===========================================================================
EXHIBIT 10.33
AMENDED AND RESTATED CREDIT AGREEMENT
Among
BROOKSTONE, INC.
BROOKSTONE COMPANY, INC.
BROOKSTONE STORES, INC.
BROOKSTONE PURCHASING, INC.
GARDENERS EDEN BY MAIL, INC.
GARDENERS EDEN COMPANY, INC.
GARDENERS EDEN PURCHASING, INC.
THE LENDERS PARTY HERETO
and
FLEET NATIONAL BANK
as Agent for the Lenders
and
CITIZENS BANK OF MASSACHUSETTS
as Documentation Agent
for the Lenders
With
FLEET SECURITIES, INC.
as Arranger
Dated as of February 21, 2002
===========================================================================
TABLE OF CONTENTS
Section Title Page
SECTION I DEFINITIONS .......................................................................... 2
1.1. Definitions ...................................................................... 2
1.2. Accounting Terms. ................................................................ 14
SECTION II DESCRIPTION OF CREDIT ............................................................... 14
2.1. The Loans ........................................................................ 14
2.2. Notice and Manner of Borrowing or Conversion of Loans. ........................... 15
2.3. Commitment Fee. .................................................................. 16
2.4. Reduction of Commitment Amount. .................................................. 17
2.5. The Notes. ....................................................................... 17
2.6. Duration of Interest Periods. .................................................... 17
2.6. Interest Rates and Payment of Interest. .......................................... 17
2.8. Changed Circumstances. ........................................................... 18
2.9. Capital Requirements. ............................................................ 19
2.10. Payments and Prepayments of the Loans. ........................................... 20
2.11. Method of Payment. ............................................................... 20
2.12. Default Interest. ................................................................ 21
2.13. Payments Not at End of Interest Period. .......................................... 21
2.14. Computation of Interest and Fees. ................................................ 21
2.15. Sharing of Payments. ............................................................. 22
2.16. Letter of Credit Facility. ....................................................... 22
2.17. Swing Line Commitment. ........................................................... 26
2.18. Procedure for Swing Line Borrowing; Interest on Swing Line Loans. ................ 27
2.19. Refunded Swing Line Loans; Swing Line Loan Participations. ....................... 27
2.20. Use of Proceeds. ................................................................. 29
2.21. Guaranty of Parent. .............................................................. 29
2.22. Replacement of Lenders. .......................................................... 30
2.23. Extension of Revolving Credit Termination Date. .................................. 30
SECTION III CONDITIONS OF LOANS AND LETTERS OF CREDIT .......................................... 31
3.1. Conditions Precedent to Initial Loan. ............................................ 31
3.2. Conditions Precedent to All Loans and Letters of Credit. ......................... 33
SECTION IV REPRESENTATIONS AND WARRANTIES ...................................................... 34
4.1. Organization and Qualification. .................................................. 34
4.2. Corporate Authority. ............................................................. 34
4.3. Valid Obligations. ............................................................... 34
4.4. Consents or Approvals. ........................................................... 35
-i-
4.5. Title to Properties; Absence of Encumbrances. .................................... 35
4.6. Financial Statements. ............................................................ 35
4.7. Defaults. ........................................................................ 35
4.8. Taxes. ........................................................................... 35
4.9. Litigation. ...................................................................... 36
4.10. Use of Proceeds. ................................................................. 36
4.11. Subsidiaries. .................................................................... 36
4.12. Investment Company Act. .......................................................... 36
4.13. Compliance with ERISA. ........................................................... 36
4.14. Environmental Matters. ........................................................... 36
4.15. Collateral. ...................................................................... 38
SECTION V AFFIRMATIVE COVENANTS ................................................................ 38
5.1. Financial Statements and other Reporting Requirements ............................ 38
5.2. Conduct of Business. ............................................................. 40
5.3. Maintenance and Insurance. ....................................................... 40
5.4. Taxes. ........................................................................... 40
5.5. Inspection. ...................................................................... 41
5.6. Maintenance of Books and Records. ................................................ 41
5.7. Consolidated Net Worth. .......................................................... 41
5.8. Cash Flow Leverage. .............................................................. 41
5.9. Fixed Charge Coverage. ........................................................... 41
5.10. Further Assurances. .............................................................. 42
SECTION VI NEGATIVE COVENANTS .................................................................. 42
6.1. Indebtedness. .................................................................... 42
6.2. Contingent Liabilities. .......................................................... 43
6.3. Sale and Leaseback. .............................................................. 43
6.4. Encumbrances. .................................................................... 43
6.5. Merger; Acquisitions; Consolidation; Sale or Lease of Assets. .................... 45
6.6. Additional Stock Issuance. ....................................................... 45
6.7. Equity Distributions. ............................................................ 46
6.8. Investments. ..................................................................... 46
6.9. ERISA. ........................................................................... 46
6.10. Capital Expenditures. ............................................................ 46
6.11. Transactions with Affiliates. .................................................... 47
SECTION VII DEFAULTS ........................................................................... 47
7.1. Events of Default. ............................................................... 47
7.2. Remedies. ........................................................................ 49
7.3. License of Intangibles ........................................................... 50
7.4. Distribution of Proceeds. ........................................................ 50
SECTION VIII CONSENTS; AMENDMENTS; WAIVERS; REMEDIES ........................................... 50
-ii-
8.1. Actions by Lenders. ............................................. 50
8.2. Actions by Parent or Borrowers. ................................. 51
SECTION IX SUCCESSORS AND ASSIGNS ............................................. 52
9.1. General. ........................................................ 52
9.2. Assignments. .................................................... 52
9.3. Participations. ................................................. 53
SECTION X THE AGENT .......................................................... 54
10.1. Authorization and Action. ....................................... 54
10.2. Agent's Reliance, Etc. .......................................... 55
10.3. Fleet as Lender. ................................................ 55
10.4. Lender Credit Decision. ......................................... 55
10.5. Indemnification of Agents. ...................................... 55
10.6. Successor Agent. ................................................ 56
10.7. Other Agents. ................................................... 56
10.8. Amendment of Section X. ......................................... 56
SECTION XI MISCELLANEOUS ...................................................... 57
11.1. Notices. ........................................................ 57
11.2. Expenses. ....................................................... 58
11.3. Set-Off. ........................................................ 58
11.4. Term of Agreement. .............................................. 58
11.5. No Waivers. ..................................................... 58
11.6. Governing Law. .................................................. 58
11.7. Counterparts. ................................................... 59
11.8. Partial Invalidity. ............................................. 59
11.9. Captions. ....................................................... 59
11.10. WAIVER OF JURY TRIAL. ........................................... 59
11.11. Entire Agreement. ............................................... 59
11.12. Indemnification. ................................................ 59
11.13. Collateral Release Conditions. .................................. 60
-iii-
EXHIBITS AND SCHEDULES
EXHIBIT A-1 Form of Promissory Note
EXHIBIT A-2 Form of Swing Line Note
EXHIBIT B Form of Notice of Borrowing or Conversion
EXHIBIT C Indebtedness; Encumbrances
EXHIBIT D Litigation
EXHIBIT E Subsidiaries
EXHIBIT F Form of Report of Chief Financial Officer
EXHIBIT G Form of Borrowing Base Report
EXHIBIT H Form of Opinion of Counsel
EXHIBIT I Form of Amended and Restated Unlimited Guaranty
EXHIBIT J Form of Assignment and Acceptance Agreement
SCHEDULE 1.1 Commitment Percentages
SCHEDULE 1.2 Pricing Schedule
SCHEDULE 2.16.9 Outstanding Letters of Credit
SCHEDULE 4.13 Certain ERISA Matters
SCHEDULE 6.8 List of Investments in Subsidiaries
-iv-
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of February 21,
2002, by and among BROOKSTONE, INC., a Delaware corporation (the "Parent"),
BROOKSTONE COMPANY, INC., a New Hampshire corporation (the "Company"),
BROOKSTONE STORES, INC., a New Hampshire corporation ("Stores"), BROOKSTONE
PURCHASING, INC., a New Hampshire corporation ("Purchasing"), GARDENERS EDEN
COMPANY, INC., a New Hampshire corporation ("GE"), GARDENERS EDEN PURCHASING,
INC., a New Hampshire corporation ("GE Purchasing"), GARDENERS EDEN BY MAIL,
INC., a New Hampshire corporation ("GE Mail;" the Parent, the Company,
Purchasing, GE, GE Mail, GE Purchasing and Stores are referred to herein
collectively as the "Companies;" and the Company, Purchasing, GE, GE Mail, GE
Purchasing and Stores are referred to herein individually as a "Borrower" and
collectively as the "Borrowers"), each having its chief executive office at ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, the lenders from time to time parties hereto,
FLEET NATIONAL BANK (f/k/a BankBoston, N.A.) ("Fleet" or the "Agent"), a
national banking association having its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as agent for the lenders from time to time parties hereto, and
CITIZENS BANK OF MASSACHUSETTS (the "Documentation Agent"), a Massachusetts
banking corporation with its principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Documentation Agent for the Lenders from time to
time parties hereto.
Recitals
The Parent, the Company, GE, GE Mail and Stores have established credit
facilities for working capital and other corporate needs, and certain of the
Lenders currently provide credit facilities to the Company, GE, GE Mail and
Stores on the terms and conditions set forth in that certain Amended and
Restated Credit Agreement dated as of May 11, 1999 (the "1999 Credit
Agreement").
The Agent, the Lenders and the Companies desire to modify the 1999
Credit Agreement in certain respects.
NOW, THEREFORE, for good and valuable consideration, (a) the Company,
GE, GE Mail, Stores, the Agent and the Lenders hereby amend and restate the 1999
Credit Agreement in its entirety and (b) the parties hereto hereby agree, as
follows:
-1-
SECTION I
DEFINITIONS
1.1. Definitions.
-----------
All capitalized terms used in this Agreement or in the Notes or in any
certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:
1999 Credit Agreement. See Preamble.
Adjusted LIBOR Rate. For any Interest Period, a rate per annum (rounded
upward, if necessary, to the nearest 1/32 of one percent) as determined on the
basis of the offered rates for deposits in U.S. dollars, for a period of time
comparable to such Interest Period which appears on the Telerate page 3750 as of
11:00 a.m. (London time) on the day that is two Business Days preceding the
first day of such Interest Period; provided, however, if the rate described
-------- -------
above does not appear on the Telerate System on any applicable interest
determination date, then the Adjusted LIBOR Rate shall be the rate (rounded
upwards as described above, if necessary) for deposits in U.S. dollars for a
period substantially equal to the Interest Period on the Reuters Page "LIBO" (or
such other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London time), on the day that is two
Business Days prior to the beginning of such Interest Period, provided, further,
-------- -------
that if both the Telerate and Reuters systems are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such Interest Period which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. (London time), on the day that is two Business Days preceding the
first day of such Interest Period as selected by Agent. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at approximately 11:00
a.m. (New York City time), on the day that is two Business Days preceding the
first day of such Interest Period. In the event that the Agent is unable to
obtain any such quotation as provided above, it will be deemed that the Adjusted
LIBOR Rate cannot be determined. In the event that the Board of Governors of the
Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of the Agent, then for any period during which such Reserve Percentage
shall apply, the Adjusted LIBOR Rate shall be equal to the amount determined
above divided by an amount equal to 1 minus the Reserve Percentage.
Affected Lender. See Section 2.22.
-2-
Affected Loans. See Section 2.8(a).
Affiliate. Shall mean (a) any director or officer of any Borrower or
the Parent and (b) any Person that controls, is controlled by or is under common
control with the Borrower. For purposes of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
Agent. See Preamble.
Agreement. This Agreement, as the same may be supplemented or amended
from time to time.
Applicable Base Rate Margin. As of any day, the applicable Base Rate
Margin described on the Pricing Schedule then in effect.
Applicable LIBOR Margin. As of any day, the applicable LIBOR Margin
described on the Pricing Schedule then in effect.
Arranger. Fleet Securities, Inc.
Assignment and Acceptance Agreement. See Section 9.2(a).
Base Rate. The greater of (a) the rate of interest announced from time
to time by the Agent at its head office as its Base Rate, and (b) the Federal
Funds Effective Rate plus 1/2 of 1% per annum (rounded upwards, if necessary, to
the next l/8 of l%).
Base Rate Loan. Any Loan or Swing Line Loan bearing interest determined
with reference to the Base Rate.
Borrower or Borrowers. See Preamble.
Borrowing Base. At any date during the periods described below for any
year, the applicable advance percentage of Eligible Inventory and stated amount
of outstanding documentary Letters of Credit issued in connection with the
purchase of goods which would otherwise constitute Eligible Inventory:
-3-
PERIOD ADVANCE PERCENTAGE
December 1 through May 31 50%
June 1 through July 31 65%
August 1 through November 30 75%
Brookstone Subsidiaries. Brookstone By Mail, Inc., Brookstone Holdings,
Inc., Brookstone Retail Puerto-Rico, Inc., Brookstone Properties, Inc., and any
other Subsidiary which may hereafter become a party to the Subsidiary Guaranty
and the Security Documents pursuant to Section 5.10(b).
Business Day. (a) For all purposes other than as covered by clause (b)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Boston, Massachusetts or New York, New York are open for the conduct of a
substantial part of their commercial banking business; and (b) with respect to
all notices and determinations in connection with, and payments of principal and
interest on, LIBOR Loans, any day that is a Business Day described in clause (a)
and that is also a day for trading by and between banks in U.S. Dollar deposits
in the Interbank LIBOR market.
Capital Expenditures. Amounts paid or Indebtedness incurred by the
Parent or any of its Subsidiaries in connection with the purchase or lease of
capital assets that would be required to be capitalized, all as shown on the
consolidated statement of cash flow of the Parent and its Subsidiaries in
accordance with generally accepted accounting principles.
Change of Control. Either (i) any Person or "group" (within the meaning
of Section 13(d) or 14(d) of the Exchange Act) and its affiliates shall have
acquired beneficial ownership of capital stock having 35% or more of the
ordinary voting power in the election of directors of the Parent and which
Person, group or affiliate shall have had no beneficial ownership of any such
capital stock on or before the date of this Agreement, or (ii) any Person or
group and its affiliates shall have acquired beneficial ownership of capital
stock having 40% or more of the ordinary voting power in the election of
directors of the Parent and which Person, group or affiliate had some beneficial
ownership of such stock on or before the date of this Agreement.
Code. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
Collateral. Any and all personal property of the Parent, the Borrowers
and the Brookstone Subsidiaries, whether tangible or intangible, but excluding
--- ---------
real property, machinery and equipment encumbered on the date of this Agreement,
and general intangibles.
-4-
Collateral Release Conditions. See Section 11.13.
Commitment Amount. $80,000,000 or any lesser amount, including zero,
resulting from a termination or reduction of such amount in accordance with
Section 2.4 or Section 7.2.
Commitment Percentage. As to each lender, its percentage interest in
the Commitment Amount as set forth on Schedule 1.1 hereto.
------------
Companies. See Preamble.
Company. See Preamble.
Consolidated EBITDA. At any date as of which the amount thereof shall
be determined and for the period specified, the sum of (a) Consolidated Net
Income (minus extraordinary or one-time gains and plus extraordinary or one-time
non-cash losses (to the extent such losses have not been and will not become
cash losses in a later fiscal period)) for such period, plus (b) consolidated
depreciation and amortization expenses for such period, plus (c) Consolidated
Interest Expense, plus (d) income tax expense for such period.
Consolidated Interest Expense. For any period for which the amount
thereof shall be determined, consolidated net interest expense (including
imputed interest on capital lease obligations) and amortized debt discount.
Consolidated Net Income. At any date as of which the amount thereof
shall be determined and for the period specified, the net income (or deficit) of
the Parent and its Subsidiaries, after taxes, determined in accordance with
generally accepted accounting principles consistently applied.
Consolidated Net Worth. At any date as of which the amount thereof
shall be determined, (a) the consolidated total assets of the Parent and its
Subsidiaries minus (b) Consolidated Total Liabilities.
Consolidated Rent Expense. At any date as of which the amount thereof
shall be determined and for the period specified, the aggregate amount of
minimum rent and percentage rent paid by the Borrowers and their Subsidiaries
under real property lease agreements with third parties during such period
through the date of determination.
Consolidated Tangible Net Worth. At any date as of which the amount
thereof shall be determined, Consolidated Net Worth minus the sum of any amounts
attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, patents, trade and service marks and names, copyrights and
research and development expenses except prepaid expenses, (c) all reserves not
already deducted from assets, (d) any write-up in the book value of assets
resulting from any revaluation thereof
-5-
subsequent to the date of the financial statements referred to in Section 4.6
and (e) the value of any minority interests in Subsidiaries.
Consolidated Total Liabilities. At any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
generally accepted accounting principles, be classified as liabilities on the
consolidated balance sheet of the Parent and its Subsidiaries, including in any
event all Loans.
Consolidated Total Funded Debt. As at any date of determination, on a
consolidated basis for the Parent and its Subsidiaries, and without duplication,
the sum of (i) the aggregate amount of Indebtedness for borrowed money
outstanding on such date (including, without limitation, the Loans outstanding
on such date), plus (ii) all principal obligations arising under capital leases
----
in effect on such date required to be capitalized in accordance with generally
accepted accounting principles, plus (iii) all Guarantees of Indebtedness for
----
borrowed money or capital leases of the Parent and its Subsidiaries outstanding
on such date.
Controlled Group. All trades or businesses (whether or not
incorporated) under common control that, together with the Company, are treated
as a single employer under Section 414(b) or 414 (c) of the Code or Section 4001
of ERISA.
Credit Participants. See Section 9.3.
Default. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
Defaulting Lender. A Lender which has defaulted in its obligation to
make Loans to the Borrowers hereunder for so long as it remains in default.
Documentation Agent. See Preamble.
Eligible Inventory. The Borrowers', the Brookstone Subsidiaries' and
PR's inventory of goods wherever located, in each case held for sale in the
ordinary course of business, valued at the lower of cost or market and less any
reserves (including any reserves for slow-moving, obsolete and clearance items)
as determined in accordance with generally accepted accounting principles;
provided that no such inventory shall be deemed eligible if:
--------
(a) it is under consignment to or from any Person;
(b) it is not owned by a Borrower, a Brookstone Subsidiary or PR,
as applicable, free and clear of all liens;
(c) it is not in good and merchantable condition, useable and
saleable in the ordinary course of business or if it is
obsolete;
-6-
(d) it arises from the sale to an account debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale or return, sale or
approval basis;
(e) it is not subject to the Agent's perfected, first-priority
security interest;
(f) it is held outside of the United States, unless backed by a
letter of credit in form and substance, and issued by a bank,
satisfactory to the Agent;
and provided, further, that the aggregate amount of such inventory that
-------- -------
constitutes Eligible Inventory of PR shall at no time exceed $100,000.
Encumbrances. See Section 6.4.
Environmental Laws. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules or common law (whether now existing or hereafter
enacted, promulgated or decided), of all governmental agencies, bureaus or
departments which may now or hereafter have jurisdiction over the Parent or any
of its Subsidiaries and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, real or personal
property or human health or the environment, including, without limitation, all
requirements pertaining to reporting, licensing, permitting, investigation,
remediation and removal of emissions, discharges, releases or threatened
releases of Hazardous Materials, chemical substances, pollutants or contaminants
whether solid, liquid or gaseous in nature, into the environment or relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of such Hazardous Materials, chemical substances,
pollutants or contaminants.
Equifax Agreement. See Section 6.4(j).
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time to
time be supplemented or amended and remain in effect.
Event of Default. Any event described in Section 7.1.
Extension Date. See Section 2.23(a).
Federal Funds Effective Rate. For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published 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 that is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three federal funds brokers of recognized standing selected by the
Agent.
-7-
Fee Letter. The letter agreement dated as of August 1, 2001, among
Fleet, the Arranger and the Borrowers.
Fixed Charge Coverage. At any date as of which the amount thereof shall
be determined and for the period specified, the quotient obtained by dividing
the total of (a) Consolidated EBITDA plus (b) Consolidated Rent Expense for such
period minus (c) consolidated Capital Expenditures for such period, by the total
of (d) Consolidated Interest Expense and Consolidated Rent Expense for such
period.
For purposes of the foregoing calculation, there shall not be deducted
as Capital Expenditures expenditures up to an aggregate amount of $17,000,000 to
the extent such amount is used for the construction of a new distribution
facility, provided that unless funded through third party financing (which may
--------
include a capital lease, but which shall not include any Loans hereunder) the
aggregate amount of Capital Expenditures excluded hereunder shall not exceed the
Capital Expenditure limitations specified in Section 6.10 in any one fiscal
year.
Fleet. See Preamble.
GE. See Preamble.
GE Mail. See Preamble.
GE Purchasing. See Preamble.
Generally accepted accounting principles. Generally accepted accounting
principles as defined by controlling pronouncements of the Financial Accounting
Standards Board, as from time to time supplemented and amended.
Guaranteed Obligations. See Section 2.21.
Guarantees. As applied to the Parent and its Subsidiaries, all
guarantees, endorsements or other contingent or surety obligations with respect
to obligations of others whether or not reflected on the consolidated balance
sheet of the Parent and its Subsidiaries, including any obligation to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other Person.
Hazardous Material. Any substance (a) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law; (b) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "controlled industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law or
amendments thereto including,
-8-
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and any applicable local statutes
and the regulations promulgated thereunder; (c) which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is or becomes regulated by any governmental authority,
agency, department, commission, board, agency or instrumentality of any foreign
country, the United States, any state of the United States, or any political
subdivision thereof to the extent any of the foregoing has or had jurisdiction
over the Company; or (d) without limitation, which contains gasoline, diesel
fuel or other petroleum products, asbestos or polychlorinated biphenyls
("PCB's").
Indebtedness. As applied to the Parent and its Subsidiaries, (a) all
obligations for borrowed money or other extensions of credit whether or not
secured or unsecured, absolute or contingent, including, without limitation,
unmatured reimbursement obligations with respect to letters of credit or
guarantees issued for the account of or on behalf of the Parent and its
Subsidiaries and all obligations representing the deferred purchase price of
property, other than accounts payable arising in the ordinary course of
business, (b) all obligations evidenced by bonds, notes, debentures or other
similar instruments, (c) all obligations secured by any mortgage, pledge,
security interest or other lien on property owned or acquired by the Parent or
any of its Subsidiaries whether or not the obligations secured thereby shall
have been assumed, (d) that portion of all obligations arising under capital
leases that is required to be capitalized on the consolidated balance sheet of
the Parent and its Subsidiaries, (e) all Guarantees, and (f) all obligations
that are immediately due and payable out of the proceeds of or production from
property now or hereafter owned or acquired by the Parent or any of its
Subsidiaries. Indebtedness shall not include any hedge contract entered into by
the Parent or any of its Subsidiaries for purposes of protecting against changes
in the cost of paper and not for speculation.
Indemnitees. See Section 11.12.
Interest Period. With respect to each LIBOR Loan, the period commencing
on the date of the making or continuation of or conversion to such LIBOR Loan
and ending one, two, three or six months thereafter, as the Company may elect in
the applicable Notice of Borrowing or Conversion; provided that:
--------
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (c) below) that would otherwise end on a
day that is not a Business Day shall be extended to the next
succeeding Business Day unless, in the case of LIBOR Loans,
such Business Day falls in the next calendar month, in which
case such Interest Period shall end on the immediately
preceding Business Day;
(b) any Interest Period applicable to a LIBOR Loan that begins on
the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such
-9-
Interest Period) shall, subject to clause (c) below, end on
the last Business Day of a calendar month;
(c) any Interest Period during the Revolving Credit Period that
would otherwise end after the Revolving Credit Termination
Date shall end on the Revolving Credit Termination Date; and
(d) notwithstanding clause (c) above, no Interest Period
applicable to a LIBOR Loan shall have a duration of less than
one month; and if any Interest Period applicable to such Loans
would be for a shorter period, such Interest Period shall not
be available hereunder.
Investment. As applied to the Parent and its Subsidiaries, the purchase
or acquisition of any share of capital stock, partnership interest, evidence of
indebtedness or other equity security of any other Person, any loan, advance or
extension of credit to, or contribution to the capital of, any other person or
entity, any real estate held for sale or investment, any commodities futures
contracts held other than in connection with bona fide hedging transactions, any
other investment in any other Person, and the making of any commitment or
acquisition of any option to make an Investment.
JV Subsidiary. See Section 6.8.
L/C Notice. See Section 2.16.2.
L/C Participant. See Section 2.16.3.
L/C Participation. See Section 2.16.3.
Lender Agreements. This Agreement, the Notes, the Swing Line Note, the
Subsidiary Guaranty, the Fee Letter, the Letters of Credit (and related
documentation and agreements, including any letter of credit application), the
Security Documents, and any other present or future agreement from time to time
entered into between the Parent or any of its Subsidiaries and the Agent, the
Arranger or the Lenders, each as from time to time amended or supplemented, and
all statements, reports and certificates delivered by the Parent or any of its
Subsidiaries to the Agent, the Arranger or the Lenders in connection therewith.
Lenders. (a) Initially, the banks described on Schedule 1.1 hereto and
------------
(b) any other Person who becomes a Successor Lender hereunder in accordance with
the terms of Section 9.2(a) hereof.
Letters of Credit. Letters of Credit of the Agent issued for the
account of the Company in accordance with the provisions of Section 2.16.
Letter of Credit Fee. See Section 2.16.4(b).
-10-
Letter of Credit Fee Rate. For standby letters of credit, the Letter of
Credit Fee Rate shall be, as of any day, a per annum fee equal to the LIBOR Rate
Margin then in effect, as determined in accordance with (and defined in) the
Pricing Schedule, and for documentary letters of credit, the Letter of Credit
Fee Rate shall be, as of any day, a per annum fee equal to the Documentary
Letter of Credit Fee Rate then in effect, as determined in accordance with (and
defined in) the Pricing Schedule.
Letter of Credit Participation Amount. See Section 2.16.4(c).
LIBOR Loan. Any Loan bearing interest at a rate determined with
reference to the Adjusted LIBOR Rate.
Loan or Revolving Credit Advance. A loan made to the Company by the
Lenders pursuant to Section II of this Agreement, and "Loans" and "Revolving
Credit Advances" means all of such loans, collectively.
Loan Parties. The Parent, the Borrowers and the Brookstone
Subsidiaries.
Majority Lenders. At any time, the Lenders having made not less than
the Required Percentage of the outstanding principal amount of the Loans
hereunder, or, if no Loans are outstanding, the Lenders having aggregate
Commitment Percentages of not less than the Required Percentage.
Maximum Letter of Credit Amount. $50,000,000.
Notes. Promissory notes of the Borrowers, substantially in the form of
Exhibit A-l hereto, evidencing the joint and several obligations of the
Borrowers to each Lender to repay the Loans.
Notice of Borrowing or Conversion. See Section 2.2(a).
Obligations. Any and all obligations of the Parent, the Borrowers and
the Brookstone Subsidiaries to the Agent, the Arranger or the Lenders of every
kind and description, direct or indirect, absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising, regardless
of how they arise or by what agreement or instrument, if any, and including, the
Loans, the Swing Line Loans, obligations with respect to the Letters of Credit
and obligations to perform acts and refrain from taking action as well as
obligations to pay money.
PBGC. The Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
PR. Brookstone Retail Puerto-Rico, Inc., a Puerto-Rico corporation.
Parent. See Preamble.
-11-
Permitted Encumbrances. See Section 6.4.
Permitted Liabilities. Liabilities of the Parent, the Borrowers and the
Brookstone Subsidiaries for (a) state franchise, income and unemployment tax
liabilities, employee withholding, accrued liabilities for employee salaries,
wages, and accrued vacation, personal property taxes, and sales and use taxes
incurred in the ordinary course of business, (b) without limitation of clause
(a) above, accounts payable and accrued liabilities (other than for inventory
purchases), incurred in the ordinary course of business, in an aggregate amount
not to exceed $25,000,000 at any time outstanding, (c) indebtedness of the
Company, GE, GE Purchasing and Purchasing for inventory purchased in the
ordinary course of business , (d) intercompany indebtedness and liabilities
among the Parent, the Borrowers and the Brookstone Subsidiaries incurred in the
ordinary course of business, and (e) liabilities of the Borrowers and the
Brookstone Subsidiaries under leases for real property.
Person. An individual, corporation, partnership, joint venture,
association, estate, joint stock company, trust, organization, business, or a
government or agency or political subdivision thereof.
Plan. At any time, an employee pension or other benefit Plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Company or any
member of the Controlled Group for employees of the Company or any member of the
Controlled Group or (ii) if such Plan is established, maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the Company or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five Plan years made contributions.
Pricing Schedule. The Pricing Schedule attached hereto as
Schedule 1.2.
------------
Purchasing. See Preamble.
Qualified Investments. As applied to the Parent and its Subsidiaries,
investments in (a) notes, bonds or other obligations of the United States of
America or any agency thereof that as to principal and interest constitute
direct obligations of or are guaranteed by the United States of America, (b)
certificates of deposit or other deposit instruments or accounts of banks or
trust companies organized under the laws of the United States or any state
thereof that have capital and surplus of at least $100,000,000, (c) commercial
paper that is rated not less than prime-one or A-l or their equivalents by
▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Corporation, respectively,
or their successors, (d) any repurchase agreement secured by any one or more of
the foregoing and (e) investments in shares of any so-called "Money Market fund"
provided that such fund is registered under the Investment Company Act of 1940,
has net assets of at least $100,000,000, has an investment portfolio with an
average maturity of 365 days or less and is not considered to be a "high-yield"
fund.
-12-
Refunded Swing Line Loans. See Section 2.19.
Refunding Date. See Section 2.19(c).
Register. See Section 9.2(c).
Reimbursement Amount. See Section 2.16.4(a).
Reimbursement Date. See Section 2.16.4(c).
Replacement Lender. See Section 2.22.
Replacement Notice. See Section 2.22.
Required Percentage. 66-2/3%.
Reserve Percentage. As applicable to any Interest Period, the rate
(expressed as a decimal) applicable to the Agent during such Interest Period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System for determining the maximum reserve requirement
(including, without limitation, any basic, supplemental, emergency or marginal
reserve requirement) of the Agent with respect to "Eurocurrency liabilities" as
that term is defined under such regulations.
Revolving Credit Period. The period beginning on the date of this
Agreement and extending through and including the Revolving Credit Termination
Date or such earlier date on which the commitment to make Loans is terminated or
the Commitment Amount is reduced to zero in accordance with the terms hereof.
Revolving Credit Termination Date. February 21, 2005. The Revolving
Credit Termination Date may subsequently be extended in accordance with the
terms of Section 2.23.
Security Documents. Each security agreement, stock pledge agreement and
other security agreement, instrument or document (including UCC financing
statements) that the Agent and/or the Lenders may in their reasonable discretion
require any Loan Party to execute and deliver from time to time in order to
secure any of the Obligations and to grant to the Agent, for the ratable benefit
of the Agent and the Lenders, a perfected, first priority security interest in
or other lien on the Collateral, including, without limitation, by way of
assignment, subject only to Permitted Encumbrances and such other liens and
encumbrances as may be acceptable to the Agent and the Lenders in their sole
discretion.
Stores. See Preamble.
Subsidiary. Any corporation, association, joint stock company,
business trust or other similar organization of which 50% or more of the
ordinary voting power for the
-13-
election of a majority of the members of the board of directors or other
governing body of such entity is held or controlled by the Parent or a
Subsidiary of the Parent; or any other such organization the management of which
is directly or indirectly controlled by the Parent or a Subsidiary of the Parent
through the exercise of voting power or otherwise; or any joint venture, whether
incorporated or not, in which the Parent has a 50% or greater ownership
interest.
Subsidiary Guaranty. The Amended and Restated Unlimited Guaranty of
even date herewith from the Brookstone Subsidiaries to the Agent in the form of
Exhibit I hereto, by which the Brookstone Subsidiaries have jointly and
severally guaranteed to the Agent, for itself and the benefit of the Lenders,
the payment and performance of all Obligations.
Successor Lender. See Section 9.2(a).
Swing Line Commitment. $2,500,000.
Swing Line Lender. See Section 2.17.
Swing Line Loans. See Section 2.17.
Swing Line Note. The Swing Line Note substantially in the form of
Exhibit A-2 hereto executed by the Borrowers, jointly and severally, in favor of
the Swing Line Lender to evidence the Swing Line Loans.
Swing Line Participation Amount. See Section 2.19(c).
1.2. Accounting Terms. All terms of an accounting character shall have
----------------
the meanings assigned thereto by generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
Section 4.6 of this Agreement, modified to the extent, but only to the extent,
that such meanings are specifically modified herein.
SECTION II
DESCRIPTION OF CREDIT
2.1. The Loans.
---------
(a) Subject to the terms and conditions hereof, each Lender, severally
and not jointly will make Loans to the Borrowers, jointly and severally, from
time to time until the close of business on the Revolving Credit Termination
Date, in such sums as the Company may request, provided that the aggregate
principal amount of all Loans and stated amount of all Letters of Credit at any
one time outstanding hereunder shall not, (a) as to each Lender, exceed such
Lender's Commitment Percentage of the Commitment
-14-
Amount, and (b) as to all Lenders, exceed the lesser of (i) the Borrowing Base
in effect at such time and (ii) the Commitment Amount. The Borrowers may borrow,
prepay pursuant to Section 2.10 and reborrow, from the date of this Agreement
until the Revolving Credit Termination Date, the full amount available hereunder
or any lesser sum that is at least $100,000 and an integral multiple of $50,000;
provided that each LIBOR Loan shall be in a minimum of $1,000,000 and multiples
of $500,000. Any Loan not repaid by the Revolving Credit Termination Date shall
be due and payable on the Revolving Credit Termination Date.
(b) Provided that no Default shall have occurred and be continuing, the
Borrowers may convert all or any part (in a minimum amount of $500,000 and
multiples of $100,000 for LIBOR Loans) of any outstanding Loan into a Loan of
any other type provided for in this Agreement in the same aggregate principal
amount, on any Business Day (which, in the case of a conversion of a LIBOR Loan,
shall be the last day of the Interest Period applicable to such LIBOR Loan). The
Company shall give the Agent prior notice of each such conversion (which notice
shall be effective upon receipt) in accordance with Section 2.2.
(c) The Borrowers covenant that there will be a period of thirty (30)
consecutive days during each period commencing December 15 and ending the
following April 30 during which the principal amount of the Loans outstanding
shall not exceed $10,000,000, provided that the first such period shall commence
--------
on the date of this Agreement and end on April 30, 2002, and provided, further,
-------- -------
that for thirty (30) consecutive days during the period commencing December 15,
2002 and ending April 30, 2003, the principal amount of the Loans outstanding
shall be reduced to zero.
2.2. Notice and Manner of Borrowing or Conversion of Loans.
------------------------------------------------------
(a) Whenever the Borrowers desire to obtain or continue a Loan
hereunder, or convert an outstanding Loan into a Loan of another type provided
for in this Agreement, the Company shall notify the Agent (which notice shall be
irrevocable) by telefax or telephone received no later than 10:00 a.m. Boston
time on the Business Day on which the requested Loan is to be made or continued
as or converted to a Base Rate Loan and received no later than 10:00 a.m. Boston
time on the date three Business Days before the day on which the requested Loan
is to be made or continued as or converted to a LIBOR Loan. Such notice shall
specify (i) the effective date and amount of each Loan or portion thereof to be
continued or converted, subject to the limitations set forth in Section 2.1,
(ii) the interest rate option to be applicable thereto, and (iii) the duration
of the applicable Interest Period, if any (subject to the provisions of the
definition of Interest Period and Section 2.6). Each such notification (a
"Notice of Borrowing or Conversion") shall be immediately followed by a written
confirmation thereof by the Company in substantially the form of Exhibit B
---------
hereto, provided that if such written confirmation differs in any material
--------
respect from the action taken by the Agent, the records of the Agent shall
control absent manifest error. The Agent shall give the Lenders notice of each
Notice of Borrowing or Conversion in accordance with the Agent's customary
practice.
-15-
(b) Subject to the terms and conditions of this Agreement, each Lender
shall make available on or before 2:00 p.m. Boston time on the date of each
proposed Loan, to the Agent at the Agent's address and in immediately available
funds, such Lender's Commitment Percentage of such Loan. After the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Section III, the Agent will credit such funds to the Company's demand
deposit account on the date of the proposed Loan.
(c) Unless the Agent shall have received notice from a Lender prior to
the date of any Loan that such Lender will not make available to the Agent such
Lender's Commitment Percentage of such Loan, the Agent may assume that such
Lender has made such amount available to the Agent on the date of such Loan in
accordance with and as provided in this Section 2.2 and the Agent may, in
reliance upon such assumption, make available on such date a corresponding
amount to the Borrowers. If and to the extent such Lender shall not have so made
its Commitment Percentage of such Loan available to the Agent and the Agent
shall have made available such corresponding amount to the Borrowers, such
Lender agrees to pay to the Agent forthwith on demand, and the Borrowers agree,
jointly and severally, to repay to the Agent within two Business Days after
demand (but only after demand for payment has first been made to such Lender and
such Lender has failed to make such payment), an amount equal to such
corresponding amount together with interest thereon for each day from the date
the Agent shall make such amount available to the Borrowers until the date such
amount is paid or repaid to the Agent, at an interest rate equal to (i) in the
case of such Lender the Federal Funds Effective Rate and (ii) in all other
respects at the interest rate applicable at the time to such Loans. If such
Lender shall pay to the Agent such corresponding amount, such amount so paid
shall constitute such Lender's Loan for purposes of this Agreement. If the
Borrowers make a repayment required by the foregoing provisions of this Section
2.2(c) and thereafter the applicable Lender or Lenders make the payments to the
Agent required by this Section 2.2(c), the Agent shall promptly refund the
amount of such payment.
(d) The failure of any Lender to make the Loan to be made by it on any
date shall not relieve any other Lender of its obligation, if any, hereunder to
make its Loan on such date, but no Lender shall be responsible for the failure
of any other Lender to make the Loan to be made by such other Lender.
2.3. Commitment Fee. The Borrowers, jointly and severally, shall pay to
--------------
the Agent, for the accounts of the Lenders in accordance with their respective
Commitment Percentages, a commitment fee on the average daily amount by which
the Commitment Amount exceeds the aggregate principal amount of all Loans and
the stated amount of all outstanding Letters of Credit during each quarter or
portion thereof computed at the Commitment Fee Rate determined in accordance
with the Pricing Schedule. Commitment Fees shall be determined and payable
quarterly in arrears on the last day of March, June, September and December of
each year, beginning March 31, 2002 and on the Revolving Credit Termination
Date; provided, however, that the Borrowers shall not be liable to pay any such
-------- -------
commitment fees for the account of a Defaulting Lender.
-16-
2.4. Reduction of Commitment Amount. The Company may from time to time
------------------------------
by written notice delivered to the Agent at least seven (7) days prior to the
date of the requested reduction, reduce by a minimum amount of $5,000,000 and by
integral multiples of $1,000,000 any unborrowed portion of the Commitment
Amount. No reduction of the Commitment Amount shall be subject to reinstatement.
2.5. The Notes.
---------
(a) The Loans shall be evidenced by the Notes executed by the
Borrowers, jointly and severally, in favor of each Lender and having a final
maturity of the Revolving Credit Termination Date. The Notes shall be dated on
or before the date of the first Loan and shall have the blanks therein
appropriately completed.
(b) The Agent shall, and is hereby irrevocably authorized by the
Borrowers to, enter in its records appropriate notations evidencing the date and
the amount of each Loan, the interest rate applicable thereto and the date and
amount of each payment of principal made by the Borrowers with respect thereto;
and in the absence of manifest error, such notations shall constitute conclusive
evidence thereof. No failure on the part of the Agent to make any notation as
provided in this subsection (b) shall in any way affect any Loan or the rights
or obligations of the Agent, the Lenders or the Borrowers with respect thereto.
2.6. Duration of Interest Periods.
----------------------------
(a) Subject to the provisions of the definition of Interest Period, the
duration of each Interest Period applicable to a Loan shall be as specified in
the applicable Notice of Borrowing or Conversion. The Borrowers shall have the
option to elect a subsequent Interest Period to be applicable to such Loan by
the Company's giving notice of such election to the Agent received no later than
10:00 a.m. Boston time on the Business Day on which the then applicable Interest
Period ends if such Loan is to be continued as or converted to a Base Rate Loan
and three Business Days before the end of the then applicable Interest Period if
such Loan is to be continued as or converted to a LIBOR Loan.
(b) If the Agent does not receive a notice of election of duration of
an Interest Period for a LIBOR Loan pursuant to subsection (a) above within the
applicable time limits specified therein, or if, when such notice must be given,
a Default exists, the Borrowers shall be deemed to have elected to convert such
Loan in whole into a Base Rate Loan on the last day of the then current Interest
Period with respect thereto.
(c) Notwithstanding the foregoing, the Borrowers may not select an
Interest Period that would end, but for the provisions of the definition of
Interest Period, after the Revolving Credit Termination Date.
2.7. Interest Rates and Payment of Interest.
--------------------------------------
-17-
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Base Rate plus the
Applicable Base Rate Margin. Such interest shall be payable on the last day of
each month, in arrears, commencing February 28, 2002, and when such Loans are
due (whether at maturity, by reason of acceleration or otherwise).
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for each Interest Period applicable thereto, at a rate per annum
equal to the Adjusted LIBOR Rate plus the Applicable LIBOR Margin. Such interest
shall be payable for such Interest Period on the last day thereof and when such
LIBOR Loan is due (whether at maturity, by reason of acceleration or otherwise)
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof. The Borrowers shall not have more than
fifteen LIBOR Loans outstanding at any time.
2.8. Changed Circumstances.
---------------------
(a) In the event that:
(i) on any date on which the Adjusted LIBOR Rate would otherwise be
set, the Agent shall have determined in good faith (which determination shall be
final and conclusive) that adequate and fair means do not exist for ascertaining
the Adjusted LIBOR Rate, or
(ii) at any time the Agent shall have determined in good faith (which
determination shall be final and conclusive) that:
(A) the making or continuation of or conversion of any Loan to a LIBOR
Loan has been made impracticable or unlawful by (1) the occurrence of a
contingency that materially and adversely affects the Interbank LIBOR market or
(2) compliance by any Lender in good faith with any applicable law or
governmental regulation, guideline or order or interpretation or change thereof
by any governmental authority charged with the interpretation or administration
thereof or with any request or directive of any such governmental authority
(whether or not having the force of law); or
(B) the Adjusted LIBOR Rate shall no longer represent the effective
cost to the Lenders for U.S. dollar deposits in the LIBOR market for deposits in
which it regularly participates;
then, and in any such event, the Agent shall forthwith so notify the Company
thereof. Until the Agent notifies the Company that the circumstances giving rise
to such notice no longer apply, the obligation of the Lenders and the Agent to
allow selection by the Borrowers of a LIBOR Loan affected by the contingencies
described in this Section 2.8(a) (herein called "Affected Loans") shall be
suspended. If at the time the Agent so notifies the Company, the Company has
previously given the Agent a Notice of Borrowing or Conversion with respect to
one or more Affected Loans but such Loans have not yet gone into effect, such
notification shall be deemed to be void and the
-18-
Borrowers may borrow Loans of a non-affected type by giving a substitute Notice
of Borrowing or Conversion Pursuant to Section 2.2 hereof.
Upon such date as shall be specified in such notice from the Agent
(which shall not be earlier than the date such notice is given) the Company
shall, with respect to the outstanding Affected Loans, prepay the same, together
with interest thereon and any amounts required to be paid pursuant to Section
2.13, and may borrow a Loan of another type in accordance with Section 2.1
hereof by giving a Notice of Borrowing or Conversion pursuant to Section 2.2
hereof.
(b) In case any law, regulation, treaty or official directive or the
interpretation or application thereof by any court or by any governmental
authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law):
(i) subjects any Lender to any tax not in effect on the date hereof
with respect to payments of principal or interest or any other amounts payable
hereunder by the Company or otherwise with respect to the transactions
contemplated hereby (except for taxes on the overall net income of such Lender
imposed by the United States of America or any political subdivision thereof),
or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, any Lender (other than such
requirements as are already included in the determination of the Adjusted LIBOR
Rate), or
(iii) imposes upon any Lender any other condition with respect to its
performance under this Agreement, and the result of any of the foregoing is to
increase the cost to such Lender, reduce the income receivable by such Lender or
impose any expense upon such Lender with respect to any outstanding LIBOR Loans,
such Lender shall notify the Company thereof. The Borrowers, jointly and
severally, agree to pay to such Lender the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, upon presentation by such Lender of a
statement in the amount and setting forth such Lender's calculation thereof,
which statement shall be deemed true and correct absent manifest error.
2.9. Capital Requirements. If after the date hereof any Lender
--------------------
determines that (a) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (b) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender or such
holding company's capital as a consequence of such Lender's commitment to make
Loans hereunder to a level below that which such Lender or such holding company
could have achieved but for such adoption, change or compliance (taking into
consideration
-19-
such Lender's or such holding company's then existing policies with respect to
capital adequacy and assuming the full utilization of such entity's capital) by
any material amount, then such Lender shall notify the Company thereof. The
Borrowers, jointly and severally, agree to pay to such Lender the amount of such
reduction in the return on capital as and when such reduction is determined,
upon presentation by such Lender of a statement in the amount and setting forth
such Lender's calculation thereof, which statement shall be deemed true and
correct absent manifest error. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.10. Payments and Prepayments of the Loans.
-------------------------------------
(a) The Borrowers may make prepayments to the Agent, for the ratable
accounts of the Lenders, of outstanding LIBOR Loans in amounts not less than
$1,000,000 and in multiples of $500,000, without premium or penalty, on the last
day of any Interest Period applicable thereto, upon three (3) Business Days'
notice to the Agent. The Borrowers may make prepayments to the Agent, for the
ratable accounts of the Lenders, of Base Rate Loans at any time in amounts not
less than $100,000 and in multiples of $50,000, without premium or penalty, upon
one Business Day's notice to the Agent. Any interest accrued on the amounts so
prepaid to the date of such payment must be paid at the time of any such
payment. No prepayment of the Revolving Loans during the Revolving Credit Period
shall affect the Commitment Amount or impair the Borrowers' right to borrow as
set forth in Section 2.1.
(b) If at any time the sum of (i) the aggregate principal amount of
outstanding Loans and (ii) the stated amount of the outstanding Letters of
Credit exceeds the lesser of (A) the Borrowing Base in effect at such time or
(B) the Commitment Amount, the Borrowers, jointly and severally, shall
immediately repay to the Agent for the ratable accounts of the Lenders a
principal amount of Loans equal to such excess.
2.11. Method of Payment. All payments and prepayments of principal and
-----------------
all payments of interest shall be made by the Company, on behalf of itself, GE,
GE Mail and Stores, or by any of the Borrowers, to the Agent at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ in immediately available funds, on or before 11:00
a.m. (Boston time) on the due date thereof, free and clear of, and without any
deduction or withholding for, any taxes or other payments. The Agent and the
Lenders may, and the Borrowers hereby authorize the Agent and the Lenders to,
debit the amount of any payment not made by such time to the demand deposit
account of any Borrower with the Agent or such Lender. The Agent will, after its
receipt thereof, distribute like funds relating to the payment of principal,
interest or any other amounts payable hereunder ratably to the Lenders in
accordance with their respective Commitment Percentages. Any payment made by the
Borrowers to the Agent under this Agreement or under the Notes in the manner
provided in this Agreement shall be deemed to be a payment to each of the
respective Lenders, unless the provisions of this Agreement expressly provide
that any such payment shall be solely for the account of the Agent or any
specific Lender.
-20-
2.12. Default Interest. Upon the occurrence and during the continuance
----------------
of any Default, the Borrowers, jointly and severally, shall pay to the Agent for
the account of the Lenders interest on the unpaid principal balance of the Loans
and the Swing Line Loans, and, to the extent permitted by applicable law, on any
overdue interest and fees or any other amounts payable hereunder or under the
Notes and the Swing Line Notes, at a rate per annum equal to two percent (2%)
above the rate then applicable to Base Rate Loans, which interest shall be
compounded monthly and payable on demand.
2.13. Payments Not at End of Interest Period. If the Borrowers for any
--------------------------------------
reason make any payment of principal with respect to any LIBOR Loan on any day
other than the last day of an Interest Period applicable to such LIBOR Loan, or
fail to borrow or continue or convert to a LIBOR Loan after giving a Notice of
Borrowing or Conversion pursuant to Section 2.2, or if any LIBOR Loan is
accelerated pursuant to Section 7.2(b), the Borrowers, jointly and severally,
shall pay to the Agent, for the ratable accounts of the Lenders, an amount
computed pursuant to the following formula.
L = (R - T) x P x D
--------------
360
L = amount payable to the Agent for the ratable accounts of the
Lenders
R = interest rate on such Loan
T = effective interest rate per annum at which any readily
marketable bond or other obligation of the United States,
selected at the Agent's sole discretion, maturing on or near
the last day of the then applicable Interest Period of such
Loan and in approximately the same amount as such Loan can be
purchased by the Agent on the day of such payment of principal
or failure to borrow or continue
P = the amount of principal prepaid or the amount of the requested
Loan
D = the number of days remaining in the Interest Period as of the
date of such payment or the number of days of the requested
Interest Period
The Borrowers shall pay such amount upon presentation by the Agent of a
statement setting forth the amount and the Agent's calculation thereof pursuant
hereto.
2.14. Computation of Interest and Fees. Interest and all fees payable
--------------------------------
hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due, except for interest on Base Rate
Loans which shall be computed daily on a basis of a year of 365/366 days and
paid for the actual number of days for which due. If the due date for any
payment of principal is extended by operation of law, interest shall be payable
for such extended time. If any payment required by this Agreement becomes due on
a day that is not a Business Day such payment may be made on the next succeeding
Business Day (subject to clause (a) of the definition of Interest Period), and
such extension shall be included in computing interest in connection with such
payment.
-21-
2.15. Sharing of Payments. If any Lender shall obtain any payment
-------------------
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans made by it in excess of its ratable share
(according to the then outstanding principal amount of the Loans) of payments on
account of the Loans obtained by all the Lenders, such Lender shall purchase
from the other Lenders such participations in the Loans held by such other
Lenders as shall cause such purchasing Lender to share such payment ratably
according to the then outstanding principal amount of the Loans with each of
such other Lenders; provided, however, that if all or any portion of such
-------- -------
payment is thereafter recovered from such purchasing Lender, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery,
with interest at an interest rate per annum equal to the Base Rate. The
Borrowers, jointly and severally, agree that any Lender so purchasing a
participation in the Loans from another Lender pursuant to this Section 2.15
may, to the fullest extent permitted by law, exercise all its rights of payment
with respect to such participation as fully as if such Lender were the direct
creditor of each Borrower in the amount of such participation.
2.16. Letter of Credit Facility.
-------------------------
2.16.1. The Letters of Credit. Subject to the terms and conditions
---------------------
hereof, including satisfaction of the conditions set forth in Section 3.2
hereof, and provided no Default has occurred and that the Agent is generally
issuing letters of credit for the account of customers in its ordinary banking
business, the Agent agrees upon the request of the Company pursuant to Section
2.16.2 hereof, to issue Letters of Credit, provided that: (a) the outstanding
stated amount of the Letters of Credit shall not exceed the Maximum Letter of
Credit Amount; (b) the sum of (i) the outstanding stated amount of all Letters
of Credit and (ii) the aggregate principal amount of all outstanding Loans shall
not exceed the lesser of (A) the Borrowing Base and (B) the Commitment Amount;
and (c) each Letter of Credit shall expire on or before the earlier of ten (10)
days prior to the Revolving Credit Termination Date or 360 days after the
issuance thereof.
2.16.2. Issuing a Letter of Credit. The Company may request that the
--------------------------
Agent issue a Letter of Credit by written notice (the "L/C Notice") given to the
Agent not less than two (2) Business Days prior to the proposed date of issuance
of such Letter of Credit. The L/C Notice shall specify the proposed date of
issuance and the beneficiary and amount of such Letter of Credit, and shall be
accompanied by a letter of credit application completed to the satisfaction of,
and with such amendments and modifications as may be deemed necessary by, the
Agent.
2.16.3. Letter Credit Participations.
----------------------------
(a) The Agent shall notify the Lenders on a monthly basis, reporting
the issuance or any amendment or extension of any Letter of Credit. Immediately
upon the issuance by the Agent of any Letter of Credit, the Agent shall be
deemed to have sold to each Lender (each such Lender, in its capacity under this
Section 2.16.3, an "L/C Participant"),
-22-
and each such L/C Participant shall be deemed irrevocably and unconditionally to
have purchased and received from the Agent, without recourse or warranty, an
undivided interest and participation (each an "L/C Participation") to the extent
of such L/C Participant's Commitment Percentage, in such Letter of Credit, any
substitute Letter of Credit, each draw made thereunder and the obligations of
the Borrowers under the Lender Agreements with respect thereto, and any security
therefor or any pertaining thereto.
(b) In determining whether to pay under any Letter of Credit, the Agent
shall have no obligation relative to the L/C Participants other than to confirm
that any documents required to be delivered under such Letter of Credit have
been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be taken
by the Agent under or in connection with any Letter of Credit, if taken or
omitted to be taken in the absence of gross negligence or willful misconduct,
shall not create for the Agent any resulting liability.
2.16.4. Reimbursement and Other Payments.
--------------------------------
(a) The Borrowers, jointly and severally, hereby agree to pay to the
Agent, for the ratable accounts of the Lenders, on the date on which the Agent
shall be required to pay any draft presented under any Letter of Credit, a sum
(the "Reimbursement Amount") equal to: (i) the amount so paid under such Letter
of Credit, plus (ii) interest on any amount remaining unpaid by the Borrowers to
the Lenders under clause (i) from and including the date on which such amount
becomes payable pursuant to clause (i) until payment in full, payable on demand,
at a per annum rate of interest equal to the rate applicable to Base Rate Loans
plus any additional interest under Section 2.12. If the Borrowers shall fail to
pay to the Agent the Reimbursement Amount on the date on which the Agent shall
be required to pay any draft presented under any Letter of Credit, the Agent
shall, to the extent the Borrowers have availability to request a Loan, consider
such failure to be a request for a Loan in the amount of the Reimbursement
Amount. In the event any such Loan is made pursuant to this Section 2.16.4(a),
the Agent shall notify each Lender of such Lender's Commitment Percentage of
such Loan, and such Lender shall make available promptly to the Agent the
corresponding amount of such Loan, all in accordance with Section 2.2 hereof.
The Borrowers, jointly and severally, agree that the Agent may make any such
Loan, and each Lender agrees to deliver such Lender's Commitment Percentage of
such Loan, even if the making of such Loan causes the outstanding balance of all
Loans to exceed the limits set forth in Section 2.1 hereof, and the Borrowers
further agree that the making of such Loan by the Agent in excess of the limits
set forth in Section 2.1 hereof shall constitute an automatic Events of Default
under Section VII, entitling the Agent and the Lenders to exercise all rights
and remedies available to them under the Lender Agreements and applicable law.
(b) The Borrowers shall, jointly and severally, quarterly in arrears on
the last day of each calendar quarter for the calendar quarter ending on such
date, pay a fee (in each case, a "Letter of Credit Fee") to the Agent in respect
of each Letter of Credit issued, extended or renewed at the request of the
Borrowers equal to the face amount of each Letter of Credit multiplied by the
Letter of Credit Fee Rate per annum. The Agent
-23-
shall, in turn, remit to each Lender its pro rata portion of such Letter of
Credit Fee. In addition, the Borrowers shall, jointly and severally, pay to the
Agent, for its own account, (a) on standby Letters of Credit, a fronting fee
equal to 0.125% per annum of the stated amount, payable quarterly in arrears,
and (b) on the date of issuance, or any extension or renewal of any Letter of
Credit and at such other time or times as such charges are customarily made by
the Agent, the Agent's standard issuance, processing, negotiation, amendment and
administrative fees, determined in accordance with customary fees and charges
for similar facilities.
(c) If prior to the time a Loan would have otherwise been made pursuant
to Section 2.16.4(a) one of the events described in Section 7.1(g) or (h) shall
have occurred and be continuing, each Lender shall, on the date such Loan was to
have been made pursuant to the provisions of paragraph (a) above (the
"Reimbursement Date"), purchase an undivided participating interest in an amount
equal to (i) its Commitment Percentage times (ii) the aggregate principal amount
of the Reimbursement Amount then outstanding which was to have been repaid with
such Loan (the "Letter of Credit Participation Amount"). On the Reimbursement
Date, each Lender shall transfer to the Agent, in immediately available funds,
such Lender's Letter of Credit Participation Amount and upon receipt thereof the
Agent shall deliver to such Lender a Letter of Credit Loan Participation
Certificate dated the date of the Lender's receipt of such funds and in such
Letter of Credit Participation Amount.
2.16.5. Obligations Absolute. The obligations of the Borrowers with
--------------------
respect to the Letters of Credit shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letters of
Credit or this Agreement;
(b) any amendment or waiver of or any consent to or actual
departure from this Agreement;
(c) the existence of any claim, set-off, defense or other right which
the Borrowers may have at any time against any beneficiary or any transferee of
a Letter of Credit (or any persons or entities for which any such beneficiary or
any such transferee may be acting), the Agent, the Lenders or any other Person,
whether in connection with this Agreement, the transactions contemplated herein
or in any other agents or any unrelated transaction;
(d) any statement or any other document presented under a 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;
(e) payment by the Agent under a Letter of Credit against presentation
by the beneficiary thereof of a draft or certificate which does not comply with
terms of such
-24-
Letter of Credit; or
(f) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
The obligations of the Borrower under this Section 2.16.5 shall not
limit any rights or claims of the Borrowers under Section 2.16.6 or 2.16.8
hereof.
2.16.6. The Uniform Customs and Practice. The Uniform Customs and
--------------------------------
Practice for Documentary Credits (ICC Publication No. 500) shall be binding on
the Borrowers, the Lenders and the Agent. The Borrowers assume all risks of the
acts or omissions of the beneficiary of each Letter of Credit with respect to
such Letter of Credit. In furtherance of, and not in limitation of the Agent's
rights and powers under the Uniform Customs and Practice, but subject to all
other provisions of this Section 2.16.6, it is understood and agreed that the
Agent shall not have any liability for, and that the Borrowers assume all
responsibility for: (a) the genuineness of any signature; (b) the form,
correctness, validity, sufficiency, genuineness, falsification and legal effect
of any draft, certification or other document required by a Letter of Credit or
the authority of the Person signing the same; (c) the failure of any instrument
to bear any reference or adequate reference to a Letter of Credit or the failure
of any Persons to note the amount of any instrument on the reverse of a Letter
of Credit or to surrender a Letter of Credit or otherwise to comply with the
terms and conditions of a Letter of Credit; (d) the good faith or acts of any
Person other than the Agent and its agents and employees; (e) the existence,
form, sufficiency or breach of or default under any agreement or instrument of
any nature whatsoever; (f) any delay in giving or failure to give any notice,
demand or protest; and (g) any error, omission, delay in or nondelivery of any
notice or other communication, however sent. The determination as to whether the
required documents are presented prior to the expiration of a Letter of Credit
and whether such other documents are in proper and sufficient form for
compliance with a Letter of Credit shall be made by the Agent in its sole
discretion, which determination shall be conclusive and binding upon the
Borrowers. It is agreed that the Agent may honor, as complying with the terms of
the Letters of Credit and this Agreement, any documents otherwise in order and
signed or issued by the beneficiary thereof. Any action, inaction or omission on
the part of the Agent under or in connection with the Letters of Credit or any
related instruments or documents, if in good faith and in conformity with such
laws, regulations or commercial or banking customs as the Agent may reasonably
deem to be applicable, shall be binding upon the Borrowers, shall not place the
Agent or the Lenders under any liability to the Borrowers, and shall not affect,
impair or prevent the vesting of any of the Agent's or the Lenders' rights or
powers hereunder or the Borrowers' obligation to make full reimbursement.
2.16.7. Modification, Consent, etc. If the Borrowers, either in writing
--------------------------
or orally, request or consent to any modification or extension of a Letter of
Credit or waive failure of any draft, certificate or other documents to comply
with the terms of a Letter of Credit, the Agent shall be entitled to rely and
shall be deemed to have relied on such request, consent or waiver with respect
to any action taken or omitted by the Agent pursuant to
-25-
any such request, consent or waiver, and such extension, modification or waiver
binding upon the Borrowers.
2.16.8. Liability of the Agent and the Lenders. Neither the Agent, the
--------------------------------------
Lenders nor any of their officers or directors shall be liable or responsible
for: (a) the use which may be made of the Letters of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Agent against
presentation of documents which do not comply with the terms of a Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to a Letter of Credit; or (d) any other circumstances whatsoever in
making or failure to make payment under a Letter of Credit, except that
notwithstanding anything in this Section 2.16.8 to the contrary, the Borrowers
shall have a claim against the Agent, and the Agent shall be liable to the
Borrowers, to the extent but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Borrowers which were caused by the
Agent's failure to conform to the standards of the Uniform Customs and Practice.
In furtherance and not in limitation of the foregoing, the Agent may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
Nothing contained in this Section 2.16.8 shall affect the Agent's
responsibilities under Section 2.16.6.
2.16.9. Outstanding Letters of Credit. As of the date of this
-----------------------------
Agreement, certain letters of credit are outstanding from Fleet for the account
of the Company under the 1999 Credit Agreement, which letters of credit are
described on Schedule 2.16.9 hereto. The parties hereto acknowledge and agree
---------------
that upon execution of this Agreement, all letters of credit described on
Schedule 2.16.9 hereto shall automatically be deemed to be Letters of Credit
---------------
hereunder without the necessity of any further action on the part of the
Company, the Lenders or the Agent.
2.17. Swing Line Commitment. Subject to the terms and conditions
---------------------
hereof, Fleet (in such capacity, the "Swing Line Lender") agrees to make
available to the Borrowers a portion of the credit otherwise available to the
Borrowers hereunder from time to time prior to the Revolving Credit Termination
Date by making swing line loans ("Swing Line Loans") to the Borrowers, jointly
and severally, in an aggregate principal amount not to exceed at any one time
outstanding the Swing Line Commitment; provided that (a) the aggregate principal
--------
amount of Swing Line Loans outstanding at any time shall not exceed the Swing
Line Commitment then in effect (notwithstanding that the Swing Line Loans
outstanding at any time, when aggregated with the Swing Line Lender's other
outstanding Loans hereunder, may exceed the Swing Line Commitment then in
effect) and (b) the Borrowers shall not request, and the Swing Line Lender shall
not be obligated to make, any Swing Line Loan if, after giving effect to the
making of such Swing Line Loan, the aggregate amount of the Loans, the Swing
Line Loans and the stated amount of all Letters of Credit exceed the lesser of
the Borrowing Base in effect at such time and the Commitment Amount. Prior to
the Revolving Credit Termination Date, the Borrowers may use the Swing Line
Commitment by borrowing, repaying and
-26-
reborrowing, all in accordance with the terms and conditions hereof. Swing Line
Loans shall be Base Rate Loans only. The Borrowers may use the proceeds of
Revolving Credit Advances from time to time to repay any outstanding Swing Line
Loans. The Borrowers, jointly and severally, shall repay all outstanding Swing
Line Loans on the Revolving Credit Termination Date. On the Closing Date, the
Borrowers shall deliver to the Swing Line Lender a Swing Line Note to evidence
the Swing Line Loans from time to time made by the Swing Line Lender to the
Borrowers hereunder.
2.18. Procedure for Swing Line Borrowing; Interest on Swing Line Loans.
----------------------------------------------------------------
Whenever the Borrowers desire that the Swing Line Lender make Swing Line Loans
under Section 2.18, the Company shall give the Swing Line Lender irrevocable
telephonic notice confirmed promptly in writing (which telephonic notice must be
received by the Swing Line Lender not later than 1:00 P.M., Boston time, on the
proposed borrowing date), specifying (a) the amount to be borrowed and, (b) the
requested borrowing date (which shall be a Business Day prior to the Revolving
Credit Termination Date); and not later than 3:00 P.M., Boston time, on the
borrowing date specified in the notice in respect of Swing Line Loans, the Swing
Line Lender shall make the proceeds of such Swing Line Loan available to the
Company, as agent for the Borrowers on such borrowing date in accordance with
the instructions of the Company. The Borrowers, jointly and severally, shall pay
interest on the unpaid balance of the Swing Line Loans from time to time
outstanding at a per annum rate equal to the Base Rate. Interest on the Swing
Line Loans shall be payable monthly in arrears on the last day of each month,
commencing February 28, 2002 and continuing until all of the Indebtedness of the
Borrowers to the Swing Line Lender hereunder shall have been paid in full.
2.19. Refunded Swing Line Loans; Swing Line Loan Participations. (a)
---------------------------------------------------------
The Swing Line Lender, at any time and from time to time in its sole and
absolute discretion, but in any event at least once every fourteen days, may, on
behalf of the Borrowers (which hereby irrevocably direct the Swing Line Lender
to act on their behalf) on one Business Day's notice given by the Swing Line
Lender no later than 12:00 noon, Boston time, request each Lender to make, and
each Lender hereby agrees to make, a Revolving Credit Advance in an amount equal
to such Lender's Commitment Percentage of the aggregate amount of the Swing Line
Loans (the "Refunded Swing Line Loans") outstanding on the date of such notice,
to repay the Swing Line Lender. Unless any of the events described in Section
7.1(g) or (h) shall have occurred and be continuing (in which case the
procedures of Section 2.19(c) shall apply), each Lender shall make the amount of
such Revolving Credit Advance available to the Agent at its office in
immediately available funds, not later than 10:00 A.M., Boston time, one
Business Day after the date of such notice. The proceeds of such Revolving
Credit Advances shall be immediately applied by the Swing Line Lender to repay
the Refunded Swing Line Loans. Effective on the day such Revolving Credit
Advances are made, the portion of the Swing Line Loans so paid shall no longer
be outstanding as Swing Line Loans and shall be outstanding as Revolving Credit
Advances and owed to the Lenders in accordance with their respective Commitment
Percentages. The Borrowers irrevocably authorize the Swing Line Lender to charge
the Borrowers' accounts with the Agent (up to the amount
-27-
available in each such account) to immediately pay the amount of such Refunded
Swing Line Loans to the extent amounts received from the Lenders are not
sufficient to repay all such Refunded Swing Line Loans.
(b) The making of any Swing Line Loan hereunder shall be subject to the
satisfaction of the applicable conditions precedent thereto set forth in Section
3.2. The Swing Line Lender shall notify the Company of its election not to make
Swing Line Loans hereunder as a result of the failure to satisfy such conditions
precedent, unless an Event of Default of the type specified in Section 7.1(g) or
(h) shall have occurred and be continuing.
(c) If prior to the time a Revolving Credit Advance would have
otherwise been made pursuant to Section 2.2(a) one of the events described in
Section 7.1(g) or (h) shall have occurred and be continuing, each Lender shall,
on the date such Revolving Credit Advance was to have been made pursuant to the
notice referred to in Section 2.19(a) (the "Refunding Date"), purchase an
undivided participating interest in an amount equal to (i) its Commitment
Percentage times (ii) the aggregate principal amount of Swing Line Loans then
outstanding which were to have been repaid with such Revolving Credit Advances
(the "Swing Line Participation Amount"). On the Refunding Date, each Lender
shall transfer to the Swing Line Lender, in immediately available funds, such
Lender's Swing Line Participation Amount, and upon receipt thereof the Swing
Line Lender shall deliver to such Lender a Swing Line Loan Participation
Certificate dated the date of the Swing Line Lender's receipt of such funds in
such Swing Line Participation Amount.
(d) Whenever, at any time after the Swing Line Lender has received from
any Lender such Lender's Swing Line Participation Amount, the Swing Line Lender
receives any payment on account of the Swing Line Loans, the Swing Line Lender
will distribute to such Lender its Swing Line Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
pay the principal of and interest on all Swing Line Loans then due); provided
however, that in the event that such payment received by the Swing Line Lender
is required to be returned, such Lender will return to the Swing Line Lender any
portion thereof previously distributed to it by the Swing Line Lender.
(e) Each Lender's obligation to make the Loans referred to in Section
2.19(a) and to purchase a participating interest pursuant to Section 2.19(c)
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or the Borrowers may have
against the Swing Line Lender, the Borrowers or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions specified in
Section 3.2; (iii) any adverse change in the condition (financial or otherwise)
of the Borrowers; (iv) any breach of this Agreement or any other Lender
Agreement by the
-28-
Borrowers or any other Lender; or (v) any other circumstances, happening or
event whatsoever, whether or not similar to any of the foregoing.
2.20. Use of Proceeds. The proceeds of all Loans and Swing Line Loans
---------------
shall be used by the Borrowers as follows: (a) the initial Revolving Credit Loan
shall be used to repay in full all amounts outstanding for Loans and Revolving
Credit Advances under the 1999 Credit Agreement, and (b) all future Revolving
Credit Advances and all Swing Line Loans shall be used for general working
capital and other general corporate purposes, including repurchases of stock of
the Parent permitted hereunder.
2.21. Guaranty of Parent. The Parent hereby unconditionally guaranties
------------------
to the Agent and the Lenders the prompt payment and performance of (a) all
liabilities and obligations and Indebtedness, direct or indirect, matured or
unmatured, primary or secondary, certain or contingent, of the Borrowers and the
Brookstone Subsidiaries (including without limitation, costs and expenses
incurred by the Agent and the Lenders in attempting to collect or enforce any of
the foregoing), accrued in each case to the date of payment, and (b) the
performance of all other agreements, covenants and conditions of the Borrowers
and the Brookstone Subsidiaries with respect thereto set forth in this Agreement
and all other Lender Agreements. The responsibilities and obligations of the
Borrowers and the Brookstone Subsidiaries to the Agent and the Lenders described
in the preceding sentence are hereinafter referred to collectively as the
"Guaranteed Obligations." The guaranty pursuant to this Section 2.21 is an
absolute, unconditional and continuing guaranty of the full and punctual payment
and performance by the Borrowers and the Brookstone Subsidiaries of the
Guaranteed Obligations and not of collectability of the Guaranteed Obligations,
and is in no way conditioned upon any requirement that the Agent or the Lenders
first attempt to collect any of the Guaranteed Obligations from the Borrowers
and the Brookstone Subsidiaries or resort to any security or other means of
obtaining payment of any of the Guaranteed Obligations which the Agent or the
Lenders now has or may acquire after the date hereof, or upon any other
contingency whatsoever. Upon any default by the Borrowers or the Brookstone
Subsidiaries in the full and punctual payment and performance of the Guaranteed
Obligations, the liabilities and obligations of the Parent hereunder shall, at
the option of the Agent, become forthwith due and payable to the Agent, for the
ratable benefit of the Agent and the Lenders, without demand or notice of any
nature, all of which are expressly waived by the Parent. Payments by the Parent
under this Section 2.21 may be required by the Agent or the Lenders on any
number of occasions. The Parent waives presentment, demand, protest, notice of
acceptance, notice of Guaranteed Obligations incurred and all other notices of
any kind, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
require the marshaling of assets of the Borrowers and the Brookstone
Subsidiaries, and all suretyship defenses generally. Without limiting the
generality of the foregoing, the Parent agrees to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Guaranteed Obligations and agrees that the obligations of the Parent hereunder
shall not be released or discharged, in whole or in part, or otherwise affected
by any rescissions, waivers, amendments or modifications of any of the terms or
provisions of any agreement evidencing securing or otherwise executed in
connection
-29-
with any Guaranteed Obligation. Until the payment and performance in full of all
Guaranteed Obligations and any and all obligations of the Borrowers and the
Brookstone Subsidiaries to any affiliate of the Agent or the Lenders, the Parent
shall not exercise any rights against the Borrowers and the Brookstone
Subsidiaries arising as a result of payment by the Parent hereunder, by way of
subrogation or otherwise. The payment of any amounts due with respect to any
indebtedness of the Borrowers and the Brookstone Subsidiaries now or hereafter
held by the Parent is hereby subordinated to the prior payment in full of the
Guaranteed Obligations.
2.22. Replacement of Lenders. If any Lender (an "Affected Lender")
----------------------
defaults in its obligation to make Loans, in accordance with the terms of this
Agreement, the Borrowers may, within ninety (90) days of receipt of notice of
such default, by notice (a "Replacement Notice") in writing to the Agent and
such Affected Lender (a) request the Affected Lender to cooperate with such
Borrowers in obtaining a replacement bank satisfactory to the Agent and such
Borrowers (the "Replacement Lender"); (b) request the non-Affected Lenders to
acquire and assume all of the Affected Lender's Loans and Commitment Percentage,
as provided herein, but none of such Lenders shall be under an obligation to do
so; or (c) designate a Replacement Lender reasonably satisfactory to the Agent
(which shall be deemed to be satisfactory if a Successor Lender). If any
satisfactory Replacement Lender shall be obtained, and/or if any one or more of
the non-Affected Lenders shall agree to acquire and assume all of the Affected
Lender's Loans and Commitment Percentage, then such Affected Lender shall
assign, in accordance with Section 9.2, all of its Commitment Percentage, Loans,
Notes and other rights and obligations under this Agreement and all other Lender
Agreements to such Replacement Lender or non-Affected Lenders, as the case may
be, in exchange for payment of the principal amount so assigned and all interest
and fees accrued on the amount so assigned, plus all other Obligations then due
and payable to the Affected Lender; provided, however, that prior to any such
-------- -------
assignment, such Borrower shall have paid to such Affected Lender all amounts
properly demanded and unreimbursed under this Agreement. Upon the effective date
of such assignment, such Borrower shall issue replacement Notes to such
Replacement Lender and/or non-Affected Lenders, as the case may be, and such
institution shall become a "Lender" for all purposes under this Agreement and
the other Loan Agreements.
2.23. Extension of Revolving Credit Termination Date.
----------------------------------------------
(a) At any time after the first anniversary of the date this
Agreement but prior to the Revolving Credit Termination Date, the Company, by
written notice to the Agent, may request an extension of the Revolving Credit
Termination Date by a period of one year from the date then in effect. The Agent
shall promptly send each Lender a copy of such extension request, and each
Lender shall in turn, in its sole discretion, not later than the thirty (30)
days following the date of such extension request, notify the Company and the
Agent in writing as to whether such Lender will consent to such extension. If
any Lender shall fail to notify the Agent and the Company in writing of its
consent to any such extension request on or before such 30/th/ day (such 30/th/
day hereinafter referred to as the "Extension Date"), such Lender shall be
deemed not to have
-30-
consented to such request. The Agent shall notify the Company on or prior to the
Extension Date of the decision of the Lenders regarding the Company's request
for an extension of the Revolving Credit Termination Date.
(b) If all Lenders consent in writing to such request in
accordance with subsection (a) of this Section 2.23, the Revolving Credit
Termination Date in effect at such time shall, effective as at the Extension
Date, be extended for a period of one year, provided, however, that on the
-------- -------
Extension Date the applicable conditions set forth in Sections 3.1 and 3.2 shall
be satisfied. If fewer than all Lenders consent in writing to any such request
in accordance with subsection (a) of this Section 2.23, the Revolving Credit
Termination Date in effect at such time shall be extended, but only as to those
Lenders who consented to such extension, and only if the aggregate Commitment
Amount of the consenting Lenders would equal or exceed $75,000,000. To the
extent the aggregate Commitment Amount would not equal or exceed $75,000,000,
the Revolving Credit Termination Date shall not be extended. In addition, to the
extent the Revolving Credit Termination Date is not extended as to any Lender,
then (i) such Lender's Commitment Percentage of the Commitment Amount shall
remain in effect until, and automatically terminate in whole upon, the original
unextended Revolving Credit Termination Date, and (ii) upon such termination as
to such Lender, the aggregate Commitment Amount of the Lenders under this
Agreement shall be automatically reduced by an amount equal to such terminated
Commitment Percentage. It is understood and agreed that no Lender shall have any
obligation whatsoever to agree to any request made by the Company for any
requested extension of the Revolving Credit Termination Date. It is further
understood and agreed that in no event shall the Commitment Percentage of the
Lenders hereunder extend for a period longer than 365 days from the original
Revolving Credit Termination Date.
SECTION III
CONDITIONS OF LOANS AND LETTERS OF CREDIT
3.1. Conditions Precedent to Initial Loan. The obligation of the
------------------------------------
Lenders to make the initial Loan is subject to the condition precedent that the
Agent shall have received, in form and substance satisfactory to Agent and its
counsel, the following:
(a) each of the Lender Agreements, duly authorized, executed and
delivered by the respective parties thereto;
(b) certificates of the Secretary or an Assistant Secretary of the
Parent, each Borrower, and each of the Brookstone Subsidiaries with respect to
resolutions of the Board of Directors authorizing the execution and delivery of
the Lender Agreements to which they are respectively a party and identifying the
officer(s) authorized to execute, deliver and take all other actions required
under this Agreement and the other Lender Agreements, and pending specimen
signatures of such officers;
-31-
(c) certificates of incorporation of each of the Parent, each Borrower
and each of the Brookstone Subsidiaries and all amendments and supplements
thereto, filed in the office of the Secretaries of State of Delaware and New
Hampshire, respectively, and each certified by said Secretaries of State as
being a true and correct copy thereof;
(d) the by-laws of each of the Parent, each Borrower and each of the
Brookstone Subsidiaries and all amendments and supplements thereto, certified by
the Secretary or an Assistant Secretary of the Parent, each Borrower, and each
of the Brookstone Subsidiaries, respectively as being a true and correct copy
thereof;
(e) certificates of the Secretaries of State of the jurisdictions of
organization of each of the Parent, each Borrower and each of the Brookstone
Subsidiaries, as to legal existence and good standing of each of the Parent,
each Borrower and each of the Brookstone Subsidiaries in such states, and
certificates of Secretaries of State with respect to authority to do business
from such states as are requested by the Agent;
(f) an opinion addressed to it from Cook, Little, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
p.l.l.c., counsel to the Parent, each Borrower,and each of the Brookstone
Subsidiaries, substantially in the form of Exhibit H hereto;
---------
(g) the Borrowers' three-year financial plan, and the Agent shall be
satisfied therewith and otherwise shall have completed its due diligence;
(h) satisfaction that the Arranger has syndicated the Commitment Amount
in a manner mutually satisfactory to the Borrowers and the Agent;
(i) payment to Fleet of all accrued commitment fees under the 1999
Credit Agreement;
(j) the Security Documents and the appropriate financing statements (in
the name of the Parent, each Borrower and each of the Brookstone Subsidiaries)
and other documents in respect thereto and necessary to enable the Agent to
perfect a legal, valid and enforceable first-priority security interest
thereunder (subject to Permitted Encumbrances) shall have been duly executed by
each such Person, and filed or recorded, as applicable, in all appropriate
filing offices or other locations necessary for the perfection of such
first-priority interests (subject to Permitted Encumbrances), and all other
actions necessary for the perfection of such interests shall have been
completed. The Agent shall have received reports concerning the results of
searches of the Uniform Commercial Code filing offices for the Parent, each
Borrower and each of the Brookstone Subsidiaries in each jurisdiction requested
by the Agent where Collateral or other assets are located made no more than 30
days prior to the date of this Agreement. The Agent shall have received the
original stock certificates, together with stock powers endorsed in blank, for
(i) all of the issued and outstanding capital stock of each domestic U.S.
Subsidiary of the Parent, and (ii) 65% of the issued and outstanding capital
stock of each foreign Subsidiary of the Parent. The Lender shall have received
satisfactory evidence that liability insurance (including umbrella coverage) and
casualty insurance, including any insurance as is required by the Security
-32-
Documents, to be in effect in respect of all real and personal property and
fixtures, of the Parent, each Borrower and each of the Brookstone Subsidiaries
is in effect and the interest of the Agent as loss payee and additional insured
has been duly endorsed upon all instruments of insurance issued in respect of
such property and in respect of liability. All such insurance shall provide for
30 days' advance written notice to the Agent of any cancellation thereof;
(k) the Agent shall have received reasonably satisfactory evidence that
the Parent, the Borrowers and the Brookstone Subsidiaries are solvent, and will
be solvent after giving effect to the Loans to be made hereunder on the date of
this Agreement; and
(l) such other documents, and evidence of the completion of such other
matters, as counsel for the Agent may reasonably deem necessary or appropriate.
3.2. Conditions Precedent to All Loans and Letters of Credit. The
-------------------------------------------------------
Lenders' obligation to make each Loan, including the initial Loan, or continue
or convert Loans to Loans of another type, or issue or extend any Letter of
Credit, are further subject to the following conditions:
(a) timely receipt by the Agent of the Notice of Borrowing or
Conversion as provided in Section 2.2 or an L/C Notice as provided in Section
2.16.2;
(b) the representations and warranties contained in Section IV shall be
true and accurate in all material respects on and as of the date of such Notice
of Borrowing or Conversion or L/C Notice and on the effective date of the
making, continuation or conversion of each Loan or issuance or extension of each
Letter of Credit as though made at and as of each such date (except to the
extent that such representations and warranties expressly relate to an earlier
date);
(c) the sum of (i) the aggregate principal amount of outstanding Loans
and (ii) the stated amount of the outstanding Letters of Credit, after the
making, continuation or conversion of such Loan or issuance or extension of such
Letter of Credit, will not exceed the lesser of (A) the Borrowing Base in effect
as of the end of the Borrowers' previous fiscal month or (B) the Commitment
Amount,
(d) no Default shall have occurred and be continuing, or would result
from such Loan or Letter of Credit;
(e) the resolutions referred to in Section 3.1(c) shall remain in full
force and effect; and
(f) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for any Lender, would
make it illegal or against the policy of any governmental agency or authority
for any Lender to make Loans or issue Letters of Credit hereunder.
The making of each Loan and issuance or extension of each Letter of
Credit shall
-33-
be deemed to be a representation and warranty by the Company on the date of the
making, continuation or conversion of such Loan or issuance or extension of such
Letter of Credit as to the satisfaction of the conditions set forth in
subsections (b) through (e) of this Section 3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to induce the Lenders to make Loans hereunder, the Parent and the
Borrowers jointly and severally represent and warrant to the Agent and the
Lenders that:
4.1. Organization and Qualification. Each of the Parent and its
------------------------------
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated, and (c) is duly qualified and in good
standing as a foreign corporation and is duly authorized to do business in each
jurisdiction where the nature of its properties or business requires such
qualification, except to the extent any such failure to be duly qualified or in
good standing does not have a material adverse effect on the assets, business,
condition (financial or otherwise) or prospects of the Parent and its
Subsidiaries considered as a whole.
4.2. Corporate Authority. The execution, delivery and performance of
-------------------
the Lender Agreements and the transactions contemplated hereby and thereby are
within the corporate power and authority of the Parent, the Borrowers and the
Brookstone Subsidiaries and have been authorized by all necessary corporate
proceedings, and do not and will not (a) require any consent or approval of the
stockholders of the Parent, the Borrowers or any of the Brookstone Subsidiaries,
(b) contravene any provision of the charter documents or by-laws of the Parent,
the Borrowers or any of the Brookstone Subsidiaries or any law, rule or
regulation applicable to the Parent, the Borrowers or any of the Brookstone
Subsidiaries, (c) contravene any provision of, or constitute an event of default
or event that, but for the requirement that time elapse or notice be given, or
both, would constitute an event of default under, any other agreement,
instrument, order or undertaking binding on the Parent, the Borrowers or any of
the Brookstone Subsidiaries, or (d) result in or require the imposition of any
Encumbrance on any of the properties, assets or rights of the Parent, the
Borrowers or any of the Brookstone Subsidiaries.
4.3. Valid Obligations. The Lender Agreements and all of their
-----------------
respective terms and provisions are the legal, valid and binding obligations of
the Parent and the Borrowers, with respect to this Agreement, the Borrowers,
with respect to the Notes, and the Parent, the Borrowers and the Brookstone
Subsidiaries with respect to the other Lender Agreements to which they are a
party, enforceable in accordance with their respective terms except as limited
by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors rights generally, and except as the
-34-
remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
4.4. Consents or Approvals. The execution, delivery and performance of
---------------------
the Lender Agreements and the transactions contemplated herein and therein do
not require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other party, except filings
under the Uniform Commercial Code in connection with the Collateral.
4.5. Title to Properties; Absence of Encumbrances. Each of the Parent
--------------------------------------------
and its Subsidiaries has good and marketable title to all of the properties,
assets and rights of every name and nature now used in the conduct of its
business, including, without limitation, such properties, assets and rights as
are reflected in the financial statements referred to in Section 4.6 (except
such properties, assets or rights as have been disposed of in the ordinary
course of business since the date thereof), free from all Encumbrances except
Permitted Encumbrances or those Encumbrances disclosed in Exhibit C hereto, and,
---------
except as so disclosed, free from all defects of title that might materially
adversely affect such properties, assets or rights, taken as a whole.
4.6. Financial Statements. The Parent has furnished to the Lenders its
--------------------
consolidated balance sheet as of February 3, 2001 and its related consolidated
statements of income, changes in stockholders' equity and cash flow for the
fiscal year then ended, and related footnotes, audited and certified by Price
Waterhouse Coopers LLP. The Parent has also furnished to the Lenders its
unaudited consolidated balance sheet as of November 3, 2001 and its related
unaudited consolidated statements of income, changes in stockholders' equity and
cash flow for the fiscal quarter then ended, certified by the principal
financial officer of the Parent. All such financial statements were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods specified (except that the unaudited financial
statements are without footnotes) and present fairly the financial position of
the Parent and its Subsidiaries as of such dates and the results of the
operations of the Parent and its Subsidiaries for such periods (except, as to
the unaudited financial statements, subject to normal, recurring year-end
adjustments). There are no liabilities, contingent or otherwise, not disclosed
in such financial statements or in Exhibit C hereto that involve a material
---------
amount. There has been no material adverse change in the assets, business,
condition (financial or otherwise) or prospects of the Parent and its
Subsidiaries since November 3, 2001.
4.7. Defaults. No Default exists.
--------
4.8. Taxes. The Parent and each Subsidiary have filed all federal,
-----
state and other tax returns or appropriate extensions required to be filed, and
all taxes, assessments and other governmental charges due from the Parent and
each Subsidiary have been fully paid, except for immaterial amounts which are
being contested by appropriate proceedings. The Parent and each Subsidiary have
established on their books reserves adequate for the payment of all federal,
state and other tax liabilities.
-35-
4.9. Litigation. Except as set forth on Exhibit D hereto, there is no
---------- ---------
litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of the Parent's or any Subsidiary's officers, threatened, against the
Parent or any Subsidiary that, if adversely determined, could result in a
material judgment not fully covered by insurance, could result in a forfeiture
of all or any substantial part of the property of the Parent or its
Subsidiaries, or could otherwise have a material adverse effect on the assets,
business, condition (financial or otherwise) or prospects of the Parent or any
Subsidiary.
4.10. Use of Proceeds. Following the application of the proceeds of
---------------
each Loan, the value of all "margin stock" as such term is used in Regulations U
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. 221 and
224, as amended, of the Parent will not exceed 25% of the value of the total
assets of the Parent that are subject to the restrictions set forth in Section
6.5 and 6.6.
4.11. Subsidiaries. All the Subsidiaries of the Parent are listed on
------------
Exhibit E hereto. The Parent or a Subsidiary of the Parent is the owner, free
---------
and clear of all liens and encumbrances, of all of the issued and outstanding
stock of each Subsidiary, except with respect to Properties which has issued
stock to other shareholders as described on Exhibit E hereto. All shares of such
---------
stock have been validly issued and are fully paid and nonassessable, and no
rights to subscribe to any additional shares have been granted, and no options,
warrants or similar rights are outstanding. Brookstone Realty, Inc. conducts no
business and owns no property, assets or rights of any name or nature.
4.12. Investment Company Act. Neither the Parent nor any of its
----------------------
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
4.13. Compliance with ERISA. Except as disclosed on Schedule 4.13, the
--------------------- -------------
Parent and each member of the Controlled Group have fulfilled their obligations
under the minimum funding standards of ERISA and the Code with respect to each
Plan and are in compliance in all material respects with the applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA; and no "prohibited transaction" or
"reportable event" (as such terms are defined in ERISA) has occurred with
respect to any Plan.
4.14. Environmental Matters.
---------------------
(a) The Parent and each of its Subsidiaries have obtained all
permits, licenses and other authorizations which are required under all
Environmental Laws, except to the extent failure to have any such permit,
license or authorization would not have a material adverse effect on the assets,
business, condition (financial or otherwise) or prospects of the Parent and its
Subsidiaries. The Parent and each of its Subsidiaries are in compliance with the
terms and conditions of all such permits, licenses and authorizations, and are
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment,
-36-
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have a material
adverse effect on the assets, business, condition (financial or otherwise) or
prospects of the Parent and its Subsidiaries.
(b) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or, to the knowledge of
the Parent or any Subsidiary, threatened by any governmental or other entity
with respect to any alleged failure by the Parent or any of its Subsidiaries to
have any permit, license or authorization required in connection with the
conduct of its business or with respect to any Environmental Laws, including,
without limitation, Environmental Laws relating to the generation, treatment,
storage, recycling, transportation, disposal or release of any Hazardous
Materials, except to the extent that such notice, complaint, penalty or
investigation did not or could not result in the remediation of any property
owned or used by the Parent or any of its Subsidiaries costing in excess of
$100,000 per occurrence or $500,000 in the aggregate.
(c) To the best of the knowledge of the Parent or any Subsidiary, no
material oral or written notification of a release of a Hazardous Material has
been filed by or on behalf of the Parent or any of its Subsidiaries and no
property now or previously owned, leased or used by the Parent or any of its
Subsidiaries is listed or proposed for listing on The National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or on any similar state list of sites requiring
investigation or clean-up.
(d) There are no liens or encumbrances arising under or pursuant to any
Environmental Laws on any of the real property or properties owned, or to the
best knowledge of the Parent and its Subsidiaries, any real property leased or
used, by the Parent or any of its Subsidiaries and no governmental actions have
been taken or are in process which could subject any of such properties to such
liens or encumbrances or, as a result of which the Parent or any of its
Subsidiaries would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any property owned by it in any deed to
such property.
(e) Neither the Parent nor any of its Subsidiaries nor, to the best
knowledge of the Parent or any Subsidiary but without conducting any special
investigation, any previous owner, tenant, occupant or user of any property
owned, leased or issued by the Parent or any of its Subsidiaries, has (i)
engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal (whether legal or illegal,
accidental or intentional) of any Hazardous Materials on, under, in or about
such property, except to the extent commonly used in day-to-day operations of
such property and in such case only in compliance with all Environmental Laws,
or (ii) transported any Hazardous Materials to, from or across such property
except to the extent commonly used
-37-
in day-to-day operations of such property and, in such case, in compliance with,
all Environmental Laws; nor to the best knowledge of the Parent, but without
conducting any special investigation, have any Hazardous Materials migrated from
other properties upon, about or beneath such property, nor, to the best
knowledge of the Parent or any Subsidiary, are any Hazardous Materials presently
constructed, deposited, stored or otherwise located on, under, in or about such
property except to the extent commonly used in day-to-day operations of such
property and, in such case, in compliance with, all Environmental Laws.
4.15. Collateral. All of the Obligations under or in respect of the
----------
Lender Agreements will at all times be entitled to the benefits of and be
secured by each of the Security Documents, except to the extent provided in
Section 11.13.
SECTION V
AFFIRMATIVE COVENANTS
So long as the Lenders have any commitment to make Loans or issue
Letters of Credit hereunder or any Loan or other Obligation remains outstanding,
the Parent and the Borrowers covenant, jointly and severally, as follows:
5.1. Financial Statements and other Reporting Requirements. The Parent
-----------------------------------------------------
shall furnish to the Agent and to each Lender:
(a) as soon as available to the Parent, but in any event within 90
days after the end of each of its fiscal years, a consolidated and consolidating
balance sheet as of the end of, and a related consolidated and consolidating
statement of income, changes in stockholders' equity and cash flow for, such
year, audited and certified by Price Waterhouse Coopers LLP (or other
independent certified public accountants acceptable to the Agent and the
Lenders) in the case of such consolidated statements, and certified by the chief
financial officer in the case of such consolidating statements; and,
concurrently with such financial statements, a copy of said certified public
accountants' management report and a written statement by such accountants that,
in the making of the audit necessary for their report and opinion upon such
financial statements they have obtained no knowledge of any Default set out in
Sections 5.7, 5.8, 5.9, 6.1 and 6.10 or, if in the opinion of such accountants
any such Default exists, they shall disclose in such written statement the
nature and status thereof;
(b) as soon as available to the Parent, but in any event within 45
days after the end of each of its fiscal quarters, commencing with the fourth
fiscal quarter of fiscal year 2001, a consolidated balance sheet as of the end
of, and a related consolidated statement of income and cash flow for, the period
then ended, certified by the principal financial officer of the Parent but
subject, however, to normal, recurring year-end adjustments that shall not in
the aggregate be material in amount;
(c) concurrently with the delivery of each financial statement
pursuant to
-38-
subsections (a) and (b) of this Section 5.1, a report in substantially the form
of Exhibit F hereto signed on behalf of the Parent by its chief financial
---------
officer;
(d) within ten (10) business days after the end of each fiscal month, a
report in substantially the form of Exhibit G hereto signed on behalf of the
---------
Borrowers by their respective chief financial officers;
(e) promptly after the receipt thereof by the Parent, copies of any
reports submitted to the Parent by independent public accountants in connection
with any interim review of accounts of the Parent made by such accountants;
(f) promptly after the same are available, copies of all proxy
statements, financial statements and reports as the Parent shall send to its
stockholders or as the Parent may file with the Securities and Exchange
Commission or any governmental authority (excluding tax returns, except on
request) at any time having jurisdiction over the Parent or its Subsidiaries;
(g) if and when the Parent or any Borrower gives or is required to give
notice to the PBGC of any "Reportable Event" (as defined in Section 4043 of
ERISA) with respect to any Plan that might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that any member of the Controlled
Group or the Plan administrator of any Plan has given or is required to give
notice of any such Reportable Event, a copy of the notice of such Reportable
Event given or required to be given to the PBGC;
(h) immediately upon becoming aware of the existence of any condition
or event that constitutes a Default, written notice thereof specifying the
nature and duration thereof and the action being or proposed to be taken with
respect thereto;
(i) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against the Parent or any of its Subsidiaries of which it has notice,
the outcome of which would or might have a materially adverse effect on the
assets, business, condition (financial or otherwise) or prospects of the Parent
and its Subsidiaries on a consolidated basis, written notice thereof and the
action being or proposed to be taken with respect thereto;
(j) promptly upon becoming aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against the Parent or
any of its Subsidiaries regarding any potential violation of Environmental Laws
or any spill, release, discharge or disposal of any Hazardous Material, written
notice thereof and the action being or proposed to be taken with respect
thereto;
(k) within 45 days after the beginning of each fiscal year, budgets for
the Parent and its Subsidiaries for such fiscal year, on a quarter-by-quarter
basis and in such detail as the Agent may reasonably request; and
-39-
(l) from time to time, such other financial data and information about
the Parent or its Subsidiaries as the Agent or the Lenders may reasonably
request.
5.2. Conduct of Business. Each of the Parent and its Subsidiaries
-------------------
shall:
(a) duly observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets (including without limitation all
Environmental Laws and ERISA), and shall maintain and keep in full force and
effect all licenses and permits necessary in any material respect to the proper
conduct of its business;
(b) maintain its corporate existence; and
(c) remain engaged substantially in its existing business -- the
Parent will continue to be a holding company, conducting no business, incurring
no Indebtedness (other than as permitted under Sections 6.1 and 6.2) and holding
no assets other than 100% of the stock of the Company; the Borrowers will not
change the nature or scope of their businesses in any material respect from that
which exists on the date hereof; and the other Subsidiaries will continue their
current operations as in effect at closing (including, in the case of Brookstone
Realty, Inc. and Brookstone Fork Distribution, conducting no business and owning
no assets).
5.3. Maintenance and Insurance. Each of the Parent and its Subsidiaries
-------------------------
shall maintain its properties in good repair, working order and condition as
required for the normal conduct of its business. Each of the Parent and its
Subsidiaries shall at all times maintain liability and casualty insurance with
financially sound and reputable insurers in such amounts as the officers of the
Parent in the exercise of their reasonable judgment deem to be adequate. Unless
the Agent determines that the Collateral Release Conditions have been satisfied,
the Agent shall at all times be named as loss payee and additional insured under
such liability and casualty insurance and shall be given thirty (30) days'
advance written notice of any cancellation thereof. If the Parent at any time
fails to provide such insurance, the Agent, in its sole discretion, may provide
such insurance and charge the cost (plus applicable interest) to any loan
account or to the deposit accounts of the Parent or the Borrowers with the Agent
or any Lender. On request of the Agent from time to time, the Parent shall
furnish to the Agent and the Lenders certificates or other evidence satisfactory
to the Agent and the Lenders of compliance with the foregoing insurance
provisions.
5.4. Taxes. The Parent shall pay or cause to be paid all taxes,
-----
assessments or governmental charges on or against it or any of its Subsidiaries
or its or their properties on or prior to the time when they become due;
provided that this covenant shall not apply to any tax, assessment or charge
--------
that is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are being
maintained in accordance with generally accepted accounting principles if no
proceedings shall have been commenced to foreclose any lien securing such tax,
-40-
assessment or charge.
5.5. Inspection. The Parent shall permit the Agent and the Lenders or
----------
their designees, at any reasonable time, and upon reasonable notice (or if a
Default shall have occurred and is continuing, at any time and without prior
notice), to (a) visit and inspect the properties of the Parent and its
Subsidiaries, (b) examine and make copies of and take abstracts from the books
and records of the Parent and its Subsidiaries, and (c) discuss the affairs,
finances and accounts of the Parent and its Subsidiaries with their appropriate
officers, employees and accountants. In handling such information the Agent and
the Lenders shall exercise the same degree of care that they exercise with
respect to their own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to subsections 5.1(a), (b), or (c) except that disclosure of such
information may be made (i) to the subsidiaries, affiliates, employees,
officers, directors, or advisors of the Agent and the Lenders in connection with
their present or prospective business relations with the Parent, (ii) to
prospective transferees or purchasers of an interest in the Loans (so long as
any such transferee is regularly engaged in the business of making loans similar
to the Loans and agrees to be subject to the confidentiality requirements set
forth herein), (iii) as required by law, regulation, rule or order, subpoena,
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of the Agent and the Lenders.
5.6. Maintenance of Books and Records. Each of the Parent and its
--------------------------------
Subsidiaries shall keep adequate books and records of account, in which true and
complete entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with generally
accepted accounting principles consistently applied and applicable law.
5.7. Consolidated Net Worth. The Parent shall maintain Consolidated Net
----------------------
Worth as of the end of each fiscal quarter, commencing with the quarter ending
February 2, 2002, of not less than the sum of (a) $75,000,000 plus (b) 75% of
Consolidated Net Income for the period from February 4, 2001 through the end of
the most recent fiscal year (but without deduction for losses during any fiscal
quarter during such period), less (c) repurchases by the Parent of its capital
stock after February 2, 2002 up to a maximum amount of $10,000,000.
5.8. Cash Flow Leverage. The Parent shall maintain, at the end of each
------------------
fiscal quarter for the period of four consecutive fiscal quarters then ending,
commencing with the four quarters ending February 2, 2002, a ratio of
Consolidated Total Funded Debt to Consolidated EBITDA of not greater than 1.50
to 1.0; provided, however, that said maximum ratio shall be increased to 2.00 to
-------- -------
1.0 solely for the third quarter of fiscal year 2002 and to 1.75 to 1.0 solely
for the third quarter of fiscal year 2003.
5.9. Fixed Charge Coverage. The Parent shall maintain, at the end of
---------------------
each fiscal quarter for the period of four consecutive fiscal quarters then
ending, commencing with the four quarters ending February 2, 2002, consolidated
Fixed Charge Coverage of
-41-
not less than (a) 1.05 to 1.0 for the fourth quarter of fiscal year 2001 and for
each of the first, second and third quarters of fiscal year 2002, (b) 1.35 to
1.0 for the fourth quarter of fiscal year 2002 and for each of the first, second
and third quarters of fiscal year 2003, and (c) 1.40 to 1.0 as at the end of
each fiscal quarter thereafter.
5.10. Further Assurances.
------------------
(a) At any time and from time to time the Parent shall, and shall cause
each of its Subsidiaries to, execute and deliver such further instruments and
take such further action as may reasonably be requested by the Agent and the
Lenders to effect the purposes of this Agreement, the Notes and the other Lender
Agreements; and
(b) In addition, upon the formation of any Subsidiary (other than a JV
Subsidiary), the Parent shall promptly notify the Agent thereof and, unless the
Agent otherwise agrees, cause such Subsidiary to become a party to the
Subsidiary Guaranty as a guarantor thereunder and to become a party to such of
the Security Documents as the Agent shall require.
SECTION VI
NEGATIVE COVENANTS
So long as the Lenders have any commitment to lend or issue Letters of
Credit hereunder or any Loan or other obligation remains outstanding, the Parent
and the Borrowers jointly and severally covenant as follows:
6.1. Indebtedness. Neither the Parent nor any of its Subsidiaries
------------
shall create, incur, assume, guarantee or be or remain liable with respect to
any Indebtedness, including intercompany Indebtedness, other than the following:
(a) Indebtedness of the Parent or any of its Subsidiaries to the
Lenders created under this Agreement and the Notes;
(b) Indebtedness of the Subsidiaries existing as of the date of this
Agreement and disclosed on Exhibit C hereto;
---------
(c) Indebtedness of the Subsidiaries secured by Permitted
Encumbrances;
(d) Indebtedness of the Company to the City of Mexico, Missouri
evidenced by a capitalized lease of the Company's facility in the City of
Mexico, Missouri in an aggregate amount not to exceed $2,500,000, and
Indebtedness (including a capital lease or mortgage financing) incurred in
connection with the construction or acquisition of a new distribution facility
in an aggregate amount not exceeding $17,000,000;
(e) other unsecured Indebtedness of the Company in an aggregate
outstanding
-42-
principal amount not exceeding $1,000,000;
(f) the Guarantees permitted pursuant to Section 6.2;
(g) Permitted Liabilities; and
(h) accounts payable and lease obligations with respect to retail
stores of Subsidiaries which are not Brookstone Subsidiaries in an aggregate
outstanding amount not exceeding (i) $50,000, in the case of Brookstone ▇'▇▇▇▇,
LLC, and (ii) $200,000 in the case of all such other Subsidiaries, if any.
6.2. Contingent Liabilities. Neither the Parent nor any of its
----------------------
Subsidiaries shall create, incur, assume, guarantee or remain liable with
respect to any Guarantees other than the following:
(a) Guarantees in favor of the Lenders;
(b) Guarantees by the Subsidiaries existing on the date of this
Agreement and disclosed on Exhibit C hereto and in the financial statements
---------
referred to in Section 4.6;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Guarantees by the Subsidiaries with respect to surety, appeal,
performance and return-of-money and other similar obligations incurred in the
ordinary course of business (exclusive of obligations for the payment of
borrowed money) not exceeding in the aggregate at any time $200,000;
(e) Guarantees by the Subsidiaries of normal trade debt relating to
the acquisition of goods and supplies and the receipt of services; and
(f) Guarantees by the Parent, GE, and the Company of obligations of
Brookstone Properties, Inc. for lease obligations with respect to retail stores
used by any of the Borrowers.
6.3. Sale and Leaseback. Neither the Parent nor any of its
------------------
Subsidiaries shall enter into any arrangements, directly or indirectly, whereby
it shall sell or transfer any property owned by it in order to lease such
property or lease other property that the Parent or any such Subsidiary intends
to use for substantially the same purpose as the property being sold or
transferred, if the aggregate principal amount of all such outstanding leases
under all such arrangements would exceed $500,000.
6.4. Encumbrances. Neither the Parent nor any of its Subsidiaries
------------
shall create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets ("Encumbrances"), or assign
-43-
or otherwise convey any right to receive income, including the sale or discount
of accounts receivable with or without recourse, except the following
("Permitted Encumbrances"):
----------------------
(a) Encumbrances in favor of the Lenders;
(b) Encumbrances against assets of the Subsidiaries existing as the
date of this Agreement and disclosed in Exhibit C hereto;
---------
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of Section 5.4;
(d) landlords' and lessors' liens in respect of rent not in default,
or in default and being contested in good faith, or liens in respect of pledges
or deposits under workmen's compensation, unemployment insurance, social
security laws, or similar legislation (other than ERISA), or in connection with
appeal and similar bonds incidental to litigation; mechanics', laborers' and
materialmen's and similar liens, if the obligations secured by such liens are
not then delinquent; liens securing the performance of bids, tenders, contracts
(other than for the payment of money); and liens in connection with statutory
obligations incidental to the conduct of its business and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;
(e) judgment liens that shall not have been in existence for a
period longer than 30 days after the creation thereof or, if a stay of execution
shall have been obtained, a period longer than 30 days after the expiration of
such stay;
(f) rights of lessors under capital leases with Subsidiaries in an
aggregate principal amount not to exceed $4,000,000;
(g) security interests created by any Subsidiary in respect of any
purchase money obligations of any Subsidiary for tangible property used in its
business that at any time shall not exceed $3,200,000 in the aggregate for all
Subsidiaries, provided that any such security interests shall not extend to
--------
property and assets of such Subsidiary not financed by such a purchase money
obligation;
(h) easements, rights of way, restrictions and other similar charges
or Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of its business;
(i) Encumbrances on its property or assets created in connection
with the refinancing of Indebtedness secured by Permitted Encumbrances on such
property, provided that the amount of Indebtedness secured by any such
--------
Encumbrance shall not be increased as a result of such refinancing and no such
Encumbrance shall extend to property and assets of any such Subsidiary not
encumbered prior to any such refinancing;
-44-
(j) Encumbrances in the nature of a security interest in checks
created or to be created in connection with a certain Welcome Check Warranty
Agreement dated September 1, 1994 between the Company and Equifax Check
Services, Inc. (the "Equifax Agreement") or similar agreements relating to the
discounting of customer checks; and
(k) rights of a lessor under a capital lease with a Borrower, or a
mortgagor in respect of mortgage financing with a Borrower, in either case to
the extent such financing (i) is used for the construction of a new distribution
facility and (ii) is not in excess of $17,000,000 in the aggregate, and also to
the extent the liens created in respect thereof extend only to such distribution
facility.
6.5. Merger; Acquisitions; Consolidation; Sale or Lease of Assets.
------------------------------------------------------------
Neither the Parent nor any of its Subsidiaries shall sell, lease or otherwise
dispose of assets or properties (valued at the lower of cost or market) in any
fiscal year, other than (a) sales of inventory by the Subsidiaries in the
ordinary course of business and (b) sales, leases or other dispositions of
assets by the Subsidiaries to third parties for fair market value in the
aggregate not in excess of 5% of Consolidated Tangible Net Worth as of the end
of its most recently completed fiscal year, provided that the aggregate amount
--------
of all such sales, leases or other dispositions shall not exceed $7,500,000
after the date hereof; or acquire all or substantially all of the assets of any
Person, except that the Borrowers may acquire all or substantially all of the
assets of any Person so long as (a) the aggregate consideration for such
acquisition or series of related acquisitions and Investments, does not exceed
$3,000,000, (b) no Default shall have occurred and be continuing (c) the
acquired Person is a specialty retailer or direct marketing company, and (d) the
assets acquired by the Borrowers in connection with such acquisition shall be
free from all liens, charges and encumbrances whatsoever (other than Permitted
Encumbrances), and the Agent shall have a valid, perfected, first-priority
security interest therein (unless the Agent determines that the Collateral
Release Conditions have been satisfied); or liquidate, merge or consolidate into
or with any other Person, provided that (a) any Subsidiary of the Parent other
than the Company may merge or consolidate into or with (i) the Company if no
Default has occurred and is continuing or would result from such merger and if
the Company is the surviving entity, or (ii) any other wholly-owned Subsidiary
of the Parent if no Default has occurred and is continuing or would result from
such merger, and if the surviving entity is a Subsidiary that is incorporated or
organized under the laws of the United States, any state thereof or the District
of Columbia, and (b) the Company may sell property as provided in Section 6.3,
and (c) the Company may assign all of its rights, title and interest in certain
checks pursuant to the provisions of the Equifax Agreement.
6.6. Additional Stock Issuance. The Parent shall not permit any of
-------------------------
its Subsidiaries to issue any additional shares of capital stock or other equity
securities, any options therefor or any securities convertible thereto other
than to the Parent or to any of the Parent's wholly-owned Subsidiaries (only to
the extent, however, that such shares, concurrently with the issuance thereof,
become subject to a perfected, first priority pledge in favor of the Agent),
except for issuance by Properties of non-voting preferred shares to
-45-
employees of the Company in New Hampshire. Neither the Parent nor any of its
Subsidiaries shall sell, transfer or otherwise dispose of any of the capital
stock or other equity securities of a Subsidiary, except to the Parent or any of
its wholly-owned Subsidiaries.
6.7. Equity Distributions. Neither the Parent nor the Company shall
--------------------
pay any dividends on any class of its capital stock or make any other
distribution or payment on account of or in redemption, retirement or purchase
of such capital stock; provided that this Section shall not apply to (a) the
--------
issuance, delivery or distribution by the Parent of shares of its common stock
pro rata to its existing shareholders, (b) the purchase or redemption by the
Parent of its capital stock with the proceeds of the issuance of additional
shares of capital stock and (c) repurchases by the Parent of up to $10,000,000
of its capital stock after the date hereof, and dividends from the Company to
the Parent in an amount equal to and used by the Parent for such repurchases,
provided that no Default has occurred or is continuing, both before and after
--------
giving effect to any such repurchases and dividends.
6.8. Investments. Neither the Parent nor any of its Subsidiaries shall
-----------
make or maintain any Investments other than (a) Investments in the Borrowers and
the Brookstone Subsidiaries described on Schedule 6.8, (b) Investments in
------------
Subsidiaries formed after the date of this Agreement to the extent such
Subsidiaries become a party to the Subsidiary Guaranty and the Security
Documents pursuant to Section 5.10(b), (c) advances by the Company to the Parent
to enable the Parent to pay Delaware franchise taxes and other routine operating
expenses, (d) Qualified Investments, and (e) Investments in Subsidiaries which
are not Brookstone Subsidiaries in an aggregate amount not exceeding $2,500,000,
which Subsidiaries have each been formed with a third-party for purposes of
operating a retail store or stores at specific locations (each, a "JV
Subsidiary").
6.9. ERISA. Neither the Parent nor any member of the Controlled Group
-----
shall permit any Plan maintained by it to (a) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code), (b) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived, or (c) terminate any Plan in a manner that could result in the
imposition of a lien or encumbrance on the assets of the Parent or any of its
Subsidiaries pursuant to Section 4068 of ERISA.
6.10. Capital Expenditures. The Parent and its Subsidiaries shall not
--------------------
make Capital Expenditures in an aggregate amount in any fiscal year exceeding
the sum of (a) $14,500,000 for the fiscal year ending February 2, 2002, (b)
$11,500,000 for the fiscal year ending February 1, 2003, (c) $26,000,000 for the
fiscal year ending January 31, 2004 (of which $10,000,000 is available solely
for the Borrowers' new distribution facility), (d) $25,500,000 for the fiscal
year ending January 29, 2005 (of which $7,000,000 is available solely for the
Borrowers' new distribution facility), and (e) $20,000,000 for the fiscal year
ending January 28, 2006. Notwithstanding the limitations contained in clauses
(b) and (c) of the immediately preceding sentence, it is agreed that the
Borrowers may aggregate their Capital Expenditures for their new distribution
facility
-46-
in either the fiscal year ending January 31, 2004 or January 29, 2005, provided
--------
that (i) such Capital Expenditures are funded through third party financing
(which may include a capital lease, but which shall not include any Loans
hereunder), (ii) if such aggregation causes the limitation on Capital
Expenditures to be exceeded in either such fiscal year, then the amount of such
excess shall reduce the limitation on Capital Expenditures for the other fiscal
year on a dollar-for-dollar basis, and (iii) the total amount expended for the
new distribution facility shall not exceed $17,000,000 in the aggregate. Up to
$4,000,000 of the amount (if any) of Capital Expenditures not used in any fiscal
year may be used in the next succeeding fiscal year, provided that the amount
--------
(if any) of Capital Expenditures unused in the fiscal year ending February 1,
2003 shall not be permitted to be used in any other fiscal year.
6.11. Transactions with Affiliates. The Parent and the Borrowers will
----------------------------
not enter into any transaction, including without limitation, the purchase, sale
or exchange of property or the rendering of any service, with each other or with
any other Affiliate, except that (a) the Parent and the Borrowers may pay
salaries, fees and bonuses to their directors, officers and employees as are
usual and customary in their business, and (b) the Parent and the Borrowers may
enter into transactions with the Brookstone Subsidiaries so long as all payments
for such transactions are made solely by offsetting intercompany accounts
receivables and payables or are Permitted Liabilities.
SECTION VII
DEFAULTS
7.1. Events of Default. There shall be an event of Default hereunder
-----------------
if any of the following events occurs:
(a) the Borrowers shall fail to pay (a) any amount of principal of
any Loans, including Swingline Loans, or any Reimbursement Amount, when due, or
(b) any amount of interest thereon or any fees or expenses payable hereunder or
under the Notes or any other Lender Agreement within five days of the due date
therefor; or
(b) the Parent or the Borrowers shall fail to perform any term,
covenant or agreement contained in Sections 5.1(h), 5.2(b), 5.2(c), 5.3, 5.5,
5.7 through 5.9, or 6.1 through 6.12, provided, however, that if a failure to
-------- -------
perform the covenants contained in Sections 5.7, 5.8, 5.9, 6.1, 6.5 and 6.10 are
solely as a result of a change in one or more accounting principles used in the
preparation of financial statements, because of a change mandated by the
Financial Accounting Standards Board, then an Event of Default relating to such
Sections shall not be an Event of Default until the 30/th/ day after the earlier
to occur of: (i) the date upon which the president or chief financial officer of
the Parent or the Borrowers makes a determination that such change shall result
in an Event of Default or (ii) the date upon which the financial statements
required to be delivered pursuant to Section 5.1(b) following such change are
due; or
(c) the Parent or the Borrowers shall fail to perform any covenant
contained in
-47-
Sections 5.1(g), 5.1(i) or 5.2(a), and such failure shall continue for 15 days;
or
(d) the Parent or the Borrowers shall fail to perform any term,
covenant or agreement (other than in respect of subsections 7.1(a) through (c)
hereof) contained in this Agreement or in any other Lender Agreement and such
default shall continue for 30 days after notice thereof has been sent to the
Parent by the Agent; or
(e) any representation or warranty of any of the Borrowers, the Parent
or the Brookstone Subsidiaries made in this Agreement, the Notes, any other
Lender Agreement or other documents or agreements executed in connection with
the transactions contemplated by this Agreement, or in any certificate delivered
hereunder, shall prove to have been false in any material respect upon the date
when made or deemed to have been made; or
(f) the Parent or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligations in excess of
$500,000 in the aggregate for Indebtedness, or for the use of real or personal
property, or shall fail to observe or perform any term, covenant or agreement
evidencing or securing such obligations for Indebtedness, or relating to such
use of real or personal property, the result of which failure is to permit the
holder or holders of such Indebtedness to cause such Indebtedness to become due
prior to its stated maturity; or
(g) the Parent or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the Federal Bankruptcy Code (as
now or hereafter in effect), (v) take any action or commence any case or
proceeding under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or any other law providing for
the relief of debtors, (vi) fail to contest in a timely or appropriate manner,
or acquiesce in writing to, any petition filed against it in an involuntary case
under the Federal Bankruptcy Code or other law, (vii) take any action under the
laws of its jurisdiction of incorporation or organization similar to any of the
foregoing, or (viii) take any corporate action for the purpose of effecting any
of the foregoing; or
(h) a proceeding or case shall be commenced, without the application or
consent of the Parent or any of its Subsidiaries in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution,
winding-up, or composition or readjustment of its debts, (ii) the appointment of
a trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets, or (iii) similar relief in respect of it, under
any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed, or unstayed and
in effect, for a period of 90 days; or an order for relief shall be entered in
an involuntary case under the Federal Bankruptcy Code, against the Parent or
such Subsidiary; or action under the laws
-48-
of the jurisdiction of incorporation or organization of the Parent or any of its
Subsidiaries similar to any of the foregoing shall be taken with respect to the
Parent or such Subsidiary and shall continue unstayed and in effect for any
period of 90 days; or
(i) a judgment or order for the payment of money shall be entered
against the Parent or any of its Subsidiaries by any court, or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Parent or such Subsidiary, that in the aggregate exceeds
$1,500,000 and such judgment, order, warrant or process shall continue
undischarged or unstayed for 45 days; or
(j) the Parent or any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $500,000 that it shall
have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans shall be filed under Title IV of
ERISA by the Parent, any member of the Controlled Group, any Plan administrator
or any combination of the foregoing, or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans or a proceeding shall be instituted by a
fiduciary of any such Plan or Plans against the Parent and such proceedings
shall not have been dismissed within 30 days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or
(k) the occurrence of a Change of Control.
7.2. Remedies. Upon the occurrence of an Event of Default described in
--------
subsections 7.1(g) and (h), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Majority Lenders' option and declaration:
(a) the Lenders' commitment to make any further Loans hereunder shall
terminate;
(b) the unpaid principal amount of the Loans together with accrued
interest and all other Obligations shall become immediately due and payable
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived;
(c) the Borrowers, jointly and severally, shall immediately provide
the Agent with cash in an amount of 105% of the stated amount of outstanding
Letters of Credit to be held by the Agent, for the ratable accounts of the
Lenders, as collateral for the Obligations; and
(d) the Agent may, and upon the request of the Majority Lenders, shall
exercise any and all rights the Agent and the Lenders have under this Agreement,
the Notes, the Security Documents or any other documents or agreements executed
in connection herewith, or at law or in equity, and proceed to protect and
enforce the
-49-
Agent's and the Lenders' rights by any action at law, in equity or other
appropriate proceeding.
7.3. License of Intangibles. Each of the Parent, the Borrowers, and the
----------------------
Brookstone Subsidiaries hereby grants an unlimited royalty-free license to the
Agent and the Lenders to use any of the general intangibles of such Person,
including without limitation, all patents, trademarks, trade names, service
marks, copyrights, and applications for any of the foregoing, for the purposes
of the sale or other liquidation of the Collateral, this license to be exclusive
to the Agent or the Lenders.
7.4. Distribution of Proceeds. Notwithstanding anything to the contrary
------------------------
contained herein, in the event that following the occurrence or during the
continuance of any Event of Default, the Agent or any Lender receives any monies
on account of the Obligations from the Borrowers or otherwise, such monies shall
be distributed for application as follows:
(a) first, to the payment of or the reimbursement of the Agent for or
in respect of all costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Agent in connection with the collection of
such monies by the Agent, or in connection with the exercise, protection or
enforcement by the Agent of all or any of the rights, remedies, powers and
privileges of Agent or the Lenders under this Agreement or any other Lender
Agreement;
(b) second, to the payment of all interest, including interest on
overdue amounts and late charges, then due and payable with respect to the
Loans, allocated among the Lenders in proportion to their respective Commitment
Percentages;
(c) third, to the payment of the outstanding principal balance of the
Loans, allocated among the Lenders in proportion to their respective Commitment
Percentages;
(d) fourth, to any other outstanding Obligations, allocated among the
Lenders in proportion to their respective Commitment Percentages; and
(e) fifth, the excess, if any, shall be returned to the Borrowers or
to such other Persons as are entitled thereto.
SECTION VIII
CONSENTS; AMENDMENTS; WAIVERS; REMEDIES
8.1. Actions by Lenders. Except as otherwise expressly set forth in any
------------------
particular provision of this Agreement, any consent or approval required or
permitted by this Agreement to be given by the Lenders, including without
limitation under Section 8.2, may be given, and any term of this Agreement or of
any other instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Parent or the Borrowers of any term of this
Agreement may be waived (either generally
-50-
or in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Parent, the Borrowers and the Majority
Lenders, provided, however, that without the written consent of all Lenders:
-------- -------
(a) no reduction in the interest rates on or any fees relating to the
Loans shall be made;
(b) no extension or postponement shall be made of the stated time of
payment of the principal amount of, interest on, or fees payable to the Lenders
relating to the Loans;
(c) no increase in the Commitment Amount, or extension of the
Revolving Credit Termination Date shall be made (except as expressly provided in
Section 2.23);
(d) no release of any guarantor of the Obligations shall be made and
no release of all or substantially all the Collateral shall be made (other than
in connection with a sale of Collateral permitted by this Agreement);
(e) no change in the definition of the term "Majority Lenders" shall
be made;
(f) no change in the provisions of this Section 8.1 shall be made; and
(g) no increase in the Commitment Percentage shall be made.
8.2. Actions by Parent or Borrowers. No delay or omission on the
------------------------------
Agent's or the Lenders' part in exercising their rights and remedies against the
Parent, the Borrowers or any other interested party shall constitute a waiver
thereof. A breach by the Parent or the Borrowers of their respective obligations
under this Agreement may be waived only by a written waiver executed by the
Agent and the Lenders in accordance with Section 8.1. The Agent's and the
Lenders' waiver of the Parent's or the Borrowers' breach in one or more
instances shall not constitute or otherwise be an implicit waiver of other or
subsequent breaches. To the extent permitted by applicable law, the Parent and
the Borrowers each hereby absolutely and irrevocably waives: (a) all
presentments, demands for performance, notices of protest and notices of
dishonor in connection with any of the Indebtedness evidenced by the Notes, (b)
any requirement of diligence or promptness on the Agent's or the Lenders' part
in the enforcement of its rights under the provisions of this Agreement or any
Lender Agreement, and (c) any and all notices of every kind and description
which may be required to be given by any statute or rule of law with respect to
its liability (i) under this Agreement or in respect of the Indebtedness
evidenced by the Notes or any other Obligation or (ii) under any other Lender
Agreement. No course of dealing between the Parent, the Borrowers and the Agent
or the Lenders' shall operate as a waiver of any of the Agent's or the Lenders,
rights under this Agreement or any other Lender Agreement or with respect to any
of the Obligations. This Agreement shall be amended only by a written instrument
executed by the Agent and the Lenders in accordance with Section 8.1 making
explicit reference to this Agreement. The Agent's and the Lenders' rights and
remedies under this Agreement or any other Lender
-51-
Agreement and under all subsequent agreements between the Agent, the Lenders,
the Parent and the Borrowers shall be cumulative and any rights and remedies
expressly set forth herein shall be in addition to, and not in limitation of,
any other rights and remedies which may be available to the Agent and the
Lenders in law or at equity.
SECTION IX
SUCCESSORS AND ASSIGNS
9.1. General. This Agreement shall be binding upon and shall inure to
-------
the benefit of the parties hereto and their respective successors (which shall
include in the case of the Agent or any Lender any entity resulting from a
merger or consolidation) and assigns, except that (a) none of the Parent or the
Borrowers may assign its rights or obligations under this Agreement, and (b)
each Lender may assign its rights in this Agreement only as set forth below in
this Section IX.
9.2. Assignments.
-----------
(a) Assignments. In compliance with applicable laws with respect to
such assignment and with the consent of the Company (provided that if there
--------
shall exist an Event of Default, the Company's consent shall not be required for
any such assignment) and the Agent (which consents in all cases shall not be
unreasonably withheld), a Lender may assign to one or more financial
institutions, including commercial finance institutions, organized or existing
under the laws of the United States of America, any state thereof or Canada and
having capital and surplus, net worth or the equivalent of not less than
$100,000,000 (each a "Successor Lender") all or a proportionate part of its
rights and obligations in connection with this Agreement, its Notes and the
related Lender Agreements and each such Successor Lender shall assume such
rights and obligations pursuant to an Assignment and Acceptance Agreement
("Assignment and Acceptance Agreement") duly executed by such Successor Lender
and such assigning Lender and acknowledged and consented to by the Company and
the Agent, substantially in the form of Exhibit J attached hereto. Any
assignment under this Section 9.2(a) shall be in a minimum amount of $2,500,000.
In connection with any assignment under this Section 9.2(a) there shall be paid
to the Agent by the assigning Lender or the Successor Lender an administrative
processing fee in the amount of $3,500.
(b) Assignment Procedures. In the event of an assignment in accordance
with Section 9.2(a), upon execution and delivery of such an assignment at least
five (5) Business Days prior to the proposed assignment date, and payment by
such Successor Lender to the assigning Lender an amount equal to the purchase
price agreed between such assigning Lender and such Successor Lender, such
Successor Lender shall become party to this Agreement as a signatory hereto and
shall have all the rights and obligations of a Lender under this Agreement and
the other Lender Agreements with an interest therein as set forth in such
assignment, and the assigning Lender making such assignment shall be released
from its obligations hereunder to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any such
-52-
assignment, the assigning Lender, the Successor Lender, the Parent and the
Borrowers shall make appropriate arrangements so that, if required, new Notes
are issued to the Successor Lender and replacement Notes are issued to the
assigning Lender in principal amounts reflecting their respective revised
interests, and all old Notes which are replaced shall be returned and cancelled.
(c) Register. The Agent shall maintain a register (the "Register") for
the recordation of (i) the names and addresses of all Successor Lenders that
enter into Assignment and Acceptance Agreements, (ii) the interests of each
Lender in the Obligations, and (iii) the amounts of the Loans owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Parent, the Borrowers, the Agent and the
Lenders may treat each Person whose name is registered therein for all purposes
as a party to this Agreement. The Register shall be available for inspection by
the Parent, the Borrowers or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d) Further Assurances. The Parent and the Borrowers shall sign such
documents and take such other actions from time to time reasonably requested by
the Agent or a Lender to enable any Successor Lender to share in the benefits
and rights created by the Lender Agreements.
(e) Assignments to Federal Reserve Bank. Any Lender at any time,
without the consent of any other party hereto, may assign all or any portion of
its rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations hereunder.
9.3. Participations. Any Lender may, without the consent of the Parent
--------------
the Borrowers or the Agent, at any time grant or offer to grant to one or more
financial institutions ("Credit Participants") participating interests in such
Lender's rights and obligations in this Agreement, its Notes and the related
Lender Agreements, and each such Credit Participant shall acquire such
participation subject to the terms set forth below.
(a) Amount. Each such participation shall be in a minimum amount of at
least $2,500,000; provided that a Lender may grant a participation to an
--------
Affiliate without any limitation on the amount thereof.
(b) Procedure. Each Lender granting such participation shall comply
with all applicable laws with respect to such transfer and shall remain
responsible for the performance of its obligations hereunder and under the other
Lender Agreements and shall retain the sole right and responsibility to exercise
its rights and to enforce the Obligations of the Parent and the Borrowers
hereunder and under the other Lender Agreements, including the right to consent
to any amendment, modification or waiver of any provision of any Lender
Agreement, except for those matters referred to in Section 8.1 which require the
consent of all Lenders and which may also require the consent of each Credit
Participant.
-53-
(c) Dealing with Lenders. The Parent and the Borrowers shall continue
to deal solely and directly with the Lenders in connection with their rights and
obligations under this Agreement and the other Lender Agreements.
(d) Rights of Credit Participants. The Parent and the Borrowers each
agree that each Credit Participant shall, to the extent provided in its
participation instrument, be entitled to the benefits of Sections 2.8, 2.9,
2.13, 7.3 and 11.3 with respect to its participating interest; provided,
--------
however, that no Credit Participant shall be entitled to receive any greater
-------
payment under such Sections than the Lender granting such participation would
have been entitled to receive with respect to the interests transferred.
(e) Notice. At the time of granting any participation, the Lender
granting such participation shall notify the Agent, the Borrowers and the
Parent.
SECTION X
THE AGENT
10.1. Authorization and Action. Each Lender hereby appoints and
------------------------
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement and the other Lender Agreements as are delegated to
the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement and the other Lender Agreements (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Lenders, and such instructions shall
be binding upon all Lenders; provided, however, that the Agent shall not be
-------- -------
required to take any action which exposes the Agent to liability or which is
contrary to this Agreement or the other Lender Agreements or applicable law.
Subject to the foregoing provisions and to the other provisions of this Section
X, the Agent shall, on behalf of the Lenders: (a) execute any documents on
behalf of the Lenders providing collateral for or guarantees of the Obligations;
(b) hold and apply any collateral for the Obligations, and the proceeds thereof,
at any time received by it, in accordance with the provisions of this Agreement
and the other Lender Agreements; (c) exercise any and all rights, powers and
remedies of the Lenders under this Agreement or any of the other Lender
Agreements, including the giving of any consent or waiver or the entering into
of any amendment, subject to the provisions of Section 8.1; (d) at the direction
of the Lenders, execute, deliver and file UCC financing statements, mortgages,
deeds of trust, lease assignments and such other agreements in respect of any
collateral for the Obligations, and possess instruments included in the
collateral on behalf of the Lenders; and (e) in the event of acceleration of the
Indebtedness of the Borrowers hereunder, act at the direction of the Lenders to
exercise the rights of the Lenders hereunder and under the other Lender
Agreements.
-54-
10.2. Agent's Reliance, Etc. Neither the Agent nor any of its
---------------------
directors, officers, agents or employees shall be liable to the Lenders for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Lender Agreements, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Agent: (a) may treat the payee of any Note as the holder thereof
until the Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form required under Section IX hereof; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representations to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Lender
Agreements; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Lender Agreements on the part of the Parent, the
Borrowers or any other entity or to inspect the property (including the books
and records) of the Parent, the Borrowers or any other entity; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Lender Agreements or any other instrument or document furnished pursuant hereto
or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Lender Agreements by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy or
telegram) believed by the Agent to be genuine and signed or sent by the proper
party or parties.
10.3. Fleet as Lender. With respect to its Commitment Percentage of the
---------------
Loans hereunder, Fleet shall have the same rights and powers under this
Agreement and the other Lender Agreements as any other Lender and may exercise
the same as though it were not the Agent; and the term "Lender" or "Lender(s)"
shall, unless otherwise expressly indicated, include Fleet in its individual
capacity. Fleet and its Affiliates may lend money to, and generally engage in
any kind of business with, the Parent, the Borrowers, any of the Parent's or the
Borrowers' Affiliates and any entity that may do business with or own securities
of the Parent, the Borrowers or any of their Affiliates, all as if Fleet were
not the Agent and without any duty to account therefor to the Lenders.
10.4. Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 5.1 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
10.5. Indemnification of Agents. Each Lender agrees to indemnify the
-------------------------
Agent and the Documentation Agent (to the extent that the Agent or the
Documentation Agent
-55-
(as applicable) is not reimbursed by the Borrowers), ratably according to each
Lender's Commitment Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent or the Documentation Agent (as
applicable) in any way relating to or arising out of this Agreement or any other
Lender Agreement or any action taken or omitted by the Agent or the
Documentation Agent (as applicable) in such capacity under this Agreement;
provided that no Lender shall be liable for any portion of such liabilities,
--------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's or the Documentation
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Lender
Agreement, to the extent that the Agent is not reimbursed for such expenses by
the Borrowers.
10.6. Successor Agent. Except as provided below, the Agent may resign
---------------
by giving not less than fifteen (15) days' written notice thereof to the
Lenders, the Parent and the Company. Upon any such resignation, the Lenders
shall have the right to appoint a successor Agent which shall be reasonably
acceptable to the Parent and the Company. If no successor Agent shall have been
so appointed by the Lenders (other than the resigning Agent), and shall have
accepted such appointment, within thirty (30) days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank or
financial institution organized under the laws of the United States of America,
or of any state thereof, and having a combined capital and surplus of at least
$50,000,000 and which shall be reasonably acceptable to the Parent and the
Company. Upon the acceptance of any appointment as Agent hereunder 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
this Agreement and the other Lender Agreements. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section X shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Lender Agreements.
10.7. Other Agents. No Lender identified on the facing page, the
------------
preamble or the signature pages of this Agreement as a "Documentation Agent"
shall have any right, power, liability, responsibility, or duty under this
Agreement other than those applicable to all Lenders as such. Each Lender
acknowledges that it has not relied, and will not rely, on any Lender so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
10.8. Amendment of Section X. The Parent and the Borrowers each hereby
----------------------
-56-
agree that the foregoing provisions of this Section X constitute an agreement
among the Agent and the Lenders (and the Agent and the Lenders acknowledge that
except for the provisions of Section 10.6, the Parent and the Borrowers are not
parties to or bound by such foregoing provisions) and that any and all of the
provisions of this Section X may be amended at any time by the Lenders without
the consent or approval of, or notice to, the Parent or the Borrowers (other
than the requirement of notice to the Parent and the Company of the resignation
of the Agent and the appointment of a successor Agent).
SECTION XI
MISCELLANEOUS
11.1. Notices. Unless otherwise specified herein, all notices hereunder
-------
to any party hereto shall be in writing and shall be deemed to have been given
when delivered by hand, when properly deposited in the mails postage prepaid,
when sent by telex, answerback received, or electronic facsimile transmission,
or when delivered to the telegraph company or overnight courier, addressed to
such party at its address indicated below:
(a) If to the Parent or the Borrowers, at
Brookstone, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
(b) If to the Agent, at
Fleet National Bank, as Agent
Retail & Apparel Division
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Stop: MA DE 10008F
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Director
(c) If to any Lender, at the address(es) and to the attention of the
person(s) specified below such Lender's name on the execution page of this
Agreement (or in the case of a Successor Lender, at the address(es) and to the
attention of the person(s) specified in the Assignment and Acceptance Agreement
executed by such Successor Lender); or
(d) at any other address specified by such party in writing.
-57-
11.2. Expenses. The Parent and the Borrowers, jointly and severally,
--------
will pay on demand all expenses of (a) the Agent and the Arranger in connection
with the preparation, waiver or amendment of this Agreement, the Notes, the
other Lender Agreements or other documents executed in connection therewith, and
(b) the Agent, the Arranger or any Lender in connection with the administration,
default or collection of the Loans or other Obligations or administration,
default, collection in connection with the Agent's, the Arranger's and the
Lenders' exercise, preservation or enforcement of any of their rights, remedies
or options thereunder, including, without limitation, reasonable fees of outside
legal counsel or the allocated costs of in-house legal counsel, reasonable
accounting, consulting, brokerage or other similar professional fees or
expenses, and any fees or expenses associated with any travel or other costs
relating to any appraisals or examinations conducted in connection with the
obligations or any collateral therefor and the amount of all such expenses
shall, until paid, bear interest at the rate applicable to principal hereunder
(including any default rate). Prior to any Default, the Agent shall notify the
Company prior to incurring any expenses for its or any Lender's in-house legal
counsel or for any accountants.
11.3. Set-Off. Regardless of the adequacy of any collateral or other
-------
means of obtaining repayment of the Obligations, any deposits, balances or other
sums credited by or due from the head office of the Lenders or any of their
branch offices to the Parent or any of the Borrowers may, at any time and from
time to time after the occurrence of an Event of Default hereunder, without
notice to the Parent or the Borrowers or compliance with any other condition
precedent now or hereafter imposed by statute, rule of law, or otherwise (all of
which are hereby expressly waived) be set off, appropriated, and applied by the
Lenders against any and all obligations of the Parent and the Borrowers to the
Lenders or any of their affiliates in such manner as the head office of the
Lenders or any of their branch offices in their sole discretion may determine,
and the Parent and each of the Borrowers hereby grant the Lenders a continuing
security interest in such deposits, balances or other sums for the payment and
performance of all such obligations.
11.4. Term of Agreement. This Agreement shall continue in force and
-----------------
effect so long as the Lenders have any commitment to make Loans or issue Letters
of Credit hereunder or any Loan, any Letter of Credit or any other Obligation
shall be outstanding.
11.5. No Waivers. No failure or delay by the Agent or the Lenders in
----------
exercising any right, power or privilege hereunder or under the Notes, any other
Lender Agreement, or any other documents or agreements executed in connection
herewith shall operate as a waiver thereof; nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and in
the Notes and other Lender Agreements provided are cumulative and not exclusive
of any rights or remedies otherwise provided by agreement or law.
11.6. Governing Law. This Agreement, the Notes and the other Lender
-------------
Agreements shall be deemed to be contracts made under seal and shall be
construed in accordance with and governed by the laws of The Commonwealth of
Massachusetts
-58-
(without giving effect to any conflicts of laws provisions contained therein).
11.7. Counterparts. This Agreement may be signed in any number of
------------
counterparts each of which shall constitute an original and all of which, taken
together, shall constitute one and the same Agreement, notwithstanding the fact
that such counterparts have not been executed by all parties hereto.
11.8. Partial Invalidity. The invalidity or unenforceability of any
------------------
one or more phrases, clauses or sections of this Agreement shall not affect the
validity or enforceability of the remaining provisions.
11.9. Captions. The captions and headings of the various sections and
--------
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.
11.10. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS, THE PARENT AND THE
--------------------
BORROWERS AGREE THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT, THE NOTES, THE OTHER LENDER AGREEMENTS,
ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE AGENT, THE
LENDERS, THE PARENT AND THE BORROWERS AND THESE PROVISIONS SHALL BE SUBJECT TO
NO EXCEPTIONS. NONE OF THE AGENT, THE LENDERS, THE PARENT OR THE BORROWERS HAS
AGREED WITH OR REPRESENTED TO ANY OTHER PERSON THAT THE PROVISIONS OF THIS
PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
11.11. Entire Agreement. This Agreement, the Notes, the Lender
----------------
Agreements and the documents and agreements executed in connection herewith
constitute the final agreement of the parties hereto and supersede any prior or
contemporaneous agreement or understanding, written or oral, with respect to the
matters contained herein and therein.
11.12. Indemnification. Each Borrower indemnifies and holds harmless
---------------
the Agent, the Arranger, the Documentation Agent and each of the Lenders and
their shareholders, directors, officers, employees, subsidiaries, affiliates and
agents (collectively, the "Indemnitees") against any and all third party claims,
demands, suits, actions, causes of action, damages, losses, settlement payments,
obligations, costs, expenses (including, without limitation, reasonable fees and
disbursements of a single legal counsel (and local counsel in any particular
jurisdiction) incurred in connection with any investigation, litigation or other
proceeding) and all other liabilities whatsoever which shall at any time or
times be incurred or sustained by any Indemnitee (other than as a result of the
gross negligence or willful misconduct of the Agent, the Arranger, the
Documentation Agent or
-59-
any of the Lenders) on account of, or in relation to, or in any way in
connection with, the use of the proceeds of the Loans and any of the
arrangements or transactions contemplated by, associated with or ancillary to
either this Agreement or any of the other Lender Agreements, whether or not all
or any of the transactions contemplated by, associated with or ancillary to this
Agreement or any such Lender Agreements are ultimately consummated. Nothing in
the foregoing is intended to prevent or restrict a Borrower or other party
hereto from asserting claims for breach of this Agreement against the Agent, the
Arranger, the Documentation Agent or any of the Lenders, any assertion of which
shall in no event affect the indemnification provided by the Borrowers
hereunder. Without prejudice to the survival of any other covenant of the
Borrowers hereunder, the covenants of this Section 11.12 shall survive the
termination of this Agreement and the payment or satisfaction of payment of
amounts owing with respect to any Lender Agreements for the five (5)-year period
following such termination, payment and satisfaction, unless prior to such fifth
anniversary the Agent, Arranger, the Documentation Agent or any Lender has
provided notice to the Borrowers of a dispute, claim or other facts which give
rise to an obligation of the Borrowers to indemnify such Person under this
Section.
11.13. Collateral Release Conditions. If the Parent shall deliver a
-----------------------------
compliance certificate to the Agent demonstrating the following: (i) a
consolidated Fixed Charge Coverage ratio of at least 1.40 to 1.0 for at least
four consecutive quarters, and (ii) Consolidated EBITDA for the four quarters
then ending of at least $34,500,000 (the foregoing clauses (i) and (ii) being
hereinafter collectively referred to as the "Collateral Release Conditions"),
each Security Document shall be automatically terminated, and the Collateral
contemplated thereby shall be released from all security interests, pledges and
assignments made in favor of the Agent and the Lenders, without any further
action by the Agent or any Lender, except that the Agent shall, at the
------
Borrowers' expense, file and cause to be recorded all such UCC-3 termination
statements, and shall take all such other actions as the Borrowers may
reasonably require, in order to effectuate the release of the Collateral from
all such security interests, pledges and assignments.
-60-
IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
BROOKSTONE, INC.
By:___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
BROOKSTONE COMPANY, INC.
By:___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
BROOKSTONE STORES, INC.
By:___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
BROOKSTONE PURCHASING, INC.
By:___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
-61-
GARDENERS EDEN BY MAIL, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GARDENERS EDEN COMPANY, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GARDENERS EDEN
PURCHASING, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
FLEET NATIONAL BANK, as Agent for the
Lenders
By:_________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
CITIZENS BANK OF MASSACHUSETTS, as
Documentation Agent for the Lenders
By:_________________________________
Name:
Title:
-62-
FLEET NATIONAL BANK
By:_________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
CITIZENS BANK OF MASSACHUSETTS
By:_________________________________
Name:
Title:
BANKNORTH, N.A.
By:_________________________________
Name:
Title:
SOVEREIGN BANK
By:_________________________________
Name:
Title:
NATIONAL CITY BANK
By:_________________________________
Name:
Title:
-▇▇-
▇▇▇▇▇▇▇ ▇-▇
-----------
BROOKSTONE COMPANY, INC.
BROOKSTONE STORES, INC.
BROOKSTONE PURCHASING, INC.
GARDENERS EDEN BY MAIL, INC.
GARDENERS EDEN COMPANY, INC.
GARDENERS EDEN PURCHASING, INC.
FORM OF PROMISSORY NOTE
February __, 2002
__________________$ Boston, Massachusetts
For value received, the undersigned, jointly and severally, hereby
promise to pay to ____________________(the "Lender"), or order, at the head
office of Fleet National Bank, as Agent, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, the principal amount of _______________ Dollars ($___________) or
such lesser amount as shall equal the principal amount outstanding hereunder on
February __, 2005 (as the same may be extended pursuant to the Credit Agreement
referred to below, the "Revolving Credit Termination Date"), in lawful money of
the United States of America and in immediately available funds, and to pay
interest on the unpaid principal balance hereof from time to time outstanding,
at said office and in like money and funds, for the period commencing on the
date hereof until paid in full, at the rates per annum and on the dates provided
in the Amended and Restated Credit Agreement referred to below. All principal
remaining unpaid and any accrued but unpaid interest shall be due and payable on
the Revolving Credit Termination Date.
This Note is issued pursuant to, and entitled to the benefits of, and
is subject to, the provisions of a certain Amended and Restated Credit Agreement
dated as of February __, 2002 by and among Brookstone, Inc., the undersigned,
the Lender, the other lenders party thereto and Fleet National Bank, as Agent
(herein, as the same may from time to time be amended or extended, referred to
as the "Credit Agreement"), but neither this reference to the Credit Agreement
nor any provision thereof shall affect or impair the absolute and unconditional
obligation of the undersigned makers of this Note to pay the principal of and
interest on this Note as herein provided.
In case an Event of Default (as defined in the Credit Agreement) shall
occur, the aggregate unpaid principal of and accrued interest on this Note shall
become or may be declared to be due and payable in the manner and with the
effect provided in the Credit Agreement.
The undersigned may at their option prepay all or any part of the
principal of this Note before maturity upon the terms provided in the Credit
Agreement.
Each undersigned maker hereby waives presentment, demand, notice of
dishonor,
A1-1
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).
BROOKSTONE COMPANY, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
BROOKSTONE STORES, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
BROOKSTONE PURCHASING, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GARDENERS EDEN BY MAIL, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
A1-2
GARDENERS EDEN COMPANY, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GARDENERS EDEN
PURCHASING, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
Witness (as to all): _____________________
A1-3
SCHEDULE I TO PROMISSORY NOTE
TYPE OF LOAN
(LIBOR OR BASE
AMOUNT ------- INTEREST INTEREST AMOUNT NOTATION
DATE OF LOAN RATE) RATE* PERIOD** PAID MADE BY
---- ------- ----- ---- ------ ---- -------
________________________
* For Base Rate Loans, insert "Base Rate".
** For LIBOR Loans.
▇▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
▇▇▇▇▇▇▇▇▇▇ COMPANY, INC.
BROOKSTONE STORES, INC.
BROOKSTONE PURCHASING, INC.
GARDENERS EDEN BY MAIL, INC.
GARDENERS EDEN COMPANY, INC.
GARDENERS EDEN PURCHASING, INC.
PROMISSORY NOTE
(Swing Line)
February __, 2002
$2,500,000 Boston, Massachusetts
For value received, the undersigned, jointly and severally, hereby
promise to pay to Fleet National Bank (the "Lender"), or order, at the head
office of Fleet National Bank, as Agent, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, the principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000) or such lesser amount as shall equal the principal amount
outstanding hereunder on February __, 2005 (the "Revolving Credit Termination
Date"), in lawful money of the United States of America and in immediately
available funds, and to pay interest on the unpaid principal balance hereof from
time to time outstanding, at said office and in like money and funds, for the
period commencing on the date hereof until paid in full, at the rates per annum
and on the dates provided in the Credit Agreement referred to below. All
principal remaining unpaid and any accrued but unpaid interest shall be due and
payable on the Revolving Credit Termination Date.
This Note is issued pursuant to, and entitled to the benefits of, and
is subject to, the provisions of a certain Amended and Restated Credit Agreement
dated as of February __, 2002 by and among Brookstone, Inc., the undersigned,
the Lender, the other lenders party thereto and Fleet National Bank, as Agent
(herein, as the same may from time to time be amended or extended, referred to
as the "Credit Agreement"), but neither this reference to the Credit Agreement
nor any provision thereof shall affect or impair the absolute and unconditional
obligation of the undersigned makers of this Note to pay the principal of and
interest on this Note as herein provided.
In case an Event of Default (as defined in the Credit Agreement) shall
occur, the aggregate unpaid principal of and accrued interest on this Note shall
become or may be declared to be due and payable in the manner and with the
effect provided in the Credit Agreement.
The undersigned may at their option prepay all or any part of the
principal of this Note before maturity upon the terms provided in the Credit
Agreement.
A2-1
Each undersigned maker hereby waives presentment, demand, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained herein).
BROOKSTONE COMPANY, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
BROOKSTONE STORES, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
BROOKSTONE PURCHASING, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
GARDENERS EDEN BY MAIL, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
A2-2
GARDENERS EDEN COMPANY, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
GARDENERS EDEN
PURCHASING, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
Witness (as to all): ____________________
A2-3
EXHIBIT B
---------
BROOKSTONE COMPANY, INC.
BROOKSTONE STORES, INC.
BROOKSTONE PURCHASING, INC.
GARDENERS EDEN BY MAIL, INC.
GARDENERS EDEN COMPANY, INC.
GARDENERS EDEN PURCHASING, INC.
NOTICE OF BORROWING OR CONVERSION
Fleet National Bank, as Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Amended and Restated Credit Agreement Dated as of February __,
2002 (the "Agreement")
Ladies and Gentlemen:
Pursuant to Section 2.2 of the Agreement the undersigned hereby
confirms its request made on ___________, 200_ for a [Base Rate] [LIBOR] Loan in
the amount of $______________* on ___________, 199___. After the making of such
Loan, the aggregate amount of Loans and Letters of Credit outstanding will not
exceed the Borrowing Base in effect as of the end of the Company's last fiscal
month end.
[The Interest Period applicable to said Loan will [be (one) (two)
(three) (six) months].**
[Said Loan represents a conversion of the [Base Rate] [LIBOR] Loan in
the same amount made on _____________________.]***
B-1
The representations and warranties contained or referred to in Section IV
of the Agreement are true and accurate on and as of the effective date of the
Loan as though made at and as of such date (except to the extent that such
representations and warranties expressly relate to an earlier date); and no
Default has occurred and is continuing or will result from the Loan.
BROOKSTONE COMPANY, INC.
Date:
By:____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
BROOKSTONE STORES, INC.
Date:
By:____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
BROOKSTONE PURCHASING, INC.
Date:
By:____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GARDENERS EDEN BY MAIL, INC.
Date:
By:____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
B-2
GARDENERS EDEN COMPANY, INC.
Date:
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GARDENERS EDEN
PURCHASING, INC.
Date:
By:_________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
____________________
* LIBOR Loans must be in a minimum amount of $1,000,000 and in integral
multiplies of $500,000.
** To be inserted in any request for a LIBOR Loan.
*** To be inserted in any request for a conversion.
B-3
EXHIBIT C
---------
INDEBTEDNESS; ENCUMBRANCES
[to be provided by the Parent]
C-1
EXHIBIT D
---------
LITIGATION
[to be provided by the Parent]
D-1
EXHIBIT E
---------
SUBSIDIARIES
[to be provided by the Parent]
E-1
EXHIBIT F
---------
BROOKSTONE, INC.
REPORT OF CHIEF FINANCIAL OFFICER
BROOKSTONE, Inc. (the "Parent") HEREBY CERTIFIES that:
This Report is furnished pursuant to Section 5.1(c) of the Amended and
Restated Credit Agreement dated as of February __, 2002 by and among the Parent,
Brookstone Company, Inc., Brookstone Stores, Inc., Brookstone Purchasing, Inc.,
Gardeners Eden By Mail, Inc., Gardeners Eden Company, Inc., Gardeners Eden
Purchasing, Inc., the lenders party thereto and Fleet National Bank as Agent
(the "Agreement"). Unless otherwise defined herein, the terms used in this
Report have the meanings given to them in the Agreement.
As required by Section 5.1(a) of the Agreement, consolidated financial
statements of the Parent and its Subsidiaries for the [year/quarter] ended
___________, 200_ (the "Financial Statements") prepared in accordance with
generally accepted accounting principles consistently applied accompany this
Report. The Financial Statements present fairly the consolidated financial
position of the Parent and its Subsidiaries as at the date thereof and the
consolidated results of operations of the Parent and its Subsidiaries for the
period covered thereby (subject only to normal, recurring year-end audit
adjustments).
The figures set forth in Schedule A for determining compliance by the
Parent with the financial and certain other covenants contained in the Agreement
present fairly the information set forth therein as of the date or for the
period to which this certificate relates.
The activities of the Parent and its Subsidiaries during the period covered
by the Financial Statements have been reviewed by the Chief Financial Officer or
by employees or agents under his immediate supervision. Based on such review, to
the best knowledge and belief of the Chief Financial Officer, and as of the date
of this Report, no Default has occurred.*
WITNESS my hand this __________ day of _____________, 200_.
BROOKSTONE, INC.
By:________________________
Name:
Title:
_____________________
* If a Default has occurred, this paragraph is to be modified with an
appropriate statement as to the nature thereof, the period of existence
thereof and what action the Parent has taken, is taking, or proposes to
take with respect thereto.
F-1
SCHEDULE A
to
EXHIBIT F
---------
COVENANT COMPLIANCE WORKSHEET
Consolidated Net Worth (Section 5.7)
------------------------------------
REQUIRED:
(i) Base Net Worth $________
(ii) 75% of Consolidated Net Income from February 4, 2001 the $________
most recent year end (without deduction for any annual
losses)
(iii) Repurchases of capital stock by the Parent since October $________
__, 2001
(iv) (i) plus (ii) less (iii) $________
---- ----
ACTUAL: $________
Cash Flow Leverage (Section 5.8)
--------------------------------
REQUIRED: Not greater than ____ to 1.00
ACTUAL:
(i) Consolidated Total Funded Debt $_________
(ii) Consolidated EBITDA $_________
(iii) Line (i) divided by line (ii) ____ to 1.0
F-2
Fixed Charge Coverage (Section 5.9)
-----------------------------------
REQUIRED: Not less than _____ to 1.0
ACTUAL:
Consolidated EBITDA
Plus: Rent Expense
Less: Capital Expenditures
(A) Subtotal $_________
Rent Expense
Plus: Interest Expense
(B) Subtotal $_________
Cash Flow Coverage: _____ to 1.0
Line (A) divided by line (B)
Capital Expenditures (Section 6.10)
-----------------------------------
Capital Expenditures since the beginning of the
current fiscal year (not to exceed $14,500,000
during the 2001 Fiscal Year, $11,500,000
during the 2002 Fiscal Year, $26,000,000
during the 2003 Fiscal Year $25,500,000
during the 2004 Fiscal Year, and $20,000,000 $_________
during the 2005 Fiscal Year (except that Section
6.10 permits, as therein provided, an
aggregation of the distribution facility amount
up to $17,000,000 in either fiscal year 2003 or
2004)).
F-3
WITNESS by hand this _____ day of ________, 200_.
BROOKSTONE, INC.
By:_______________________
Name:
Title:
F-4
EXHIBIT G
---------
BROOKSTONE COMPANY, INC.
BROOKSTONE STORES, INC.
BROOKSTONE PURCHASING, INC.
GARDENERS EDEN BY MAIL, INC.
GARDENERS EDEN COMPANY, INC.
GARDENERS EDEN PURCHASING, INC.
BROOKSTONE RETAIL PUERTO-RICO, INC.
BROOKSTONE COMPANY, INC. (the "Company"), BROOKSTONE STORES, INC.
("Stores"), BROOKSTONE PURCHASING, INC. ("Purchasing"), GARDENERS EDEN COMPANY,
INC. ("GE"), GARDENERS EDEN PURCHASING, INC. ("GE Purchasing"), BROOKSTONE
RETAIL PUERTO-RICO, INC. ("PR") and GARDENERS EDEN BY MAIL, INC. ("GE Mail")
hereby jointly and severally certify that:
This Report is furnished pursuant to Section 5.1(d) of the Amended and
Restated Revolving Credit Agreement dated as of February __, 2002 by and among
Brookstone, Inc., the Company, Stores, Purchasing, PR, GE, GE Purchasing, GE
Mail, the lenders party thereto and Fleet National Bank, as Agent (the
"Agreement"). Unless otherwise defined herein, the terms used in this Report
have the meanings given to them in the Agreement.
As of ____________, 200_, the end of the last fiscal month of the Company,
Stores, Purchasing, PR, GE, GE Purchasing, GE Mail, the Company, Stores,
Purchasing, PR, GE, GE Purchasing, and GE Mail jointly and severally certify as
follows:
A. Eligible Inventory was $_________ determined as follows:
1. Gross Inventory* $__________
2. Less reserves and other exclusions $__________
3. Eligible Inventory (Line 1 less Line 2) $__________
B. The Borrowing Base was $__________, determined as follows:
1. Applicable % of Eligible Inventory** $__________
2. Applicable % Outstanding Documentary Letters of $__________
Credit**
3. Borrowing Base (Line 1 plus line 2) $__________
G-1
C. The amount available for Loans and Letters of Credit under the Agreement
was $_________, determined as follows:
1. The Lesser of $80,000,000 or the Borrowing Base $__________
2. Outstanding Loans $__________
3. Outstanding Letters of Credit $__________
4. Availability for Loans and Letters of Credit $__________
(Line 1 less the sum of line 2 and line 3)
WITNESS my hand this ________ day of ________, 200_.
BROOKSTONE COMPANY, INC.
BROOKSTONE-STORES, INC.
BROOKSTONE PURCHASING, INC.
BROOKSTONE RETAIL PUERTO-RICO, INC.
GARDENERS EDEN BY MAIL, INC.
GARDENERS EDEN COMPANY, INC.
GARDENERS EDEN PURCHASING, INC.
By:___________________________
Name:
Title: Chief Financial Officer
______________________________________
*up to $100,000, in the case of PR
**"Applicable %" means: 50%, from December 1 through May 31, 65% from June 1
through July 31, and 75% from August 1 through November 30.
G-2
EXHIBIT H
---------
FORM OF OPINION OF COUNSEL
[TO BE INSERTED]
H-1
EXHIBIT I
---------
AMENDED AND RESTATED UNLIMITED GUARANTY
AMENDED AND RESTATED UNLIMITED GUARANTY dated as of February __, 2002, by
BROOKSTONE PROPERTIES, INC., BROOKSTONE HOLDINGS, INC., BROOKSTONE RETAIL
PUERTO-RICO, INC. and BROOKSTONE BY MAIL, INC. (each a "Guarantor" and
collectively the "Guarantors"), in favor of FLEET NATIONAL BANK, a national
banking association with its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, as Agent (the "Agent") for the Lenders parties to the Amended and
Restated Credit Agreement referred to below.
Recitals
In consideration of the Lenders' giving time, credit or banking facilities
or accommodations to Brookstone Company, Inc., Brookstone Stores, Inc.,
Brookstone Purchasing, Inc., Gardeners Eden by Mail, Inc., Gardeners Eden
Company, Inc. and Gardeners Eden Purchasing, Inc. and their successors
(collectively, the "Borrowers") under an Amended and Restated Credit Agreement
of even date herewith (the "Amended and Restated Credit Agreement") by and among
the Agent, the Borrowers, Brookstone, Inc. and the Lenders parties thereto, the
Notes and Swing Line Note issued thereunder and otherwise, the Guarantors hereby
amend and restate that certain Unlimited Guaranty dated as of May 11, 1999 by
the Guarantors and agree, jointly and severally, as follows. Capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Amended and Restated Credit Agreement (provided, however, that the term
"Lenders" as used herein shall mean all the Lenders and the Swing Line Lender
under the Amended and Restated Credit Agreement).
1. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantors hereby absolutely
and unconditionally guarantee to the Agent and the Lenders, jointly and
severally, the full and punctual payment when due (whether at maturity, by
acceleration or otherwise), and the performance, of all liabilities, agreements
and other obligations of the Borrowers to the Agent and the Lenders, whether
direct or indirect, absolute or contingent, due or to become due, secured or
unsecured, now existing or hereafter arising or acquired (whether by way of
discount, letter of credit, lease, loan, overdraft or otherwise) (the
"Obligations"). This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of the obligations and
not of their collectibility only and is in no way conditioned upon any
requirement that the Agent and the Lenders first attempt to collect any of the
Obligations from the Borrowers or resort to any security or other means of
obtaining their payment. Should the Borrowers default in the payment or
performance of any of the Obligations, the obligations of the Guarantors
hereunder shall become immediately due and payable to the Agent and the Lenders,
without demand or notice of any nature, all of which are expressly waived by the
Guarantors. Payments by the Guarantors hereunder may be required by the Agent on
any number of occasions.
I-1
2. GUARANTORS' AGREEMENT TO PAY. The Guarantors further agree, jointly and
severally, as principal obligors and not as guarantors only, to pay to the Agent
and the Lenders, on demand, all costs and expenses (including court costs and
legal expenses) incurred or expended by the Agent and the Lenders in connection
with the Obligations, this Guaranty and the enforcement thereof, together with
interest on amounts recoverable under this Guaranty from the time such amounts
become due until payment, at the rate per annum equal to the rate of interest
announced by the Agent from time to time at its head office as its Base Rate,
plus 2%; provided that if such interest exceeds the maximum amount permitted to
be paid under applicable law, then such interest shall be reduced to such
maximum permitted amount.
3. UNLIMITED GUARANTY. The liability of the Guarantors hereunder shall be
unlimited.
4. WAIVERS BY GUARANTORS; AGENT'S FREEDOM TO ACT. The Guarantors agree that
the Obligations will be paid and performed strictly in accordance with their
respective terms regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent and the Lenders with respect thereto. The Guarantors waive presentment,
demand, protest, notice of acceptance, notice of Obligations incurred and all
other notices of any kind, all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in effect,
any right to require the marshaling of assets of the Borrowers, and all
suretyship defenses generally. Without limiting the generality of the foregoing,
the Guarantors agree to the provisions of any instrument evidencing, securing or
otherwise executed in connection with any Obligation and agree that the
obligations of the Guarantors hereunder shall not be released or discharged, in
whole or in part, or otherwise affected by (i) the failure of the Agent and the
Lenders to assert any claim or demand or to enforce any right or remedy against
the Borrowers; (ii) any extensions or renewals of any Obligation; (iii) any
rescissions, waivers, amendments or modifications of any of the terms or
provisions of any agreement evidencing securing or otherwise executed in
connection with any Obligation; (iv) the substitution or release of any entity
primarily or secondarily liable for any Obligation; (v) the adequacy of any
rights the Agent and the Lenders may have against any collateral or other means
of obtaining repayment of the Obligations; (vi) the impairment of any collateral
securing the Obligations, including without limitation the failure to perfect or
preserve any rights the Agent and the Lenders might have in such collateral or
the substitution, exchange, surrender, release, loss or destruction of any such
collateral; or (vii) any other act or omission which might in any manner or to
any extent vary the risk of the Guarantors or otherwise operate as a release or
discharge of the Guarantors, all of which may be done without notice to the
Guarantors.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWERS. If for any reason the
Borrowers have no legal existence or are under no legal obligation to discharge
any of the obligations, or if any of the Obligations have become irrecoverable
from the Borrowers by operation of law or for any other reason, this Guaranty
shall nevertheless be binding on the Guarantors to the same extent as if the
Guarantors at all
I-2
times had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of a Borrower, or for any other reason,
all such amounts otherwise subject to acceleration under the terms of any
agreement evidencing, securing or otherwise executed in connection with any
Obligation shall be immediately due and payable by the Guarantors.
6. SUBROGATION; SUBORDINATION. Until the payment and performance in full of
all Obligations and any and all obligations of the Borrowers to any affiliate of
the Agent and the Lenders, the Guarantors shall not exercise any rights against
the Borrowers arising as a result of payment by the Guarantors hereunder, by way
of subrogation or otherwise, and will not prove any claim in competition with
the Agent and the Lenders or their affiliates in respect of any payment
hereunder in bankruptcy or insolvency proceedings of any nature; the Guarantors
will not claim any set-off or counterclaim against the Borrowers in respect of
any liability of the Guarantors to the Borrowers; and the Guarantors waive any
benefit of and any right to participate in any collateral which may be held by
the Agent or any such affiliate. The payment of any amounts due with respect to
any indebtedness of the Borrowers now or hereafter held by the Guarantors is
hereby subordinated to the prior payment in full of the obligations. The
Guarantors agree that after the occurrence of any default in the payment or
performance of the obligations, the Guarantors will not demand, ▇▇▇ for or
otherwise attempt to collect any such indebtedness of the Borrowers to the
Guarantors until the Obligations shall have been paid in full. If,
notwithstanding the foregoing sentence, the Guarantors shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by the Guarantors as trustee for the Agent and
the Lenders and be paid over to the Agent on account of the Obligations without
affecting in any manner the liability of the Guarantors under the other
provisions of this Guaranty.
7. SECURITY; SET-OFF. The Guarantors grant to the Agent and the Lenders, as
security for the full and punctual payment and performance of the Guarantors'
obligations hereunder, a continuing lien on and security interest in all
securities or other property belonging to the Guarantors now or hereafter held
by the Agent or the Lenders and in all deposits (general or special, time or
demand, provisional or final) and other sums credited by or due from the Agent
or the Lenders to the Guarantors or subject to withdrawal by the Guarantors; and
regardless of the adequacy of any collateral or other means of obtaining
repayment of the Obligations, the Agent or the Lenders are hereby authorized at
any time and from time to time, without notice to the Guarantors (any such
notice being expressly waived by the Guarantors) and to the fullest extent
permitted by law, to set off and apply such deposits and other sums against the
obligations of the Guarantors under this Guaranty, whether or not the Agent or
the Lenders shall have made any demand under this Guaranty and although such
obligations may be contingent or unmatured.
8. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force and
effect until the Agent is given written notice of the Guarantors' intention to
discontinue this Guaranty, notwithstanding any intermediate or temporary payment
or
I-3
settlement of the whole or any part of the Obligations. No such notice shall be
effective unless received and acknowledged by an officer of the Agent at its
head office. No such notice shall affect any rights of the Agent or the Lenders
or of any affiliate hereunder including, without limitation, the rights set
forth in Sections 4 and 6, with respect to Obligations incurred prior to the
receipt of such notice or Obligations incurred pursuant to any contract or
commitment in existence prior to such receipt, and all checks drafts, notes,
instruments (negotiable or otherwise) and writings made by or for the account of
the Borrowers and drawn on the Agent or any Lender or any of their agents
purporting to be dated on or before the date of receipt of such notice, although
presented to and paid or accepted by the Agent or any Lender after that date,
shall form part of the Obligations. This Guaranty shall continue to be effective
or be reinstated, notwithstanding any such notice, if at any time any payment
made or value received with respect to an Obligation is rescinded or must
otherwise be returned by the Agent or any Lender upon the insolvency, bankruptcy
or reorganization of the Borrowers, or otherwise, all as though such payment had
not been made or value received.
9. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantors, jointly and severally, their successors and assigns, and shall inure
to the benefit of and be enforceable by the Agent, the Lenders and their
successors, transferees and assigns. Without limiting the generality of the
foregoing sentence, the Agent and the Lenders may assign or otherwise transfer
any agreement or any note held by it evidencing, securing or otherwise executed
in connection with the obligations, or sell participations in any interest
therein, to any other person or entity, in accordance with the provisions of the
Amended and Restated Credit Agreement, and such other person or entity shall
thereupon become vested, to the extent set forth in the agreement evidencing
such assignment, transfer or participation, with all the rights in respect
thereof granted to the Agent and the Lenders herein.
10. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantors therefrom shall be
effective unless the same shall be in writing and signed by the Agent. No
failure on the part of the Agent and the Lenders to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
11. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class mail postage prepaid or, in the case of telegraphic or telexed
notice, when transmitted, answer back received, addressed as follows: if to the
Guarantors, at the address set forth beneath its signature hereto, and if to the
Agent and the Lenders, c/o Fleet National Bank, as Agent, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ Stop: MA DE 10008F, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Director, or at such other address as either party may designate in
writing.
I-4
12. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is intended to
take effect as a sealed instrument and shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts. The Guarantors
agree that any suit for the enforcement of this Guaranty may be brought in the
courts of The Commonwealth of Massachusetts or any Federal Court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Guarantors by mail at the address
specified in Section 11 hereof. The Guarantors hereby waive any objection that
they may now or hereafter have to the venue of any such suit or any such court
or that such suit was brought in an inconvenient court.
13. WAIVER OF JURY TRIAL. THE AGENT AND THE GUARANTORS AGREE THAT NONE OF
THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS
GUARANTY, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE
RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE AGENT
AND THE GUARANTORS, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
NEITHER THE AGENT NOR THE GUARANTORS HAVE AGREED WITH OR REPRESENTED TO THE
OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
14. MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
Guarantors with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other agreement, and this Guaranty shall be in addition to any other
guaranty of the obligations. The invalidity or unenforceability of any one or
more sections of this Guaranty shall not affect the validity or enforceability
of its remaining provisions. Captions are for the ease of reference only and
shall not affect the meaning of the relevant provisions. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined.
I-5
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
and delivered by its duly authorized officer as of the date appearing on page
one.
BROOKSTONE PROPERTIES, INC.,
BROOKSTONE HOLDINGS, INC.,
BROOKSTONE RETAIL PUERTO-RICO, INC.
BROOKSTONE BY MAIL, INC.
By:______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President
and Chief Financial Officer
Address:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
I-6
EXHIBIT J
---------
[FORM OF ASSIGNMENT AND ACCEPTANCE]
ASSIGNMENT AND ACCEPTANCE
Dated as of ____________
Reference is made to the Amended and Restated Credit Agreement, dated as of
February __, 2002 (as amended, modified or otherwise supplemented, the
"Agreement"), by and among BROOKSTONE COMPANY, INC. and certain affiliates
(collectively, the "Borrowers"), certain other affiliates of the Borrowers (the
"Companies"), the Lenders under (and as defined in) the Agreement, and Fleet
National Bank as agent for the Lenders (the "Agent"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Agreement.
______________________ (the "Assignor") and ______________________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, that Commitment Percentage under
the Lender Agreements as of the Effective Date (as hereinafter defined) with
respect to the Obligations as is specified on Annex I hereto. After giving
effect to such sale and assignment, the Assignor's and Assignee's Commitment
Percentages will be as set forth on Annex I hereto.
2. The Assignor (i) represents that it is legally authorized to enter into
this Assignment and Acceptance and that, as of the date hereof, its Commitment
Percentage is as set forth on Annex I hereto; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Agreement, the other Lender Agreements or any other instrument or
document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers, the Companies, or any other person which
may be primarily or secondarily liable in respect of any of the Obligations or
any of their respective obligations under the Agreement or the other Lender
Agreements or any other instrument or document delivered or executed pursuant
thereto.
3. The Assignee (i) represents and warrants that (a) it is a Successor
Lender, (b) it is legally authorized to enter into this Assignment and
Acceptance, (c) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or
by-laws of the Assignee, or of any agreement binding on the Assignee and (d) all
acts, conditions and things required to be
J-1
done and performed and to have occurred prior to the execution, delivery and
performance of this Assignment and Acceptance, and to render the same the legal,
valid and binding obligation of the Assignee, enforceable against it in
accordance with its terms, have been done and performed and have occurred in due
and strict compliance with all applicable laws; (ii) confirms that it has
received a copy of the Agreement, together with copies of the most recent
financial statements delivered pursuant to Sections 4.6 and 5.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Assignor, any
other Lender or the Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own appraisals and
credit decisions in taking or not taking action under the Agreement; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers as are reasonably incidental thereto pursuant to the
terms of the Agreement and the other Lender Agreements; and (v) agrees that it
will perform all the obligations which by the terms of the Agreement are
required to be performed by it as a Lender in accordance with the terms of the
Agreement.
4. The effective date for this Assignment and Acceptance shall be as set
forth on Annex I hereto (the "Effective Date"), provided, however, that on or
--------
before such date (i) this Assignment and Acceptance shall have been executed and
delivered by the parties hereto, (ii) executed copies hereof shall have been
delivered to and consented to by the Agent and, if required, the Borrowers, and
(iii) the Assignor shall have paid to the Agent the fee required by Section
9.2(a) of the Agreement. Following the execution of this Assignment and
Acceptance and the consent thereto by the Agent and, if required, the Borrowers,
it will be delivered to the Agent for acceptance and recording by the Agent. The
Agent shall maintain a copy of each Assignment and Acceptance delivered to it
and a register or similar list (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitment Percentages of, and principal
amount of the Loans owing to, the Lenders from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Companies, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender for all purposes of the Agreement.
The Register shall be available for inspection by the Borrowers and the Lenders
at any reasonable time and from time to time upon reasonable prior notice.
5. Upon such acceptance and recording, from and after the Effective Date,
(i) the Assignee shall be a party to the Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder, and (ii) provided that the Agent and, if required, the Borrowers
shall have approved the herein assignment pursuant to Section 9.2 of the
Agreement, the Assignor shall, with respect to that portion of its interest
under the Agreement assigned hereunder, relinquish its rights and be released
from its obligations under the Agreement accruing from and after the Effective
Date; provided, however, that the Assignor shall retain its rights to be
-------- -------
indemnified pursuant to Section 11.12 of the Agreement with respect to any
claims or actions arising prior to the Effective Date.
J-2
6. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments
directly between themselves with respect to payments by the Agent for periods
prior to the Effective Date or otherwise with respect to the making of this
assignment.
7. THIS ASSIGNMENT AND ASSUMPTION IS INTENDED TO BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
8. This Assignment and Acceptance may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
[signatures on next page]
J-3
IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned
has caused this Assignment and Acceptance to be executed on its behalf by its
officer thereunto duly authorized, as of the date first above written.
The Assignor:
--- --------
[_______________________________________]
By:_____________________________________
Title: _________________________________
The Assignee:
--- --------
[_______________________________________]
By:_____________________________________
Title: _________________________________
Notice Address of Assignee:
________________________________________
________________________________________
________________________________________
Attn:___________________________________
Wire Instructions for Assignee:
________________________________________
________________________________________
________________________________________
J-4
CONSENTED TO:
The Agent
---------
FLEET NATIONAL BANK
By:_________________________________________
Title:______________________________________
The Borrowers:
--- ---------
BROOKSTONE, INC., for itself
and on behalf of the other Borrowers
and the Companies
By:_________________________________________
Title:______________________________________
J-5
ANNEX FOR ASSIGNMENT AND ACCEPTANCE
ANNEX 1
1. Borrowers:
Brookstone Company, Inc., a Delaware corporation, and certain affiliates
(collectively, the "Borrowers")
2. Name and Date of Loan Agreement:
Amended and Restated Credit Agreement, dated as of February __, 2002,
among the Borrowers, certain of their affiliates, the Lenders parties
thereto, and Fleet National Bank, as agent for the Lenders
3. Date of Assignment and Acceptance: ______________, 200_
4. Commitment Percentages:
a. Commitment Percentage being assigned
by Assignor to Assignee ___%
b. Assignor's Commitment Percentage
before giving effect to this Assignment
and Acceptance ___%
c. Assignor's Commitment Percentage
after giving effect to this Assignment and Acceptance
___%
d. Assignee's Commitment Percentage after giving effect
to this Assignment and Acceptance
___%
5. Effective Date of assignment: _________________, 200_
ASSIGNOR: ASSIGNEE:
_______________________ _______________________
_______________________ _______________________
_______________________ _______________________
_______________________ _______________________
J-6
SCHEDULE 1.1
Commitment Percentages
----------------------
--------------------------------- ----------------------- ----------------------
Maximum Amount of
Commitment Revolving Loans and
Lender Percentage Letters of Credit
------ ---------- -----------------
--------------------------------- ----------------------- ----------------------
Fleet National Bank
Retail & Apparel Division
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Stop: MA DE 10008F
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Director 32.5% $26,000,000
--------------------------------- ----------------------- ----------------------
Citizens Bank of Massachusetts
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
22.5% $18,000,000
--------------------------------- ----------------------- ----------------------
Sovereign Bank
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Mail Stop: sst 04-10
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇ 17.5% $14,000,000
--------------------------------- ----------------------- ----------------------
Banknorth, N.A.
7 New England ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
17.5% $14,000,000
--------------------------------- ----------------------- ----------------------
National City Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 10.0% $ 8,000,000
--------------------------------- ----------------------- ----------------------
TOTALS 100.00% $80,000,000.00
--------------------------------- ----------------------- ----------------------
1.1-1
SCHEDULE 1.2
Pricing Schedule
----------------
The Applicable LIBOR Margin, the Applicable Base Rate Margin, the
Documentary Letter of Credit Fee Rate and the Commitment Fee Rate for any day
are the respective percentages set forth below in the applicable row under the
column corresponding to the Status that exists on such day:
------------------------------------------------------------------------------------------------------------
Status Level I Level II Level III Level IV
Applicable LIBOR Margin 2.25 2.00 1.75 1.50
------------------------------------------------------------------------------------------------------------
Applicable Base Rate Margin 0.75 0.50 0.25 0.00
------------------------------------------------------------------------------------------------------------
Documentary Letter of Credit Fee 1.125 1.00 0.875 0.75
------------------------------------------------------------------------------------------------------------
Commitment Fee 0.750 0.625 0.50 0.50
------------------------------------------------------------------------------------------------------------
For purposes of this Schedule, the following terms have the following meanings:
"Level I Status" exists at any date if, at such date, no other Status
exists.
"Level II Status" exists at any date if, at such date, the Fixed Charge
Coverage ratio for the four consecutive quarters then ending is greater than or
equal to 1.2-to-1.0 and less than 1.4-to-1.0 and no Default exists.
"Level III Status" exists at any date if, at such date, the Fixed Charge
Coverage ratio for the four consecutive quarters then ending is greater than or
equal to 1.4-to-1.0 and less than 1.60-to-1.0 and no Default exists.
"Level IV Status" exists at any date if, at such date, the Fixed Charge
Coverage ratio for the four consecutive quarters then ending is greater than or
equal to 1.60-to-1.0 and no Default exists.
"Status" refers to the determination of which Level I Status, Level II
Status, Level III Status or Level IV Status exists at any date.
The applicable Fixed Charge Coverage ratio (a) shall be determined and
effective on a date (each a "Determination Date") selected by the Agent within
ten (10) days of the Agent's receipt of the final, signed financial statements
for the Parent's previous fiscal
1.2-1
quarter for the four consecutive fiscal quarters then ending, commencing with
receipt of the financial statements for the fiscal quarter ending August 3,
2002, (b) shall be equal to the Fixed Charge Coverage ratio in effect as of the
end of such fiscal quarter for the four consecutive fiscal quarters then ending
as reflected on the final, signed financial statements and certified by the
Parent's chief financial officer and (c) shall remain in effect until the next
Determination Date. If the Parent fails to deliver such financial statements in
the time period required, the Level I Status for each of the Applicable LIBOR
Rate Margin, the Applicable Base Rate Margin, the Documentary Letter of Credit
Fee Rate and the Commitment Fee Rate will apply. Anything hereinbefore to the
contrary notwithstanding, Level I Status for each of the Applicable LIBOR Rate
Margin, the Applicable Base Rate Margin, the Documentary Letter of Credit Fee
Rate and the Commitment Fee Rate will apply from the date of this Agreement
through the Determination Date following the Agent's receipt of the final,
signed financial statements for the Parent's fiscal quarter ending August 3,
2002.
1.2-1
SCHEDULE 2.16.9
OUTSTANDING LETTERS OF CREDIT
[to be provided by Fleet]
2.16.9-1
SCHEDULE 4.13
CERTAIN ERISA MATTERS
[to be provided by the Parent]
4.13-1
SCHEDULE 6.8
LIST OF INVESTMENTS IN SUBSIDIARIES
[to be provided by the Parent]
6.8-1