant to Section 5.1(H) hereof, or more
frequently if requested by the Agent at any time when an Event of Default has
occurred and is continuing, a review report as to Borrowers' Inventory,
including a valuation thereof, prepared by a reputable non-affiliated
gemological company, selected by Borrowers but reasonably satisfactory to Agent.
Agent and Lenders agree that delivery to Agent in
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any calendar year, within the required time period set forth in the preceding
sentence, of a copy of a review report commissioned by Borrowers' certified
public accountants from a reputable non-affiliated gemological company in
connection with the preparation of such accountant's audit report for Borrowers'
financial statements for its preceding Fiscal Year shall satisfy the requirement
set forth in the preceding sentence for the calendar year in question if the
preparer of such report and the form and scope of such report are reasonably
satisfactory to Agent.
(L) Other Collateral Data. Deliver to Agent such other
information respecting the Collateral as Agent may reasonably request from time
to time.
(M) Other Notices. Notify Agent and each Lender in
writing: (i) promptly after knowledge thereof by an Authorized Officer or other
officer of a Borrower, of the commencement of any litigation affecting a
Borrower or any of its Properties, and of the institution of any administrative
proceeding which, in either case, may have a Material Adverse Effect; (ii)
promptly after knowledge thereof by an Authorized Officer or other officer of a
Borrower, of any labor dispute to which a Borrower may become a party, any
strikes or walkouts relating to any of its facilities, and the expiration of any
labor contract to which it is a party or by which it is bound; (iii) promptly
after knowledge thereof by an Authorized Officer or other officer of a Borrower,
of any Default or Event of Default; (iv) promptly after knowledge thereof by an
Authorized Officer or other officer of a Borrower, of any material default by a
Borrower under any note, indenture, loan agreement, mortgage, lease, deed,
guaranty or other similar agreement relating to any material Indebtedness of a
Borrower or by ▇▇▇ ▇▇▇▇ under the Sam's Club Agreement, and of ▇▇▇ ▇▇▇▇'▇
receipt of any notice of termination of the Sam's Club Agreement; (v) at least
thirty (30) days prior thereto, of the closing of any retail location of a
Borrower; and (vi) promptly after the rendition thereof, of any judgment
rendered against a Borrower or any of its Subsidiaries in an amount in excess of
Two Hundred Fifty Thousand Dollars ($250,000). Each Borrower shall also provide
written notice to Agent of (1) all jurisdictions in which such Borrower or any
Active Subsidiary becomes qualified after the Closing Date to transact business,
(2) any material change after the Closing Date in the authorized and issued
Capital Stock or other equity interests of such Borrower or any Active
Subsidiary or any other material amendment to their charter, by-laws or other
organization documents and (3) any Subsidiary created or acquired by a Borrower
or any Active Subsidiary after the Closing Date, (presuming a consent is
obtained in respect thereof pursuant hereto, to the extent required), such
notice, in each case, to identify the applicable jurisdictions, capital
structures or Subsidiaries, as applicable.
(N) Further Assurances. At Agent's reasonable request,
promptly execute or cause to be executed and deliver to Agent any and all
documents, instruments and agreements deemed necessary by Agent or the Requisite
Lenders to give effect to or carry out the terms or intent of this Agreement or
any of the other Loan Documents.
(O) Communications. Permit Agent to communicate directly
with any of the following Persons concerning each Borrower, its business, the
Collateral and the Revolver Loans (and Agent is irrevocably authorized to
communicate with such Persons): (a) any Person employed by a Borrower; (b)
Borrowers' present and future independent public accountants, each of whom is
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authorized by Borrowers to communicate with Agent and to disclose to Agent
any and all matters relating to Borrowers, their financial condition and
prospects, and the Collateral, provided that the Agent shall be bound by the
confidentiality provisions set forth in Section 8.29 with respect to any
information so disclosed to it; and (c) at any time when a Default or Event of
Default has occurred and is continuing, any service bureau, warehousing service,
freight forwarded, trade creditor, consignee, bailee or landlord.
(P) Supplemented Schedules. As soon as practicable after
a Borrower becomes aware thereof, but in any event concurrently with delivery by
Borrowers of the quarterly Financial Statements required to be delivered by
subsection (H), supplement in writing and deliver to Agent revisions of the
Schedules, to the extent necessary to disclose new or changed facts or
circumstances occurring within any Fiscal Quarter after the Closing Date in
respect of any material data set forth in, or which are the subject of, any such
Schedules; provided that subsequent disclosures shall not constitute a cure or
waiver of any Default or Event of Default resulting from the matters disclosed
therein.
(Q) Insurance. In addition to the insurance required
herein with respect to the Collateral, maintain, with financially sound and
reputable insurers, insurance with respect to its Properties and business
against such casualties and contingencies of such type (including product
liability, larceny, embezzlement, or other criminal misappropriation insurance)
and in such amounts as is customary in its business or as otherwise reasonably
required by Agent.
(R) Leases. Keep each of its material leases of real
property in full force and effect through the schedule expiration data of such
lease, except for leases terminated by a Borrower in the exercise of its
reasonable business judgment, the termination of which would not have a Material
Adverse Effect.
(S) Year 2000 Compatibility. ▇▇▇ ▇▇▇▇ will deliver to
Agent (i) simultaneously with the delivery of its quarterly financial statements
pursuant to Section 5.1(H), a statement of an Authorized Officer of ▇▇▇ ▇▇▇▇ to
the effect that nothing has come to such officer's attention to cause such
officer to believe that the Y2K Plan milestones have not been met in a manner
such that ▇▇▇ ▇▇▇▇'▇ and its Active Subsidiaries' hardware and software systems
will not be Year 2000 Compliant and Ready in accordance with the Y2K Plan; and
(ii) within five (5) Business Days after any Authorized Officer or other officer
of a Borrower becomes aware of any deviations from the Y2K Plan which would
cause compliance with the Plan to be delayed or not achieved in any material
respect, a statement of an Authorized Officer of ▇▇▇ ▇▇▇▇, setting forth the
details thereof and the action which such Borrower is taking or proposes to take
with respect thereto;
5.2. Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations outstanding, no Borrower
shall (and shall not permit any Active Subsidiary to), unless the Requisite
Lenders otherwise have consented in writing thereto.
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(A) Merger. Merge or consolidate with any Person; or
acquire all or any substantial part of the Properties of any Person; provided,
however, that ▇▇▇ ▇▇▇▇ or any Active Subsidiary may acquire all of the stock of,
or all or a substantial part of the assets of another Person, so long as (i) the
aggregate amount expended by ▇▇▇ ▇▇▇▇ and its Active Subsidiaries to consummate
all such acquisitions during the term of this Agreement does not exceed
$30,000,000 (inclusive of the value of any Property or capital stock contributed
or conveyed by ▇▇▇ ▇▇▇▇ or its Active Subsidiaries as consideration in such
acquisitions), (ii) ▇▇▇ ▇▇▇▇ provides to Agent a summary of the terms of such
acquisition, including a description of the stock or assets to be acquired, the
purchase price to be paid therefor and other material terms and notifies Agent
of the closing of such acquisition; (iii) Agent receives a perfected first
priority Lien in the assets or stock so acquired as security for the
Obligations, subject only to Permitted Liens, and the Agent receives such legal
opinions and other confirmation of the foregoing as it shall request; (iv) any
Subsidiary of ▇▇▇ ▇▇▇▇ acquired in any such Acquisition executes a Subsidiary
Guaranty in favor of Agent, and Agent receives such legal opinions and other
confirmation of the foregoing as it shall request; (v) on a pro forma basis,
after giving effect to any such acquisition, ▇▇▇ ▇▇▇▇ and its Consolidated
Subsidiaries are in compliance with the provisions of Section 5.3 hereof; (vi)
neither ▇▇▇ ▇▇▇▇ nor any of its Subsidiaries incurs or assumes any Indebtedness
in connection with the consummation of such acquisition, except Permitted
Indebtedness; and (vii) no Default or Event of Default has occurred and is
continuing or will result from the consummation of any such acquisition.
(B) Loans. Make any loans or other advances of money
(other than for salary, travel advances, advances against commissions and other
similar advances in the ordinary course of business and pursuant to employee
charge accounts in the ordinary course of its business) to any Person,
including, any Affiliates, officers or employees; provided, however, that
Borrowers may make loans or advances to the Active Subsidiaries, and the Active
Subsidiaries may make loans or advances to Borrowers (including, in each case,
extensions of credit for the purchase of Inventory) so long as (i) the amount of
the Indebtedness outstanding among Borrowers and the Israeli Subsidiary does not
exceed Five Million Dollars ($5,000,000) in the aggregate at any time, (ii) the
amount of the Indebtedness outstanding among Borrowers and the Mexican
Subsidiary does not exceed Three Million Dollars ($3,000,000) in the aggregate
at any time, and (iii) the amount of the Indebtedness outstanding among
Borrowers and the Guarantor Subsidiaries (other than the Mexican Subsidiary)
does not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) in the
aggregate at any time; provided, further, however, that Borrowers and the Active
Subsidiaries shall cease making such loans and advances available to each other
if directed to do so by the Agent or the Requisite Lenders in writing at any
time when an Event of Default has occurred and is continuing. At the request of
the Agent made at any time hereafter, the applicable Borrowers and Active
Subsidiaries shall cause such Indebtedness to be evidenced by promissory notes
and shall cause such notes to be endorsed in blank and delivered to the Agent as
additional Collateral.
(C) Indebtedness. Create, incur, assume, or suffer to
exist, any Indebtedness or Contingent Obligations, except Permitted
Indebtedness.
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(D) Affiliates. Enter into, or be a party to any
transaction with any Affiliate or stockholder, officer or employee, except (i)
for the loans, advances and extensions of credit permitted to be made between
and among Borrowers and the Active Subsidiaries pursuant to Section 5.2(B), (ii)
as permitted pursuant to Section 5.2(K) and (iii)in the ordinary course of and
pursuant to the reasonable requirements of its business and upon fair and
reasonable terms which, upon Agent's request, are fully disclosed to Agent and
are no less favorable than would obtain in a comparable arm's length transaction
with a Person not an Affiliate or stockholder, officer or employee of such
Borrower or such Subsidiary.
(E) Partnerships. Become or agree to become a general or
limited partner in any general or limited partnership or a joint venturer in any
joint venture.
(F) Adverse Transactions. Enter into any transaction
which materially and adversely affects or may materially and adversely affect
the Collateral or such Borrower's ability to repay the Obligations.
(G) Liens. Create or suffer to exist any Lien upon any of
its Property, income or profits, whether now owned or hereafter acquired, except
Permitted Liens.
(H) Subordinated Debt. Except as otherwise may be
permitted under any Subordinated Debt Agreement, make any payment of any part or
all of any Subordinated Debt; or otherwise repurchase, redeem or retire any
instrument evidencing any such Subordinated Debt prior to maturity; or enter
into any agreement which could in any way be construed to amend, modify, alter
in any material respect or terminate any one or more instruments or agreements
evidencing or relating to any Subordinated Debt.
(I) Distributions. Declare or make any Distributions
other than (i) Distributions payable solely in shares of capital stock which, to
the extent that such shares of capital stock are issued by JBM, Mayor's or any
Guarantor Subsidiary, are pledged to the Agent pursuant to the Stock Pledge
Agreement and (ii) distributions payable in cash by a Subsidiary of a Borrower
(including, in the case of ▇▇▇ ▇▇▇▇, JBM and Mayor's) to a Borrower to be used
by such Borrower to pay the Obligations and/or operating expenses and taxes
incurred in the ordinary course of business.
(J) Subsidiaries. Create any Subsidiary; provided,
however, that each Borrower and each Guarantor Subsidiary may create
Subsidiaries for business purposes so long as (i) no Default or Event of Default
has occurred and is continuing, (ii) each Subsidiary so created shall execute
and deliver in favor of Agent a Subsidiary Guaranty and such UCC financing
statements and other documents as Agent deems necessary to perfect its lien in
the Property of such Subsidiary granted under the Subsidiary Guaranty, (iii)
such Borrower or Guarantor Subsidiary shall have pledged to Agent all of the
stock of each Subsidiary so created and (iv) ▇▇▇ ▇▇▇▇ shall have delivered to
Agent, or caused to be delivered to Agent, such legal opinions and other
confirmation of the foregoing matters as it shall request.
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(K) Sales and other Divestitures of Properties. Sell,
lease or otherwise dispose of any of its Properties, including any disposition
of Property as part of a sale and lease back transaction, to or in favor of any
Person (including any Subsidiary), except (i) loans, advances and extensions of
credit permitted pursuant to Section 5.2(B), (ii) Distributions permitted
pursuant to Section 5.2(I), (iii) sales of Inventory by Borrowers or the Active
Subsidiaries in the ordinary course of business (other than to Inactive
Subsidiaries) except if the Agent or the Requisite Lenders have directed
Borrowers in writing to cease (and cause the Active Subsidiaries to cease)
making such sales following the occurrence of, and during the continuance of, an
Event of Default, (iv) transfers by a Subsidiary of Property to a Borrower, (v)
so long as no Default or Event of Default has occurred and is continuing,
transfers of immaterial items of Equipment or similar assets by a Borrower to
any Guarantor Subsidiary in the ordinary course of business, (vi) the sale by
▇▇▇ ▇▇▇▇ of its Property Held for Sale, provided that ▇▇▇ ▇▇▇▇ shall remit the
Net Proceeds of any such sale to the Agent for application to the Revolver Loans
and (vii) any other dispositions expressly authorized by this Agreement
(including, without limitation, pursuant to Section 6.9(D) hereof).
(L) Place of Business. Transfer its principal place of
business or chief executive office to any location other than those at which the
same are presently kept or maintained, as set forth on the Location and Real
Property Schedule, except upon at least thirty (30) days prior written notice to
Agent and after the delivery to Agent of financing statements, if required by
Agent, in form satisfactory to Agent to perfect or continue the perfection of
Agent's Lien and security interest hereunder.
(M) Business Purposes. Enter into any business other than
the jewelry business or make any material change in any of Borrower's or any
Subsidiary's business objectives or purposes.
(N) Corporate Name. Use any corporate name (other than
its own) or any fictitious name, trade style or "d/b/a" except for any names
disclosed on the Corporate Information Schedule and except upon forty-five (45)
days prior written notice to Agent.
(O) Margin Security. Own, purchase or acquire (or enter
into any contract to purchase or acquire) any "margin security" as defined by
any regulation of the Board of Governors as now in effect or as the same may
hereafter be in effect unless such purchase or acquisition will not cause a
violation of Regulations G or U or any other regulation of the Board of
Governors then in effect.
(P) Restricted Investment. Make or have any Restricted
Investment.
(Q) Bank Accounts; Commingling. Establish any deposit
accounts for the deposit of any Proceeds of Collateral not expressly
contemplated herein or commingle any funds not constituting Proceeds of
Collateral in any deposit account established pursuant hereto for the depositing
of Proceeds of Collateral.
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(R) Fiscal Year. Change its Fiscal Year, or permit any
Subsidiary other than the Mexican subsidiary or the Israeli Subsidiary to have a
fiscal year different from that of ▇▇▇ ▇▇▇▇.
(S) Capital Stock. Sell or otherwise dispose of any
shares of capital stock of any Subsidiary, or permit any Subsidiary to issue any
additional shares of its capital stock except director's qualifying shares.
(T) Consolidated Tax Return. File or consent to the
filing of any consolidated income tax return with any Person other than a
Subsidiary.
(U) Consigned Inventory. Permit any financing statement
filed by a consignor of inventory to such Borrower or Active Subsidiary to cover
proceeds of such inventory, other than cash proceeds paid at the time of sale.
Each Borrower will provide to the Agent on a quarterly basis concurrently with
the delivery to the Agent and Lenders of ▇▇▇ ▇▇▇▇'▇ quarterly financial
statements pursuant to this Agreement, copies of all financing statements filed
by consignors of inventory during the preceding fiscal quarter.
(V) Purchase Documents. Amend, modify or supplement, or
acquiesce in any amendment, modification or supplement of any of the Purchase
Documents, in each case, in any material respect.
(W) Sam's Club Agreements. (i) Terminate the Sam's Club
Agreement or (ii) amend or modify the Sam's Club Agreement in any way which
materially and adversely affects or may materially and adversely affect the
Collateral or the Borrowers' ability to repay the Obligations.
(X) Inactive Subsidiaries. Permit any of the Inactive
Subsidiaries to conduct any business or own any assets; provided, however, that
nothing contained herein shall prevent a Borrower from dissolving an Inactive
Subsidiary.
5.3. Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations outstanding, ▇▇▇ ▇▇▇▇ and
its Subsidiaries shall:
(A) Leverage Ratio. Maintain a Leverage Ratio of not more
than 4.0:1 as of the end of each Fiscal Quarter.
(B) Fixed Charge. Maintain a Fixed Charge Coverage of not
less than 2.5:1 as of the end of each Fiscal Quarter.
(C) Tangible Net Worth. Maintain Tangible Net Worth of
not less than the amount set forth below for each Fiscal Quarter set forth
below:
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Fiscal Quarter Amount
-------------- ------
2nd Fiscal Quarter 1999 $100,000,000
3rd Fiscal Quarter 1999 $100,000,000
4th Fiscal Quarter 1999 $108,000,000
1st Fiscal Quarter 2000 $108,000,000
2nd Fiscal Quarter 2000 $108,000,000
3rd Fiscal Quarter 2000 $108,000,000
4th Fiscal Quarter 2000 $115,000,000
1st Fiscal Quarter 2001 $115,000,000
2nd Fiscal Quarter 2001 $115,000,000
3rd Fiscal Quarter 2001 $115,000,000
4th Fiscal Quarter 2001 $125,000,000
1st Fiscal Quarter 2002 $125,000,000
2nd Fiscal Quarter 2002 $125,000,000
3rd Fiscal Quarter 2002 $125,000,000
4th Fiscal Quarter 2002 $135,000,000
and each Fiscal Quarter
thereafter
SECTION 6. COLLATERAL
6.1. Grant of Security Interest. To secure the prompt payment and
performance of the Obligations, each Borrower hereby grants to Agent, for its
benefit and the ratable benefit of Lenders, a continuing security interest in,
security title to and Lien upon all the Collateral of such Borrower.
6.2. Representations, Warranties and Covenants -- Collateral
Generally. To induce Agent and each Lender to enter into this Agreement,
Borrowers, jointly and severally, represent and warrant to, and covenants with,
Agent and each Lender as follows:
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(A) The Collateral is now and will continue to be owned
solely by a Borrower or, subject to the limitations on transfer set forth in
Section 5.2(K), a Subsidiary Guarantor. No other Person has or will have any
right, title, interest, claim, or Lien therein, thereon or thereto other than a
Permitted Lien.
(B) The Liens granted to Agent are to be first and prior
Liens on the Collateral, subject only to Permitted Liens. No further action need
be taken to perfect the Liens granted to Agent, other than the filing of
continuation statements under the Code or other Applicable Law, continued
possession by Agent of that portion of the Collateral constituting Instruments
or Documents and, if the Agent elects to perfect its Lien in motor vehicles as
provided in Section 6.3 below, the processing of Lien notations on motor vehicle
title certificates.
(C) All goods evidenced by the Collateral constituting
Chattel Paper, Documents or Instruments, the possession of which has been given
to Agent, are owned by a Borrower and the same are free and clear of any Lien,
other than Permitted Liens.
6.3. Lien Perfection. Each Borrower agrees to execute financing
statements provided for by the Code or other Applicable Law together with any
and all other instruments, assignments or documents and is to take such other
action as may be required to perfect or to continue the perfection of Agent's
security interest in the Collateral, including, without limitation, the
execution, at Agent's request, of all documents deemed necessary by Agent to
cause Agent's Lien to be noted on any motor vehicle title certificates for motor
vehicles forming a part of the Collateral. Unless prohibited by Applicable Law,
each Borrower hereby authorizes Agent to execute and file any such financing
statement on such Borrower's behalf. The parties agree that a carbon,
photographic or other reproduction of this Agreement is to be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
6.4. Location of Collateral. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by a Borrower at one or
more of the Collateral Locations of such Borrower set forth in the Location and
Real Property Schedule and shall not be located elsewhere except for (A) sales
of Inventory in the ordinary course of business except if the Agent or the
Requisite Lenders have directed Borrowers to cease making such sales following
the occurrence of, and during the continuance of, an Event of Default; (B) the
storage or location of Inventory at locations within the United States and its
territories which have adopted the Uniform Commercial Code in addition to those
shown on the Location and Real Property Schedule if (i) such Borrower gives
Agent written notice of the new location at least forty-five (45) days prior to
placing Inventory at such location, (ii) Agent's security interest in such
Inventory is and continues to be a duly perfected, first priority Lien thereon
(and Borrowers take all actions required by the Agent pursuant to the provisions
of Section 6.3 hereof to ensure the foregoing), (iii) neither such Borrower's
nor Agent's right of entry upon the premises where such Inventory is located, or
its right to remove the Inventory therefrom, is in any way restricted, (iv) the
owner of such premises executes a Lien Waiver or the Agent has imposed an
appropriate Reserve for rentals as such premises, as determined by the Agent
based on its customary credit considerations and (v) all negotiable documents
and receipts in
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respect of any Collateral maintained at such premises are promptly delivered to
Agent; and (C) removals in connection with dispositions of Equipment that are
authorized herein.
6.5. Insurance of Collateral. Each Borrower shall maintain and pay
for insurance upon all of its Collateral wherever located, in storage or in
transit in vehicles, including goods evidenced by documents, covering casualty,
hazard, public liability and such other risks and in such amounts and with such
insurance companies as is to be satisfactory to Agent to insure Agent's interest
in the Collateral. Each Borrower is to deliver evidence of such policies
(including, without limitation, if Agent so requests, complete copies of such
policies) to Agent with satisfactory lender's loss payable endorsements naming
Agent loss payee and additional insured. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than thirty (30)
days prior written notice to Agent in the event of cancellation of the policy
for any reason whatsoever and a clause that the interest of Agent is not to be
impaired or invalidated by any act or neglect of a Borrower or owner of the
Property nor by the occupation of the premises for purposes more hazardous than
are permitted by said policy. If a Borrower fails to provide and pay for such
insurance, Agent may, at such Borrower's expense, procure the same, but is not
to be required to do so. Each Borrower agrees to deliver to Agent, promptly as
rendered, true copies of all reports made in any reporting forms to insurance
companies. In addition to the insurance required herein with respect to the
Collateral, each Borrower shall maintain, with financially sound and reputable
insurers, insurance with respect to its Properties and business against such
casualties and contingencies of such type (including product liability, larceny,
embezzlement, or other criminal misappropriation insurance) and in such amounts
as is customary in the business or as otherwise required by Agent.
6.6. Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping Collateral (including,
without limitation, all rent payable by a Borrower to any landlord of any
premises where any of the Collateral may be located), and any and all Charges
are to be borne and paid by such Borrower. All sums paid or incurred by Agent in
enforcing or protecting its Lien on or rights and interest in the Collateral or
any of its rights or remedies under this or any other agreement between the
parties hereto or in respect of any of the transactions to be had hereunder
until paid by Borrowers to Agent with interest at the Default Rate, are to be
considered Obligations, secured by all Collateral and by any and all other
collateral, security, assets, reserves, or funds of Borrowers in or coming into
the hands or inuring to the benefit of Agent. Agent shall not be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Agent's actual possession) or for any diminution in the
value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other Person whomsoever, but the same shall be at each
Borrower's sole risk.
6.7. Special Provisions Relating to Accounts.
(A) Representations, Warranties and Covenants. With
respect to all Accounts, Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by each Borrower
with respect to any Account or Accounts. With respect to
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each Account of such Borrower, each Borrower represents and warrants: (i) it is
genuine and in all respects what it purports to be, and it is not evidenced by a
judgment; (ii) it arose out of a completed, bona fide sale and delivery of goods
or rendition of services by such Borrower in the ordinary course of its business
and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and forming a part of the contract
between such Borrower and the Account Debtor; (iii) to such Borrower's
knowledge, the Account Debtor thereunder (a) had the capacity to contract at the
time any contract or other document giving rise to the Account was executed, and
is Solvent, (iv) to such Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor thereunder
which could reasonably be expected to result in any material adverse change in
such Account Debtor's financial condition or the collectibility of such Account;
(v) the Account is for a liquidated amount maturing as stated in the duplicate
invoice covering such sale or rendition of services, a copy of which is
available to Agent; (vi) to such Borrower's knowledge, at the time of sale, such
Account, and Agent's security interest therein, was not subject to any offset,
Lien, deduction, defense, dispute, counterclaim or any other adverse condition
except for disputes resulting in returned goods where the amount in controversy
is immaterial, and each such Account is absolutely owing to a Borrower and was
not contingent in any respect or for any reason, and, to such Borrower's
knowledge, there are no facts, events or occurrences which in any way impair the
validity or enforceability thereof or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements with respect
thereto; and (vii) such Borrower has made no agreement with any Account Debtor
for any deduction therefrom, except discounts or allowances which are granted by
such Borrower in the ordinary course of its business for prompt payment and
which are reflected in the calculation of the net amount of each respective
invoice related thereto.
(B) Administration of Accounts. Each Borrower shall keep
accurate and complete records of its Accounts and all payments and collections
thereon. Any discounts, allowances or credits to such Accounts shall be
reflected in the Borrowing Base Certificates delivered by Borrowers to the Agent
pursuant to this Agreement. Each Borrower shall provide Agent with written
notice of any amounts in excess of One Hundred Thousand Dollars ($100,000) in
dispute between such Borrower and an Account Debtor, explaining in detail the
reason for such dispute, all claims related thereto and the specific amount in
controversy. If an Account includes a charge for any tax payable to any
governmental taxing authority, Agent may pay the amount thereof to the proper
taxing authority for the account of a Borrower and charge the Loan Account
therefor. Each Borrower is to notify Agent if any Account includes any tax due
to any governmental taxing authority and, in the absence of such notice, Agent
is to have the right to retain the full proceeds of the Account and is not to be
liable for any taxes to any governmental taxing authority that may be due by
such Borrower by reason of the sale and delivery creating the Account. Any of
Agent's officers, employees or agents are to have the right, at any time, in the
name of a Borrower, or, after the occurrence of a Default of Event of Default
and during the continuance thereof, in the name of Agent or any designee of
Agent, to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone or otherwise. Each Borrower is to cooperate fully
with Agent to facilitate any such verification process.
(C) Collection of Accounts. Each Borrower shall deposit
all proceeds of the Collateral, including, without limitation, all remittances
received by such Borrower on account of Accounts, or cause the same to be
deposited in lockbox or blocked accounts pursuant to a Bank
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Agency Agreement. Agent assumes no responsibility for such lockbox arrangement,
including, without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder.
(D) Governmental Accounts. If any of the Accounts, the
face value of which exceeds Fifty Thousand Dollars ($50,000) individually or in
the aggregate, arises out of a contract with the United States of America, or
any department, agency, subdivision or instrumentality thereof, each Borrower
shall promptly notify Agent thereof in writing and is to execute any instruments
and take any other action required or requested by Agent to comply with the
provisions of the Federal Assignment of Claims Act or any other Applicable Law.
6.8. Special Provisions Relating to Inventory. With respect to
Inventory, each Borrower represents and warrants to Agent that Agent may rely on
all statements and representations made by such Borrower with respect to any
Inventory and that: (i) all Inventory is presently and will continue to be
located at such Borrower's places of business listed in the Location and Real
Property Schedule or established pursuant to Section 6.4 hereof and will not be
removed therefrom except as authorized by this Agreement; (ii) no Inventory is
or will be sold in violation of the Fair Labor Standards Act or any other
Applicable Law and (iii) all Inventory included as Eligible Inventory in any
Borrowing Base Certificate will satisfy each of the conditions set forth in the
second sentence of the definition of Eligible Inventory.
6.9. Special Provisions Relating to Equipment.
(A) Representations, Warranties and Covenants. With
respect to the Equipment, each Borrower represents, warrants and covenants to
and with Agent that: (i) the Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto are to be made so
that the value and operating efficiency of the Equipment are to be maintained
and preserved, reasonable wear and tear excepted; and (ii) such Borrower will
not permit any of the Equipment to become affixed to any Real Property leased to
such Borrower so that an interest arises therein under the real estate laws of
the applicable jurisdiction unless the landlord and each mortgage of such Real
Property has executed a Lien Waiver or mortgagee waiver in favor of Agent; and
Borrower will not permit any of the Equipment to become an accession to any
personal Property that is subject to a Lien unless the Lien is a Permitted Lien.
(B) Evidence of Ownership of Equipment. Promptly on
request therefor by Agent, each Borrower shall deliver to Agent any and all
evidence of ownership, if any, of any of the Equipment (including, without
limitation, certificates of title and applications for title).
(C) Records and Schedules of Equipment. Each Borrower
shall maintain accurate records itemizing and describing the kind, type,
quality, quantity and value of its Equipment and all dispositions made as
authorized below and shall furnish Agent with a current schedule containing the
foregoing information from time to time upon Agent's request.
(D) Disposition of Equipment. No Borrower will sell,
lease or otherwise dispose of or transfer any of the Equipment or any part
thereof without the prior written consent of Agent; provided, however, that the
foregoing restriction is not to apply, for so long as no Default or Event
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of Default exists, to (i) dispositions of Equipment which, in the aggregate
during any Fiscal Year, as to all Borrowers, together with any Equipment
disposed of by Guarantor Subsidiaries in such Fiscal Year in accordance with the
corresponding provision of the Subsidiary Guaranty, has a fair market value or
book value, whichever is more, of Five Hundred Thousand Dollars ($500,000) or
less, provided that all Net Proceeds thereof are remitted to Agent for
application to the Obligations, (ii) dispositions of obsolete Equipment,
provided that all Net Proceeds are remitted to Agent for application to the
Obligations, or (iii) replacements of Equipment that is substantially worn or
damaged with Equipment of like kind, function and value, provided that the
replacement Equipment shall be acquired prior to or substantially concurrently
with any disposition of the Equipment that is to be replaced and the replacement
Equipment is to be free and clear of Liens (except for Permitted Liens).
6.10. Special Provisions Relating to Realty. At the Agent's request,
at any time after the occurrence of, and during the continuance of, a Default or
Event of Default, each Borrower shall execute and deliver to Agent, or cause its
Guarantor Subsidiaries to execute and deliver to Agent, such Mortgages on such
Borrower's or its Guarantor Subsidiaries' Real Property as Agent shall request,
and shall deliver such Mortgages to Agent, accompanied by mortgagee title
insurance policies in form and substance satisfactory to the Agent, obtained at
Borrowers' expense.
6.11. Additional Collateral. At the Agent's request, at any time
after the occurrence of, and during the continuance of, a Default of Event of
Default, at Borrower's expense, Borrowers shall take, and cause each of their
Subsidiaries to take, all actions as may be necessary or appropriate under
applicable law to cause the Agent's security interest in the stock of the
Mexican Subsidiary and ▇▇▇ ▇▇▇▇ Marketing/Puerto Rico, Inc. to be a first
priority perfected Lien.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES ON DEFAULT
7.1. Events of Default. The occurrence of any one or more of the
following conditions or events is to constitute an "Event of Default," whatever
the reason for such event or condition and whether it be voluntary or
involuntary, or within or without the control of any Borrower, any Guarantor or
any Active Subsidiary, or be effected by operation of law or pursuant to any
order or judgment of a court or otherwise:
(A) Non-Payment. Borrowers fail to pay any of the
Obligations, including, without limitation, any principal or interest owing on
any Note on the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise); provided, however, that failure to make any
payments of interest hereunder on the due date therefor shall not become an
Event of Default hereunder if cured within three (3) days after the due date.
(B) Misrepresentation. Any warranty, representation, or
other statement made or furnished to Agent by or on behalf of any Borrower or
any Guarantor or in any instrument, certificate or financial statement furnished
in compliance with or in reference to this Agreement or any of the other Loan
Documents proves to have been false or misleading in any material respect when
made or furnished.
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(C) Covenants. Borrowers fail or neglect to perform, keep
or observe (i) any covenants to comply with Applicable Law or any of the
covenants set forth in Sections 5.1(Q), 5.2, 5.3 or Article 6 (other than
Sections 6.7(B), 6.7(D) and 6.9(C)), (ii) any of the covenants set forth in
Section 5.1 (C), (D), (G), (H), (I), (K), (L), (M), (N), (O) and (S), Section
6.7(B), 6.7(D) or Section 6.9(c) and the breach of such covenant is not cured to
the Requisite Lenders' satisfaction within fifteen (15) days after the sooner to
occur of any Borrower's receipt of notice of such breach from Agent or the date
on which such failure or neglect first becomes known to an officer of any
Borrower, or (iii) any other covenant contained in this Agreement (not dealt
with specifically elsewhere in this Section) and the breach of such other
covenant is not cured to the Requisite Lenders' satisfaction within thirty (30)
days after the sooner to occur of any Borrower's receipt of notice of such
breach from Agent or the date on which such failure or neglect first becomes
known to any officer of any Borrower.
(D) Loan Documents. Any Borrower or any Guarantor fails
or neglects to perform, keep or observe any term, condition or agreement
contained in any of the other Loan Documents or any default otherwise occurs
thereunder and such failure, neglect or default is not cured to the Requisite
Lenders' satisfaction within thirty (30) days after the sooner to occur of any
Borrower's or Guarantor's receipt of notice of such breach from Agent or the
date on which such failure or neglect first becomes known to any officer of any
Borrower or Guarantor.
(E) Cross-Default. Any default or event of default occurs
on the part of any Borrower, Guarantor or Active Subsidiary (including
specifically, but without limitation, due to non-payment) under any agreement,
document or instrument to which such Borrower, Guarantor or Active Subsidiary is
a party or by which such Borrower, Guarantor or Active Subsidiary or any of its
Property is bound, creating or relating to any Indebtedness (other than the
Obligations) in excess of Two Million Dollars ($2,000,000) if the holder of such
Indebtedness has the right to accelerate the payment or maturity of such
Indebtedness in consequence of such event of default or to demand payment of
such Indebtedness.
(F) Material Loss. There occurs any material loss, theft,
damage or destruction not fully covered by insurance, or any sale, lease or
encumbrance of any of the Collateral of any Borrower or Guarantor Subsidiary or
the making of any levy, seizure, or attachment thereof or thereon, except in all
cases as may be specifically permitted by other provisions of this Agreement.
(G) Solvency. Any Borrower, Guarantor or Active
Subsidiary ceases to be Solvent or suffers the appointment of a receiver,
trustee, custodian or similar fiduciary, or makes an assignment for the benefit
of creditors, or any petition for an order for relief is filed by or against any
Borrower, Guarantor or Active Subsidiary under the Bankruptcy Code (and, if
against any Borrower, Guarantor or Active Subsidiary, such proceeding shall not
have been vacated, discharged or stayed within sixty (60) days from the entry
thereof), or any Borrower, Guarantor or Active Subsidiary makes any offer of
settlement, extension or composition to their respective unsecured creditors
generally, or any motion, complaint or other pleading is filed in any bankruptcy
case of any Person other than a Borrower, Guarantor or Active Subsidiary and
such motion, complaint or pleading seeks the consolidation of a Borrower's,
Guarantor's or Active Subsidiary's assets and Liabilities with the assets and
Liabilities of such Persons.
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(H) Cessation of Business. A cessation of a substantial
part of the business of any Borrower for a period which significantly affects
such Borrower's capacity to continue its business on a profitable basis; or any
Borrower suffers the loss or revocation of any license or permit now held or
hereafter acquired by such Borrower which is necessary to the continued or
lawful operation of its business; or any Borrower is enjoined, restrained or in
any way prevented by court, governmental or administrative order from conducting
all or any material part of its business affairs.
(I) Change of Control. (i) any Person or group of related
Persons is or becomes the owner of more than fifty percent (50%) of the Voting
Stock of ▇▇▇ ▇▇▇▇, or (ii) ▇▇▇ ▇▇▇▇ shall cease to own one hundred percent
(100%) of the Voting Stock of Mayor's, JBM or any other of ▇▇▇ ▇▇▇▇'▇
Subsidiaries, except, in the case of an Inactive Subsidiary, as a result of its
dissolution.
(J) Executive Management. There shall cease to be a duly
authorized and empowered chairman and chief executive officer of ▇▇▇ ▇▇▇▇ or
Mayor's for a period of ninety (90) consecutive days.
(K) Contest of Loan Documents. Any Borrower or any
Guarantor, or any Affiliate of either, challenges or contests in any action,
suit or proceeding the validity or enforceability of this Agreement or any of
the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Agent.
(L) Guaranty. Any Guarantor revokes or attempts to revoke
the Guaranty Agreement signed by such Guarantor, or repudiates such Guarantor's
liability thereunder or becomes in default under the terms thereof.
(M) Money Judgment. Any money judgment, writ of
attachment or similar process is entered or filed against any Borrower, any
Active Subsidiary or any Guarantor or any of its Property in an amount in excess
of $2,500,000 (unless covered by insurance).
(N) Subordinated Debt Agreement. Any Subordinated Debt
Agreement is determined by a court of competent jurisdiction to be unenforceable
by the Agent.
(O) Material Adverse Change. The occurrence of a Material
Adverse Effect.
(P) Sam's Club Agreement. The Sam's Club Agreement shall
have a remaining term of less than six (6) months (unless such agreement is
automatically and unconditionally renewable at expiration for a term of at least
twelve (12) months) or shall be terminated unless, in either case, replaced by
an arrangement between ▇▇▇ ▇▇▇▇ and Sam's Club which is satisfactory to the
Requisite Lenders, in the reasonable exercise of their credit judgment.
7.2. Acceleration of the Obligations. Upon the occurrence of any
Event of Default described in Section 7.1(G), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
requirements of any kind, all of which are hereby expressly waived by each
Borrower. Upon the occurrence and during the continuance of any other Event of
Default, Agent may and, at the direction of the Requisite Lenders, Agent shall,
by written notice to Borrowers (a) declare all or any
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portion of the Revolver Loans and all or some of the other Obligations to be,
and the same shall forthwith become, immediately due and payable together with
accrued interest thereon, and (b) demand that Borrowers immediately deposit with
Agent an amount equal to the Letter of Credit Liability to enable Agent to meet
its obligations in respect thereof when required and such amount shall become
immediately due and payable.
7.3. Other Remedies. Upon or at any time after the occurrence of an
Event of Default, Agent may and, at the direction of the Requisite Lenders,
Agent shall, exercise from time to time the following rights and remedies:
(A) Terminate. The right to terminate the Revolver
Facility without further notice to Borrowers.
(B) Notify Account Debtors. The right to notify all
Persons in any way liable on any Accounts, Instruments or Chattel Paper to make
remittances to Agent of all sums due or to become due thereon and to collect and
enforce payment of all Accounts, Instruments and Chattel Paper directly from the
Persons liable thereon, by legal proceedings or otherwise, and generally
exercise all of Borrowers' rights and remedies with respect to the collection of
the Accounts.
(C) Repossession. The right (i) to take immediate
possession of the Inventory and Equipment, or alternatively to require Borrowers
to assemble the Inventory and Equipment, at Borrowers' expense, and make it
available to Agent at a place designated by Agent that is reasonably convenient
to both parties, and (ii) to enter any of the premises of Borrowers or wherever
any of the Inventory or Equipment is located, and to keep and store the same on
said premises until sold (and if said premises be the Property of Borrowers,
Borrowers agree not to charge Agent for storage thereof).
(D) Dispose of Collateral. With respect to any or all of
the Collateral (other than any Real Property, which shall be disposed of in
accordance with any Mortgages executed pursuant to Section 6.10 hereof), the
right to sell or otherwise dispose of all or any of such Collateral in its then
condition, or after any further manufacturing or processing thereof, at public
or private sale or sales, with such notice as may be required by Applicable Law,
in lots or in bulk, for cash or on credit, all as the Requisite Lenders, in
their sole discretion, may deem advisable. Ten (10) days written notice to
Borrowers of any public or private sale or other disposition of any such
Collateral is to be reasonable notice thereof; provided, however, that no notice
of Agent's intended disposition of such Collateral shall be required with
respect to any portion of such Collateral that is perishable, threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, nor is any such notice to be required hereunder if not otherwise
required under Applicable Law. Agent shall have the right to conduct such sales
on Borrowers' premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with Applicable Law. Agent shall have the right
to sell, lease or otherwise dispose of any such Collateral, or any part thereof,
for cash, credit or any combination thereof, and Agent may purchase all or any
part of any such Collateral at public or, if permitted by Applicable Law,
private sale and, in lieu of actual payment of such purchase price, may set off
the amount of such price against the Obligations.
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(E) Foreclose. The right to foreclose or otherwise
realize upon any of the Real Property of Borrowers or the Guarantor Subsidiaries
encumbered by any Mortgage pursuant to Section 6.10, in accordance with the
terms of any such Mortgage with respect to such Real Property or Applicable Law.
(F) Other Rights. All of the rights and remedies of a
secured party under the Code or under other Applicable Law and all other legal
and equitable rights to which Agent or any Lender may be entitled.
7.4. License to Use. Agent is hereby further granted a license or
other right to use, without charge, each Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any Property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral, and each
Borrower's rights and under all licenses and all franchise agreements are to
inure to Agent's benefit. The proceeds realized from the sale or other
disposition of any Collateral may be applied, after allowing two (2) Business
Days for collection, first to the costs, expenses and attorneys, fees incurred
by Agent in collecting the Obligations, in enforcing the rights of Agent under
the Loan Documents and in collecting, retaking, completing, protecting,
removing, storing, advertising for sale, selling and delivering any of the
Collateral; secondly, to interest due upon any of the Obligations; and thirdly,
to the principal amount of the Obligations. If any deficiency arises, each
Borrower and each Guarantor will remain jointly and severally liable to Agent
and Lenders therefor. Any surplus after payment in full of the Obligations shall
be remitted by Agent to Borrowers or as otherwise required by Applicable Law.
7.5. Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrowers contained in this Agreement and the other Loan Documents, or in any
other agreement between Agent and Borrowers, heretofore, concurrently, or
hereafter entered into, are to be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrowers herein contained.
7.6. Limitation on the Agent's Duty in Respect of Collateral. The
Agent shall not have any duty as to any Collateral in its possession or control
or in the possession or control of any agent or nominee of it or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto, except that the Agent shall use reasonable care with
respect to the Collateral in its possession or under its control.
SECTION 8. MISCELLANEOUS
8.1. Power of Attorney. Each Borrower hereby irrevocably
designates, makes, constitutes and appoints Agent (and all Persons designated by
Agent) as such Borrower's true and lawful attorney (and agent-in-fact) and
Agent, or Agent's agent, may, without notice to such Borrower and in either such
Borrower's or Agent's name, but at the cost and expense of such Borrower:
(A) At any time, endorse such Borrower's name on any
checks, notes, acceptances, drafts, money orders or any other evidence of
payment or proceeds of Collateral which come into the possession of Agent or
under Agent's control; and
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(B) At such time or times as it shall determine upon or
after the occurrence of, and during the continuation of, any Event of Default:
(i) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (ii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable; (iii) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (iv) prepare, file and sign such Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with any of the Collateral; (v) receive, open and dispose
of all mail addressed to each Borrower and notify postal authorities to change
the address for delivery thereof to such address as Agent may designate; (vi)
endorse the name of each Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent for
application to the Obligations; (vii) endorse the name of each Borrower upon any
chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or
similar document or agreement relating to the Accounts, Inventory and any other
Collateral; (viii) use each Borrower's stationery and sign the name of each
Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (ix) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory, Equipment and any other Collateral and to which each
Borrower has access; (x) make and adjust claims under policies of insurance; and
(xi) do all other acts and things necessary, in Agent's determination, to
fulfill each Borrower's Obligations under this Agreement or any of the other
Loan Documents.
8.2. Indemnity.
(A) Borrowers, jointly and severally, agree to indemnify
Agent and each Lender, each of their respective Affiliates and each of their and
their Affiliates' respective officers, directors, employees, agents, advisors,
attorneys, consultants and representatives (each, an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities, costs and expenses
(including, without limitation, reasonable fees and disbursements of counsel),
joint or several (including, without limitation, any of the foregoing relating
to the violation of, noncompliance with or liability under, any Environmental
Law), that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or relating to any
investigation, litigation or proceeding (including, without limitation, any of
those matters set forth on Schedule 5) or the preparation of any defense with
respect thereto, arising out of or in connection with or relating to this
Agreement, the other Loan Documents, the Purchase Agreement, the Merger
Agreement, the other Purchase Documents or the transactions contemplated hereby
or thereby or any use made or proposed to be made with the proceeds of the
Revolver Loans, whether or not such investigation, litigation or proceeding is
brought by a Borrower, any of its Subsidiaries, Affiliates, shareholders or
creditors, any Seller, any current or former shareholders of any Borrower or any
predecessor to any Borrower, an Indemnified Party or any other Person, and
whether or not an Indemnified Party is party thereto, except to the extent that
such claim, damage, loss, liability or expense is found in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct.
Additionally, if any taxes (excluding taxes imposed upon or measured by the net
income of any Lender, but including, without limitation, any intangibles tax,
stamp tax, recording tax or franchise tax) are payable by
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Agent or any Lender on account of the execution or delivery of this Agreement,
or the execution, delivery, issuance or recording of any of the other Loan
Documents, or the creation of any of the Obligations hereunder, by reason of any
existing or hereafter enacted federal, state, foreign or local statute, rule or
regulation, Borrowers, jointly and severally, agree to pay (or will promptly
reimburse such Lender or Agent for the payment of) all such taxes, including,
but not limited to, any interest and penalties thereon, and will indemnify and
hold such Lender and Agent harmless from and against liability in connection
therewith. Notwithstanding any contrary provision of this Agreement, all
obligations of Borrowers under this Section 8.2 or pursuant to any provision of
this Agreement to indemnify Indemnified Parties for any expense or liability
incurred by Indemnified Parties shall survive the payment in full of the
Obligations and the termination of this Agreement. In the event that all or any
of the transactions contemplated by the Purchase Agreement, the Merger Agreement
or any of the other Purchase Documents are at any time rescinded or otherwise
set aside, in any litigation or otherwise, Borrowers acknowledge and agree that
(a) all Loan Documents shall continue in full force and effect, (b) Borrowers
shall remain jointly and severally liable for the payment and performance of the
Obligations and (c) all of the Collateral shall continue to secure all of the
Obligations.
(B) Borrowers, jointly and severally, further agree to
indemnify Agent and each Lender from any losses arising from the inability on
the part of Agent to collect or retain the full amount of customers' or other
checks or other items of payment previously received by Citicorp North America,
Inc., as agent under the Existing Mayor's Loan Agreement, or by any bank for its
account and credited to the account of Mayor's in computing the balance of the
"Obligations" (as defined in the Existing Mayor's Loan Agreements) owing to
Agent and Lenders under the Mayor's Loan Agreement.
8.3. Amendments and Waivers. Except as otherwise provided in
subsection 9.2(H)(i) hereof and except as to matters set forth in other
subsections hereof as requiring only Agent's consent, no amendment,
modification, termination or waiver of any provision of this Agreement, the
Notes or any other Loan Document, or consent to any departure by Borrowers
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Requisite Lenders and, in the case of any amendment or
modification of any provision of this Agreement other than subsection 9.2, 9.4,
9.5, 9.6 or 9.7, by Borrowers; provided, however, that, no such amendment,
modification, termination or waiver shall, unless in writing and signed by all
Lenders, Agent and Borrowers, do any of the following: (a) except to the extent
affected by any assignment permitted under subsection 9.1 or by the increases in
the Commitments provided for in Section 2.3 hereof, change the Commitment of any
Lender or increase the Commitments of the Lenders; (b) forgive all or any of the
principal amount of, reduce the rate of interest on, or reduce the fees payable
with respect to, any Revolver Loan; (c) extend or postpone any scheduled
maturity date for the payment of the principal amount of any Revolver Loan; (d)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Revolver Loans, except pursuant to the increases in the
Commitments provided for in Section 2.3 hereof, or the percentage of Lenders
which shall be required for Lenders or any of them to take any action hereunder;
(e) release Collateral (except if the sale or disposition of such Collateral is
expressly permitted under any other Loan Document); (f) amend or waive this
subsection 8.3 or the definitions of any terms used in this subsection 8.3
insofar as the definitions affect the substance of this subsection 8.3; (g)
consent to the assignment or other transfer by any Borrower of any of its rights
and obligations under any Loan Document; or (h)
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increase the advance rates against Eligible Accounts or Eligible Inventory in
excess of the maximum percentages provided in the definition of Borrowing
Availability; and provided, further, that no amendment, modification,
termination or waiver affecting the rights or duties of Agent under any Loan
Document shall in any event be effective unless in writing and signed by Agent,
in addition to any Lenders whose signatures are required, as prescribed
hereinabove, to take such action. Each such amendment, modification, termination
or waiver shall be effective only in the specific instance and for the specific
purpose for which it was given. No such amendment, modification, termination or
waiver shall be required for Agent to take additional Collateral pursuant to any
Loan Document. No notice to or demand on any Borrower in any case shall entitle
such Borrower to any other or further notice or demand in similar or other
circumstances. Any such amendment, modification, termination, waiver or consent
effected in accordance with this subsection 8.3 shall inure to the benefit of,
and be binding upon, all parties hereto.
8.4. Reimbursement of Expenses. If, at any time or times prior or
subsequent to the date hereof, regardless of whether or not an Event of Default
then exists or any of the transactions contemplated hereunder are concluded,
Agent employs counsel for advice or other representation, or incurs legal
expenses or other costs or out-of-pocket expenses in connection with: (A) the
negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, or any sale or attempted sale of any interest herein to a
Participating Lender; (B) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (C)
periodic audits and appraisals performed by Agent; (D) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Lenders, Agent,
Borrowers, any Seller, any current or former shareholder of a Borrower or any
other Person) in any way relating to the Collateral, this Agreement, any of the
other Loan Documents, the Purchase Agreement, the Merger Agreement, any other
Purchase Document or Borrowers' affairs; (E) any attempt to enforce any rights
or remedies of Agent or Lenders against Borrowers or any other Person which may
be obligated to Agent or Lenders by virtue of this Agreement or any of the other
Loan Documents, including, without limitation, the Account Debtors; or (F) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate
or otherwise dispose of or realize upon the Collateral; then, in any such event,
the reasonable attorneys' fees arising from such services and all expenses,
costs, charges and other fees of such counsel or of Agent or relating to any of
the events or actions described in this Section are to be payable, on demand, by
Borrowers to Agent and are to be additional Obligations hereunder secured by the
Collateral. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include accountants' fees, costs and expenses; costs
and expenses incurred by Agent's loan administration staff, audit staff and
appraisal staff; court reporter fees, costs and expenses; photocopying and
duplicating expenses; long distance telephone charges; air express charges;
telegram charges; secretarial over-time charges; and expenses for travel,
lodging and food paid or incurred in connection with the performance of such
legal services. Such expenses, costs, charges and fees shall not include the
Agent's overhead costs. Each Borrower acknowledges and agrees that legal counsel
to Agent does not represent such Borrower as such Borrower's attorney, that such
Borrower has retained counsel of its own choice and has not and will not rely
upon any advice from Agent's counsel and that such Borrower's reimbursement of
expenses pursuant to this Agreement (even if effected by payment directly by
such Borrower to Agent's counsel) shall not be deemed to establish an
attorney-client relationship between Borrower and Agent's counsel. Without
limitation of the foregoing, at any time when an Event of Default has occurred
and is continuing,
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Borrowers shall pay all costs and expenses (including reasonable attorneys'
fees) of all Lenders incurred in enforcing their rights and remedies under this
Agreement and the other Loan Documents.
8.5. Indulgences Not Waivers. Agent's or Lenders' failure, at any
time or times hereafter, to require strict performance by Borrowers of any
provision of this Agreement is not to waive, affect or diminish any right of
Agent or Lenders thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Lenders of an Event of Default by
Borrowers under this Agreement or any of the other Loan Documents is not to
suspend, waive or affect any other Event of Default by Borrowers under this
Agreement or any of the other Loan Documents, whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrowers
contained in this Agreement or any of the other Loan Documents and no Event of
Default by Borrowers under this Agreement or any of the other Loan Documents are
to be deemed to have been suspended or waived by Agent or Lenders, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Agent or Lenders
and directed to Borrower. The Requisite Lenders may, by written notice to
Borrowers, at any time and from time to time, waive any Default or any Event of
Default and its consequences, but any such waivers are to be for such period and
subject to such conditions as are to be specified in any such notice. In the
case of any such waiver, Borrowers, Agent and Lenders are to be restored to
their former positions and rights hereunder and under the other Loan Documents
and any Default or Event of Default so waived is to be deemed to be cured and
not continuing during the period specified in such written notice. No such
waiver is to extend to any subsequent or other Default or Event of Default or
impair any right or remedy consequent thereon.
8.6. Severability. Wherever possible, each provision of this
Agreement is to be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement is to be prohibited by or
invalid under Applicable Law, such provision is to be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8.7. Successors and Assigns. This Agreement, the Other Agreements
and the Security Documents are to be binding upon and inure to the benefit of
the successors and assigns of Borrowers, Lenders and Agent. This provision,
however, is not to be deemed to permit any Borrower to sell, assign or transfer
this Agreement or any of the other Loan Documents, without first obtaining the
prior written consent of the Requisite Lenders.
8.8. Cumulative Effect. The provisions of the Other Agreements and
the Security Documents are cumulative with the provisions of this Agreement.
8.9. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered are to be deemed to
be an original and all of which counterparts taken together are to constitute
but one and the same instrument. In proving this Agreement in any judicial
proceeding, it is not to be necessary to produce or account for more than one
such counterpart signed by the party against whom such enforcement is sought.
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8.10. Notices. Unless otherwise specifically provided herein, any
notice or other communication required or permitted to be given shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied, telexed or sent by overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by telecopy or telex, on the date of
transmission if transmitted before 4:00 p.m. (New York, New York time) on a
Business Day or, if not, on the next succeeding Business Day; (c) if delivered
by overnight courier, two (2) Business Days after delivery to such courier
properly addressed; or (d) if by U.S. Mail, five (5) Business Days after
depositing in the United States mail, with postage prepaid, properly addressed
and sent by registered or certified mail, return receipt requested. Notices
shall be addressed care of the addresses of Borrowers, Agent and Lenders set
forth on the signature pages hereof or to such other address as the party
addressed shall have previously designated by written notice to the serving
party, given in accordance with this Section. A notice not given as provided
above shall, if it is in writing, be deemed given if and when actually received
by the party to whom given.
8.11. Consents. Whenever Agent's or any Lender's consent is required
to be obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Agent or such Lender is authorized to give or withhold such consent in its sole
and absolute discretion and to condition its consent upon the giving of
additional collateral security for the Obligations, the payment of money or any
other manner.
8.12. Time of Essence. Time is of the essence in this Agreement, the
Other Agreements and the Security Documents.
8.13. Entire Agreement. This Agreement constitutes an amendment and
restatement of the Existing Mayor's Loan Agreement, and upon the effectiveness
of this Agreement, the "Obligations" (as defined therein) of Mayor's to the
lenders thereunder shall be deemed to have been assigned to the Lenders
hereunder. This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written, including, without
limitation, those set forth in that certain Commitment Letter, dated as of June
4, 1998, between ▇▇▇ ▇▇▇▇ and Citicorp.
8.14. Interpretation. No provision of this Agreement or any of the
other Loan Documents is to be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
8.15. Marshalling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets or securities in favor of
any Borrower or any Guarantor or any other Person or against or in payment of
any or all of the obligations. To the extent that any Borrower makes a payment
or payments to Agent or any Lender, or Agent or any Lender enforces its security
interest or exercises its rights or setoff, and such payment or payments for the
proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or
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preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the Obligations or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, are to be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
8.16. Construction. Agent, Lenders and Borrowers acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by Lenders, Agent and Borrowers.
8.17. Governing Law; Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial. This Agreement and, unless otherwise expressly provided
therein, all other Loan Documents, shall be governed by, and shall be construed
and enforced in accordance with, the laws of the State of New York. Each
Borrower hereby consents to the jurisdiction of any state or federal court
located within the County of New York, State of New York and irrevocably agrees
that, subject to Lenders' election, all actions or proceedings arising out of or
relating to this Agreement or the other Loan Documents shall be litigated in
such courts. Each Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts and waives any defense of forum non conveniens, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement, each Note, each other Loan Document or the Obligations. Each Borrower
designates and appoints CT Corporation System, New York, New York and such other
Persons as may hereafter be selected by such Borrower which irrevocably agree in
writing to so serve as its agent to receive on its behalf service of all process
in any such proceedings in any such court, such service being hereby
acknowledged by such Borrower to be effective and binding service in every
respect. A copy of any such process so served shall be mailed by registered mail
to Borrower at its address provided in subsection 8.10 except that unless
otherwise provided by Applicable Law, any failure to mail such copy shall not
affect the validity of service of process. If any agent appointed by any
Borrower refuses to accept service, such Borrower hereby agrees that service
upon it by mail shall constitute sufficient notice. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Lenders or Agent to bring proceedings against a Borrower in
the courts of any other jurisdiction. Each Borrower, Agent and each Lender
hereby waive their respective rights to a jury trial of any claim or cause of
action based upon or arising out of this agreement, any of the Loan Documents,
or any dealings between them relating to the subject matter of this loan
transaction and the relationship that is being established hereunder. Each
Borrower also waives any bond or surety or security upon such bond which might,
but for this waiver, be required of Lenders or Agent. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Each Borrower, Agent and Lenders
acknowledge that this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in entering into this
Agreement and that each will continue to rely on the waiver in their related
future dealings. Each Borrower, Agent and Lenders further warrant and represent
that each has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and the waiver shall
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apply to any subsequent amendments, renewals, supplements or modifications to
this Agreement, the Loan Documents, or to any other documents or agreements
relating to the loans or any letters of credit. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
8.18. Publicity. Borrowers authorize Agent to publicize and place
"tombstone" advertisements with respect to the financing arrangements set forth
in this Agreement and the transactions contemplated hereby.
8.19. Effectiveness. This Agreement and each Loan Document shall
become effective upon the execution of a counterpart hereof and thereof by each
of the parties hereto, and the delivery thereof to Agent in New York, New York.
8.20. Sole Benefit. The rights and benefits set forth in this
Agreement and in all the other Loan Documents are for the sole and exclusive
benefit of the parties hereto and thereto and the Issuer, and may be relied upon
only by such parties and the Issuer.
8.21. General Waivers by Each Borrower. To the fullest extent
permitted by Applicable Law, each Borrower waives (i) presentment, demand and
protest and notice of presentment, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which such Borrower may in any way be
liable and hereby ratifies and confirms whatever Agent may do in this regard;
(ii) notice prior to Agent's taking possession or control of any of the
Collateral or any bond or security which might be required by any court prior to
allowing Agent to exercise any of Agent's remedies, including the issuance of an
immediate writ of possession; (iii) the benefit of all valuation, appraisement
and exemption laws; (iv) any right such Borrower may have upon payment in full
of the obligations to require Agent to terminate its security interest in the
Collateral or in any other Property of such Borrower until the execution by such
Borrower, and by any Person whose loans to Borrower are used in whole or in part
to satisfy the Obligations, of an agreement indemnifying Agent from any loss or
damage which Agent may incur as the result of dishonored checks or other items
of payment received by Agent from Borrower or any Account Debtor and applied to
the Obligations; and (v) notice of Agent's or any Lender's acceptance hereof.
8.22. Independence of Covenants. All covenants hereunder shall be
given in any jurisdiction independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.
8.23. Headings. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
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8.24. No Fiduciary Relationship. No provision in this Agreement or
in any of the other Loan Documents and no course of dealing between the parties
shall be deemed to create any fiduciary duty on the part of Agent or any Lender
to either Borrower.
8.25. Limitation of Liability. Neither any Lender nor any Affiliate,
officer, director, employee, attorney, or agent of any Lender shall have any
liability with respect to, and each Borrower hereby waives, releases, and agrees
not to ▇▇▇ any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by such Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents.
8.26. No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Agent or Lenders shall have the
right to act exclusively in the interest of Agent or Lenders and shall have no
duty of disclosure, duty of loyalty, duty of care, or other duty or obligation
of any type or nature whatsoever to either Borrower or any of either Borrower's
shareholders or to any other Person.
8.27. Maximum Interest. Regardless of any provision contained in
this Agreement or any of the other Loan Documents, the aggregate of all amounts
that are contracted for, charged or collected pursuant to the terms of this
Agreement or any of the other Loan Documents and that are deemed interest are
not to exceed the Maximum Rate under Applicable Law. No agreement, condition,
provision or stipulation contained in this Agreement or any of the other Loan
Documents or the exercise by Agent of any right or option whatsoever contained
therein, or the prepayment by Borrowers of any of the Obligations, or the
occurrence of any contingency whatsoever, is to entitle Lenders to charge or
receive or to obligate Borrowers to pay, interest or any charges, amounts,
premiums or fees deemed interest by Applicable Law (referred to herein
collectively as "Interest") in excess of the Maximum Rate. Borrowers acknowledge
and stipulate that any Interest charged or received in excess of the Maximum
Rate ("Excess") is to be the result of an accident and bona fide error and that,
with fluctuations in the rates of interest set forth in this Agreement, and the
Maximum Rate, such an unintentional result could inadvertently occur. To the
extent received, any Excess is to be applied first to reduce the principal
Obligations and the balance, if any, returned to Borrowers, it being the intent
of the parties hereto not to enter into a usurious or otherwise illegal
relationship. The right to accelerate the maturity of any of the Obligations
does not include the right to accelerate any interest that has not otherwise
accrued on the date of such acceleration, and neither Agent nor any Lender
intends to collect any unearned interest in the event of any such acceleration.
The credit or return of any Excess is to constitute the acceptance by Borrowers
of such Excess, and Borrowers are not to seek or pursue any other remedy, legal
or equitable, against Agent or any Lender, based in whole or in part upon
contracting for, charging or receiving any Interest in excess of the Maximum
Rate. For purposes of determining whether or not any Excess has been contracted
for, charged or received by Agent or any Lender, all interest at any time
contracted for, charged or received from Borrowers in connection with any of the
Loan Documents, to the extent permitted by Applicable Law, is to be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Obligations. Borrowers, Agent and each Lender, to the maximum extent permitted
under Applicable Law, will (i) characterize any non-principal payment as an
expense, fee or premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this
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Section are to be deemed to be incorporated into every Loan Document, whether or
not any provision of this Section is specifically referred to therein.
8.28. Joint and Several Liability.
(A) Each Borrower agrees that it is jointly and severally
liable to Agent and Lenders for the payment of all Obligations arising under
this Agreement, and that such liability is independent of the obligations of any
other Borrower (or any Guarantor). Agent and Lenders may bring an action against
any Borrower, whether an action is brought against any other Borrower (or any
Guarantor).
(B) Each Borrower agrees that any release which may be
given by Agent or Lenders to any other Borrower (or any Guarantor) will not
release such Borrower from its obligations under this Agreement.
(C) Each Borrower waives any right to assert against
Agent or Lenders any defense, setoff, counterclaim, or claims which such
Borrower may have against any other Borrower or any other party (including any
Guarantor) liable to Agent or Lenders for the Obligations of Borrowers under
this Agreement.
(D) Each Borrower agrees that it is solely responsible
for keeping itself informed as to the financial condition of each other Borrower
and of all circumstances which bear upon the risk of nonpayment. Each Borrower
waives any right it may have to require Agent or Lenders to disclose to such
Borrower any information which Agent or Lenders may now or hereafter acquire
concerning the financial condition of the other Borrowers.
(E) Each Borrower waives all rights to notices of default
or nonperformance by any other Borrower under this Agreement. Each Borrower
further waives all rights to notices of the existence or the creation of new
Indebtedness by any other Borrower.
(F) Borrowers represent and warrant to Agent and Lenders
that they each will derive benefit, directly and indirectly, from the collective
administration and availability of credit under this Agreement. Borrowers agree
that Agent and Lenders will not be required to inquire as to the disposition by
any Borrower of funds disbursed in accordance with the terms of this Agreement.
(G) Each Borrower subordinates any right of subrogation,
reimbursement, indemnification and contribution (contractual, statutory or
otherwise), including without limitation, any claim or right of subrogation
under the Bankruptcy Code (Title 11 of the U.S. Code) or any successor statute,
which such Borrower may now or hereafter have against any other Borrower with
respect to the Indebtedness incurred under this Agreement and the
Cross-Corporate Guaranty, and agrees that it will not exercise any such right
unless and until this Agreement is terminated and all Obligations have been
fully paid and satisfied. Each Borrower further waives any right to enforce any
remedy which the Agent now has or may hereafter have against any other Borrower,
and waives any benefit of, and any right to participate in, any security now or
hereafter held by the Agent.
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8.29. Confidentiality.
(A) Subject to the provisions of clause (B) of this
Section 8.29, the Agent and each Lender agree that they will use their best
efforts not to disclose without the prior consent of Borrowers' Agent (other
than to their respective employees, auditors, advisors or counsel or to another
Lender, provided such Persons shall be subject to the provisions of this Section
8.29 to the same extent as the Agent and Lenders) any information with respect
to ▇▇▇ ▇▇▇▇ or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Loan Document and which is designated by
the ▇▇▇ ▇▇▇▇ to the Agent and the Lenders in writing as confidential, provided
that the Agent and Lenders may disclose any such information (i) as has become
generally available to the public other than by virtue of a breach of this
Section 8.29(A) by the Agent and Lenders, (ii) as may be required or reasonably
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
Agent or any Lender or to the Federal Reserve Board or the Federal Deposit
Insurance Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (iii) as may be required or reasonably
appropriate in respect to any summons or subpoena or in connection with any
litigation, (iv) in order to comply with any law, order, regulation or ruling
applicable to Agent or such Lender, (v) in the case of any Lender, to Agent,
(vi) to any assignees or participants which are Eligible Assignees (including
prospective assignees and participants which are Eligible Assignees) who agree
to be bound by the provisions of this Section 8.29 and (vii) in connection with
the exercise of any remedy hereunder.
(B) Each Borrower hereby acknowledges and agrees that
Agent and each Lender may share with any of its Affiliates any information
related to ▇▇▇ ▇▇▇▇ or any of its Subsidiaries (including, without limitation,
any nonpublic customer information regarding the creditworthiness of ▇▇▇ ▇▇▇▇
and its Subsidiaries), provided such Persons shall be subject to the provisions
of this Section 8.29 to the same extent as the Agent or such Lender.
8.30. Replacement of Lender. Upon (a) the occurrence of any event
giving rise to the operation of subsection 3.1(A)(iv)(b), 3.1(A)(v), 3.1(F) or
3.1(G) with respect to any Lender which results in such Lender charging to the
Borrowers increased costs in excess of those being generally charged by the
other Lenders or (b) the failure or refusal of a single Lender to consent to any
amendment, modification, termination or waiver which pursuant to subsection 8.3
requires the consent of all Lenders, Borrower shall have the right, if no
Default or Event of Default then exists or will exist immediately after giving
effect to the replacement, to replace such Lender (the "Replaced Lender") with
one or more other Eligible Assignees (collectively, the "Replacement Lender")
and each of whom shall be required to be reasonably acceptably to the Agent,
provided that (i) at the time of any replacement pursuant to this subsection
8.30, the Replacement Lender shall enter into a Lender Addition Agreement
pursuant to subsection 9.1 pursuant to which the Replacement Lender shall
acquire all of the Commitments and outstanding Revolver Loans of, and
participations in Letter of Credit Liabilities owned by, the Replaced Lender
and, in connection therewith, shall pay the "Purchase Price" specified in such
Lender Addition Agreement. Upon the execution of the respective Lender Addition
Agreement, the payment of the Purchase Price provided therein, and, delivery to
the Replacement Lender of the appropriate Note or Notes executed by Borrowers,
as provided in the Lender Addition Agreement, the Replacement Lender shall
become
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a Lender hereunder and, the Replaced Lender shall cease to constitute a
Lender except with respect to indemnification provisions under this Agreement
which shall survive as to such Replaced Lender.
8.31. Release. In consideration of the Agent's and each Lender's
execution and delivery of this Agreement and other good and valuable
consideration, the receipt and sufficiency of all of which are hereby
acknowledged, Mayor's hereby releases and discharges the Agent and each Lender,
their respective Affiliates and their and their respective Affiliates'
respective successors, representatives and assigns, from any and all claims,
demands, accounts, actions, causes of action, proceedings and sums of money that
Mayor's had, has or may have or claim, against the Agent, any Lender, any of
their respective Affiliates or any of their or their respective Affiliates'
respective successors, representatives and assigns, by reason of any act,
omission, cause, claim, counterclaim, crossclaim, right, matter or thing
whatsoever, howsoever created, evidenced, arising or incurred, up to and
including the date of this release, under, pursuant to or in connection with the
Existing Mayor's Loan Agreement.
SECTION 9. AGENCY
9.1. Assignments and Participations in Revolver Loans and Notes.
(A) Assignments. Each Lender may assign its rights and
delegate its obligations under this Agreement and the other Loan Documents to an
Eligible Assignee; provided, however, that no Lender may make any assignment of
less than all of its Commitment unless, upon giving effect to such assignment,
both the assigning Lender and the Eligible Assignee receiving such assignment
have Commitments each equal to at least Five Million Dollars ($5,000,000)
immediately after such assignment is consummated, it being understood and agreed
among Lenders that, at all times hereafter, each Lender, to remain a Lender,
shall be obliged to hold a Commitment in the aforesaid minimum amounts. In the
case of an assignment authorized under this subsection 9.1, upon such assignment
becoming effective, the Person receiving such assignment, shall have, to the
extent of such assignment, the same rights, benefits and obligations as it would
if it were an original Lender hereunder, and the assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitment or assigned
portion thereof. Each Borrower hereby acknowledges and agrees that any such
assignment will give rise to a direct obligation of such Borrower to the Person
receiving such assignment and that such Person, upon such assignment becoming
effective, shall be considered to be a "Lender" for all purposes of this
Agreement and the Loan Documents. Each Lender intending to make an assignment
pursuant hereto shall notify the Agent and Borrowers in writing thereof at least
three (3) Business Days prior to the intended effective date of such assignment,
including therein the name, notice address and lending office of such intended
assignee and the amount of the Commitments of such Lender intended to be
assigned. Borrowers will, on the effective date of each such assignment, issue
new Notes to such Eligible Assignee and, as applicable, the assigning Lender,
upon the surrender of the assigning Lender's Notes.
(B) Federal Reserve Bank as Assignee. Notwithstanding the
foregoing, any Lender may, at any time, without notice to the Agent or
Borrowers, assign its rights under this Agreement to any Federal Reserve Bank as
collateral, and such assignment shall not, in any event, be deemed to bind such
Federal Reserve Bank under the terms of this Agreement and the other Loan
Documents.
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(C) Participations. Each Lender may also sell
participations in all or any part of any Revolver Loans made by it to any
Eligible Assignee; provided, however, that (i) all amounts payable by Borrowers
hereunder shall be determined as if that Lender had not sold such participation;
(ii) the holder of any such participation shall not be entitled to require such
Lender to take or omit to take any action hereunder, except solely in respect of
the forgiveness of any principal amount of any Revolver Loan; and (iii)
Borrowers shall have no obligation to the holder of any such participation but
may continue to deal with the applicable Lender as if such participation had not
been sold.
(D) Lender Addition Agreement. Each assignment hereunder
shall be effected pursuant to a Lender Addition Agreement executed and delivered
by the assigning Lender, the Eligible Assignee and the Agent. Each such
assignment shall become effective on the date provided in such Lender Addition
Agreement
(E) No Relief from Obligations. Except as otherwise
provided in this subsection 9.1, no Lender shall, as between Borrowers and that
Lender, be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Revolver Loans, the Notes or other Obligations owed to such
Lender. Each Lender may furnish any information concerning Borrowers and their
Subsidiaries in the possession of that Lender from time to time to assignees and
participants which are Eligible Assignees (including prospective assignees and
participants which are Eligible Assignees); provided that such assignees and
participants agree to be bound by the provisions of Section 8.29.
9.2. Agent.
(A) Appointment. Each Lender hereby designates and
appoints Citicorp as its Agent under this Agreement and the Loan Documents, and
each Lender hereby irrevocably authorizes Agent to take such action or to
refrain from taking such action on its behalf under the provisions of this
Agreement and the Loan Documents and to exercise such powers as are set forth
herein or therein, together with such other powers as are reasonably incidental
thereto. Agent is authorized and empowered to amend, modify, or waive any
provisions of this Agreement or the other Loan Documents on behalf of Lenders
subject to the requirement that the written consents of the Requisite Lenders or
all Lenders, as applicable, be obtained as and to the extent required pursuant
to subsection 8.3. Agent agrees to act as such on the express conditions
contained in this subsection 9.2. Except as otherwise expressly set forth
herein, the provisions of this subsection 9.2 are solely for the benefit of
Agent and Lenders and Borrowers shall not have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, Agent shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrowers. Agent may perform any of
its duties hereunder, or under the Loan Documents, by or through its agents or
employees.
(B) Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a
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fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any obligations in respect of this Agreement or
any of the Loan Documents except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of Borrowers in connection with the extension of credit hereunder
and shall make its own appraisal of the creditworthiness of Borrowers. Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the Closing Date or at any time or
times thereafter. Notwithstanding the foregoing, however, each Lender agrees to
notify Agent in advance of, and coordinate with Agent, any visits with Borrowers
or their respective Subsidiaries (but Agent need not be present at any such
meetings). If Agent seeks the consent or approval of any Lenders to the taking
or refraining from taking any action hereunder, then Agent shall send notice
thereof to each Lender. Agent shall promptly notify each Lender any time that
the Requisite Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted by them hereunder or under any of the Loan
Documents, or in connection herewith or therewith, except that Agent shall be
obligated on the terms set forth herein for performance of its express
obligations hereunder, and except that Agent shall be liable to each Lender with
respect to its own gross negligence or willful misconduct and the gross
negligence or willful misconduct of its officers, directors, employees and
agents. In performing its functions and duties hereunder, Agent shall exercise
the same care which it would in dealing with loans for its own account, but
Agent shall not be responsible to any Lender or the Issuer for any recitals,
statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility, or
sufficiency of this Agreement or any of the Loan Documents or the transactions
contemplated thereby, or for the financial condition of Borrowers. Agent shall
not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any of the Loan Documents or the financial condition of Borrowers, or the
existence or possible existence of any Default or Event of Default. Agent may at
any time request instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the Loan Documents
Agent is permitted or required to take or to grant, and if such instructions are
promptly requested, Agent shall be absolutely entitled to refrain from taking
any action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from the Requisite Lenders or all the Lenders, as applicable.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
under this Agreement, the Notes, or any of the other Loan Documents in
accordance with the instructions of Requisite Lenders.
(D) Reliance. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex, telecopy
or telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person; and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder. Agent
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further shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent.
(E) Indemnification. If and to the extent not reimbursed
to Agent by Borrowers, Lenders will reimburse and indemnify Agent for and
against any and all Liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any of
the Loan Documents or any action taken or omitted by Agent under this Agreement
for any of the Loan Documents, in proportion to each Lender's Pro Rata Share;
provided, however, that no Lender shall be liable for any portion of such
Liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agent's gross
negligence or willful misconduct. The obligations of Lenders under this
subsection 9.2(E) shall survive the payment in full of the Obligations and the
termination of this Agreement.
(F) Agent Individually. With respect to its Commitment,
any Revolver Loans made by it, and any Notes issued to it, Agent shall have and
may exercise the same rights and powers hereunder and is subject to the same
obligations and Liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity as a Lender or one of the Requisite Lenders. Agent may lend money to,
and generally engage in any kind of banking, trust or other business with
Borrowers as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(i) Resignation. If, at any time hereafter,
Agent so elects, the Agent may resign as Agent, and if a receiver,
trustee or custodian is appointed for Agent or for all or substantially
all of the Agent's property, then, the Requisite Lenders or Borrowers
may require that the Agent resign as Agent, in each case by giving at
least thirty (30) days prior written notice to the Lenders and, as
applicable, Borrower. In either event, such resignation shall take
effect upon the acceptance by a successor Agent of appointment pursuant
to clause (ii) below or as otherwise provided below.
(ii) Appointment of Successor. Upon any such
notice of resignation being given pursuant to clause (G)(i) above, the
Requisite Lenders shall appoint a successor Agent from among the
Lenders. If a successor Agent shall not have been so appointed within
said thirty (30) day period, the retiring Agent shall then appoint a
successor Agent from among the Lenders who shall serve as Agent until
such time, if any, as Requisite Lenders appoint a successor Agent from
among the Lenders as provided above.
(iii) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring Agent's
resignation as Agent under the Loan
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Documents, the provisions of this subsection 9.2 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it
was Agent under the Loan Documents.
(H) Collateral Matters.
(i) Release of Collateral. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to
release any Lien granted to or held by Agent upon any property covered
by the Security Documents under, and subject to, the following
conditions: (a) upon termination of the Commitments and, in connection
therewith, the termination of all Letters of Credit (or the provision
of cash collateral in regard thereto, if required pursuant hereto) and
the full payment and satisfaction of all Obligations; or (b)
constituting property being sold or disposed of if Borrowers certify to
Agent that the sale or disposition is made in compliance with the
provisions of this Agreement (and Agent may rely in good faith
conclusively on any such certificate, without further inquiry). Upon
request by Agent at any time, Lenders will confirm in writing Agent's
authority to release particular types or items of property covered by
the Security Documents pursuant to this subsection 9.2(H)(i).
(ii) Confirmation of Authority; Execution of
Releases. Without in any manner limiting Agent's authority to act
without any specific or further authorization or consent by Requisite
Lenders (as set forth in subsection 9.2(H)(i)), each Lender agrees to
confirm in writing, upon request by Borrower, the authority of Agent to
release any property covered by the Security Documents conferred upon
Agent under subsection 9.2(H)(i). Prior to any termination of this
Agreement, so long as no Event of Default has occurred and is then
continuing, upon receipt by Agent of confirmation from the Requisite
Lenders of its authority to release any particular item or types of
property covered by the Security Documents, and upon at least five (5)
Business Days prior written request by Borrowers, Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as
may be necessary to evidence the release of the Liens granted to Agent
for the benefit of Lenders herein or pursuant hereto upon such
Collateral; provided, however, that (a) Agent shall not be required to
execute any such document on terms which, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or
warranty, and (b) such release shall not in any manner discharge,
affect or impair the Obligations or any Liens upon (or obligations of
Borrowers, in respect of), all interests retained by Borrowers,
including (without limitation) the proceeds of any sale, all of which
shall continue to constitute part of the property covered by the
Security Documents. The foregoing shall not apply, however, in respect
of the release of any security interest or Lien by Agent, on behalf of
Lenders, in connection with a termination of this Agreement, which
shall be governed exclusively by subsections 9.2(H)(i).
(iii) Absence of Duty. Agent shall have no
obligation whatsoever to any Lender or any other Person to assure that
the property covered by the Security Documents exists or is owned by
Borrowers or is cared for, protected or insured or has been encumbered
or that the Liens granted to Agent therein or pursuant thereto have
been properly or sufficiently or lawfully created, perfected, protected
or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers
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granted or available to Agent in this subsection 9.2(H) or in any of
the Loan Documents, it being understood and agreed that in respect of
the property covered by the Security Documents or any act, omission or
event related thereto, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in property
covered by the Security Documents as one of the Lenders and that Agent
shall have no duty or liability whatsoever to any of the other Lenders;
provided that Agent shall exercise the same care which it would in
dealing with loans for its own account.
(I) Agency for Perfection. Agent hereby appoints each
Lender as its agent for the purpose of perfecting Agent's security interest in
assets which, in accordance with Article 9 of the Uniform Commercial Code in any
applicable jurisdiction, can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver
such Collateral to Agent or in accordance with Agent's instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Security Document or to realize upon any collateral security for the
Revolver Loans, it being understood and agreed that all such rights and remedies
shall reside in, and may be exercised only by, Agent.
9.3. [INTENTIONALLY NOT USED]
9.4. Set Off and Sharing of Payments. In addition to any rights now
or hereafter granted under Applicable Law and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender is hereby authorized by Borrowers at any time or from time
to time, with reasonably prompt subsequent notice to Borrowers (any prior or
contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (A) balances held by such Lender or such
holder at any of its offices for the account of such Borrowers or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (B) other property at any time held or owing by such
Lender or such holder to or for the credit or for the account of such Borrower
or any of its Subsidiaries, against and on account of any of the Obligations
which are not paid when due; except that no Lender shall exercise any such right
without first giving notice to the Agent. Any Lender having a right to setoff
shall, to the extent that, upon setoff, the amount of any such setoff exceeds
its Pro Rata Share of the Obligations, be deemed to have purchased for cash (and
the other Lenders shall be deemed to have sold) participations in each such
other Lender's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share such excess with each such other Lender in accordance with
its respective Pro Rata Share. Each Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its right to set
off with respect to amounts in excess of its Pro Rata Share of the Obligations
and may sell participations in such excess to other Lenders and holders, and (b)
any Lender or holder so purchasing a participation in the Revolver Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
setoff, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of
Revolver Loans and other Obligations in the amount of such participation.
9.5. Disbursement of Funds. Agent may, on behalf of Lenders,
disburse funds to Borrowers for Revolver Loans requested pursuant hereto. Each
Lender shall reimburse Agent on demand by 2:00 p.m. (New York, New York time) on
the Business Day of demand for all funds
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disbursed on its behalf by Agent (provided that if such demand is made on a day
when such Lender is authorized to close for business under the laws of the State
in which it is located and such Lender is, in fact, closed for business, such
payment may be made on the immediately succeeding Business Day), or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Revolver
Loan before Agent disburses same to Borrowers. If any Lender fails to pay the
amount of its Pro Rata Share within one (1) Business Day after its receipt of
Agent's demand in accordance with the preceding sentence, Agent shall promptly
notify Borrowers, and Borrowers shall immediately repay such amount to Agent.
Pending Agent's receipt of such amount from Borrowers, such Lender shall remain
obligated to Agent for reimbursement of such amount together with accrued
interest thereon at the Federal Funds Rate from the date of Agent's disbursement
of such amount until paid. Any repayment required pursuant to this subsection
9.5 shall be without premium or penalty. Nothing in this subsection 9.5 or
elsewhere in this Agreement or the other Loan Documents, including without
limitation the provisions of subsection 9.6, shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Agent or Borrower may have against any Lender as a result of any default by such
Lender hereunder.
9.6. Disbursements of Advances, Payments and Information.
(A) Revolver Loan Advances and Payments; Fee Payments.
(i) The Revolver Loan balance may fluctuate from
day to day through Agent's disbursement of funds to, and receipt of
funds from, Borrowers. In order to minimize the frequency of transfers
of funds between Agent and each Lender, notwithstanding any terms to
the contrary set forth in Section 2, Revolver Loans constituting Base
Rate Loans and payments of principal and interest thereon will be
settled according to the procedures described in subsections 9.6(A)(ii)
and 9.6(A)(iii) of this Agreement. All other payments of principal,
interest and fees hereunder, including, without limitation, in respect
of any Revolver Loans constituting LIBOR Rate Loans, will be settled on
the first Business Day after the Business Day received in accordance
with the provisions of Section 2. Notwithstanding these special
procedures as to Revolver Loans constituting Base Rate Loans, each
Lender's obligation to fund its portion of any Revolver Loans made by
Agent to Borrowers will commence on the date such Revolver Loans are
made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(ii) By not later than 11:00 a.m. (New York, New
York time) on the first Business Day of each week, or more frequently
(including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone, telex,
or telecopy of the amount of each such Lender's Pro Rata Share of
Revolver Loans constituting Base Rate Loans as of the close of business
of the Business Day immediately preceding the Settlement Date. In the
event that payments are necessary to adjust the actual amount of such
Lender's share of Revolver Loans constituting Base Rate Loans to the
required amount of such Lender's Pro Rata Share of Revolver Loans
constituting Base Rate Loans as of any Settlement Date, the party from
which such payment is due will pay the other, in same day funds, by
wire transfer to the other's account not later than 2:00 p.m. (New
York, New York
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time) on the Settlement Date. Notwithstanding the foregoing, if Agent
so elects, Agent may require that each Lender make its Pro Rata Share
of any requested Revolver Loan constituting a Base Rate Loan available
to Agent for disbursement on the Funding Date applicable to such Loan.
If Agent elects to require that such funds be made available, Agent
shall advise each Lender by telephone, telex or telecopy of the amount
of such Lender's Pro Rata Share of such requested Revolver Loan no
later than 11:00 a.m. (New York, New York time) on the Funding Date
applicable thereto, and each such Lender shall pay Agent such Lender's
Pro Rata Share of such requested Revolver Loan, in same day funds, by
wire transfer to Agent's account not later than 2:00 p.m. (New York,
New York time) on such Funding Date.
(iii) For purposes of this subsection 9.6(A)(iii),
the following terms and conditions will have the meanings indicated:
(1) "Daily Loan Balance" means an
amount calculated as of the end of each calendar day by
subtracting (i) the cumulative principal amount paid by Agent
to a Lender on a Revolver Loan constituting a Base Rate Loan
from its Funding Date through and including such calendar day,
from (ii) the cumulative principal amount advanced by such
Lender to Agent on that Revolver Loan.
(2) "Daily Interest Rate" means an
amount calculated by dividing the interest rate payable to a
Lender on a Revolver Loan constituting a Base Rate Loan as of
each calendar day by three hundred sixty (360).
(3) "Daily Interest Amount" means an
amount calculated by multiplying the Daily Loan Balance of a
Revolver Loan constituting a Base Rate Loan by the associated
Daily Interest Rate on that Revolver Loan.
(4) "Interest Ratio" means a number
calculated by dividing the total amount of the interest on a
Revolver Loan constituting a Base Rate Loan received by Agent
during the immediately preceding calendar month by the total
amount of interest on that Revolver Loan due from Borrowers
during the immediately preceding calendar month.
On the first Business Day of each calendar month ("Interest Settlement Date"),
Agent will advise each Lender by telephone, telex, or telecopy of the amount of
such Lender's Pro Rata Share of interest on Revolver Loans constituting Base
Rate Loans as of the end of the last day of the immediately preceding calendar
month. Agent will pay to such Lender by wire transfer to such Lender's account
(as specified by such Lender from time to time after the date hereof pursuant to
the notice provisions contained herein or in the applicable Lender Addition
Agreement) not later than 2:00 p.m. (New York, New York time) on the Interest
Settlement Date, such Lender's Pro Rata Share of interest on such Revolver Loans
constituting Base Rate Loans. Such Lender's Pro Rata Share of interest on each
such Revolver Loan will be calculated for that Revolver Loan by adding together
the Daily Interest Amounts for each calendar day of the prior month for that
Revolver Loan and multiplying the total thereof by the Interest Ratio for such
Revolver Loan.
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(B) Availability of Lender's Pro Rata Share.
(i) Unless Agent has been notified by a Lender
prior to a Funding Date of such Lender's intention not to fund its Pro
Rata Share of a Revolver Loan requested by a Borrower, Agent may assume
that such Lender will make such amount available to Agent on the
Settlement Date. If such amount is not, in fact, made available to
Agent by such Lender when due, Agent will be entitled to recover such
amount on demand from such Lender without set-off, counterclaim or
deduction of any kind.
(ii) Nothing contained in this subsection 9.6(B)
will be deemed to relieve a Lender of its obligation to fulfill its
Commitments or to prejudice any rights which Agent or a Borrower may
have against such Lender as a result of any default by such Lender
under this Agreement.
(iii) Without limiting the generality of the
foregoing, each Lender shall be obligated to fund its Pro Rata Share of
any Revolver Loan made after any acceleration of the Obligations with
respect to any draw on a Letter of Credit.
(C) Return of Payments.
(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has
been or will be received by Agent from Borrowers and such related
payment is not received by Agent, then Agent will be entitled to
recover such amount from such Lender without set-off, counterclaim or
deduction of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to a
Borrower or paid to any other person pursuant to any solvency law or
otherwise, then, notwithstanding any other term or condition of this
Agreement, Agent will not be required to distribute any portion thereof
to any Lender. In addition, each Lender will repay to Agent on demand
any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to
pay to a Borrower or such other Person, without set-off, counterclaim
or deduction of any kind.
(D) Dissemination of Information. Agent will use its best
efforts to provide Lenders with any information received by Agent from Borrowers
which is required to be provided to a Lender hereunder; provided, however, that
Agent shall not be liable to Lenders for any failure to do so, except to the
extent that such failure is attributable to Agent's gross negligence or willful
misconduct.
9.7. Defaulting Lender's Status. Notwithstanding anything contained
herein to the contrary, but in addition to provisions regarding the failure of a
Lender to perform its obligations hereunder set forth elsewhere in this
Agreement, so long as any Lender shall be in default in its obligation to fund
its Pro Rata share of any Revolver Loan or shall have repudiated its Commitment,
then, such Lender shall not be entitled to receive any payments of interest on
its Revolver Loans or
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its share of any fees payable hereunder, and solely for purposes of voting or
consenting to matters with respect to this Agreement, such Lender shall be
deemed not to be a "Lender" hereunder and such Lender's Commitment shall be
deemed to be zero ($0), unless and until (a) all other Obligations have been
fully paid and satisfied, (b) such failure to fulfill its obligation to fund is
cured and such Lender shall have paid, as and to the extent provided in this
Agreement, to the applicable party, such amount then owing together with
interest on the amount of funds that such Lender failed to timely fund at the
interest rate prescribed therefor herein, or (c) the Obligations shall have been
declared (or otherwise shall have become) immediately due and payable and/or the
Commitments shall have been terminated. No Commitment of any Lender shall be
increased or otherwise affected by any such failure or rejection by any Lender
in any event, however.
SECTION 10. CONDITIONS PRECEDENT
The obligations of Lenders to make Revolver Loans and of Agent to incur
Letter of Credit Liabilities are subject to satisfaction of all of the
applicable conditions precedent set forth below.
10.1. Conditions to Initial Revolver Loans. The obligations of
Lenders to make the initial Revolver Loans and for Agent to incur any initial
Letter of Credit Liability are, in addition to the conditions precedent
specified in Section 10.2, subject to the prior or concurrent satisfaction of
the conditions set forth below.
(A) Working Estimates. Borrowers shall have delivered to
Agent (with copies for each Lender) Working Estimates, on a month-to-month
basis, for such period as the Lenders shall request, and Lenders shall be
satisfied in all respects therewith.
(B) Fees. Borrowers shall have paid all fees payable on
the Closing Date referred to in Section 3.1.
(C) Performance of Agreements. Borrowers shall have
performed in all respects all agreements which this Agreement provides shall be
performed on or before the Closing Date except as otherwise may be waived or
deferred in writing by Lenders on the Closing Date.
(D) Environmental Due Diligence. Agent shall have
received such Phase 1 environmental reports concerning the Real Property owned
by Borrower as Agent shall require (with copies for each Lender) and the
findings set forth therein shall be satisfactory to Lenders.
(E) Appraisals. Agent shall have received such appraisals
and gemological reviews of Borrowers' Inventory as Agent shall require (with
copies for each Lender) demonstrating appraised values thereof satisfactory to
Lenders.
(F) Evidence of Perfection and Priority of Liens. Agent
shall have received copies of all filing receipts or acknowledgments issued by
any Governmental Authority to evidence any filing or recordation necessary to
perfect the Liens of Agent in the Collateral and evidence in form satisfactory
to Agent that such Liens constitute valid and perfected first priority security
interests and Liens, and that there are no other Liens upon any Collateral,
except for Permitted Liens.
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(G) No Labor Disputes. Lenders shall have received
assurances satisfactory to Lenders that there are no threats of strikes or work
stoppages by any employees, or organization of employees, of any Borrower.
(H) Compliance with Laws and Other Agreements. Lenders
shall have determined or received assurances satisfactory to Lenders that none
of the Loan Documents or any of the transactions contemplated thereby violate
any Applicable Law or agreement binding upon any Borrower.
(I) No Material Adverse Change. No material adverse
change in the financial condition of any Borrower or the quality or value of any
Collateral shall have occurred since January 31, 1998.
(J) Material Agreements. Agent and Lenders shall have
reviewed and shall be satisfied with the terms and provisions of all material
agreements of Borrowers, including, without limitation, the Sam's Club
Agreement.
(K) Purchase Documents. The Purchase Agreement, the
Merger Agreement and all other Purchase Documents, as well as the structure of
the purchase and merger transactions contemplated thereby, shall be in form and
substance satisfactory to Lenders in all respects. All consents, waivers,
approvals, filings with, and notices to, Governmental Authorities or other
Persons necessary to permit the consummation of the transactions contemplated by
the Purchase Agreement and the Merger Agreement shall have been obtained, made
or given, and the transactions contemplated by the Purchase Agreement and the
Merger Agreement shall have been consummated, including, without limitation, the
payment in full of the "Purchase Price" and all "Subordinated Debt" and the
"Revolving Credit Facility" (as such terms are defined in the Purchase
Agreement) and deposit of the Merger Consideration with such escrow agent as is
required pursuant to the Merger Agreement.
(L) Solvency. After giving effect to the consummation of
the transactions contemplated by the Purchase Agreement and by this Agreement,
each Borrower shall be Solvent, and Agent shall have received from Borrowers
(with copies for each Lender) pro forma balance sheets and Working Estimates
prepared on a basis satisfactory to Lenders, so demonstrating, as well as
certifications of Authorized Officers of Borrowers as to Borrowers' solvency and
related matters, in form and substance satisfactory to Lenders.
(M) Corporate Existence and Authority. The Agent shall
have received for each Borrower and each Guarantor Subsidiary of each Borrower,
copies of its articles or certificate of incorporation or equivalent
organizational documents, certified by the Secretary of State of its State of
Incorporation or other appropriate officer of its jurisdiction of organization,
as well as copies of its bylaws and resolutions authorizing its execution,
delivery and performance of the Loan Documents to which it is party, certified
by its corporate Secretary or Assistant Secretary.
(N) Loan Documents. On or before the Closing Date,
Borrowers shall have delivered, or caused to have been delivered, to Agent the
Notes, the Cross-Corporate Guaranty, the
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Subsidiary Guaranty, the Stock Pledge Agreement, other Loan Documents and all
other documents listed on the Closing Documents Schedule, each, unless otherwise
noted, dated the Closing Date, duly executed (if applicable), in form and
substance satisfactory to Lenders and in quantities designated by Agent.
10.2. Conditions to All Revolver Loans. The obligations of Lenders
to make any Revolver Loan or of Agent to incur any Letter of Credit Liability on
each Funding Date are subject to the further conditions precedent set forth
below.
(A) Notice of Borrowing. Agent shall have received, in
accordance with the provisions of subsection 2.1, a Notice of Borrowing or
notice requesting incurrence of Letter of Credit Liability.
(B) Representations Still True. The representations and
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of the Funding Date to the same
extent as though made on and as of the Closing Date, except for any
representation or warranty limited by its terms to a specific date and taking
into account any updates to the Schedules or Exhibits and any events which would
cause any such representations and warranties no longer to be true, correct or
complete, in each case as disclosed in writing by Borrowers to Agent after the
Closing Date, and, if not consistent with the covenants corresponding thereto,
approved by the Requisite Lenders or, if required, all Lenders.
(C) No Suspension or Termination of Commitments. The
Commitments of Lenders shall not have been suspended or terminated pursuant to
the operation of Section 7.2.
(D) No Restraining Order. Agent shall not have received
notice or knowledge of any pending or threatened order, judgment or decree of
any court, arbitrator or Governmental Authority which purports to enjoin or
restrain Lenders from making any Revolver Loans or Agent from incurring any
Letter of Credit Liability.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto, and each Borrower has caused its corporate seal to be affixed
hereto, as of the Closing Date.
"BORROWERS"
▇▇▇ ▇▇▇▇ MARKETING, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President/Finance and
Chief Financial Officer
MAYOR'S JEWELERS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Title: Vice President
-------------------------------
JBM RETAIL COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President and Treasurer
Address for Borrowers and Borrowers' Agent:
▇▇▇ ▇▇▇▇ Marketing, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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"AGENT"
CITICORP USA, INC.
By: /s/ Shapleigh ▇. ▇▇▇▇▇
-------------------------------------
Name: Shapleigh ▇. ▇▇▇▇▇
Title: Vice President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Shapleigh ▇. ▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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"LENDERS"
Commitment: CITICORP USA, INC.
$15,000,000
By: /s/ Shapleigh ▇. ▇▇▇▇▇
----------------------------
Name: Shapleigh ▇. ▇▇▇▇▇
Title: Vice President
Lending Office: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Shapleigh ▇. ▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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Commitment: FIRST UNION NATIONAL BANK
$13,000,000
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Lending Office: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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Commitment: BANKBOSTON RETAIL FINANCE INC.
$13,000,000
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Title: Managing Director
---------------------------
Lending Office: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Credit
Administration
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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94
Commitment: FOOTHILL CAPITAL CORPORATION
$13,000,000
By: /s/ ▇▇▇▇▇▇▇ Alui
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Name: ▇▇▇▇▇▇▇ Alui
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Title: Vice President
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Lending Office: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
-90-
95
Commitment: NATIONAL CITY COMMERCIAL FINANCE,
$13,000,000 INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
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Lending Office: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Assistant Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
-91-
96
Commitment: ▇▇▇▇▇ FARGO BANK, N.A.
$13,000,000
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: Vice President
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Lending Office: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
First Floor
MAC# 4101-016
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
-92-