Exhibit 6
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U.S. $____________
REVOLVING CREDIT FACILITY
FORM OF CREDIT AGREEMENT
dated as of December 16, 1994
between
--------------,
as the Borrower,
and
CITIBANK, N.A.,
as the Bank
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms..........................................1
Advance..................................................................1
Agreement................................................................1
Base Rate................................................................1
Base Rate Advance........................................................2
Business Day.............................................................2
Cash and Cash Equivalents................................................2
Collateral...............................................................3
Collateral Account.......................................................3
Commitment...............................................................3
Confidential Information.................................................3
Continuation", "Continue", and "Continued................................3
Control Person Statement.................................................3
"Convert," "Conversion" and "Converted"..................................3
Eurodollar Rate..........................................................3
Eurodollar Rate Advance..................................................4
Event of Default.........................................................4
General Partner..........................................................4
Guarantor................................................................4
Guaranty Agreement.......................................................4
Hedge Agreement..........................................................4
Interest Period..........................................................4
LIBO Rate................................................................4
Loan Document............................................................4
Market Rate..............................................................4
Maverick.................................................................4
Michaels.................................................................5
Note.....................................................................5
Other Taxes..............................................................5
Partnership Agreement....................................................5
Partnership Certificate..................................................5
Person...................................................................5
Pledge Agreement.........................................................5
Pledged Collateral.......................................................5
Pledged Shares...........................................................5
Readily Marketable Securities............................................5
Rule 144.................................................................6
Sterling.................................................................6
Subsidiary...............................................................6
Taxes....................................................................7
Termination Date.........................................................7
Type.....................................................................7
SECTION 1.02. Accounting Terms...............................................7
SECTION 1.03. Articles, Sections, Etc........................................7
SECTION 1.04. Computation of Time Periods....................................7
(i)
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.01. The Advances....................................................7
SECTION 2.02. Making the Advances.............................................7
SECTION 2.03. Responsibility for Requests for Advances........................8
SECTION 2.04. Facility Fees...................................................9
SECTION 2.05. Reduction and Termination of the Commitment.....................9
SECTION 2.06. Repayment.......................................................9
SECTION 2.07. Interest........................................................9
(a) Ordinary Interest.................................................9
(i) Eurodollar Rate Advances............................9
(ii) Base Rate Advances................................10
(b) Default Interest.................................................10
(c) Interest Periods.................................................10
SECTION 2.08. Optional Prepayments...........................................11
(a) Base Rate Advances...............................................11
(b) Eurodollar Rate Advances.........................................11
SECTION 2.09. Certain Mandatory Prepayments..................................11
SECTION 2.10. Increased Costs................................................11
SECTION 2.11. Additional Interest............................................12
SECTION 2.12. Increased Capital..............................................12
SECTION 2.13. Voluntary Continuation of Advances.............................12
SECTION 2.14. Illegality, Etc................................................13
SECTION 2.15. Payments and Computations......................................14
SECTION 2.16. Taxes..........................................................14
SECTION 2.17. Hedge Agreements...............................................15
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Initial Advance.........................16
SECTION 3.02. Conditions Precedent to All Advances...........................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.................19
ARTICLE V
CERTAIN COVENANTS OF THE BORROWER
SECTION 5.01. Certain Affirmative Covenants..................................20
(a) Use of Advances..................................................20
(b) Compliance with Laws, Etc........................................20
(c) Payment of Taxes, Etc............................................20
(d) Reporting Requirements...........................................21
SECTION 5.02. Certain Negative Covenants.....................................22
(a) Liens, Etc.......................................................22
(ii)
ARTICLE VI
CERTAIN OTHER COVENANTS
SECTION 6.01. Collateral to Loan Coverage....................................23
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default..............................................25
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc................................................27
SECTION 8.02. Notices, Etc...................................................27
SECTION 8.03. No Waiver; Remedies............................................27
SECTION 8.04. Costs, Expenses and Taxes......................................28
SECTION 8.05. Right of Set-Off...............................................28
SECTION 8.06. Binding Effect.................................................28
SECTION 8.07. Counterparts...................................................30
SECTION 8.08. Interest.......................................................30
SECTION 8.09. Governing Law; Consent to Jurisdiction.........................30
SECTION 8.10. WAIVER OF JURY TRIAL...........................................31
Exhibit A - Promissory Note
Exhibit B - Pledge Agreement
Exhibit C -
Form of Legal Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., Counsel for
the Borrower
(iii)
FORM OF CREDIT AGREEMENT
Dated as of December 16, 1994
______________, a _________________________ (the "Borrower"), acting
through its , and CITIBANK, N.A., a national banking association (the "Bank"),
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Credit Agreement
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(this "Agreement"), the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Advance" means an advance by the Bank to the Borrower
pursuant to Article II.
"Agreement" means this Credit Agreement, as the same may from
time to time be amended or supplemented.
"Base Rate" means, for any Interest Period or any other
period, a fluctuating interest rate per annum as shall be in effect from time to
time, which rate per annum shall at all times be equal to:
(a) the rate of interest announced publicly by the Bank
in New York, New York, from time to time, as the Bank's base
rate; or
(b) if the rate referred to in clause (a) above is unavailable
for any reason, then "Base Rate" shall mean a fluctuating interest rate
per annum equal to the sum (adjusted to the nearest 1/4 of one percent
or, if there is no nearest 1/4 of one percent, to the next higher 1/4
of one percent) of (i) 1/2 of one percent per annum, plus (ii) the rate
per annum obtained by dividing (A) the latest three-week moving average
of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly on each
Monday (or, if any such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by the Bank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated on the basis of quotations for such rates received by the
Bank from three New York certificate of deposit dealers of recognized
standing selected by Citibank, N.A., by (B) a percentage equal to 100%
minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental
or
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other marginal reserve requirement) for the Bank in respect of
liabilities consisting of or including (among other liabilities)
three-month U.S. dollar nonpersonal time deposits each at least
$100,000, plus (iii) the average during such three-week period of the
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daily net annual assessment rates estimated by the Bank for determining
the then current annual assessment payable by the Bank to the Federal
Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank, N.A. in the United States.
"Base Rate Advance" means an Advance which bears interest as
provided in Section 2.07 (a)(ii).
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City or Dallas, Texas, and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Cash and Cash Equivalents" means the aggregate amount of the
following, to the extent owned by the Borrower free and clear of all liens,
security interests, charges, encumbrances and rights of others: (a) cash on
hand; (b) United States dollar demand deposits maintained in the United States
with any commercial bank and United States dollar time deposits maintained in
the United States with, or certificates of deposit having a maturity of one year
or less issued by, any commercial bank which has its head office in the United
States and which has a combined capital and surplus of at least $100,000,000.00;
(c) direct obligations of, or obligations unconditionally guaranteed by, the
United States and having a maturity of one year or less; (d) readily marketable
commercial paper having a maturity of one year or less, issued by any
corporation organized and existing under the laws of the United States or any
state thereof or the District of Columbia and rated by Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc. (or, if neither such organization
shall rate such commercial paper at any time, rated by any nationally recognized
rating organization in the United States) with the highest rating assigned by
such organization; (e) repurchase agreements which (i) are callable at any time
or have a maturity date of one year or less, (ii) are entered into with any
commercial bank that has its head office in the United States and has a combined
capital and surplus of at least $100,000,000.00 and (iii) are secured by direct
obligations of, or obligations unconditionally guaranteed by, the United States
and having a maturity of one year or less; (f) mutual funds that invest
exclusively in direct obligations of, or obligations unconditionally guaranteed
by, the United States and having a maturity of one year or less; and (g) such
other short-term investments as shall be acceptable to the Bank from time to
time in its sole discretion.
"Collateral" means, collectively, (a) the Pledged Collateral,
(b) all additional shares of stock of any issuer of any of the Pledged Shares,
or any successor to any such issuer, from
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time to time acquired by the Borrower and pledged and delivered by the Borrower
to the Bank pursuant to Section 6.01, and all certificates representing such
additional shares and all dividends (including, but not limited to, stock
dividends), cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such additional shares for any reason, including, but not limited to, any
change in the number or kind of outstanding shares of any securities of any
issuer of any of the Pledged Shares, or any successor to any such issuer, by
reason of any recapitalization, merger, consolidation, reorganization,
separation, liquidation, stock split, stock dividend, combination of shares or
other similar corporate event, (c) all cash from time to time pledged and
delivered by the Borrower to the Bank for deposit in any one or more of the
Collateral Accounts pursuant to Section 6.01, and (d) all proceeds of any and
all of the properties described in clauses (a), (b) and (c) of this definition.
"Collateral Account" has the meaning assigned to that
term in the Pledge Agreement.
"Commitment" has the meaning assigned to that term in
Section 2.01.
"Confidential Information" means the information furnished to
the Bank by the Borrower pursuant to clause (i) of Section 5.01(d) and any other
information that is furnished to the Bank by the Borrower and is clearly
identified by the Borrower to the Bank in writing as confidential information.
"Continuation", "Continue", and "Continued" each refer to a
continuation of a Eurodollar Rate Advance pursuant to Section 2.14.
"Control Person Statement" means the Control Person Statement,
dated as of a December 16, 1994, furnished by or on behalf of the Borrower to
the Bank.
"Convert," "Conversion" and "Converted" each refers to a
conversion of an Advance of one Type into an Advance of another Type pursuant to
Section 2.14.
"Dollars" and "$" means lawful money of the United States
of America.
"Eurodollar Rate" means, for any Interest Period for any
Advance, an interest rate per annum equal to the sum of the LIBO Rate for such
Interest Period plus one percent (1.00%) per annum.
"Eurodollar Rate Advance" means an Advance which bears
interest as provided in Section 2.07(a)(i).
"Event of Default" has the meaning assigned to that term
in Section 7.01.
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"General Partner" means ________, not individually but as
general partner of the Borrower.
"Guarantor" means ______________, as an individual.
"Guaranty Agreement" means that certain Guaranty Agreement of
Guarantor of even date herewith, as the same may from time to time be amended or
supplemented.
"Hedge Agreement" means any equity derivative (including, but
not limited to, any equity swap, future or option agreement), any interest rate
swap, cap or collar agreement, any interest rate future or option contract, any
currency swap agreement, any currency future or option agreement, any future
commodity contract or option or any other similar agreement designed to hedge
against fluctuations in equity values, interest rates or foreign exchange rates.
"Interest Period" means, for each Eurodollar Rate Advance, the
period commencing on the date of such Advance or the date of the Conversion of
any Advance into such a Eurodollar Rate Advance and ending on the last day of
the period selected by the Borrower pursuant to the provisions of Section
2.07(c) and, thereafter, each subsequent period commencing on the day following
the last day of the immediately preceding Interest Period and ending on the last
day of the period selected by the Borrower pursuant to the provisions of Section
2.07(c).
"LIBO Rate" means, for any Interest Period for any Eurodollar
Rate Advance, an interest rate per annum equal to the rate of interest per annum
at which deposits in United States dollars are offered by the principal office
of the Bank in London, England, to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to such Advance and for a period equal
to such Interest Period.
"Loan Document" means any of this Agreement, the Note, the
Pledge Agreement, the Guaranty Agreement and any other pledge and security
agreements executed and delivered pursuant to Section 6.01, as the same may be
amended or otherwise modified from time to time.
"Market Rate" has the meaning assigned to that term in
Section 8.04(b).
"Maverick" means the current market value of partnership
interests in Maverick Fund.
"Michaels" means Michaels Stores, Inc., a corporation duly
formed and validly existing under the laws of the State of Delaware.
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"Note" means a promissory note of the Borrower payable to the
order of the Bank, in substantially the form of Exhibit A, evidencing the
aggregate indebtedness of the Borrower to the Bank resulting from the Advances
and delivered to the Bank pursuant to Article III, as the same may be amended,
extended, renewed or otherwise modified from time to time.
"Other Taxes" has the meaning assigned to that term in
Section 2.16(b).
"Partnership Agreement" means that certain Limited Partnership
Agreement entered into as of ___________, 1992, pursuant to which the Borrower
was formed, as such "Partnership Agreement" may be from time to time amended,
restated or modified.
"Partnership Certificate" has the meaning assigned such
term in Section 3.01(j).
"Person" means an individual, a partnership (including a
general partnership, a limited partnership and a limited liability partnership),
a limited liability company, a corporation (including a business trust), a joint
stock company, a trust, an unincorporated association, a joint venture or any
other entity, or a government or any political subdivision or agency of any
government.
"Pledge Agreement" means a pledge agreement, duly executed by
the Borrower in substantially the form of Exhibit B, as the same may be amended
or otherwise modified from time to time.
"Pledged Collateral" has the meaning assigned to that
term in the Pledge Agreement.
"Pledged Shares" has the meaning assigned to that term in
the Pledge Agreement.
"Readily Marketable Securities" means the aggregate current
market value of marketable securities listed or admitted to trading on the New
York Stock Exchange or the American Stock Exchange or quoted on the NASDAQ
National Market and legally and beneficially owned by the Borrower and/or by the
Guarantor free and clear of all liens, security interests, options, charges,
encumbrances and restrictions, including, but not limited to, restrictions
(contractual or otherwise) on the transferability of such securities, but
excluding restrictions on the transferability of any such marketable securities
imposed by Rule 144 so long as a minimum of three years has elapsed or is deemed
to have elapsed pursuant to Rule 144 since the later of (a) the date of the
acquisition by the Borrower of such marketable securities from the respective
issuers thereof or from any affiliate (as that term is defined in paragraph
(a)(1) of Rule 144) of any such issuers and (b) the date of payment by the
Borrower of the full purchase price or other consideration paid or given to
acquire such marketable
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securities from the respective issuers thereof or from any affiliate (as that
term is defined in paragraph (a)(1) of Rule 144). For the purposes of Section
5.02(b), the current market value of any marketable security quoted on the
NASDAQ National Market shall mean the closing bid price as quoted for such
security on the NASDAQ National Market on the Business Day immediately preceding
the date of determination, and the current market value of any marketable
security listed or admitted to trading on the New York Stock Exchange or the
American Stock Exchange shall mean the last reported sale price of such security
on the New York Stock Exchange or the American Stock Exchange, as the case may
be, on the Business Day immediately preceding the date of determination or, if
no such reported sale takes place on such immediately preceding Business Day,
the average of the last reported bid and asked prices for such security on the
New York Stock Exchange or the American Stock Exchange, as the case may be, on
such immediately preceding Business Day.
"Rule 144" means Rule 144 under the Securities Act of 1933, as
amended from time to time.
"Sterling" means Sterling Software, Inc., a corporation duly
formed and validly existing under the laws of the State of Delaware.
"Subsidiary" means, for any Person, any corporation,
partnership (including a general partnership, a limited partnership and a
limited liability partnership), limited liability company, joint venture, trust
or estate of which, or in which, (a) in the case of a corporation, more than
fifty percent of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), or (b) in the case of a partnership, a limited liability company
or a joint venture, more than fifty percent of the interest in the capital or
profits of such partnership, limited liability company or joint venture, or (c)
in the case of a trust or estate, more than fifty percent of the beneficial
interest of such trust or estate, is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries, or by one or
more other Subsidiaries.
"Taxes" has the meaning assigned to that term in Section
2.16(a).
"Termination Date" means December 16, 1996, or the earlier
date of termination in whole of the Commitment pursuant to Section 2.05, Section
2.09 or Section 7.01.
"Type" refers to an Advance and means a Base Rate Advance or a
Eurodollar Rate Advance, as the case may be.
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SECTION 1.02. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied.
SECTION 1.03. Articles, Sections, Etc. Unless stated otherwise in this
-----------------------
Agreement, references to this Agreement to Articles, Sections, Schedules and
Exhibits are references to Articles and Sections of, and Schedules and Exhibits
attached to, this Agreement. Each Schedule to this Agreement is by this
reference incorporated in this Agreement.
SECTION 1.04. Computation of Time Periods. In this Agreement, the Note and
---------------------------
the other Loan Documents, for the purpose of computing periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and each of the words "to" and "until" means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.01. The Advances. The Bank agrees, on the terms and conditions
------------
set forth in this Agreement, to make Advances to the Borrower from time to time
on any Business Day during the period from the date hereof until the Termination
Date in an aggregate amount not to exceed __________________________________ and
No/1OO Dollars ($____________), as such amount may be reduced pursuant to
Section 2.05 (the "Commitment"). Subject to Section 2.02(b), each Eurodollar
Rate Advance shall be in an amount not less than $100,000. Amounts borrowed
hereunder and repaid or prepaid may be reborrowed.
SECTION 2.02. Making the Advances.
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(a) Each Eurodollar Rate Advance shall be made on notice given not later
than 12:00 noon (New York City time) two Business Days prior to the date of the
proposed Advance, by or on behalf of the Borrower to the Bank, specifying the
date and amount thereof and selecting the interest rate therefor pursuant to
Section 2.07 and, the initial Interest Period for such Advance. Not later than
2:00 p.m. (New York City time) on the date of such Advance and upon fulfillment
of the applicable conditions set forth in Article III, the Bank will make such
Advance available to the Borrower in same day funds at the Bank's address
referred to in Section8.02.
(b) Any other provision of this Agreement to the contrary
notwithstanding, the Borrower may not select the Eurodollar Rate for any Advance
if the principal amount of such Advance is less than $100,000, unless, on the
date of such Eurodollar Rate Advance the Borrower also Continues one or more
Advances pursuant to Section 2.13 into an Advance of the same Type and having
the same Interest Period as such Eurodollar Rate Advance and the aggregate
amount of such Eurodollar Rate Advances so made and Continued on such date is
not less than $100,000.
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(c) Each notice from or on behalf of the Borrower to the Bank
requesting a Eurodollar Rate Advance shall be irrevocable and binding on the
Borrower. If any Eurodollar Rate Advance is not made as a result of any failure
to fulfill the applicable conditions to such Advance set forth in Article III on
or before the date for such Advance specified in the notice from or on behalf of
the Borrower to the Bank requesting such Advance, then the Borrower shall pay to
the Bank, upon demand by the Bank, an amount equal to the loss or expense
incurred or sustained by the Bank as a result of such failure as set forth in a
statement prepared by the Bank in good faith and in reasonable detail.
SECTION 2.03. Responsibility for Requests for Advances.
----------------------------------------
(a) The Borrower hereby authorizes the Bank to make Advances under
this Agreement upon notice given by the Borrower or upon notice given on behalf
of the Borrower by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and any
other Person designated in writing by the Borrower to the Bank from time to
time, each of whom shall at all times continue to be authorized by the Advance
to request Advances on behalf of the Borrower under this Agreement until receipt
by the Bank of written notice from the Borrower of the revocation of such
authority of any such Person. Each Advance made by the Bank upon notice given by
the Borrower or by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or any other
Person designated in writing by the Borrower to the Bank shall be conclusively
presumed to have been made to or for the benefit of the Borrower when made by
the Bank in accordance with such notice and deposited in an account in the name
of the Borrower pursuant to such notice, regardless of whether any Person
(including, but not limited to, any Person authorized to request Advances on
behalf of the Borrower) other than the Borrower also shall have authority to
withdraw funds from such account. The Borrower agrees to repay, and to pay
interest on, any Advance that is so made, deposited or credited by the Bank.
(b) The Borrower acknowledges and agrees that the making by the Bank
of Advances in response to notices given via telephone facsimile communications
is in the interest of the Borrower and that the Bank cannot effectively
determine whether a specific notice requesting an Advance and purporting to have
been made by or on behalf of the Borrower is actually authorized or authentic.
In order to induce the Bank to make Advances in response to notices given via
telephone facsimile communications, the Borrower hereby assumes all risks
regarding the validity, authenticity and due authorization of all notices
requesting Advances that are purported to be given by or on behalf of the
Borrower, whether or not the Person giving such notice has authority in fact to
request Advances on behalf of the Borrower and whether or not the requested
Advance or the application of the proceeds of such Advance constitutes an Event
of Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both. The Bank shall incur no liability to the
Borrower in acting upon any notice or other communication, whether given via
telephone
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facsimile or telex or otherwise in writing, which the Bank believes in good
faith to have been given by any Person authorized to give notices requesting
Advances on behalf of the Borrower or in otherwise acting in good faith under
this Agreement.
SECTION 2.04. Facility Fees. In consideration of the Commitment
-------------
available on the terms of this Agreement, the Borrower agrees to pay to the Bank
a facility fee equal to one tenth of one percent (0.10%) of the then outstanding
Commitment, payable on the 16th day of December in each calendar year for so
long as the Commitment is outstanding, commencing on December 16, 1994.
SECTION 2.05. Reduction and Termination of the Commitment.
-------------------------------------------
(a) The Borrower shall have the right, upon at least two
Business Days notice to the Bank, to terminate in whole or reduce in part the
unused portion of the Commitment; provided that each partial reduction shall be
in an amount of not less than $1,200,000.00.
(b) Any other provision of this Agreement to the contrary
notwithstanding, the Commitment shall terminate in whole on February 28, 1995,
if (i) the Borrower shall not have given notice of the initial Advance pursuant
to Section 2.02(a) on or before February 28, 1995, and (ii) the applicable
conditions to the initial Advance set forth in Article III shall not have been
fulfilled on or before February 28, 1995.
SECTION 2.06. Repayment. The Borrower shall repay the
---------
aggregate unpaid principal amount of all Advances on or before the
Termination Date.
SECTION 2.07. Interest.
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(a) Ordinary Interest. The Borrower shall pay interest on the
-----------------
unpaid principal amount of each Advance from the date of such Advance until such
principal amount shall be paid in full, at the following rates per annum:
(i) Eurodollar Rate Advances. During such periods as
------------------------
such Advance is a Eurodollar Rate Advance, a rate per annum equal at
all times during the Interest Period for such Advance to the Eurodollar
Rate for such Interest Period, payable monthly on the last day of each
calendar month and on the last day of such Interest Period.
(ii) Base Rate Advances. During such periods as such
------------------
Advance is a Base Rate Advance, a rate per annum equal
to all times to the Base Rate in effect from time to time
minus one percent (1.00%), payable monthly on the last day of
each calendar month and on the date such Base Rate Advance
shall be Converted or paid in full.
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(b) Default Interest. The Borrower shall pay interest on the
----------------
unpaid principal amount of each Advance that is not paid when due and on the
unpaid amount of all interest, fees and other amounts payable hereunder that is
not paid when due, payable on demand, at a rate per annum equal at all times to
(i) in the case of any amount of principal, the greater of (A) three percent
(3.00%) per annum above the rate per annum required to be paid on such Advance
immediately prior to the date on which such amount became due and (B) three
percent (3.00%) per annum above the Base Rate in effect from time to time, and
(ii) in the case of all other amounts, three percent (3.00%) per annum above the
Base Rate in effect from time to time.
(c) Interest Periods. The duration of each Interest Period
----------------
shall be (i) one, two, three or six months in the case of a Eurodollar Rate
Advance as the Borrower may, upon notice received by the Bank not later than
12:00 noon (New York City time) two Business Days prior to the first day of such
Interest Period, select; provided that:
(A) the duration of any Interest Period which commences
before the Termination Date, and would otherwise end after
such date shall end on such date; and
(B) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last
day of such Interest Period shall be extended to occur on the
next succeeding Business Day; provided that, in the case of
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any Interest Period for a Eurodollar Rate Advance, if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, then the last day
of such Interest Period shall occur on the next preceding
Business Day.
If the Borrower shall fail to select an Interest Period, the Borrower shall be
deemed to have selected the one (1) month Interest Period.
SECTION 2.08. Optional Prepayments.
--------------------
(a) Base Rate Advances. The Borrower may, upon at least two
------------------
Business Days notice to the Bank stating the proposed date and principal amount
of the prepayment, and if such notice is given the borrower shall, prepay the
outstanding principal amounts of the Base Rate Advances, in whole or in part,
plus accrued interest to the date of such prepayment on the principal amount
prepaid.
(b) Eurodollar Rate Advances. The Borrower may, upon at least
------------------------
thirty days notice to the Bank specifying the Advance to be prepaid and stating
the proposed date and principal amount of the prepayment, and if such notice is
given the Borrower shall, prepay the entire outstanding principal amount of any
Eurodollar Rate Advance specified in such notice, plus accrued interest to the
date of such prepayment on the principal amount prepaid; provided that
--------
-10-
the Borrower shall be obligated to pay the Bank in respect of such prepayment
pursuant to Section 8.04(b).
SECTION 2.09. Certain Mandatory Prepayments. Upon the death of the
-----------------------------
Guarantor or the appointment by a court of competent jurisdiction of a guardian,
conservator, committee or other similar appointee for the Borrower or Guarantor,
then, and in any such event, (a) the obligation of the Bank to make Advances
shall automatically be terminated and (b) the Advances, the Note, all interest
thereon and all other amounts payable under this Agreement shall automatically
become and be due and payable on the ninetieth day after the earlier to occur of
the date of such death or the date of such appointment, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.
SECTION 2.10. Increased Costs. If, due to either (a) the introduction
---------------
of or any change (other than any change by way of imposition or increase of
reserve requirements referred to in Section 2.11) in or in the interpretation of
any law or regulation or (b) the compliance with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to the Bank of agreeing
to make or making, funding or maintaining Eurodollar Rate Advances to the extent
not reflected in the Eurodollar Rate, then the Borrower shall from time to time,
upon demand by the bank, pay to the Bank additional amounts sufficient to
compensate the Bank for such increased cost incurred or accrued by the Bank not
more than ninety days prior to the date of such demand by the Bank. A
certificate as to the amount of such increased cost, submitted to the Borrower
by the Bank, shall be conclusive and binding for all purposes, absent manifest
error.
SECTION 2.11. Additional Interest. The Borrower shall pay to the Bank,
-------------------
so long as the Bank shall be required under regulations of the Board of
Governors of the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency liabilities (as
such term is defined in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time), additional interest on the
unpaid principal amount of each Eurodollar Rate Advance, from the date of such
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (a) the LIBO
Rate for the Interest Period for such Advance from (b) the rate obtained by
dividing such LIBO Rate by a percentage equal to 100% minus the reserve
percentage applicable during such Interest Period (or if more than one such
percentage shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve
-11-
requirement (including, but not limited to, any emergency, supplemental or other
marginal reserve requirement) for the Bank with respect to liabilities or assets
consisting of or including Eurocurrency liabilities having a term equal to such
Interest Period, payable on each date on which interest is payable on such
Advance. Such additional interest shall be determined by the Bank and notified
to the Borrower, and such determination by the Bank shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.12. Increased Capital. If the Bank determines that compliance
-----------------
with any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank and that the amount of such capital
is increased by or based upon the existence of the Bank's commitment to lend
hereunder and other commitments of this type, then, upon demand by the Bank
within ninety days after such increase in capital, the Borrower shall
immediately pay to the Bank, from time to time, as specified by such corporation
in the light of such circumstances, to the extent that the Bank reasonably
determines such increase in capital to be allocable to the existence of the
Bank's commitment to lend hereunder. A certificate as to such amounts submitted
to the Borrower by the bank shall be conclusive and binding for all purposes,
absent manifest error.
SECTION 2.13. Voluntary Continuation of Advances. The Borrower may on
----------------------------------
any Business Day, upon notice given to the Bank not later than 12:00 noon (New
York City time) on the second Business Day prior to the date of the proposed
Continuation and subject to the provisions of Sections 2.07 and 2.14, Continue a
Eurodollar Rate Advance with another Interest Period as selected pursuant to
Section 2.07(c); provided that any Continuation of any Eurodollar Rate Advance
--------
shall be made on, and only on, the last day of an Interest Period for such
Eurodollar Rate Advance; provided, further, that the Borrower may not Continue a
-------- -------
Eurodollar Rate Advance if the principal amount of the Eurodollar Rate Advance
is less than $100,000. Each notice of a Continuation pursuant to this Section
2.13 shall, within the restrictions specified above, specify (a) the date of
such Continuation, (b) the Advance to be Continued and (c) the duration of the
Interest Period for such Advance. In the event that (i) the Borrower fails to
provide the Bank with notice of Continuation on any Eurodollar Advance and (ii)
such Advance is less than $100,000, but greater than $25,000, then such Advance
will be Converted to a Base Rate Advance until the next Eurodollar Rate Advance
that, when combined with all outstanding Base Rate Advances is equal to or
greater than $100,000, is Continued at which time such Base Rate Advance will be
aggregated with such Eurodollar Rate Advance and Continued with such Eurodollar
Rate Advance.
-12-
SECTION 2.14. Illegality, Etc.
---------------
(a) Any other provision of this Agreement to the contrary
notwithstanding, if the Bank shall notify the Borrower that the introduction of,
or any change in or in the interpretation of, any law or regulation makes it
unlawful, or that any central bank or other governmental authority asserts that
it is unlawful, for the Bank to perform its obligations hereunder to make
Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, then (i) the obligation of the Bank to make Eurodollar Rate Advances
shall be suspended until the Bank shall notify the Borrower that the
circumstances causing such suspension no longer exist and (ii) the Borrower
shall forthwith prepay in full all Eurodollar Rate Advances then outstanding,
plus interest accrued thereon, unless the Borrower, within five Business Days of
notice from the Bank, Converts all Eurodollar Rate Advances then outstanding
into Base Rate Advances.
(b) If, with respect to any Eurodollar Rate Advance, the Bank
notifies the Borrower that (i) the Bank is unable to determine the Eurodollar
Rate or (ii) the Eurodollar Rate for any Interest Period for such Advance will
not adequately reflect the cost to the Bank of making, funding or maintaining
such Eurodollar Rate Advance for such Interest Period, such Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance, and the obligation of the Bank to
make Eurodollar Rate Advances shall be suspended until the Bank shall notify the
Borrower that the circumstances causing such suspension no longer exist.
(c) Within five (5) Business Days after the Bank notifies the
Borrower that the reason for the suspension of the Eurodollar Rate Advances has
ended, the Borrower shall Convert all of the Base Rate Advances to Eurodollar
Rate Advances pursuant to the terms of Section 2.02 as if such Conversion were a
new Eurodollar Rate Advance.
SECTION 2.15. Payments and Computations.
-------------------------
(a) The Borrower shall make each payment under any Loan Document
not later than 12:00 noon (New York city time) on the day when due in United
States dollars to the Bank at its address referred to in Section 8.02 in same
day funds.
(b) The Borrower hereby authorizes the Bank, if and to the extent
payment is not made when due under any Loan Document, to charge from time to
time against any or all of the Borrower's accounts with the Bank any amount so
due.
(c) All computations of interest shall be made by the Bank on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day, but excluding the last day) occurring in the period
for which such interest or commitment fees are payable. Each determination by
the Bank of an
-13-
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(d) Whenever any payment under any Loan Document shall be stated
to be due on a day other than a Business Day, and such extension of time shall
in such case be included in the computation of payment of interest or commitment
fee, as the case may be; provided that if such extension would cause payment of
interest on or principal of any Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
SECTION 2.16. Taxes.
-----
(a) Any and all payments by the Borrower hereunder or under the
Note shall be made, in accordance with Section 2.15, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Bank, net income taxes that are imposed by the
United States and franchise taxes and net income taxes that are imposed on the
Bank by the state or foreign jurisdiction under the laws of which the Bank is
organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable to the Bank hereunder or
under the Note, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including, but not limited to,
deductions applicable to additional sums payable under this Section 2.16) the
Bank receives an amount equal to the sum the Bank would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Note or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or the
Note (all such taxes, charges and levies being hereinafter referred to as "Other
Taxes").
(c) The Borrower shall indemnify the Bank for the full amount of
Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 2.16, paid by the Bank and
any liability (including, but not limited to, penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within thirty days from the date the Bank makes
written demand therefor.
-14-
(d) Within thirty days after the date of any payment of Taxes,
the Borrower shall furnish to the Bank, at the Bank's address referred to in
Section 8.02, the original receipt of payment thereof or a certified copy of
such receipt. In the case of any payment hereunder or under the Note by the
Borrower through an account or branch outside the United States or on behalf of
the Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Bank, at such address of
the Bank, an opinion of counsel acceptable to the Bank stating that such payment
is exempt from Taxes. For the purposes of this subsection (d) and subsection (a)
of this Section 2.16, the terms "United States" and "United States person" shall
have the respective meanings specified in section 7701 of the Internal Revenue
Code.
(e) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.16 shall survive the payment in full of principal and interest
hereunder and under the Note.
SECTION 2.17. Hedge Agreements. It is expressly contemplated that the
----------------
Bank may, in its sole discretion, enter into Hedge Agreements with the Borrower
from time to time and that under any such Hedge Agreements the Bank shall be
entitled to any and all benefits of which the Bank is entitled under the Loan
Documents.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Initial Advance. The obligation of
--------------------------------------
the Bank to make its initial Advance is subject to the condition precedent that
the Bank shall have received on or before the day of such Advance the following,
each dated such day, in form and substance satisfactory to the Bank:
(a) The Note duly executed by the Borrower;
(b) The Pledge Agreement duly executed by the Borrower,
together with:
(i) acknowledgement copies or stamped receipt copies
of proper financing statements, duly filed under the Uniform Commercial
Code of all jurisdictions that the Bank may deem necessary or desirable
in order to perfect the security interests created by the Pledge
Agreement;
(ii) completed requests for information, listing the
financing statements referred to in Section 3.01(b)(i) and all
other effective financing statements filed in the jurisdictions
referred to in Section 3.01(b)(i) that name the Borrower as debtor,
together with copies of such other
-15-
financing statements (none of which shall cover the collateral
purported to be covered by the Pledge Agreement);
(iii) certificates, representing the Pledged Shares
accompanied by the following:
(A) a letter from each issuer of Pledged
Shares (singularly, an "Issuer Letter") directing the transfer
agent to remove the legend on such Pledged Shares;
(B) a letter from the transfer agent for
each issuer of such Pledged Shares stating that such transfer
agent will
(i) remove any restrictive legend on such
Pledged Shares upon delivery of the
certificates representing such issuer's
Pledged Shares and the related Issuer Letter;
(ii) hold such Pledged Shares as agent
for the Bank while removing the legends; and
(iii) deliver the reissued Pledged Shares
to the Bank after removal of any such
restrictive legend; and
(C) undated stock powers executed in blank
or registered in the name of the Bank or such nominee or
nominees as the Bank shall specify; and
(iv) evidence that all other actions (including, but
not limited to, the giving of any and all notices) necessary or, in the
opinion of the Bank, desirable to perfect and protect the security
interests created by the Pledge Agreement have been taken;
(c) Federal Reserve Form U-1 provided for in Regulation U
issued by the Board of Governors of the Federal Reserve System, the statements
made in which shall be such, in the opinion of the Bank, as to permit the
transactions contemplated hereby in accordance with said Regulation U;
(d) Certified copies of all documents evidencing
necessary governmental approvals, if any, with respect to each Loan
Document;
(e) The balance sheet of the Guarantor as at June 30, 1994 in
reasonable detail and day certified by the Guarantor as being accurate and
fairly presenting the financial condition of the Guarantor as at such date and
for such period;
(f) The balance sheet of the Borrower as at June 30,
1994 in reasonable detail and duly certified by the Trustee as
-16-
being accurate and fairly presenting the financial condition of the
Trust as at such date and for such period;
(g) A certificate of the Borrower certifying the name and true
signature of the Person authorized to request Advances on behalf of the Borrower
pursuant to Section 2.03;
(h) A favorable written opinion of the law firm of ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P., counsel for the Borrower, substantially in the form of Exhibit
C, and as to such other matters as the Bank may reasonably request;
(i) The Guaranty Agreement duly executed by the Guarantor;
(j) Receipt by the Bank of certificate (the "Partnership
Certificate") from the Borrower certifying (i) that a true and complete copy of
the Partnership Agreement has been provided to the Bank, and (ii) the general
partner has all necessary power and authority to act on behalf of the Borrower;
and
(k) Receipt and review of any such documentation as the
Bank may reasonably request concerning the Collateral.
SECTION 3.02. Conditions Precedent to All Advances. The obligation of
------------------------------------
the Bank to make each Advance (including the initial Advance) shall be subject
to the further conditions precedent that on the date of such Advance:
(a) The following statements shall be true (and each of the
giving of the applicable notice requesting such Advance and the acceptance by
the Borrower of the proceeds of such Advance shall constitute a representation
and warranty by the Borrower that on the date of such Advance such statements
are true):
(i) The representations and warranties contained in
Section 4.01 of this Agreement, Section 4 of the Pledge Agreement and
the Partnership Certificate are correct on and as of the date of such
Advance, before and after giving effect to such Advance and to the
application of the proceeds therefrom, as though made on and as of such
date;
(ii) The balance sheet of the Borrower then most recently
furnished to the Bank pursuant to Section 5.01(d)(i) is accurate and
fairly presents the financial condition of the Borrower as at the date
of such balance sheet, and since the date of such balance sheet there
has been no material adverse change in such condition;
(iii) The balance sheet of the Guarantor then most
recently furnished to the Bank pursuant to the Guaranty Agreement is
accurate and fairly presents the financial condition of the Guarantor
as at the date of such balance
-17-
sheet, and since the date of such balance sheet there has been
no material adverse change in such condition;
(iv) No event has occurred and is continuing, or
would result from such Advance or from the application of the proceeds
therefrom, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both;
(v) The ratio of the aggregate current market value
of the Pledged Shares to the aggregate unpaid principal amount of the
Advances (including the amount of the requested Advance) is not less
than 2.0 to 1.0; and
(b) The Bank shall have received such other approvals,
opinions or documents as the Bank may reasonably request, including, without
limitation, additional Federal Reserve Form U-1 provided for in Regulation U
issued by the Board of Governors of the Federal Reserve System, the statements
made in which shall be such, in the opinion of the Bank, as to permit the
transactions contemplated hereby in accordance with said Regulation U to the
extent required in connection with the pledge of additional shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
----------------------------------------------
The Borrower represents and warrants as follows:
(a) The General Partner has the legal capacity to execute and
deliver this Agreement and the other Loan Documents on behalf of the Borrower
and to execute, deliver and perform the Loan Documents to which the Guarantor is
or will be a party.
(b) The execution, delivery and performance by the Borrower of
each Loan Document to which the Borrower is or will be a party do not and will
not (i) contravene any law or any contractual restriction or fiduciary duty
binding on or affecting the Borrower or General Partner or (ii) result in or
require the creation of any lien, security interest or other charge or
encumbrance (other than pursuant to the Loan Documents) upon or with respect to
any of the Trust's properties.
(c) No consent, authorization or approval or other action by,
and no notice to or filing or registration with, any governmental authority or
regulatory body or any other Person is required for the due execution, delivery
and performance by the Borrower of any Loan Document to which the Borrower is or
will be a party.
(d) This Agreement is, and each other Loan Document to which
the Borrower will be a party when delivered hereunder will be, legal, valid and
binding obligations of the Borrower,
-18-
enforceable against the Borrower in accordance with their respective terms.
(e) The balance sheet of the Borrower as at June 30, 1994, a
copy of which certified by the Borrower has been furnished to the Bank, is
accurate and fairly presents the financial condition of the Trust as at such
date, and since June 30, 1994, there has been no material adverse change in such
condition.
(h) There is no pending or threatened action, suit or
proceeding affecting the Borrower or the General Partner before any court, any
arbitrator or mediator or any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which may materially
adversely affect the financial condition or operations of the Borrower or the
General Partner or which purports to affect the legality, validity or
enforceability of this Agreement, any other Loan Document to which the Borrower
is or will be a party, or the Trust Agreement.
(i) No proceeds of any Advance will be used to acquire any
equity security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 if the result of such acquisition is to effect a
change in control of the issuer thereof.
(j) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal Reserve
System).
(k) The Borrower is not a party to any indenture, loan or
credit agreement, lease or other instrument or agreement which could have a
material adverse effect on the business, properties, assets, operations or
condition, financial or otherwise, of the Borrower or on the ability of the
Borrower to perform the Borrower's obligations under this Agreement or any other
Loan Document.
(l) The Borrower has provided the Bank with accurate and
complete copies of all indentures, loan or credit agreements, leases or other
instruments or agreements of any kind which have been submitted to the Bank
pursuant to this Agreement.
(m) All tax returns (federal, state and local) required to be
filed on behalf of the Borrower have been filed and all taxes shown on such tax
returns to be due, including, but not limited to, interest and penalties have
been paid.
(n) The address specified for the Borrower in Section 8.02 is
a mailing address of the Borrower.
-19-
ARTICLE V
CERTAIN COVENANTS OF THE BORROWER
SECTION 5.01. Certain Affirmative Covenants. So long as the Note shall
-----------------------------
remain unpaid in whole or in part or the Bank shall have any Commitment
hereunder, the Borrower shall, unless the Bank shall otherwise consent in
writing;
(a) Use of Advances. Use and apply the proceeds of the Advances
---------------
for commercial, business or investment purposes including the refinancing of
existing margin debt and other lawful purposes.
(b) Compliance with Laws, Etc. Comply, and cause the Trust to
-------------------------
comply, in all material respects with all applicable laws, rules, regulations
and orders.
(c) Payment of Taxes, Etc. Without limiting the generality of
---------------------
Section 5.01(b), pay and discharge before the same shall become delinquent, (i)
all taxes, assessments and governmental charges or levies imposed upon the
Borrower or upon any property of the Borrower and (ii) all lawful claims which,
if unpaid, might by law become a lien upon any property of the Borrower or the
Trust; provided that the Borrower shall not be required to pay or discharge any
such tax, assessment, charge or claim which is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being maintained
in accordance with generally accepted accounting principles consistently
applied.
(d) Reporting Requirements. Furnish to the Bank:
----------------------
(i) as soon as available and in any event within sixty days
after the last day of the most recently ended fiscal quarter, a balance
sheet of the Trust as at the end of such fiscal quarter, including a
listing of all contingent liabilities of the Trust, in reasonable
detail and in form satisfactory to the Bank and certified by the
Borrower as being accurate and fairly presenting the financial
condition of the Trust as at the end of such fiscal quarter, and
accompanied by (A) a certificate of the Borrower stating that no Event
of Default or other event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default has occurred and
is continuing or, if an Event of Default or any such other event has
occurred and is continuing, a statement as to the nature thereof and
the action which the Borrower has taken and proposes to take with
respect thereto, and (B) a certificate of compliance of the Borrower
and accompanying schedule in form and detail satisfactory to the Bank
of the computations used by the Borrower in determining compliance with
the covenants set forth in Section 5.02(b) and Section 5.02(c);
-20-
(ii) as soon as available and in any event within sixty days
after the end of each fiscal quarter of Michaels and Sterling, the 1OQ
report of Michaels and Sterling, respectively;
(iii) as soon as possible and in any event within five days
after the occurrence of each Event of Default and each other event
which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default, continuing on the date of such
statement, a statement of the Borrower setting forth details of such
Event of Default or such other event and the action which the Borrower
has taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of
all Forms 3 (Initial Statement of Beneficial Ownership of Securities),
Forms 4 (Statement of Changes of Beneficial Ownership of Securities)
and Forms 5 which the Borrower files with the Securities and Exchange
Commission (or any governmental authority or regulatory body that may
be substituted therefor) by reason or in respect of any securities of,
or any relationship of the Borrower to, any issuer of any securities
constituting any of the Collateral;
(v) promptly after the sending or filing thereof, copies of
all reports, filings and registration statements which the Borrower
files with the Securities and Exchange Commission (or any governmental
authority or regulatory body that may be substituted therefor) or any
national securities exchange;
(vi) promptly after the earlier of the commencement
thereof or receipt by the Borrower of notice or knowledge thereof,
notice of any pending or threatened action, suit, proceeding or
investigation affecting the Borrower or the Trust by or before any
court, any arbitrator or mediator or any governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, or of any claim for the payment of money asserted against the
Borrower or the Trust which seeks or involves an amount exceeding
$2,000,000.00 or which may materially adversely affect the properties
assets, operations or condition, financial or otherwise, of the
Borrower or the Trust;
(vii) prompt notice of any material adverse change in the
business, properties, assets, operations or condition, financial or
otherwise, of the Borrower since the dates of the financial statements
of the Trust then most recently furnished to the Bank pursuant to
Section 5.01(d)(i);
(viii) in the event any securities of any class of any
issuer that are included in the Collateral at any time constitute ten
percent or more of the issued and outstanding
-21-
securities of such issuer and such class, prompt notice of such event;
and
(ix) such other information respecting the business,
properties, assets, operations or condition, financial or otherwise, of
the Borrower or any Subsidiary of the Borrower as the Bank may from
time to time reasonably request.
SECTION 5.02. Certain Negative Covenants. So long as the Note shall
--------------------------
remain unpaid in whole or in part or the Bank shall have any Commitment
hereunder, the Borrower will not, without the written consent of the Bank:
(a) Liens, Etc. Create or suffer to exist any lien, security
----------
interest or other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of the Collateral, whether now owned or
hereafter acquired, other than the security interest created by the Pledge
Agreement and any other lien or security interest created in favor of the Bank
pursuant to Section 6.01.
(b) Liquidity. Permit the current market value of the
---------
unpledged Cash and Cash Equivalents and/or Readily Marketable Securities
(excluding any securities issued by Michaels or Sterling), but including
interests in Maverick of the Borrower and the Guarantor, collectively, to be
less than fifteen percent (15%) of the Commitment for a period of ten (10)
consecutive Business Days; provided, that it is expressly contemplated that
within such period of ten (10) consecutive Business Days the Borrower shall have
the ability to increase such current market value of the unpledged Cash and Cash
Equivalents and/or Readily Marketable Securities (excluding any securities
issued by Michaels or Sterling), but including interests in Maverick in
accordance with the provisions of subsection (ii) of Section 6.01.
(c) Balancing. Permit the shares of either Michaels or
---------
Sterling pledged by the Borrower to the Bank to represent more than sixty
percent (60%) of the total market value of Collateral for a period of ten (10)
consecutive Business Days; provided that it is expressly contemplated that
--------
within such period of ten (10) consecutive Business Days the Borrower shall have
the ability to increase the number of Michaels or Sterling shares pledged by the
Borrower to the Bank in accordance with the provisions of subsection (ii) of
Section 6.01 in order to prevent the shares of either Michaels or Sterling
pledged by the Borrower to the Bank to represent more than sixty percent (60%)
of the total market value of Collateral.
ARTICLE VI
CERTAIN OTHER COVENANTS
SECTION 6.01. Collateral to Loan Coverage. If, at any time
---------------------------
prior to payment in full in cash of all obligations of the Borrower now or
hereafter existing under this Agreement, the Note and the
-22-
other Loan Documents (whether for principal, interest, fees, expenses or
otherwise), or at any other time when the Bank shall have any Commitment under
this Agreement, the ratio of the aggregate current market value of the
Collateral to the aggregate unpaid principal amount of the Advances shall be
less than 1.66 to 1.0 but equal to or greater than 1.50 to 1.0, then, within two
Business Days of such event, the Borrower
(i) shall prepay the outstanding principal amounts of
the Advances, in whole or in part, plus accrued interest to the date of
such prepayment on the principal amount prepaid, and/or
(ii) shall (i) pledge, assign and deliver to the Bank
cash for deposit in one or more of the Collateral Accounts and/or
pledge and assign to the Bank, and grant to the Bank security interests
in, such additional shares of stock owned by the Borrower as shall be
acceptable to the Bank in its sole discretion, all as security for the
payment of all obligations of the Borrower now or hereafter existing
under this Agreement, the Note and the other Loan Documents (whether
for principal, interest, fees, expenses or otherwise), (ii) duly
execute and deliver to the Bank such pledge and security agreements
(including, but not limited to, amendments to the Pledge Agreement), as
specified by and in form and substance satisfactory to the Bank,
securing the payment of all obligations of the Borrower now or
hereafter existing under this Agreement, the Note and the other Loan
Documents (whether for principal, interest, fees, expenses or
otherwise) and constituting pledges and assignments of and security
interests in such cash as shall be pledged and delivered by the
Borrower to the Bank for deposit in one or more of the Collateral
Accounts and in such additional shares of stock as shall be acceptable
to the Bank in its sole discretion, (iii) take whatever action
(including, but not limited to, the delivery to the Bank of original
instruments, stock certificates and stock powers, the filing of Uniform
Commercial Code financing statements and amendments to financing
statements and the giving of notices and endorsements) may be necessary
or advisable in the opinion of the Bank to vest in the Bank (or in any
representative or nominee of the Bank designated by the Bank,
including, but not limited to, any clearing corporation or custodian
bank as those terms are defined in the Uniform Commercial Code in
effect in the State of New York) valid, subsisting and perfected liens
on and security interests in the properties purported to be subject to
the pledge and security agreements delivered pursuant to this Section
6.01, enforceable against all third parties in accordance with their
respective terms, (iv) deliver to the Bank a signed favorable opinion,
addressed to the Bank, of counsel for the Borrower acceptable to the
Bank as to the matters contained in clauses (i), (ii) and (iii), as to
such pledge and security agreements being legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in
accordance with their
-23-
respective terms and as to such other matters as the Bank may
reasonably request, and (v) execute and deliver to the Bank any and all
further certificates, instruments and documents and take all such other
action as the Bank may deem desirable in obtaining the full benefits
of, or in preserving the security interests of, such pledge and
security agreements, so that, immediately after giving effect to such
prepayment and/or such other actions, the ratio of the aggregate
current market value of the Collateral to the aggregate unpaid
principal amount of the Advances shall be not less than 2.0 to 1.0. For
the purposes of this Section 6.01 and 7.01(j), the term "current market
value" shall have the meaning assigned to that term in Regulation U
issued by the Board of Governors of the Federal Reserve System.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following
-----------------
events (individually, an "Event of Default" and collectively,
"Events of Default") shall occur and be continuing:
(a) Any principal of, or interest on, the Note shall not
be paid on the date the same becomes due and payable or within
three Business Days thereafter; or
(b) Any representation or warranty made by the Borrower under
or in connection with any Loan Document, or any representation or warranty made
in the Control Person Statement, or any certification made by the Borrower or
the Guarantor in connection with any financial statement furnished to the Bank
under or in connection with any Loan Document, shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower or the Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in any Loan Document on
the Borrower's or the Guarantor's part to be performed or observed if such
failure shall remain unremedied for ten days after written notice thereof shall
have been given to the Borrower by the Bank; or
(d) The Borrower or the Guarantor shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
is debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower or
the Guarantor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of its or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it),
-24-
either such proceeding shall remain undismissed or unstayed for a period of
sixty days, or any of the actions sought in such proceeding (including, but not
limited to, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or the Guarantor
shall take any action to authorize any of the actions set forth above in this
Section 7.01(d); or
(e) Any judgment or order for the payment of money in excess
of $5,000,000.00 shall be rendered against the Borrower or the Guarantor and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of ten consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(f) Any lawful claims for the payment of money in an aggregate
amount exceeding $10,000,000.00 which, if unpaid, might by law become liens upon
any property of the Borrower or the Guarantor shall be asserted against the
Borrower or the Guarantor and shall not be contested by the Borrower or the
Guarantor, as the case may be, in good faith and by proper proceedings and as to
which appropriate reserves are not being maintained in accordance with generally
accepted accounting principles consistently applied; or
(g) Any material adverse change shall occur in the business,
properties, assets, operations or condition, financial or otherwise, of the
Borrower or the Guarantor; or
(h) Any provision of the Pledge Agreement, the Guaranty
Agreement or any other Loan Document after delivery thereof shall for any reason
cease to be valid and binding on the Borrower or the Guarantor, or the Borrower
or the Guarantor shall so state in writing; or
(i) The Pledge Agreement or any other Loan Document after
delivery thereof pursuant to Section 3.01 or Section 6.01 shall for any reason
(other than pursuant to the terms thereof) cease to create a valid and perfected
first priority security interest in any of the Collateral purported to be
covered thereby; or
(j) The ratio of the aggregate current market value of the
Collateral to the aggregate unpaid principal amount of the Advances shall be
less than 1.5 to 1.0; or
(k) Any of the Pledged Shares shall cease to be (i) quoted on
the Nasdaq National Market or (ii) listed or admitted to trading on the New York
Stock Exchange or the American Stock Exchange; then, and in any such event, the
Bank (A) may, by notice to the Borrower, declare the Bank's obligation to make
Advances to be terminated, whereupon the same shall forthwith terminate, and
-25-
(B) may, by notice to the Borrower, declare the Note, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that in the event of an actual or deemed entry of an order for relief
--------
with respect to the Borrower or the Guarantor under the United States Bankruptcy
Code, (1) the obligation of the Bank to make Advances shall automatically be
terminated and (2) the Advances, the Note, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement or the Note, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 8.02. Notices Etc. Except as expressly provided in Section
-----------
6.01, all notices and other communications provided for hereunder shall be in
writing (including, but not limited to, telephone facsimile communications) and
sent via certified or registered mail, return receipt requested, via telephone
facsimile, via personal delivery or via express courier or delivery service to
the Borrower or the Bank, as the case may be, at the respective addresses or
telephone facsimile numbers of the Borrower and the Bank specified below or, as
to either party, at such other address or telephone facsimile number as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section: if to the Borrower, at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, telephone
facsimile number (▇▇▇) ▇▇▇-▇▇▇▇; and if to the Bank, at One Citicorp Center, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Vice
President, telephone facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Citicorp
North America, Inc., Private Banking Division, 2100 Citicorp Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President, telephone
facsimile number (▇▇▇) ▇▇▇-▇▇▇▇. All such notices and other communications shall
be deemed given (a) when receipted for (or upon the date of attempted delivery
when delivery is refused) if sent via certified or registered mail, return
receipt requested, via (b) when received if sent via telephone facsimile
(confirmation of such receipt via telephone facsimile being deemed receipt).
Without limiting the generality of the preceding sentence, notices to the Bank
pursuant to the provisions
-26-
of Article II shall in no event be effective until received by the
Bank.
SECTION 8.03. No Waiver; Remedies. No failure on the part of the Bank
-------------------
to exercise, and no delay in exercising, any right under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies provided in the Loan Documents are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes.
-------------------------
(a) The Borrower agrees to pay on demand all costs and
expenses in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents and the other
documents to be delivered under the Loan Documents, including, but not limited
to, the reasonable fees and out-of-pocket expenses of counsel for the Bank with
respect thereto and with respect to advising the Bank as to the Bank's rights
and responsibilities under the Loan Documents. The Borrower further agrees to
pay on demand all costs and expenses, if any (including, but not limited to,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of the Loan
Documents, including, but not limited to, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 8.04(a).
(b) If any payment of principal of any Eurodollar Rate Advance
is made other than on the last day of the Interest Period for such Advance, as a
result of any payment pursuant to Section 2.08(b), Section 2.09, Section 2.14 or
Section 6.01 or as a result of acceleration of the maturity of the Advances and
the Note pursuant to Section 7.01 or for any other reason, the Borrower shall
pay to the Bank, upon demand by the Bank, an amount equal to the loss or expense
incurred or sustained by the Bank as a result of such payment as set forth in a
statement prepared by the Bank in good faith and in reasonable detail.
SECTION 8.05. Right of Set-Off. Upon the occurrence and during the
----------------
continuance of any Event of Default the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Document,
whether or not the Bank shall have made any demand under such Loan Document and
although such obligations may be unmatured. The Bank agrees promptly to notify
the Borrower after any such set-off and application; provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this Section are in
-27-
addition to other rights and remedies (including, but not limited to, other
rights of set-off) which the Bank may have.
SECTION 8.06. Binding Effect.
--------------
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Bank, the respective successors and assigns of the Borrower
and the Bank, and the heirs, executors, administrators and legal representatives
of the Borrower, except that the Borrower shall not have the right to assign the
Borrower's rights hereunder or any interest herein without the prior written
consent of the Bank, which consent may be withheld for no reason or for any
reason.
(b) The Bank, without any notice to or consent of the Borrower,
may sell participations to one or more Persons in or to all or any portion of
the Bank's rights and obligations under this Agreement, the Note and any other
Loan Document (including, but not limited to, all or any portion of the
Commitment, the Advances and the Note); provided that (i) the Bank's obligations
--------
under this Agreement (including, but not limited to, the commitment) shall
remain unchanged, (ii) the Bank shall remain solely responsible to the Borrower
for the performance of such obligations, (iii) the Bank shall remain the holder
of the Note for all purposes of this Agreement and (iv) the Borrower shall
continue to deal solely and directly with the Bank in connection with the Bank's
rights and obligations under this Agreement.
(c) The Bank, with the prior written consent of the Borrower,
which consent shall not be unreasonably withheld, may assign, syndicate or
otherwise transfer all or any portion of the Bank's rights and obligations under
this Agreement, the Note and any other Loan Document (including, but not limited
to, all or any portion of the Commitment, the Advances and the Note) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Bank in this Agreement or otherwise.
(d) Any other provision of this Agreement to the contrary
notwithstanding, the Bank may at any time create a security interest in all or
any portion of the Bank's rights under this Agreement (including, but not
limited to, the Advances owing to the Bank and the Note held by the Bank) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Board
of Governors of the Federal Reserve System.
(e) The Bank will use reasonable good faith efforts to hold in
confidence any Confidential Information, except to the extent that any such
Confidential Information can be shown to have been (i) previously known on a
nonconfidential basis by the Bank, (ii) in the public domain through no fault of
the Bank or (iii) later lawfully acquired by the Bank from sources other than
the Borrower; provided that the Bank may disclose Confidential Information (A)
--------
to the Bank's directors, officers, employees,
-28-
accountants, attorneys, consultants, advisors, agents and other representatives
who are or reasonably are expected to be or become engaged in evaluating,
approving, structuring, negotiating, documenting or administering the Loan
Documents or the transactions contemplated by the Loan Documents, (B) to the
Bank's attorneys and independent auditors, (C) to any actual or prospective
participant, assignee or transferee under Section 8.06(b), Section 8.06(c) or
Section 8.06(d) so long as such Persons are informed by the Bank of the
confidential nature of such Confidential Information and are directed by the
Bank to other Person if such disclosure is reasonably incidental to the
administration of the Loan Documents or any of the transactions contemplated by
the Loan Documents, (E) upon any order of directive of, or any request by, any
court, arbitrator, mediator or governmental department, commission, board,
bureau, agency or instrumentality, (F) in connection with any action, suit or
proceeding to which the Bank or any affiliate of the Bank is a party, and (G) to
the extent reasonably required in connection with the exercise of any right or
remedy under this Agreement or another Loan Document. Without limiting the
preceding sentence, the Bank may disclose to any actual or prospective
participant, assignee or transferee under Section 8.06(b), Section 8.06(c) or
Section 8.06(d) any financial statements, documents and other information that
the Bank now or in the future has relating to the Advances, the Loan Documents,
the Collateral, the Borrower, any Subsidiary of the Borrower or the business,
properties, assets, operations or condition, financial or otherwise, of the
Borrower, or any Subsidiary of the Borrower.
SECTION 8.07. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 8.08. Interest. It is the intention of the parties hereto to
--------
conform strictly to the usury laws applicable to the Bank. Accordingly, if the
transactions contemplated hereby or by the Loan Documents would be usurious
under applicable law (including, without limitation, the laws of the United
States of America and the State of New York), then, in that event,
notwithstanding anything to the contrary herein or in the Loan Documents, it is
agreed as follows: (i) the aggregate of all consideration which constitutes
interest applicable to the Bank that is contracted for, taken, reserved, charged
or received under this Agreement or any Loan Document shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be credited by the Bank on the principal amount outstanding under
the Note, or, if no principal amount is outstanding under the Note, refunded to
the Borrower; and (ii) in the event that the maturity of the principal is
accelerated, then such consideration that constitutes interest under any law
that is applicable to the Bank may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or the Loan Documents or otherwise shall be cancelled
automatically as of the date of such
-29-
acceleration or prepayment and, if theretofore paid, shall be credited by the
Bank on the principal amount outstanding or, if the principal amount shall have
been paid in full, refunded by the Bank to the Borrower.
SECTION 8.09. Governing Law; Consent to Jurisdiction. This Agreement
--------------------------------------
and the Note shall be governed by, and construed in accordance with, the laws of
the State of New York. The Borrower hereby submits to the exclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any court of the State of New York sitting in New York City for purposes of all
legal proceedings arising out of or relating to this Agreement, the Note, any
other Loan Document or any transactions contemplated hereby or thereby. The
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which the Borrower may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Notwithstanding the preceding two sentences, the Bank retains the right to bring
any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement, the Note, any
other Loan Document or any of the transactions contemplated hereby or thereby in
any court that has jurisdiction over the parties and subject matter.
SECTION 8.10. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY
--------------------
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THIS AGREEMENT, THE NOTE, THE PLEDGE AGREEMENT, ANY OTHER
LOAN DOCUMENT, THE ADVANCES OR THE ACTIONS OF THE BANK IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the Borrower and the Bank have executed this
Agreement as of the date first above written.
(Borrower)
______________,
By: ____________________________________
________, its ____________________
(Bank)
CITIBANK N.A.
-30-
By:_______________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
-31-
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "First Amendment") dated as
---------------
of September 30, 1996, is among _____________________, a _____________
________________ (the "Borrower"), acting through _____________________, its
--------
_____________________, and CITIBANK, N.A., a national banking association (the
"Bank").
-----
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower and the Bank entered into that certain Credit
Agreement dated as of December 16, 1994 (the "Credit Agreement") pursuant to
----------------
which the Bank agreed to made certain Advances to the Borrower; and
WHEREAS, the Borrower has requested and the Bank has agreed to amend
certain provisions of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms which are defined in the
-------------
Credit Agreement, but which are not defined in this First Amendment, shall have
the same meanings as defined in the Credit Agreement. Unless otherwise
indicated, all section references in this First Amendment refer to the Credit
Agreement.
Section 2. Amendments to the Pledge Agreement.
----------------------------------
2.1 Section 1.01 is amended to add the following:
"Sterling Commerce" means Sterling Commerce, Inc., a corporation
duly formed and validly existing under the laws of the State of
Delaware.
2.3 Section 1.01 of the Credit Agreement is hereby amended by
deleting the defined term "Control Person Statement" in its entirety and
inserting the following:
"Control Person Statement" means the Control Person Statement,
dated as of September 30, 1996, furnished by or on behalf of the
Borrower to the Bank.
2.4 Section 3.02 is amended to add the following:
(c) That in no event shall the aggregate of all advances
made by the Bank to the Borrower:
i. exceed ____________________ where
such advances are made against
Collateral consisting of Sterling
stock or Sterling Commerce stock;
and
ii. exceed ____________________ where
such advances are made against
Collateral consisting of Michaels
stock.
(d) That in no event shall the aggregate of all of
the stock of Sterling Commerce that is pledged to the Bank
by the Borrower exceed ___________ % of the shares then
outstanding.
2.5 Section 5.01(d)(ii) is restated in its entirety to read as
follows:
"As soon as available and in any event within sixty (60) days
after the end of each fiscal quarter of Michaels, Sterling and
Sterling Commerce, the 10-Q Report of Michaels, Sterling and
Sterling Commerce, respectively;"
2.6 Sections 5.02(b) is restated in its entirety to read as follows:
(b) Liquidity. Permit the current market value of the
---------
unpledged Cash and Cash Equivalents and/or Readily Marketable
Securities (excluding any securities issued by Michaels, Sterling
or Sterling Commerce), but including interests in Maverick of the
Borrower and the Guarantor, collectively, to be less than fifteen
percent (15%) of the Commitment for a period of ten (10)
consecutive Business Days; provided, that it is expressly
contemplated that within such period of ten (10) consecutive
Business Days the Borrower shall have the ability to increase
such current market value of the unpledged Cash and Cash
Equivalents and/or Readily Marketable Securities (excluding any
securities issued by Michaels, Sterling or Sterling Commerce),
but including interests in Maverick in accordance with the
provisions of subsection (ii) of Section 6.01.
2.7 Section 5.02(c) is restated in its entirety to read as follows:
(c) Collateral Limits. Permit the aggregate of the shares
-----------------
pledged by the Borrower as Collateral to the Bank to exceed:
(i) _____ % of Michaels' outstanding stock;
-2-
(ii) ____ % of Sterling's outstanding stock; or
(iii) ____ % of Sterling Commerce's outstanding stock.
2.8 Section 6.01 is restated in its entirety to read as follows:
Section 6.01. Collateral to Loan Coverage. (a) If, at any
---------------------------
time prior to payment in full in cash of all obligations of the
Borrower now or hereafter existing under this Agreement, the Note
and the other Loan Documents (whether for principal, interest,
fees, expenses or otherwise), or at any other time when the Bank
shall have any Commitment under this Agreement, the ratio of the
aggregate current market value of the Collateral to the aggregate
unpaid principal amount of the Advances shall be less than 1.66
to 1.0 but equal to or greater than 1.50 to 1.0, then, within two
Business Days of such event, the Borrower
(i) shall prepay the outstanding principal amounts of the
Advances, in whole or in part, plus accrued interest to the date
of such prepayment on the principal amount prepaid, and/or
(ii) shall (i) pledge, assign and deliver to the Bank cash
for deposit in one or more of the Collateral Accounts and/or
pledge and assign to the Bank, and grant to the Bank security
interests in, such additional shares of stock owned by the
Borrower as shall be acceptable to the Bank in its sole
discretion, all as security for the payment of all obligations of
the Borrower now or hereafter existing under this Agreement, the
Note and the other Loan Documents (whether for principal,
interest, fees, expenses or otherwise), (ii) duly execute and
deliver to the Bank such pledge and security agreements
(including, but not limited to, amendments to the Pledge
Agreement), as specified by and in form and substance
satisfactory to the Bank, securing the payment of all obligations
of the Borrower now or hereafter existing under this Agreement,
the Note and the other Loan Documents (whether for principal,
interest, fees, expenses or otherwise) and constituting pledges
and assignments of and security interests in such cash as shall
be pledged and delivered by the Borrower to the Bank for deposit
in one or more of the Collateral Accounts and in such additional
shares of stock as shall be acceptable to the Bank in its sole
discretion, (iii) take whatever action (including, but not
limited to, the delivery to the Bank of original instruments,
-3-
stock certificates and stock powers, the filing of Uniform
Commercial Code financing statements and amendments to financing
statements and the giving of notices and endorsements) may be
necessary or advisable in the opinion of the Bank to vest in the
Bank (or in any representative or nominee of the Bank designated
by the Bank, including, but not limited to, any clearing
corporation or custodian bank as those terms are defined in the
Uniform Commercial Code in effect in the State of New York)
valid, subsisting and perfected liens on and security interests
in the properties purported to be subject to the pledge and
security agreements delivered pursuant to this Section 6.01,
enforceable against all third parties in accordance with their
respective terms, (iv) deliver to the Bank a signed favorable
opinion, addressed to the Bank, of counsel for the Borrower
acceptable to the Bank as to the matters contained in clauses
(i), (ii) and (iii), as to such pledge and security agreements
being legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their
respective terms and as to such other matters as the Bank may
reasonably request, and (v) execute and deliver to the Bank any
and all further certificates, instruments and documents and take
all such other action as the Bank may deem desirable in obtaining
the full benefits of, or in preserving the security interests of,
such pledge and security agreements,
so that, immediately after giving effect to such prepayment
and/or such other actions, the ratio of the aggregate current
market value of the Collateral to the aggregate unpaid principal
amount of the Advances shall be not less than 2.0 to 1.0. For
the purposes of this Section 6.01 and 7.01(j), the term "current
market value" shall have the meaning assigned to that term in
Regulation U issued by the Board of Governors of the Federal
Reserve System, except as the same may be adjusted by 6.01(b)
below.
(b) For purposes of calculating the value of the Collateral for
Section 6.01(a) above:
i. the value of the Michaels stock shall be excluded for
such period of time as the share price of Michaels
stock is below $7.50 per share;
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ii. the value of the Sterling stock shall be excluded for
such period of time as the share price of Sterling
stock is below $10.00 per share; and
iii. the value of the Sterling Commerce stock shall be
excluded for such period of time as the share price of
Sterling Commerce stock is below $10.00 per share.
2.9 Section 7.01 is amended to add the following after subparagraph (k) :
or (l) The Borrower fails to execute and deliver any of the
following documents:
i. The Second Amendment to Pledge Agreement;
ii. Federal Reserve Form U-1 relating to the pledged shares
described on Schedule I of the Second Amendment to
Pledge Agreement; and
iii. The stock certificates evidencing the pledged shares
(if certificated) as further described on Schedule I of
the Second Amendment to Pledge Agreement, or otherwise
cause perfection of the Bank's first and prior security
interest in the pledged shares in the event that any of
such pledged shares are uncertificated; and
iv. The Financing Statement relating to the Collateral; and
v. (Within 30 days after the date of the First Amendment)
a favorable written opinion of the law firm of ▇▇▇▇▇,
Day, ▇▇▇▇▇▇ & ▇▇▇▇▇.
Section 3. Additional Conditions Precedent to the Advances. The
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obligations of the Bank to make Advances after the date hereof shall be subject
to the following conditions precedent:
(a) The Bank shall have received multiple counterparts, as requested,
of this First Amendment, executed and delivered by a duly authorized
representative of the Borrower.
(b) No Event of Default as defined in the Credit Agreement shall have
occurred and be continuing as of the date of this First Amendment.
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(c) The Bank shall have received within 30 days of the date hereof, a
favorable written opinion of the law firm of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ as
to such matters as the Bank may reasonably request.
Section 4. Representations and Warranties. The Borrower hereby affirms
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that as of the date of execution and delivery of this First Amendment, except as
affected by the transactions contemplated in this First Amendment, all of the
representations and warranties contained in the Credit Agreement are true and
correct in all material respects as though made on and as of the date hereof and
no Event of Default shall have occurred and be continuing.
Section 5. Effectiveness. Upon the execution hereof by the Borrower and
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the Bank, this First Amendment shall be effective as of the date first written
above.
Section 6. Reference to and Effect on Credit Agreement.
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(a) On or after the date first written above, each reference in the
Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import, and each reference to the Credit Agreement in any
certificate or other document or instrument delivered in connection
therewith, shall mean and be a reference to the Credit Agreement as amended
hereby.
(b) Except as specifically amended above, the Credit Agreement is and
shall continue to be in full force and effect and is hereby ratified and
confirmed.
Section 7. Cost, Expenses and Taxes. The Seller agrees to pay on demand
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all reasonable costs and expenses of the Bank in connection with the
preparation, execution and delivery of this First Amendment and any other
documents to be delivered in connection herewith including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Bank with
respect thereto.
Section 8. Counterparts. This First Amendment may be executed by one or
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more of the parties hereto in any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 9. No Oral Agreement. THIS WRITTEN FIRST AMENDMENT AND THE OTHER
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DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 10. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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(d) IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed effective as of the date first written above.
Borrower:
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By:
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, its
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Witness: By:
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Name:
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Bank: CITIBANK, N.A.
By:
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Name:
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Title:
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