EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
BY AND AMONG
THE BOMBAY COMPANY, INC.
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS LENDERS,
AND
▇▇▇▇▇ FARGO RETAIL FINANCE, LLC
AS ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF SEPTEMBER 29, 2004
TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION...........................................1
1.1. Definitions......................................................1
1.2. Accounting Terms................................................35
1.3. Code............................................................35
1.4. Construction....................................................35
1.5. Schedules and Exhibits..........................................36
2. LOAN AND TERMS OF PAYMENT.............................................36
2.1. Revolver Advances...............................................36
2.2. Borrowing Procedures and Settlements............................38
2.3. Payments and Reductions.........................................50
2.4. Overadvances....................................................54
2.5. Interest Rates, Letter of Credit Fee, Bankers' Acceptance
Fee, Rates, Payments, and Calculations
54
2.6. Cash Management.................................................57
2.7. Crediting Payments; Float Charge................................58
2.8. Designated Account..............................................59
2.9. Maintenance of Loan Account; Statements of Obligations..........60
2.10. Fees............................................................60
2.11. Credit Instruments..............................................60
2.12. LIBOR Option....................................................66
2.13. Capital Requirements............................................69
2.14. Joint and Several Liability of U.S. Borrowers...................69
2.15. Judgment Currency; Contractual Currency.........................72
3. CONDITIONS; TERM OF AGREEMENT.........................................73
3.1. Conditions Precedent to the Initial Extension of Credit.........73
3.2. Reserved........................................................75
3.3. Conditions Precedent to all Extensions of Credit................76
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3.4. Term............................................................76
3.5. Effect of Termination...........................................76
3.6. Early Termination by Borrowers..................................77
4. CREATION OF SECURITY INTEREST.........................................77
4.1. Grant of Security Interest......................................77
4.2. Other Collateral................................................78
4.3. Collection of Accounts, General Intangibles, and Negotiable
Collateral......................................................78
4.4. Authorization to File Financing Statements......................79
4.5. Power of Attorney...............................................79
4.6. Right to Inspect; Inventories, Appraisals and Audits,
Environmental Assessments.......................................80
4.7. Control Agreements..............................................81
4.8. Grant of Non-Exclusive License..................................82
5. REPRESENTATIONS AND WARRANTIES........................................82
5.1. No Encumbrances.................................................82
5.2. Accounts........................................................83
5.3. Eligible Inventory..............................................83
5.4. Location of Inventory...........................................83
5.5. Inventory Records...............................................83
5.6. Jurisdiction of Incorporation; Location of Chief Executive
Office; FEIN; Organizational ID Number
83
5.7. Due Organization and Qualification; Subsidiaries................84
5.8. Due Authorization; No Conflict..................................85
5.9. Litigation......................................................85
5.10. No Material Adverse Change......................................86
5.11. Fraudulent Transfer.............................................86
5.12. Employee Benefits...............................................86
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5.13. Environmental Condition.........................................86
5.14. Brokerage Fees..................................................87
5.15. Intellectual Property...........................................87
5.16. Leases..........................................................87
5.17. Deposit Accounts................................................87
5.18. Complete Disclosure.............................................87
5.19. Credit Card Receipts............................................88
5.20. Holding Company and Investment Company Acts.....................88
5.21. Absence of Financing Statements, etc............................88
5.22. Certain Transactions............................................88
5.23. Regulations U and X.............................................88
5.24. Labor Relations.................................................88
5.25. Indebtedness....................................................89
5.26. Payment of Taxes................................................89
5.27. Foreign Assets Control Regulations, Etc.........................89
6. AFFIRMATIVE COVENANTS.................................................89
6.1. Accounting System...............................................90
6.2. Collateral Reporting............................................90
6.3. Financial Statements, Reports, Certificates.....................90
6.4. Returns.........................................................92
6.5. Maintenance of Properties.......................................92
6.6. Taxes...........................................................93
6.7. Insurance.......................................................93
6.8. Location of Inventory...........................................93
6.9. Compliance with Laws............................................94
6.10. Leases..........................................................94
6.11. Existence.......................................................94
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6.12. Environmental...................................................94
6.13. Disclosure Updates..............................................94
6.14. Formation of Domestic Subsidiaries..............................95
6.15. Additional Collateral Covenants.................................95
6.16. Investment Proceeds, Etc........................................95
6.17. Immediate Notice to Agent.......................................95
6.18. Inactive Subsidiaries...........................................97
6.19. Further Assurances..............................................97
7. NEGATIVE COVENANTS....................................................97
7.1. Indebtedness....................................................97
7.2. Liens...........................................................98
7.3. Restrictions on Negative Pledges and Upstream Limitation........98
7.4. Restrictions on Fundamental Changes.............................99
7.5. Disposal of Assets; Sale and Leaseback..........................99
7.6. Change Name....................................................100
7.7. [Reserved.]....................................................100
7.8. Prepayments and Amendments.....................................100
7.9. Consignments...................................................100
7.10. Distributions..................................................100
7.11. Accounting Methods.............................................101
7.12. Investments, Acquisitions......................................101
7.13. Transactions with Affiliates...................................101
7.14. Suspension.....................................................101
7.15. Use of Proceeds................................................101
7.16. Inventory with Bailees.........................................101
7.17. Store Openings and Closings....................................102
7.18. Securities Accounts............................................102
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7.19. Employee Benefit Plans.........................................102
7.20. Deposit Accounts, Credit Card Agreements, etc..................102
7.21. Minimum Availability...........................................103
8. EVENTS OF DEFAULT....................................................103
9. THE LENDER GROUP'S RIGHTS AND REMEDIES...............................105
9.1. Rights and Remedies............................................105
9.2. Securities and Deposits........................................108
9.3. Standards for Exercising Rights and Remedies...................108
9.4. Remedies Cumulative............................................109
10. TAXES AND EXPENSES...................................................109
11. WAIVERS; INDEMNIFICATION.............................................110
11.1. Demand; Protest; etc...........................................110
11.2. The Lender Group's Liability for Collateral....................110
11.3. Indemnification................................................110
12. NOTICES..............................................................111
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...........................112
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...........................113
14.1. Assignments and Participations.................................113
14.2. Successors.....................................................116
15. AMENDMENTS; WAIVERS..................................................117
15.1. Amendments and Waivers.........................................117
15.2. Replacement of Holdout Lender..................................118
15.3. No Waivers; Cumulative Remedies................................118
16. AGENT; THE LENDER GROUP..............................................118
16.1. Appointment and Authorization of Agent.........................119
16.2. Delegation of Duties...........................................119
16.3. Liability of Agent.............................................120
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16.4. Reliance by Agent..............................................120
16.5. Notice of Default or Event of Default..........................121
16.6. Credit Decision................................................121
16.7. Costs and Expenses; Indemnification............................121
16.8. Agent in Individual Capacity...................................122
16.9. Successor Agent, Canadian Agent................................122
16.10.Lender in Individual Capacity..................................123
16.11.Payments to, and Distributions by, Agent.......................124
16.12.Duties in the Case of Enforcement..............................124
16.13.Agent May File Proofs of Claim.................................124
16.14.Withholding Taxes..............................................125
16.15.Collateral Matters.............................................127
16.16.Restrictions on Actions by Lenders; Sharing of Payments........128
▇▇.▇▇.▇▇▇▇▇▇ for Perfection..........................................129
16.18.Payments by Agent to Lenders...................................129
16.19.Concerning the Collateral and Related Loan Documents...........129
16.20.Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information
129
16.21.Several Obligations; No Liability..............................131
▇▇.▇▇.▇▇▇▇▇ Representation of Agent..................................131
▇▇.▇▇.▇▇▇▇▇▇, Canada - Power of Attorney.............................131
17. GENERAL PROVISIONS...................................................132
17.1. Effectiveness..................................................132
17.2. Section Headings...............................................132
17.3. Interpretation.................................................132
17.4. Severability of Provisions.....................................132
17.5. Amendments in Writing..........................................132
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17.6. Counterparts; Telefacsimile Execution..........................132
17.7. Revival and Reinstatement of Obligations.......................132
17.8. Confidentiality................................................133
17.9. Integration....................................................133
17.10.Parent as Agent for Borrowers..................................134
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit C-2 Form of Confirmation of Increase in Commitment
Exhibit L-1 Form of LIBOR Notice
Exhibit N-1 Form of Note
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule 5.4 Locations of Inventory
Schedule 5.6 States of Organization, Chief Executive Offices, ▇▇▇▇▇
Schedule 5.7(b) Capitalization of Borrowers
Schedule 5.7(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.9 Litigation
Schedule 5.13 Environmental Matters
Schedule 5.17 Deposit Accounts and Securities Accounts
Schedule 5.19 Credit Card Receipts
Schedule 5.25 Permitted Indebtedness
Schedule 6.2 Collateral Reporting
Schedule 7.13 Borrowers' Affiliates
Schedule 7.20 Concentration Accounts, Deposit Accounts, Credit Card
Agreements
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of September 29, 2004 by and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter each individually
as, a "Lender" and collectively as, the "Lenders"), ▇▇▇▇▇ FARGO RETAIL FINANCE,
LLC, a Delaware limited liability company, as the arranger and administrative
agent for Lenders ("Agent"), and, on the other hand, THE BOMBAY COMPANY, INC.,
a Delaware corporation ("Parent"), and each of Parent's Subsidiaries identified
on the signature pages hereof (such Subsidiaries, together with Parent, are
referred to hereinafter each individually as, a "Borrower", and individually
and collectively, jointly and severally, as, the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"Acceptance Agreement" has the meaning set forth in Section
2.11(c).
"Acceptance Face Amount" means, the aggregate amount, from time to
time, of the face amount of all Bankers' Acceptances created and outstanding
hereunder.
"Accordion Activation" has the meaning set forth in
Section 2.2.A.(h).
"Accordion Activation Fee" means the fee payable by Borrowers to
the Accordion Lenders as required by Section 2.2.A.(h) and in accordance with
the terms of the Fee Letter.
"Accordion Amount" means an amount up to $50,000,000.
"Accordion Commitment" means the commitments of Accordion Lenders
to fund the Accordion Amount as set forth in Section 2.2.A.(h).
"Accordion Lenders" means after the Accordion Activation, the U.S.
Lenders identified as "Accordion Lenders" on Schedule C-1 to this Agreement
and, when used in the context of a particular Accordion Commitment, shall mean
Accordion Lenders having that Accordion Commitment.
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account.
"Accounts" means an "account" (as such term is defined in the
Code), and any and all supporting obligations in respect thereof.
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"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by a Bank
Product Provider for the account of Administrative Borrower or its
Subsidiaries.
"Adjusted Availability" means as of any date of determination, if
such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount as determined by Agent at any time, in its Permitted
Discretion equal to (x) the Aggregate Borrowing Base, minus (y) the Revolver
Usage (in each case, determined after giving effect to all sublimits and
Reserves then applicable hereunder).
"Adjusted Seasonal Period" means the period commencing on October
15 through and including November 15 of each Fiscal Year.
"Adjusted Seasonal Period Amount" means an amount equal to the
greater of (a) $15,000,000 or (b) 10% of the Cost of Eligible Inventory owned
by U.S. Borrowers.
"Adjustment Date" means the first day of the month immediately
following the month in which a Compliance Certificate is to be delivered
pursuant to Section 6.3(a)(iii).
"Administrative Borrower" has the meaning set forth in Section
17.10.
"Advances" means collectively U.S. Advances and Canadian Advances.
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of Section 7.14 hereof: (a)
any Person which owns directly or indirectly 20% or more of the Stock having
ordinary voting power for the election of directors or other members of the
governing body of a Person or 20% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed to control such Person; and (b) each director (or comparable manager) of
a Person shall be deemed to be an Affiliate of such Person.
"Agent" means WFRF, solely in its capacity as administrative agent
for Lenders hereunder, and any other holder of Obligations, and any successor
thereto.
"Agent Advances" has the meaning set forth in Section 2.2.A.(e)(i).
"Agent-Related Persons" means Agent and Canadian Agent, together
with each of their respective Affiliates, officers, directors, employees,
attorneys, and agents.
"Agent's Account" means the account identified on Schedule A-1.
"Agent's Liens" means the Liens granted by Borrowers or their
Subsidiaries to Agent under this Agreement or the other Loan Documents.
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"Aggregate Borrowing Base" means as of any date of determination,
an amount equal to the U.S. Borrowing Base plus the Canadian Borrowing Base.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Margin" means for each period commencing on an
Adjustment Date through the date immediately preceding the next Adjustment Date
(each a "Rate Adjustment Period"), the Applicable Margin shall be the
applicable margin set forth below with respect to Availability based on the
average Availability for the Fiscal Quarter ended immediately prior to the
applicable Rate Adjustment Period:
Level Performance Criteria LIBOR Bankers' Acceptances and Documentary Standby
Rate Letters of Credit Letters of
Margin Credit
I Availability greater than or equal to $50,000,000 1.00% 0.75% 1.00%
II Availability greater than or equal to $35,000,000 1.25% 0.75% 1.25%
and less than $50,000,000
III Availability greater than or equal to $25,000,000 1.50% 1.00% 1.50%
and less than $35,000,000
IV Availability less than $25,000,000 1.75% 1.25% 1.75%
Notwithstanding the foregoing, (a) for Advances outstanding, Bankers'
Acceptance and Letter of Credit fees payable during the period commencing on
the Closing Date and ending on March 31, 2005, the Applicable Margin shall be
the Applicable Margin set forth in Level II above, and (b) if Administrative
Borrower fails to deliver any Compliance Certificate pursuant to Section
6.3(a)(iii) hereof then, for the period commencing on the next Adjustment Date
to occur subsequent to such failure through the date immediately following the
date on which such Compliance Certificate is delivered, the Applicable Margin
shall be the highest Applicable Margin set forth above.
"Approved Customs Broker" means a customs broker selected by
Borrowers acceptable to Agent in its Permitted Discretion (and which may be
affiliated with one of the Lender Group) to perform port of entry services, to
accept and process Inventory imported by a U.S. Borrower and who has executed
and delivered a customs broker agreement in form and substance satisfactory to
Agent in its Permitted Discretion, duly executed and delivered to Agent by a
Customs Broker and the applicable Borrower.
3
"Approved Inventory Servicer" means RGIS Inventory Specialists,
Western Inventory Service, Washington Inventory Service and any other third
parties acceptable to Agent in its Permitted Discretion (and which may be
affiliated with one of the Lender Group.
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means the Chief Executive Officer, President,
Chief Financial Officer, Vice President - Financial Planning & Analysis,
Treasurer, Assistant Treasurer, and Secretary of Administrative Borrower or
Bombay Canada, as applicable.
"Availability" means, as of any date of determination, if such date
is a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day,
the amount as determined by Agent at any time, in its Permitted Discretion
equal to (x) the lesser of (i) the Maximum Revolver Amount and (ii) the
Aggregate Borrowing Base, minus (y) the Revolver Usage (in each case,
determined after giving effect to all sublimits and Reserves then applicable
hereunder).
"Bailee Acknowledgment" means a record in form and substance
satisfactory to Agent authenticated by any bailee, warehouseman or other third
party in possession of any Inventory acknowledging that it holds possession of
the applicable Inventory for the benefit of Agent, on behalf of the Lender
Group.
"Bank Products" means any financial accommodation extended to
Administrative Borrower or its Subsidiaries by a Bank Product Provider (other
than pursuant to this Agreement) including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services,
or (g) transactions under any Hedge Agreement.
"Bank Product Agreements" means those certain cash management
service agreements entered into from time to time by Administrative Borrower or
its Subsidiaries in connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by
Administrative Borrower or its Subsidiaries to Bank Product Provider pursuant
to or evidenced by the Bank Product Agreements and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, and including all such
amounts that a Borrower is obligated to reimburse to Agent or any member of the
Lender Group as a result of Agent or such member of the Lender Group purchasing
participations or executing indemnities or reimbursement obligations with
respect to the Bank Products provided to Administrative Borrower or its
Subsidiaries pursuant to the Bank Product Agreements.
"Bank Product Provider" means ▇▇▇▇▇ Fargo or any of its Affiliates.
4
"Bank Product Reserves" means, as of any date of determination, the
amount of reserves that Agent has established (based upon ▇▇▇▇▇ Fargo's or its
Affiliate's reasonable determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding.
"Bankers' Acceptances" means Eligible Drafts of U.S. Borrowers that
have been or are accepted from time to time pursuant to Section 2.11(c).
"Bankers' Acceptance Discount Rate" means a rate (computed on the
basis of a year of three hundred sixty (360) days for the actual days elapsed)
equal to the sum of (a) the per annum average discount rate quoted to the
Issuing Lender on the day an Eligible Draft is presented for discount by the
Issuing Lender's bankers' acceptance traders for acceptances which are of the
type described in paragraph 7 of section 13 of the Federal Reserve Act (12 USC
{section}372), as amended from time to time, or any successor statute and which
approximate the face amount and mature on the maturity date of such Eligible
Draft plus (b) the Applicable Margin.
"Bankruptcy Code" means title 11 of the United States Bankruptcy
Code, as in effect from time to time.
"Base LIBOR Rate" means for any Interest Period with respect to a
LIBOR Rate Loan, the rate of interest equal to (i) the rate determined by the
Agent at which Dollar deposits for such Interest Period are offered based on
information presented on Page 3750 of the Dow ▇▇▇▇▇ Market Service (formerly
known as the Telerate Service) as of 11:00 a.m. (London time) on the second
Business Day prior to the first day of such Interest Period, divided by (ii) a
number equal to 1.00 minus the Eurocurrency Reserve Rate. If the rate
described above does not appear on the Dow ▇▇▇▇▇ Market Service on any
applicable interest determination date, the LIBOR Rate shall be the rate
(rounded upward, if necessary, to the nearest one hundred-thousandth of a
percentage point), determined on the basis of the offered rates for deposits in
Dollars for a period of time comparable to such LIBOR Rate Loan which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. (London time), on the second Business Day prior to the first day of
such Interest Period as selected by the Agent. The principal London office of
each of the four major London banks will be requested to provide a quotation of
its Dollar deposit offered rate. If at least two such quotations are provided,
the rate for that date will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in Dollars to leading
European banks for a period of time comparable to such Interest Period offered
by major banks in New York City at approximately 11:00 a.m. (New York, New York
time), on the second Business Day prior to the first day of such Interest
Period. In the event that the Agent is unable to obtain any such quotation as
provided above, it will be considered that LIBOR Rate pursuant to a LIBOR Rate
Loan cannot be determined.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) subject to Title IV of ERISA for which any Borrower or
any Subsidiary or ERISA Affiliate of any Borrower has been an "employer" (as
defined in Section 3(5) of ERISA) within the past six years.
"▇▇▇▇▇▇▇" has the meaning as set forth in Section 16.22.
5
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
"Bombay Canada" means The Bombay Furniture Company of Canada Inc. a
corporation continued under the laws of the Province of Ontario.
"Bombay Office Complex" means the Parent's office buildings and
Real Property located in Tarrant County, Texas.
"Books" means all of each Borrower's and its Subsidiaries' now
owned or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of each Borrower's or its Subsidiaries' Records relating to
its or their business operations or financial condition, and all of each
Borrower's or its Subsidiaries' goods or General Intangibles related to such
information).
"Borrower" and "Borrowers" have the respective meanings set forth
in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of U.S. Advances
made on the same day by U.S. Lenders (or Agent, on behalf thereof), or Canadian
Advances made on the same day by the Canadian Lenders, or by Swing Lender in
the case of Swing Loans or by Canadian Swing Agent in the case of Canadian
Swing Loans, or by Agent in the case of an Agent Advance, in each case, to
Administrative Borrower or Bombay Canada, as the case may be.
"Borrowing Base" means as the context may require, the U.S.
Borrowing Base, and/or the Canadian Borrowing Base.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1, with respect to the Aggregate Borrowing Base and as such form may
be revised from time to time by Agent.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close in the
States of New York, Massachusetts or Texas and in addition, in the case of the
Canadian Advances made to Bombay Canada, also a day in which banking
institutions in Toronto, Canada are open for the transaction of banking
business, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank
market.
"Business Plan" means the set of Projections of Borrowers for the 1
year period following the Closing Date (on a month by month basis), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent, together with any amendment, modification or revision thereto approved
by Agent in its Permitted Discretion.
"Canadian Advances" has the meaning set forth in Section 2.1.B.
6
"Canadian Agent" means Trans Canada Credit Corporation, solely in
its capacity as agent for the Canadian Lenders hereunder and any other holders
of Obligations related to the Canadian Advances and any successor thereto.
"Canadian Availability" means as of any date of determination, if
such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, the amount determined by Agent at any time
in its Permitted Discretion equal to (x) the lesser of (i) the Maximum Canadian
Revolver Amount, (ii) the Maximum Revolver Amount minus U.S. Revolver Usage,
and (iii) the Canadian Borrowing Base, minus (y) the Canadian Revolver Usage
(in each case, determined after giving effect to all sublimits and Reserves
(without duplication) then applicable hereunder).
"Canadian Borrowing Base" means, with respect to Bombay Canada, as
of any date of determination, an amount equal to:
(a) the lesser of (i) 85% of the Net Retail Liquidation Value of
Eligible Inventory owned by Bombay Canada, or (ii) 75% of the Cost of
Eligible Inventory owned by Bombay Canada; plus,
(b) 85% of the face amount of Eligible Credit Card Receivables of
Bombay Canada, minus,
(c) the aggregate of such Reserves as may have been established
by Agent.
"Canadian Commitments" means with respect to each Canadian Lender,
its Canadian Commitment, and, with respect to all Canadian Lenders, their
Canadian Commitments, in each case as such Dollar amounts are set forth beside
such Canadian Lender's name under the applicable heading on Schedule C-1 or in
the Assignment and Acceptance pursuant to which such Canadian Lender became a
Canadian Lender hereunder in accordance with the provisions of Section 14.1
"Canadian Lenders" means Lenders which make Canadian Advances to
Bombay Canada pursuant to each Lender's Canadian Commitment.
"Canadian Priority Payables" means, at any time with respect to
Bombay Canada:
(a) the amount past due and owing by Bombay Canada, or the accrued
amount for which Bombay Canada has an obligation to remit to a Governmental
Authority or other Person pursuant to any applicable law, rule or regulation,
in respect of (i) pension fund obligations; (ii) unemployment insurance; (iii)
goods and services taxes, sales taxes, employee income taxes and other taxes
payable or to be remitted or withheld; (iv) workers' compensation; (v) vacation
pay; and (vi) other like charges and demands; in each case, in respect of which
any Governmental Authority or other Person may claim a security interest, lien,
trust or other claim ranking or capable of ranking prior to or pari passu with
one or more of the Liens granted in the Loan Documents; and
(b) the amount equal to the percentage applicable to Inventory in
the calculation of the Canadian Borrowing Base multiplied by the aggregate
7
value of the Eligible Inventory which the Canadian Agent, in good faith,
considers is or may be subject to a right of a supplier to repossess goods
pursuant to Section 81.1 of the Bankruptcy and Insolvency Act (Canada) or any
applicable laws granting revendication or similar rights to unpaid suppliers or
any similar laws of Canada or any other applicable jurisdiction, in each case,
where such supplier's right ranks or is capable of ranking prior to or pari
passu with one or more of the Liens granted in the Loan Documents.
"Canadian Revolver Usage" means, as of any date of determination,
the sum of the then extant amount of outstanding Canadian Advances.
"Canadian Security Documents" means each of the various Canadian
security agreements by and among Bombay Canada and Agent, and any and all
acknowledgments of security, or similar agreements made in favor of Agent by
Bombay Canada, and any agreement delivered on or after the Closing Date
(including by way of supplement to the foregoing) by any Person granting a Lien
on the assets of such Person to secure all or any part of the Obligations, or
any bond issued by Bombay Canada to Agent, including, without limitation, any
security granted by Bombay Canada pursuant to the laws of the Province of
Quebec, in each case as amended, supplemented or modified from time to time in
accordance with its terms.
"Canadian Swing Loan" has the meaning set forth in Section
2.2.B.(d)(i).
"Capitalized Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented
by obligations under a Capitalized Lease.
"Cash Dominion Event" means (a) on or prior to December 31, 2004,
the occurrence and continuance of an Event of Default and (b) at any time
thereafter, either (i) the occurrence and continuance of any Event of Default,
or (ii) the period commencing with each failure by Borrowers to maintain
Adjusted Availability in an amount of less than (A) $15,000,000 for a period of
5 consecutive Business Days or (B) $10,000,000 at any time and, in each case,
ending with the occurrence of a Cash Dominion Reversion; provided, however that
(1) no more than 2 Cash Dominion Reversions may occur in any 12 month period
and (2) if an additional Cash Dominion Event occurs during such 12 month
period, no further Cash Dominion Reversions may occur through and including the
Maturity Date.
"Cash Dominion Reversion" means that Borrowers shall have
maintained Adjusted Availability in an amount of not less than $20,000,000 for
a period of 30 consecutive Business Days as evidenced by a Compliance
Certificate delivered to Agent; provided, however that (1) no more than 2 Cash
Dominion Reversions may occur in any 12 month period and (2) if an additional
Cash Dominion Event occurs during such 12 month period, no further Cash
Dominion Reversions may occur through and including the Maturity Date.
"Cash Equivalents" means (a) marketable direct obligations issued
or unconditionally guaranteed by the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
8
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-2 or
P-2, or better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition
thereof either (i) issued by any bank organized under the laws of the United
States or any state thereof which bank has a rating of A or A2, or better, from
S&P or ▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000
in the aggregate issued by any other bank insured by the Federal Deposit
Insurance Corporation.
"Cash Management Bank" has the meaning set forth in Section 2.6(a).
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50%, or more, of the Stock of Parent having the right to vote
for the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or
(c) any Borrower ceases to own and control, directly or indirectly, 100% of the
outstanding capital Stock of each of its Subsidiaries extant as of the Closing
Date other than with respect to (i) any Subsidiary the Stock of which was sold
or otherwise disposed of in a transaction permitted by Section 7.4, or (ii) any
Subsidiary that is merged or consolidated in a transaction permitted by Section
7.4.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder or the date on which Agent sends
Administrative Borrower a written notice that each of the conditions precedent
set forth in Section 3.1 either have been satisfied or have been waived.
"Code" means the New York Uniform Commercial Code, as in effect
from time to time.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books relating to the Specified Collateral,
(c) all of its Deposit Accounts relating to the Specified
Collateral, (it being understood and agreed that Deposit Accounts
relating to payroll obligations, tax liabilities, and third party funds
shall not be deemed to relate to the Specified Collateral),
(d) all of its Documents relating to the Specified Collateral,
(e) all of its General Intangibles relating to the Specified
Collateral,
(f) all of its Inventory,
9
(g) all of its Investment Property (including all of its
securities and Securities Accounts) relating to the Specified Collateral,
(h) all of its Negotiable Collateral relating to the Specified
Collateral,
(i) money or other assets of such Borrower that now or hereafter
come into the possession, custody, or control of any member of the Lender
Group (other than money placed into an escrow account in connection with
sale leaseback transactions permitted by Section 7.5), and
(j) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all
of the foregoing, and any and all Collateral, money, or other tangible or
intangible property resulting from the sale, exchange, collection, or
other disposition of any of the foregoing, or any portion thereof or
interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a waiver or consent in form and
substance satisfactory to Agent executed by any lessor of Real Property leased
by a Borrower or any other Person having a Lien upon, or having rights or
interests in the Inventory pledged hereunder or a Bailee Acknowledgment.
"Collections" means all cash, checks, credit card slips or
receipts, notes, instruments, and other items of payment (including insurance
proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of
Borrowers.
"Commitment" means as the context may require, each U.S. Lender's
U.S. Commitments and each Canadian Lender's Canadian Commitments or any such
Commitment.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Administrative
Borrower to Agent.
"Concentration Account" has the meaning set forth in Section
2.6(a).
"Confirmation of Increase in Commitment" has the meaning set forth
in Section 2.2(h)
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the then Continuing
Directors.
"Control Agreement" means an agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Borrower,
Agent, and the applicable securities intermediary or bank, which agreement is
sufficient to give Agent "control" over the subject Securities Account, Deposit
Account or Investment Property as provided in the Code.
10
"Cost" means the calculated cost of purchases, as determined from
invoices received by a Borrower, such Borrower's purchase journal or stock
ledger, based upon such Borrower's accounting practices, known to Agent, which
practices are in effect on the date on which this Agreement was executed or
subsequently adopted with the written approval of Agent. "Cost" does not
include the value of any capitalized costs unrelated to the acquisitions of
Inventory used in the Borrowers' calculation of cost of goods sold, but may
include other charges used in such Borrower's determination of cost of goods
sold and bringing goods to market, all within Agent's Permitted Discretion and
in accordance with GAAP.
"Credit Card Agreements" means those certain credit card receipts
agreements, each in form and substance reasonably satisfactory to Agent and
each of which is among Agent, the applicable Borrower and the applicable Credit
Card Processors.
"Credit Card Issuer" means collectively (a) MasterCard or Visa bank
credit or debit cards or other bank credit or debit cards issued through
MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International,
American Express, Discover, and Diners Club (or their respective successors),
and (b) private label credit cards of Borrowers, provided, however, Accounts
due from private label credit card issuers shall not be included in Eligible
Credit Card Receivables unless and until (i) Agent has completed a review of
such Accounts, including, without limitation, any agreements between a Borrower
and a private label credit card provider, the results of which shall be
satisfactory to Agent in its reasonable discretion, and (ii) Agent has notified
Administrative Borrower of its consent to such inclusion and to the amount of
any Reserves which shall be taken in connection with such inclusion.
Accordingly, Borrowers acknowledge and agree that Accounts due from private
label credit card issuers shall not be included in the calculation of the U.S.
Borrowing Base or the Canadian Borrowing Base on the Closing Date.
"Credit Card Processor" means any Person that acts as a credit card
clearinghouse or processor with respect to any sales transactions involving
credit card purchases by customers using credit cards issued by any Credit Card
Issuer.
"Credit Instrument" means Letters of Credit and Bankers'
Acceptances.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender (whether a U.S. Lender or a
Canadian Lender, as applicable) that fails to make any Advance (or other
extension of credit) that it is required to make hereunder on the date that it
is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from and
after the date the relevant payment is due, the Prime Rate, and (b) thereafter,
the interest rate then applicable to Advances that are Prime Rate Loans.
11
"Deposit Account" means any checking or other deposit account (as
that term is defined in the Code).
"Designated Account" means collectively, the Deposit Account of
Administrative Borrower or Bombay Canada, as the case may be, identified on
Schedule D-1.
"Designated Account Bank" means the bank identified on Schedule D-
1.
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Agent.
"Documents" means any document (as that term is defined in the
Code).
"Dollars" or "$" means United States dollars.
"Domestic Subsidiary" means each direct or indirect Subsidiary of
Parent formed under the laws of the United States or any state thereof.
"Due Diligence Letter" means the due diligence letter, checklist or
Perfection Certificate sent by Agent or Agent's counsel to Administrative
Borrower, together with Administrative Borrower's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"Eligible Accounts" means those Accounts created by Wholesale in
the ordinary course of its business in connection with or that arise out of its
sale of goods on a whole-sale basis, that comply with each of the
representations and warranties respecting Eligible Accounts made in the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, however, that such criteria
may be revised from time to time by Agent in Agent's Permitted Discretion. In
determining the amount to be included, Eligible Accounts shall be calculated
net of customer deposits and unapplied cash. Eligible Accounts shall not
include the following:
(a) Accounts that the Account Debtor has failed to pay within 60
days of original invoice date or Accounts with selling terms of more than
60 days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
Affiliate of a U.S. Borrower or an employee or agent of a U.S. Borrower
or any Affiliate of a U.S. Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return,
a sale on approval, a ▇▇▇▇ and hold, or any other terms by reason of
which the payment by the Account Debtor may be conditional,
12
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States, or
(ii) is not organized under the laws of the United States or any state
thereof, or (iii) is the government of any foreign country or sovereign
state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or
other instrumentality thereof, unless (y) the Account is supported by an
irrevocable letter of credit satisfactory to Agent (as to form,
substance, and issuer or domestic confirming bank) that has been
delivered to Agent and is directly drawable by Agent, or (z) the Account
is covered by credit insurance in form, substance, and amount, and by an
insurer, satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which
Wholesale has complied, to the reasonable satisfaction of Agent, with the
Assignment of Claims Act, 31 USC {section} 3727), or (ii) any state of
the United States,
(h) Accounts with respect to which the Account Debtor is a
creditor of Wholesale, has or has asserted a right of setoff, or has
disputed its obligation to pay all or any portion of the Account, to the
extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Wholesale exceed 10% (such percentage, as applied to
a particular Account Debtor, being subject to reduction by Agent in its
Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations
owing by such Account Debtor in excess of such percentage; provided,
however, that, in each case, the amount of Eligible Accounts that are
excluded because they exceed the foregoing percentage shall be determined
by Agent based on all of the otherwise Eligible Accounts prior to giving
effect to any eliminations based upon the foregoing concentration limit,
(j) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, is not Solvent, has gone out of business, or
as to which Wholesale has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such
Account Debtor,
(k) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(l) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(m) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or
(ii) the services giving rise to such Account have not been performed and
billed to the Account Debtor, or
13
(n) Accounts that represent the right to receive progress
payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion
of performance by the Wholesale of the subject contract for goods or
services.
Notwithstanding the foregoing, that portion of the U.S. Borrowing Base
attributable to Eligible Accounts shall not exceed $12,000,000 at any time. In
addition, Eligible Accounts shall not be included in the calculation of the
U.S. Borrowing Base, unless and until (i) Agent has completed a review of such
Accounts, the results of which shall be satisfactory to Agent in its reasonable
discretion, and (ii) Agent has notified Administrative Borrower in writing of
its consent to such inclusion and to the amount of any Reserves which shall be
taken in connection with such inclusion. Accordingly, U.S. Borrowers
acknowledge and agree that Eligible Accounts shall not be included in the
calculation of the U.S. Borrowing Base on the Closing Date.
"Eligible Credit Card Receivables" means Accounts (other than
Eligible Accounts) due to a Borrower on a non recourse basis from a
Credit Card Issuer or Credit Card Processor arising in the ordinary
course of business and net of such Credit Card Issuer's or Credit Card
Processor's expenses and chargebacks, which have been earned by
performance and are not deemed by Agent in its Permitted Discretion to be
ineligible for inclusion in the calculation of the Borrowing Base by
virtue of one or more of the excluding criteria set forth below. Unless
otherwise approved in writing by Agent, none of the following shall be
deemed to be Eligible Credit Card Receivables:
(a) Accounts that have been outstanding for more than 5 Business
Days from the date of sale;
(b) Accounts with respect to which a Borrower does not have good,
valid and marketable title thereto, free and clear of any Lien (other
than Liens granted to Agent, for its benefit and the ratable benefit of
Lenders, pursuant to the Loan Documents);
(c) Accounts that are not subject to a first priority security
interest in favor of Agent, for the benefit of itself and Lenders;
(d) Accounts which are disputed, subject to recourse against a
Borrower, or with respect to which a claim, counterclaim, offset or
chargeback has been asserted (to the extent of such claim, counterclaim,
offset or chargeback); or
(e) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition
"Eligible Draft" means a draft in a form satisfactory to Agent
being issued to finance purchase of inventory and for other general working
capital purposes, which draft (a) is payable to the order of Agent, signed by
Borrowers, as maker, and dated the date of presentment; (b) has a maturity not
longer than 180 days; provided, that in no event shall such maturity extend
beyond the Maturity Date unless, prior to the time of issuance, Borrowers have
delivered to Agent cash collateral in the face amount of such Eligible Draft;
and (c) is, if accepted by a member bank of the Federal Reserve System,
eligible for discount with a Federal Reserve Bank under applicable law and all
applicable rules, regulations and interpretations of the Board of Governors of
the Federal Reserve System. An Eligible Draft shall in no event include
bankers' acceptances issued outside of this Agreement.
14
"Eligible In-Transit Inventory" means Inventory of U.S. Borrowers
that does not qualify as Eligible Inventory under clause (b) of the definition
of Eligible Inventory solely because it is not at a location in the United
States set forth on Schedule E-1 or in transit among such locations in the
United States and that meets the following criteria, which criteria may be
revised by Agent in its Permitted Discretion from time to time after the
Closing Date:
(a) the Inventory was the subject of a Qualified Import Letter of
Credit, or was paid for in full by a U.S. Borrower,
(b) such Inventory currently is in transit (whether by vessel,
air, or land) to a location set forth on Schedule E-1 in the United
States that is the subject of a Bailee Acknowledgment or a Collateral
Access Agreement,
(c) title to such Inventory has passed to the applicable U.S.
Borrower,
(d) such Inventory is insured against types of loss, damage,
hazards, and risks, and in amounts, satisfactory to Agent in its
Permitted Discretion,
(e) such Inventory is either (1) the subject of a negotiable
document of title that (x) is in the name of the Agent, a U.S. Borrower
or an Approved Customs Broker and has not been consigned to any third
parties other than to the Agent, a U.S. Borrower or an Approved Customs
Broker (either directly or by means of endorsements), (y) was issued by
the carrier or consolidator respecting the subject Inventory, and (z) is
either (I) in the possession of the Borrowers (and held at a location in
the United States listed on Schedule E-1), the Agent or an Approved
Customs Broker or (II) the subject of a telefacsimile copy that Agent or
a U.S. Borrower has received from the Underlying Issuer which issued the
Underlying Letter of Credit and as to which Agent or a U.S. Borrower also
has received a confirmation from such Underlying Issuer that such
document is in-transit by air-courier to Agent, U.S. Borrower or an
Approved Customs Broker; or (2) at a port of entry in a State of the
United States,
(f) Administrative Borrower has provided a certificate to Agent
that certifies that, to the best knowledge of Borrowers, such Inventory
meets all of Borrowers' representations and warranties contained in the
Loan Documents concerning Eligible Inventory, that Borrowers know of no
reason why such Inventory would not be accepted by the applicable
Borrower when it arrives in the United States, and that the shipment as
evidenced by the documents conforms to the related order documents, and
(g) if subject to a Qualified Import Letter of Credit, the
Underlying Letter of Credit has been drawn upon in full and the
Underlying Issuer has honored such drawing and Agent has honored its
obligations to the Underlying Issuer under the applicable Qualified
Import Letter of Credit.
Notwithstanding the foregoing, (i) that portion of the Aggregate Borrowing Base
attributable to Eligible In-Transit Inventory shall not exceed 15% of the
15
Aggregate Borrowing Base at any time and (ii) Inventory located at a port of
entry in a State of the United States pursuant to clause (e)(2) above shall not
be included in the U.S. Borrowing Base unless and until (A) Agent has completed
a review of such Inventory the results of which shall be satisfactory to Agent
in it's reasonable discretion and (b) Agent has notified Administrative
Borrower in writing of its consent to such inclusion and to the amount of any
Reserves which shall be taken in connection with such inclusion. Accordingly,
U.S. Borrowers acknowledge and agree that Inventory included pursuant to clause
(e)(2) above shall not be included in the calculation of the U.S. Borrowing
Base on the Closing Date.
In addition, Agent may revise from time to time the foregoing criteria with
respect to Inventory being subject to a negotiable document of title and modify
such criteria to include Inventory subject to non-negotiable documents and
other related parameters so long as Agent shall be satisfied in its sole
discretion that (i) Agent shall have a valid and perfected first priority Lien
in such Inventory and (ii) Borrowers shall provide to Agent all other
documentation, including opinions of counsel, satisfactory to Agent which in
Agent's opinion is appropriate to evidence Agent's perfected first priority
Lien in such Inventory.
"Eligible Inventory" means (a) Eligible In-Transit Inventory, and
(b) Inventory of Borrowers consisting of finished goods held for sale in the
ordinary course of Borrowers' business located at one of Borrowers' business
locations set forth on Schedule E-1 (or in-transit between any such locations),
that complies with each of the representations and warranties respecting
Eligible Inventory made by Borrowers in the Loan Documents, and that is not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth below, which criteria may be fixed and revised from time to time by Agent
in its Permitted Discretion to address the results of any audit or appraisal
performed by Agent from time to time after the Closing Date. In determining
the value of Eligible Inventory, Inventory shall be valued at the lower of Cost
or market on a basis consistent with Borrowers' accounting practices.
An item of Inventory (that is not Eligible In-Transit Inventory)
shall not be included in Eligible Inventory if:
(a) a Borrower does not have good, valid and marketable title
thereto (including Inventory acquired on consignment),
(b) (i) in the case of U.S. Borrowers, it is not located at one
of the locations in the United States set forth on Schedule E-1 or in
transit from one such location to another such location, as such
locations are updated by U.S. Borrowers from time to time by written
notice to Agent, and (ii) in the case of Bombay Canada, it is not located
at one of the locations in Canada set forth on Schedule E-1 or in transit
from one such location to another such location, as such locations are
updated by Bombay Canada from time to time by written notice to Agent,
(c) it is located at a warehouse, distribution center or other
real property (other than a retail store location) leased by a Borrower
or in a fulfillment center or contract warehouse, in each case, unless it
is subject to a Collateral Access Agreement executed by the lessor,
fulfillment services provider or other applicable third party,
16
(d) it is located in a contract warehouse or is otherwise stored
with a bailee, warehouseman or similar third party unless it is subject
to a Bailee Acknowledgment executed by the bailee, warehouseman, or other
third party, as the case may be, and unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the
premises,
(e) it is not subject to a valid and perfected first priority
security Agent's Lien,
(f) it consists of goods returned or rejected by a Borrower's
customers unless such goods are repackaged and saleable in the ordinary
course of such Borrower's business, or
(g) other than saleable clearance goods arising in the ordinary
course of business consistent with past practice, consists of goods that
are obsolete or slow moving (for example, more than 18 months old),
custom items, work-in-process, raw materials, or goods that constitute
spare parts, packaging and shipping materials, supplies used or consumed
in a Borrower's business, ▇▇▇▇ and hold goods, defective goods, and
"seconds," or Inventory acquired on consignment.
"Eligible Transferee" means (a) in connection with Obligations of
U.S. Borrowers, the U.S. Commitments and the other rights and obligations of
U.S. Lenders hereunder, a commercial bank organized under the laws of the
United States, or any state thereof, and having total assets in excess of
$250,000,000, (i) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (ii) a finance company,
insurance company, or other financial institution or fund that is engaged in
making, purchasing, or otherwise investing in commercial loans in the ordinary
course of its business and having (together with its Affiliates) total assets
in excess of $250,000,000, (iii) any Affiliate (other than individuals) of a
Lender, and (iv) any other Person approved by Agent and, so long as no Event of
Default has occurred and is continuing, Administrative Borrower (which approval
of Administrative Borrower shall not be unreasonably withheld, delayed, or
conditioned) and (b) in connection with Obligations of Bombay Canada, the
Canadian Commitments and the other rights and obligations of Canadian Lenders
hereunder, means (i) a person resident in Canada for purposes of the Income Tax
Act (Canada), (ii) an authorized foreign bank which at all times holds all of
its interest in any Canadian Advances and other Obligations owed by Bombay
Canada hereunder in the course of its Canadian banking business for purposes of
subsection 212(13.3) of the Income Tax Act (Canada) or (iii) any Lender or
Eligible Transferee as determined by paragraph (a) able to establish to the
satisfaction of the Administrative Borrower, Bombay Canada and the Agent based
on applicable law in effect on the date on which it becomes a Canadian Lender
that such lender is not subject to deduction or withholding of income or
similar Taxes imposed by Canada (or any political subdivision or taxing
authority thereof or therein) with respect to any payments to such Lender of
interest, fees, commissions, or any other amount payable by Bombay Canada under
the Loan Documents.
17
"Employee Benefit Plan" means any employee benefit plan within the
meaning of {section}3(3) of ERISA maintained or contributed to by any Borrower
or any ERISA Affiliate, other than a Guaranteed Pension Plan or a Multiemployer
Plan.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication, each, by
or from any Governmental Authority, or any third party involving (x) violations
of Environmental Laws or (y) releases of Hazardous Materials from (a) any
assets, properties, or businesses of any Borrower or any predecessor in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by any Borrower or any
predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, employee health and safety, or
Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution
Control Act, 33 USC {section}1251 et seq. the Toxic Substances Control Act, 15
USC {section}2601 et seq. the Clean Air Act, 42 USC {section}7401 et seq.; the
Safe Drinking Water Act, 42 USC {section}3803 et seq.; the Oil Pollution Act of
1990, 33 USC {section}2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC {section}11001 et seq.; the Hazardous
Material Transportation Act, 49 USC {section}1801 et seq.; and the Occupational
Safety and Health Act, 29 USC {section}651 et seq. (to the extent it regulates
occupational exposure to Hazardous Materials); any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or
consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand
by any Governmental Authority or any third party, and which relate to any
Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means "equipment" (as that term is defined in the
Code).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means any Person which is treated as a single
employer with a Borrower under {section}414 of IRC.
"ERISA Reportable Event" means a reportable event with respect to a
Guaranteed Pension Plan within the meaning of {section}4043 of ERISA and the
regulations promulgated thereunder.
18
"Eurocurrency Reserve Rate" means for any day with respect to a
LIBOR Rate Loan, the maximum rate (expressed as a decimal) at which any bank
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D), if such
liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate.
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of July 5, 2002 among the Parent and the Existing Lenders.
"Existing Lenders" means Bank of America, N.A. and each of the
other financial institutions party to the Existing Credit Agreement as lenders
thereunder.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrowers and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Fiscal Period" means one of the three fiscal periods in a Fiscal
Quarter, the first of such periods comprised of four weeks, the second of such
periods comprised of five weeks, and the third of such periods comprised of
four weeks, with each of the weeks in a Fiscal Quarter ending on the close of
business on a Saturday (except that the last fiscal period in the last Fiscal
Quarter of a 53 week year shall be five weeks). There are twelve Fiscal
Periods in a Fiscal Year.
"Fiscal Quarter" means one of four thirteen or fourteen week
quarters in a Fiscal Year, with the first of such quarters beginning on the
first day of a Fiscal Year and ending on the Saturday of the last week in such
quarter.
"Fiscal Year" means the fifty-two or fifty-three week period ending
on the Saturday closest to the last day of January of any calendar year.
"Fund" means any Person (other than a natural person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.12(b)(ii).
"GAAP" means generally accepted accounting principles that are (i)
recognized as such by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or any generally recognized
successor of any of the foregoing), and (ii) consistently applied with past
19
financial statements of Borrowers adopting the same principles. If any change
in any accounting practice is required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or any
successor of any of the foregoing) in order for such principle or practice to
continue as a generally accepted accounting principle or practice, all reports
and financial statements required hereunder or in connection herewith may be
prepared in accordance with such change, but all calculations and
determinations to be made hereunder may be made in accordance with such change
only after notice of such change is given to each Lender, and Parent, Required
Lenders and Agent agree to such change.
"General Intangibles" means general intangibles (as that term is
defined in the Code).
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, unanimous shareholders
agreements or declarations, or other organizational documents of such Person.
"Governmental Authority" means any foreign, federal, state,
provincial, municipal, local, or other governmental or administrative body,
instrumentality, department, or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.
"Guaranteed Pension Plan" means any employee pension benefit plan
within the meaning of {section}3(2) of ERISA maintained or contributed to by
any Borrower or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
"Guaranty" means the Guaranty of U.S. Borrowers in favor of Agent,
dated the date hereof, guarantying the Obligations of Bombay Canada, in form
and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity,
or "EP toxicity", (b) oil, petroleum, or petroleum derived substances, natural
gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and
other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources, (c) any flammable substances
or explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Administrative
Borrower or its Subsidiaries and a Bank Product Provider, which provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
20
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Administrative Borrower's or its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.
"Holdout Lender" has the meaning set forth in Section 15.2.
"Indebtedness" As to any Person means, without duplication: (a)
all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations as a lessee under
Capital Leases, (d) all obligations or liabilities of others secured by a Lien
on any asset of a Person or its Subsidiaries, irrespective of whether such
obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business), (f) all obligations owing under hedge agreements or
similar agreements, (g) all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper, instruments or
documents creating or evidencing a right to payment of money, or (iii) other
receivables (collectively "receivables"), whether pursuant to a purchase
facility or otherwise, other than in connection with the disposition of the
business operations of such Person relating thereto or a disposition of
defaulted receivables for collection and not as a financing arrangement, and
together with any obligation of such Person to pay any discount, interest,
fees, indemnities, penalties, recourse, expenses or other amounts in connection
therewith, (h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of Stock issued by such Person or any rights measured by the value of
such Stock, (i) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law; (j) any
obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse)
any obligation of any other Person that constitutes Indebtedness under any of
clauses (a) through (i) above, and (k) every obligation of such Person under
any Synthetic Lease.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code, the Bankruptcy
and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada),
or under any other state or federal bankruptcy or insolvency law, assignments
for the benefit of creditors, formal or informal moratoria, compositions,
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"Interest Payment Date" means (a) as to any Prime Rate Loan, in
arrears on the first day of the calendar month with respect to interest accrued
during such prior calendar month; and (b) as to any LIBOR Rate Loan in respect
21
of which the Interest Period is (i) 3 months or less, the last day of such
Interest Period and (ii) more than 3 months, the date that is 3 months from the
first day of such Interest Period and, in addition, the last day of such
Interest Period.
"Interest Period" means, with (a) respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Prime Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3, or 6 months thereafter, as applicable;
provided, however, that (i) if any Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended (subject to clauses
((iii)-(v) below) to the next succeeding Business Day, (ii) interest shall
accrue at the applicable rate based upon the LIBOR Rate from and including the
first day of each Interest Period to, but excluding, the day on which any
Interest Period expires, (iii) any Interest Period that would end on a day that
is not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (iv) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, 3, or 6 months
after the date on which the Interest Period began, as applicable, and (v)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date, and (b) with respect to
each Prime Rate Loan, initially the period commencing on the date of the making
of such Prime Rate Loan and ending on the last day of the calendar month and
thereafter each period commencing on the last day of each preceding Interest
Period and ending on the last day of the calendar month; provided, however,
that if any Interest Period would end on a day that is not a Business Day, that
Interest Period shall end on the next succeeding Business Day and any Interest
Period that would otherwise extend beyond the Maturity Date shall end on the
Maturity Date.
"Inventory" means "inventory" (as that term is defined in the
Code).
"Inventory Reserves" means such reserves as may be established from
time to time by Agent in its Permitted Discretion with respect to the
determination of the saleability, at retail, of the Eligible Inventory or which
reflect such other factors as affect the market value of the Eligible
Inventory. Without limiting the generality of the foregoing, Inventory
Reserves may include (but are not limited to) (a) reserves based on
obsolescence or inventory shrinkage, (b) the estimated reclamation claims of
unpaid sellers of Inventory sold to a Borrower, (c) change in Inventory
character, composition or mix, (d) imbalance of Inventory, retail markdowns or
markups inconsistent with prior period practice and performance, current
business plans, or advertising calendar and planned advertising events, (e) the
change in the Net Retail Liquidation Value of the Inventory, or (f) as
reasonably required by Agent to protect Collateral value based upon changes to
the ordinary course of business of Borrowers.
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
22
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other
Person), and any other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP.
"Investment Property" means "investment property" (as that term is
defined in the Code), and any and all supporting obligations in respect
thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means WFRF in its capacity as Issuing Lender for
the purpose of issuing (a) L/Cs or L/C Undertakings, or (b) Bankers'
Acceptances.
"Judgment Conversion Date" has the meaning set forth in Section
2.15(a).
"Judgment Currency" has the meaning set forth in Section 2.15(a).
"L/C" has the meaning set forth in Section 2.11(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.11(a).
"Lender" and "Lenders" have the respective meanings set forth in
the preamble to this Agreement, and shall include Accordion Lenders, U.S.
Lenders, Canadian Lenders, Swing Lender and any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each Lender
(including the Canadian Lenders, U.S. Lender and the Issuing Lender), Canadian
Agent and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower or its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) reasonable fees or charges paid or incurred
by Agent or Canadian Agent, as the case may be, in connection with the Lender
Group's transactions with Borrowers or their Subsidiaries, including, fees or
charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
UCC and PPSA searches), filing, recording, publication, appraisal (including
periodic Collateral appraisals or business valuations), (c) reasonable costs
and expenses incurred by Agent or Canadian Agent, as the case may be, and in
the disbursement of funds to or for the account of Borrowers (by wire transfer
or otherwise), (d) reasonable charges paid or incurred by Agent or Canadian
Agent, as the case may be, resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) audit fees and
expenses of Agent or Canadian Agent, as the case may be, related to audit
examinations of the Books permitted by the Loan Documents, (g) reasonable costs
23
and expenses of third party claims or any other suit paid or incurred by the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or the Lender Group's
relationship with any Borrower or any Subsidiary of a Borrower, (h) Agent's or
Canadian Agent's, as the case may be, reasonable costs and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering, syndicating, or amending the Loan Documents, and other
instrument mentioned herein, in connection with each closing hereunder, any
amendments, modifications, approvals, consents or waivers hereto or hereunder,
or the cancellation of any Loan Document upon payment in full in cash of all of
the Obligations or pursuant to any terms of such Loan Document providing for
such cancellation, and (i) Agent's or Canadian Agent's, as the case may be,
reasonable fees and expenses (including, but not limited to, attorneys,
accountants, consultants, and other advisors fees and expenses) incurred in
terminating, enforcing (including, but not limited to attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning any
Borrower or any Subsidiary of a Borrower or in exercising rights or remedies
under the Loan Documents), preserving or defending the Loan Documents,
irrespective of whether suit is brought, in the administration of the Loan
Documents after a Default exists, or in taking any Remedial Action concerning
the Collateral. Notwithstanding the foregoing, Bombay Canada shall only be
obligated to pay Lender Group Expenses set forth in clauses (a)-(i) above to
the extent arising out of or related to the Collateral of Bombay Canada or
Obligations of Bombay Canada, including pursuant to Canadian Advances.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination,
the aggregate undrawn amount of all outstanding Letters of Credit plus 100% of
the amount of outstanding time drafts accepted by an Underlying Issuer as a
result of drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.12(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.12(a).
"LIBOR Rate" means, for each Interest Period, the rate per annum
determined by Agent (rounded upwards, if necessary, to the next 1/100%) by
dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100% minus
the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
24
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest is based on the common law, statute, or contract, whether such
interest is recorded or perfected, and whether such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances, including the lien or security interest arising
from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, security agreement, conditional sale, trust receipt or
other title retention agreement, or from a lease, consignment, or bailment for
security purposes and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and
other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.9.
"Loan Documents" means this Agreement, the Canadian Security
Documents, the Guaranty, the Bank Product Agreements, the Credit Card
Agreements, the Control Agreements, the Disbursement Letter, the Due Diligence
Letter, the Fee Letter, the Perfection Certificate, the Credit Instruments, the
Post Closing Letter, any certificates (including without limitation, the
Borrowing Base Certificate and the Compliance Certificate) from time to time
delivered by a Borrower pursuant to this Agreement or any other Loan Document,
any Note or Notes executed by a Borrower in connection with this Agreement and
payable to a member of the Lender Group, Uniform Commercial Code financing
statements, PPSA registration statements and registrations in Quebec, Canada
required under this Agreement, and any other agreement entered into, now or in
the future, by any Borrower and the Lender Group in connection with this
Agreement.
"Local Account" has the meaning set forth in Section 2.6(a).
"Material Adverse Change" means (a) a material adverse change in
the business, operations, results of operations, assets, liabilities or
financial condition of Borrowers and their Subsidiaries taken as a whole (b) a
material impairment of a Borrower's ability to perform its obligations under
the Loan Documents to which it is a party or of the Lender Group's ability to
enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the validity, enforceability, attachment, perfection or priority
of Agent's Liens with respect to the Collateral.
"Maturity Date" means September 15, 2009 and as such date may be
modified pursuant to Section 3.4.
"Maximum Canadian Revolver Amount" means the aggregate amount of
all Canadian Advances and other Obligations that may be borrowed by or made to
Bombay Canada under this Agreement; provided, however, that the Maximum
Canadian Revolver Amount shall in no event exceed $18,000,000, as may be
increased by Canadian Agent is its sole discretion from to time to time after
an Accordion Activation.
"Maximum Revolver Amount" means the aggregate amount of all
Advances and other Obligations that may be borrowed by or made to Borrowers
under this Agreement, as such amount may be increased or decreased from time to
time in accordance with this Agreement; provided, however, that the Maximum
Revolver Amount shall in no event exceed (a) $125,000,000 prior to Borrowers'
25
exercise of the Accordion Activation and (b) $175,000,000 after Borrowers'
exercise of the Accordion Activation, as may be reduced by Borrowers from time
to time in accordance with Section 3.6.
"Minimum Adjusted Availability Requirement" means, as of any date
of determination, the lesser of (a) $10,000,000 and (b) 7.5% of the Aggregate
Borrowing Base.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"Multiemployer Plan" means any multiemployer plan within the
meaning of {section}3(37) of ERISA maintained or contributed to by any Borrower
or any ERISA Affiliate.
"Negotiable Collateral" means collectively, letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof arising from the sale
of Inventory or Accounts.
"Net Liquidation Percentage" means, at any date of determination,
the percentage of the Cost value of Borrowers' Eligible Inventory that is
estimated to be recoverable in an orderly liquidation of such Eligible
Inventory, net of liquidation expenses, such percentage to be as determined
from time to time by Agent in its Permitted Discretion or by a qualified
appraisal company selected by Agent.
"Net Retail Liquidation Value" means, at any date of determination,
the result (expressed in Dollars) of the Net Liquidation Percentage times the
Cost value of Eligible Inventory as of such date.
"Note" or "Notes" means one or more of the promissory notes issued
pursuant to Section 2.1(k) to evidence the Advances hereunder and substantially
in the form of Exhibit N-1 annexed hereto, as amended, endorsed or otherwise
modified from time to time.
"Obligation Currency" has the meaning set forth in Section 2.15(a).
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, Bankruptcy and Insolvency Act (Canada) or Companies' Creditors
Arrangement Act (Canada) would have accrued), contingent reimbursement
obligations with respect to outstanding Credit Instruments, premiums,
liabilities (including all amounts charged to Borrowers' Loan Accounts pursuant
hereto), obligations, fees (including the fees provided for in the Fee Letter),
charges, costs, Lender Group Expenses (including any fees or expenses that, but
for the provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by
Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents or
Hedge Agreements and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all interest not paid when due and all
Lender Group Expenses that Borrowers are required to pay or reimburse by the
Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations.
Any reference in this Agreement or in the Loan Documents to the Obligations
shall include all amendments, changes, extensions, modifications, renewals,
replacements, substitutions, and supplements, thereto and thereof, as
26
applicable, both prior and subsequent to any Insolvency Proceeding. For the
purposes of Sections 2.3(c)(iii), 2.3(e), 2.5(a) and 16.1, the definition of
Required Lenders, and determining whether an Overadvance has occurred under
Section 2.4, the term "Obligations" shall not include Bank Product Obligations.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.4.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Pay-Off Letter" means a letter, in form and substance satisfactory
to Agent, from Bank of America, N.A., as administrative agent for the Existing
Lenders to Agent respecting the amount necessary to repay in full all of the
obligations of Borrowers and their Subsidiaries owing to Existing Lenders and
obtain a release of all of the Liens existing in favor of Existing Lenders in
and to the assets of Borrowers and their Subsidiaries pursuant to the Existing
Credit Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation created by
{section}4002 of ERISA and any successor entity or entities having similar
responsibilities.
"Perfection Certificate" means, collectively, (a) the Perfection
Certificate submitted by Administrative Borrower to Agent with respect to each
U.S. Borrower, together with U.S. Borrowers' completed responses to the
inquiries set forth therein, and (b) the Perfection Certificate submitted by
Bombay Canada to Agent with respect to Bombay Canada, together with Bombay
Canada's completed responses to the inquiries set forth therein, the form and
substance of each such responses to be satisfactory to Agent.
"Permitted Acquisitions" means acquisitions of all or substantially
all of the assets of a Person in or of any division or business line of a
Person or Stock of a Person, provided, (a) Agent shall receive at least 3
Business Days prior written notice of such acquisition, which notice shall
include a reasonably detailed description of such acquisition, (b) such assets
are located in the United States or Canada (except that such location
requirement shall not apply to acquisitions of assets or stores from a licensee
or franchisee of a Borrower or any Subsidiary of a Borrower) and are those
assets of a business that would comply with Section 6.5(d), and which business
would not subject Agent or any Lender to regulatory or third party approvals in
connection with the exercise of its rights and remedies under this Agreement or
any Loan Documents, (c) no Default or Event of Default exists prior to or
immediately after giving effect to such acquisition, (d) Agent is granted, to
the extent and in accordance with the scope required by Section 4, a valid
first priority perfected security interest in the assets so acquired (subject
to any Permitted Liens) and the applicable Borrower or Subsidiary shall have
delivered to Agent evidence reasonably satisfactory to Agent that all liens and
encumbrances with respect to the assets so acquired, other than Permitted
Liens, have been discharged in full, (e) the seller of such assets or capital
Stock is not an Affiliate of any Borrower or any of their Subsidiaries, (f) the
terms of such acquisition are on an arms length basis, (g) Section 6.14 is
complied with at the time of consummation of such acquisition (or concurrently
27
therewith), (h) the board of directors and (if required by applicable law) the
shareholders, or the equivalent thereof, of the business to be acquired has
approved such acquisition in the event such Permitted Acquisition would result
in a change of control of the acquired Person, (A) the applicable Borrower or
Subsidiary shall have delivered to Agent (i) evidence satisfactory to Agent
that such Borrower or such Subsidiary has completed such acquisition in
accordance with the terms of the contracts and agreements entered into by such
Person in connection with such acquisition, and (B) certified copies of all
such documents shall have been delivered to Agent, (j) no additional
Indebtedness, contingent obligations or other liabilities shall be incurred
assumed or otherwise be reflected on a consolidated balance sheet of Borrowers
and Parent after giving effect to such acquisition, except, (I) Advances made
hereunder, and (II) ordinary course trade payables, accrued expenses and
unsecured Indebtedness of Borrowers and (III) Indebtedness otherwise permitted
under Section 7.1, and (k) after giving effect to any such acquisition,
Availability shall not be less than $25,000,000 and the Administrative Borrower
shall have delivered to Agent a Compliance Certificate and Projections
demonstrating that Borrowers shall have Availability of at least $25,000,000 at
all times for the 2 Fiscal Quarters immediately succeeding such acquisition.
In addition, the Accounts shall not be included in Eligible Accounts and the
Inventory so acquired shall not be included in Eligible Inventory, unless and
until (i) Agent has completed a review of such assets, the results of which
shall be satisfactory to Agent in its reasonable discretion, and (ii) Agent has
notified Administrative Borrower in writing of its consent to such inclusion
and to the amount of any Reserves which shall be taken in connection with such
inclusion.
"Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
Administrative Borrower or its Subsidiaries of Equipment that is substantially
worn, damaged, or obsolete in the ordinary course of business, (b) sales by
Administrative Borrower or its Subsidiaries of Inventory to buyers in the
ordinary course of business, (c) the use or transfer of money or Cash
Equivalents by Administrative Borrower or its Subsidiaries in a manner that is
not prohibited by the terms of this Agreement or the other Loan Documents, (d)
the licensing by Administrative Borrower or its Subsidiaries, on a non-
exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business, (e) a disposition between
Borrowers, and (f) the surrender or waiver of contract rights or the
disposition, settlement, release or surrender of contract, tort or other claims
of any kind in the ordinary course of business, and (g) any disposition of
defaulted receivables that arose in the ordinary course of business for
collection.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to a
Borrower or any Subsidiary of a Borrower effected in the ordinary course of
business or owing to a Borrower or any Subsidiary of a Borrower as a result of
Insolvency Proceedings involving an Account Debtor or upon the foreclosure or
enforcement of any Lien in favor of a Borrower or any Subsidiary of a Borrower,
(e) (i) Investments in a Borrower, (ii) Investments in a Subsidiary of a
28
Borrower, and (iii) to the extent otherwise permitted hereunder, Investments in
any Person who, simultaneously with such Investment, becomes a Subsidiary of
Parent and complies with Section 6.14 hereof provided, however, that after
giving effect to any such Permitted Investments pursuant to clauses (e) (ii)
and (iii) above, Availability shall not be less than $25,000,000 and the
Administrative Borrower shall have delivered to Agent a Compliance Certificate
and Projections demonstrating that Borrowers shall have Availability of at
least $25,000,000 at all times for the 2 Fiscal Quarters immediately succeeding
such Permitted Investments, (f) Investments in The Bombay Furniture Company,
Inc. in an amount not to exceed $5,000,000 in any Fiscal Year; (g) Investments
the net aggregate book value of which does not at any time exceed the amount of
$1,000,000, (h) so long as the Revolver Usage is equal to $0, investments in
(i) commercial notes and bonds or variable rate demand notes, issued by any
commercial institution with a rating of not less than A, as determined by S&P
or Moody's, (ii) Eurodollar deposits, and (iii) money market or other mutual
funds substantially all of whose assets comprise securities of the types
described in the definition of "Cash Equivalents" or clause (h) hereof;
provided, that notwithstanding the foregoing, no such Investments shall be
permitted (i) after the occurrence of a Default or Event of Default, and (ii)
unless such Investments are pledged to Agent as additional Collateral for the
Obligations pursuant to such agreements as may be required by Agent in its
Permitted Discretion.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Agent and Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capitalized Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law including those in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred
in the ordinary course of Borrowers' business and not in connection with the
borrowing of money, and which Liens either (I) are for sums not yet delinquent,
or (II) are the subject of Permitted Protests, (g) Liens arising from deposits
made in connection with obtaining worker's compensation or other unemployment
insurance, (h) Liens or deposits to secure performance of bids, tenders, or
leases incurred in the ordinary course of business and not in connection with
the borrowing of money, (i) Liens granted as security for surety or appeal
bonds in connection with obtaining such bonds in the ordinary course of
business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, (k) with respect to any Real Property, easements, rights
of way, minor encroachments, and zoning restrictions that do not materially
interfere with or impair the use or operation thereof, (l) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods, (m) Liens resulting
from the filing of precautionary UCC financing statements, PPSA registration
statements or registrations in Quebec, Canada relating to operating leases of
any Credit Party which are entered into in the ordinary course of business and
which are limited solely to the assets subject thereto, and (n) Liens securing
Permitted Office Building Indebtedness so long as such Lien attaches only to
the Real Property related to Parent's chief executive offices, the buildings
and fixtures thereon, and the proceeds thereof (including insurance proceeds)
and Liens on money placed in an escrow account in connection with sale
leaseback transactions permitted by Section 7.5.
29
"Permitted Office Building Indebtedness" means Indebtedness
incurred by a U.S. Borrower or any of its Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed 90% of the appraised
value (based upon an independent third-party appraisal) of the portion of the
Bombay Office Complex securing such Indebtedness.
"Permitted Protest" means the right of Administrative Borrower or
any of its Subsidiaries, as applicable, to protest any Lien (other than any
such Lien that secures the Obligations), taxes (other than payroll taxes or
taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Administrative
Borrower or any of its Subsidiaries, as applicable, in good faith, and (c)
Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, perfection or priority of any of
Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate amount outstanding at any one time not in excess of $2,000,000.
In no event shall Permitted Purchase Money Indebtedness include Indebtedness
incurred for the purpose of financing all or any part of the acquisition Cost
of any Inventory.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and any
Governmental Authority.
"PPSA" means the Personal Property Security Act (Ontario), or,
where the context requires, the legislation of other provinces or territories
in Canada relating to security in personal property generally, including
Accounts Receivable and Inventory, as adopted by and in effect from time to
time in such provinces or territories in Canada, as applicable.
"Prime Rate" means the rate of interest announced, from time to
time, within ▇▇▇▇▇ Fargo at its principal office in San Francisco as its "prime
rate," with the understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's
prime rates (not necessarily the lowest of such rates) and serves as the basis
upon which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as ▇▇▇▇▇ Fargo may designate.
"Prime Rate Loan" means the portion of the Advances that bears
interest at a rate determined by reference to the Prime Rate.
"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions in
form and substance reasonably acceptable to Agent.
30
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a U.S. Lender's obligation to make U.S.
Advances and receive payments of principal, interest, fees, costs, and
expenses with respect thereto, (i) prior to the U.S. Commitment being
terminated or reduced to zero, the percentage obtained by dividing (y)
such Lender's U.S. Commitment, by (z) the aggregate U.S. Commitments of
all U.S. Lenders, and (ii) from and after the time that the U.S.
Commitments have been terminated or reduced to zero, the percentage
obtained by dividing (y) the aggregate outstanding principal amount of
such U.S. Lender's U.S. Advances by (z) the aggregate outstanding
principal amount of all U.S. Advances,
(b) with respect to a U.S. Lender's obligation to participate in
Credit Instruments, to reimburse the Issuing Lender with respect to
Credit Instruments, and to receive payments of fees with respect thereto,
(i) prior to the U.S. Commitment being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender's U.S. Commitment, by (z)
the aggregate U.S. Commitments of all U.S. Lenders, and (ii) from and
after the time that the U.S. Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (y) the aggregate outstanding
principal amount of such Lender's Advances by (z) the aggregate
outstanding principal amount of all Advances,
(c) with respect to a Canadian Lender's obligation to make
Canadian Advances and receive payments of principal, interest, fees,
costs, and expenses with respect thereto, (i) prior to the Canadian
Commitments being terminated or reduced to zero, the percentage obtained
by dividing (y) such Canadian Lender's Canadian Commitment, by (z) the
aggregate Canadian Commitments of all Canadian Lenders, and (ii) from and
after the time that the Canadian Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Canadian Lender's Canadian Advances
by (z) the aggregate outstanding principal amount of all Canadian
Advances
(d) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7),
the percentage obtained by dividing (i) such Lender's Commitment by (ii)
the aggregate amount of Commitments of all Lenders; provided, however,
that in the event the Commitments have been terminated or reduced to
zero, Pro Rata Share under this clause shall be the percentage obtained
by dividing (A) the outstanding principal amount of such Lender's
Advances plus such Lender's ratable portion of the Risk Participation
Liability with respect to outstanding Credit Instruments, by (B) the
outstanding principal amount of all Advances plus the aggregate amount of
the Risk Participation Liability with respect to outstanding Credit
Instruments.
"Post Closing Letter" means that certain letter, dated as of the
date hereof, by and among the Borrowers and the Agent with respect to the
delivery of certain documents to the Agent after the Closing Date (as amended
or otherwise modified and in effect from time to time).
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the
31
purpose of financing all or any part of the acquisition cost thereof, together
with any refinancings thereof under Section 7.1(e).
"Qualified Import Letter of Credit" means a Letter of Credit that
(a) is issued to facilitate the purchase by a U.S. Borrower of Eligible
Inventory, (b) is in form and substance acceptable to Agent, and (c) is issued
to support an Underlying Letter of Credit that only is drawable by the
beneficiary thereof by the presentation of, among other documents, a negotiable
document of title that (x) is in the name of Agent, a U.S. Borrower or an
Approved Customs Broker and has not been consigned to any third parties other
than to the Agent, a U.S. Borrower or an Approved Customs Broker (either
directly or by means of endorsements), and (y) was issued by the carrier or
consolidator respecting the subject Inventory.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower or a Subsidiary of any Borrower and
the improvements thereto.
"Record" means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC {section}9601.
"Replacement Lender" has the meaning set forth in Section 15.2.
"Report" has the meaning set forth in Section 16.17.
"Required Lenders" means, at any time, Lenders whose aggregate Pro
Rata Shares (calculated under clause (d) of the definition of Pro Rata Shares)
equal or exceed 51%.
"Reserves" means such reserves as Agent, from time to time
determines in its Permitted Discretion as being appropriate to reflect
impediments to Lender Group's ability to realize upon the Collateral,
including, without limitation, Bank Product Reserves, Canadian Priority
Payables and Inventory Reserves.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
32
"Revolver Usage" means the U.S. Revolver Usage and the Canadian
Revolver Usage.
"Risk Participation Liability" means, (i) as to each Letter of
Credit, all reimbursement obligations of U.S. Borrowers to the Issuing Lender
with respect to an L/C Undertaking, consisting of (a) the amount available to
be drawn or which may become available to be drawn, (b) all amounts that have
been paid by the Issuing Lender to the Underlying Issuer to the extent not
reimbursed by U.S. Borrowers, whether by the making of an Advance or otherwise,
and (c) all accrued and unpaid interest, fees, and expenses payable with
respect thereto; and (ii) as to each Bankers' Acceptance, all reimbursement
obligations of U.S. Borrowers to Agent with respect to the Bankers'
Acceptances, consisting of (a) the Acceptance Face Amount, (b) all amounts that
have been paid by Agent to the extent not reimbursed by U.S. Borrowers, whether
by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"S&P" means Standard & Poor's Rating Group, or its successor.
"SEC" means the United States Securities and Exchange Commission
and any successor thereto.
"Seasonal Period" means the period commencing on October 15 through
and including December 15 of each Fiscal Year.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Settlement" has the meaning set forth in Section 2.2(f)(i).
"Settlement Date" has the meaning set forth in Section 2.2(f)(i).
"Solvent" means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person's assets is greater than all
of such Person's debts.
"Specified Collateral" means Accounts, Inventory and any proceeds
of the foregoing.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock,
or any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
33
"Swing Lender" means WFRF in its capacity as the Swing Lender
hereunder.
"Swing Loan(s)" has the meaning set forth in Section 2.2.A.(d)(i).
"Synthetic Lease" means any lease of goods or other property,
whether real or personal, which is treated as an operating lease under GAAP and
as a loan or financing for United States income tax purposes.
"Taxes" has the meaning set forth in Section 16.11.
"Underlying Issuer" means a third Person which is the beneficiary
of an L/C Undertaking and which has issued a letter of credit at the request of
the Issuing Lender for the benefit of Borrowers, and in the case of a proposed
Qualified Import Letter of Credit, has agreed, in writing, to hold documents of
title as agent for Agent.
"Underlying Letter of Credit" means a letter of credit that has
been issued by an Underlying Issuer.
"Unused Line Fee" has the meaning set forth in Section 2.10(a).
"U.S. Advances" has the meaning set forth in Section 2.1(a)(i).
"U.S. Availability" means as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, the amount determined by Agent at any time
in its Permitted Discretion equal to (x) the lesser of (i) the Maximum Revolver
Amount minus the Canadian Revolver Usage, and (ii) the U.S. Borrowing Base,
minus (y) the U.S. Revolver Usage (in each case, determined after giving effect
to all sublimits and Reserves then applicable hereunder).
"U.S. Borrowers" means Borrowers other than Bombay Canada.
"U.S. Borrowing Base" means, as of any date of determination, an
amount equal to:
(a) the lesser of (i) 85% of the Net Retail Liquidation Value of
Eligible Inventory or (ii) 75% of the Cost of Eligible Inventory owned by
a U.S. Borrower; provided, however, that during the Seasonal Period, the
advance rate shall be the lesser of 90% of the Net Retail Liquidation
Value of Eligible Inventory owned by a U.S. Borrower and 80% of the Cost
of Eligible Inventory owned by a U.S. Borrower, plus
(b) 85% of the face amount of Eligible Credit Card Receivables of
a U.S. Borrower, plus
(c) 85% of the face amount of Eligible Accounts of Wholesale,
plus
(d) during the Adjusted Seasonal Period, the Adjusted Seasonal
Period Amount minus
(e) the aggregate of such Reserves as may have been established
by Agent.
34
"U.S. Commitments" means with respect to each U.S. Lender, its U.S.
Commitment, and, with respect to all U.S. Lenders, their U.S. Commitments, in
each case as such Dollar amounts are set forth beside such U.S. Lender's name
under the applicable heading on Schedule C-1 (as such may be adjusted pursuant
to an Accordion Activation) or in the Assignment and Acceptance pursuant to
which such U.S. Lender became a U.S. Lender hereunder in accordance with the
provisions of Section 14.1
"U.S. Lenders" means Lenders which make U.S. Advances to U.S.
Borrowers pursuant to each Lender's U.S. Commitment.
"U.S. Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding U.S. Advances, plus (b) the
then extant amount of the Letter of Credit Usage, plus (c) the Acceptance Face
Amount.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
"WFRF" means ▇▇▇▇▇ Fargo Retail Finance, LLC.
"Wholesale" means ▇▇▇▇▇▇ Street Trading Company and Bombay
International, Inc.
1.2. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP applied on a consistent basis
by the accounting entity to which they refer. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise. Unless otherwise expressly provided herein or unless Required
Lenders otherwise consent, all financial statements and reports furnished to
Agent or any Lender hereunder shall be prepared, all financial computations and
determinations pursuant hereto shall be made, and all terms of an accounting or
financial nature shall be construed, in accordance with GAAP.
1.3. CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth from time to time in the Code
unless otherwise defined herein, with the term "instrument" being that defined
under Article 9 of the Code.
1.4. CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "including",
"include" and "includes" are not limiting." The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to
any agreement, instrument, or document shall include all alterations,
35
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Any reference herein to the repayment in full
or satisfaction in full of the Obligations shall mean the repayment in full in
cash (or cash collateralized in accordance with the terms hereof) of all
Obligations other than contingent indemnification Obligations that, at such
time, are allowed by the applicable member of the Lender Group to remain
outstanding and are not required to be repaid or cash collateralized pursuant
to the provisions of this Agreement. Any reference herein to any Person shall
be construed to include such Person's successors and assigns. Any requirement
of a writing contained herein or in the other Loan Documents shall be satisfied
by the transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. This Agreement and the other Loan Documents may
use several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are, however,
cumulative and are to be performed in accordance with the terms thereof. Text
which is shown in italics (except for parenthesized italicized text), shown in
BOLD, shown IN ALL CAPITAL LETTERS, or in any combination of the foregoing,
shall be deemed to be conspicuous. The words "may not" are prohibitive and not
permissive. Any reference to a Person's "knowledge" (or words of similar
import) are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent investigation with respect to the subject of such
"knowledge" (whether or not such investigation has actually been undertaken).
To the extent that this Agreement refers to ratings by S&P and ▇▇▇▇▇'▇ and to
the extent that a rating from one of such Persons ceases to be available, then
the rating by whichever of S&P or ▇▇▇▇▇'▇ continues to be available shall be
used as the sole rating for purposes of this Agreement.
1.5. SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1. REVOLVER ADVANCES.
2.1.A U.S. REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each U.S. Lender agrees (severally,
not jointly or jointly and severally) to make advances ("U.S. Advances")
to U.S. Borrowers in an amount at any one time outstanding not to exceed
such U.S. Lender's Pro Rata Share of an amount equal to the lesser of (A)
the Maximum Revolver Amount less Revolver Usage, or (B) the U.S.
Borrowing Base less U.S. Revolver Usage;
(b) Anything to the contrary in this Section 2.1.A.
notwithstanding, Agent shall have the right without declaring an Event of
Default, to reduce its inventory advance rates or establish Reserves in
such amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, against U.S. Borrowing
Base, including Reserves with respect to (i) sums that U.S. Borrowers are
36
required to pay (such as taxes, assessments, insurance premiums, or, in
the case of leased assets, rents or other amounts payable under such
leases) and has failed to pay under any Section of this Agreement or any
other Loan Document, (ii) amounts as determined by Agent in its Permitted
Discretion based on noncompliance with the covenants set forth in
Sections 6 and 7 (without duplication as to the Canadian Borrowing Base),
and (iii) Bank Products then provided or outstanding (based upon ▇▇▇▇▇
Fargo's or its Affiliate's reasonable determination of the credit
exposure in respect of then extant Bank Products), and (iv) amounts owing
by U.S. Borrowers or their Subsidiaries to any Person to the extent
secured by a Lien on, or trust over, any of the Collateral (other than
any existing Permitted Lien set forth on Schedule P-1 which is
specifically identified thereon as entitled to have priority over Agent's
Liens), which Lien or trust, in the Permitted Discretion of Agent likely
would have a priority superior to Agent's Liens (such as Liens or trusts
in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales,
or other taxes where given priority under applicable law) in and to such
item of the Collateral.
(c) Amounts borrowed pursuant to this Section 2.1.A may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
2.1.B CANADIAN REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Canadian Lenders agree to make
advances ("Canadian Advances") to Bombay Canada in an amount equal to (x)
the lesser of (A) the Maximum Canadian Revolver Amount, or (B) the
Canadian Borrowing Base less Canadian Revolver Usage or (C) the Maximum
Revolver Amount minus Revolver Usage; provided, that (1) Canadian
Advances pursuant to this clause (a) shall only be made by Canadian
Lenders at such times as U.S. Availability is equal to $0.
Notwithstanding anything herein to the contrary, Borrowers may not make
any payments on account of U.S. Advances until Bombay Canada's Obligation
to Canadian Lenders have been paid in full in immediately available funds
and there shall not exist any outstanding Canadian Advances.
(b) Anything to the contrary in this Section 2.1.B.
notwithstanding, Agent shall have the right without declaring an Event of
Default, to reduce its inventory advance rates or establish Reserves in
such amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, against the Canadian
Borrowing Base, including Reserves with respect to (i) sums that Bombay
Canada is required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay under any Section of
this Agreement or any other Loan Document, (ii) as determined by Agent in
its Permitted Discretion based on noncompliance with the covenants set
forth in Sections 6 and 7 (without duplication as to the U.S. Borrowing
Base), (iii) Bank Products then provided or outstanding (based upon ▇▇▇▇▇
Fargo's or its Affiliate's reasonable determination of the credit
exposure in respect of then extant Bank Products), (iv) Canadian Priority
Payables, and (v) amounts owing by Bombay Canada to any Person to the
extent secured by a Lien on, or trust over, any of the Collateral (other
37
than any existing Permitted Lien set forth on Schedule P-1 which is
specifically identified thereon as entitled to have priority over Agent's
Liens), which Lien or trust, in the Permitted Discretion of Agent likely
would have a priority superior to Agent's Liens (such as Liens or trusts
in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales,
or other taxes where given priority under applicable law) in and to such
item of the Collateral.
(c) Amounts borrowed pursuant to this Section 2.1.B. may be
repaid and, subject to the terms and conditions of this Agreement and if
U.S. Availability is equal to $0, reborrowed during the term of this
Agreement.
2.2. BORROWING PROCEDURES AND SETTLEMENTS.
2.2.A U.S. PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing of U.S. Advances
shall be made by an irrevocable written request by an Authorized Person
of the Administrative Borrower delivered to Agent (which notice must be
received by Agent no later than 1:00 p.m. (New York, New York time) on
the Business Day that is the requested Funding Date with respect to Prime
Rate Loans and subject to Section 2.12(b) with respect to LIBOR Rate
Loans, specifying (i) the amount of such Borrowing of U.S. Advances, and
(ii) the requested Funding Date, which shall be a Business Day. At
Agent's election, in lieu of delivering the above-described written
request, any Authorized Person may give Agent telephonic notice of such
request by the required time. In such circumstances, U.S. Borrowers
agree that any such telephonic notice will be confirmed in writing within
24 hours of the giving of such notice and failure to provide such written
confirmation shall not affect the validity of the request.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing of U.S. Advances pursuant to Section 2.2.A.(a), Agent shall
elect, in its discretion, (i) to have the terms of Section 2.2.A.(c)
apply to such requested Borrowing of U.S. Advances, or (ii) to request
Swing Lender to make a Swing Loan pursuant to the terms of Section
2.2.A.(d) in the amount of the requested Borrowing of U.S. Advances;
provided, however, Swing Loans at any one time outstanding may not exceed
$15,000,000; provided, further, that if (1) Swing Lender declines in its
sole discretion to make a Swing Loan pursuant to Section 2.2.A.(d), Agent
shall elect to have the terms of Section 2.2.A.(c) apply to such
requested Borrowing of U.S. Advances, and (2) if a notice requesting
LIBOR Rate Loan has been timely delivered pursuant to Section 2.12(b) and
which is otherwise in accordance with Section 2.12(b), Agent shall not
have the option to request Swing Lender to make such Borrowing of U.S.
Advances as a Swing Line Loan.
(c) MAKING OF LOANS.
(i) In the event that Agent shall elect to have the terms
of this Section 2.2(c) apply to a requested Borrowing of U.S.
Advances as described in Section 2.2.A.(b), then promptly after
receipt of a request for a Borrowing of U.S. Advances pursuant to
Section 2.2.A.(a), Agent shall notify the U.S. Lenders, not later
38
than 2:00 p.m. (New York, New York time) on the Funding Date
applicable thereto, by telecopy, telephone, or other similar form
of transmission, of the requested Borrowing of U.S. Advances. Each
U.S. Lender shall make the amount of such U.S. Lender's Pro Rata
Share of the requested U.S. Advance available to Agent in
immediately available funds, to Agent's Account, not later than
3:00 p.m. (New York, New York time) on the Funding Date applicable
thereto. After Agent's receipt of the proceeds of such U.S.
Advances, upon satisfaction of the applicable conditions precedent
set forth in Section 3 hereof, Agent shall make the proceeds
thereof available to Administrative Borrower on the applicable
Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to Administrative Borrower's
Designated Account; provided, however, that, subject to the
provisions of Section 2.2.A.(a), Agent shall not request any U.S.
Lender to make, and no U.S. Lender shall have the obligation to
make, any U.S. Advance if Agent shall have actual knowledge that
(1) one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for
the Borrowing of U.S. Advances unless such condition has been
waived, or (2) the requested Borrowing of U.S. Advances would
result in U.S. Availability being less than $0 on such Funding
Date.
(ii) Unless Agent receives notice from a U.S. Lender on or
prior to the Closing Date or, with respect to any Borrowing of U.S.
Advances after the Closing Date, prior to 3:00 p.m. (New York, New
York time) on the date of such Borrowing of U.S. Advances, that
such U.S. Lender will not make available as and when required
hereunder to Agent for the account of U.S. Borrowers the amount of
that U.S. Lender's Pro Rata Share of the Borrowing of U.S.
Advances, Agent may assume that each U.S. Lender has made or will
make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required),
in reliance upon such assumption, make available to U.S. Borrowers
on such date a corresponding amount. If and to the extent any U.S.
Lender shall not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances has
made available to U.S. Borrowers such amount, that U.S. Lender
shall on the Business Day following such Funding Date make such
amount available to Agent, together with interest at the Defaulting
Lender Rate for each day during such period. A notice submitted by
Agent to any U.S. Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such U.S. Lender's U.S. Advance on the date of Borrowing of U.S.
Advances for all purposes of this Agreement. If such amount is not
made available to Agent on the Business Day following the Funding
Date, Agent will notify Administrative Borrower of such failure to
fund and, upon demand by Agent, U.S. Borrowers shall pay such
amount to Agent for Agent's account, together with interest thereon
for each day elapsed since the date of such Borrowing of U.S.
Advances, at a rate per annum equal to the interest rate applicable
at the time to the U.S. Advances composing such Borrowing of U.S.
Advances. The failure of any U.S. Lender to make any U.S. Advance
on any Funding Date shall not relieve any other U.S. Lender of any
39
obligation hereunder to make a U.S. Advance on such Funding Date,
but no U.S. Lender shall be responsible for the failure of any
other U.S. Lender to make the U.S. Advance to be made by such other
U.S. Lender on any Funding Date.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of
Swing Lender, as a U.S. Lender, to have the terms of this Section
2.2.A.(d) apply to a requested Borrowing as described in Section
2.2.A.(b), Swing Lender as a U.S. Lender shall make such U.S.
Advance in the amount of such Borrowing (any such U.S. Advance made
solely by Swing Lender as a Lender pursuant to this Section
2.2.A.(d) being referred to as a "Swing Loan" and such U.S.
Advances being referred to collectively as "Swing Loans") available
to U.S. Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Administrative
Borrower's Designated Account. Each Swing Loan shall be deemed to
be a U.S. Advance hereunder and shall be subject to all the terms
and conditions applicable to other U.S. Advances, except that no
such Swing Loan shall be eligible to be a LIBOR Rate Loan and all
payments on any Swing Loan shall be payable to Swing Lender as a
U.S. Lender solely for its own account (and for the account of the
holder of any participation interest with respect to such Swing
Loan). Subject to the provisions of Section 2.2(g), Agent shall
not request Swing Lender as a U.S. Lender to make, and Swing Lender
as a U.S. Lender shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (ii) the requested Borrowing would
result in U.S. Availability being equal to $0 on such Funding Date.
Swing Lender as a U.S. Lender shall not otherwise be required to
determine whether the applicable conditions precedent set forth in
Section 3 have been satisfied on the Funding Date applicable
thereto prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by Agent's Liens,
constitute Advances and Obligations hereunder, and bear interest at
the rate applicable from time to time to Advances that are Prime
Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by U.S. Borrowers and the
U.S. Lenders, from time to time in Agent's sole discretion, (1)
after the occurrence and during the continuance of a Default or an
Event of Default, or (2) at any time that any of the other
applicable conditions precedent set forth in Section 3 have not
been satisfied, to make Advances to U.S. Borrowers on behalf of
Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the
Obligations (other than the Bank Product Obligations), or (C) to
pay any other amount chargeable to U.S. Borrowers pursuant to the
terms of this Agreement, including Lender Group Expenses and the
costs, fees, and expenses described in Section 10 (any of the
40
Advances described in this Section 2.2.A.(e) shall be referred to
as "Agent Advances"). Each Agent Advance shall be deemed to be a
U.S. Advance hereunder and shall be subject to all the terms and
conditions applicable to other U.S. Advances, except that no such
Agent Advance shall be eligible to be a LIBOR Rate Loan and all
payments thereon shall be payable to Agent solely for its own
account (and for the account of the holder of any participation
interest with respect to such Agent Advance).
(ii) Agent Advances shall be repayable on demand, and
secured by Agent's Liens granted to Agent under the Loan Documents,
shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances that
are Prime Rate Loans.
(f) SETTLEMENT. It is agreed that each U.S. Lender's funded
portion of the U.S. Advances is intended by the U.S. Lenders to equal, at
all times, such U.S. Lender's Pro Rata Share of the outstanding U.S.
Advances. Such agreement notwithstanding, Agent, Swing Lender, and the
other Lenders agree (which agreement shall not be for the benefit of or
enforceable by U.S. Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement
among them as to the U.S. Advances, the Swing Loans, and Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:
(i) Agent shall request settlement ("Settlement") with the
U.S. Lenders on a periodic basis contemplated to be weekly, or on a
more frequent basis if so determined by Agent, (1) on behalf of
Swing Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with respect to
U.S. Borrowers' or their Subsidiaries' Collections received (if
applicable), as to each by notifying the U.S. Lenders by telecopy,
telephone, or other similar form of transmission, of such requested
Settlement, no later than 2:00 p.m. (New York, New York time) on
the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include
a summary statement of the amount of outstanding U.S. Advances,
Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.2.C.(a)): (y) if a U.S. Lender's
balance of the U.S. Advances (including Swing Loans and Agent
Advances) exceeds such U.S. Lender's Pro Rata Share of the U.S.
Advances (including Swing Loans and Agent Advances) as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m. (New
York, New York time) on the Settlement Date, transfer in
41
immediately available funds to the account of such U.S. Lender (as
such U.S. Lender may designate), an amount such that each such U.S.
Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the U.S. Advances (including
Swing Loans and Agent Advances), and (z) if a U.S. Lender's balance
of the U.S. Advances (including Swing Loans and Agent Advances) is
less than such U.S. Lender's Pro Rata Share of the U.S. Advances
(including Swing Loans and Agent Advances) as of a Settlement Date,
such U.S. Lender shall no later than 12:00 p.m. (New York, New York
time) on the Settlement Date transfer in immediately available
funds to Agent's Account, an amount such that each such U.S. Lender
shall, upon transfer of such amount, have as of the Settlement
Date, its Pro Rata Share of the U.S. Advances (including Swing
Loans and Agent Advances). Such amounts made available to Agent
under clause (z) of the immediately preceding sentence shall be
applied against the amounts of the applicable Swing Loan or Agent
Advances and, together with the portion of such Swing Loan or Agent
Advances representing Swing Lender's Pro Rata Share thereof, shall
constitute U.S. Advances of such U.S. Lenders. If any such amount
is not made available to Agent by any U.S. Lender on the Settlement
Date applicable thereto to the extent required by the terms hereof,
Agent shall be entitled to recover for its account such amount on
demand from such U.S. Lender together with interest thereon at the
Defaulting Lender Rate.
(ii) In determining whether a U.S. Lender's balance of the
U.S. Advances, Swing Loans, and Agent Advances is less than, equal
to, or greater than such U.S. Lender's Pro Rata Share of the U.S.
Advances, Swing Loans, and Agent Advances as of a Settlement Date,
Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by
Agent with respect to principal, interest and fees payable by U.S.
Borrowers and allocable to the U.S. Lenders hereunder, and proceeds
of Collateral. To the extent that a net amount is owed to any such
U.S. Lender after such application, such net amount shall be
distributed by Agent to that U.S. Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the
U.S. Advances, for application to Swing Lender's Pro Rata Share of
the U.S. Advances constituting Swing Loans. If, as of any
Settlement Date, repayments or Collections (if applicable) of U.S.
Borrowers or their Subsidiaries received since the then immediately
preceding Settlement Date have been applied to Swing Lender's Pro
Rata Share of the U.S. Advances other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to
Agent for the accounts of the U.S. Lenders, and Agent shall pay to
the U.S. Lenders, to be applied to the outstanding U.S. Advances of
such U.S. Lenders, an amount such that each U.S. Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro
Rata Share of the U.S. Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent
with respect to Agent Advances, and each U.S. Lender (subject to
the effect of letter agreements between Agent and individual U.S.
Lenders) with respect to the U.S. Advances other than Swing Loans
and Agent Advances, shall be entitled to interest at the applicable
rate or rates payable under this Agreement on the daily amount of
funds employed by Swing Lender, Agent, or the U.S. Lenders, as
applicable.
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(g) OPTIONAL OVERADVANCES. Any contrary provision of this
Agreement notwithstanding, the U.S. Lenders hereby authorize Agent or
Swing Lender, as applicable, and Agent or Swing Lender, as applicable,
may, but is not obligated to, knowingly and intentionally, continue to
make U.S. Advances (including Swing Loans) to U.S. Borrowers
notwithstanding that an Overadvance exists or thereby would be created,
so long as (i) after giving effect to such U.S. Advances (including Swing
Loans), the then extant amount of the U.S. Revolver Usage does not exceed
the U.S. Borrowing Base by more than five percent (5%) of the then
available U.S. Borrowing Base, (ii) after giving effect to such U.S.
Advances, (including Swing Loans) the outstanding U.S. Revolver Usage
(except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the U.S.
Commitments, and (iii) at the time of the making of any such U.S. Advance
(including any Swing Loan), Agent does not believe, in good faith, that
the Overadvance created by such U.S. Advance will be outstanding for more
than 45 days. The foregoing provisions are for the exclusive benefit of
Agent, Swing Lender, and U.S. Lenders and are not intended to benefit
U.S. Borrowers in any way. The U.S. Advances and Swing Loans, as
applicable, that are made pursuant to this Section 2.2(g) shall be
subject to the same terms and conditions as any other U.S. Advance or
Swing Loan, as applicable, except that they shall not be eligible for the
LIBOR Option and the rate of interest applicable thereto shall be the
rate applicable to U.S. Advances that are Prime Rate Loans under
Section 2.5(d) hereof without regard to the presence or absence of a
Default or Event of Default.
A. In the event Agent obtains actual knowledge that
the U.S. Revolver Usage exceeds the amounts permitted by the
preceding paragraph, regardless of the amount of, or reason
for, such excess, Agent shall notify U.S. Lenders as soon as
practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice
would result in imminent harm to the Collateral or its
value), and U.S. Lenders shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented
with U.S. Borrowers and intended to reduce, within a
reasonable time, the outstanding principal amount of the U.S.
Advances to U.S. Borrowers to an amount permitted by the
preceding paragraph. In the event Agent or any U.S. Lender
disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof
shall be implemented according to the determination of the
Required Lenders.
B. Each U.S. Lender shall be obligated to settle
with Agent as provided in Section 2.2.A.(f) for the amount of
such Lender's Pro Rata Share of any unintentional
Overadvances by Agent reported to such U.S. Lender, any
intentional Overadvances made as permitted under this Section
2.2.A.(g), and any Overadvances resulting from the charging
to the Loan Account of interest, fees, or Lender Group
Expenses.
43
(h) ACCORDION OPTION. Unless a Default or an Event of Default
has occurred and is then continuing, so long as Borrowers shall not have
elected to permanently reduce the Commitments hereunder and except as
otherwise provided herein, Administrative Borrower may make a maximum of
1 request that the Accordion Lenders increase their U.S. Commitments
hereunder (such increase, the "Accordion Activation"); provided, that (i)
Administrative Borrower shall have made such request subsequent to the
Closing Date but prior to September 15, 2007, (ii) in no event shall the
U.S. Commitments of the Accordion Lenders be increased pursuant to this
Section 2.2.A.(h) by an amount which exceeds, in the aggregate, the
Accordion Amount, (iii) in no event shall the Commitment of all Lenders
be increased under this Section 2.2.A.(h) so as to exceed, in the
aggregate, the Maximum Revolver Amount, (iv) in no event shall the
Commitments of all U.S. Lenders be increased under this Section 2.2.A.(h)
so as to exceed $157,000,000 (v) no Default or Event of Default will
occur as a result of such Accordion Activation, and (vi) U.S. Borrowers
shall pay Agent (for the ratable benefit of the Accordion Lenders,
subject to any letter agreement between Agent and Accordion Lenders), an
Accordion Activation Fee pursuant to the terms of the Fee Letter. Upon a
request by Administrative Borrower hereunder, each Accordion Lender shall
increase its U.S. Commitment by an amount equal to its Accordion
Commitment. The amount of each Accordion Lender's Accordion Commitment
is set forth opposite its name on Schedule C-1 annexed hereto. Each
Accordion Lender increasing its Commitment pursuant to this Section
2.2.A.(h) shall execute a Confirmation of Increase in Commitment in the
form of Exhibit C-2 attached hereto (a "Confirmation of Increase in
Commitment"). On the effective date of the Accordion Activation effected
in accordance with this Section 2.2.A.(h), Schedule C-1 annexed hereto
shall be deemed to be amended to reflect (a) the name, address,
Commitment, and Pro Rata Share of each U.S. Lender, and (B) the Maximum
Revolver Amount and U.S. Commitments as increased by such Accordion
Activation.
2.2.B CANADIAN BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing of Canadian Advances
shall be made by an irrevocable written request by an Authorized Person
of Bombay Canada delivered to Canadian Agent, with a copy to Agent (which
notice must be received by Canadian Agent and Agent no later than 1:00
p.m. (New York, New York time) on the Business Day that is the requested
Funding Date with respect to Prime Rate Loans and subject to Section
2.12(b) with respect to LIBOR Rate Loans, specifying (i) the amount of
such Borrowing of Canadian Advances, and (ii) the requested Funding Date,
which shall be a Business Day. At Canadian Agent's election, in lieu of
delivering the above-described written request, any Authorized Person of
Bombay Canada may give Canadian Agent telephonic notice of such request
by the required time. In such circumstances, Bombay Canada agrees that
any such telephonic notice will be confirmed in writing to Canadian Agent
and Agent within 24 hours of the giving of such notice and failure to
provide such written confirmation shall not affect the validity of the
request.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing of Canadian Advances pursuant to Section 2.2.B.(a), Canadian
Agent shall elect, in its discretion, (i) to have the terms of Section
2.2.B.(c) apply to such requested Borrowing, or (ii) to request Canadian
Agent as a Canadian Lender to make a Canadian Swing Loan pursuant to the
44
terms of Section 2.2.B.(d) in the amount of the requested Borrowing;
provided, further, that if (1) Canadian Agent declines in its sole
discretion to make a Canadian Swing Loan pursuant to Section 2.2.B.(d),
Canadian Agent shall elect to have the terms of Section 2.2.B.(c) apply
to such requested Borrowing, and (2) if a notice requesting LIBOR Rate
Loan has been timely delivered pursuant to Section 2.12(b) and otherwise
in accordance with Section 2.12(b), Canadian Agent shall not have the
option as a Canadian Lender to make such Borrowing as a Canadian Swing
Loan.
(c) MAKING OF LOANS.
(i) In the event that Canadian Agent shall elect to have
the terms of this Section 2.2.B.(c) apply to a requested Borrowing
of Canadian Advances as described in Section 2.2(b), then promptly
after receipt of a request for a Borrowing pursuant to Section
2.2(a), Canadian Agent shall notify Canadian Lenders, not later
than 2:00 p.m. (New York, New York time) on the Funding Date
applicable thereto, by telecopy, telephone, or other similar form
of transmission, of the requested Borrowing of Canadian Advances.
Each Canadian Lender shall make the amount of such Canadian
Lender's Pro Rata Share of the requested Borrowing of Canadian
Advances available to Canadian Agent in immediately available
funds, as specified by Canadian Agent, not later than 3:00 p.m.
(New York, New York time) on the Funding Date applicable thereto.
After Canadian Agent's receipt of the proceeds of such Canadian
Advances, upon satisfaction of the applicable conditions precedent
set forth in Section 3 hereof, Canadian Agent shall make the
proceeds thereof available to Bombay Canada on the applicable
Funding Date by transferring immediately available funds equal to
such proceeds received by Canadian Agent to Bombay Canada's
Designated Account; provided, however, that, subject to the
provisions of Section 2.2(g), Canadian Agent shall not request any
Canadian Lender to make, and no Canadian Lender shall have the
obligation to make, any Canadian Advance if Canadian Agent shall
have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 2.2.B.(a) and Section 3
will not be satisfied on the requested Funding Date for the
applicable Borrowing of Canadian Advances unless such condition has
been waived, or (2) the requested Borrowing of Canadian Advances
would result in Canadian Availability being equal to $0 on such
Funding Date.
(ii) Unless Canadian Agent receives notice of Canadian
Advances from a Canadian Lender on or prior to the Closing Date or,
with respect to any Borrowing of Canadian Advances after the
Closing Date, prior to 3:00 p.m. (New York, New York time) on the
date of such Borrowing of Canadian Advances, that such Canadian
Lender will not make available as and when required hereunder to
Canadian Agent for the account of Bombay Canada the amount of that
Canadian Lender's Pro Rata Share of the Borrowing of Canadian
Advances, Canadian Agent may assume that each Canadian Lender has
made or will make such amount available to Canadian Agent in
immediately available funds on the Funding Date and Canadian Agent
may (but shall not be so required), in reliance upon such
assumption, make available to Bombay Canada on such date a
45
corresponding amount. If and to the extent any Canadian Lender
shall not have made its full amount available to Canadian Agent in
immediately available funds and Canadian Agent in such
circumstances has made available to Bombay Canada such amount, that
Canadian Lender shall on the Business Day following such Funding
Date make such amount available to Canadian Agent, together with
interest at the Defaulting Lender Rate for each day during such
period. A notice submitted by Canadian Agent to any Canadian
Lender with respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is so made
available, such payment to Canadian Agent shall constitute such
Canadian Lender's Canadian Advance on the date of Borrowing of
Canadian Advances for all purposes of this Agreement. If such
amount is not made available to Canadian Agent on the Business Day
following the Funding Date, Canadian Agent will notify Bombay
Canada of such failure to fund and, upon demand by Canadian Agent,
Bombay Canada shall pay such amount to Canadian Agent for Canadian
Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing of Canadian Advances, at a
rate per annum equal to the interest rate applicable at the time to
the Canadian Advances composing such Borrowing. The failure of any
Canadian Lender to make any Canadian Advances on any Funding Date
shall not relieve any other Canadian Lender of any obligation
hereunder to make a Canadian Advance on such Funding Date, but no
Canadian Lender shall be responsible for the failure of any other
Canadian Lender to make the Canadian Advance to be made by such
other Lender on any Funding Date.
(d) MAKING OF CANADIAN SWING LOANS.
(i) In the event Canadian Agent shall elect, as a Canadian
Lender, to have the terms of this Section 2.2.B.(d) apply to a
requested Borrowing of Canadian Advances as described in Section
2.2.B.(b), Canadian Agent as a Canadian Lender shall make such
Canadian Advance in the amount of such Borrowing (any such Canadian
Advance made solely by Canadian Agent as a Canadian Lender pursuant
to this Section 2.2.B.(d) being referred to as a "Canadian Swing
Loan" and such Canadian Advances being referred to collectively as
"Canadian Swing Loans") available to Bombay Canada on the Funding
Date applicable thereto by transferring immediately available funds
to Bombay Canada's Designated Account. Each Canadian Swing Loan
shall be deemed to be a Canadian Advance hereunder and shall be
subject to all the terms and conditions applicable to other
Canadian Advances, except that no such Canadian Swing Loan shall be
eligible to be a LIBOR Rate Loan and all payments on any Canadian
Swing Loan shall be payable to Canadian Agent as a Canadian Lender
solely for its own account (and for the account of the holder of
any participation interest with respect to such Canadian Swing
Loan). Canadian Agent shall not make any Canadian Swing Loan if
Canadian Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 2.2.B.(a) and
Section 3 will not be satisfied on the requested Funding Date for
the applicable Borrowing unless such condition has been waived, or
(ii) the requested Borrowing would result in Canadian Availability
being equal to $0 on such Funding Date. Canadian Agent as a
46
Canadian Lender shall not otherwise be required to determine
whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to
making, in its sole discretion, any Canadian Swing Loan.
(ii) The Canadian Swing Loans shall be secured by Agent's
Liens, constitute Canadian Advances and Obligations hereunder, and
bear interest at the rate applicable from time to time to Canadian
Advances that are Prime Rate Loans.
(e) SETTLEMENT. It is agreed that each Canadian Lender's funded
portion of the Canadian Advances is intended by the Canadian Lenders to
equal, at all times, such Canadian Lender's Pro Rata Share of the
outstanding Canadian Advances. Such agreement notwithstanding, Canadian
Agent and Canadian Lenders and Agent and other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers)
that in order to facilitate the administration of this Agreement and the
other Loan Documents, settlement among Canadian Agent and Canadian
Lenders as to the Canadian Advances and the Canadian Swing Loans shall
take place on a periodic basis in accordance with the following
provisions:
(i) Canadian Agent shall request Settlement with the
Canadian Lenders on a periodic basis contemplated to be weekly, or
on a more frequent basis if so determined by Canadian Agent, (1) on
behalf of Canadian Agent, with respect to each outstanding Canadian
Swing Loan, (2) with respect to Bombay Canada or its Subsidiaries'
Collections received (if applicable), as to each by notifying the
Canadian Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(New York, New York time) on the requested Settlement Date. Such
notice of a Settlement Date shall include a summary statement of
the amount of outstanding Canadian Advances and Canadian Swing
Loans for the period since the prior Settlement Date. Subject to
the terms and conditions contained herein (including Section
2.2.C.(a)): (y) if a Canadian Lender's balance of the Canadian
Advances (including Canadian Swing Loans) exceeds such Canadian
Lender's Pro Rata Share of the Canadian Advances (including
Canadian Swing Loans) as of a Settlement Date, then Canadian Agent
shall, by no later than 12:00 p.m. (New York, New York time) on the
Settlement Date, transfer in immediately available funds to the
account of such Canadian Lender (as such Canadian Lender may
designate), an amount such that each such Canadian Lender shall,
upon receipt of such amount, have as of the Settlement Date, its
Pro Rata Share of the Canadian Advances (including Canadian Swing
Loans), and (z) if a Canadian Lender's balance of the Canadian
Advances (including Canadian Swing Loans) is less than such
Canadian Lender's Pro Rata Share of the Canadian Advances
(including Canadian Swing Loans) as of a Settlement Date, such
Canadian Lender shall no later than 12:00 p.m. (New York, New York
time) on the Settlement Date transfer in immediately available
funds as specified by Canadian Agent, an amount such that each such
Canadian Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Canadian Advances
(including Canadian Swing Loans). Such amounts made available to
47
Canadian Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable
Canadian Swing Loan and, together with the portion of such Canadian
Swing Loan representing Canadian Agent's Pro Rata Share thereof,
shall constitute Canadian Advances of such Canadian Lenders. If
any such amount is not made available to Canadian Agent by any
Canadian Lender on the Settlement Date applicable thereto to the
extent required by the terms hereof, Canadian Agent shall be
entitled to recover for its account such amount on demand from such
Canadian Lender together with interest thereon at the Defaulting
Lender Rate.
(ii) In determining whether a Canadian Lender's balance of
the Canadian Advances and Canadian Swing Loans is less than, equal
to, or greater than such Canadian Lender's Pro Rata Share of the
Canadian Advances and Canadian Swing Loans, as of a Settlement
Date, Canadian Agent shall, as part of the relevant Settlement,
apply to such balance the portion of payments actually received in
good funds by Canadian Agent with respect to principal, interest
and fees payable by Bombay Canada and allocable to the Canadian
Lenders hereunder, and proceeds of Collateral. To the extent that
a net amount is owed to any such Canadian Lender after such
application, such net amount shall be distributed by Canadian Agent
to that Canadian Lender as part of such next Settlement.
(iii) Between Settlement Dates, Canadian Agent, to the extent
no Canadian Swing Loans are outstanding, may pay over to itself any
payments received by it, that in accordance with the terms of this
Agreement would be applied to the reduction of the Canadian
Advances, for application to Canadian Agent's Pro Rata Share of the
Canadian Advances constituting Canadian Swing Loans. If, as of any
Settlement Date, repayments or Collections (if applicable) of
Bombay Canada or its Subsidiaries received since the then
immediately preceding Settlement Date have been applied to Canadian
Agent's Pro Rata Share of the Canadian Advances other than to
Canadian Swing Loans, as provided for in the previous sentence,
Canadian Agent shall pay to Canadian Lenders, to be applied to the
outstanding Canadian Advances of such Canadian Lenders, an amount
such that each Canadian Lender shall, upon receipt of such amount,
have, as of such Settlement Date, its Pro Rata Share of the
Canadian Advances. During the period between Settlement Dates,
Canadian Agent with respect to Canadian Swing Loans, and each
Canadian Lender (subject to the effect of letter agreements between
Canadian Agent and individual Lenders) with respect to the Canadian
Advances other than Canadian Swing Loans, shall be entitled to
interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Canadian Agent,
or the Canadian Lenders, as applicable.
(f) SEPARATE OBLIGATIONS OF BOMBAY CANADA. Notwithstanding any
provision to the contrary in any Loan Document, (i) all Obligations of
Bombay Canada under this Agreement and the other Loan Documents are
separate and individual Obligations of Bombay Canada from the Obligations
of the U.S. Borrowers, (ii) Bombay Canada shall not have any liabilities
48
in respect of U.S. Advances made by the U.S. Lenders to the U.S.
Borrowers or in respect or any other Obligations of the U.S. Borrowers to
Agent or Lenders arising from or related to U.S. Advances, and (iii) the
assets of Bombay Canada shall not serve at any time, directly or
indirectly, as security for the payment and performance of the
Obligations of the U.S. Borrowers under the Loan Documents.
2.2.C DEFAULTING LENDER; NOTATIONS; FAILURE TO PERFORM; NOTES; ADDITIONAL
ADVANCES
(a) DEFAULTING LENDER. Agent or Canadian Agent (as the case may
be) shall not be obligated to transfer to a Defaulting Lender any
payments made by either U.S. Borrowers or Bombay Canada (as the case may
be), to Agent or Canadian Agent (as the case may be) for the Defaulting
Lender's benefit, and, in the absence of such transfer to the Defaulting
Lender, Agent or Canadian Agent (as the case may be) shall transfer any
such payments to each other non-Defaulting Lender (either U.S. Lenders or
Canadian Lenders, as the case may be) ratably in accordance with their
Commitments (but only to the extent that such Defaulting Lender's Advance
was funded by the other U.S. Lenders or Canadian Lenders, as the case may
be) or, if so directed by Administrative Borrower or Bombay Canada (as
the case may be) and if no Default or Event of Default had occurred and
is continuing (and to the extent such Defaulting Lender's Advance was not
funded by the other U.S. Lenders or Canadian Lenders, as the case may
be), retain the same to be re-advanced to either U.S. Borrowers or Bombay
Canada, as the case may be, as if such Defaulting Lender had made
Advances to applicable Borrowers. Subject to the foregoing, Agent or
Canadian Agent (as the case may be) may hold and, in its Permitted
Discretion, re-lend to the applicable Borrowers for the account of such
Defaulting Lender the amount of all such payments received and retained
by Agent or Canadian Agent (as the case may be) for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender shall
be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section shall remain effective with respect to
such Lender until (x) the Obligations under this Agreement shall have
been declared or shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, Canadian Agent and Administrative Borrower
or Bombay Canada shall have waived such Defaulting Lender's default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent or Canadian Agent (as the case may
be) all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or otherwise
affect the Commitment of any Lender, to relieve or excuse the performance
by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by
Borrowers of their duties and obligations hereunder to Agent, Canadian
Agent or to Lenders other than such Defaulting Lender. Any such failure
to fund by any Defaulting Lender shall constitute a material breach by
such Defaulting Lender of this Agreement and shall entitle Administrative
Borrower or Bombay Canada (as the case may be) at its option, upon
written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be
reasonably acceptable to Agent or Canadian Agent (as the case may be).
49
In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced hereunder,
and agrees to execute and deliver a completed form of Assignment and
Acceptance in favor of the substitute Lender (and agrees that it shall be
deemed to have executed and delivered such document if it fails to do so)
subject only to being repaid its share of the outstanding Obligations
(other than Bank Product Obligations, but including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium
or penalty of any kind whatsoever; provided however, that any such
assumption of the Commitment of such Defaulting Lender shall not be
deemed to constitute a waiver of any of the Lender Groups' or Borrowers'
rights or remedies against any such Defaulting Lender arising out of or
in relation to such failure to fund.
(b) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans
owing to Swing Lender, and Agent Advances owing to Agent, and the
interests therein of each Lender, from time to time and such records
shall, absent manifest error, conclusively be presumed to be correct and
accurate. Canadian Agent shall record on its books the principal amount
of the Canadian Advances owing to each Canadian Lender, including the
Canadian Swing Loans owing to Canadian Agent, as a Canadian Lender, and
the interests therein of each Canadian Lender, from time to time and such
records shall, absent manifest error, conclusively be presumed to be
correct and accurate. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or
prepayment of principal of such Lender's Advances in its books and
records, including computer records. In the event of any conflict
between the accounts or records maintained by any Lender and the accounts
and records maintained by Agent or Canadian Agent, as the case may be, in
respect of such matters the account and records of Agent and Canadian
Agent, as the case may be, shall control in the absence of manifest
error.
(c) LENDERS' FAILURE TO PERFORM. All U.S. Advances (other than
Swing Loans and Agent Advances) shall be made by Lenders
contemporaneously and in accordance with their Pro Rata Shares of U.S.
Advances. All Canadian Advances shall be made by the Canadian Lenders
contemporaneously and in accordance with their Pro Rata Shares of
Canadian Advances. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its obligation
to make any Advance (or other extension of credit) hereunder, nor shall
any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and
(ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.
(d) NOTES. Each U.S. Borrower shall execute and deliver on the
Closing Date (or such other date on which a U.S. Lender may become a
party hereto in accordance with Section 14.1 or an Accordion Lender in
accordance with Section 2.1(h)) to Agent for each U.S. Lender which so
requests a Note to evidence that U.S. Lender's U.S. Advances, in the
principal amount of that U.S. Lender's U.S. Commitment and with
appropriate insertions. Bombay Canada shall execute and deliver on the
Closing Date (or such other date on which a Canadian Lender may become a
party hereto in accordance with Section 14.1) to Canadian Agent for each
50
Canadian Lender which so requests a Note to evidence that Canadian
Lender's Canadian Advances, in the principal amount of that Canadian
Lender's Canadian Commitment and with appropriate insertions.
(e) ADDITIONAL ADVANCES. Lenders shall have no obligation to
make additional Advances hereunder to the extent such additional Advances
would cause the Revolver Usage to exceed the Maximum Revolver Amount.
2.3. PAYMENTS AND REDUCTIONS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all
payments by U.S. Borrowers shall be made to Agent's Account for the
account of Agent or U.S. Lenders and all payments by Bombay Canada
shall be made to the account specified by Canadian Agent for the
account of Canadian Lenders and in each case, such payments shall
be made in immediately available funds, no later than 1:00 p.m.
(New York, New York time) on the date specified herein. Any
payment received by Agent or Canadian Agent, as the case may be,
later than 1:00 p.m. (New York, New York time), shall be deemed to
have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following
Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower or Canadian Agent receives notice from Bombay Canada,
prior to the date on which any payment is due to Lenders that
Borrowers will not make such payment in full as and when required,
Agent or Canadian Agent (as the case may be) may assume that
Borrowers have made (or will make) such payment in full to Agent or
Canadian Agent on such date in immediately available funds and
Agent or Canadian Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If
and to the extent Borrowers do not make such payment in full to
Agent or Canadian Agent, as applicable, on the date when due, each
Lender severally shall repay to Agent or Canadian Agent, as
applicable, on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender
until the date repaid.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(i) Except as otherwise provided with respect to Defaulting
Lenders and subject to Section 2.1.B., aggregate principal and
interest payments shall be apportioned ratably among Lenders
(according to the unpaid principal balance of the Obligations to
which such payments relate held by each Lender) and payments of
fees and expenses (other than fees or expenses that are for Agent's
separate account, after giving effect to any letter agreements
between Agent and individual Lenders) shall be apportioned ratably
among Lenders having a Pro Rata Share of the type of Commitment or
51
Obligation to which a particular fee relates. Subject to Section
2.1.B., all payments shall be remitted to Agent and all such
payments, and (other than payments received while no Default or
Event of Default has occurred and is continuing and which relate to
the payment of principal or interest of specific Obligations or
which relate to the payment of specific fees), and all proceeds of
Accounts or other Collateral received by Agent, shall be applied as
follows:
A. first, to pay any Lender Group Expenses then due
to Agent under the Loan Documents, until paid in full,
B. second, to pay any fees then due to Agent or
Canadian Agent (for their separate accounts, after giving
effect to any letter agreements between Agent or Canadian
Agent and the individual Lenders) under the Loan Documents,
until paid in full,
C. third, to pay the principal of all Canadian Swing
Loans, until paid in full,
D. fourth, ratably to pay interest due in respect of
the Canadian Advances, until paid in full,
E. fifth, to pay the principal of all Canadian
Advances, until paid in full,
F. sixth, to pay any fees then due to any or all of
Lenders (after giving effect to any letter agreements between
Agent and individual Lenders) under the Loan Documents, on a
ratable basis, until paid in full,
G. seventh, to pay interest due in respect of all
Agent Advances, until paid in full,
H. eighth, ratably to pay interest due in respect of
the U.S. Advances (other than Agent Advances), until paid in
full,
I. ninth, to pay the principal of all Swing Loans,
until paid in full,
J. tenth, to pay the principal of all Agent
Advances, until paid in full,
K. eleventh, to pay any Lender Group Expenses then
due to Lenders under the Loan Documents, on a ratable basis,
until paid in full,
L. twelfth, so long as no Cash Dominion Event has
occurred and is continuing, and at Agent's election (which
election Agent agrees will not be made if an Overadvance
would be created thereby), to pay amounts then due and owing
52
by Administrative Borrower or its Subsidiaries in respect of
Bank Products, until paid in full,
M. thirteenth, so long as no Cash Dominion Event has
occurred and is continuing, to pay the principal of all U.S.
Advances, until paid in full,
N. fourteenth, if a Cash Dominion Event has occurred
and is continuing, ratably (i) to pay the principal of all
U.S. Advances, until paid in full, (ii) to Agent, to be held
by Agent, for the ratable benefit of Issuing Lender and
Lenders, as cash collateral in an amount up to 103% of the
then extant Letter of Credit Usage until paid in full, (iii)
to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender, as cash collateral in an amount up to 103% of
the then extant Acceptance Face Amount until paid in full,
and (iv) to Agent, to be held by Agent, for the benefit of
the Bank Product Providers, as cash collateral in an amount
up to the amount of the Bank Product Reserve established
prior to the occurrence of, and not in contemplation of, the
subject Event of Default until Administrative Borrower's and
its Subsidiaries' obligations in respect of the then extant
Bank Products have been paid in full or the cash collateral
amount has been exhausted,
O. fifteenth, if a Cash Dominion Event has occurred
and is continuing, to pay any other Obligations (including
the provision of amounts to Agent, to be held by Agent, for
the benefit of the Bank Product Providers, as cash collateral
in an amount up to the amount determined by Agent in its
Permitted Discretion as the amount necessary to secure
Administrative Borrower's and its Subsidiaries' obligations
in respect of the then extant Bank Products), and
P. sixteenth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) Agent or Canadian Agent, as applicable, promptly shall
distribute to each Lender, pursuant to the applicable wire
instructions received from each Lender in writing, such funds as it
may be entitled to receive, subject to a Settlement delay as
provided in Section 2.2(f).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, this Section 2.3(b) shall not be deemed
to apply to any payment by Borrowers specified by Borrowers to be
for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of Article II of this Agreement, "paid in
full" means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees,
professional fees, interest (and specifically including interest
accrued after the commencement of any Insolvency Proceeding),
53
default interest, interest on interest, and expense reimbursements,
whether or not the same would be or is allowed or disallowed in
whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.3 and other provisions contained in
any other Loan Document, it is the intention of the parties hereto
that such priority provisions in such documents shall be read
together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the
terms and provisions of this Section 2.3 shall control and govern.
2.4. OVERADVANCES. If, at any time or for any reason, the amount of
Obligations of U.S. Borrowers (other than Bank Product Obligations) owed by
U.S. Borrowers to the U.S. Lenders pursuant to Section 2.1 or Section 2.11 is
greater than either the Dollar or percentage limitations set forth in Section
2.1 or Section 2.11, as applicable (an "Overadvance"), U.S. Borrowers
immediately shall pay to Agent in cash, the amount of such excess, which amount
shall be used by Agent to reduce the Obligations of U.S. Borrowers in
accordance with the priorities set forth in Section 2.1.B.(a) and 2.3(b). If
at any time or for any reason the amount of Obligations owed by Bombay Canada
to the Canadian Lenders results in an Overadvance, Bombay Canada immediately
shall pay to Canadian Agent in cash the amount of such excess, which amount
shall be used by Canadian Agent to reduce the Obligations in accordance with
the priorities set forth in Section 2.1.B.(a) and 2.3(b). In addition, U.S.
Borrowers hereby promise to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full to the Lender Group as and when
due and payable under the terms of this Agreement and the other Loan Documents
and Bombay Canada hereby promises to pay the Obligations (including principal,
interest, fees, costs and expenses) in connection with and arising out of
Canadian Advances in Dollars in full to Canadian Agent and Canadian Lenders as
when due and payable under the terms of this Agreement and the other Loan
Documents.
2.5. INTEREST RATES, LETTER OF CREDIT FEE, BANKERS' ACCEPTANCE FEE,
RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (d) below, all
Obligations (except for undrawn Letters of Credit, undrawn Bankers'
Acceptances and Bank Product Obligations) that have been charged to the
applicable Loan Account pursuant to the terms hereof shall bear interest
on the Daily Balance thereof as follows (i) if the relevant Obligation is
an Advance that is a LIBOR Rate Loan, during each Interest Period
applicable thereto, at a per annum rate equal to the LIBOR Rate plus the
Applicable Margin for LIBOR Rate Loans, and (ii) if the relevant
Obligation is an Advance that is a Prime Rate Loan, during each Interest
Period applicable thereto, at a per annum rate equal to the Prime Rate
plus the Applicable Margin (if any) for Prime Rate Loans.
(b) LETTER OF CREDIT FEE. U.S. Borrowers shall pay Agent (for
the ratable benefit of Lenders with a U.S. Commitment, subject to any
letter agreement between Agent and individual Lenders), a Letter of
Credit fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.11(e)) which shall accrue at a per annum rate equal to
54
the Applicable Margin times the Daily Balance of the undrawn amount of
all outstanding Letters of Credit.
(c) BANKERS' ACCEPTANCE FEE. U.S. Borrowers shall pay Agent (for
the ratable benefit of Lenders, subject to any letter agreement between
Agent and individual Lenders), a Bankers' Acceptance fee (including
customary issuance fees of Issuing Lender) which shall accrue at a per
annum rate equal to the Bankers' Acceptance Discount Rate plus the
Applicable Margin for Bankers' Acceptances times the Daily Balance of the
Acceptance Face Amount.
(d) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders and the provision of notice to Administrative Borrower),
(i) all Obligations (except for undrawn Letters of Credit
and except for Bank Product Obligations) that have been charged to
the applicable Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to
2 percentage points above the per annum rate otherwise applicable
hereunder,
(ii) the Letter of Credit fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
(iii) the Bankers' Acceptance fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
(e) PAYMENT. Interest on (i) LIBOR Rate Loans and Prime Rate
Loans shall be payable on each Interest Payment Date, (ii) the Bankers'
Acceptance fee shall be payable on the date of discount of each Bankers'
Acceptance, and (iii) Letter of Credit fees and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. U.S.
Borrowers hereby authorize Agent, from time to time, to charge such
interest and fees, all Lender Group Expenses (as and when incurred), the
charges, commissions, fees, and costs provided for in Section 2.11 (as
and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including any amounts due and payable to
the Bank Product Providers in respect of Bank Products up to the amount
of the then extant Bank Product Reserve) to U.S. Borrowers' Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall
accrue interest at the rate then applicable to Advances hereunder that
are Prime Rate Loans hereunder, and Bombay Canada hereby authorizes
Canadian Agent, from time to time, to charge such interest and fees, all
Lender Group Expenses (as and when incurred), the charges, commissions,
fees, and costs provided for herein (as and when accrued or incurred)
attributable to Bombay Canada or the credit facility made available to
it, and all other payments as and when due and payable under any Loan
Document to Bombay Canada's Loan Account, which amounts thereafter shall
constitute Canadian Advances hereunder and shall accrue interest at the
rate then applicable to Canadian Advances hereunder that are Prime Rate
55
Loans hereunder, provided however, that prior to the occurrence and
continuation of a Cash Dominion Event, Borrowers may elect to pay such
interest, fees and expenses set forth on the statement provided by Agent
or Canadian Agent, as the case may be, pursuant to Section 2.9, to Agent
or Canadian Agent, as the case may be, directly in lieu of such interest,
fees or Lender Group Expenses being charged to the applicable Loan
Account. Any interest not paid when due shall be compounded by being
charged to the applicable Loan Account and shall thereafter constitute
U.S. Advances or Canadian Advances hereunder, as applicable and shall
accrue interest at the rate then applicable to Advances that are Prime
Rate Loans hereunder.
(f) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Prime Rate is changed from time
to time hereafter, the rates of interest hereunder based upon the Prime
Rate automatically and immediately shall be increased or decreased by an
amount equal to such change in the Prime Rate.
(g) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. The Lender
Group and Borrowers intend to contract in strict compliance with
applicable usury law from time to time in effect. In furtherance thereof
each Lender stipulates and agrees that none of the terms and provisions
contained in the Loan Documents shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest
in excess of the maximum amount of interest permitted to be charged by
applicable Law from time to time in effect. No Borrower nor any present
or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned
interest thereon or shall ever be required to pay interest thereon in
excess of the maximum amount that may be lawfully contracted for,
charged, or received under applicable Law from time to time in effect,
and the provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or apparent
conflict herewith. The Lender Group expressly disavows any intention to
contract for, charge, or collect excessive unearned interest or finance
charges in the event the maturity of any Obligation is accelerated. If
(a) the maturity of any Obligation is accelerated for any reason, (b) any
Obligation is prepaid and as a result any amounts held to constitute
interest are determined to be in excess of the legal maximum under
applicable Law, or (c) any Lender or any other holder of any or all of
the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or
all of the Obligations to an amount in excess of that permitted to be
charged by applicable Law then in effect, then all sums determined to
constitute interest in excess of such legal limit shall, without penalty,
be promptly applied to reduce the then outstanding principal of the
related Obligations or, at such Lender's or holder's option, promptly
returned to Borrower or the other payor thereof upon such determination.
In determining whether or not the interest paid or payable, under any
specific circumstance, exceeds the maximum amount permitted under
applicable Law, the Lender Group shall to the greatest extent permitted
under applicable Law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate,
allocate, and spread the total amount of interest throughout the entire
contemplated term of the instruments evidencing the Obligations in
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accordance with the amounts outstanding from time to time thereunder and
the maximum legal rate of interest from time to time in effect under
applicable Law in order to lawfully contract for, charge, or receive the
maximum amount of interest permitted under applicable Law. As used in
this section the term "applicable Law" means the Laws of the State of New
York or the Laws of the United States of America, whichever Laws allow
the greater interest, as such Laws now exist or may be changed or amended
or come into effect in the future.
(h) INTEREST ACT DISCLOSURE. For purposes of the Interest Act
(Canada), (i) whenever any interest or fee under this Agreement or any
Note is calculated using a rate based on a year of 360 days, the rate
determined pursuant to such calculation, when expressed as an annual
rate, is equivalent to (x) the applicable rate based on a year of 360
days, (y) multiplied by the actual number of days in the calendar year in
which the period for which such interest or fee is payable (or
compounded) ends, and (z) divided by 360, (ii) the principle of deemed
reinvestment of interest does not apply to any interest or fee
calculation under this Agreement and any Note, and (iii) the rates of
interest stipulated in this Agreement and any Note are intended to be
nominal rates and not effective rates or yields.
2.6. CASH MANAGEMENT.
(a) U.S. Borrowers shall (i) establish and maintain cash
management services of a type and on terms satisfactory to Agent at one
or more of the banks (a "Cash Management Bank") set forth on Schedule
7.20 (ii) promptly, and in any event no later than the first Business Day
after the date of receipt thereof, cause all Collections of U.S.
Borrowers or cash proceeds of Accounts of U.S. Borrowers to be deposited
only into local depository accounts ("Local Accounts") or concentration
depository accounts ("Concentration Accounts"), each set forth on
Schedule 7.20 and (iii) direct all Cash Management Banks with Local
Accounts to (A) so long as no Cash Dominion Event has occurred and is
continuing, cause all Collections of U.S. Borrowers in an amount greater
than $50,000 to be transferred no less frequently than twice each week,
to and only to, a Concentration Account or an Agent Account, and (B)
after the occurrence and during the continuance of a Cash Dominion Event
cause all Collections of U.S. Borrowers in an amount greater than $10,000
then held in each such Local Account to be transferred no less frequently
than once each day to, and only to, a Concentration Account or Agent's
Account. If, notwithstanding the provisions of this Section 2.6, after
the occurrence and during the continuance of a Cash Dominion Event, any
U.S. Borrower receives or otherwise has dominion over or control of any
Collections, such U.S. Borrower shall hold such Collections in trust for
Agent and shall not commingle such Collections with any of U.S.
Borrowers' other funds or deposit such Collections in any account of U.S.
Borrowers except as instructed by Agent.
(b) U.S. Borrowers shall establish and maintain Control
Agreements with Agent and each Cash Management Bank with respect to each
Concentration Account. Each such Control Agreement shall provide, among
other things, that after the occurrence and during the continuance of a
Cash Dominion Event, (i) upon notice from Agent, the Cash Management Bank
will comply with instructions of Agent directing the disposition of funds
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in the Concentration Account without further consent by U.S. Borrowers,
(ii) the Cash Management Bank has no rights of setoff or recoupment or
any other claim against the applicable Concentration Account, other than
for payment of its service fees and other charges directly related to the
administration of such Concentration Account and for returned checks or
other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Concentration Accounts to the Agent's
Account.
(c) U.S. Borrowers shall establish and maintain Credit Card
Agreements with Agent and each Credit Card Processor. Each such Credit
Card Agreement shall provide, among other things, that each such Credit
Card Processor shall transfer all proceeds due with respect to credit
card charges for sales (net of expenses and chargebacks of the Credit
Card Issuer or Credit Card Processor) by U.S. Borrowers received by it
(or other amounts payable by such Credit Card Processor) into a
designated Concentration Account on a daily basis. U.S. Borrowers shall
not attempt to change any direction or designation set forth in the
Credit Card Agreements regarding payment of charges without the prior
written consent of Agent.
(d) So long as no Cash Dominion Event has occurred and is
continuing, Administrative Borrower may amend Schedule 7.20 to add or
replace a Cash Management Bank or Deposit Account; provided, however,
that (i) such prospective Cash Management Bank shall be satisfactory to
Agent and Agent shall have consented in writing in advance to the opening
of such Deposit Account with the prospective Cash Management Bank, and
(ii) prior to the time of the opening of any Concentration Account, U.S.
Borrowers and such prospective Cash Management Bank shall have executed
and delivered to Agent a Control Agreement in accordance with Section
2.6(b) above. U.S. Borrowers shall close any of their Deposit Accounts
(and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of
notice from Agent that the creditworthiness of any Cash Management Bank
is no longer acceptable in Agent's reasonable judgment, or as promptly as
practicable and in any event within 60 days of notice from Agent that the
operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Concentration
Accounts or Agent's liability under any Control Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
If, notwithstanding the provisions of this Section 2.6, after the
occurrence and during the continuance of a Cash Dominion Event, any
Borrower receives or otherwise has dominion over or control of any
Collections, such Borrower shall hold such Collections in trust for Agent
and shall not commingle such Collections with any of Borrowers' other
funds or deposit such Collections in any account of Borrowers except as
instructed by Agent.
(e) After the occurrence and during the continuance of a Cash
Dominion Event, the Deposit Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrowers are hereby
deemed to have granted a Lien on each Deposit Account to Agent.
2.7. CREDITING PAYMENTS; FLOAT CHARGE.
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(a) The receipt of any payment item by Agent or Canadian Agent,
as the case may be (whether from transfers to Agent or Canadian Agent (as
the case may be) by the Cash Management Banks pursuant to the Control
Agreements or otherwise shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or an account specified by
Canadian Agent (as the case may be) or unless and until such payment item
is honored when presented for payment. Should any payment item not be
honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly.
Anything to the contrary contained herein notwithstanding, any payment
item shall be deemed received by Agent or Canadian Agent (as the case my
be) only if it is received into the Agent's Account or an account
specified by Canadian Agent (as the case may be) on a Business Day on or
before 1:00 p.m. (New York, New York time). If any payment item is
received into the Agent's Account or an account specified by Canadian
Agent (as the case may be) on a non-Business Day or after 1:00 p.m. (New
York, New York time) on a Business Day, it shall be deemed to have been
received by Agent or Canadian Agent (as the case may be) as of the
opening of business on the immediately following Business Day.
(b) After the occurrence and during the continuance of a Cash
Dominion Event, Agent or Canadian Agent (as the case may be) shall be
entitled to charge Borrowers for 1 Business Day of `clearance' or `float'
at the rate then applicable under Section 2.5 to Advances that are Prime
Rate Loans on all Collections that are received by Borrowers and their
Subsidiaries (regardless of whether forwarded by the Cash Management
Banks to Agent or otherwise). This across the board 1 Business Day
clearance or float charge on all Collections of Borrowers and their
Subsidiaries is acknowledged by the parties to constitute an integral
aspect of the pricing of the financing of Borrowers and shall apply
irrespective of whether or not there are any outstanding monetary
Obligations; the effect of such clearance or float charge being the
equivalent of charging interest on such Collections through the
completion of a period ending 1 Business Day after the receipt thereof.
The parties acknowledge and agree that the economic benefit of the
foregoing provisions of this Section 2.7 shall be for the exclusive
benefit of Agent.
2.8. DESIGNATED ACCOUNT. Agent and Canadian Agent are authorized to
make the Advances and Issuing Lender is authorized to issue the Credit
Instruments under this Agreement based upon telephonic or other instructions
received from any Authorized Person, or without instructions if pursuant to
Section 2.5(d). Agent shall be entitled to rely, and shall be fully protected
in relying upon, any Credit Instrument, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex
or teletype message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by an Authorized
Person. Canadian Agent shall be entitled to rely, and shall be fully protected
in relying upon, any draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it to be genuine and correct and
to have been signed, sent or made by an Authorized Person of Bombay Canada.
Administrative Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrowers and made by Agent or Lenders hereunder.
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Unless otherwise agreed by Agent and Administrative Borrower, any Advance,
Agent Advance, or Swing Loans requested by U.S. Borrowers and made by Agent or
Lenders hereunder shall be made to the Designated Account. Bombay Canada
agrees to establish and maintain the Designated Account with the Designated
Account Bank for the purpose of receiving the proceeds of the Canadian Advances
requested by Bombay Canada and made by Canadian Agent or Canadian Lenders
hereunder. Unless otherwise agreed by Canadian Agent and Bombay Canada, any
Canadian Advance or Canadian Swing Loans requested by Bombay Canada and made by
Canadian Agent or Canadian Lenders hereunder shall be made to the Designated
Account.
2.9. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of U.S. Borrowers and
Canadian Agent shall maintain an account on its books in the name of Bombay
Canada (in either case and as applicable, the "Loan Account") on which the
applicable Borrowers will be charged with the Advances (including Agent
Advances and Swing Loans) made by Agent, Canadian Agent, Swing Lender, or
Lenders to applicable Borrowers or for applicable Borrowers' account, the
Credit Instruments issued by Issuing Lender for U.S. Borrowers' account, and
with all other payment Obligations hereunder or under the other Loan Documents
(except for Bank Product Obligations), including, accrued interest, fees and
expenses, and Lender Group Expenses. In accordance with Sections 2.6 and 2.7,
the applicable Loan Account will be credited with all payments received by
Agent from Borrowers or for Borrowers' account, including all amounts received
in the Agent's Account from any Cash Management Bank. In accordance with
Sections 2.6 and 2.7, the applicable Loan Account will be credited with all
payments received by Canadian Agent from Bombay Canada or for Bombay Canada's
account, including all amounts received in the Canadian Agent's Account from
any Cash Management Bank. Agent and Canadian Agent, as the case may be, shall
render statements regarding the applicable Loan Account to Administrative
Borrower and Bombay Canada, as the case may be, including principal, interest,
fees, and including an itemization of all charges and expenses constituting
Lender Group Expenses owing, and such statements, absent manifest error, shall
be conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after
receipt thereof by Administrative Borrower or Bombay Canada, as the case may
be, Administrative Borrower or Bombay Canada, as the case may be, shall deliver
to Agent or Canadian Agent, as the case may be, written objection thereto
describing the error or errors contained in any such statements.
2.10. FEES. U.S. Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter) and shall be apportioned
among Lenders in accordance with the terms of letter agreements between Agent
and individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee (the "Unused Line Fee") in the
amount equal to 0.250% per annum times the result of (A) the Maximum
Revolver Amount, less (B) the average Daily Balance of the Revolver Usage
during the immediately preceding month;
(b) FEE LETTER FEES. As and when due and payable under the terms
of the Fee Letter, the fees set forth in the Fee Letter.
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2.11. CREDIT INSTRUMENTS.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of U.S.
Borrowers (each, an "L/C") or to purchase participations or execute
indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying
Issuer (as of the Closing Date, the prospective Underlying Issuer is to
be ▇▇▇▇▇ Fargo) for the account of U.S. Borrowers. To request the
issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or
extension of an outstanding L/C or L/C Undertaking), Administrative
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of
the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or
identifying the L/C or L/C Undertaking to be amended, renewed, or
extended, the date of issuance, amendment, renewal, or extension, the
date on which such L/C or L/C Undertaking is to expire, the amount of
such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such
other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender,
the applicable U.S. Borrower also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be
the subject of an L/C Undertaking. The Issuing Lender shall have no
obligation to issue a Letter of Credit if any of the following would
result after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed (x) the U.S.
Borrowing Base minus (y) the sum of the then extant amount of
outstanding U.S. Advances plus the then extant Acceptance Face
Amount, or
(ii) the Letter of Credit Usage plus the then extant
Acceptance Face Amount would exceed $60,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances
plus the then extant Acceptance Face Amount.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.11(a), each U.S. Lender agrees to fund its Pro Rata
Share of the U.S. Advance deemed made pursuant to Section 2.11(g) on the
same terms and conditions as if the applicable U.S. Borrower or U.S.
Borrowers had requested such U.S. Advance and Agent shall promptly pay to
Issuing Lender the amounts so received by it from the applicable U.S.
Lenders. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the U.S. Lenders, the Issuing
Lender shall be deemed to have granted to each U.S. Lender, and each U.S.
Lender shall be deemed to have purchased, a participation in each Letter
of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit, and each such U.S.
Lender agrees to pay to Agent, for the account of the Issuing Lender,
such U.S. Lender's Pro Rata Share of any payments made by the Issuing
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Lender under such Letter of Credit. In consideration and in furtherance
of the foregoing, each U.S. Lender hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such U.S.
Lender's Pro Rata Share of each L/C Disbursement made on account of U.S.
Borrowers by the Issuing Lender and not reimbursed by the applicable U.S.
Borrower or U.S. Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
any U.S. Borrower for any reason. Each U.S. Lender acknowledges and
agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share of each
L/C Disbursement made by the Issuing Lender pursuant to this Section
2.11(b) shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in
Section 3 hereof. If any such Lender fails to make available to Agent
the amount of such Lender's Pro Rata Share of each L/C Disbursement on
account of U.S. Borrowers made by the Issuing Lender in respect of such
Letter of Credit as provided in this Section, such U.S. Lender shall be
deemed to be a Defaulting Lender and Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from
such U.S. Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.
(c) Subject to the terms and conditions set forth in this
Agreement and the execution by the applicable U.S. Borrower of an
Acceptance Agreement in Agent's customary form (the "Acceptance
Agreement") and a certification by U.S. Borrowers that the bankers'
acceptances relate to goods in transit, upon the written request of the
applicable U.S. Borrowers, the Issuing Lender, on behalf of the U.S.
Lenders, and in reliance upon the agreement of U.S. Lenders set forth in
Section 2.11(d) hereof and upon the representations and warranties of
U.S. Borrowers contained herein, agrees, in its individual capacity, to
discount Eligible Drafts for the account of U.S. Borrowers (all such
accepted and discounted Eligible Drafts whether heretofore or hereafter
issued being referred to individually as a "Banker's Acceptance" and
collectively as the "Bankers' Acceptances"); provided, however, that any
Bankers' Acceptance issued shall provide for a maturity date not longer
than 180 days provided that in no event shall such maturity extend beyond
the Maturity Date unless, prior to the time of such issuance, the
applicable U.S. Borrowers have delivered to Agent cash collateral in an
amount equal to 103% of the face amount of such Bankers' Acceptance; and
provided, further, that, after giving effect to such request, (i) the sum
of the Letters of Credit Usage plus the then extant Acceptance Face
Amount shall not exceed $60,000,000, (ii) U.S. Revolver Usage shall not
exceed the lesser of (A) the U.S. Borrowing Base, and (B) the Maximum
Revolver Amount minus Canadian Advances; and provided, further, that the
Issuing Lender shall not accept an Eligible Draft if the face amount of
all outstanding drafts accepted by the Issuing Lender which are of the
type described in paragraph 7 of Section 13 of the Federal Reserve Act
(12 USC {section}372), as amended from time to time, or any successor
statute, would cause the Issuing Lender to violate any limitation imposed
upon it under said paragraph or would cause the Issuing Lender to violate
such limitation if all such drafts were sold by the Issuing Lender in the
secondary market. To expedite the acceptance and discounting of Eligible
Drafts, the applicable U.S. Borrower shall provide to the Issuing Lender
fully executed drafts, which shall be blank as to dates and amounts. The
62
applicable U.S. Borrowers may request the Issuing Lender to accept and
discount an Eligible Draft by submitting to the Issuing Lender by no
later than 12:00 noon (New York, New York time) or the proposed date of
acceptance and discounting a bankers' acceptance application in the
Issuing Lender's customary form, completed to the satisfaction of the
Issuing Lender and accompanied by such documents as may be required by
the Issuing Lender to establish that the drafts to be accepted and
discounted will (if accepted and endorsed by a member bank of the Federal
Reserve System) be eligible for discount by such Federal Reserve Bank.
The Issuing Lender shall make available to the applicable U.S. Borrower
at the time of acceptance of each Eligible Draft and upon the
satisfaction of the conditions set forth in Section 3.1 and Section 3.3
hereof, an amount equal to the discounted value of such Eligible Draft
based on: (x) the stated maturity date of such Eligible Draft, (y) the
face amount of such Eligible Draft, and (z) the Bankers' Acceptance
Discount Rate.
(d) Upon receipt of such bankers' acceptance application, Agent
shall notify each U.S. Lender of its Pro Rata Share of the Bankers'
Acceptance on account of U.S. Borrowers. Subject to the terms and
conditions hereof, each U.S. Lender severally agrees that it shall
participate in any Bankers' Acceptances upon notification by Agent that
it has received an application for acceptance and discounting of an
Eligible Draft in form and substance satisfactory to the Issuing Lender.
Agent agrees to furnish each U.S. Lender with a copy of each Bankers'
Acceptance promptly after issuance. Each U.S. Lender severally agrees
that it shall be absolutely liable, without regard to the occurrence of
any Default or Event of Default or any other condition precedent
whatsoever to the extent of such U.S. Lender's Pro Rata Share of the Risk
Participation Liability, to reimburse Agent on demand for the amount of
each draft paid by the Pro Rata Share under each Bankers' Acceptance on
account of U.S. Borrowers to the extent such amount is not reimbursed by
U.S. Borrowers pursuant to Section 2.11(f) hereof. If any such U.S.
Lender fails to make available to Agent the amount of such U.S. Lender's
Pro Rata Share under any Bankers' Acceptance on account of U.S. Borrower
as provided in this Section, such U.S. Lender shall be deemed a
Defaulting Lender and Agent (for the account of Issuing Lender) shall be
entitled to recover such amount on demand from such U.S. Lender together
with interest thereon at the Defaulting Lender Rate until paid in full.
(e) Each such payment made by a U.S. Lender shall be treated as
the purchase by such U.S. Lender of a participating interest in the
applicable U.S. Borrowers' reimbursement obligations under Section
2.11(f) hereof in an amount equal to such payment.
(f) Each U.S. Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or
liability, and reasonable attorneys fees incurred by the Lender Group
arising out of or in connection with any Credit Instrument. Each U.S.
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C or Bankers' Acceptance issued by Issuing
Lender to or for such U.S. Borrower's account, even though this
interpretation may be different from such Borrower's own, and each U.S.
Borrower understands and agrees that the Lender Group shall not be liable
for any error, negligence, or mistake, whether of omission or commission
63
(except, as to any member of the Lender Group, to the extent caused by
its gross negligence or willful misconduct), in following U.S. Borrowers'
instructions or those contained in any Credit Instrument or any
modifications, amendments, or supplements thereto. Each U.S. Borrower
understands that the L/C Undertakings may require Issuing Lender to
indemnify the Underlying Issuer for certain costs or liabilities arising
out of claims by U.S. Borrowers against such Underlying Issuer. Each
U.S. Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by the Lender Group
under any Credit Instrument as a result of the Lender Group's
indemnification of any Underlying Issuer or Issuing Lender.
THE FOREGOING INDEMNIFICATIONS SHALL APPLY WHETHER OR NOT SUCH
LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR
IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN
WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
MEMBER OF THE LENDER GROUP,
provided only that no member of the Lender Group shall be entitled under
this section to receive indemnification for that portion, if any, of any
liabilities and costs which is proximately caused by its own individual
gross negligence or willful misconduct, as determined in a final
judgment.
(g) U.S. Borrowers and the Lender Group acknowledge and agree
that certain Underlying Letters of Credit may be issued to support
letters of credit that already are outstanding as of the Closing Date.
Each Letter of Credit (and corresponding Underlying Letter of Credit) and
each Bankers' Acceptance shall be in form and substance acceptable to the
Issuing Lender (in the exercise of its Permitted Discretion), including
the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter
of Credit or a Bankers' Acceptance, U.S. Borrowers immediately shall
reimburse such L/C Disbursement to Issuing Lender or Acceptance Face
Amount, as applicable, by paying to Agent an amount equal to such L/C
Disbursement or Acceptance Face Amount. All such payments shall be made
no later than 1:00 p.m. (New York, New York time) on the date that such
L/C Disbursement is made or demand for payment is made under a Bankers'
Acceptance, if Administrative Borrower shall have received written or
telephonic notice of such L/C Disbursement or Banker's Acceptance, as
applicable, prior to 1:00 p.m. (New York, New York time), on such date,
or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 1:00 p.m. (New York, New
York time), on (i) the Business Day that Administrative Borrower receives
such notice, if such notice is received prior to 1:00 p.m. (New York, New
York time), on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement or payment under such Bankers'
Acceptance, as applicable, immediately and automatically shall be deemed
64
to be an Advance to the applicable U.S. Borrower hereunder subject to the
provisions of Section 2.1.B. and, thereafter, shall bear interest at the
applicable rate for such Letter of Credit or Banker's Acceptance, as
applicable. To the extent an L/C Disbursement or payment under a
Bankers' Acceptance, as applicable, is deemed to be an Advance hereunder,
a U.S. Borrower's obligation to reimburse such L/C Disbursement or
payment under a Bankers' Acceptance, as applicable, shall be discharged
and replaced by the resulting U.S. Advance. Promptly following receipt
by Agent of any payment from the applicable U.S. Borrower pursuant to
this paragraph, Agent shall distribute such payment to the Issuing Lender
to the extent that the applicable Lenders have made payments pursuant to
Section 2.11(f) to reimburse the Issuing Lender, as applicable, then to
such U.S. Lenders and the Issuing Lender as their interest may appear.
(h) Each U.S. Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the Issuing Lender all instruments,
documents, and other writings and property received by such Underlying
Issuer pursuant to such Underlying Letter of Credit and to accept and
rely upon the Issuing Lender's instructions with respect to all matters
arising in connection with such Underlying Letter of Credit and the
related application.
(i) Any and all charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Credit Instruments shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be
reimbursable by U.S. Borrowers to Agent for the account of the Issuing
Lender; it being acknowledged and agreed by each U.S. Borrower that, (i)
the issuance fee imposed by the prospective Underlying Issuer is one-
eighth of one percent per annum times the face amount of each Underlying
Letter of Credit, (ii) the Issuing Lender may charge customary issuance
fees with respect to the issuance of any Credit Instrument hereunder and
(iii) the Underlying Issuer or the Issuing Lender also imposes a schedule
of charges for amendments, extensions, drawings, and renewals; in each
case it being agreed that U.S. Borrowers as to each Credit Instrument
shall not be subject to charges both of the Issuing Lender plus the
Underlying Issuer.
(j) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the
interpretation or application thereof by any Governmental Authority, or
(ii) compliance by the Underlying Issuer, the Issuing Lender or the
Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or
monetary authority including, Regulation D of the Federal Reserve Board
as from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or
shall be imposed or modified in respect of any Credit Instrument
issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer, the
Issuing Lender or the Lender Group any other condition regarding
any Underlying Letter of Credit or any Credit Instrument issued
pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the
cost to the Lender Group of issuing, making, guarantying, or maintaining any
Credit Instrument or to reduce the amount receivable in respect thereof by the
Lender Group, then, and in any such case, Agent may, at any time within a
reasonable period after the additional cost is incurred or the amount received
is reduced, notify Administrative Borrower, and U.S. Borrowers shall pay within
1 Business Day after demand such amounts as Agent may specify to be necessary
65
to compensate the Lender Group for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until
payment in full thereof at the rate then applicable to Prime Rate Loans
hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
(k) Each U.S. Borrower acknowledges and agrees that certain of
the Qualified Import Letters of Credit may provide for the presentation
of time drafts to the Underlying Issuer. If an Underlying Issuer accepts
such a time draft that is presented under an Underlying Letter of Credit,
it is acknowledged and agreed that (i) the Letter of Credit will require
the Issuing Lender to reimburse the Underlying Issuer for amounts paid on
account of such time draft on or after the maturity date thereof, (ii)
the pricing provisions hereof (including Sections 2.5(b) and 2.12(e))
shall continue to apply, until payment of such time draft on or after the
maturity date thereof, as if the Underlying Letter of Credit were still
outstanding, and (iii) on the date on which Issuing Lender makes payment
to the Underlying Issuer of the amounts paid on account of such time
draft, the Borrowers immediately shall reimburse such amount to Issuing
Lender and such amount shall constitute an L/C Disbursement hereunder.
2.12. LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Prime Rate, Borrowers shall
have the option (the "LIBOR Option") to have interest on all or a portion
of the Advances be charged at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of
(i) the Interest Payment Date applicable to LIBOR Rate Loans, (ii) the
occurrence of an Event of Default in consequence of which the Required
Lenders or Agent on behalf thereof have elected to accelerate the
maturity of all or any portion of the Obligations, or (iii) termination
of this Agreement pursuant to the terms hereof. On the last day of each
applicable Interest Period, unless Administrative Borrower or Bombay
Canada, as the case may be, properly has exercised the LIBOR Option with
respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to
Prime Rate Loans of the same type hereunder. At any time that an Event
of Default has occurred and is continuing, Borrowers no longer shall have
the option to request that Advances bear interest at the LIBOR Rate and
Agent or Canadian Agent (as the case may be) shall have the right to
convert the interest rate on all outstanding LIBOR Rate Loans with an
initial Interest Period greater than 3 months to the rate then applicable
to Prime Rate Loans hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower with respect to U.S. Advances
or Bombay Canada with respect to Canadian Advances, may, at any
time and from time to time, so long as no Event of Default has
occurred and is continuing, elect to exercise the LIBOR Option by
notifying Agent or Canadian Agent, as the case may be, prior to
1:00 p.m. (New York, New York time) at least 2 Business Days prior
to the commencement of the proposed Interest Period (the "LIBOR
66
Deadline"). Notice of Administrative Borrower's or Bombay Canada's
election of the LIBOR Option for a permitted portion of the
Advances and an Interest Period pursuant to this Section shall be
made by delivery to Agent with respect to US. Advances or Canadian
Agent with respect to Canadian Advances of a LIBOR Notice received
by Agent with respect to U.S. Advances or Canadian Agent with
respect to Canadian Advances before the LIBOR Deadline, or by
telephonic notice received by Agent, before the LIBOR Deadline (to
be confirmed by delivery to Agent of a LIBOR Notice received by
Agent or the Canadian Agent, as the case may be, prior to 5:00 p.m.
(New York, New York time) on the same day). Promptly upon its
receipt of each such LIBOR Notice, Agent or Canadian Agent, as the
case may be, shall provide a copy thereof to each Lender having a
Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall indemnify, defend, and hold Agent, the Canadian Agent and
Lenders harmless against any loss, cost, or expense incurred by
Agent, the Canadian Agent or any Lender as a result of (a) the
payment of any principal of any LIBOR Rate Loan other than on the
last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any LIBOR
Rate Loan other than on the last day of the Interest Period
applicable thereto, or (c) the failure to borrow, convert, continue
or prepay any LIBOR Rate Loan on the date specified in any LIBOR
Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with
respect to Agent, Canadian Agent, Canadian Lenders or any Lender,
be deemed to equal the amount determined by Agent, Canadian Agent
or such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such
LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that
would have been applicable thereto, for the period from the date of
such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate which
Agent, Canadian Agent or such Lender would be offered were it to be
offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A
certificate of Agent, Canadian Agent or a Lender delivered to
Administrative Borrower setting forth any amount or amounts that
Agent, Canadian Agent or such Lender is entitled to receive
pursuant to this Section 2.12 shall be conclusive absent manifest
error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans
in effect at any given time. Borrowers only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $1,000,000 in excess thereof.
(c) PREPAYMENTS OF LIBOR RATE LOANS. (i) U.S. Borrowers may
prepay LIBOR Rate Loans at any time and (ii) Bombay Canada may prepay
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LIBOR Rate Loans at any time with respect to Canadian Advances; provided,
however, that in the event that LIBOR Rate Loans are prepaid on any date
that is not the last day of the Interest Period applicable thereto,
including as a result of any mandatory prepayment (whether or not through
the required application by Agent of proceeds of Borrowers' and their
Subsidiaries' Collections in accordance with Section 2.4(b)), if
applicable or for any other reason, including early termination of the
term of this Agreement or acceleration of all or any portion of the
Obligations pursuant to the terms hereof, (A) each U.S. Borrower shall
indemnify, defend, and hold Agent and Lenders and their Participants, and
(B) Bombay Canada shall indemnify, defend, and hold Canadian Agent and
Canadian Lenders and their Participants, harmless against any and all
Funding Losses in accordance with clause (b) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent or Canadian
Agent, as the case may be, with respect to any Lender on a
prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable
Interest Period, including changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in
the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase the
cost of funding loans bearing interest at the LIBOR Rate. In any
such event, the affected Lender shall give Administrative Borrower
or Bombay Canada, as the case may be, and Agent or Canadian Agent,
as the case may be, notice of such a determination and adjustment
and Agent or Canadian Agent, as the case may be, promptly shall
transmit the notice to each other Lender and, upon its receipt of
the notice from the affected Lender, Administrative Borrower or
Bombay Canada, as the case may be, may, by notice to such affected
Lender (y) require such Lender to furnish to Administrative
Borrower or Bombay Canada, as the case may be, a statement setting
forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR
Rate Loans with respect to which such adjustment is made (together
with any amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or
any law, regulation, treaty, or directive, or any change therein or
in the interpretation of application thereof, shall at any time
after the date hereof, in the reasonable opinion of any Lender,
make it unlawful or impractical for such Lender to fund or maintain
LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender
shall give notice of such changed circumstances to Agent or
Canadian Agent, as the case may be, and Administrative Borrower or
Bombay Canada, as the case may be, and Agent or Canadian Agent, as
the case may be, promptly shall transmit the notice to each other
Lender and (y) in the case of any LIBOR Rate Loans of such Lender
that are outstanding, the date specified in such Lender's notice
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shall be deemed to be the last day of the Interest Period of such
LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such
Lender thereafter shall accrue interest at the rate then applicable
to Prime Rate Loans, and (z) applicable Borrowers shall not be
entitled to elect the LIBOR Option until such Lender determines
that it would no longer be unlawful or impractical to do so. Each
U.S. Lender at such time having as its lending office an office
outside the United States agrees to use reasonable efforts to
designate a different lending office if such designation will avoid
the need for such a notice of changed circumstances and would not,
in the good faith judgment of such U.S. Lender, otherwise be
disadvantageous to such U.S. Lender. Each Canadian Lender at such
time having as its lending office an office outside of Canada
agrees to use reasonable efforts to designate a different lending
office if such designation will avoid the need for such a notice of
changed circumstances and would not, in the good faith judgment of
such Canadian Lender, otherwise be disadvantageous to such Canadian
Lender.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, Canadian Agent, nor any
Lender, nor any of their Participants, is required actually to acquire
eurodollar deposits to fund or otherwise match fund any Obligation as to
which interest accrues at the LIBOR Rate. The provisions of this Section
shall apply as if each Lender or its Participants had match funded any
Obligation as to which interest is accruing at the LIBOR Rate by
acquiring eurodollar deposits for each Interest Period in the amount of
the LIBOR Rate Loans.
2.13. CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies,
or any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation thereof
and the assumptions upon which such calculation was based (which statement
shall be deemed true and correct absent manifest error). Notwithstanding
anything to the contrary in this Section, Borrower will not be required to
compensate any Lender pursuant to this Section for any reduction incurred more
than 180 days before such Lender notified Borrower of the change in law (or
other circumstance) giving rise to such reduction. In determining such amount,
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such Lender may use any reasonable averaging and attribution methods. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
2.14. JOINT AND SEVERAL LIABILITY OF U.S. BORROWERS.
(a) Each U.S. Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by Agent and Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each
Borrower (including Bombay Canada) and in consideration of the
undertakings of the other Borrowers to accept joint and several liability
for the Obligations.
(b) Each U.S. Borrower, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-
debtor, joint and several liability with the other U.S. Borrowers, with
respect to the payment and performance of all of the Obligations
(including, without limitation, any Obligations arising under this
Section 2.14), it being the intention of U.S. Borrowers that all the
Obligations (including those of Bombay Canada) shall be the joint and
several obligations of U.S. Borrowers without preferences or distinction
among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then
in each such event, the other Persons composing U.S. Borrowers will make
such payment with respect to, or perform, such Obligation.
(d) The Obligations of U.S. Borrowers under the provisions of
this Section 2.14 constitute the absolute and unconditional, full
recourse Obligations of each U.S. Borrower enforceable against each such
Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each U.S. Borrower hereby waives notice of acceptance of its joint and
several liability, as applicable, notice of any Advances, Credit
Instruments issued under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand for any
payment under this Agreement, notice of any action at any time taken or
omitted by Agent, Canadian Agent or Lenders under or in respect of any of
the Obligations, any requirement of diligence or to mitigate damages, any
and al suretyship defenses and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind
in connection with this Agreement (except as otherwise provided in this
Agreement). Each U.S. Borrower hereby assents to, and waives notice of,
any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by Agent, Canadian Agent or Lenders at any time or
times in respect of any default by any Person composing Borrowers in the
performance or satisfaction of any term, covenant, condition or provision
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of this Agreement, any and all other indulgences whatsoever by Agent,
Canadian Agent or Lenders in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing,
each U.S. Borrower assents to any other action or delay in acting or
failure to act on the part of any of Agent, Canadian Agent or any Lender
with respect to the failure by any Person composing Borrowers to comply
with any of its respective Obligations, including, without limitation,
any failure strictly or diligently to assert any right or to pursue any
remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.14 afford grounds
for terminating, discharging or relieving any U.S. Borrower, in whole or
in part, from any of its Obligations under this Section 2.14, it being
the intention of U.S. Borrower that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of such U.S. Borrower under
this Section 2.14 shall not be discharged except by performance and then
only to the extent of such performance. The Obligations of each U.S.
Borrower under this Section 2.14 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any
Borrower or any Agent or Lender. The joint and several liability of U.S.
Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of U.S.
Borrowers or any Agent or Lender.
(f) Each U.S. Borrower represents and warrants to Agent, Canadian
Agent and Lenders that such Borrower is currently informed of the
financial condition of Borrowers and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment
of the Obligations. Each U.S. Borrower further represents and warrants
to Agent, Canadian Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each U.S.
Borrower hereby covenants that such Borrower will continue to keep
informed of Borrowers' financial condition, the financial condition of
other guarantors, if any, and of all other circumstances which bear upon
the risk of nonpayment or nonperformance of the Obligations.
(g) The provisions of this Section 2.14 are made for the benefit
of Agent, Canadian Agent, Lenders and their respective successors and
assigns, and may be enforced by it or them from time to time against any
or all U.S. Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign
first to marshal any of its or their claims or to exercise any of its or
their rights against any of the other U.S. Borrowers or to exhaust any
remedies available to it or them against any of the other Borrowers or to
resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of
this Section 2.14 shall remain in effect until all of the Obligations
shall have been paid in full or otherwise fully satisfied. If at any
time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by
any Agent, Canadian Agent or Lender upon the insolvency, bankruptcy or
71
reorganization of any of Borrowers, or otherwise, the provisions of this
Section 2.14 will forthwith be reinstated in effect, as though such
payment had not been made.
(h) Each U.S. Borrower hereby agrees that it will not enforce any
of its rights of contribution or subrogation against Borrowers with
respect to any liability incurred by it hereunder or under any of the
other Loan Documents, any payments made by it to Agent, Canadian Agent or
Lenders with respect to any of the Obligations or any collateral security
therefor until such time as all of the Obligations have been paid in full
in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent, Canadian Agent or
Lender hereunder or under any other Loan Documents are hereby expressly
made subordinate and junior in right of payment, without limitation as to
any increases in the Obligations arising hereunder or thereunder, to the
prior payment in full in cash of the Obligations and, in the event of any
insolvency, bankruptcy, receivership, liquidation, reorganization or
other similar proceeding under the laws of any jurisdiction relating to
any Borrower, its debts or its assets, whether voluntary or involuntary,
all such Obligations shall be paid in full in cash before any payment or
distribution of any character, whether in cash, securities or other
property, shall be made to any other Borrower therefor.
(i) Each U.S. Borrower hereby agrees that, after the occurrence
and during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees
that after the occurrence and during the continuance of any Default or
Event of Default, such Borrower will not demand, ▇▇▇ for or otherwise
attempt to collect any indebtedness of any other Borrower owing to such
Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as
trustee for Agent, and such Borrower shall deliver any such amounts to
Agent for application to the Obligations in accordance with Section
2.3(b).
2.15. JUDGMENT CURRENCY; CONTRACTUAL CURRENCY.
(a) If, for the purpose of obtaining or enforcing judgment
against any Borrower in any court in any jurisdiction, it becomes
necessary to convert into any other currency (such other currency being
hereinafter in this Section 2.15 referred to as the "Judgment Currency")
an amount due under any Loan Document in any currency (the "Obligation
Currency") other than the Judgment Currency, the conversion shall be made
at the rate of exchange prevailing on the Business Day immediately
preceding (i) the date of actual payment of the amount due, in the case
of any proceeding in the courts of any jurisdiction that will give effect
to such conversion being made on such date, or (ii) the date on which the
judgment is given, in the case of any proceeding in the courts of any
other jurisdiction (the applicable date as of which such conversion is
made pursuant to this Section 2.15 being hereinafter referred to as the
"Judgment Conversion Date").
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(b) If, in the case of any proceeding in the court of any
jurisdiction referred to in Section 2.15, there is a change in the rate
of exchange prevailing between the Judgment Conversion Date and the date
of actual receipt for value of the amount due, the applicable Borrower
shall pay such additional amount (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount actually received
in the Judgment Currency, when converted at the rate of exchange
prevailing on the date of payment, will produce the amount of the
Obligation Currency which could have been purchased with the amount of
the Judgment Currency stipulated in the judgment or judicial order at the
rate of exchange prevailing on the Judgment Conversion Date. Any amount
due from a Borrower under this Section 2.15(b) shall be due as a separate
debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of any of the Loan Documents.
(c) The term "rate of exchange" in this Section 2.15 means the
rate of exchange at which Agent would, on the relevant date at or about
12:00 p.m. (New York, New York time), be able to sell the Obligation
Currency against the Judgment Currency to prime banks.
(d) Any amount received or recovered by any Agent, Canadian Agent
or Lender in respect of any sum expressed to be due to them (whether for
itself or as trustee for any other person) from any Borrower under this
Agreement or under any of the other Loan Documents in a currency other
than the currency (the "Contractual Currency") in which such sum is so
expressed to be due (whether as a result of, or from the enforcement of,
any judgment or order of a court or tribunal of any jurisdiction, the
winding-up of a Borrower or otherwise) shall only constitute a discharge
of such Borrower to the extent of the amount of the contractual currency
that such Agent, Canadian Agent or Lender is able, in accordance with its
usual practice, to purchase with the amount of the currency so received
or recovered on the date of receipt or recovery (or, if later, the first
date on which such purchase is practicable). If the amount of the
Contractual Currency so purchased is less than the amount of the
Contractual Currency so expressed to be due, such Borrower shall
indemnify such Agent and Canadian Lender against any loss sustained by it
as a result, including the cost of making any such purchase other than
losses resulting from the gross negligence or willful misconduct of the
Person seeking such indemnification.
3. CONDITIONS; TERM OF AGREEMENT.
3.1. CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent in its Permitted Discretion,
of each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before September 29, 2004;
(b) Agent shall have received appropriate financing statements on
Form UCC-1 and PPSA registration statements duly filed in such office or
offices as may be necessary or, in the opinion of Agent, desirable to
perfect Agent's Liens in and to the Collateral and Agent shall have
73
received searches reflecting the filing of all such financing statements
and PPSA registration statements and otherwise satisfactory to Agent;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent in its Permitted Discretion,
duly executed, and each such document shall be in full force and effect:
(i) this Agreement,
(ii) the Canadian Security Documents,
(iii) the Guaranty,
(iv) the Control Agreements,
(v) the Credit Card Agreements,
(vi) the Disbursement Letter,
(vii) the Due Diligence Letter,
(viii)the Fee Letter,
(ix) the Notes,
(x) the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by
Existing Lenders of their Liens in and to the properties and assets
of Borrowers and their Subsidiaries,
(xi) the Eligible Drafts as required pursuant to Section
2.11(c), and
(xii) additional documents required to be determined;
(d) Agent shall have received a certificate from the Secretary of
each Borrower attesting to the resolutions of such Borrower's Board of
Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party
and authorizing specific officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction
of organization of such Borrower, which certificate shall indicate that
such Borrower is in good standing in such jurisdiction;
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(g) Agent shall have received certificates of status with respect
to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Borrower) in which
its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that such Borrower is
in good standing in such jurisdictions;
(h) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.7,
the form and substance of which shall be satisfactory to Agent;
(i) Agent shall have received Collateral Access Agreements with
respect to each warehouse, distribution center, fulfillment center,
contract warehouse or other real property (other than a retail store
location) leased by a Borrower;
(j) Agent shall have received opinions from each of Borrowers'
U.S. and Canadian counsel in form and substance satisfactory to Agent;
(k) Borrowers shall have received a Borrowing Base Certificate
demonstrating Availability in an amount no less than $10,000,000 after
giving effect to the initial extensions of credit hereunder and the
payment of all fees and expenses required to be paid by Borrowers on the
Closing Date under this Agreement or the other Loan Documents;
(l) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and verification of Borrowers'
representations and warranties to the Lender Group, the results of which
shall be satisfactory to Agent, and (ii) an inspection of each of the
locations selected by Agent where Borrowers' and their Subsidiaries'
Inventory is located, the results of which shall be satisfactory to
Agent;
(m) Agent shall have received an appraisal of the Net Retail
Liquidation Value and Net Liquidation Percentage applicable to Borrowers'
and their Subsidiaries' Inventory, the results of which shall be
satisfactory to Agent;
(n) Agent shall have received Borrowers' Closing Date Business
Plan;
(o) Borrowers shall have paid all Lender Group Expenses incurred
in connection with the transactions evidenced by this Agreement;
(p) [Reserved];
(q) Agent shall have received evidence satisfactory in Agent's
Permitted Discretion that Borrowers have received all consents, all
licenses, approvals or evidence of other actions required by any
Governmental Authority in connection with the execution and delivery by
Borrowers or their Subsidiaries of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby
and thereby; and
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(r) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to
Agent.
3.2. RESERVED.
3.3. CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation
of the Lender Group (or any member thereof) to make any Advances hereunder at
any time (or to extend any other credit hereunder) shall be subject to the
following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either
result from the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending
of such credit shall have been issued and remain in force by any
Governmental Authority against any Borrower, Agent, any Lender, or any of
their Affiliates;
(d) Agent shall have received the most recent Borrowing Base
Certificate required to be delivered to Agent in accordance with Section
6.2; and
(e) no Material Adverse Change shall have occurred.
3.4. TERM. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, Canadian Agent and Lenders and shall
continue in full force and effect for a term ending on the Maturity Date. The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5. EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
U.S. Borrowers with respect to any outstanding Credit Instruments, and
including all Bank Products Obligations) immediately shall become due and
payable without notice or demand (including (a) either (i) U.S. Borrowers
providing cash collateral to be held by Agent for the benefit of those Lenders
with a Commitment in an amount equal to 103% of the then extant Letter of
Credit Usage and Acceptance Face Amount, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender and the cancellation of any
Bankers' Acceptances, and (b) providing cash collateral (in an amount
determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank Product Providers
with respect to the then extant Bank Products Obligations). No termination of
this Agreement, however, shall relieve or discharge Borrowers or their
Subsidiaries of their duties, Obligations, or covenants hereunder and Agent's
Liens in the Collateral shall remain in effect until all Obligations have been
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paid in full and fully discharged and the Lender Group's obligations to provide
additional credit hereunder have been terminated. When this Agreement has been
terminated and all of the Obligations have been paid in full and fully
discharged and the Lender Group's obligations to provide additional credit
under the Loan Documents have been terminated irrevocably, Agent will, at
Borrowers' sole expense, execute and deliver any UCC termination statements,
lien releases, mortgage releases, re-assignments of trademarks, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are reasonably necessary to release, as of
record, Agent's Liens and all notices of security interests and liens
previously filed by Agent with respect to the Obligations.
3.6. EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any
time upon 5 Business Days prior written notice by Administrative Borrower to
Agent, to (a) so long as no Accordion Activation shall have occurred,
permanently reduce the Commitment in the minimum amount of $25,000,000 and
integral multiples of $25,000,000 in excess thereof provided, that (i) the
Commitment shall not be permanently reduced to an amount less than $75,000,000
and (b) terminate this Agreement by paying to Agent, in cash, the Obligations
(including (x) either (i) U.S. Borrowers providing cash collateral to be held
by Agent for the benefit of those Lenders with a Commitment in an amount equal
to 103% of the then extant Letter of Credit Usage and Acceptance Face Amount or
(ii) causing the original Letters of Credit to be returned to the Issuing
Lender and the cancellation of any Bankers' Acceptances, and (y) providing cash
collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of
the Bank Product Providers with respect to the then extant Bank Products
Obligations), in full. If Administrative Borrower has sent a notice of
termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrowers shall be obligated to repay the Obligations
(including (a) either (i) U.S. Borrowers providing cash collateral to be held
by Agent for the benefit of those Lenders with a Commitment in an amount equal
to 103% of the then extant Letter of Credit Usage and Acceptance Face Amount,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender and the cancellation of any Bankers' Acceptances, and (b) providing cash
collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of
the Bank Product Providers with respect to the then extant Bank Products
Obligations), in full on the date set forth as the date of termination of this
Agreement in such notice.
4. CREATION OF SECURITY INTEREST.
4.1. GRANT OF SECURITY INTEREST. Each U.S. Borrower hereby grants to
Agent, for the benefit of the Lender Group and the Bank Product Providers, a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Collateral in order to
secure prompt repayment of any and all of the Obligations in accordance with
the terms and conditions of the Loan Documents and in order to secure prompt
performance by U.S. Borrowers of each of their covenants and duties under the
Loan Documents. Agent's Liens in and to the Collateral shall attach to all
Collateral without further act on the part of Agent or U.S. Borrowers.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions or any other disposition
permitted under Section 7.5, Borrowers and their Subsidiaries have no
authority, express or implied, to dispose of any item or portion of the
Collateral (it being understood, with respect to any such Permitted Disposition
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of Collateral, Agent's Liens in and to such Collateral shall be released
automatically upon consummation of such Permitted Disposition, and the proceeds
and products of such Permitted Disposition shall be subject to Agent's Liens).
4.2. OTHER COLLATERAL. Each U.S. Borrower agrees to take the following
actions at any time and solely if proceeds or products of the Specified
Collateral constitutes any of the following:
(a) In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral, and if and to the
extent that Agent determines that perfection or priority of Agent's
security interest is dependent on or enhanced by possession, the
applicable U.S. Borrower, immediately upon the request of Agent, shall
endorse and deliver physical possession of such Negotiable Collateral to
Agent accompanied by such instruments of transfer or assignment duly
executed in blank as Agent may from time to time specify.
(b) If any U.S. Borrower shall, acquire any certificated
securities, such Borrower shall forthwith endorse, assign and deliver the
same to Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as Agent may from time to time specify. If any
securities now or hereafter acquired by any U.S. Borrower are
uncertificated and are issued to such U.S. Borrower or its nominee
directly by the issuer thereof, such U.S. Borrower shall immediately
notify Agent thereof and, at Agent's request and option, either (a) cause
the issuer to enter into a Control Agreement, or (b) pursuant to an
agreement in form and substance satisfactory to Agent, arrange for Agent
to become the registered owner of the securities. If any securities,
whether certificated or uncertificated, or other Investment Property now
or hereafter acquired by any U.S. Borrower are held by such U.S. Borrower
or its nominee through a securities intermediary or commodity
intermediary, such U.S. Borrower shall immediately notify Agent thereof
and, at Agent's request and option, either (i) cause such securities
intermediary or (as the case may be) commodity intermediary to enter into
a Control Agreement, or (ii) pursuant to an agreement in form and
substance satisfactory to Agent, in the case of financial assets or other
Investment Property held through a securities intermediary, arrange for
Agent to become the entitlement holder with respect to such Investment
Property, with such U.S. Borrower being permitted, only with the consent
of Agent, to exercise rights to withdraw or otherwise deal with such
Investment Property. The provisions of this paragraph shall not apply to
any financial assets credited to a securities account for which Agent is
the securities intermediary.
(c) If any Borrowers acquire an interest in any electronic
chattel paper or any "transferable record," as that term is defined in
Section 201 of the federal Electronic Signatures in Global and National
Commerce Act, or in {section}16 of the Uniform Electronic Transactions
Act as in effect in any relevant jurisdiction, such Borrower shall
promptly notify Agent thereof and, at the request and option of Agent,
shall take such action as Agent may reasonably request to vest in Agent
control, under {section}9-105 of the Code, of such electronic chattel
paper or control under Section 201 of the federal Electronic Signatures
in Global and National Commerce Act or, as the case may be, {section}16
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of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record.
4.3. COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
U.S. Borrowers that U.S. Borrowers' Accounts, have been assigned to Agent or
that Agent has a security interest therein, or (b) collect U.S. Borrowers'
Accounts directly and charge the collection costs and expenses to the
applicable Loan Account. Subject to Section 2.6, each U.S. Borrower agrees
that it will hold in trust for the Lender Group, as the Lender Group's trustee,
any of its or its Subsidiaries' Collections that it receives without
commingling the same with other funds of U.S. Borrowers and immediately will
deliver such Collections to Agent or a Cash Management Bank in their original
form as received by such U.S. Borrower or its Subsidiaries, together with any
necessary endorsements or assignments.
4.4. AUTHORIZATION TO FILE FINANCING STATEMENTS.
(a) Each Borrower hereby irrevocably authorizes Agent at any time
and from time to time to file in any filing office in any Code
jurisdiction any initial financing statements and amendments thereto that
(a) indicate the Collateral and (b) provide any other information
required by part 5 of Article 9 of the Code or such other jurisdiction
for the sufficiency or filing office acceptance of any financing
statement or amendment, including whether such Borrower is an
organization, the type of organization and any organizational
identification number issued to such Borrower. Each Borrower agrees to
furnish any such information to Agent promptly upon request. Each
Borrower also ratifies its authorization for Agent to have filed in any
Code jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.
(b) Each U.S. Borrower further agrees, upon the request of Agent
and at Agent's option, to take any and all other actions as Agent may
determine in its Permitted Discretion to be necessary or useful for the
attachment, perfection and first priority of, and the ability of Agent to
enforce, Agent's Lien in any and all of the Collateral, including (a)
executing, delivering and, where appropriate, filing financing statements
and amendments relating thereto under the Code, to the extent, if any,
that such Borrower's signature thereon is required therefor, (b) causing
Agent's name to be noted as secured party on any certificate of title for
a titled good if such notation is a condition to attachment, perfection
or priority of, or ability of Agent to enforce, Agent's security interest
in such Collateral, (c) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection
or priority of, or ability of Agent to enforce, Agent's security interest
in such Collateral, (d) obtaining governmental and other third party
waivers, consents and approvals, in form and substance satisfactory to
Agent, including any consent of any licensor, lessor or other person
obligated on Collateral, (e) obtaining waivers from mortgagees and
landlords in form and substance satisfactory to Agent, and (f) taking all
actions under any earlier versions of the Code or under any other law, as
determined by Agent in its Permitted Discretion to be applicable in any
relevant Code or other jurisdiction, including any foreign jurisdiction.
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4.5. POWER OF ATTORNEY. Each U.S. Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such U.S. Borrower's true and lawful attorney,
with power to (a) if such U.S. Borrower refuses to, or fails timely to execute
and deliver any of the documents described in Section 4.4, sign the name of
such U.S. Borrower on any of the documents described in Section 4.4, (b) at any
time that an Event of Default has occurred and is continuing, sign such U.S.
Borrower's name on any invoice or ▇▇▇▇ of lading relating to the Collateral,
drafts against Account Debtors, or notices to Account Debtors, (c) send
requests for verification of U.S. Borrowers' or their Subsidiaries' Accounts,
(d) after the occurrence of and during the continuation of an Event of Default,
endorse such U.S. Borrower's name on any of its payment items (including all of
its Collections) that may come into the Lender Group's possession, (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under such U.S. Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and
(f) at any time that an Event of Default has occurred and is continuing, settle
and adjust disputes and claims respecting U.S. Borrowers' or their
Subsidiaries' Accounts, chattel paper, or General Intangibles constituting
Collateral directly with Account Debtors or other Persons obligated on any of
the Collateral, for amounts and upon terms that Agent determines to be
reasonable, and Agent may cause to be executed and delivered any documents and
releases that Agent determines to be necessary. The appointment of Agent as
each U.S. Borrower's attorney, and each and every one of its rights and powers,
being coupled with an interest, is irrevocable until all of the Obligations
have been fully and finally repaid and performed and the Lender Group's
obligations to extend credit hereunder are terminated.
4.6. RIGHT TO INSPECT; INVENTORIES, APPRAISALS AND AUDITS, ENVIRONMENTAL
ASSESSMENTS. Agent (through any of its respective officers, employees, or
agents) shall have the right, from time to time hereafter (which shall be at
reasonable times following reasonable notice to Administrative Borrower, prior
to the occurrence of and during the continuation of an Event of Default) to
inspect the Books and make copies or abstracts thereof and to check, test, and
appraise the Collateral in order to verify Borrowers' financial condition or
the amount, quality, value, condition of, or any other matter relating to, the
Collateral. Without limiting the generality of the foregoing:
(a) At Borrowers' expense, an Approved Inventory Servicer shall
conduct physical inventories at, at least 95% of Borrowers' store
locations 1 time per Fiscal Year, and at each of Borrowers' distribution
centers at least 1 time per Fiscal Year at such times as shall be
determined by Borrowers with notice to Agent. Agent, at the expense of
Borrowers, may participate in and/or observe each physical count and/or
inventory of so much of the Collateral as consists of Inventory which is
undertaken on behalf of Borrowers at each of Borrowers' distribution
centers and at not more than 10% of Borrowers' store locations. The
Administrative Borrower shall provide Agent with the preliminary
Inventory levels at each of each Borrower's stores within 15 Business
Days following the completion of such inventory. The Administrative
Borrower, within 45 days following the completion of each such inventory
in the aggregate, shall provide Agent with an aggregate reconciliation of
the results of such inventory and shall post such results to Borrowers'
stock ledger and general ledger, as applicable. Agent, in its Permitted
Discretion, if a Cash Dominion Event exists, may, and shall at the
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Required Lender's direction, cause 1 additional inventory per Fiscal Year
to be taken (at the expense of Borrowers).
(b) At Borrowers' expense, upon the request of Agent from time to
time, Borrowers will obtain and deliver to Agent, or, if Agent so elects,
will cooperate with Agent in Agent's obtaining, a report of an
independent collateral auditor satisfactory to Agent (which may be
affiliated with one of Lenders) with respect to the Books and Accounts
and Inventory components included in the Aggregate Borrowing Base, which
report shall indicate whether or not the information set forth in the
Borrowing Base Certificate most recently delivered is accurate and
complete in all material respects based upon a review by such auditors of
the Accounts (including verification with respect to the amount, aging,
identity and credit of the respective account debtors and the billing
practices of Borrowers) and Inventory (including verification as to the
value, location and respective types); provided, however, that prior to
the occurrence of a Cash Dominion Event, Borrowers shall not be obligated
to pay for more than 2 commercial finance exams in any 12 month period,
provided, further, that prior to the occurrence of a Cash Dominion Event,
Borrowers shall be obligated to pay for any commercial finance exams (i)
conducted in connection with Borrowers request to add Eligible Accounts
of Wholesale, Accounts with respect to private label credit cards, or
Accounts with respect to Permitted Acquisitions to the U.S. Borrowing
Base, and (ii) in the event that the Canadian Revolver Usage is greater
than $0 for 60 days. Without in any way limiting Agent's rights
hereunder so long as there has not occurred a Cash Dominion Event as of
the Closing Date, it is Agent's expectations not to require more than 1
commercial finance exam per calendar year.
(c) Agent may from time to time, if a Cash Dominion Event exists,
obtain inventory appraisals conducted by such appraisers as are
satisfactory to Agent or conduct inventory appraisals (in all events, at
Borrowers' expense). If Agent determines that there have been changes in
markdowns, inventory mix and composition, accounting methods or any other
factors affecting the value of the Collateral, Agent may in its Permitted
Discretion have the Inventory reappraised by a qualified appraisal
company selected by Agent from time to time after the Closing Date for
the purpose of redetermining the Net Liquidation Percentage of the
Eligible Inventory portion of the Collateral and, as a result,
redetermining the Aggregate Borrowing Base; provided however, that prior
to the occurrence of a Cash Dominion Event, Borrowers shall not be
obligated to pay for more than 2 appraisals in any 12 month period
provided, further, that prior to the occurrence of a Cash Dominion Event,
Borrowers shall be obligated to pay for any inventory appraisals (i)
conducted in connection with Borrowers request to add Inventory with
respect to Permitted Acquisitions to the U.S. Borrowing Base,
(ii) Inventory at a port of entry in a State of the United States or from
a third party location to a location set forth on Schedule E-1 and (iii)
in the event that the Canadian Revolver Usage is greater than $0 for 60
days. Without in any way limiting Agent's rights hereunder, so long as
there has not occurred a Cash Dominion Event, as of the Closing Date, it
is Agent's expectation not to require more than 1 appraisal per calendar
year.
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4.7. CONTROL AGREEMENTS. Following the occurrence of a Cash Dominion
Event, Borrowers agree that they will not, and will not permit their
Subsidiaries to, transfer assets out of any of their Deposit Accounts or
Securities Accounts. Following the occurrence of a Cash Dominion Event,
Borrowers agree that they will and will cause their Subsidiaries to take any or
all reasonable steps that Agent requests in order for Agent to obtain control
in accordance with Sections 9-104, 9-105, 9-106, and 9-107 of the Code with
respect to any of its or their Securities Accounts, Deposit Accounts,
electronic chattel paper, Investment Property, and letter-of-credit rights. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Deposit Accounts, Securities Accounts or other Investment Property shall be
modified by Borrowers without the prior written consent of Agent. Subject to
Section 2.6, upon the occurrence and during the continuance of a Default or
Event of Default, Agent may notify any bank or securities intermediary to
liquidate the applicable Deposit Account or Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof
to the Agent's Account.
4.8. GRANT OF NON-EXCLUSIVE LICENSE. For the purpose of enabling Agent
to exercise Agent's rights and remedies under Section 9.1 (including, without
limitation, in order to take possession of, hold, preserve, process, assemble,
prepare for sale, market for sale, sell or otherwise dispose of the Collateral)
at such time as Agent shall be lawfully entitled to exercise Agent's rights and
remedies under Section 9.1, each U.S. Borrower hereby (i) grants to Agent, for
the benefit of Agent and the other Lenders, a royalty free, non-exclusive,
irrevocable license, such license being with respect to Agent's exercise of the
Agent's rights and remedies under Section 9.1 including, without limitation, in
connection with any completion of the manufacture of Inventory or any sale or
other disposition of Inventory (a) to use, apply, and affix any trademark,
trade name, logo, or the like in which any U.S. Borrower now or hereafter has
rights, (b) to use, license or sublicense any intellectual property, computer
software now owned, held or hereafter acquired by such U.S. Borrower, including
in such license access to all media such and to the extent to which any of the
licensed items may be recorded or stored and to all computer software programs
such and to the extent used for the compilation or print out thereof, provided
that Agent's use of the property described in subclauses (a) and (b) above will
comply with all applicable law, and (c) to use any and all furniture, fixtures
and equipment contained in any premises owned or occupied by any U.S. Borrower
in connection with the exercise of Agent's rights and remedies under Section
9.1, and (ii) without limiting the provisions of Section 9.1(f), agrees to
provide Agent and/or its agents with access to, and the right to use, any such
premises owned or occupied by any U.S. Borrower.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
(as to itself only) which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as
though made on and as of the date of such Advance (or other extension of
credit) (except to the extent that such representations and warranties relate
solely to an earlier date) and such representations and warranties shall
survive the execution and delivery of this Agreement:
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5.1. NO ENCUMBRANCES. Each Borrower (a) has good and valid title to its
personal property assets and good and marketable title to its owned Real
Property (subject to exceptions that do not, in the aggregate, materially
impair the use of the personal property and Real Property of Borrowers taken as
a whole), and in the case of the Collateral, free and clear of Liens except for
Permitted Liens. All other information set forth on the Perfection
Certificates pertaining to the Collateral is accurate and complete. There has
been no change in any of such information since the date on which the
Perfection Certificates were signed by Borrowers except as otherwise permitted
under this Agreement.
5.2. ACCOUNTS. The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the sale and delivery of Inventory or
the rendition of services to such Account Debtors in the ordinary course of
Borrowers' business, owed to Borrowers without any known defenses, disputes,
offsets, counterclaims, or rights of return or cancellation (other than
contingent customer rights of return arising in the ordinary course of
business). As to each Account that is identified by Administrative Borrower as
an Eligible Credit Card Receivable in a Borrowing Base Certificate submitted to
Agent, such Account is not excluded as ineligible by virtue of one or more of
the excluding criteria set forth in the definition of Eligible Credit Card
Receivable.
5.3. ELIGIBLE INVENTORY. All Eligible Inventory is of good and
merchantable quality, free from known defects (other than saleable clearance
goods arising in the ordinary course of business consistent with past
practice). As to each item of Inventory that is identified by Administrative
Borrower as Eligible Inventory in a Borrowing Base Certificate submitted to
Agent, such Inventory is not excluded as ineligible by virtue of one or more of
the excluding criteria set forth in the definition of Eligible Inventory.
5.4. LOCATION OF INVENTORY. The Eligible Inventory of Borrowers and
their Subsidiaries are not stored with a bailee, warehouseman, or similar party
and are located only at, or in-transit between, the locations identified on
Schedule 5.4 (as such Schedule may be updated pursuant to Section 6.8). Other
than with respect to Eligible In-Transit Inventory, all of the Eligible
Inventory of Borrowers and their Subsidiaries is used or held for use in their
business and is fit for such purposes.
5.5. INVENTORY RECORDS. Each Borrower keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof.
5.6. JURISDICTION OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
FEIN; ORGANIZATIONAL ID NUMBER.
(a) The jurisdiction of organization of each Borrower and each of
its Subsidiaries is set forth on Schedule 5.6.
(b) The chief executive office of each Borrower and each of its
Subsidiaries is located at the address indicated on Schedule 5.6 (as such
Schedule may be updated pursuant to Section 6.8).
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(c) Each Borrower's and each of its Subsidiaries' FEIN and
organizational identification number, if any, are identified on Schedule
5.6.
(d) Each Borrower has previously delivered to Agent a Perfection
Certificate. Each Borrower represents and warrants to Lender Group that:
(i) such Borrower's exact legal name is that indicated on the applicable
Perfection Certificate and on the signature page hereof; (ii) such
Borrower is an organization of the type, and is organized in the
jurisdiction, set forth in the applicable Perfection Certificate; (iii)
the applicable Perfection Certificate accurately sets forth such
Borrower's organizational identification number or accurately states that
such Borrower has none; (iv) the applicable Perfection Certificate
accurately sets forth such Borrower's place of business or, if more than
one, its chief executive office, as well as such Borrower's mailing
address, if different; (v) all other information set forth on the
applicable Perfection Certificate pertaining to such Borrower is accurate
and complete as of the date hereof; and (vi) there has been no change in
any of such information since the date on which the applicable Perfection
Certificate was signed by such Borrower.
5.7. DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Borrower is (a) duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and (b)
has all requisite corporate (or the equivalent company) power to own its
property and conduct its business as now conducted and as presently
contemplated and (c) qualified to do business in any state or province
where the failure to be so qualified reasonably could be expected to
cause a Material Adverse Change.
(b) Set forth on Schedule 5.7(b) (as such Schedule may be updated
with the written consent of Agent), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class,
and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other than as described
on Schedule 5.7(b) and except for employee and director stock options and
deferred director units there are no subscriptions, options, warrants, or
calls relating to any shares of each Borrower's capital Stock, including
any right of conversion or exchange under any outstanding security or
other instrument. No Borrower is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of
its capital Stock or any security convertible into or exchangeable for
any of its capital Stock.
(c) Set forth on Schedule 5.7(c) (as such Schedule may be updated
with the written consent of Agent), is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each
class of common and preferred Stock authorized for each of such
Subsidiaries; and (iii) the number and the percentage of the outstanding
shares of each such class owned directly or indirectly by the applicable
Borrower. All of the outstanding capital Stock of each such Subsidiary
has been validly issued and is fully paid and non-assessable.
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(d) Except as set forth on Schedule 5.7(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion
or exchange under any outstanding security or other instrument. No
Borrower or any of its respective Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of any Borrower's Subsidiaries' capital Stock or any
security convertible into or exchangeable for any such capital Stock.
5.8. DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the other Loan Documents to which
it is a party and the transactions contemplated hereby and thereby are
within the corporate (or the equivalent) authority of such Borrower and
have been duly authorized by all necessary action on the part of such
Borrower.
(b) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the other Loan Documents to which
it is a party do not and will not (i) violate any provision of federal,
state, or local, statute, law, rule or regulation applicable to any
Borrower or any order, judgment, decree, writ, injunction, license or
permit of any court or other Governmental Authority binding on any
Borrower unless such violation could not reasonably be expected to cause
a Material Adverse Change, (ii) violate any provision of the Governing
Documents of any Borrower or require any approval of any Borrower's
interest holder, (iii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of any Borrower unless such violation
could not reasonably be expected to cause a Material Adverse Change or
the termination of such contract, (iv) result in or require the creation
or imposition of any Lien of any nature whatsoever upon any properties or
assets of any Borrower, other than Permitted Liens unless the imposition
of such Lien could not reasonably be expected to cause a Material Adverse
Change, or (v) require any approval of any Person under any material
contractual obligation of any Borrower, other than consents or approvals
that have been obtained and that are still in force and effect unless
such consent could not reasonably be expected to have a Material Adverse
Change.
(c) Other than the filing of Uniform Commercial Code financing
statements, PPSA registration statements and registrations in Quebec,
Canada, the execution, delivery, and performance by each Borrower of this
Agreement and the other Loan Documents to which such Borrower is a party
do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority,
other than consents or approvals that have been obtained and that are
still in force and effect.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such
Borrower will be the legally valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their
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respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or limiting creditors' rights generally.
(e) Agent's Liens are validly created, perfected and first
priority Liens, subject only to Permitted Liens.
5.9. LITIGATION.
(a) Other than those matters disclosed on Schedule 5.9 and
immaterial matters where the amount in controversy is less than $250,000,
there are no actions, suits, or proceedings or investigations pending or,
to the best knowledge of Borrowers, threatened against Borrowers or any
of their Subsidiaries, as applicable, except for (a) matters that are
fully covered by insurance (subject to customary deductibles), and (b)
matters arising after the Closing Date, reasonably could not be expected
to result in a Material Adverse Change.
(b) There are no actions, suits, proceedings or investigations
pending or, to the best knowledge of Borrowers, threatened against
Borrowers or any of their Subsidiaries, as applicable, that question the
validity or enforceability of this Agreement or any other Loan Document
or any action taken or to be taken by Borrowers in connection therewith.
5.10. NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers and their Subsidiaries that have been delivered by Borrowers to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrowers' and their Subsidiaries' financial condition as of the date thereof
and results of operations for the period then ended. There has not been a
Material Adverse Change with respect to Borrowers and their Subsidiaries since
the date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.11. FRAUDULENT TRANSFER.
(a) Each Borrower and each Subsidiary of a Borrower taken as a
whole are Solvent.
(b) No transfer of property is being made by any Borrower or any
Subsidiary of a Borrower and no obligation is being incurred by any
Borrower or any Subsidiary of a Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future
creditors of Borrowers or their Subsidiaries.
5.12. EMPLOYEE BENEFITS. None of Borrowers, any of their Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.13. ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.13 and
except for other matters that could not reasonably be expected to result in a
Material Adverse Change, (a) to Borrowers' knowledge, none of Borrowers' or
their Subsidiaries' properties or assets has ever been used by Borrowers, their
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Subsidiaries, or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was
in violation of applicable Environmental Law, (b) to Borrowers' knowledge, none
of Borrowers' nor their Subsidiaries' owned Real Property has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) none of Borrowers nor any
of their Subsidiaries have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Borrowers or their Subsidiaries, and (d) none of Borrowers nor any
of their Subsidiaries have received a summons, citation, notice, or directive
from the Environmental Protection Agency or any other federal, state or
provincial governmental agency concerning any action or omission by any
Borrower or any Subsidiary of a Borrower resulting in the releasing or
disposing of Hazardous Materials into the environment in violation of any
applicable Environmental Law.
5.14. BROKERAGE FEES. Borrowers and their Subsidiaries have not utilized
the services of any broker or finder in connection with obtaining financing
from the Lender Group under this Agreement and no brokerage commission or
finders fee is payable by Borrowers or their Subsidiaries in connection
herewith.
5.15. INTELLECTUAL PROPERTY. Each Borrower and each Subsidiary of a
Borrower owns, or holds licenses in, all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are necessary to the conduct of its
business of such Persons as currently conducted, except where the failure to do
so, in the aggregate, would not result in a Material Adverse Change.
5.16. LEASES. Except where the failure to do so would not cause a
Material Adverse Change, Borrowers and their Subsidiaries enjoy peaceful and
undisturbed possession under all leases (including Capitalized Leases) material
to their business and to which they are a party or under which they are
operating. Except to the extent that such default would not cause a Material
Adverse Change, each of such leases is valid and subsisting and no material
default by any Borrower or any of its Subsidiaries exists under such lease.
5.17. DEPOSIT ACCOUNTS. Set forth on Schedule 5.17 (as such Schedule may
be updated from time to time by Administrative Borrower, except during the
continuance of a Cash Dominion Event) are all of Borrowers' and their
Subsidiaries' Deposit Accounts and Securities Accounts, including, with respect
to each bank or securities intermediary (i) the name and address of such
Person, and (ii) the account numbers of the Deposit Accounts or Securities
Accounts maintained with such Person.
5.18. COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to
Agent or any Lender (including all information contained in the Schedules
hereto or in the other Loan Documents) for purposes of or in connection with
this Agreement, the other Loan Documents or any transaction contemplated herein
or therein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of Borrowers or their Subsidiaries in
writing to Agent or any Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect (other than industry-
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wide risks normally associated with the types of businesses conducted by
Borrowers and their Subsidiaries) at such time in light of the circumstances
under which such information was provided. On the Closing Date, the
Projections represent, and as of the date on which any other Projections are
delivered to Agent, such additional Projections represent Borrowers' good faith
reasonable estimate of their and their Subsidiaries' future performance for the
periods covered thereby it being understood that such Projections as to future
events are not to be viewed as facts and that actual results during the period
or period covered by Projections may differ from the projected results and no
assurance can be given that the projections will be realized.
5.19. CREDIT CARD RECEIPTS. Schedule 5.19 sets forth each of Borrowers'
Credit Card Issuers, Credit Card Processors and all arrangements to which
Borrowers are a party with respect to the payment to Borrowers of the proceeds
of all credit card charges for sales by Borrowers.
5.20. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither any Borrower
nor any of their Subsidiaries is a "holding company", or a "subsidiary company"
of a "holding company, or an "affiliate" of a "holding company", as such terms
are defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter"
of an "investment company", as such terms are defined in the Investment Company
Act of 1940.
5.21. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future Lien on any Collateral.
5.22. CERTAIN TRANSACTIONS. None of the officers, directors, or
employees of any Borrower or any of their Subsidiaries is presently a party to
any transaction with any Borrower or any of their Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of Borrowers, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
5.23. REGULATIONS U AND X. No portion of any Advance is to be used, and
no portion of any Letter of Credit is to be obtained, for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms
are used in Regulations U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224.
5.24. LABOR RELATIONS. No Borrower has been or is presently a party to
any collective bargaining or other labor contract. No event has occurred or
circumstance exists which is likely to provide the basis for any work stoppage
or other labor dispute. Borrowers have complied in all material respects with
all applicable laws, decrees, orders, judgments, statutes, laws, rules and
regulations relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing including all applicable provisions of the federal
88
Fair Labor Standards Act, as amended. There is not presently pending and, to
Borrowers' knowledge, there is not threatened any of the following:
(a) Any strike, slowdown, picketing, or work stoppage.
(b) Any proceeding against or affecting Borrowers relating to the
alleged violation of any applicable law, decree, order, judgment,
statute, law, rule or regulation pertaining to labor relations or before
National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable governmental body, organizational activity,
or other labor or employment dispute against or affecting Borrowers,
which, if determined adversely to Borrowers would cause a Material
Adverse Change.
(c) Any lockout of any employees by Borrowers (and no such action
is contemplated by Borrowers).
(d) Any application for the certification of a collective
bargaining agent.
5.25. INDEBTEDNESS. Set forth on Schedule 5.25 is a true and complete
list of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such
Indebtedness.
5.26. PAYMENT OF TAXES. All tax returns, reports and declarations
required to be filed by Borrowers by any jurisdiction to which any of them is
subject have been timely filed, except where the failure to so file could not
reasonably be expected to have a Material Adverse Change. All taxes and other
governmental assessments and charges upon Borrowers or their properties,
assets, income and franchises (including real property taxes and payroll taxes)
but not subject of a Permitted Protest have been paid prior to delinquency
except where the failure to so pay could not reasonably be expected to have a
Material Adverse Change. Borrowers have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and none of the officers of any Borrower know of any basis
for any such claim. Borrowers do not intend to treat the Advances, Credit
Instruments and/or related transactions hereunder as being a "reportable
transaction" (within the meaning of Treasury Regulation Section 1.6011-4).
5.27. FOREIGN ASSETS CONTROL REGULATIONS, ETC. None of the requesting or
borrowing of the Advances, the requesting or issuance, extension or renewal of
any Credit Instrument or the use of the proceeds of any thereof will violate
the Trading With the Enemy Act (50 USC {section}1 et seq., as amended) (the
"Trading With the Enemy Act") or any of the foreign assets control regulations
of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended) (the "Foreign Assets Control Regulations") or any enabling legislation
or executive order relating thereto (which for the avoidance of doubt shall
include, but shall not be limited to (a) Executive Order 13224 of September 21,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
"Executive Order") and (b) the Uniting and Strengthening America by Providing
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Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56)). Furthermore, none of Borrowers nor any of their
Subsidiaries or other Affiliates (a) is or will become a "blocked person" as
described in the Executive Order, the Trading With the Enemy Act or the Foreign
Assets Control Regulations or (b) engages or will engage in any dealings or
transactions, or be otherwise associated, with any such "blocked person".
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Borrowers shall and shall
cause each of their respective Subsidiaries to do all of the following:
6.1. ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns,
and allowances with respect to the Inventory. Borrowers shall further (a)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and
the properties of its Subsidiaries, contingencies and other reserves and (b) at
all times engage independent certified public accountants satisfactory to Agent
as the independent certified public accountants of the Parent and its
Subsidiaries and will not permit more than 90 days to elapse between the
cessation of such firm's (or any successor firm's) engagement as the
independent certified public accountants of the Parent and its Subsidiaries and
the appointment in such capacity of a successor firm registered with the Public
Company Accounting Oversight Board.
6.2. COLLATERAL REPORTING. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the documents set forth on Schedule 6.2 in
accordance with the delivery schedule set forth thereon.
6.3. FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent,
with copies to each Lender:
(a) as soon as available, but in any event within 45 days after
the end of each of the first 11 Fiscal Periods during each of Parent's
Fiscal Years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
A. the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments)
and fairly present in all material respects the financial
condition of Parent and its Subsidiaries,
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B. the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date), and
C. there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrowers
have taken, are taking, or propose to take with respect
thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.21 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the financial covenant contained in Section 7.21,
(b) As soon as available, but in any event within 90 days after
the end of each of Parent's Fiscal Years, consolidated financial
statements of Parent and its Subsidiaries for each such Fiscal Year,
audited by independent certified public accountants reasonably acceptable
to Agent and certified by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(c) as soon as available, but in any event within 90 days after
the end of each of Parent's Fiscal Years, copies of Borrowers'
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion, for the
forthcoming Fiscal Year, on a month by month basis, certified by the
chief financial officer of Parent as being such officer's good faith
reasonable estimate of the financial performance of Parent and its
Subsidiaries during the period covered thereby, it being understood that
such Projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any
Projections may differ from the projected results and no assurance can be
given that the Projections will be realized,
(d) if and when filed by any Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports,
and Form 8-K current reports,
(ii) any other filings made by any Borrower with the SEC,
(iii) upon request by Agent, in its Permitted Discretion,
copies of Borrowers' federal income tax returns, and any amendments
thereto, filed with the Internal Revenue Service, and
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(iv) any other information that is provided by Parent to its
shareholders generally,
(provided, that for purposes of this clause (d), any information to
be delivered hereunder shall be deemed to have been delivered when posted
on the Parent's website or otherwise made available on the website of the
SEC),
(e) as soon as a Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof
together with a reasonably detailed description thereof and a statement
of the curative action that Borrowers propose to take with respect
thereto,
(f) promptly after the commencement thereof, but in any event
within 10 Business Days after the service of process with respect thereto
on any Borrower or any Subsidiary of a Borrower, notice of all actions,
suits, or proceedings brought by or against any Borrower or any
Subsidiary of a Borrower before any Governmental Authority which, if
determined adversely to such Borrower or such Subsidiary, reasonably
could be expected to result in a Material Adverse Change, and
(g) upon the request of Agent in its Permitted Discretion, any
other report reasonably requested relating to the financial condition of
Borrowers or their Subsidiaries, provided that such reports shall not be
overly burdensome for any Borrower to prepare.
In addition to the financial statements referred to above, Borrowers
agree to deliver financial statements prepared on both a consolidated and
consolidating basis, provided that (a) only Parent's consolidated financial
statements shall be audited, (b) consolidating financial statements shall be
prepared without footnotes, and (c) Borrowers shall only be required to deliver
balance sheets and income statements on a consolidating basis. Parent agrees
to cooperate with Agent to allow Agent to consult with its independent
certified public accountants if Agent reasonably requests the right to do so
(and Agent shall notify Parent as to the timing of such consultation and permit
Parent to be present thereat or to otherwise participate therein) and that, in
such connection, their independent certified public accountants are authorized
to communicate with Agent and to release to Agent whatever financial
information concerning Borrowers or their Subsidiaries that Agent reasonably
may request.
6.4. RETURNS. Account for returns of inventory and customer credits and
record the effects thereof on the general ledger on the same basis and in
accordance with the usual and customary practices of the applicable Borrower,
as they exist at the time of the execution and delivery of this Agreement
except where failure to do so could not reasonably be expected to result in a
Material Adverse Change..
6.5. MAINTENANCE OF PROPERTIES.
(a) At all times preserve and keep in full force and effect each
Borrower's valid existence and good standing and any rights and
franchises material to Borrowers' business,
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(b) Maintain and preserve all of their properties which are
necessary or useful in the proper conduct to their business in good
working order and condition, ordinary wear and tear excepted,
(c) Cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the
judgment of Borrowers may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times,
(d) Continue to engage in the businesses of selling home
furnishings at the retail and wholesale level, and related businesses,
and
(e) Comply at all times with the provisions of all leases to
which it is a party as lessee, so as to prevent any loss or forfeiture
thereof or thereunder;
provided that nothing in this Section 6.5 shall prevent Borrower from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of such
Borrower, desirable in the conduct of its or their business and that do not in
the aggregate cause a Material Adverse Change.
6.6. TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against
Borrowers, their Subsidiaries, or any of their respective assets to be paid in
full, before delinquency or before the expiration of any extension period, as
well as all claims for labor materials or supplies that if unpaid might by law
become a Lien or charge upon its property, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrowers will and will cause their Subsidiaries to make timely payment or
deposit of all tax payments and withholding taxes required of them by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that the applicable
Borrower or Subsidiary of a Borrower has made such payments or deposits.
6.7. INSURANCE. At Borrowers' expense, maintain insurance respecting
their and their Subsidiaries' assets wherever located, covering loss or damage
by fire, theft, explosion, and other hazards and risks and also shall maintain
business interruption, public liability, and product liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation,
all as ordinarily are insured against by other Persons engaged in the same or
similar business. All such policies of insurance shall be in such amounts
which are customary for Persons engaged in the same or similar business and
with nationally recognized insurance companies. Borrowers shall deliver copies
of all such policies to Agent with a satisfactory lender's loss payable
endorsement naming Agent as loss payee (with respect to the Collateral) or
additional insured, as appropriate. Each such policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Agent in the event of cancellation of the
policy for any reason whatsoever.
6.8. LOCATION OF INVENTORY. Keep Borrowers' and their Subsidiaries'
Inventory (other than Eligible In-Transit Inventory) only at the locations
identified on Schedule 5.4 and their chief executive offices only at the
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locations identified on Schedule 5.6; provided, however, that (a)
Administrative Borrower may amend Schedule 5.4 and Schedule 5.6 so long as such
amendment occurs by written notice to Agent not less than 30 days prior to the
date on which such Inventory is moved to such new location or such chief
executive office is relocated, so long as such new location is within the
United States or Canada (other than Eligible In-Transit Inventory), and so long
as, at the time of such written notification, the applicable Borrower provides
any financing statements or other documents necessary to perfect and continue
Agent's Liens on such assets and also provides a Collateral Access Agreement
with respect thereto if such location is a warehouse, distribution center,
fulfillment center, contract warehouse or other real property (other than a
retail store location) leased by a Borrower, and (b) Borrowers and their
Subsidiaries may keep Inventory during the period from September 1 to December
31 of each year at warehouses leased by such Persons or in a fulfillment center
or contract warehouse, in each case without a Collateral Access Agreement, in
an aggregate amount not to exceed 5% of the Cost of Eligible Inventory.
6.9. COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change.
6.10. LEASES. Pay when due all rents and other amounts payable under any
leases to which any Borrower or any Subsidiary of a Borrower is a party or by
which any Borrower's or any Subsidiary of a Borrower's properties and assets
are bound, unless such payments are the subject of a Permitted Protest or
unless nonpayment of such rents and other amounts individually or in the
aggregate could not reasonably be expected to result in a Material Adverse
Change.
6.11. EXISTENCE. At all times preserve and keep in full force and effect
each Borrower's and each Subsidiary of a Borrower's valid existence and good
standing and any rights and franchises material to their businesses except as
otherwise permitted pursuant to Section 7.4.
6.12. ENVIRONMENTAL. Except for such Environmental Liens, failures to
comply, releases, Environmental Actions, notices, citations or orders which
individually or in the aggregate could not reasonably be expected to result in
a Material Adverse Change (a) keep any property either owned or operated by any
Borrower or any Subsidiary of a Borrower free of any Environmental Liens or
post bonds or other financial assurances sufficient to satisfy the obligations
or liability evidenced by such Environmental Liens, (b) comply with all
applicable Environmental Laws and provide to Agent documentation of such
compliance which Agent reasonably requests, (c) promptly notify Agent of any
release of a Hazardous Material of any reportable quantity from or onto
property owned or operated by any Borrower or any Subsidiary of a Borrower and
take any Remedial Actions required to ▇▇▇▇▇ said release or otherwise to come
into compliance with applicable Environmental Law, and (d) promptly, but in any
event within 5 days of its receipt thereof, provide Agent with written notice
of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of any Borrower or any Subsidiary
of a Borrower, (ii) commencement of any Environmental Action or notice that an
Environmental Action will be filed against any Borrower or any Subsidiary of a
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Borrower, and (iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse
Change.
6.13. DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in any
material respect (other than industry-wide risks normally associated with the
types of businesses conducted by Borrowers and their Subsidiaries) in light of
the circumstances in which made; provided that Projections and Schedules
furnished to the Lender Group shall be deemed to be updated as and when
delivered pursuant to the terms hereof. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the affect
of amending or modifying this Agreement or any of the Schedules hereto.
6.14. FORMATION OF DOMESTIC SUBSIDIARIES. At the time that any Borrower
forms any direct or indirect Domestic Subsidiary or acquires any direct or
indirect Domestic Subsidiary after the Closing Date, such Borrower shall (a)
cause such new Subsidiary to provide to Agent a joinder to this Agreement,
allonges to Notes, and other security documents, as well as appropriate UCC-1
financing statements all in form and substance satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly formed or acquired Subsidiary in
scope similar to the collateral granted hereunder), and (b) provide to Agent
all other documentation, including one or more opinions of counsel satisfactory
to Agent, which in its opinion is appropriate with respect to the execution and
delivery of the applicable documentation referred to above. Any document,
agreement, or instrument executed or issued pursuant to this Section 6.14 shall
be a Loan Document.
6.15. ADDITIONAL COLLATERAL COVENANTS. Except for Permitted Liens, be
the owners of the Collateral free from any right or claim of any other person
or any Lien, and shall defend the same against all claims and demands of all
Persons at any time claiming the same or any interests therein adverse to Agent
or any Lender. Borrowers may grant such allowances, discounts or other
adjustments to Borrowers' Account Debtors as Borrowers may reasonably deem to
accord with sound business practice pursuant to past practices.
6.16. INVESTMENT PROCEEDS, ETC. The proceeds of any funds received by
any Borrower whether or not from ordinary course business operations
(including, without limitation, tax refunds, damage awards, or insurance or
condemnation proceeds) with respect to the Collateral shall be deposited
directly into Agent's Account to be applied on account of the Obligations in
accordance with Section 2.3(b) if a Cash Dominion Event has occurred and is
continuing.
6.17. IMMEDIATE NOTICE TO AGENT.
(a) The Administrative Borrower shall provide Agent with written
notice promptly upon the occurrence of any of the following events, which
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written notice shall state with reasonable particularity the facts and
circumstances of the event for which such notice is being given:
(i) Any change in the Authorized Persons;
(ii) The completion of any physical count of all or a
material portion of Borrowers' Inventory (together with a copy of
the results thereof certified by the Administrative Borrower);
(iii) Any cessation by Borrowers of their making payment to
its creditors generally as Borrowers' debts become due;
(iv) Any failure by Borrowers to pay rent on a timely basis
at 20% or more of any of Borrowers' locations, and as and when such
rent payment is due;
(v) Any Material Adverse Change;
(vi) The occurrence of any Default or Event of Default;
(vii) Any discharge by Parent of its independent accountants
or any withdrawal or resignation by such independent accountants
from their acting in such capacity;
(viii)If any Borrower receives notice of or any action is
taken in respect of a claimed default (whether or not constituting
a default) under the Credit Card Agreements;
(ix) Any judgment not covered by insurance final or
otherwise against any Borrower or any of its Subsidiaries in an
amount in excess of $1,000,000;
(x) Any setoff, claims, withholdings or other defenses to
which any of the Collateral, or Agent's rights with respect to the
Collateral, are subject; or
(xi) The obtaining of an organization identification number
by any Borrower which did not have one on the Closing Date,
together with such number.
(b) The Administrative Borrower shall:
(i) Provide Agent, when so distributed, with copies of any
materials distributed to the shareholders of any Borrower
(provided, that for purposes of this clause (i), any materials to
be delivered hereunder shall be deemed to have been delivered when
posted on the Parent's website or otherwise made available on the
website of the SEC);
(ii) Add Agent as an addressee on all mailing lists
maintained by or for Borrowers;
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(iii) At the reasonable request of Agent, from time to time,
provide Agent with copies of all requested advertising (including
copies of all print advertising and duplicate tapes of all
requested video and radio advertising);
(iv) Provide Agent, following review by the Audit and
Finance Committee of the Parent's Board of Directors, with a copy
of any management letter or similar communications from any
accountant of Borrowers; and
(v) Provide Agent with details of all credit card
arrangements to which Borrowers or any of their Subsidiaries is
from time to time a party, including details relating to such
Borrower's or such Subsidiary's compliance with the terms of
payment to the applicable Agent's Account of the proceeds of all
credit card charges for sales by such Borrower or such Subsidiary.
(vi) The Administrative Borrower shall provide Agent with
(a) prior written notice of any entity's becoming or ceasing to be
a Subsidiary and (b) prompt written notice of any entity's becoming
or ceasing to be an Affiliate (other than a Subsidiary).
6.18. INACTIVE SUBSIDIARIES. The Parent shall not permit BMAJ, Inc. to
engage in any trade or business or own any assets or incur any Indebtedness to
any Person.
6.19. FURTHER ASSURANCES. Cooperate with Lenders and Agent and execute
such further instruments and documents as Lenders or Agent shall reasonably
request to carry out to their satisfaction the transactions contemplated by
this Agreement and the other Loan Documents.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, until termination of all of the
Commitments and final payment in full of the Obligations, Borrowers will not
and will not permit any of their respective Subsidiaries to do any of the
following:
7.1. INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee,
or otherwise become or remain, directly or indirectly, liable with respect to
any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit and any other Obligations that
constitute Indebtedness;
(b) Indebtedness set forth on Schedule 5.25;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance
or renewal of any Permitted Liens associated therewith) so long as: (i)
the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's Permitted Discretion, materially impair the prospects of
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repayment of the Obligations by Borrowers or materially impair Borrowers'
creditworthiness, (ii) such refinancings, renewals, or extensions do not
result in an increase in the then extant principal amount of, or interest
rate with respect to, the Indebtedness so refinanced, renewed, or
extended or add one or more Borrowers as liable with respect thereto if
such additional Borrowers were not liable with respect to the original
Indebtedness, (iii) such refinancings, renewals, or extensions do not
result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms
or conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Borrower, (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to
the Obligations, then the terms and conditions of the refinancing,
renewal, or extension Indebtedness must include subordination terms and
conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended
Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or
extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended;
(e) Permitted Office Building Indebtedness and all refinancings,
renewals, or extensions thereof (and continuance or renewal or any
Permitted Liens associated therewith);
(f) endorsement of instruments or other payment items for
deposit;
(g) Indebtedness composing Permitted Investments;
(h) Indebtedness of a Borrower to another Borrower;
(i) Indebtedness of a Borrower or a Subsidiary of a Borrower in
respect of hedge agreements entered into by such Person with the purpose
and effect of fixing interest rates on a principal amount of Indebtedness
of such Person that is accruing interest at a variable rate, provided
that each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who at the time the contract is made has
long-term obligations rated A or Aa3 or better, respectively, by S&P and
▇▇▇▇▇'▇; and
(j) other unsecured Indebtedness of Borrowers and their
Subsidiaries, in an aggregate amount not to exceed at any time
$2,000,000.
7.2. LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) or (e) and so long as the replacement Liens only
encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
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7.3. RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATION.
(a) Enter into or permit to exist any arrangement or agreement
(excluding this Agreement and the other Loan Documents) which directly or
indirectly prohibits any Borrower or any of its Subsidiaries from
creating, assuming or incurring any Lien upon its properties, revenues or
assets or those of any of their Subsidiaries whether now owned or
hereafter acquired; or
(b) Enter into any agreement, contract or arrangement (excluding
this Agreement and the other Loan Documents) restricting the ability of
any Subsidiary of any Borrowers to pay or make dividends or distributions
in cash or kind to Borrowers, to make loans, advances or other payments
of whatsoever nature to Borrowers, or to make transfers or distributions
of all or any part of its assets to Borrowers;
in each case other than (i) restrictions on specific assets which assets are
the subject of Permitted Purchase Money Indebtedness or Permitted Office
Building Indebtedness, (ii) customary anti-assignment provisions contained in
leases and licensing agreements entered into by such Borrower or such
Subsidiary in the ordinary course of its business and (iii) customary
restrictions contained in asset sale agreements limiting the transfer of such
assets pending the closing of such sale.
7.4. RESTRICTIONS ON FUNDAMENTAL CHANGES. (a) Enter into any merger or
consolidation, (b) liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), or (c) convey, sell, lease, license, assign,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets, except:
(i) any Borrower may be merged with or into another Borrower, or
be liquidated, wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions, to
any Borrower; provided that (i) at the time of any such event, no Event
of Default shall exist or shall result from such event and (ii) in the
case of such a event, a Borrower shall be the continuing or surviving
Person;
(ii) (A) any Domestic Subsidiary of a Borrower may be merged with
or into another Domestic Subsidiary of a Borrower, or be liquidated,
wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or a series of transactions, to any Domestic
Subsidiary of a Borrower, provided that at the time of any such event no
Event of Default shall exist or shall result from such event, and (B) any
Domestic Subsidiary of a Borrower may be merged with and into a Borrower,
or be liquidated, wound up or dissolved, or all or any part of its
business, property or assets may be conveyed, sold, leased, transferred
or otherwise disposed of, in one transaction or a series of transactions,
to any Borrower; provided that (i) at the time of any such event, no
Event of Default shall exist or shall result from such event, (ii) a
Borrower shall be the continuing or surviving Person, and (iii) the
Borrowers shall have obtained the Agent's prior written consent;
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(iii) in connection with (1) sales or closures of stores or
distribution centers in the normal course of business, and (2)
dispositions of Inventory and other assets located at such locations (or
used in connection with the operation thereof) and related non-
depreciated leasehold interests related thereto, in each case on
reasonable terms consistent with such Person's usual practice in
connection with such sales or closures; provided that the proceeds of
such sales and dispositions of Inventory closures are used to repay or
prepay the Obligations pursuant to Section 2.3;
(iv) the sale, in one transaction or a series of transactions, of
the Bombay Office Complex;
(v) dispositions permitted by Section 7.5; and
(vi) any other disposition of assets in any Fiscal Year for full
and fair consideration as long as the value of such assets does not
exceed $1,000,000.
7.5. DISPOSAL OF ASSETS; SALE AND LEASEBACK. Other than Permitted
Dispositions, and dispositions permitted by Section 7.4, convey, sell, lease,
license, assign, transfer, or otherwise dispose of any of the assets of any
Borrower or any Subsidiary of a Borrower. Borrowers will not, and will not
permit any of their Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby Borrowers or any Subsidiary of Borrowers shall sell or
transfer any property owned by it in order then or thereafter to lease such
property or lease other property that Borrowers or any Subsidiary of Borrowers
intends to use for substantially the same purpose as the property being sold or
transferred other than (a) sale leaseback transactions(in one transaction or a
series of transactions) in respect of the Bombay Office Complex and (b) other
sale leaseback transactions not to exceed $2,500,000 in the aggregate at any
time.
7.6. CHANGE NAME. Change any Borrower's or any Subsidiary of a
Borrower's name, FEIN, organizational identification number, type of
organization, jurisdiction of organization or other legal structure or relocate
any Borrower's or any Subsidiary of a Borrower's chief executive office to a
new location, without the consent of the Agent (not to be unreasonably withheld
so long as, at the time of such request for consent, such Borrower or such
Subsidiary provides any financing statements necessary to perfect and continue
perfected Agent's Liens or any constitutive documents resulting from such
change); provided, however, that a Borrower or any Subsidiary of a Borrower may
change its name or chief executive office location upon at least 30 days prior
written notice by Administrative Borrower to Agent of such change and so long
as, at the time of such written notification, such Borrower or such Subsidiary
provides any financing statements necessary to perfect and continue perfected
Agent's Liens.
7.7. [RESERVED.]
7.8. PREPAYMENTS AND AMENDMENTS. Except in connection with a
refinancing permitted by Section 7.1(d),
(a) prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower or any Subsidiary of a Borrower, other than
the Obligations in accordance with this Agreement, or
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(b) directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Section 7.1(b) or (c).
7.9. CONSIGNMENTS. Consign any of their Inventory or sell any of their
Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or other
conditional terms of sale, except for (a) consignments of Inventory not to
exceed the aggregate Cost amount of $1,000,000 at any time, and (b) rights of
purchasers to return Inventory pursuant to a Borrower's or any of its
Subsidiary's return policy.
7.10. DISTRIBUTIONS. Other than distributions or declaration and payment
of dividends by a Borrower to another Borrower, make any distribution or
declare or pay any dividends (in cash or other property, other than common
Stock or options or rights with respect to Common Stock) on, or purchase,
acquire, redeem, or retire any of any Borrower's Stock, of any class, whether
now or hereafter outstanding; provided, however, that (a) Borrowers may
purchase, acquire, redeem or retire any of Borrowers' Stock or may pay cash
dividends on any Borrowers' stock so long as (i) at the time of such purchase,
acquisition redemption, retirement, payment and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing and (ii)
immediately after giving effect thereto, Availability shall be at least equal
to $25,000,000 and the Administrative Borrower shall have delivered to Agent a
Compliance Certificate and Projections evidencing the maintenance of
Availability of at least $25,000,000 for the 2 Fiscal Quarters then ended
immediately prior to such purchase, acquisition, redemption or retirement of
any Borrower's Stock and (b) Borrowers may make distributions or declare and
pay any dividends on and may purchase, acquire, redeem, or retire any
Borrower's Stock in a substantially contemporaneous exchange for common Stock
or other common equity interests of such Borrower (including as a result of new
issuances of common Stock or common equity interests).
7.11. ACCOUNTING METHODS. Modify or change their Fiscal Year or their
method of accounting (other than as may be required to conform to GAAP).
7.12. INVESTMENTS, ACQUISITIONS. Except for Permitted Investments and
Permitted Acquisitions, directly or indirectly, make or acquire any Investment,
or incur any liabilities (including contingent obligations) for or in
connection with any Investment; provided, however, that such Investments will
be considered Investments permitted by this Section 7.12 only if all actions
have been taken to the satisfaction of Agent to provide to Agent, for the
benefit of Lenders and Agent, a first priority perfected security interest in
all of such Investments free of all Liens other than Permitted Liens.
7.13. TRANSACTIONS WITH AFFILIATES. Engage in any transaction with any
Affiliate (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
Affiliate or, to the knowledge of Borrowers, any corporation, partnership,
trust or other entity in which any such Affiliate has a substantial interest or
is an officer, director, trustee or partner, on terms more favorable to such
Person than would have been obtainable on an arm's-length basis in the ordinary
course of business except (a) reasonable and customary fees and other
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consideration paid to members of the board of directors of Parent and (b)
compensation and benefit arrangements for officers and other employees of
Borrowers and their Subsidiaries entered into in the ordinary course of
business and (c) transactions among Parent and its wholly-owned Subsidiaries in
the ordinary course of business consistent with past practices. Each Affiliate
of Borrowers is listed on Schedule 7.13 (as such Schedule may be updated from
time to time).
7.14. SUSPENSION. Suspend or go out of a substantial portion of their
business.
7.15. USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lenders, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent with the terms
and conditions hereof, for its lawful and permitted purposes.
7.16. INVENTORY WITH BAILEES. Unless Agent has granted its prior written
consent and Borrowers have delivered to Agent a Bailee Acknowledgment with
respect to the applicable Inventory, no Inventory shall at any time now or
hereafter be stored with a bailee, warehouseman, or similar party (other than
Inventory located at retail locations).
7.17. STORE OPENINGS AND CLOSINGS. Open or close any location at which
Borrowers maintain, offer for sale or store any of the Collateral unless
Borrowers have provided Agent at least 30 days' prior written notice of such
opening or closing and (i) in the case of any such opening, such opening
results in no more than a 24 store difference in the projected store openings
set forth in the Projections or (ii) in the case of any such closing, such
closing results in no more than a 24 store difference in the projected store
openings set forth in the Projections.
7.18. SECURITIES ACCOUNTS. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account subject to the provisions of Section 2.6. No Borrower shall
transfer assets out of any Securities Account; provided, however, that, so long
as no Cash Dominion Event has occurred and is continuing or would result
therefrom, Borrowers may use such assets (and the proceeds thereof) to the
extent not prohibited by this Agreement.
7.19. EMPLOYEE BENEFIT PLANS.
(a) Engage in any "prohibited transaction" within the meaning of
{section}406 of ERISA or {section}4975 of the Code which could reasonably
be expected to result in a Material Adverse Change; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in {section}302 of ERISA,
whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner which,
could result in the imposition of a lien or encumbrance on the assets of
any Borrowers or any of their Subsidiaries pursuant to {section}302(f) or
{section}4068 of ERISA; or
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(d) amend any Guaranteed Pension Plan in circumstances requiring
the posting of security pursuant to {section}307 of ERISA or
{section}401(a)(29) of the Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of {section}4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities, by
more than the amount set forth in Section 5.15.
7.20. DEPOSIT ACCOUNTS, CREDIT CARD AGREEMENTS, ETC. (a)Establish any
bank accounts, credit card clearinghouse or processors, other than those
Deposit Accounts, Credit Card Agreements and other accounts, all listed on
Schedule 7.20, without Agent's prior written consent, (b) violate directly or
indirectly any Control Agreement, Bank Product Agreement, or other bank agency
or lock box agreement in favor of Agent for the benefit of the Lender Group
with respect to such account, (c) deposit into any of the payroll accounts
listed on Schedule 7.20 any amounts in excess of amounts necessary to pay
current payroll obligations from such accounts or (d) change any direction or
designation relating to any Credit Card Processor.
7.21. MINIMUM AVAILABILITY. Borrowers shall have at all times Adjusted
Availability of at least equal to the Minimum Adjusted Availability
Requirement.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 Any Borrower shall fail to pay (a) when due any installment of
principal whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment of the Obligations, (b) when
due any accounts payable to the Issuing Lender constituting reimbursement of
Obligations, and (c) any interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts), fees
and charges due the Lender Group, reimbursement of Lender Group Expenses, or
other amounts constituting Obligations not set forth in the preceding clauses
(a) or (b) herein (i) so long as clause (b) of the definition of Cash Dominion
Event shall not have occurred, within 5 days after the date due, and (ii) when
the same shall be due and payable at any time that clause (b) of the definition
of Cash Dominion Event shall have occurred.
8.2 (a) Any Borrower shall fail to comply with any of its covenants
contained in Section 6, or 7; (b) any Borrower or any of its Subsidiaries shall
fail to perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this Section
8) for 20 days after written notice of such failure has been given to
Administrative Borrower by Agent; and (c) any representation or warranty of any
Borrower or any of its Subsidiaries in this Agreement or any of the other Loan
Documents or any Record or in any other document or instrument delivered
pursuant to or in connection with this Agreement shall prove to have been false
in any material respect upon the date when made or deemed to have been made or
repeated.
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8.3 If any material portion of any Borrower's or any Subsidiary of a
Borrower's assets is attached, seized, subjected to a writ or distress warrant,
levied upon, or comes into the possession of any third Person and the same is
not discharged for 30 days or more;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any
Subsidiary of a Borrower;
8.5 If an Insolvency Proceeding is commenced against any Borrower or
any Subsidiary of a Borrower, and any of the following events occur: (a) the
applicable Borrower or Subsidiary consents to the institution of the Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted; provided, however, that, during the pendency of such
period, each member of the Lender Group shall be relieved of its obligations to
extend credit hereunder, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, each member of the
Lender Group shall be relieved of its obligation to extend credit hereunder,
(d) a trustee, custodian, liquidator, monitor, receiver or receiver manager is
appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, any Borrower or any Subsidiary of a Borrower, or (e) an order for
relief shall have been entered therein;
8.6 If any Borrower or any Subsidiary of a Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any Borrower's or any of its Subsidiaries' assets by any
Governmental Authority, or if any taxes or debts owing at any time hereafter to
any one or more of such entities becomes a Lien, whether ▇▇▇▇▇▇ or otherwise,
upon any Borrower's or any of its Subsidiaries' assets and the same is not paid
on the payment date thereof.
8.8 If any Borrower or any Subsidiary suffers the entry against it of a
final judgment for the payment of money in excess of $1,000,000 (not covered by
insurance), and such judgment is unstayed and undischarged for a period of
thirty consecutive days after the date of entry thereof;
8.9 If there is a default in any material agreement to which any
Borrower or any Subsidiary of a Borrower is a party relative to such Person's
Indebtedness involving an aggregate amount of $10,000,000, or more, and such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of the applicable Borrower's or
Subsidiary's obligations thereunder, or to terminate such agreement;
8.10 If any Borrower or any Subsidiary of a Borrower makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
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8.11 If any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or Agent's Liens in a substantial portion of the
Collateral shall cease to be perfected, or shall cease to have the priority
contemplated by the Loan Documents, in each case otherwise than in accordance
with the terms thereof or with the express prior written agreement, consent or
approval of Lenders, or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of any Borrower or any of its Subsidiaries party
thereto or any of their respective stockholders, or any court or any other
governmental or regulatory authority or agency of competent jurisdiction shall
make a determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
8.12 Any Borrower or any ERISA Affiliate incurs any liability to the
PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate
amount exceeding $1,000,000, or any Borrower or any ERISA Affiliate is assessed
withdrawal liability pursuant to Title IV of ERISA by a Multiemployer Plan
requiring aggregate annual payments exceeding $1,000,000, or any of the
following occurs with respect to a Guaranteed Pension Plan: (i) an ERISA
Reportable Event, or a failure to make a required installment or other payment
(within the meaning of {section}302(f)(1) of ERISA), provided that Agent
determines in its Permitted Discretion that such event (A) could be expected to
result in liability of any Borrower or any of its Subsidiaries to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and
(B) could constitute grounds for the termination of such Guaranteed Pension
Plan by the PBGC, for the appointment by the appropriate United States District
Court of a trustee to administer such Guaranteed Pension Plan or for the
imposition of a lien in favor of such Guaranteed Pension Plan; or (ii) the
appointment by a United States District Court of a trustee to administer such
Guaranteed Pension Plan; or (iii) the institution by the PBGC of proceedings to
terminate such Guaranteed Pension Plan;
8.13 RESERVED;
8.14 Any Borrower or any of its Subsidiaries shall be indicted for a
state or federal crime, or any civil or criminal action shall otherwise have
been brought or threatened against any Borrower or any of its Subsidiaries, a
punishment for which in any such case could include the forfeiture of any
assets of such Borrower or such Subsidiary included in the Aggregate Borrowing
Base or any assets of such Borrower or such Subsidiary not included in the
Aggregate Borrowing Base but having a fair market value in excess of
$5,000,000;
8.15 A Change of Control shall occur; or
8.16 There is a Material Adverse Change.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1. RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, Agent may, and upon instruction of the
Required Lenders (at their election but without notice of their election and
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrowers) Agent shall exercise any of the
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rights and remedies of a secured party under the Code or Canadian law and any
other rights and remedies provided for in this Agreement or any other Loan
Document or otherwise available to it at law or in equity on behalf of the
Lender Group and Agent may or, acting upon the instructions of the Required
Lenders, shall do the same on behalf of the Lender Group, such rights and
remedies to include the following, all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and
payable, provided that in the event of any Event of Default under
Sections 8.4 or 8.5, all such amounts shall become immediately due and
payable automatically and without any requirement of notice from Agent or
any Lender;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the Lender
Group, provided that in the event of any Event of Default under Sections
8.4 or 8.5, any unused portion of the credit hereunder shall forthwith
terminate and each Lender shall be relieved of all further obligations to
make Advances to Borrowers and the Issuing Lender shall be relieved of
all further obligations to issue, extend or renew Credit Instruments;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of Agent's Liens in the Collateral and without affecting
the Obligations, provided that in the event of any Event of Default under
Sections 8.4 or 8.5, any unused portion of the credit hereunder shall
forthwith terminate and each Lender shall be relieved of all further
obligations to make Advances to Borrowers and the Issuing Lender shall be
relieved of all further obligations to issue, extend or renew Credit
Instruments;
(d) Notify Account Debtors and other Persons obligated on the
Collateral to make payment or otherwise render performance to or for
Agent, and, to the extent permitted under the Code, enforce the
obligations of Account Debtors and other Persons obligated on the
Collateral and exercise the rights of Borrowers with respect to such
obligations and any property that may secure such obligations;
(e) Take any proceeds of the Collateral;
(f) Settle or adjust disputes and claims directly with Borrowers'
Account Debtors for amounts and upon terms which Agent considers
advisable, and in such cases, Agent or Canadian Agent (as the case may
be) will credit the applicable Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting
all Lender Group Expenses incurred or expended in connection therewith;
(g) Cause Borrowers to hold all of their returned Inventory in
trust for the Lender Group and segregate all returned Inventory from all
other assets of Borrowers or in Borrowers' possession and conspicuously
label said returned Inventory as the property of the Lender Group;
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(h) Without notice to or demand upon any Borrower, make such
payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. In addition to the
rights granted pursuant to Section 4.8. Each Borrower agrees to assemble
the Collateral if Agent so requires, and to make the Collateral available
to Agent at a place that Agent may designate which is reasonably
convenient to both parties. Each Borrower authorizes Agent to enter the
premises where the Collateral is located, to take and maintain possession
of the Collateral, or any part of it, to utilize its assets in accordance
with Section 4.8 and to pay, purchase, contest, or compromise any Lien
that in Agent's determination appears to conflict with Agent's Liens in
and to the Collateral and to pay all expenses incurred in connection
therewith and to charge Borrowers' Loan Account therefor. With respect
to any of Borrowers' owned or leased premises, each Borrower hereby
grants Agent a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(i) Without notice to any Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off
and apply to the Obligations any and all (i) balances and deposits of any
Borrower held by the Lender Group (including any amounts received in the
Deposit Accounts or Securities Accounts subject to Control Agreements),
or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by the Lender Group;
(j) Hold, as cash collateral, any and all balances and deposits
of any Borrower held by the Lender Group, and any amounts received in the
Deposit Accounts or Securities Account subject to Control Agreements, to
secure the full and final repayment of all of the Obligations;
(k) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Each Borrower hereby grants to Agent a
license or other right to use, without charge, such Borrower's labels,
patents, copyrights, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and such Borrower's rights under all
licenses and all franchise agreements shall inure to the Lender Group's
benefit;
(l) Sell or cause to be sold, the Collateral at either a public
or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places
(including Borrowers' premises) as Agent determines is commercially
reasonable. It is not necessary that the Collateral be present at any
such sale;
(m) Agent shall give notice of the disposition of the Collateral
as follows:
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(i) Agent shall give Administrative Borrower (for the
benefit of the applicable Borrower) a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Collateral, the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in Section
12, at least 10 days before the earliest time of disposition set
forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Collateral that is perishable or
threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;
(iii) Borrowers hereby acknowledge that 5 days prior written
notice of such sale or sales shall be reasonable notice; in
addition Borrowers waive any and all rights that they have to a
judicial hearing in advance of the enforcement of any of Agent's
rights and remedies hereunder, including its right if a Default
exists to take immediate possession of Collateral and to exercise
its rights and remedies with respect thereto;
(n) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(o) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate
same and, to the maximum extent permitted by law, may seek the
appointment of such a receiver without the requirement of prior notice or
a hearing;
(p) Agent shall have the rights and remedies of a secured party
under the Code and any additional rights and remedies as may be provided
to a secured party in any jurisdiction in which Collateral is located;
(q) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents
and whether or not Lenders shall have accelerated the maturity of the
Obligations pursuant to this Section 9.1, each Lender, if owed any amount
with respect to the Obligations, may, with the consent of Required
Lenders or Agent but not otherwise, proceed to protect and enforce its
rights by suit in equity, action at law, or other appropriate proceeding,
whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Lender are
evidenced, included as permitted by applicable law the obtaining of the
ex parte appointment of a receiver, and if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of such Lender; and
(r) Any deficiency that exists after disposition of the (i)
Collateral as provided above, will be paid immediately by U.S. Borrowers
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and (ii) Collateral of Bombay Canada as provided above, will be paid
immediately by Bombay Canada. Any excess will be returned, without
interest and subject to the rights of third Persons, by Agent to
Administrative Borrower (for the benefit of the applicable U.S. Borrower)
or Bombay Canada (for the benefit of Bombay Canada), as the case may be.
9.2. SECURITIES AND DEPOSITS. Agent may at any time, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, Agent may
demand, ▇▇▇ for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral Obligations.
9.3. STANDARDS FOR EXERCISING RIGHTS AND REMEDIES. To the extent that
applicable law imposes duties on Agent to exercise remedies in a commercially
reasonable manner, Borrowers acknowledge and agree that it is not commercially
unreasonable for Agent (a) to fail to incur expenses reasonably deemed
significant by Agent to prepare Collateral for disposition or otherwise to fail
to complete raw material or work in process into finished goods or other
finished products for disposition, (b) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (c) to
fail to exercise collection remedies against Account Debtors or other persons
obligated on Collateral or to fail to remove Liens on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account Debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (f) to
contact other persons, whether or not in the same business as Borrowers, for
expressions of interest in acquiring all or any portion of the Collateral, (g)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (i) to
dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to
insure Agent against risks of loss, collection or disposition of Collateral or
to provide to Agent a guaranteed return from the collection or disposition of
Collateral, or (l) to the extent deemed appropriate by Agent, to obtain the
services of brokers, investment bankers, consultants and other professionals to
assist Agent in the collection or disposition of any of the Collateral, or (m)
conduct going out of business sales and otherwise liquidate the inventory.
Borrowers acknowledge that the purpose of this Section 9.3 is to provide non-
exhaustive indications of what actions or omissions by Agent would fulfill
Agent's duties under the Code or any other relevant jurisdiction in Agent's
exercise of remedies against the Collateral and that other actions or omissions
by Agent shall not be deemed to fail to fulfill such duties solely on account
of not being indicated in this Section 9.3. Without limitation upon the
foregoing, nothing contained in this Section 9.3. shall be construed to grant
any rights to Borrowers or to impose any duties on Agent that would not have
been granted or imposed by this Agreement or by applicable law in the absence
of this Section 9.3.
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9.4. REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative and may be exercised simultaneously. The Lender Group shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by the Lender Group of one right or
remedy shall be deemed an election, and no waiver by the Lender Group of any
Event of Default shall be deemed a continuing waiver. No delay by the Lender
Group shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay (prior to delinquency or within the
applicable grace period) any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other
amounts payable under such leases) due to third Persons (other than any monies
that are the subject of a Permitted Protest), or fails to make any deposits or
furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its sole discretion and without prior
notice to any Borrower, may do any or all of the following: (a) make payment
of the same or any part thereof, (b) set up such reserves in Borrowers' Loan
Account as Agent deems necessary to protect the Lender Group from the exposure
created by such failure, or (c) in the case of the failure to comply with
Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1. DEMAND; PROTEST; ETC. Each Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
the Lender Group on which any such Borrower may in any way be liable.
11.2. THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or
damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers. Each Borrower shall remain obligated and liable under each contract
or agreement comprised in the Collateral to be observed or performed by
Borrowers thereunder. Neither Agent nor any Lender shall have any obligation
or liability under any such contract or agreement by reason or arising out of
this Agreement or the receipt by Agent or any Lender of any payment relating to
any of the Collateral, not shall Agent or any Lender be obligated in any manner
to perform any of the obligations of Borrowers under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by Agent or any Lender in respect of the Collateral or as to
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the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to Agent or to which Agent or any Lender may be entitled to at any
time or times. Agent's sole duty with respect to the custody, safe-keeping and
physical preservation of the Collateral in its possession, under {section}9-207
of the Code, or otherwise, shall be to deal with such Collateral in the same
manner as Agent deals with similar property for its own account.
11.3. INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender-Related Persons, and each
Participant (each, an "Indemnified Person") harmless (to the fullest extent
permitted by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Borrowers' and their Subsidiaries' compliance with the terms of
the Loan Documents, (b) any actual or proposed use by any Borrower or any of
its Subsidiaries of the proceeds of any of the Advances or Credit Instruments,
(c) the reversal or withdrawal of any provisional credits granted by Agent upon
the transfer of funds from lock box, bank agency, concentration accounts or
otherwise under any cash management arrangements with any Borrower or any
Subsidiary or in connection with the provisional honoring of funds transfers,
checks or other items, and (d) with respect to any investigation, litigation,
or proceeding related to this Agreement, any other Loan Document, or the use of
the proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. If, and to the extent that the
obligations of Borrowers under this Section 11.3 are unenforceable for any
reason, each Borrower hereby agrees to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law. This provision shall survive the termination of this Agreement
and the repayment of the Obligations. If any Indemnified Person makes any
payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Borrowers were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with respect thereto.
THE FOREGOING INDEMNIFICATIONS SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNIFIED PERSON,
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provided only that no Indemnified Person shall be entitled under this section
to receive indemnification for that portion, if any, of any liabilities and
costs which is proximately caused by its own individual gross negligence or
willful misconduct, as determined in a final judgment.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative
Borrower: THE BOMBAY COMPANY, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Agent: ▇▇▇▇▇ FARGO RETAIL FINANCE, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Agent and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent
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by the Lender Group in connection with the exercise of enforcement rights
against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO
AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER
OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE FEDERAL COURTS LOCATED IN NEW YORK
COUNTY, CITY OF NEW YORK, NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY BORROWER COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE
AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH BORROWER COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(B).
(c) BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND
THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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(d) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to
in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to,
actual damages. Each party hereto (a) certifies that no representative,
agent or attorney of any other party hereto has represented, expressly or
otherwise, that such other party would not, in the event of litigation,
seek to enforce the foregoing waivers and (b) acknowledges that such
other party has been induced to enter into this Credit Agreement, the
other Loan Documents to which it is a party by, among other things, the
waivers and certifications contained herein.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1. ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more assignees
(each an "Assignee") that are Eligible Transferees all, or any ratable
part of all, of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents,
in a minimum amount of $10,000,000; provided, however, that Borrowers and
Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses,
and related information with respect to the Assignee, have been given to
Administrative Borrower and Agent by such Lender and the Assignee,
(ii) such Lender and its Assignee have delivered to Administrative
Borrower and Agent an Assignment and Acceptance, and (iii) the assignor
Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $7,500. Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required
and the Assignee need not be an Eligible Transferee if such assignment is
in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan
portfolio of the assigning Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower) that it has received an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except with respect to
Section 11.3 hereof) and be released from any future obligations under
this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement and the other Loan Documents, such
Lender shall cease to be a party hereto and thereto), and such assignment
shall effect a novation between Borrowers and the Assignee; provided,
however, that nothing contained herein shall release any assigning Lender
from obligations that survive the termination of this Agreement,
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including such assigning Lender's obligations under Section 16 and
Section 17.8 of this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or
any other Loan Document furnished pursuant hereto, (2) such assigning
Lender makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrowers or the performance
or observance by Borrowers of any of their obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment
and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement, (5) such Assignee appoints and authorizes
Agent to take such actions and to exercise such powers under this
Agreement as are delegated to Agent, by the terms hereof, together with
such powers as are reasonably incidental thereto, and (6) such Assignee
agrees that it will perform all of the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required processing
fee payment and the fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of
the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or
other Persons not Affiliates of such Lender (a "Participant")
participating interests in its Obligations, the Commitment, and the other
rights and interests of that Lender (the "Originating Lender") hereunder
and under the other Loan Documents (provided that no written consent of
Agent shall be required in connection with any sale of any such
participating interests by a Lender to an Eligible Transferee); provided,
however, that (i) the Originating Lender shall remain a "Lender" for all
purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other
Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall
remain solely responsible for the performance of such obligations,
(iii) Borrowers, Agent, and Lenders shall continue to deal solely and
directly with the Originating Lender in connection with the Originating
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Lender's rights and obligations under this Agreement and the other Loan
Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any
amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or
consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the
interest rate applicable to the Obligations hereunder in which such
Participant is participating, (C) release all or substantially all of the
Collateral or guaranties (except to the extent expressly provided herein
or in any of the Loan Documents) supporting the Obligations hereunder in
which such Participant is participating, (D) postpone the payment of, or
reduce the amount of, the interest or fees payable to such Participant
through such Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had
not sold such participation; except that, if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect
of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. The rights of any
Participant only shall be derivative through the Originating Lender with
whom such Participant participates and no Participant shall have any
rights under this Agreement or the other Loan Documents or any direct
rights as to the other Lenders, Agent, Borrowers, the Collections of
Borrowers or their Subsidiaries, the Collateral, or otherwise in respect
of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to Section
17.8, disclose all documents and information which it now or hereafter
may have relating to Borrowers or Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement to secure
obligations of such Lender, including without limitation (a) any pledge
or assignment to secure obligations to any of the twelve Federal Reserve
Banks organized under {section}4 of the Federal Reserve Act, 12 USC
{section}341 and (b) with respect to any Lender that is a Fund, to any
lender or any trustee for, or any other representative of, holders of
obligations owed or securities issued by such Fund as security for such
obligations or securities or any institutional custodian for such Fund or
for such lender; provided that no such grant shall release such Lender
from any of its obligations hereunder, provide any voting rights
hereunder to the secured party thereof, substitute any such secured party
for such Lender as a party hereto or affect any rights or obligations of
Borrowers or Agent hereunder. If any assignee Lender is an Affiliate of
any Borrower, then any such assignee Lender shall have no right to vote
as a Lender hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for
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purposes of making requests to Agent pursuant to Section 9, and the
determination of the Required Lenders shall for all purposes of this
Agreement and the other Loan Documents be made without regard to such
assignee Lender's interest in any of the Obligations. If any Lender
sells a participating interest in any of the Obligations to a
Participant, and such Participant is a Borrower or an Affiliate of a
Borrower, then such transferor Lender shall promptly notify Agent of the
sale of such participation. A transferor Lender shall have no right to
vote as a Lender hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes
of making requests to Agent pursuant to Section 10 to the extent that
such participation is beneficially owned by a Borrower or any Affiliate
of a Borrower, and the determination of the Required Lenders shall for
all purposes of this Credit Agreement and the other Loan Documents be
made without regard to the interest of such transferor Lender in the
Obligations to the extent of such participation.
14.2. SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided,
however, that Borrowers may not assign this Agreement or any rights or duties
hereunder without Lenders' prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by Agent at the written
request of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing
and signed by all of Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or
other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan
or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document,
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(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend or modify this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of Agent's Liens,
(i) release any Borrower from any obligation for the payment of
money owed to any Lender, or
(j) change the definition of "Aggregate Borrowing Base" "U.S.
Borrowing Base", "Canadian Borrowing Base" or the definitions of
"Eligible Accounts", "Eligible Credit Card Receivables", "Eligible
Inventory", "Maximum Revolver Amount" or any component definition
contained in the foregoing terms, or change Section 2.1(b); or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing
notwithstanding, any amendment, modification, waiver, consent, termination, or
release of, or with respect to, any provision of this Agreement or any other
Loan Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Borrowers,
shall not require consent by or the agreement of Borrowers.
15.2. REPLACEMENT OF HOLDOUT LENDER. If any action to be taken by the
Lender Group or Agent hereunder requires the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout Lender shall have no right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an
effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance
Agreement, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
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such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3. NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or, any other
Loan Document, or delay by Agent or any Lender in exercising the same, will
operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1. APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints WFRF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Agent agrees to act as such on the express conditions contained in this Section
16. Each Lender hereby designates Trans Canada Credit Corporation as Canadian
Agent under this Agreement. The provisions of this Section 16 (other than the
proviso to Section 16.11(d)) are solely for the benefit of Agent, Canadian
Agent and Lenders, and Borrowers and their Subsidiaries shall have no rights as
a third party beneficiary of any of the provisions contained herein. Any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document notwithstanding, Agent and Canadian Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
Agent or Canadian Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent or Canadian Agent; it being expressly
understood and agreed that the use of the word "Agent" is for convenience only,
that WFRF is merely the representative of Lenders, and only has the contractual
duties set forth herein. Except as expressly otherwise provided in this
Agreement, Agent or Canadian Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent or Canadian
Agent expressly is entitled to take or assert under or pursuant to this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents that provides rights
or powers to Agent, Lenders agree that Agent or Canadian Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
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ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Borrowers and their Subsidiaries, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open
and maintain such bank accounts and cash management accounts as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and
all other rights and remedies of the Lender Group with respect to Borrowers,
the Obligations, the Collateral, the Collections of Borrowers and their
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2. DELEGATION OF DUTIES. Agent and Canadian Agent may execute any of
its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.
16.3. LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of Lenders for any
recital, statement, representation or warranty made by any Borrower or any
Subsidiary or Affiliate of any Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent or Canadian Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Borrower or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Books or properties of Borrowers or the books or records or properties of any
of Borrowers' Subsidiaries or Affiliates.
16.4. RELIANCE BY AGENT.
(a) Each of Agent and Canadian Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent,
or made by the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent or
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Canadian Agent. Each of Agent and Canadian Agent shall be fully
justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless Agent or Canadian Agent shall first
receive such advice or concurrence of Lenders as it deems appropriate and
until such instructions are received, Agent and Canadian Agent shall act,
or refrain from acting, as it deems advisable. If Agent or Canadian
Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such
action. Each of Agent and Canadian Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
requisite Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders.
(b) For purposes of determining compliance with the conditions
set forth in Section 3.1, each Lender that has executed this Agreement
shall be deemed to have consented to, approved or accepted, or to be
satisfied with, each document and matter either sent, or made available,
by Agent or Canadian Agent to such Lender for consent, approval,
acceptance or satisfaction, or required thereunder to be to be consent to
or approved by or acceptable or satisfactory to such Lender, unless an
officer of Agent or Canadian Agent active upon Borrowers' account shall
have received notice from such Lender not less than 2 days prior to the
Closing Date specifying such Lender's objection thereto and such
objection shall not have been withdrawn by notice to Agent or Canadian
Agent to such effect on or prior to the Closing Date.
16.5. NOTICE OF DEFAULT OR EVENT OF DEFAULT. Neither of Agent nor
Canadian Agent shall be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default, except with respect to defaults in the payment
of principal, interest, fees, and expenses required to be paid to Agent or
Canadian Agent for the account of Lenders and, except with respect to Events of
Default of which Agent or Canadian Agent has actual knowledge, unless Agent
shall have received written notice from a Lender or Administrative Borrower
referring to this Agreement, describing such Default or Event of Default, and
stating that such notice is a "notice of default." Agent promptly will notify
Lenders of its receipt of any such notice or of any Event of Default of which
Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default. Each Lender shall be solely responsible for giving
any notices to its Participants, if any. Subject to Section 16.4, Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Required Lenders in accordance with Section 9; provided,
however, that unless and until Agent has received any such request, Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable.
16.6. CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by Agent or Canadian Agent hereinafter taken, including any review of
the affairs of Borrowers and their Subsidiaries or Affiliates, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any
Lender. Each Lender represents to Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
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investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrowers and any other Person party to
a Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrowers. Each Lender also represents that
it will, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of Borrowers and any other Person party to a Loan
Document. Except for notices, reports, and other documents expressly herein
required to be furnished to Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
16.7. COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection
agencies, auctioneer fees and expenses, and costs of security guards or
insurance premiums paid to maintain the Collateral, whether or not Borrowers
are obligated to reimburse Agent or Lenders for such expenses pursuant to the
Loan Agreement or otherwise. Agent is authorized and directed to deduct and
retain sufficient amounts from the Collections of Borrowers and their
Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from the Collections of
Borrowers and their Subsidiaries received by Agent, each Lender hereby agrees
that it is and shall be obligated to pay to or reimburse Agent for the amount
of such Lender's Pro Rata Share thereof. Whether or not the transactions
contemplated hereby are consummated, Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of
Borrowers and without limiting the obligation of Borrowers to do so), according
to their Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct nor shall any
Lender be liable for the obligations of any Defaulting Lender in failing to
make an Advance or other extension of credit hereunder. Without limitation of
the foregoing, each Lender shall reimburse Agent upon demand for such Lender's
Pro Rata Share of any costs or out-of-pocket expenses (including attorneys,
accountants, advisors, and consultants fees and expenses) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrowers. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
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16.8. AGENT IN INDIVIDUAL CAPACITY. WFRF and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Borrowers and
their Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though WFRF were not Agent or Canadian Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to
such activities, WFRF or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person party to any Loan Documents
that is subject to confidentiality obligations in favor of Borrowers or such
other Person and that prohibit the disclosure of such information to Lenders,
and Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver Agent will use its
reasonable best efforts to obtain), Agent shall not be under any obligation to
provide such information to them. The terms "Lender" and "Lenders" include
WFRF in its individual capacity.
16.9. SUCCESSOR AGENT, CANADIAN AGENT.
(a) Agent may resign as Agent upon 45 days notice to Lenders. If
Agent resigns under this Agreement, the Required Lenders shall appoint a
successor Agent for Lenders. If no successor Agent is appointed prior to
the effective date of the resignation of Agent, Agent may appoint, after
consulting with Lenders, a successor Agent. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such
successor Agent shall succeed to all the rights, powers, and duties of
the retiring Agent and the term "Agent" shall mean such successor Agent
and the retiring Agent's appointment, powers, and duties as Agent shall
be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 16 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor Agent has accepted appointment as Agent
by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as Lenders appoint a successor
Agent as provided for above.
(b) Canadian Agent may resign as Canadian Agent upon 45 days
notice to Lenders. If Canadian Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Canadian Agent for Lenders.
If no successor Canadian Agent is appointed prior to the effective date
of the resignation of Canadian Agent, Canadian Agent may appoint, after
consulting with Lenders, a successor Canadian Agent. In any such event,
upon the acceptance of its appointment as successor Canadian Agent
hereunder, such successor Canadian Agent shall succeed to all the rights,
powers, and duties of the retiring Canadian Agent and the term "Canadian
Agent" shall mean such successor Canadian Agent and the retiring Canadian
Agent's appointment, powers, and duties as Canadian Agent shall be
terminated. After any retiring Canadian Agent's resignation hereunder as
Canadian Agent, the provisions of this Section 16 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Canadian Agent under this Agreement. If no successor Canadian Agent has
accepted appointment as Canadian Agent by the date which is 45 days
following a retiring Canadian Agent's notice of resignation, the retiring
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Canadian Agent's resignation shall nevertheless thereupon become
effective and the Canadian Lenders shall perform all of the duties of
Canadian Agent hereunder until such time, if any, as Lenders appoint a
successor Canadian Agent as provided for above.
16.10.LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents as though such Lender were
not a Lender hereunder without notice to or consent of the other members of the
Lender Group. The other members of the Lender Group acknowledge that, pursuant
to such activities, such Lender and its respective Affiliates may receive
information regarding Borrowers or their Affiliates and any other Person party
to any Loan Documents that is subject to confidentiality obligations in favor
of Borrowers or such other Person and that prohibit the disclosure of such
information to Lenders, and Lenders acknowledge that, in such circumstances
(and in the absence of a waiver of such confidentiality obligations, which
waiver such Lender will use its reasonable best efforts to obtain), such Lender
not shall be under any obligation to provide such information to them. With
respect to the Swing Loans, Canadian Swing Loans and Agent Advances, Swing
Lender, and Canadian Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11.PAYMENTS TO, AND DISTRIBUTIONS BY, AGENT.
(a) A payment by Borrowers to Agent or Canadian Agent hereunder
or any of the other Loan Documents for the account of any Lender shall
constitute a payment to such Lender. Agent or Canadian Agent agrees
promptly to distribute to each Lender such Lender's Pro Rata Share of
payments received by Agent or Canadian Agent for the account of Lenders
except as otherwise expressly provided herein or in any of the other Loan
Documents.
(b) If in the reasonable opinion of Agent the distribution of any
amount received by it in such capacity hereunder, under any of the other
Loan Documents might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by Agent or Canadian Agent is to be repaid, each Person to
whom any such distribution shall have been made shall either repay to
Agent or Canadian Agent its proportionate share of the amount so adjudged
to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court
16.12.Duties in the Case of Enforcement. In case one or more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, Agent shall, if (a) so requested by the
Required Lenders, and (b) Lenders have provided to Agent such additional
indemnities and assurances against expenses and liabilities as Agent may
reasonably request, proceed to enforce the provisions of this Agreement and the
other Loan Documents authorizing the sale or other disposition of all or any
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part of the Collateral and exercise all or any such other legal and equitable
and other rights or remedies as it may have in respect of such Collateral. The
Required Lenders may direct Agent in writing as to the method and the extent of
any such sale or other disposition, Lenders hereby agreeing to indemnify and
hold Agent, harmless from all liabilities incurred in respect of all actions
taken or omitted in accordance with such directions, provided that Agent need
not comply with any such direction to the extent that Agent reasonably believes
Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
THE FOREGOING INDEMNIFICATIONS SHALL APPLY WHETHER OR NOT SUCH
LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR
IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN
WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that Agent shall not be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and
costs which is proximately caused by its own individual gross negligence
or willful misconduct, as determined in a final judgment.
16.13.AGENT MAY FILE PROOFS OF CLAIM.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial, administrative or like proceeding or any
assignment for the benefit of creditors relative to any Borrower or any
of its Subsidiaries, Agent (irrespective of whether the principal of any
Advance, or Obligations with respect to the Credit Instruments shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Agent shall have made any demand on Borrowers)
shall be entitled and empowered, by intervention in such proceeding,
under any such assignment or otherwise:
(i) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Advances,
or Obligations in respect of the Credit Instruments and all other
Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the
claims of the Lender Group (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lender
Group and their respective agents and counsel and all other amounts
due the Lender Group under Sections 2.10, 2.11 and 11.3) allowed in
such proceeding or under any such assignment; and
(ii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the
same;
(b) Any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such proceeding or under
any such assignment is hereby authorized by each Lender to make such
payments to Agent and, in the event that Agent shall consent to the
making of such payments directly to Lenders, nevertheless to pay to Agent
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any amount due for the reasonable compensation, expenses, disbursements
and advances of Agent and its agents and counsel, and any other amounts
due Agent under Sections 2.10, 2.11 and 11.3.
(c) Nothing contained herein shall authorize Agent to consent to
or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations owed to
such Lender or the rights of any Lender or to authorize Agent to vote in
respect of the claim of any Lender in any such proceeding or under any
such assignment.
16.14.WITHHOLDING TAXES.
(a) If any Lender is a "foreign person" within the meaning of the
IRC and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the IRC, such Lender
agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (A) a statement of
Lender, signed under penalty of perjury, that it is not a (I) a
"bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder of a Borrower (within the meaning of Section
871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to a Borrower within the meaning of Section 864(d)(4) of
the IRC, and (B) a properly completed and executed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and
at any other time reasonably requested by Agent or Administrative
Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed and executed IRS Form W-8BEN before the first payment of
any interest under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of
such Lender, two properly completed and executed copies of IRS Form
W-8ECI before the first payment of any interest is due under this
Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be required under the
IRC or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative
Borrower of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.
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(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-
8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrowers to such
Lender, such Lender agrees to notify Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of Borrowers to
such Lender. To the extent of such percentage amount, Agent will treat
such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to Agent,
then Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the
amounts payable to Agent under this Section, together with all costs and
expenses (including attorneys fees and expenses). The obligation of
Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any Note or
other Loan Document will be made without setoff, counterclaim, or other
defense, except as required by applicable law other than for Taxes (as
defined below). All such payments will be made free and clear of, and
without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such
payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the
extent that such tax results from a change in the circumstances of
Lender, including a change in the residence, place of organization, or
principal place of business of Lender, or a change in the branch or
lending office of Lender participating in the transactions set forth
herein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes").
If any Taxes are so levied or imposed, each Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement
or under any Note, including any amount paid pursuant to this
Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided,
however, that Borrowers shall not be required to increase any such
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amounts payable to Agent or any Lender (i) that is not organized under
the laws of the United States, if such Person fails to comply with the
other requirements of this Section 16.11, or (ii) if the increase in such
amount payable results from Agent's or such Lender's own willful
misconduct or gross negligence. After a Lender learns of the imposition
of Taxes, such Lender will act in good faith to promptly notify Borrowers
of their obligations hereunder. Borrowers will furnish to Agent as
promptly as possible after the date the payment of any Taxes are due
pursuant to applicable law certified copies of tax receipts evidencing
such payment by Borrowers.
(f) If Borrowers are required to indemnify or pay additional
amounts to or for the account of any Lender pursuant to this Section
16.14, then, such Lender may take action so long as such action is not
unlawful or impractical for such Lender and such action (i) will avoid
the need for, or reduce the amount of, any such additional payment by
Borrowers, and (ii) will not, in the good faith judgment of such Lender,
otherwise be disadvantageous to such Lender.
16.15.COLLATERAL MATTERS.
(a) Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i) upon
the termination of the Commitments and payment and satisfaction in full
by Borrowers of all Obligations, (ii) constituting property being sold or
disposed of if a release is required or desirable in connection therewith
and if Administrative Borrower certifies to Agent that the sale or
disposition is permitted under Section 7.4 of this Agreement or the other
Loan Documents (and Agent may rely conclusively on any such certificate,
without further inquiry), (iii) constituting property in which no
Borrower or its Subsidiaries owned any interest at the time Agent's Lien
was granted nor at any time thereafter, or (iv) constituting property
leased to a Borrower or its Subsidiaries under a lease that has expired
or is terminated in a transaction permitted under this Agreement. Except
as provided above, Agent will not execute and deliver a release of any
Lien on any Collateral without the prior written authorization of (y) if
the release is of all or substantially all of the Collateral, all of
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent
or Administrative Borrower at any time, Lenders will confirm in writing
Agent's authority to release any such Liens on particular types or items
of Collateral pursuant to this Section 16.12; provided, however, that (1)
Agent shall not be required to execute any document necessary to evidence
such release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than
the release of such Lien without recourse, representation, or warranty,
and (2) such release shall not in any manner discharge, affect, or impair
the Obligations or any Liens (other than those expressly being released)
upon (or obligations of Borrowers in respect of) all interests retained
by Borrowers, including, the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of Lenders
to assure that the Collateral exists or is owned by Borrowers or is cared
for, protected, or insured or has been encumbered, or that Agent's Liens
have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
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exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to
the terms and conditions contained herein, Agent may act in any manner it
may deem appropriate, in its sole discretion given Agent's own interest
in the Collateral in its capacity as one of Lenders and that Agent shall
have no other duty or liability whatsoever to any Lender as to any of the
foregoing, except as otherwise provided herein.
16.16.RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each Lender agrees that it shall not, without the express
written consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the written request of Agent, set off against the
Obligations, any amounts owing by such Lender to Borrowers or any deposit
accounts of Borrowers now or hereafter maintained with such Lender. Each
Lender further agrees that it shall not, unless specifically requested to
do so in writing by Agent, take or cause to be taken any action,
including, the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any
of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or
any payments with respect to the Obligations, except for any such
proceeds or payments received by such Lender from Agent pursuant to the
terms of this Agreement, or (ii) payments from Agent in excess of such
Lender's ratable portion of all such distributions by Agent, such Lender
promptly shall (1) turn the same over to Agent, in kind, and with such
endorsements as may be required to negotiate the same to Agent, or in
immediately available funds, as applicable, for the account of all
Lenders and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without
recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment
received shall be applied ratably as among Lenders in accordance with
their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or
in part, as applicable, and the applicable portion of the purchase price
paid therefor shall be returned to such purchasing party, but without
interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
▇▇.▇▇.▇▇▇▇▇▇ FOR PERFECTION. Agent hereby appoints each other member of
the Lender Group as its agent (and each other member of the Lender Group hereby
accepts such appointment) for the purpose of perfecting Agent's Liens in assets
which, in accordance with Article 9 of the Code can be perfected only by
possession or control. Should any other member of the Lender Group obtain
possession or control of any such Collateral, such other member of the Lender
Group shall notify Agent thereof, and, promptly upon Agent's request therefor
shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
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16.18.PAYMENTS BY AGENT TO LENDERS. All payments to be made by Agent to
Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
or Canadian Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest of the Obligations.
16.19.CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of
its powers set forth therein or herein, together with such other powers that
are reasonably incidental thereto, shall be binding upon all Lenders.
16.20.FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared
by Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and
(ii) shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific
information regarding Borrowers and will rely significantly upon the
Books, as well as on representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 17.8, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any
such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the
indemnifying Lender may reach or draw from any Report in connection with
any loans or other credit accommodations that the indemnifying Lender has
made or may make to Borrowers, or the indemnifying Lender's participation
in, or the indemnifying Lender's purchase of, a loan or loans of
Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses, and
other amounts (including, attorneys fees and costs) incurred by Agent and
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any such other Lender preparing a Report as the direct or indirect result
of any third parties who might obtain all or part of any Report through
the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time
request of Agent in writing that Agent provide to such Lender a copy of
any report or document provided by Borrowers to Agent or Canadian Agent
(as the case may be) that has not been contemporaneously provided by
Borrowers to such Lender, and, upon receipt of such request, Agent shall
provide a copy of same to such Lender, (y) to the extent that Agent or
Canadian Agent (as the case may be) is entitled, under any provision of
the Loan Documents, to request additional reports or information from
Borrowers, any Lender may, from time to time, reasonably request Agent or
Canadian Agent (as the case may be) to exercise such right as specified
in such Lender's notice to Agent or Canadian Agent (as the case may be),
whereupon Agent or Canadian Agent (as the case may be) promptly shall
request of Administrative Borrower or Bombay Canada (as the case may be)
the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower or Bombay
Canada (as the case may be), Agent or Canadian Agent (as the case may be)
promptly shall provide a copy of same to such Lender, and (z) any time
that Agent or Canadian Agent (as the case may be) renders to
Administrative Borrower or Bombay Canada (as the case may be) a statement
regarding the applicable Loan Account, Agent or Canadian Agent (as the
case may be) shall send a copy of such statement to each Lender.
16.21.SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any
interest in, or subject any Lender to any liability for, or in respect of, the
business, assets, profits, losses, or liabilities of any other Lender. Each
Lender shall be solely responsible for notifying its Participants of any
matters relating to the Loan Documents to the extent any such notice may be
required, and no Lender shall have any obligation, duty, or liability to any
Participant of any other Lender. Except as provided in Section 16.7, no member
of the Lender Group shall have any liability for the acts or any other member
of the Lender Group. No Lender shall be responsible to any Borrower or any
other Person for any failure by any other Lender to fulfill its obligations to
make credit available hereunder, nor to advance for it or on its behalf in
connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
▇▇.▇▇.▇▇▇▇▇ REPRESENTATION OF AGENT. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇▇") only has represented and only shall represent WFRF in
its capacity as Agent and as a Lender. Each other Lender hereby acknowledges
that ▇▇▇▇▇▇▇ does not represent it in connection with any such matters.
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▇▇.▇▇.▇▇▇▇▇▇, CANADA - POWER OF ATTORNEY. Without limiting the powers of
the Agent hereunder or under any other Loan Document and to the extent
applicable, each of the Lenders hereby acknowledges that the Agent (or a
collateral agent designated by the Agent) shall, for the purposes of holding
any security granted by Bombay Canada on the property of Bombay Canada pursuant
to the laws of the Province of Quebec, be the holder of an irrevocable power of
attorney (fond{e'} de pouvoir) (within the meaning of Article 2692 of the Civil
Code of Quebec) for all present and future Lenders and in particular for all
present and future holders of any bond issued by Bombay Canada to the Agent and
secured by a hypothec granted by Bombay Canada pursuant to the laws of the
Province of Quebec. Each of the Lenders hereby irrevocably constitutes, to the
extent necessary, the Agent (or such designated collateral agent) as the holder
of such irrevocable power of attorney (fond{e'} de pouvoir) (within the meaning
of Article 2692 of the Civil Code of Quebec) in order to hold security granted
by Bombay Canada in the Province of Quebec. Each Assignee shall be deemed to
have confirmed and ratified the constitution of the Agent as the holder of such
irrevocable power of attorney (fond{e'} de pouvoir) by execution of the
relevant Assignment and Acceptance. Notwithstanding the provisions of Section
32 of An Act respecting the Special Powers of Legal Persons (Quebec), Bombay
Canada and the Lenders irrevocably agree that the Agent may acquire and be the
holder of any bond issued by Bombay Canada and secured by a hypothec granted by
Bombay Canada pursuant to the laws of the Province of Quebec at any time and
from time to time. Bombay Canada hereby acknowledges that any such bond
constitutes a title of indebtedness, as such term is used in Article 2692 of
the Civil Code of Quebec.
17. GENERAL PROVISIONS.
17.1. EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2. SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3. INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of the words used
so as to accomplish fairly the purposes and intentions of all parties hereto.
17.4. SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5. AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
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counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one
and the same Agreement. Delivery of an executed counterpart of this Agreement
by telefacsimile shall be equally as effective as delivery of an original
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.
17.7. REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or the transfer to the Lender Group
of any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrowers
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8. CONFIDENTIALITY. Agent and Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding Borrowers and their Subsidiaries, their operations, assets, and
existing and contemplated business plans shall be treated by Agent and Lenders
in a confidential manner, and shall not be disclosed by Agent and Lenders to
Persons who are not parties to this Agreement, except: (a) to attorneys for
and other advisors, accountants, auditors, and consultants to any member of the
Lender Group who are advised about the confidentiality of such information, (b)
to Subsidiaries and Affiliates of any member of the Lender Group (including the
Bank Product Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this
Section 17.8, (c) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation (with prompt notice to Administrative
Borrower so that Borrowers may seek a protective order or other appropriate
remedy and/or waive Agent's or any Lender's compliance with the provisions of
this Section 17.8), (d) as may be agreed to in advance by Administrative
Borrower or its Subsidiaries or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process (with prompt notice
to Administrative Borrower so that Borrowers may seek a protective order or
other appropriate remedy and/or waive Agent's or any Lender's compliance with
the provisions of this Section 17.8), (e) as to any such information that is or
becomes generally available to the public (other than as a result of prohibited
disclosure by or on behalf of Agent or Lenders), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of any Lender's
interest under this Agreement, provided that any such assignee, prospective
assignee, purchaser, prospective purchaser, participant, prospective
participant, pledgee, or prospective pledgee shall have agreed in writing to
receive such information hereunder subject to the terms of this Section, and
(g) in connection with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding involves claims
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related to the rights or duties of such parties under this Agreement or the
other Loan Documents; provided that the disclosing party shall use its best
efforts to ensure that such documents are filed under seal. The provisions of
this Section 17.8 shall survive for 2 years after the payment in full of the
Obligations. Anything contained herein or in any other Loan Document to the
contrary notwithstanding, the obligations of confidentiality contained herein
and therein, as they relate to the transactions contemplated hereby, shall not
apply to the federal tax structure or federal tax treatment of such
transactions, and each party hereto (and any employee, representative, or agent
of any party hereto) may disclose to any and all Persons, without limitation of
any kind, the federal tax structure and federal tax treatment of such
transactions (including all written materials related to such tax structure and
tax treatment). The preceding sentence is intended to cause the transactions
contemplated hereby to not be treated as having been offered under conditions
of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
IRC, and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or
exclusive rights to the tax structure of the transactions contemplated hereby
or any tax matter or tax idea related thereto.
17.9. INTEGRATION. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
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.
17.10.PARENT AS AGENT FOR BORROWERS. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force
and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances and Credit Instruments obtained
for the benefit of any Borrower and all other notices and instructions under
this Agreement and (ii) to take such action as the Administrative Borrower
deems appropriate on its behalf to obtain Advances and Credit Instruments and
to exercise such other powers as are reasonably incidental thereto to carry out
the purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the integrated
group. To induce the Lender Group to do so, and in consideration thereof, each
Borrower hereby jointly and severally agrees to indemnify each member of the
Lender Group and hold each member of the Lender Group harmless against any and
all liability, expense, loss or claim of damage or injury, made against the
Lender Group by any Borrower or by any third party whosoever, arising from or
incurred by reason of (a) the handling of the Loan Account and Collateral of
Borrowers as herein provided, (b) the Lender Group's relying on any
instructions of the Administrative Borrower, or (c) any other action taken by
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the Lender Group hereunder or under the other Loan Documents, except that
Borrowers will have no liability to the relevant Agent-Related Person or
Lender-Related Person under this Section 17.9 with respect to any liability
that has been finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such Agent-
Related Person or Lender-Related Person, as the case may be.
17.10.A USA PATRIOT ACT. Each Lender that is subject to the Act (as
hereinafter defined) and Agent (for itself and not on behalf of any
Lender) hereby notifies Borrowers that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001)) (the "Act"), it is required to obtain verify and record
information that identified Borrowers, which information includes the
name and address of Borrowers and other information that will allow such
Lender or Agent, as applicable, to identify Borrowers in accordance with
the Act.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
THE BOMBAY COMPANY, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SVP, CFO & Treasurer
BBA HOLDINGS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ STREET TRADING COMPANY
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
BOMBAY INTERNATIONAL, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
THE BOMBAY FURNITURE COMPANY OF CANADA INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ FARGO RETAIL FINANCE, LLC, as Agent
and as a U.S. Lender,
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
TRANS CANADA CREDIT CORPORATION, as
Canadian Agent and as Canadian Lender
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer