Exhibit 10.1
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of June 19, 2001
among
WILSONS LEATHER HOLDINGS INC.
as Borrower,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent, Lender, Term Lender and Swing Line Lender
GECC CAPITAL MARKETS GROUP, INC.
as Lead Arranger
FLEET NATIONAL BANK
as Lender and Documentation Agent
and
FIRST UNION NATIONAL BANK
as Lender and Syndication Agent
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT............................................2
1.1 Credit Facilities..................................................2
1.2 Letters of Credit..................................................6
1.3 Prepayment.........................................................6
1.4 Use of Proceeds....................................................8
1.5 Interest...........................................................8
1.6 Applicable Margins................................................10
1.7 Eligible Inventory................................................12
1.8 Cash Management Systems...........................................12
1.9 Fees..............................................................12
1.10 Receipt of Payments...............................................12
1.11 Application and Allocation of Payments............................12
1.12 Loan Account and Accounting.......................................13
1.13 Indemnity.........................................................14
1.14 Access............................................................15
1.15 Taxes.............................................................16
1.16 Capital Adequacy: Increased Costs: Illegality.....................16
1.17 Single Loan.......................................................18
1.18 Effect On Prior Loans; Prior Credit Agreement.....................18
2. CONDITIONS PRECEDENT.................................................18
2.1 Conditions to the Initial Loans...................................18
2.2 Further Conditions to Each Loan...................................19
3. REPRESENTATIONS AND WARRANTIES.......................................20
3.1 Corporate Existence; Compliance with Law..........................20
3.2 Executive Offices; FEIN...........................................21
3.3 Corporate Power, Authorization, Enforceable Obligations...........21
3.4 Financial Statements and Projections..............................21
3.5 Material Adverse Effect...........................................22
3.6 Ownership of Property; Liens......................................22
3.7 Labor Matters.....................................................22
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness................................................23
3.9 Government Regulation.............................................23
3.10 Margin Regulations................................................23
3.11 Taxes.............................................................23
3.12 ERISA.............................................................24
3.13 No Litigation.....................................................24
3.14 Brokers...........................................................25
3.15 Intellectual Property.............................................25
3.16 Full Disclosure...................................................25
3.17 Hazardous Materials...............................................25
3.18 Insurance.........................................................26
3.19 Deposit and Disbursement Accounts.................................26
3.20 Government Contracts..............................................26
3.21 Landlords and Trade Relations.....................................26
3.22 Agreements and Other Documents....................................26
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3.23 Solvency..........................................................26
4. FINANCIAL STATEMENTS AND INFORMATION.................................26
4.1 Reports and Notices...............................................26
4.2 Communication with Accountants....................................27
5. AFFIRMATIVE COVENANTS................................................27
5.1 Maintenance of Existence and Conduct of Business..................27
5.2 Payment of Obligations............................................27
5.3 Books and Records.................................................28
5.4 Insurance: Damage to or Destruction of Collateral.................28
5.5 Compliance With Laws..............................................29
5.6 Employee Plans....................................................29
5.7 Environmental Matters.............................................30
5.8 Landlords' Agreements and Bailee Letters..........................30
5.9 Ownership of Inventory............................................30
5.10 Additional Pledges................................................31
6. NEGATIVE COVENANTS...................................................31
6.1 Mergers, Subsidiaries, Etc........................................31
6.2 Investments; Loans and Advances...................................33
6.3 Indebtedness......................................................34
6.4 Employee Loans and Affiliate Transactions.........................34
6.5 Capital Structure and Business....................................35
6.6 Guaranteed Indebtedness...........................................35
6.7 Liens.............................................................35
6.8 Sale of Stock and Assets..........................................35
6.9 ERISA.............................................................36
6.10 Financial Covenants...............................................36
6.11 Hazardous Materials...............................................36
6.12 Sale-Leasebacks...................................................36
6.13 Cancellation of Indebtedness......................................36
6.14 Restricted Payments...............................................36
6.15 Change of Corporate Name or Location; Change of Fiscal Year.......37
6.16 No Impairment of Upstreaming......................................37
6.17 Changes Relating to Senior Notes..................................37
6.18 Eligible Trade L/Cs...............................................37
7. TERM.................................................................38
7.1 Termination.......................................................38
7.2 Survival of Obligations Upon Termination of Financing
Arrangements....................................................38
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES...............................39
8.1 Events of Default.................................................39
8.2 Remedies..........................................................40
8.3 Waivers by Credit Parties.........................................42
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT..................42
9.1 Assignment and Participations.....................................42
9.2 Appointment of Agent..............................................44
9.3 Agent's Reliance, Etc.............................................44
9.4 GE Capital and Affiliates.........................................45
9.5 Lender Credit Decision............................................45
9.6 Indemnification...................................................45
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9.7 Successor Agent...................................................46
9.8 Setoff and Sharing of Payments....................................46
9.9 Advances; Payments; Information; Non-Funding Lender...............47
10. SUCCESSORS AND ASSIGNS...............................................50
10.1 Successors and Assigns............................................50
11. MISCELLANEOUS........................................................51
11.1 Complete Agreement; Modification of Agreement.....................51
11.2 Amendments and Waivers............................................51
11.3 Fees and Expenses.................................................53
11.4 No Waiver.........................................................54
11.5 Remedies..........................................................54
11.6 Severability......................................................54
11.7 Conflict of Terms.................................................54
11.8 Authorized Signature..............................................54
11.9 GOVERNING LAW.....................................................54
11.10 Notices...........................................................55
11.11 Section Titles....................................................56
11.12 Counterparts......................................................56
11.13 WAIVER OF JURY TRIAL..............................................56
11.14 Press Releases....................................................56
11.15 Reinstatement.....................................................57
11.16 Advice of Counsel.................................................57
11.17 No Strict Construction............................................57
11.18 Confidentiality...................................................57
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INDEX OF EXHIBITS AND SCHEDULES
-------------------------------
Schedule A (Recitals) - Definitions
Schedule B (Section 1.2) - Letters of Credit
Schedule C - Intentionally Omitted
Schedule D - Intentionally Omitted
Schedule E (Section 1.9) - Cash Management System
Schedule F (Section 2.1(b)) - Schedule of Additional Closing Documents
Schedule G (Section 4.1(a)) - Financial Statements and Projections - Reporting
Schedule H (Section 4.1(b)) - Collateral Reports
Schedule I (Section 6y.10) - Financial Covenants
Schedule J (Section 11.10) - Notice Addresses
Schedule 1.1 - Responsible Individual
Schedule 3.2 - Executive Offices
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.18 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 6.18 - Form of Transportation Certificate
Schedule 11.8 - Authorized Signatures
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(i) - Form of Term B Note
Exhibit 1.1(c)(i) - Form of Notice of Swing Line Advance
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
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This THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 19, 2001
among WILSONS LEATHER HOLDINGS INC., a Minnesota corporation ("Borrower"),
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (in its individual
capacity, "GE Capital"), for itself, as Lender, as Term Lender, as Swing Line
Lender and as Agent for Lenders, FLEET NATIONAL BANK, as documentation agent and
as Lender, FIRST UNION NATIONAL BANK, as syndication agent and as Lender and the
other Lenders signatory hereto from time to time.
RECITALS
--------
WHEREAS, Borrower and Agent, certain of the Lenders signatory hereto, and
the Credit Parties, are parties to a Credit Agreement dated as of May 25, 1996
(the "Initial Credit Agreement"), which was amended and restated by that certain
Amended and Restated Credit Agreement dated as of May 24, 1999 and subsequently
by that certain Second Amended and Restated Credit Agreement dated as of October
31, 2000 (as amended or otherwise modified prior to the date hereof, the "Prior
Credit Agreement"), pursuant to which the Agent and the other Lenders party
thereto provided to Borrower a Revolving Loan Commitment in the original amount
of $150,000,000, which amount was subsequently increased to $165,000,000;
WHEREAS, pursuant to the Prior Credit Agreement Borrower has outstanding
certain Loans, Letters of Credit and Eligible Trade L/Cs (the "Prior Loans");
WHEREAS, Borrower desires that the terms governing the outstanding Prior
Loans be amended and restated in accordance herewith;
WHEREAS, Borrower desires that Lenders increase the prior revolving credit
facility to Borrower to One Hundred Ninety Million Dollars ($190,000,000), and
Lenders are willing to provide Borrower with Revolving Loan Commitments in that
amount upon the terms and conditions set forth herein;
WHEREAS, Borrower desires that Term Lender provide a new term loan in the
principal amount equal to Twenty Five Million Dollars ($25,000,000) (the "Term
Loan B") and Term Lender is willing to provide Borrower with Term Loan B upon
the terms and conditions set forth herein;
WHEREAS, to secure the Obligations, Borrower granted to Agent, for the
benefit of Agent and Lenders, a security interest in and lien upon all of its
existing and after-acquired personal property other than Equipment and Fixtures
as set forth in the previously executed Security Agreement and the Supplemental
Security Agreement. In addition, Borrower further desires to secure the
Obligations (including, without limitation, the repayment of the Term Loan B and
the Revolving Loan) by granting to Agent, for the benefit of Agent and Lenders,
a first priority perfected lien and mortgage upon (i) certain real estate of
Bermans and Bentley consisting of two Distribution Centers (and the Proceeds
thereof) pursuant to the Mortgages and (ii) all of the Equipment of each Credit
Party (and the Proceeds thereof), as set forth in the Amended and Restated
Security Agreement of even date herewith; and
WHEREAS, capitalized terms used in this Agreement shall have the meanings
ascribed to them in Schedule A. All Schedules, Disclosure Schedules, Exhibits
and other attachments (collectively, "Appendices") hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Lender
agrees to make available from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance"). The obligations of each Lender hereunder shall be
several and not joint. The aggregate amount of Revolving Credit
Advances outstanding shall not exceed at any time the lesser of (A)
the Maximum Amount less the sum of 100% of the Letter of Credit
Obligations, 100% of the Eligible Trade L/C Obligations and the Swing
Line Loan outstanding and (B) the Borrowing Base, less the sum of 100%
of the Letter of Credit Obligations, 100% of the Swing Line Loan, and
30% of the Eligible Trade L/C Obligations for the Fiscal Months of
August and September of each year, 35% of the Eligible Trade L/C
Obligations for the Fiscal Months of July and October of each year or
40% of the Eligible Trade L/C Obligations at all other times, as
applicable, outstanding at such time (such amount, subject to the
limitations described in Section 1.1(a)(v) hereof, "Borrowing
Availability"). Furthermore, the Pro Rata Share of the Revolving Loan
of any Lender shall not at any time exceed its separate Revolving Loan
Commitment. Until the Commitment Termination Date, Borrower may from
time to time borrow, repay and reborrow under this Section 1.1(a).
Each Revolving Credit Advance shall be made on notice by Borrower to
the representative of the Agent identified on Schedule 1.1 at the
address specified thereon. Those notices must be given no later than
(1) 11:00 a.m. (Chicago time) on the Business Day of the proposed
Revolving Credit Advance, in the case of an Index Rate Loan, or (2)
10:00 a.m. (Chicago time) on the date which is two (2) Business Days
prior to the proposed Revolving Credit Advance, in the case of a LIBOR
Loan. Each such notice (a "Notice of Revolving Credit Advance") must
be substantially in the form of Exhibit 1.1(a)(i), and must specify
the requested date, the amount and type of the requested Revolving
Credit Advance, and such other information as may be required by Agent
and must be given in writing (by telecopy or overnight courier) or by
telephone confirmed immediately in writing. Revolving Credit Advances
in the form of Index Rate Loans must be in a minimum amount of $25,000
and multiples of $10,000 in excess of such amount; minimum advances
and integral multiples for LIBOR Loans are set forth in Section
1.5(e). In the case of a Revolving Credit Advance that is not to be
funded by a Swing Line Advance, Agent shall promptly notify each
Lender of the Notice of Revolving Credit Advance. Notwithstanding the
foregoing, any
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Revolving Credit Advance to Borrower which is to be used solely to
repay the Swing Line Loan to Borrower may be in the aggregate
principal amount of the Swing Line Loan even if less than the
foregoing minimums. If Borrower desires to have the Revolving Loan
bear interest by reference to a LIBOR Rate, it must comply with
Section 1.5(e).
(ii) Borrower shall execute and deliver to each Lender a
promissory note to evidence the Revolving Loan and all Revolving Loan
Notes outstanding under the Prior Credit Agreement shall thereupon
cease to be of any force or effect. Each note shall be in the
principal amount of the Revolving Loan Commitment of the applicable
Lender, dated the Closing Date and substantially in the form of
Exhibit 1.1(a)(ii) (each a "Revolving Note" and, collectively, the
"Revolving Notes"). The Revolving Notes shall represent the obligation
of Borrower to pay the amount of the Revolving Loan Commitment or, if
less, the applicable Lender's Pro Rata Share of the aggregate unpaid
principal amount of all Revolving Credit Advances made by the
applicable Lender to Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Revolving
Loan and all other non-contingent Obligations shall be immediately due
and payable in full in immediately available funds in Dollars on the
Commitment Termination Date.
(iii) In its discretion the Agent may (but shall have absolutely
no obligation to) make Revolving Credit Advances to Borrower on behalf
of the Lenders in amounts which cause the outstanding principal
balance of the aggregate Revolving Credit Advances to exceed Borrowing
Availability (any such excess Revolving Credit Advances are herein
referred to collectively as "Overadvances"), and no such event or
occurrence shall cause or constitute a waiver by Agent or Lenders of
any Default or Event of Default that may result therefrom or of their
right to refuse to make any further Overadvances, Revolving Credit
Advances or Swing Line Advances or incur any Letter of Credit
Obligations or Eligible Trade L/C Obligations at any time that an
Overadvance exists or would result therefrom. In addition,
Overadvances may be made even if the conditions to lending set forth
in Section 2 have not been met. The authority of the Agent to make
Overadvances is limited to an aggregate amount not to exceed
$1,500,000 at any time, shall not cause the sum of the Revolving Loan
plus the Swing Line Loan to exceed the Maximum Amount, and may be
revoked prospectively by a written notice to Agent signed by Lenders
holding fifty-one percent (51%) or more of the Revolving Loan
Commitments. The aggregate principal balance of all Overadvances shall
bear interest at the Default Rate then applicable to Index Rate Loans.
Each Overadvance shall be payable by Borrower as and when specified by
Agent at the time that such Overadvance is made or, if not so
specified by Agent, shall be payable on demand.
(iv) Borrower shall cause the outstanding principal balance of
the Revolving Credit Advances and the Swing Line Loan to equal zero
dollars ($0) for ninety (90) consecutive days during each calendar
year, commencing with 2001.
(v) Notwithstanding anything to the contrary set forth herein, in
no event shall, the sum of the aggregate outstanding Revolving Loan
plus the aggregate outstanding principal balance of the Term Loan B
exceed one hundred five percent (105%) (one hundred eleven percent
(111%) solely for the Fiscal Month of August, 2001) of the amount
which could
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be realized upon a sale of the Borrower's Inventory pursuant to a
going out of business sale (as determined in accordance with the then
most recent appraisal delivered to the Agent pursuant to subsection
(f) of Schedule H hereto or, until the first such appraisal is
delivered, in accordance with the most recent appraisal delivered to
Agent prior to the Closing Date (the "GOB Cap")).
(b) Term Loan B.
(i) Subject to the terms and conditions hereof, the Term Lender
agrees to make a term loan (the "Term Loan B") on the Closing Date to
Borrower in the original principal amount of the Term Loan B
Commitment. The Term Loan B shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1(b)(i) (the "Term B Note") and
Borrower shall execute and deliver the Term B Note to the Term Lender
on the Closing Date. The Term B Note shall represent the obligation of
Borrower to pay the amount of the Term Loan B, together with interest
thereon as prescribed in Section 1.5.
(ii) The aggregate outstanding principal balance of the Term Loan
B shall be due and payable in full in immediately available funds on
the Commitment Termination Date, if not sooner paid in full. No
payment with respect to the Term B Loan may be reborrowed.
(iii) Each payment of principal and each payment of interest with
respect to the Term Loan B shall be paid to Agent for the benefit of
the Term Lender.
(c) Swing Line Facility.
(i) Subject to the terms and conditions hereof, the Swing Line
Lender agrees to make available from time to time until the Commitment
Termination Date advances (each, a "Swing Line Advance"); provided
that, except as set forth in Section 2.2, no Swing Line Advance may be
made after the occurrence and during the continuance of an Event of
Default unless such Swing Line Advance is approved by Requisite
Lenders. The aggregate amount of Swing Line Advances outstanding shall
not exceed the lesser of (A) the Swing Line Commitment and (B) the
Borrowing Base less the sum of the outstanding balance of the
Revolving Credit Advances, 100% of outstanding Letter of Credit
Obligations, and 30% of the Eligible Trade L/C Obligations for Fiscal
Months of August and September of each year, 35% of the Eligible Trade
L/C Obligations for the Fiscal Months of July and October of each year
or 40% of the Eligible Trade L/C Obligations at all other times, as
applicable ("Swing Line Availability"). Until the Commitment
Termination Date, Borrower may from time to time borrow, repay and
reborrow under this Section 1.1(c). In order to minimize fluctuations
in the Revolving Loan balance, it is intended that the Swing Line Loan
shall be the first Loan borrowed and the first Loan repaid. Each Swing
Line Advance shall be made on notice by Borrower to the representative
of the Agent identified on Schedule 1.1 at the address specified
thereon. Those notices must be given no later than 11:00 a.m. (Chicago
time) on the Business Day of the proposed Swing Line Advance. Each
such notice (a "Notice of Swing Line Advance") must be substantially
in the form of Exhibit 1.1(c)(i), and must specify the requested date,
the amount of the requested Swing Line Advance, and such other
information as may be required by Agent or
4
the Swing Line Lender and must be given in writing (by telecopy or
overnight courier) or by telephone confirmed immediately in writing.
(ii) Borrower shall execute and deliver to the Swing Line Lender
a promissory note to evidence the Swing Line Loan. Such note shall be
in the principal amount of the Swing Line Commitment of the Swing Line
Lender, dated the Closing Date and substantially in the form of
Exhibit 1.1(c)(ii) (the "Swing Line Note"). The Swing Line Note shall
represent the obligation of Borrower to pay the amount of the Swing
Line Commitment or, if less, the aggregate unpaid principal amount of
all Swing Line Advances made to Borrower together with interest
thereon as prescribed in Section 1.5. The entire unpaid balance of the
Swing Line Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on
the Commitment Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at
any time and from time to time in its sole and absolute discretion,
but not less frequently than once weekly, shall on behalf of Borrower
(and Borrower hereby irrevocably authorizes the Swing Line Lender to
so act on its behalf) request by telephone or telecopy each Lender
(including the Swing Line Lender) to make a Revolving Credit Advance
to Borrower (which initially shall be an Index Rate Loan, but may be
converted to a LIBOR Loan) in an amount equal to such Lender's Pro
Rata Share of the principal amount of the Swing Line Loan (the
"Refunded Swing Line Loan") outstanding on the date such notice is
given. Unless any of the events described in Sections 8.1(h) or 8.l(i)
shall have occurred (in which event the procedures of Section
1.1(c)(iv) shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving
Credit Advance are then satisfied, each Revolving Lender shall
disburse directly to Agent, its Pro Rata Share of a Revolving Credit
Advance on behalf of the Swing Line Lender, prior to 1:00 p.m.
(Chicago time), in immediately available funds on the Business Day
that such notice is given. The proceeds of such Revolving Credit
Advances shall be immediately applied to repay the Refunded Swing Line
Loan.
(iv) Participation in Swing Line Loans. If, prior to refunding a
Swing Line Loan with a Revolving Credit Advance pursuant to Section
1.1(c)(iii), one of the events described in Sections 8.1 (h) or 8.1(i)
shall have occurred with respect to Borrower, then, subject to the
provisions of Section 1.1(c)(v) below, each Lender will, on the date
such Revolving Credit Advance was to have been made to Borrower,
purchase from the Swing Line Lender an undivided participation
interest in the Swing Line Loan in an amount equal to its Pro Rata
Share of such Swing Line Loan. Upon request, each Lender will promptly
transfer to the Swing Line Lender, in immediately available funds, the
amount of its participation and upon receipt thereof the Swing Line
Lender will deliver to such Lender a Swing Line Loan participation
certificate, in form and substance reasonably satisfactory to Agent,
dated the date of receipt of such funds and in such amount.
(v) Lenders' Obligations Unconditional. Each Revolving Lender's
obligation to make Revolving Credit Advances in accordance with
Section 1.1(c)(iii) and to purchase participating interests in
accordance with Section 1.1(c)(iv) shall be absolute and unconditional
and shall not be affected by any of the following circumstances: (A)
any setoff,
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counterclaim, recoupment, defense or other right which such Lender may
have against the Swing Line Lender, Borrower or any other Person for
any reason whatsoever; (B) the occurrence or continuance of any
Default or Event of Default; (C) any inability of Borrower to satisfy
the conditions precedent to borrowing set forth in this Agreement on
the date upon which such participating interest is to be purchased or
(D) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing. If any Revolving Lender does not
make available to the Swing Line Lender the amount required pursuant
to Section 1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing
Line Lender shall be entitled to recover such amount on demand from
such Lender, together with interest thereon for each day from the date
of non-payment until such amount is paid in full at the federal funds
rate for the first two Business Days and at the Index Rate thereafter.
(d) Reliance on Notices. Agent shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation, Notice of Swing Line Advance or
similar notice believed by Agent to be genuine. Agent may assume that each
Person executing and delivering such a notice was duly authorized, unless
the responsible individual acting thereon for Agent has actual knowledge to
the contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Schedule B, Borrower shall have the right to
request, and the Lenders agree to incur, Eligible Trade L/C Obligations and
Letter of Credit Obligations in respect of Borrower. The aggregate Letter of
Credit Obligations and Eligible Trade L/C Obligations outstanding at any time
shall not exceed as of any date of determination, the lesser of (A) $85,000,000
and (B) $190,000,000 less the then outstanding Revolving Credit Advances and
Swing Line Loan. In addition, the sum of 100% of the Letter of Credit
Obligations, and 30% of the Eligible Trade L/C Obligations for the Fiscal Months
of August and September of each year, 35% of the Eligible Trade L/C Obligations
for the Fiscal Months of July and October of each year or 40% of the Eligible
Trade L/C Obligations at all other times, as applicable, shall not exceed the
Borrowing Base, less the then outstanding Revolving Credit Advances and Swing
Line Loan. The determination of availability described in the preceding two
sentences is herein referred to as "L/C Availability."
1.3 Prepayment.
(a) Subject to Section 1.1(a)(iii), if at any time Borrowing
Availability or L/C Availability is less than zero, Borrower shall
immediately repay the aggregate outstanding Revolving Credit Advances and
Swing Line Advances (in such order as shall minimize the aggregate of LIBOR
breakage costs and the interest costs on the Revolving Loan and/or Swing
Line Loan that remains outstanding) to the extent required to eliminate
such deficit. If any deficit remains after repayment in full of the
aggregate outstanding Revolving Credit Advances and Swing Line Advances,
Borrower shall provide cash collateral for the Letter of Credit Obligations
and Eligible Trade L/C Obligations in the manner set forth in Schedule B to
the extent required to eliminate such deficit.
6
(b) If Ultimate Parent issues Stock, no later than the Business Day
following the date of receipt of the proceeds thereof, Borrower shall
prepay the Loans (other than Term Loan B) in an amount equal to 50% of such
proceeds if requested by Requisite Lenders, net of underwriting discounts
and commissions and other reasonable costs paid to non-Affiliates in
connection therewith; provided, however, that Borrower shall have the right
but not the obligation to use the net proceeds from such sale to prepay
Term Loan B, in whole but not in part, and the amount of net proceeds used
to prepay Term Loan B shall reduce dollar for dollar Borrower' s obligation
to prepay the Loans (other than Term Loan B) under this clause (b). Any
such prepayment of Loans (other than Term Loan B) shall be applied in
accordance with clause (e) below.
(c) Borrower may at any time on at least five (5) days' (thirty (30)
days' in the case of prepayment in full of the Loans) prior written notice
to Agent voluntarily prepay all or part of the Revolving Loan and/or the
Swing Line Loan and permanently reduce or terminate the Revolving Loan
Commitment or the Swing Line Commitment, as applicable; provided that (a)
any such prepayments or reductions shall be in a minimum amount of
$1,000,000 and integral multiples of $250,000 in excess of such amount, (b)
such voluntary prepayments or reductions may be made or effected no more
frequently than once per year following the Closing Date, (c) any partial
reduction of the Revolving Loan Commitment shall result in a ratable
reduction in the Swing Line Commitment, and (d) any partial reduction of
the Revolving Loan Commitment to $100,000,000 or less shall result in a
ratable reduction in the L/C Sublimit. Any such voluntary prepayment and
any such reduction or termination of the Revolving Loan Commitment must be
accompanied by the payment of any LIBOR funding breakage costs in
accordance with Section 1.13(b). Upon any such prepayment in full and
termination in full of the Revolving Loan Commitment and the Swing Line
Commitment, Borrower's right to request Revolving Credit Advances, request
that Letter of Credit Obligations or Eligible Trade L/C Obligations be
incurred on its behalf, or request Swing Line Advances shall simultaneously
be permanently terminated. Term Loan B may be voluntarily prepaid only in
whole and not in part, and only from the net proceeds of the issuance by
Ultimate Parent of its Stock.
(d) In the event of the receipt by any Credit Party of proceeds of any
sale or other disposition of all or any portion of the Term Collateral (or
the receipt of insurance or condemnation proceeds relating to such Term
Collateral which have not been applied to replacement or reconstruction as
provided in Section 5.4(c) and the Mortgages) then, at the option of the
Term Lender, the amount equal to the net proceeds of such sale or
disposition (i) shall be applied to prepayment of Term Loan B or the other
Loans, in such order of application as the Term Lender shall determine, or
(ii) shall be released to Borrower. The Term Lender shall exercise its
option to direct application of such proceeds by notice to Borrower no
later than the later of (x) the date that the applicable proceeds are
received by a Credit Party or (y) thirty (30) days after the Term Lender
receives written notice of the event giving rise to such option, and
Borrower shall make any prepayment required hereby within two days after
receipt of such notice.
(e) Any prepayments made by Borrower pursuant to clause (b) above or
pursuant to Section 5.4(c) (unless otherwise set forth in this Section 1.3)
shall be applied in the
7
following order of priority, in each instance until all Obligations having
a higher priority have been paid in full: first, to accrued Fees and
expenses reimbursable hereunder; second, to accrued interest on the Swing
Line Loan; third, to the principal balance of the Swing Line Loan; fourth,
to the accrued interest on the Index Rate Loans; fifth, to the principal
balance of the Index Rate Loans; and sixth, if L/C Availability is less
than zero, to any Letter of Credit Obligations and Eligible Trade L/C
Obligations of Borrower to provide cash collateral therefor in the manner
set forth in Schedule B, until all such Letter of Credit Obligations and
Eligible Trade L/C Obligations have been cash collateralized to the extent
so required. If an Event of Default shall have occurred and be continuing,
the remainder of any such prepayments shall be applied to outstanding
Obligations in such order as Agent may deem appropriate, including the cash
collateralization of Letter of Credit Obligations and Eligible Trade L/C
Obligations. Otherwise the remainder of such prepayments shall be returned
to Borrower. Neither the Revolving Loan Commitment nor the Swing Line
Commitment shall be permanently reduced by the amount of any prepayments
applied to the Revolving Loan or the Swing Line Loan pursuant to the
foregoing.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Revolving
Credit Advances, the Term Loan B and the Swing Line Advances solely for the
financing of Borrower's ordinary working capital needs, including Capital
Expenditures, repurchases of Senior Notes in accordance with Section 6.17 and
Permitted Investments in accordance with Section 6.1 (but excluding in any event
the making of any Restricted Payment not specifically permitted by Section
6.14).
1.5 Interest.
(a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders, in arrears on each applicable Interest Payment Date, at the
following rates: (i) with respect to the Revolving Credit Advances bearing
interest at the Index Rate, at a per annum rate equal to the Index Rate
plus the Applicable Index Margin, or at the election of Borrower, at a per
annum rate equal to the applicable LIBOR Rate plus the Applicable LIBOR
Margin, based on the aggregate Revolving Credit Advances outstanding from
time to time; (ii) with respect to the Term Loan B, the Index Rate plus
four percent (4%) per annum; and (iii) with respect to the Swing Line Loan
at a per annum rate equal to the Commercial Paper Rate plus the Applicable
Swing Line Margin; provided, however, that solely for the period from and
after the Closing Date through the first anniversary of the Closing Date,
(a) the interest rates applicable to the Revolving Credit Advances and the
Swing Line Loan in accordance with this Section 1.5(a) and (b) the
Applicable L/C Margin (as set forth in Section 1.6 below), shall be
increased by one half of one percent (0.5%) per annum.
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR
Period) and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
8
(c) All computations of interest with respect to LIBOR Loans and the
Swing Line Loan shall be made by Agent on the basis of a three hundred
sixty (360) day year, for the actual number of days occurring in the period
for which such interest is payable. All computations of interest with
respect to Index Rate Loans, shall be made by Agent on the basis of a three
hundred sixty-five (365) day year for the actual number of days elapsed.
The Index Rate shall be determined each day based upon the Index Rate as in
effect each day. Each determination by Agent of an interest rate hereunder
shall be conclusive, absent manifest error.
(d) So long as any Event of Default shall have occurred and be
continuing, and at the election of Agent (or upon the written request of
Requisite Lenders) after written notice from Agent to Borrower, the
interest rates applicable to the Revolving Loan, the Term Loan B, the Swing
Line Loan and the Letter of Credit Fees shall be increased by two
percentage points (2%) per annum above the rate of interest or the rate of
such Fees otherwise applicable hereunder ("Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable
to such Obligations. If such notice is issued, interest and Letter of
Credit Fees at the Default Rate shall accrue from the initial date of such
Event of Default for so long as that Event of Default shall continue and
shall be payable upon demand.
(e) So long as no Default or Event of Default shall have occurred and
be continuing, Borrower shall have the option to (i) request that any
Revolving Credit Advance (other than an Overadvance) be made as a LIBOR
Loan, (ii) convert at any time all or any part of outstanding Revolving
Credit Advances (including a Refunded Swing Line Loan) from Index Rate
Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan,
subject to payment of LIBOR breakage costs in accordance with Section
1.13(b) if such conversion is made prior to the expiration of the LIBOR
Period applicable thereto, or (iv) continue all or any portion of any LIBOR
Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period and
the succeeding LIBOR Period of that continued Loan shall commence on the
last day of the LIBOR Period of the Loan to be continued. Any Loan to be
made or continued as, or converted into, a LIBOR Loan must be in a minimum
amount of $5,000,000 and integral multiples of $1,000,000 in excess of such
amount. Any such election must be made by 10:00 a.m. (Chicago time) on the
second (2nd) Business Day prior to (1) the date of any proposed Advance
which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR
Period with respect to any LIBOR Loans to be continued as such, or (3) the
date on which Borrower wishes to convert any Index Rate Loan to a LIBOR
Loan for a LIBOR Period designated by Borrower in such election. If no
election is received with respect to a LIBOR Loan by 10:00 a.m. (Chicago
time) on the second (2nd) Business Day prior to the end of the LIBOR Period
with respect thereto (or if a Default or an Event of Default shall have
occurred and be continuing), that LIBOR Loan shall be converted to an Index
Rate Loan at the end of its LIBOR Period. Borrower must make such election
by notice to Agent in writing, by telecopy or overnight courier. In the
case of any conversion or continuation, such election must be made pursuant
to a written notice (a "Notice of Conversion/Continuation") in the form of
Exhibit 1.5(e). Borrower shall not be entitled to request or continue any
Revolving Loan as, or convert any Revolving Loan into, a LIBOR Loan unless
at the time of such request, conversion or continuation, the aggregate
outstanding principal balance of the Revolving Credit Advances plus the
amount of the Swing Line Advances
9
equals or exceeds $5,000,000. Not more than ten (10) LIBOR Loans shall be
outstanding at any time.
(f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that
the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, however,
that if at any time thereafter the rate of interest payable hereunder is
less than the Maximum Lawful Rate, Borrower shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by Agent, on behalf of Lenders, is equal to the total interest
which would have been received had the interest rate payable hereunder been
(but for the operation of this paragraph) the interest rate payable since
the Closing Date as otherwise provided in this Agreement. Thereafter, the
interest rate payable hereunder shall be the rate(s) of interest provided
in Sections 1.5(a) through (e) above, unless and until the rate of interest
again exceeds the Maximum Lawful Rate, and at that time this paragraph
shall again apply. In no event shall the total interest received by any
Lender pursuant to the terms hereof exceed the amount which such Lender
could lawfully have received had the interest due hereunder been calculated
for the full term hereof at the Maximum Lawful Rate. If the Maximum Lawful
Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order
specified in Section 1.11 and thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.
1.6 Applicable Margins. The Applicable Swing Line Margin, Applicable Index
Margin, Applicable LIBOR Margin and Applicable L/C Margin will be adjusted (up
or down) quarterly based on Ultimate Parent's consolidated financial performance
for the trailing four quarters as evidenced by its quarterly consolidated
Financial Statements in accordance with the following grid:
10
--------------------- ------------------------- ---------------------- --------------------- -----------------------
IF EBIT/Cash Applicable Swing Line Applicable Index Applicable LIBOR Applicable L/C Margin
Interest Coverage Margin is: Margin is: Margin is: is:
is:
--------------------- ------------------------- ---------------------- --------------------- -----------------------
less than 2.0 2.25% 0.50% 2.25% 1.25%
--------------------- ------------------------- ---------------------- --------------------- -----------------------
2.0 up to but not 2.00% 0.25% 2.00% 1.25%
including 3.0
--------------------- ------------------------- ---------------------- --------------------- -----------------------
3.0 up to but not 1.75% 0.25% 1.75% 1.00%
including 4.0
--------------------- ------------------------- ---------------------- --------------------- -----------------------
4.0 up to but not 1.50% 0.0% 1.50% 0.75%
including 5.0
--------------------- ------------------------- ---------------------- --------------------- -----------------------
5.0 or more 1.25% 0.0% 1.25% 0.75%
--------------------- ------------------------- ---------------------- --------------------- -----------------------
The Applicable Swing Line Margin, Applicable Index Margin, Applicable LIBOR
Margin and Applicable L/C Margin will be 1.75%, 0.50%, 1.75% and 1.25%,
respectively, as of the Closing Date (it being understood that such percentages
have been increased above the rates reflected in the foregoing grid to give
effect to the one half of one percent (0.5%) increase provided for in Section
1.5(a)) and will first be subject to adjustment prospectively on the first day
of the calendar month that is more then five (5) days following delivery to
Lenders of Ultimate Parent's quarterly consolidated Financial Statements for the
Fiscal Quarter ending on or about April 30, 2002.
Adjustments in the Applicable Swing Line Margin, Applicable Index Margin,
Applicable LIBOR Margin and Applicable L/C Margin shall be prospective only and
shall be based on Ultimate Parent's consolidated financial performance for the
trailing four quarters as of the last day of each Fiscal Quarter as evidenced by
Ultimate Parent's unaudited consolidated Financial Statements for the first
three Fiscal Quarters of each Fiscal Year and Ultimate Parent's audited
consolidated Financial Statements for each Fiscal Year. Each increase or
decrease in the above-referenced margins shall become effective starting (i) in
the case of the Swing Line Loan, Index Rate Loans and Letter of Credit Fees on
the first day of the first calendar month commencing at least five (5) days
after delivery of the applicable Financial Statements and (ii) in the case of
LIBOR Loans on the first day of each LIBOR Period commencing after delivery of
the applicable Financial Statements.
The Seasonal Over-Advances shall bear interest (i) at the LIBOR Rate or the
Index Rate, plus the Applicable Margin(s) or (ii) the Applicable L/C Margin
(plus the additional one half of one percent (0.5%) increase provided for in
Section 1.5(a)), plus, in each case, 100
11
basis points per annum. For purposes of this Section, Advances, Letter of Credit
Obligations or Eligible Trade L/C Obligations constituting Seasonal
Over-Advances shall be deemed to constitute the last Advances made (or Letter of
Credit Obligations or Eligible Trade L/C Obligations incurred) and the first
Advances repaid (or Letter of Credit Obligations or Eligible Trade L/C
Obligations discharged).
1.7 Eligible Inventory. Agent reserves the right, at any time and from time
to time after the Closing Date, subject to Section 11.2, to adjust the advance
rates against Eligible Inventory contained in the definition of Borrowing Base
and to establish Reserves against the Borrowing Base in its reasonable credit
judgment based on changes in the salability of Inventory, shrinkage, Liens,
unpaid liabilities or other changed circumstances arising after the Closing
Date.
1.8 Cash Management Systems. Borrower will maintain its existing cash
management systems as described on Schedule E (the "Cash Management Systems").
1.9 Fees.
(a) Borrower shall pay to GE Capital, individually, the Fees specified
in the GE Capital Fee Letter at the times specified for payment therein.
(b) As additional compensation for the Lenders having Revolving Loan
Commitments, Borrower agrees to pay to Agent, for the ratable benefit of
such Lenders, in arrears, on the first Business Day of each month prior to
the Commitment Termination Date and on the Commitment Termination Date, a
fee for Borrower's non-use of funds (the "Non-Use Fee") in an amount equal
to three-tenths of one percent (.30%) per annum (calculated on the basis of
a 360 day year for actual days elapsed) of the difference between (x) the
Maximum Amount (as it may be reduced from time to time) and (y) the average
for the period of the daily closing balances of the Revolving Loan and the
Swing Line Loan outstanding during the period for which the Non-Use Fee is
due.
1.10 Receipt of Payments. Payments in the form of immediately available
funds received in Agent's Collection Account before 2:00 p.m. (Chicago time) on
any Business Day will be applied against the Obligations on that day. Payments
received after 2:00 p.m. (Chicago time) on any Business Day shall be deemed to
have been received on the next Business Day.
1.11 Application and Allocation of Payments.
(a) Borrower hereby irrevocably waives as to all payments from and
after the Commitment Termination Date, the right to direct the application
of such payments received from or on behalf of Borrower, and Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive
right to apply any and all such payments against the Obligations as Agent
may deem advisable notwithstanding any previous entry by Agent in the Loan
Account or any other books and records. Subject to Section 8.2, in the
absence of a specific determination by Agent with respect thereto after the
Commitment Termination Date and in all other instances (except as otherwise
expressly provided herein), payments shall be applied in the following
order
12
of priority, in each instance until all Obligations having a higher
priority have been paid in full: (1) to Fees and Agent's expenses
reimbursable hereunder; (2) to accrued interest on the Swing Line Loan; (3)
to the outstanding principal balance of the Swing Line Loan; (4) to accrued
interest on the Revolving Loans that are Index Rate Loans; (5) to the
principal balance of the Revolving Loans that are Index Rate Loans; (6) to
accrued interest on the Revolving Loans that are LIBOR Rate Loans; (7) to
the principal balance of the Revolving Loans that are LIBOR Rate Loans; (8)
if the Commitment Termination Date has occurred or if L/C Availability is
less than zero, to cash collateralize Letter of Credit Obligations and
Eligible Trade L/C Obligations in the manner described in Schedule B, (9)
to interest on the Term Loan B, (10) to the principal of the Term Loan B
and (11) to all other Obligations then due and payable including expenses
of Lenders reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may, charge to
the Swing Line Loan to the extent such charge would not cause the Swing
Line Loan balance to exceed the Swing Line Commitment and then to the
Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest owing by Borrower under this Agreement or any
of the other Loan Documents if and to the extent Borrower fails to promptly
pay any such amounts within three (3) days after the date on which such
payment is due, even if such charges would cause the Revolving Loan to
exceed Borrowing Availability. At Agent's option and to the extent
permitted by law, any charges so made shall constitute part of the Swing
Line Loan or Revolving Loan hereunder.
(c) If a Default or an Event of Default has occurred and is
continuing, Agent may in its sole and absolute discretion, impose a Reserve
against Borrowing Availability for interest, Fees and expenses due and
payable or which will become due and payable hereunder on the next
respective payment dates therefor.
(d) Subject to Section 1.11(a) above, if Borrower pays less than all
of the interest due hereunder on any Interest Payment Date, Agent shall
apply such partial payment ratably to all interest then due hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account (the
"Loan Account") on its books to record: (a) all Advances and the Term Loan B (b)
all payments made by Borrower, and (c) all other debits and credits as provided
in this Agreement with respect to the Loans or any other Obligations. All
entries in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall be presumptive evidence of the amounts due and owing to Agent and Lenders
by Borrower; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect Borrower's duty to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions with respect
to the Loans setting forth the balance of the Loan Account. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the date
thereof, each and every such accounting shall (absent manifest error) be deemed
final,
13
binding and conclusive upon Borrower in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be deemed
to be disputed by Borrower.
1.6 Indemnity.
(a) Borrower shall indemnify and hold harmless each of Agent, Lenders
and their respective Affiliates, and each such Person's respective
officers, directors, employees, attorneys, agents and representatives
(each, an "Indemnified Person"), from and against any and all suits,
actions, proceedings, claims, damages, losses, liabilities and expenses
(including attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) which
may be instituted or asserted against or incurred by any such Indemnified
Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents, and in
connection with or arising out of the transactions contemplated hereunder
and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and Costs and legal costs
and expenses arising out of or incurred in connection with disputes between
or among any parties to any of the Loan Documents; provided, that Borrower
shall not be liable for any indemnification to an Indemnified Person to the
extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results solely from that Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of
competent jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE To ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERiVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING
BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACtiON CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that
repayment is made pursuant to any provision of this Agreement or any other
Loan Document or is the result of acceleration, by operation of law or
otherwise); (ii) Borrower shall default in payment when due of the
principal amount of or interest on any LIBOR Loan; (iii) Borrower shall
default in making any borrowing of, conversion into or continuation of
LIBOR Loans after Borrower has given notice requesting the same in
accordance herewith; or (iv) Borrower shall fail to make any prepayment of
a LIBOR Loan after Borrower has given a notice thereof in accordance
herewith, Borrower shall indemnify and hold harmless each Lender from and
against all losses, costs and expenses resulting from or arising from any
of the foregoing. Such indemnification shall include, without limitation,
any loss (including, without limitation, loss of margin) or expense arising
from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender
shall be deemed to have actually funded its relevant LIBOR Loan through the
purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the amount of that LIBOR Loan and
15
having a maturity comparable to the relevant Interest Period; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it
sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower and Agent with its
written calculation of all amounts payable pursuant to this Section
1.13(b), and such calculation shall be binding on the parties hereto unless
Borrower shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail. All amounts
payable pursuant to this Section 1.13(b) shall be made payable to Agent for
the benefit of the requesting Lender and shall then be funded by Agent to
such Lender.
1.14 Access.
(a) Borrower shall, and in accordance with the Guaranties, shall cause
each other Credit Party who is a signatory thereto to, during normal
business hours, from time to time upon one (1) Business Day's prior notice
as frequently as Agent reasonably determines to be appropriate: (a) provide
Agent and any of its officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, and any of its
officers, employees and agents, to inspect, audit and make extracts from
any Credit Party's books and records, and (c) permit Agent, and its
officers, employees and agents, to inspect, review and evaluate the
Accounts, Inventory and other Collateral of any Credit Party. If a Default
or Event of Default shall have occurred and be continuing, Borrower,
Ultimate Parent, First Intermediate Parent, Second Intermediate Parent and
Third Intermediate Parent shall provide such access at all times and
without advance notice. Borrower, Ultimate Parent, First Intermediate
Parent, Second Intermediate Parent and Third Intermediate Parent shall make
available to Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books and records which Agent may
request. Borrower, Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent shall deliver any
document or instrument necessary for Agent, as it may from time to time
request, to obtain records from any service bureau or other Person which
maintains records for the Credit Parties. Borrower, Ultimate Parent, First
Intermediate Parent, Second Intermediate Parent and Third Intermediate
Parent shall maintain duplicate records or supporting documentation on
media, including computer tapes and discs owned by Borrower, Ultimate
Parent, First Intermediate Parent, Second Intermediate Parent and Third
Intermediate Parent.
(b) Borrower shall pay Agent a Fee of $700 per day per individual
(plus all out-of-pocket costs and expenses) in connection with Agent's
field examinations permitted under Section 1.14(a) above and Section 4(c)
of the Amended and Restated Security Agreement, including the cost of
verifying Eligible In-Transit Inventory in the possession of Approved
Shippers; provided that such Fees and expenses shall not be reimbursable by
Borrower with respect to more than two field examinations during any period
of twelve consecutive months unless an Event of Default shall have occurred
and be continuing at the time of those field examinations that exceed two
during any period of twelve consecutive months.
15
1.15 Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with this Section 1.15, free and clear of and
without deduction for any and all present or future Taxes. Except as
provided in Section 1.16(d), if Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder under the Notes,
(i) the sum payable shall be increased as much as shall be necessary so
that after making all required deductions (including deductions applicable
to additional sums payable under this Section 1.15) Agent or Lenders, as
applicable, receive an amount equal to the sum they would have received had
no such deductions been made, (ii) Borrower shall make such deductions, and
(iii) Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within thirty (30) days
after the date of any payment of Taxes, Borrower shall furnish to Agent the
original or a certified copy of a receipt evidencing payment thereof.
(b) Borrower shall indemnify and, within ten (10) days of demand
therefor, pay, Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under
this Section 1.15) paid by Agent or such Lender, as appropriate, and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.
1.16 Capital Adequacy: Increased Costs: Illegality.
(a) If any Lender shall have determined that the adoption after the
date hereof of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender with any
request or directive regarding capital adequacy, reserve requirements or
similar requirements (whether or not having the force of law) from any
central bank or other Governmental Authority increases or would have the
effect of increasing the amount of capital, reserves or other funds
required to be maintained by such Lender and thereby reducing the rate of
return on such Lender's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower and
to Agent shall, absent manifest error, be final, conclusive and binding for
all purposes.
(b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to any Lender of agreeing to make or
making, funding or maintaining any Loan, then Borrower shall from time to
time, upon demand by such Lender (with a copy such demand to Agent), pay to
Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost. A certificate as to the
amount of such increased cost, submitted to Borrower and to Agent by such
16
Lender, shall be conclusive and binding on Borrower for all purposes,
absent manifest error. Each Lender agrees that, as promptly as practicable
after it becomes aware of any circumstances referred to above which would
result in any such increased cost, the affected Lender shall, to the extent
not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and
expenses incurred by it and payable to it by Borrower pursuant to this
Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or
other Governmental Authority shall assert that it is unlawful, for any
Lender to agree to make or to make or to continue to fund or maintain any
LIBOR Loan, then, unless that Lender is able to make or to continue to fund
or to maintain such LIBOR Loan at another branch or office of that Lender
without, in that Lender's opinion, adversely affecting it or its Loans or
the income obtained therefrom, on notice thereof and demand therefor by
such Lender to Borrower through Agent, (i) the obligation of such Lender to
agree to make or to make or to continue to fund or maintain LIBOR Loans
shall terminate and (ii) Borrower shall forthwith prepay in full all
outstanding LIBOR Loans owing by Borrower to such Lender, together with
interest accrued thereon (but without LIBOR breakage costs), unless
Borrower, within five (5) Business Days after the delivery of such notice
and demand, converts all such Loans into a Loan bearing interest based on
the Index Rate (which conversion shall be without LIBOR breakage costs).
(d) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which
payments to be made under this Agreement or under the Notes are exempt from
United States withholding tax under an applicable statute or tax treaty
shall provide to Borrower and Agent a properly completed and executed IRS
Form 4224 or Form 1001 or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to such exemption (a "Certificate of Exemption").
Prior to becoming a Lender under this Agreement and within fifteen (15)
days after a reasonable written request of Agent or Borrower from time to
time thereafter, each Foreign Lender that becomes a Lender under this
Agreement shall provide a Certificate of Exemption to Borrower and Agent.
No Person may become a Lender hereunder if such Person is unable to deliver
a Certificate of Exemption. If a Foreign Lender does not provide a
Certificate of Exemption to Agent and Borrower within the time periods set
forth above, Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rate and Borrower shall not be required
to pay any additional amounts as a result of such withholding; provided,
that all such withholding shall cease upon delivery by such Foreign Lender
of a Certificate of Exemption to Agent and Borrower.
(e) Replacement of Lender in Respect of Increased Costs. Within
fifteen (15) days after receipt by Borrower of written notice and demand
from any Lender or a participant that has purchased a participation from
such Lender (an "Affected Lender") for payment of taxes, additional amounts
or increased costs as provided in Section 1.15 or Section 1.16(a) or (b),
Borrower may, at its option, notify Agent and such Affected Lender of its
intention to replace the Affected Lender as follows: So long as no Default
or Event of Default shall have occurred and
17
be continuing, Borrower, with the consent of Agent, may obtain, at
Borrower's expense, a replacement Lender ("Replacement Lender") for the
Affected Lender, which Replacement Lender must be reasonably satisfactory
to Agent. If Borrower obtains a Replacement Lender within ninety (90) days
following notice of its intention to do so, the Affected Lender must sell
and assign its Loans and Revolving Loan Commitments to such Replacement
Lender provided that Borrower reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under
this Agreement through the date of such sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right to obtain
a Replacement Lender, if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrower's notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within ninety (90) days thereafter, Borrower's rights under this
Section 1.16(e) shall terminate and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 1.15, 1.16(b) and (c).
1.17 Single Loan. All Loans to Borrower and all of the other Obligations of
Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower and Guarantors secured, until the
Termination Date, by all of the Collateral.
1.18 Effect On Prior Loans; Prior Credit Agreement. The Prior Loans and
Liens securing payment thereof shall in all respects be continuing, and this
Agreement shall not be deemed to evidence or result in a novation or repayment
and reborrowing of the Prior Loans. This Agreement shall supersede the Prior
Credit Agreement. From and after the Closing Date, this Agreement shall govern
the terms of the Prior Loans. To the extent not replaced by Loan Documents dated
as of the Closing Date, Loan Documents executed in connection with the Prior
Credit Agreement or the Initial Credit Agreement (other than any such Loan
Document that is specifically terminated by the parties thereto) shall continue
to be effective, and all references in those prior Loan Documents to the "Credit
Agreement" shall be deemed to refer to this Agreement without further amendment
thereof.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to make
any Loan or maintain or incur any Eligible Trade L/C Obligations or Letter of
Credit Obligations on the Closing Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied, in
Agent's sole discretion, or waived in writing by Agent and those Lenders present
at the closing on the Closing Date:
(a) Credit Agreement: Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, Agent
and Lenders; and Agent shall have received such documents, instruments,
agreements and legal opinions as Agent shall request in connection with the
transactions contemplated by this Agreement and the other
18
Loan Documents, including all those listed in the Schedule of Documents
attached hereto as Schedule F, each in form and substance satisfactory to
Agent. ----------
(b) Governmental Approvals. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including, but not limited to, all requisite
Governmental Authorities, to the execution, delivery and performance of
this Agreement and the other Loan Documents or (ii) an officer's
certificate in form and substance satisfactory to Agent affirming that no
such consents or approvals are required.
(c) Payment of Fees. Borrower shall have paid or reimbursed Agent for
all fees, costs and expenses of closing to the extent statements therefor
are presented at closing (including fees of consultants and special loan
counsel to Agent presented as of the Closing Date).
(d) Compliance with Laws. Each Credit Party shall be in compliance in
all material respects with all applicable foreign, federal, state and local
laws and regulations, including those specifically referenced in Section
5.5.
(e) Leases. Evidence supporting the fact that each of the Distribution
Center leases are in full force and effect and have a remaining term of not
less than six (6) months past the Termination Date.
(f) Consignment Agreement. As of the Closing Date, the Consignment
Agreement shall be in full force and effect and shall have been executed by
all Store Guarantors.
(g) Financial Statements. Agent shall have received Ultimate Parent's
unaudited financial statements for the Fiscal Month ending in April of
2001.
(h) Closing Fee. Borrowers shall pay to each Lender a closing fee
equal to 0.5% of the increase in its Commitment effected by this Agreement.
(i) Appraisals. Prior to the Closing Date, Agent shall have received
appraisals, which were prepared by an appraiser retained by Borrower and
acceptable to Agent, in form and substance satisfactory to Agent,
reflecting asset values of Borrower's assets at levels acceptable to Agent.
2.2 Further Conditions to Each Loan. It shall be a further condition to the
initial and each subsequent Advance and to the incurrence of the initial and any
subsequent Letter of Credit Obligations or Eligible Trade L/C Obligations that
the following statements shall be true on the date of each such Advance or
incurrence, as the case may be:
(a) All of each Credit Party's representations and warranties
contained herein or in any of the other Loan Documents shall be true and
correct in all material respects as though made on and as of such date,
except to the extent that any such representation or warranty
19
expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement.
(b) No Event of Default shall have occurred and be continuing or would
result from the making of any Advance (or the incurrence of any Letter of
Credit Obligations or Eligible Trade L/C Obligations) or, if an Event of
Default shall have occurred and be continuing or would result from the
making of any Advance (or the incurrence of any Letter of Credit
Obligations or Eligible Trade L/C Obligations), Lenders having 60% or more
of the Commitments shall not have determined by affirmative vote to cease
making further Advances or incurring additional Letter of Credit
Obligations or Eligible Trade L/C Obligations as a result of such Event of
Default.
(c) After giving effect to any Revolving Credit Advance or Swing Line
Advance, Borrowing Availability shall be greater than zero. After giving
effect to the incurrence of any Letter of Credit Obligations or Eligible
Trade L/C Obligations, L/C Availability shall be greater than zero.
(d) No event or circumstance having a Material Adverse Effect shall
have occurred since the date hereof as reasonably determined by the
Requisite Lenders and Agent or, if such a Material Adverse Effect shall
have occurred, Requisite Lenders shall not have determined by affirmative
vote to cease making Advances, or incurring additional Letter of Credit
Obligations and Eligible Trade L/C Obligations as a result of the fact that
such event or circumstance has occurred.
The request and acceptance by Borrower of the proceeds of any Loan or the
incurrence of any Letter of Credit Obligations or Eligible Trade L/C Obligations
shall be deemed to constitute, as of the date of such request or acceptance, (i)
a representation and warranty by Borrower that the conditions in this Section
2.2 have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents. With respect to clauses (b) and (d) above, if an Event of
Default or event or circumstance having a Material Adverse Effect has occurred,
Agent shall call for a vote of Lenders with respect thereto within two (2)
Business Days following the date on which Agent learns of the occurrence
thereof.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations and Eligible Trade L/C Obligations, the Loan Parties, jointly and
severally, make the following representations and warranties to Agent and each
Lender, each and all of which shall survive the execution and delivery of this
Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (b) is duly qualified to conduct business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification except
where the failure to so qualify would not have a Material
20
Adverse Effect; (c) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (d) has all material
licenses, permits, consents or approvals from or by, and has made all filings
with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and by-laws; and (f) is in compliance with
all applicable provisions of law to the extent required by Section 5.5.
3.2 Executive Offices; FEIN. As of the Closing Date, the current location
of each Credit Party's chief executive office and principal place of business is
set forth in Disclosure Schedule 3.2. In addition, the Disclosure Schedule 3.2
lists the federal employer identification number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party and the creation of Liens provided for therein: (a) are within such
Person's corporate power; (b) have been duly authorized by all necessary or
proper corporate and shareholder action; (c) do not contravene any provision of
such Person's charter or bylaws; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate any performance required by, any indenture, mortgage, or deed of
trust, or any material lease, agreement or other instrument to which such Person
is a party or by which such Person or any of its property is bound; (f) do not
result in the creation or imposition of any Lien upon any of the property of
such Person other than those in favor of Agent, on behalf of itself and Lenders,
pursuant to the Loan Documents; and (g) do not require the consent or approval
of any Governmental Authority or any other Person, except those referred to in
Section 2.1(b), all of which will have been duly obtained, made or complied with
prior to the Closing Date. On or prior to the Closing Date, each of the Loan
Documents shall have been duly executed and delivered by each Credit Party
thereto and each such Loan Document shall then constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms.
3.4 Financial Statements and Projections. Except for the Projections, all
Financial Statements concerning Ultimate Parent and its Subsidiaries which have
been delivered to Agent have been prepared in accordance with GAAP consistently
applied throughout the periods covered (except as disclosed therein and except,
with respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial condition of the Persons covered thereby as at the dates thereof
and the results of their operations for the periods then ended. The Projections
delivered to Agent and Lenders on or prior to the date hereof have been prepared
by Ultimate Parent in light of the past operations of its Subsidiaries'
businesses, but including future payments of known contingent liabilities, and
reflect projections for the Fiscal Years ending in January 2002, 2003 and 2004.
The Projections are based upon estimates and assumptions stated therein, all of
which, as of the Closing Date, Ultimate Parent believes to be reasonable and
fair in
21
light of current conditions and current facts known to Ultimate Parent and, as
of the Closing Date, reflect Ultimate Parent's good faith and reasonable
estimates of the future financial performance of Ultimate Parent and its
Subsidiaries and of the other information projected therein for the period set
forth therein.
3.5 Material Adverse Effect. Between the last day of the Fiscal Year ending
in January, 2001 and the date hereof (a) no Credit Party has incurred any
obligations, contingent or non-contingent liabilities, liabilities for Charges,
long-term leases or unusual forward or long-term commitments which, alone or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
(b) no contract, lease or other agreement or instrument has been entered into by
any Credit Party or has become binding upon any Credit Party's assets and no law
or regulation applicable to any Credit Party has been adopted which has had or
could reasonably be expected to have a Material Adverse Effect, (c) no Credit
Party is in default and to the best of the Credit Parties' knowledge no third
party is in default under any material contract, lease or other agreement or
instrument, which alone or in the aggregate could reasonably be expected to have
a Material Adverse Effect and (d) there has been no changes in the Credit
Party's business or financial condition, the industry in which the Credit
Parties operate or the Collateral, which alone or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. Disclosure Schedule 3.6 sets forth all
locations owned or leased by any Credit Party as of the Closing Date. Each
Credit Party has good and marketable title to, or valid leasehold interests in,
all of its personal properties and assets. As of the Closing Date, none of the
properties and assets of any Credit Party are subject to any Liens, except
Permitted Encumbrances. Each of Bermans and Bentley has received all deeds,
bills of sale and other documents, and has duly effected all recordings, filings
and other actions necessary to establish, protect and perfect such Credit
Party's right, title and interest in and to (i) in the case of Bermans, the
Distribution Center owned by Bermans, and (ii) in the case of Bentley, the
Distributor Center owned by Bentley (collectively, the "Real Estate"). As of the
Closing Date, no portion of any of the Real Estate has suffered any material
damage by fire or other casualty loss that has not heretofore been repaired and
restored in all material respects to its original condition or otherwise
remedied. As of the Closing Date, all material permits required to have been
issued or appropriate to enable the Real Estate to be lawfully occupied and used
for all of the purposes for which it is currently occupied and used have been
lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date: (a) no strikes or other material
labor disputes against any Credit Party are pending or, to any Credit Party's
knowledge, threatened; (b) hours worked by and payment made to employees of each
Credit Party in all material respects comply with the Fair Labor Standards Act
and each other federal, state, local or foreign law applicable to such matter;
(c) all material payments due from any Credit Party for employee health and
welfare insurance have been paid or accrued as a liability on the books of such
Credit Party; (d) except as set forth in Disclosure Schedule 3.7, no Credit
Party is a party to or bound by any collective bargaining agreement; (e) there
is no organizing activity involving any Credit Party pending or, to any Credit
Party's knowledge, threatened by any labor union or group of employees; (f)
there are no representation proceedings pending or, to any Credit Party's
22
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of any Credit Party has made a pending demand
for recognition; and (g) except as set forth in Disclosure Schedule 3.7, there
are no complaints or charges against any Credit Party pending or threatened to
be filed with any Governmental Authority or arbitrator relating to the
employment or termination of employment by any Credit Party of any employee,
other than routine, non-material claims by individual employees or former
employees.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule 3.8, as of the Closing
Date no Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person.
Disclosure Schedule 3.8 sets forth the corporate organizational chart as of the
Closing Date for Ultimate Parent and its Subsidiaries. Except as set forth on
Disclosure Schedule 3.8, as of the Closing Date Ultimate Parent owns, directly
or indirectly, all of the outstanding capital stock of each of its Subsidiaries.
3.9 Government Regulation. No Credit Party is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940 as amended. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations and the Eligible
Trade L/C Obligations on behalf of Borrower, the application of the proceeds
thereof and repayment thereof will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin security" as
such terms are defined in Regulation U of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") as now and from time to time
hereafter in effect (such securities being referred to herein as "Margin
Stock"). No Credit Party owns any Margin Stock, and none of the proceeds of the
Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a "purpose credit" within the meaning of Regulation T, U or X
of the Federal Reserve Board. No Credit Party will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.11 Taxes. All material tax returns, reports and statements, including,
but not limited to, information returns, required by any Governmental Authority
to be filed by any Credit Party have been filed with the appropriate
Governmental Authority and all material Charges have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof (or any such fine, penalty, interest, late charge or loss has
been
23
paid), excluding Charges or other amounts being contested in accordance with
Section 5.2(b). Proper and accurate amounts have been withheld by each Credit
Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities.
Disclosure Schedule 3.11 sets forth, as of the Closing Date, those taxable years
for which any Credit Party's tax returns are currently being audited by the IRS
or any other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audits or otherwise currently outstanding.
Except as described on Disclosure Schedule 3.11, as of the Closing Date, no
Credit Party has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for any Charges: (a)
under any agreement (including, without limitation, any tax sharing agreements)
or (b) to the best of each Credit Party's knowledge, as a transferee. As of the
Closing Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method
or otherwise, which would have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule 3.12 lists and separately identifies all Title
IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans in effect as
of the Closing Date. Each Plan is in compliance in all material respects
with the applicable provisions of ERISA and the IRC, including the filing
of reports required under the IRC or ERISA. No Credit Party or ERISA
Affiliate has failed to make any material contribution or pay any material
amount due as required by either Section 412 of the IRC or Section 302 of
ERISA or the terms of any Plan subject to such sections. No Credit Party or
ERISA Affiliate has engaged in a prohibited transaction, as defined in
Section 4975 of the IRC, in connection with any Plan, which would subject
any Credit Party to a material tax on prohibited transactions imposed by
Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule 3.12, as of the Closing
Date: (i) no Title IV Plan has any Unfunded Pension Liability; (ii) no
material ERISA Event or event described in Section 4062(e) of ERISA with
respect to any Title IV Plan has occurred or is reasonably expected to
occur; (iii) there are no pending, or to the knowledge of any Credit Party,
threatened claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any plan or
any person as fiduciary or sponsor of any Plan; and (iv) no Credit party or
ERISA Affiliate has incurred or reasonably expects to incur any material
liability as a result of a complete or partial withdrawal from a
Multiemployer Plan.
3.13 No Litigation. No action, claim or proceeding is now pending or, to
the knowledge of any Credit Party, threatened against any Credit Party, before
any court, board, commission, agency or instrumentality of any federal, state,
local or foreign government or of any agency or subdivision thereof, or before
any arbitrator or panel of arbitrators (collectively, "Litigation"), (a) which
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which
is reasonably
24
likely to be determined adversely to any Credit Party and which,
if so determined, would have a Material Adverse Effect. Except as set forth on
Disclosure Schedule 3.13, as of the Closing Date there is no Litigation pending
or threatened which seeks damages in excess of $500,000 or injunctive relief.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
brought about the obtaining, making or closing of the Loans. No Credit Party has
any obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party owns
or has rights to use all Intellectual Property necessary to continue to conduct
its business as now or heretofore conducted by it or proposed to be conducted by
it, and each material Patent, Trademark, Copyright and License for which, as of
the Closing Date, a U.S. registration has been obtained or for which an
application to register in the U.S. has been filled is listed, together with
application or registration numbers, as applicable, in Disclosure Schedule 3.15
hereto. Each Credit Party conducts and will continue to conduct its business and
affairs without infringement of or interference with, in any material respect,
any Intellectual Property of any other Person.
3.16 Full Disclosure. No information contained in this Agreement, any of
the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by any Material Credit Party with respect to any Credit
Party to Agent or any Lender pursuant to the terms of this Agreement contains
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. The Liens
granted to Agent, on behalf of itself and Lenders, pursuant to the Collateral
Documents will at all times be fully perfected first priority Liens in and to
the Collateral described therein, subject only to Permitted Encumbrances with
respect to the Collateral.
3.17 Hazardous Materials.
(a) Except as set forth in Disclosure Schedule 3.17, as of the Closing
Date, the Real Estate is free of contamination from any Hazardous Material
in such form and quantity so as to create any material unpaid liability for
any of the Loan Parties. In addition, Disclosure Schedule 3.17 discloses
material environmental liabilities of any Credit Party existing as of the
Closing Date (i) that could result in Environmental Liabilities and Costs,
or (ii) associated with the Real Estate. No Credit Party has caused or
suffered to occur any Release with respect to any Hazardous Material at,
under, above or upon any of its Real Estate. No Credit Party is involved in
operations that are likely to result in the imposition of any Lien on its
assets or any material liability under any Environmental Law, and no Credit
Party has permitted any tenant or occupant of such premises to engage in
any such operations.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to
25
influence any Credit Party's conduct with respect to the ownership,
operation or management of any of its Real Estate.
3.18 Insurance. Disclosure Schedule 3.18 lists all insurance policies of
any nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule 3.19 lists all
banks and other financial institutions at which any Credit Party maintains
deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20 Government Contracts. Except as set forth in Disclosure Schedule 3.20,
as of the Closing Date, no Credit Party is a party to any contract or agreement
with the federal government and no Credit Party's Accounts are subject to the
Federal Assignment of Claims Act (31 U.S.C. Section 3727).
3.21 Landlords and Trade Relations. As of the Closing Date, there exists no
actual or threatened termination or cancellation of, or any material adverse
modification or change in the business relationship of any Credit Party with any
supplier material to its operations.
3.22 Agreements and Other Documents. Each Credit Party has provided to
Agent or its counsel, on behalf of Lenders, accurate and complete copies (or
summaries) of all of the following agreements or documents to which it is
subject as of the Closing Date and each of which are listed on Disclosure
Schedule 3.22: (a) instruments or documents evidencing Indebtedness of such
Credit Party and any security interest granted by such Credit Party with respect
thereto; and (b) instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity securities of
each Credit Party (other than Ultimate Parent).
3.23 Solvency. Both before and after giving effect to (a) the Revolving
Loan, Eligible Trade L/C Obligations and Letter of Credit Obligations, including
the Prior Loans outstanding, (b) the disbursement of the proceeds of such Loan
pursuant to the instructions of Borrower, (c) the payment and accrual of all
transaction costs in connection with the foregoing, each Material Credit Party
is Solvent.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver or cause to be delivered to
Agent and/or Lenders, as required,
26
Financial Statements, notices, Projections and other information at the
times, to the Persons and in the manner set forth in Schedule G.
(b) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver or cause to be delivered to
Agent and/or Lenders, as required, the various Collateral Reports
(including, without limitation, Borrowing Base Certificates in the form of
Exhibit 4.1(b) at the times, to the Persons and in the manner set forth in
Schedule H.
4.2 Communication with Accountants. Ultimate Parent authorizes Agent, so
long as an Event of Default has occurred and is continuing, to communicate
directly with its independent certified public accountants, including ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, LLP and authorizes and shall instruct those accountants and advisors
to disclose and make available to Agent any and all Financial Statements and
other supporting financial documents, schedules and information relating to any
Credit Party (including, without limitation, copies of any issued management
letters) with respect to the business, financial condition and other affairs of
any Credit Party. On or before the Closing Date, the Credit Parties shall obtain
a letter from such accountants, on which the Agent shall be designated as a
recipient, acknowledging that Lenders may rely upon such certification.
5. AFFIRMATIVE COVENANTS
Each Loan Party jointly and severally agrees that it shall and shall cause
all Credit Parties from and after the date hereof and until the Termination Date
to do the following:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall: (a) do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and franchises
(except for mergers, sales, dispositions and other transactions permitted in
Section 6 hereof and liquidations of Store Guarantors that are not Material
Credit Parties following such dispositions and transactions); (b) continue to
conduct its business substantially as now conducted or as otherwise permitted
hereunder; (c) except as permitted in Section 6.8 hereof, at all times maintain,
preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices; and
(d) transact business only in such corporate and trade names as are set forth in
Disclosure Schedule 5.1 and as otherwise disclosed to Agent in accordance with
the Loan Documents.
5.2 Payment of Obligations.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable
by it, including (A) Charges imposed upon it, its income and profits, or
any of its property (real, personal or mixed) and all Charges with respect
to tax, social security and unemployment withholding with respect to its
employees, and (B) lawful claims for storage and shipping charges payable
to Approved Shippers.
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(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a); provided, that (i) the imposition of such Charge does not
otherwise constitute an Event of Default under Section 8.1 hereof, (ii)
adequate reserves with respect to such contest are maintained on the books
of such Credit Party, in accordance with GAAP, (iii) such contest is
maintained and prosecuted continuously and with diligence, (iv) none of the
Collateral becomes subject to forfeiture or loss as a result of such
contest, (v) no Lien shall be filed or imposed to secure payment of such
Charges or claims which would, with the passage of time or otherwise, have
priority over Agent's Liens with respect to the Collateral, (vi) such
Credit Party shall promptly pay or discharge such contested Charges or
claims and all additional charges, interest, penalties and expenses, if
any, and shall deliver to Agent evidence acceptable to Agent of such
compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in
this Section 5.2(b) are no longer met, and (vii) Agent has not advised
Borrower in writing that Agent reasonably believes that nonpayment or
nondischarge thereof could have or result in a Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements delivered to Agent.
5.4 Insurance: Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense, maintain
the policies of insurance described on Disclosure Schedule 3.18 or
substantially equivalent coverage with reputable insurers. If Borrower at
any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required above or to pay all premiums relating
thereto, Agent may at any time or times thereafter obtain and maintain such
policies of insurance and pay such premium and take any other action with
respect thereto which Agent deems reasonably advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default
or Event of Default arising from any Credit Party's failure to maintain
such insurance or pay any premiums therefor. All sums so disbursed,
including attorneys' fees, court costs and other charges related thereto,
shall be payable on demand by Borrower to Agent and shall be additional
Obligations hereunder secured by the Collateral. Borrower must provide
Agent fifteen (15) days prior written notice of any non-renewal,
cancellation or amendment of the insurance policies required above.
(b) Intentionally Omitted.
(c) Borrower shall deliver or cause to be delivered to Agent, in form
and substance satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional
insured. Each Loan Party irrevocably makes, constitutes and appoints Agent
(and all officers,
28
employees or agents designated by Agent) as its true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claim
under such "All Risk" policies of insurance, endorsing the name of each
such Credit Party on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance; provided
that so long as no Event of Default shall have occurred and be continuing,
Borrower shall have the right to direct any such settlements and
adjustments. The Credit Parties that are signatories hereto shall promptly
notify Agent of any loss, damage, or destruction to the Collateral in the
amount of $1,000,000 or more, whether or not covered by insurance. If an
Event of Default shall have occurred and be continuing, Agent is hereby
authorized to collect all insurance proceeds relating to the Collateral.
After deducting from such proceeds the expenses, if any, incurred by Agent
or any Credit Party in the collection or handling thereof, Agent may, at
its option, apply all net proceeds to the reduction of the Obligations in
accordance with Section 1.3(e), or permit or require Borrower to use such
money, or any part thereof, to replace the Collateral in a diligent and
expeditious manner. Notwithstanding the foregoing, if the casualty giving
rise to such insurance proceeds would not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds do not exceed
$5,000,000 in the aggregate, Agent shall permit Borrower to replace the
Collateral so long as no Event of Default shall have occurred and be
continuing at the time of any requested release of funds; provided that, if
Borrower shall not have completed the replacement of the Collateral within
270 days of such casualty, Agent may apply such insurance proceeds to the
Obligations in accordance with Section 1.3(d) or Section 1.3(e), as
applicable. Except as otherwise provided in this Section, all insurance
proceeds which are to be made available to Borrower to replace the
Collateral shall first be applied by Agent in accordance with Section
1.3(e) (which application in accordance with Section 1.3(e) shall not
result in a permanent reduction of the Revolving Loan Commitments), and any
excess shall be released to Borrower. Upon any application in accordance
with Section 1.3(e), Agent shall establish a Reserve against the Borrowing
Base in an amount equal to the amount of such proceeds so applied.
Thereafter, such funds shall be made available to Borrower to provide funds
to replace the Collateral as follows: (i) Borrower shall request a Swing
Line Advance or Revolving Credit Advance be made to Borrower in the amount
requested to be released; (ii) so long as the conditions set forth in
Section 2.2 have been met, Agent shall make such Swing Line Advance or
Revolving Credit Advance; and (iii) the Reserve established with respect to
such insurance proceeds shall be reduced by the amount of such Swing Line
Advance or Revolving Credit Advance.
5.5 Compliance With Laws. Each Credit Party shall comply with all federal,
state and local laws and regulations applicable to it, including those relating
to ERISA, customs import and export laws and labor matters and Environmental
Laws, except to the extent that the failure to so comply would not have a
Material Adverse Effect.
5.6 Employee Plans. Each Credit Party shall promptly notify Agent of (a)
any violation of ERISA or the IRC with respect to any Plan which results in a
material increase in any Credit Party's obligations with respect thereto; (b)
the occurrence or likely occurrence of an ERISA Event resulting in a material
increase in Borrower's fixed liabilities under ERISA; (c) the filing for a
funding waiver under Section 412 of the IRC with respect to
29
any Plan; (d) the occurrence of an "accumulated funding deficiency" under
Section 412 of the IRC with respect to any Plan; (e) a material increase in the
Unfunded Pension Liability of any Title IV Plan or a material increase in the
aggregate Unfunded Pension Liability of all Title IV Plans, but only taking into
account Title IV Plans with Unfunded Pension Liability at the time of reference;
and (f) a material increase in any Credit Party's obligations under any Retiree
Welfare Plan. For purposes of clauses (e) and (f) above and Sections 6.9(d) and
(e), a "material increase" shall mean the lesser of (i) 50% or (ii) $500,000, in
each case measured from the Closing Date. In addition, the Credit Parties shall
promptly furnish to the Agent copies of the annual form 5500 filed for each
Title IV Plan.
5.7 Environmental Matters. Each Credit Party shall (a) notify Agent
promptly after such Credit Party becomes aware of any Release upon or at any
Real Estate which is reasonably likely to result in Environmental Liabilities
and Costs in excess of $200,000, and (b) promptly forward to Agent a copy of any
order, notice, permit, application or any communication or report received by
such Credit Party in connection with any such Release, its compliance with
Environmental Laws and Environmental Permits or any other matter relating to the
Environmental Laws that may affect such premises or such Credit Party, in each
case whether or not the Environmental Protection Agency, any other federal
agency or any state, local or foreign environmental agency has taken or
threatened any action in connection with any such Release or other matter. So
long as any Event of Default shall have occurred and be continuing, Borrower
shall permit Agent or its representatives to have access to all premises owned
or occupied by it for the purpose of conducting such environmental audits and
testing as Agent reasonably deems appropriate, including Phase II environmental
testing. Borrower shall reimburse Agent for the costs of such audits and tests
and the same will constitute a part of the Obligations secured hereunder.
5.8 Landlords' Agreements and Bailee Letters. Borrower shall obtain a
landlord's agreement, or bailee letter, from Bermans with respect to the
Distribution Center located in Brooklyn Park, Minnesota and from each other
lessor of a warehouse or bailee in possession of collateral property or with
respect to any other warehouse where Collateral is located. After the Closing
Date, no warehouse space shall be leased or acquired by any Credit Party, unless
and until a landlord agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location. Although the Credit Parties
are not required to obtain landlord waivers as to Store locations, (i) if an
Event of Default shall have occurred and be continuing, Agent may impose a
Reserve against Borrowing Availability equal to one month's rent as to all Store
locations and (ii) if any Store Guarantor shall default in the payment of rent
under its Store Lease, Agent may impose a Reserve against Borrowing Availability
in the amount of those defaulted rent obligations (which may exceed one month's
rent). All such landlord and bailee letters shall be in form and substance
satisfactory to Agent. Each Credit Party shall timely and fully pay and perform
its obligations under all leases and other agreements with respect to each
leased location or public warehouse where any Collateral is or may be located.
5.9 Ownership of Inventory. Borrower shall purchase directly from suppliers
and pay for all Inventory from time to time held for sale by all Store
Guarantors. Borrower shall own all Inventory held for sale by each Store
Guarantor. The Loan Parties shall not and shall not
30
cause or permit any Store Guarantor to execute any agreement or take any action
inconsistent with the foregoing.
5.10 Additional Pledges. The Credit Parties signatory hereto shall pledge
or cause to be pledged to Agent for the benefit of Lenders the Stock of all
Store Guarantors created or acquired after the Closing Date.
6. NEGATIVE COVENANTS
The Loan Parties jointly and severally covenant and agree that without the
prior written consent of Agent and the Requisite Lenders, from and after the
date hereof until the Termination Date they shall not, and shall not cause or
permit the other Credit Parties to do the following :
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person, except (i) Bermans may be merged with and into Borrower or another Loan
Party, (ii) one or more Store Guarantors may be merged with any other Store
Guarantor or any Loan Party so long as such Loan Party is the survivor in any
merger involving a Loan Party; (iii) cash and financial assets may be
transferred among the Loan Parties so long as no Event of Default has occurred
and is continuing; (iv) the Stock or fixed assets, Trademarks and Trademark
Licenses of Store Guarantors may be transferred to other Store Guarantors or to
any Loan Party; (v) the Credit Parties may form new wholly-owned domestic
Subsidiaries; provided that (x) the aggregate initial cash investment in each
new domestic Subsidiary in the form of equity shall not exceed $300,000 and (y)
the Credit Parties and each new domestic Subsidiary shall execute and deliver to
Agent forms of the Loan Documents executed by or with respect to the Loan
Parties as of the Closing Date; and (vi) Ultimate Parent or any of its
Subsidiaries may (x) form or enter into Joint Ventures, (y) create or acquire
Foreign Subsidiaries or (z) acquire all or substantially all of the assets or
capital Stock of any Person (the "Target") and form Subsidiaries in connection
therewith (in each case, a "Permitted Investment") subject to the satisfaction
of each of the following conditions:
(1) Agent shall receive at least twenty (20) days' prior written
notice of such proposed Permitted Investment, which notice shall include a
reasonably detailed description of that proposed Permitted Investment;
(2) all Permitted Investments shall only involve assets located or to
be located in the United States; provided that assets owned by Joint
Ventures or Foreign Subsidiaries may be located outside of the United
States so long as the investment in such Joint Ventures or Foreign
Subsidiaries, and in their respective assets, is in compliance with clause
(4) below;
(3) at the time of the Permitted Investment and after giving effect
thereto, the Loan Parties shall be in compliance with Section 6.19;
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(4) the aggregate amount invested in Joint Ventures and Foreign
Subsidiaries shall not exceed $5,000,000 in any Fiscal Year;
(5) such Permitted Investment shall be consensual and, if applicable,
shall have been approved by the Target's board of directors;
(6) no additional Indebtedness, Guaranteed Indebtedness, contingent
obligations or other liabilities shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of the Credit Parties and Target
after giving effect to such Permitted Investment, except (A) Loans made
hereunder (B) ordinary course trade payables, accrued expenses and
Indebtedness of the Target within the limits permitted by Section 6.3 and
(C) contingent obligations consisting of indemnities given to sellers with
respect to assumed liabilities, assumed letter of credit obligations, and
nonmaterial contingent liabilities so long as no Event of Default would
result after giving effect thereto;
(7) the sum of all amounts payable in connection with all Permitted
Investments (including all transaction costs and all Indebtedness,
liabilities and contingent obligations incurred or assumed in connection
therewith or otherwise reflected on a consolidated balance sheet of the
Credit Parties and Target) shall not exceed $40,000,000 during the Fiscal
Year ending in January, 2002, and $20,000,000 during any Fiscal Year
thereafter (including, in each case, $5,000,000 of Permitted Investments
involving assets outside the United States and investments in Joint
Ventures);
(8) the business and assets acquired in each Permitted Investment
shall be free and clear of all Liens (other than Permitted Encumbrances);
(9) except for Foreign Subsidiaries and Joint Ventures, at or prior to
the closing of any Permitted Investment, Agent will be granted a first
priority perfected Lien (subject to Permitted Encumbrances) in all assets
acquired pursuant thereto or in the assets and capital stock of the Target
and the Target shall have become a Guarantor and each Target that is a
Store Guarantor shall have become a party to the Consignment Agreement, and
the Credit Parties and the Target shall have executed such documents and
taken such actions as may be reasonably required by Agent in connection
therewith; and in the case of Foreign Subsidiaries and Joint Ventures Agent
will be granted, as applicable, a pledge of 100% of any domestic Joint
Venture equity owned directly or indirectly by Ultimate Parent, sixty-five
percent (65%) of the stock of any Foreign Subsidiary and/or the maximum
percentage of any foreign Joint Venture equity as will not result in tax
liability under IRC ss. 956;
(10) on or prior to the date of such Permitted Investment, Agent shall
have received, in form and substance reasonably satisfactory to Agent in
all material respects, copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates, lien search
results and other material documents reasonably requested by Agent;
32
(11) at the time of such Permitted Investment and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing;
(12) after giving effect to a Permitted Investment, Ultimate Parent
and Target, on a consolidated basis ( if consolidation is required under
GAAP), or Ultimate Parent alone (if consolidation is not required under
GAAP) shall have a Fixed Charge Coverage Ratio that complies with Schedule
I for the 12 months preceding and the 12 months following the Permitted
Investment; and
(13) if the Target has incurred an operating loss for the trailing
twelve month period preceding the date of the Permitted Investments, as
determined based upon the Target's Financial Statements for its most recent
interim financial period completed not more than ninety (90) days prior to
the date of the consummation of such Permitted Investment, Borrower shall
have Borrowing Availability of at least $10 million (excluding Seasonal
Over-Advances), on a pro forma basis after giving effect to that Permitted
Investment.
Notwithstanding the foregoing, the Inventory of the Target shall not be
included in Eligible Inventory prior to completion of a successful field audit
with respect thereto.
6.2 Investments; Loans and Advances. No Credit Party shall make any
investment in, or make or accrue loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of securities or
otherwise, except that (a) any Loan Party may, so long as no Default or Event of
Default has occurred and is continuing, make investments in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one year from
the date of creation thereof and having an investment rating of A-2 or P-2 or
better from either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service,
Inc., (iii) time deposits, demand deposits and certificates of deposit, maturing
no more than one year from the date of creation thereof, issued by commercial
banks incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $300,000,000
and having a senior secured rating of "A" or better by a nationally recognized
rating agency (an "A Bank"), (iv) time deposits, maturing no more than 30 days
from the date of creation thereof with an A Bank; (v) overnight repurchase
obligations issued by an A Bank; (b) any Loan Party may, so long as no Default
or Event of Default has occurred and is continuing and no Revolving Credit
Advances are outstanding, make investments in (i) asset-backed securities and
taxable or tax-exempt municipal bonds, in each case rated "AAA" or better by
Standard & Poor's Corporation and maturing in six months or less and (ii)
corporate bonds maturing in six months or less and rated "A" or better by
Standard & Poor's Corporation; and (c) each Credit Party may (i) maintain its
existing investments in its Subsidiaries as of the Closing Date, (ii) make
unlimited investments in Borrower, (iii) make investments in new Subsidiaries
and Permitted Investments in accordance with Section 6.1, (iv) upon prior
written notice to Agent, maintain equity investments in Store Guarantors
necessary to maintain them as Solvent in an aggregate amount not to exceed
33
$1,000,000, (v) make intercompany loans as permitted under Section 6.3, and (vi)
make other investments not exceeding $500,000 in the aggregate at any time
outstanding.
6.3 Indebtedness. No Credit Party shall create, incur, assume or permit to
exist any Indebtedness, except (a) Indebtedness secured by Permitted
Encumbrances, (b) the Loans and the other Obligations, (c) reimbursement
obligations owed by Borrower to the L/C Issuer with respect to Letters of Credit
and Eligible Trade L/Cs, (d) the Senior Notes, (e) deferred taxes, (f) unfunded
pension fund and other employee benefit plan obligations and liabilities to the
extent they are permitted to remain unfunded under applicable law, (g) existing
Indebtedness set forth in Disclosure Schedule 6.3 and refinancings thereof or
amendments or modifications thereto on terms and conditions no less favorable to
any Credit Party, Agent or any Lender, as determined by Agent, than the terms of
the Indebtedness being refinanced, amended or modified, (h) intercompany loans
among the Loan Parties for operating expenses incurred in the ordinary course of
business, (i) intercompany loans by any Loan Party in the ordinary course of
business, to Store Guarantors and intercompany loans by Store Guarantors to any
Loan Party in the ordinary course of business, (j) intercompany loans to Foreign
Subsidiaries or Joint Ventures not to exceed $2,000,000 in the aggregate;
provided that at the time any such intercompany loan is made to a Foreign
Subsidiary or Joint Venture no Event of Default shall have occurred and be
continuing or would result after giving effect thereto and Borrower shall have
Borrowing Availability of at least $1,000,000 after giving effect thereto, (k)
an unsecured $100,000 customs bond line from Barclays Bank for the Foreign
Subsidiaries, (l) obligations under interest rate swaps on an unsecured basis,
and (m) unsecured Indebtedness not to exceed $2,000,000 in the aggregate
assumed, incurred or reflected on the balance sheet of a Target in connection
with Permitted Investments (but not incurred in anticipation of any such
Permitted Investment).
6.4 Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any transaction
with any Affiliate thereof (other than another Credit Party) except in the
ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party that would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party,
except intercompany loans permitted in clauses (h) and (i) of Section 6.3
and the Consignment Agreement. In addition, if any such transaction or
series of related transactions involves payments in excess of $1,000,000 in
the aggregate, the terms of these transactions must be disclosed in advance
to Agent (which disclosure may be in the form of a request for issuance of
an Eligible Trade L/C). All such transactions existing as of the date
hereof are described on Disclosure Schedule 6.4(a).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employee of any Credit Party, except loans to their
respective employees on an arm's length basis in the ordinary course of
business consistent with past practices for travel expenses, relocation
costs and similar purposes up to a maximum of $200,000 to any employee and
up to a maximum of $1,000,000 in the aggregate at any one time outstanding.
34
6.5 Capital Structure and Business. No Credit Party shall make any changes
in any of its business objectives, purposes or operations which could in any way
adversely affect the repayment of the Loans or any of the other Obligations or
could have or result in a Material Adverse Effect. No Credit Party other than
Ultimate Parent shall (i) make any change its capital structure as described on
Disclosure Schedule 3.8 (including a change in capital structure effected
through the issuance of any shares of Stock, warrants or other securities
convertible into Stock or any revision of the terms of its outstanding Stock, or
(ii) amend its charter or bylaws in a manner which would adversely affect the
Agent or Lenders or Borrower's, First Intermediate Parent's or Store Guarantors'
duty or ability to repay the Obligations; provided, however, that nothing herein
shall prohibit a merger or consolidation otherwise permitted by Section 6.1
hereof.
6.6 Guaranteed Indebtedness. No Credit Party shall incur any Guaranteed
Indebtedness except (a) by endorsement of instruments or items of payment for
deposit to the general account of any Credit Party, (b) for Guaranteed
Indebtedness incurred for the benefit of any other Credit Party consisting of
payments under the Store leases or if the primary obligation is otherwise
expressly permitted by this Agreement, (c) the Barclays customs bond for the
Foreign Subsidiaries described in Section 6.3(k), and (d) guaranties of the
Senior Notes; provided that if any Person shall guarantee payment of the Senior
Notes that is not a guarantor or direct obligor with respect to the Obligations,
the Credit Parties shall cause such Person to guarantee payment of the
Obligations and grant to Agent a security interest in such Person's assets in a
manner consistent with the terms of the Loan Documents executed and delivered by
the other Credit Parties.
6.7 Liens. No Credit Party shall create, incur, assume or permit to exist
any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for Permitted
Encumbrances and those existing Liens set forth on Schedule 6.7. In addition, no
Credit Party shall become a party to any agreement, note, indenture or
instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases, purchase money obligations, or Licenses which
prohibit Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, including
the capital Stock of any of its Subsidiaries, or any of their Accounts, other
than as permitted under Section 6.1 and (a) the sale of Inventory in the
ordinary course of business, (b) the sale, transfer, conveyance or other
disposition by a Credit Party of Equipment, Fixtures or Real Estate that are
obsolete or no longer used or useful in such Credit Party's business and having
a value not exceeding $2,000,000 in any single transaction or $5,000,000 in the
aggregate in any Fiscal Year, (c) the sale of other Equipment and Fixtures
having a value not exceeding $1,000,000 in any single transaction or $4,000,000
in the aggregate in any Fiscal Year, (d) the sale of all of the stock or
substantially all of the assets of one or more Subsidiaries or Joint Ventures in
an arms'-length transaction in an amount not to exceed $5,000,000 in the
aggregate (and in connection with such sale, such Subsidiary or Subsidiaries
shall be released from all obligations hereunder and under
35
the other Loan Documents to which it is subject), (e) the sale of the
Distribution Center located in Brooklyn Park, Minnesota by Bermans to Borrower
in an arms'-length transaction, and (f) the sale of the Distribution Center
located on Northwest Avenue, Miami, Florida by Bentley to any Person not an
Affiliate of the Credit Parties. No Credit Party, other than Ultimate Parent,
shall sell or issue any of its capital Stock (other than directors' qualifying
shares) to any Person other than a Credit Party.
6.9 ERISA. No Credit Party shall cause or permit (a) the occurrence of an
ERISA Event which results, or could reasonably be expected to result, in a
distress termination of a Title IV Plan under Section 4041 of ERISA, an
involuntary termination of a Title IV Plan by the PBGC under Section 4042 of
ERISA, a Lien on any property of a Credit Party or ERISA Affiliate or a
liability in excess of $500,000 being assessed against any Credit Party or ERISA
Affiliate; (b) any Title IV Plan to incur an "accumulated funding deficiency"
under Section 412 of the IRC in excess of $500,000, regardless of any waiver;
(c) any Credit Party or ERISA Affiliate to apply for a material funding waiver
under Section 412(d) of the IRC; (d) a material increase in the aggregate
Unfunded Pension Liability of all Title IV Plans, but only taking into account
Title IV Plans with Unfunded Pension Liability at the time of reference; or (e)
a material increase in any Credit Party's obligations under any Retiree Welfare
Plan.
6.10 Financial Covenants. Ultimate Parent shall not breach or fail to
comply with any of the Financial Covenants (the "Financial Covenants") set forth
in Schedule I.
6.11 Hazardous Materials. No Credit Party shall cause or permit a Release
of any Hazardous Material on, at, in, under, above, to, from or about any of the
Real Estate where such Release would violate in any material respect, or form
the basis for any material Environmental Liabilities under any Environmental
Laws or Environmental Permits or would otherwise materially and adversely impact
the value or marketability of any of the Real Estate or any of the Collateral.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets; provided
that Bermans may engage in a sale-leaseback transaction with regard to its
Brooklyn Park, Minnesota Distribution Center; provided that Agent shall have
received copies of all documents governing or evidencing such transaction,
including a landlord waiver, in form and substance reasonably satisfactory to
Agent, prior to the consummation of such transaction.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any claim
or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis or in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) asset or Stock transfers permitted under Section 6.1; (b)
intercompany loans permitted under Section 6.3; (c) restricted payments
consisting of cash dividends paid to any Store Guarantor or to First
Intermediate Parent, Second Intermediate Parent, Third Intermediate Parent or
Ultimate Parent; and (d) redemptions or repurchases of fractional shares not to
exceed $100,000 per year.
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6.15 Change of Corporate Name or Location; Change of Fiscal Year. No Credit
Party shall (a) change its corporate name, or (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
Collateral locations, or the location of its records concerning the Collateral,
or merge with any other Credit Party in any case without at least twenty (20)
days prior written notice to Agent and completion by the Credit Parties of any
action reasonably requested by Agent in connection therewith, including, without
limitation, to continue the perfection of any Liens in favor of Agent, on behalf
of Lenders, in any Collateral has been completed or taken, and provided that any
such new location shall be in the continental United States. Without limiting
the foregoing, no Credit Party shall change its name, identity or corporate
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of Section
9.402(7) of the Code or any other then applicable provision of the Code except
upon prior written notice to Agent and Lenders and completion by the Credit
Parties of any action reasonably requested by Agent in connection therewith,
including, without limitation, any action necessary to continue the perfection
of any Liens in favor of Agent, on behalf of Lenders, in any Collateral.
6.16 No Impairment of Upstreaming. No Credit Party shall directly or
indirectly enter into or become bound by any agreement, instrument, indenture or
other obligation (other than this Agreement and the other Loan Documents) which
could directly or indirectly restrict, prohibit or require the consent of any
Person with respect to the payment of dividends or distributions or the making
of intercompany loans by a Subsidiary of First Intermediate Parent to any other
Subsidiary of First Intermediate Parent.
6.17 Changes Relating to Senior Notes. No Credit Party shall (a) change or
amend the terms of any Senior Notes Documents if the effect of such amendment is
to: (i) increase the interest rate on such Senior Notes; (ii) change the dates
upon which payments of principal or interest are due on the Senior Notes other
than to extend such dates; (iii) change any default or event of default other
than to delete or make less restrictive any default provision therein, or add
any covenant with respect to the Senior Notes; (iv) change the redemption or
prepayment provisions of the Senior Notes other than to extend the dates
therefor or to reduce the premiums payable in connection therewith; (v) grant
any security or collateral to secure payment of the Senior Notes; or (vi) change
or amend any other term of the Senior Notes Documents if such change or
amendment would materially increase the obligations of any obligor or confer
additional material rights to the holder of a Senior Note in a manner adverse to
any Credit Party, Agent or any Lender, or (b) prepay, defease or purchase any
Senior Note; except that Ultimate Parent may repurchase an aggregate of
$30,590,000 of Senior Notes at any time or from time to time after the Closing
Date so long as no Event of Default has occurred and is continuing or would
result after giving effect thereto.
6.18 Eligible Trade L/Cs. Borrower shall not request any documentary letter
of credit for the purchase of finished goods unless each of the following
documents are required as conditions to any draw thereon, unless Agent shall
otherwise consent, and such deliveries must constitute conditions to drawing for
a documentary letter of credit to constitute an Eligible Trade L/C.
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(i) the original Eligible Trade L/C, if only one draw is permitted
thereunder or if multiple draws are permitted and the subject draw is the
final draw thereunder;
(ii) all drafts and pre-approved forms of certificates executed by
Borrower's supplier, certifying that it has met the conditions for a draw
under the Eligible Trade L/C;
(iii) an inspection certificate substantially in the form attached
hereto as Schedule 6.18, executed by Borrower's employee or agent at the
point of origin of the finished goods;
(iv) a commercial invoice with respect to the purchase order(s)
against which such finished goods are being delivered and a packaging list
with respect to such goods;
(v) a non-negotiable ocean ▇▇▇▇ of lading, freight forwarders cargo
receipt, a house ▇▇▇▇ of lading or a copy of an airway ▇▇▇▇ of lading (a
"Document of Title") issued by an Approved Shipper with respect to the
finished goods being shipped and providing for the delivery thereof to
Borrower; and
(vi) a certificate of origin.
6.19 Non-Core Businesses. The Loan Parties shall not permit (x) the
aggregate revenue attributable to all Non-Core Businesses or (y) the EBITDA
attributable to all Non-Core Businesses, to exceed 10% of Ultimate Parent's
consolidated revenue or EBITDA, respectively, for any twelve fiscal month
period. No Permitted Investment shall be made unless at the time of such
Permitted Investment and after giving effect thereto, the requirements of this
section would be met on a pro forma basis for the trailing twelve Fiscal Months
ending on the Fiscal Month end preceding the effective date of any such
Permitted Investment.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall be in
effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of Borrower or the rights of Agent and Lenders relating to any
unpaid portion of the Loans or any other Obligations, due or not due,
liquidated, contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of which
is required after the Commitment Termination Date. Except as otherwise expressly
provided herein or in any other Loan Document, all undertakings, agreements,
covenants, warranties and representations of or binding upon any Credit Party,
and all rights of Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any
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such termination or cancellation and shall continue in full force and effect
until the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder:
(a) (i) Borrower shall fail to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans, when due and payable,
or (ii) Borrower shall fail to pay or reimburse Agent or Lenders for any
expense reimbursable hereunder or under any other Loan Document or any
other Obligations within ten (10) days following Agent's demand for such
reimbursement or payment thereof.
(b) Any Credit Party shall fail or neglect to perform, keep or observe
any of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the
provisions set forth in Schedules E or I, respectively.
(c) Borrower shall fail or neglect to perform, keep or preserve any of
the provisions of Section 4 or any provisions set forth in Schedules G or
H, respectively, and the same shall remain unremedied for ten (10) days or
more.
(d) Any Credit Party shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents
(other than any provision embodied in or covered by any other clause of
this Section 8.1) and the same shall remain unremedied for twenty (20) days
or more following notice to such Credit Party.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not
cured within any applicable grace period, and such default or breach (i)
involves the failure to make any payment when due in respect of any
Indebtedness (other than the Obligations) of any Credit Party in excess of
$2,000,000 in the aggregate, or (ii) causes, or such permits any holder of
such Indebtedness or a trustee to cause, Indebtedness or a portion thereof
in excess of $2,000,000 in the aggregate to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, regardless
of whether such right is exercised, by such holder or trustee.
(f) Any representation or warranty herein or in any Loan Document or
in any written statement, report, financial statement or certificate made
or delivered to Agent or any Lender by any Credit Party shall be untrue or
incorrect in any material respect as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $1,000,000
or more shall be attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and
such condition continues for thirty (30) days or more.
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(h) A case or proceeding shall have been commenced against any
Material Credit Party a decree or order in respect of any Material Credit
Party (i) under Title 11 of the United States Code, as now constituted or
hereafter amended or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for any
Material Credit Party or any substantial part of any such Person's assets,
or (iii) ordering the winding-up or liquidation of the affairs of any
Material Credit Party, and such case or proceeding shall remain undismissed
or unstayed for sixty (60) days or more or such court shall enter a decree
or order granting the relief sought in such case or proceeding.
(i) Any Material Credit Party shall (i) file a petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of any Material Credit Party
or of any substantial part of any such Person's assets, (iii) make an
assignment for the benefit of creditors, or (iv) take any corporate action
in furtherance of any of the foregoing.
(j) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate at any time outstanding shall be rendered
against any Credit Party and the same shall not, within thirty (30) days
after the entry thereof, have been discharged or execution thereof stayed
or bonded pending appeal, or shall not have been discharged prior to the
expiration of any such stay.
(k) Any provision of any Loan Document shall for any reason cease to
be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or
shall assert in writing, or engage in any action or inaction based on any
such assertion, that any provision of any of the Loan Documents has ceased
to be or otherwise is not valid, binding and enforceable in accordance with
its terms), or any security interest created under any Loan Document shall
cease to be a valid and perfected first priority security interest or Lien
(except as otherwise permitted herein or therein) in any of the Collateral
purported to be covered thereby other than as a result of Agent's failure
to take any action within its control.
(l) Any "Change of Control" shall occur.
8.2 Remedies.
(a) (i) If any Event of Default or Material Adverse Effect shall have
occurred and be continuing, Agent may, in accordance with Section 2.2,
suspend this facility with respect to further Advances and/or the
incurrence of further Letter of Credit Obligations and Eligible Trade L/C
Obligations and (ii) if any Event of Default shall have occurred and be
continuing, Agent may (and at the request of the Requisite Lenders shall),
following notice, increase the rate of interest applicable to the Loans and
the Letter of Credit Fees to the Default Rate.
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(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall),
without notice, (i) terminate this facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations and
Eligible Trade L/C Obligations; (ii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due
and payable, and require that the Letter of Credit Obligations and Eligible
Trade L/C Obligations be cash collateralized as provided in Schedule B, all
without presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower and each Credit Party that is a
signatory hereto; and (iii) exercise any rights and remedies provided to
Agent under the Loan Documents and/or at law or equity, including all
remedies provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Sections 8.1(g), (h) or (i),
Revolving Loan Commitments to make further Advances or the incurrence of
further Letter of Credit Obligations and Eligible Trade L/C Obligations
shall automatically terminate and all of the Obligations, including the
Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
(c) Notwithstanding anything to the contrary contained herein, in the
Mortgages or in the Amended and Restated Security Agreement, if the Loans
have been accelerated in accordance with the provisions hereof, the
proceeds from the foreclosure, sale or other disposition of Collateral
shall be applied as follows:
(i) if such proceeds are from the Term Collateral, such proceeds
shall be applied (1) first, to the expenses of such foreclosure, sale
or other disposition of Collateral, (2) second, to Fees and Agent's
expenses reimbursable hereunder, (3) third, to accrued interest on the
Term Loan B, (4) fourth, to the outstanding principal balance of the
Term Loan B, (5) fifth, to accrued interest on the Swing Line Loan,
(6) sixth, to the outstanding principal balance of the Swing Line
Loan, (7) seventh, to the accrued interest on the Revolving Loan; (8)
eighth, to the outstanding principal balance of the Revolving Loan and
(9) ninth, to the other Obligations in such order as Agent shall
determine; and
(ii) if such proceeds are from Collateral other than Term
Collateral, such proceeds shall be applied (1) first, to the expenses
of such foreclosure, sale or other disposition of Collateral, (2)
second, to Fees and Agent' s expenses reimbursable hereunder, (3)
third, to accrued interest and the outstanding principal balance of
Loans other than the Term Loan B, and to the cash collateralization of
all outstanding Letter of Credit Obligations and Eligible Trade L/C
Obligations, in such order as Agent shall determine, (4) fourth, to
accrued interest on the Term Loan B, (5) fifth, to the outstanding
principal balance of the Term Loan B and (6) sixth, to the other
Obligations in such order as Agent shall determine.
(d) In the event that Borrower and some or all of the Credit Parties
are sold as a going concern or Term Collateral and other Collateral are
sold together, and, in either case, the proceeds are insufficient to pay
all of the Obligations in full, then, at the request of the holders of a
majority in principal amount of the Revolving Loan Commitments (or
following acceleration of the Revolving Loan, the holders of a majority of
the principal amount of the Revolving Loan) or at the request of the
holders of a majority in principal amount of the Term Loan B, an
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independent appraiser will be hired to appraise the Collateral to be sold
with the expenses of such appraiser to be paid by the Lenders in accordance
with their Pro Rata Shares. The appraiser shall determine the fair market
values of the Term Collateral and all other Collateral being directly or
indirectly sold in such a transaction. The portion of the net proceeds of
sale equal to a percentage determined by (x) the fair market value of the
Term Collateral divided by (y) the fair market value of all Collateral
sold, will be applied to the Term Loan B. The balance of the net proceeds
of sale will be applied to the other Obligations. The appraiser's
determination will be final and binding on all Lenders.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives (a) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Agent on which any Credit Party may in any way be liable,
and hereby ratifies and confirms whatever Agent may do in this regard, (b) all
rights to notice and a hearing prior to Agent's taking possession or control of,
or to Agent's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing Agent to
exercise any of its remedies, and (c) the benefit of all valuation, appraisal
and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Any Lender may assign at any time or times, any of the Loan
Documents, Loans, any Commitment or any portion thereof or interest
therein, including, without limitation, any Lender's rights, title,
interests, remedies, powers or duties thereunder, whether evidenced by a
writing or not, with Borrower's consent which shall not be unreasonably
withheld or delayed; provided that so long as any Event of Default shall
have occurred and be continuing Borrower's consent shall not be required.
Any assignment by a Lender shall (i) require the consent of Agent (which
consent shall not be unreasonably withheld or delayed) and the execution of
an assignment agreement (a "Lender Assignment Agreement") substantially in
form attached hereto as Exhibit 9.1(a) and otherwise in form and substance
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
assignee Lender representing to the assigning Lender and the Agent that it
is purchasing the applicable Loans to be assigned to it for its own
account, for investment purposes and not with a view to the distribution
thereof; (iii) if a partial assignment, be in an amount at least equal to
$5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least
equal to $5,000,000; and (iv) include a payment by the assigning Lender to
the Agent of an assignment fee of $3,500. In the case of an assignment by a
Lender under this Section 9.1, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as it would if
it were a Lender hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitment or assigned portion
thereof from and after the date of such
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assignment. Borrower hereby acknowledges and agrees that any assignment
will give rise to a direct obligation of Borrower to the assignee and that
the assignee shall be considered to be a "Lender". In all instances, each
Lender's liability to make Loans hereunder shall be several and not joint
and shall be limited to such Lender's Pro Rata Share of the Commitments. In
the event Agent or any Lender assigns or otherwise transfers all or any
part of a Note, Agent or any such Lender shall so notify Borrower and
Borrower shall, upon the request of Agent or such Lender, execute new Notes
in exchange for the Notes being assigned.
(b) Borrower consents to any Lender's sale of a participation, at any
time or times, in all or part of its Commitment. Any sale of a
participation by a Lender of all or any part of its Commitment shall be
made with the understandings that all amounts payable by Borrower hereunder
shall be determined as if that Lender had not sold such participation,
except as provided in the following sentence, and that the holder of any
such participation shall not be entitled to require such Lender to take or
omit to take any action hereunder except actions directly affecting (i) any
reduction in the principal amount of, or interest rate or Fees payable with
respect to, any Loan in which such holder participates, (ii) any extension
of the final scheduled maturity date of the principal amount of any Loan in
which such holder participates, and (iii) any release of all or
substantially all of the Collateral (other than in accordance with the
terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8,
Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of Borrower to the participant and the participant shall
be considered to be a "Lender". Except as set forth in the preceding
sentence neither Borrower nor any Credit Party shall have any obligation or
duty to any participant. Neither Agent nor any Lender (other than the
Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if
no such sale had occurred.
(c) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of
its Loans or Revolving Loan Commitments to a potential Lender or
participant, if, as of the date of the proposed assignment or sale, the
assignee Lender or participant would be subject to capital adequacy or
similar requirements under Section 1.16(a), increased costs under Section
1.16(b), an inability to fund LIBOR Loans under Section 1.16(c), or
withholding taxes in accordance with Section 1.16(d).
(d) Except as expressly provided in this Section 9.1, no Lender shall,
as between Borrower and that Lender, or Agent and that Lender, be relieved
of any of its obligations hereunder as a result of any sale, assignment,
transfer or negotiation of, or granting of participation in, all or any
part of the Loans, the Notes or other Obligations owed to such Lender.
(e) Borrower shall assist any Lender permitted to sell assignments
under this Section 9.1 as reasonably required to enable the assigning or
selling Lender to effect any such assignment, including the execution and
delivery of any and all agreements, notes and other documents and
instruments as shall be requested, and the participation of management in
meetings with, potential assignees at Borrower's headquarters. Borrower
shall certify the correctness, completeness and accuracy of all
descriptions of Borrower and its affairs contained
43
in any selling materials provided by it and all other information provided
by it and included in such materials, except that any Projections delivered
by Borrower shall only be certified by Borrower as having been prepared by
Borrower in compliance with the representations contained in Section 3.4.
(f) A Lender may furnish any information concerning Borrower in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall
obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained herein.
9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf
of all Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this Section 9.2 are solely for the benefit of Agent and Lenders
and no Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Credit Party or any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in nature
and Agent shall not have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise a fiduciary relationship in respect of any
Lender. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
solely caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
If Agent shall request instructions from Requisite Lenders with respect to
any act or action (including failure to act) in connection with this Agreement
or any other Loan Document, then Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, and Agent shall not incur liability to any
Person by reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent, be contrary to law or the terms of
this Agreement or any other Loan Document, (b) if such action would, in the
opinion of Agent, expose Agent to Environmental Liabilities and Costs or (c) if
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Requisite Lenders.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan
44
Documents, except for damages solely caused by its or their own gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction. Without limitation of the generality of the foregoing, Agent: (a)
may treat the payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Agent; (b) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments hereunder,
GE Capital shall have the same right and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same as though it
were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE Capital in its individual capacity. GE Capital
and its Affiliates may lend money to, invest in, and generally engage in any
kind of business with, any Credit Party, any of their Affiliates and any Person
who may do business with or own securities of any Credit Party or any such
Affiliate, all as if GE Capital were not Agent and without any duty to account
therefor to Lenders. GE Capital and its Affiliates may accept fees and other
consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4 and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of the Lenders holding disproportionate interests in the Loans, and
expressly consents to, and waives any claim based upon, such conflict of
interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrower and without limiting the obligations of Borrower
hereunder), ratably according to their respective Pro Rata Shares, from and
against any and all liabilities, obligations,
45
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by Agent in
connection therewith; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from Agent's
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) 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
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Borrower.
9.7 Successor Agent. Agent may resign at any time by giving not less than
thirty (30) days' prior written notice thereof to Lenders and Borrower. Upon any
such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent which shall be reasonably acceptable to Borrower. If no
successor Agent shall have been so appointed by the Requisite Lenders and shall
have accepted such appointment within 30 days after the resigning Agent's giving
notice of resignation, then the resigning Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a Lender, if a Lender is willing to
accept such appointment, or otherwise shall be a commercial bank or financial
institution organized under the laws of the United States of America or of any
State thereof having a combined capital and surplus of at least $300,000,000. If
no successor Agent has been appointed pursuant to the foregoing, by the 30th day
after the date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent (which shall be reasonably
acceptable to Borrower) as provided above. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Agent, and the resigning Agent shall be discharged from its
duties and obligations under this Agreement and the other Loan Documents, except
that any indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent's resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all balances held by it at any of its offices for the account of Borrower
(regardless of whether such balances are then due to Borrower) and any other
properties or assets any time held or owing by that Lender or that holder to or
for the credit or for the account of Borrower against
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and on account of any of the Obligations which are not paid when due. Any Lender
or holder of any Note exercising a right to set off shall purchase for cash (and
the other Lenders or holders shall sell) such participations in each such other
Lender's or holder's Pro Rata Share of the Obligations as would be necessary to
cause such Lender to share the amount so set off with each other Lender or
holder in accordance with their respective Pro Rata Shares. Borrower agrees, to
the fullest extent permitted by law, that (a) any Lender or holder may exercise
its right to set off with respect to amounts in excess of its Pro Rata Share of
the Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
set-off amount is thereafter recovered from the Lender that has exercised the
right of set-off, the purchase of participations by that Lender shall be
rescinded and the purchase price restored without interest.
9.9 Advances; Payments; Information; Non-Funding Lender.
(a) Advances; Payments; Fee Payments.
(i) The parties hereto agree that, whenever possible, the Swing
Line Loan shall be the first Loan advanced and the first Loan repaid
so as to minimize fluctuations in the Revolving Loan balance.
Furthermore, for ease of administration, Agent may, on behalf of
Lenders, disburse funds to Borrower for requested Revolving Credit
Advances and the Revolving Loan balance may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the frequency of transfers of funds
between Agent and each Lender, Revolving Credit Advances requested to
be made in respect of Index Rate Loans and payments in respect thereof
will be settled according to the procedures described in Sections
9.9(a)(ii) and 9.9(a)(iii) below. Notwithstanding these procedures,
each Lender's obligation to fund its portion of any Revolving Credit
Advances made by Agent to Borrower will commence on the date such
Advances are made by Agent. Such payments will be made by each Lender
without setoff, counterclaim or reduction of any kind.
(ii) Not later than 11:00 a.m. (Chicago time) on the second (2nd)
and fifth (5th) Business Day of each week, or more frequently
(including daily) if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone or
telecopy of the amount of such Lender's Pro Rata Share of the balance
of the Revolving Loan as of the close of business on the first (1st)
Business Day immediately preceding the Settlement Date. In the event
that payments from Agent are necessary to adjust the amount of such
Lender's portion of the Revolving Loan to such Lender's Pro Rata Share
of the Revolving Loan as of any Settlement Date, Agent will pay each
Lender, in same day funds, by wire transfer to its account not later
than 2:00 p.m. (Chicago time) on the Settlement Date. Agent may
allocate payments among the Lenders so as to cause the principal
amount of the Loans outstanding from each Lender to match that
Lender's Pro Rata Share. If Agent so elects, Agent may require that
each Lender make its Pro Rata Share of any requested Revolving Credit
Advance available to Agent
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for disbursement prior to the funding of such Advance. If Agent elects
to require that such funds be so made available, Agent shall advise
each Lender by telephone or telecopy of the amount of such Lender's
Pro Rata Share of the requested Revolving Credit Advance no later than
noon (Chicago time) on the date of funding of each Index Rate Loan and
no later that 11:00 a.m. (Chicago Time) on the date that is two (2)
Business Days prior to the proposed funding date of any LIBOR Loan,
and each such Lender shall pay Agent such amount in same day funds, by
wire transfer to the Collection Account not later than 2:00 p.m.
(Chicago time) on the date of funding such Advance.
(iii) For purposes of this Section 9.9(a)(iii), the following
terms will have the following meanings:
(A) "Daily Loan Balance" means, with respect to the
Revolving Credit Advances, an amount calculated as of the end of
each calendar day by subtracting (i) the cumulative principal
amount paid by Agent to a Lender with respect to the Revolving
Credit Advances from the Closing Date through and including such
calendar day, from (ii) the cumulative principal amount of the
Revolving Credit Advances advanced by such Lender to Agent from
the Closing Date through and including such calendar day.
(B) "Daily Interest Rate" means, with respect to the
Revolving Credit Advances, an amount calculated by dividing the
interest rate payable to a Lender on the Revolving Credit
Advances (as determined pursuant to Section 1.5 and 1.6) as of
each calendar day by three hundred sixty (360) days in the case
of LIBOR Loans and three hundred sixty-five (365) days in the
case of Index Rate Loans.
(C) "Daily Interest Amount" means, with respect to the
Revolving Loan, an amount calculated by multiplying the Daily
Loan Balance of the Revolving Credit Advances by the associated
Daily Interest Rate applicable to such Revolving Credit Advances.
(D) "Interest Ratio" means, with respect to the Revolving
Credit Advances, a number calculated by dividing the total amount
of interest on the Revolving Credit Advances received by Agent
during the immediately preceding month by the total amount of
interest on the Revolving Credit Advances due from Borrower
during the immediately preceding month.
On the first (1st) Business Day of each calendar month (an "Interest
Settlement Date"), Agent will advise each Lender by telephone or
telecopy of the amount of such Lender's Pro Rata Share of interest and
Fees paid for the benefit of Lenders with respect to the Revolving
Credit Advances as of the end of the last day of the immediately
preceding month. Provided that such Lender has made all payments
required to be made by it under this Agreement and the other Loan
Documents, Agent will pay to such Lender such Lender's Pro Rata Share
of principal, interest and Fees paid for the benefit of Lenders on the
Revolving Loans. Such payments shall be made by wire transfer to such
Lender's account (as specified by such Lender to Agent in
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writing, as amended by such Lender from time to time after the date
hereof pursuant to the notice provisions contained herein or in the
applicable Lender Assignment Agreement) not later than 12:00 noon
(Chicago time) on the next Business Day following the Interest
Settlement Date. Such Lender's Pro Rata Share of interest on Revolving
Credit Advances will be calculated by adding together such Lender's
Pro Rata Share of the Daily Interest Amounts for each calendar day of
the prior month for the Revolving Credit Advances and multiplying the
total thereof by the Interest Ratio for the Revolving Credit Advances.
Consistent with the foregoing, during those periods between Settlement
Dates in which Agent has advanced more than its Pro Rata Share of the
Revolving Credit Advances, the Daily Interest Amount allocable to the
Lenders will be reduced and the interest accrued on such amounts shall
be for the account of Agent.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
each Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each Settlement Date. If such Pro Rata Share is not,
in fact, paid to Agent by such Lender when due, Agent will be entitled to
recover such amount on demand from such Lender without set-off,
counterclaim or deduction of any kind. If any Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower and Borrower shall immediately repay such amount
to Agent. Nothing in this Section 9.9 or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Revolving Loan Commitments hereunder or to prejudice any rights
that Borrower may have against any Lender as a result of any default by
such Lender hereunder.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be
received by Agent from Borrower and such related payment is not
received by Agent, then Agent will be entitled to recover such amount
from such Lender on demand without set-off, counterclaim or deduction
of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any
other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any
other Loan Document, Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay to
Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent
is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders.
The failure of any Lender (such Lender, a "Non-Funding Lender") to
make any Revolving Credit Advance to be made by it on the date specified
therefor shall not relieve any other Lender (each such other Lender, an
"Other Lender") of its obligations to make a Revolving Credit Advance on
such date, but neither any Other Lender nor Agent shall be responsible for
the failure of any Non-Funding Lender to make a Revolving Credit Advance to
be made by such
49
Non-Funding Lender, and no Other Lender shall have any obligation to Agent
or any Other Lender for the failure by such Non-Funding Lender.
Notwithstanding anything set forth herein to the contrary so long as any
Lender continues to be a Non-Funding Lender, such Non-Funding Lender shall
not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" (or be included in the calculation of
"Requisite Lenders" hereunder) for any voting or consent rights under or
with respect to any Loan Document.
(e) Dissemination of Information.
Agent will use reasonable efforts to provide Lenders with any notice
of Default or Event of Default received by Agent from, or delivered by
Agent to, any Credit Party, with notice of any Event of Default of which
Agent has actually become aware and with notice of any action taken by
Agent following any Event of Default; provided, however, that Agent shall
not be liable to any Lender for any failure to do so, except to the extent
that such failure is attributable solely to Agent's gross negligence or
willful misconduct as finally determined by a court of competent
jurisdiction. Lenders acknowledge that Borrower is required to provide
Financial Statements and Collateral Reports to certain of the Lenders in
accordance with Schedules G and H hereto and agree that Agent shall have no
duty to provide the same to Lenders.
(f) Actions in Concert.
Anything in this Agreement to the contrary notwithstanding, each
Lender hereby agrees with each other Lender that no Lender shall take any
action to protect or enforce its rights arising out of this Agreement or
the Notes (including, without limitation, exercising any rights of set-off)
without first obtaining the prior written consent of Agent or Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert
and at the direction or with the consent of the Agent.
(g) Regulation A.
Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or a portion of
its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of
the Federal Reserve System.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of each Credit Party
signatory hereto, Agent, Lenders and their respective successors and assigns
(including, in the case of any Credit Party, a debtor-in-possession on behalf of
such Credit Party), except as otherwise provided herein or therein. No Credit
Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the
50
prior express written consent of Agent and Requisite Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
signatory hereto without the prior express written consent of Agent and
Requisite Lenders shall be void. The terms and provisions of this Agreement are
for the purpose of defining the relative rights and obligations of each Credit
Party signatory hereto, Agent and Lenders with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2 below. Any letter of interest, commitment letter, fee
letter (other than the GE Capital Fee Letter) or confidentiality agreement
between any Credit Party and Agent or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.1 Amendments and Waivers.
(a) Except as otherwise provided below, no amendment, modification,
termination or waiver of any provision of this Agreement or any of the
Notes, or any consent to any departure by any Credit Party therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Agent and each Credit Party signatory hereto, and by Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of Borrowing Base,
shall be effective unless the same shall be in writing and signed by Agent,
all Lenders and each Credit Party signatory hereto.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby, do
any of the following: (i) increase the principal amount of the Commitment
of any Lender (and all Lenders shall be deemed to be affected thereby) or
amend the definition of Borrowing Base or any component thereof which would
have the effect of increasing the credit available to Borrower hereunder;
(ii) reduce the principal of, rate of interest on or Fees payable with
respect to any Loan, Letter of Credit Obligations or Eligible Trade L/C
Obligations of any affected Lender; (iii) extend the final scheduled
maturity date of the principal amount of any Loan of any affected Lender;
(iv) waive, forgive, defer, extend or postpone any payment of interest or
Fees as to any affected Lender; (v) release any Guaranty of a Material
Credit Party; (vi) except as otherwise permitted herein or in the other
Loan Documents, release the Agent's Liens upon, or permit any Credit Party
to sell or otherwise dispose of, any Collateral with a value exceeding
$5,000,000 in the aggregate other than sales of Inventory in the ordinary
course; (vii) increase the L/C Sublimit (and all Lenders shall be deemed to
be affected thereby); (viii) change the percentage of the Revolving Loan
Commitments or of the aggregate unpaid principal amount of the Loans which
shall be required for Lenders or any of them to take any action hereunder;
and (ix) amend or waive Section 8.2(c) or (d) or this Section 11.2 or the
definitions of the terms used in Section 8.2(c) or (d) or this
51
Section 11.2 insofar as the definitions affect the substance of Section
8.2(c) or (d) or this Section 11.2. Without limiting the foregoing, no
amendment, modification, termination or waiver which (i) impacts, affects
or involves the Term Collateral or (ii) impacts the Term Lender in a manner
different than the impact upon the Revolving Lenders shall be effective
without the consent of the Term Lender and Requisite Lenders. Furthermore,
no amendment, modification, termination or waiver affecting the rights or
duties of Agent under this Agreement or any other Loan Document shall be
effective unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and
for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No notice to or demand
on any Credit Party in any case shall entitle such Credit Party or any
other Credit Party to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 11.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of
the Notes.
(d) If, in connection with any proposed amendment, waiver or
termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (each such Lender whose consent is
not obtained as described in this clause (i) or in clause (ii) below
being referred to as a "Non Consenting Lender"), or
(ii) requiring the consent of Requisite Lenders, the consent of
Lenders holding 50.1% of the aggregate Revolving Loan Commitments is
obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, Agent shall have the
right in its sole discretion (but shall be under no obligation) to purchase
from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent, all of the
Revolving Loan Commitments of such Non-Consenting Lender for an amount
equal to the principal balance of all Loans held by the Non-Consenting
Lender and all accrued interest and Fees with respect thereto through the
date of sale, such purchase and sale to be consummated pursuant to an
executed Lender Assignment Agreement.
(e) Upon indefeasible payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations under Section
1.13) and termination of the Revolving Loan Commitments, and so long as no
suits, actions, proceedings or claims are pending or threatened against any
Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination
statements, termination letters regarding bailee agreements and blocked
account agreements and other documents necessary or appropriate to evidence
the termination of the Liens securing payment of the Obligations.
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11.3 Fees and Expenses. Borrower shall reimburse Agent for all
out-of-pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in connection with the Loan
Documents and advice in connection therewith). Borrower shall reimburse Agent
(and, with respect to clauses (c), (d) and (e) below, each Lender) for all fees,
costs and expenses, including the fees, costs and expenses of counsel (including
the allocated cost of in-house counsel) or other advisors (including
environmental and management consultants) for advice, assistance, or other
representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with respect
to, any of the Loan Documents or advice in connection with the
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person) in
any way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against Borrower or any
other Person that may be obligated to Agent by virtue of the Loan
Documents;
(d) any attempt to enforce any rights of Agent or any Lender against
any or all of the Credit Parties or any other Person that may be obligated
to Agent or any Lender by virtue of any of the Loan Documents;
(e) any work-out or restructuring of the Loans during the pendency of
one or more Events of Default, but only as to Persons who are Lenders as of
the Closing Date and who continue to hold 7.5% or more of the total
Revolving Loan Commitments;
(f) efforts to (i) consistent with the terms of the Loan Documents,
monitor the Loans or any of the other Obligations, (ii) consistent with the
terms of the Loan Documents verify, observe or assess any of the Credit
Parties or their respective affairs, and (iii) protect, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, without limitation, all the attorneys' and other professional and
service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 11.3 shall be payable, on demand, by Borrower to Agent. Without limiting
the generality of the foregoing, such expenses, costs, charges and fees may
include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
53
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times, to
require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of any Credit Party contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by Agent or any Lender, unless
such waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of Agent and Requisite Lenders and directed to
Borrower specifying such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement and
the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement or
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.8 Authorized Signature. Until Agent shall be notified by Borrower to the
contrary, the signature upon any Notice of Revolving Credit Advance, Notice of
Swing Line Advance, Notice of Continuation/Conversion or other notice or
certificate delivered in accordance herewith delivered pursuant hereto of an
officer of Borrower listed on Schedule 11.8 shall bind Borrower and be deemed to
be the act of Borrower affixed pursuant to and in accordance with resolutions
duly adopted by Borrower's Board of Directors.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
54
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇▇ COUNTY, CITY OF CHICAGO,
ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN BORROWER, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND
BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF ▇▇▇▇ COUNTY, CITY OF CHICAGO, ILLINOIS AND, PROVIDED,
FURTHER NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN SCHEDULE J OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL
BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10), (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges,
prepaid or (d) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the parry to be notified and sent
55
to the address or facsimile number indicated on Schedule J or to such other
address (or facsimile number) as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated on
Schedule J to receive copies shall in no way adversely affect the effectiveness
of such notice, demand, request, consent, approval, declaration or other
communication.
11.11 Section Titles. The Section titles and Table of Contents contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND BORROWER ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party agrees that neither it nor its
Affiliates will in the future issue any press release or other public disclosure
using the name of GE Capital or its affiliates or referring to this Agreement or
the other Loan Documents without at least two (2) Business Days' prior notice to
GE Capital and without the prior written consent of GE Capital unless (and only
to the extent that) such Credit Party or Affiliate is required to do so by law
or regulation and then, in any event, such Credit Party or Affiliate will
consult with GE Capital before issuing such press release or other public
disclosure. Each Credit Party consents to the publication by Agent of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement and after such publication, Borrower may make
public disclosure of the same information set forth in the tombstone.
Furthermore, Borrower may make private disclosures to its suppliers of the
existence of this Agreement, the Maximum Amount hereunder, and the fact that GE
Capital acts as Agent hereunder. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.
56
11.15 Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against Borrower
for liquidation or reorganization, should Borrower become insolvent or make an
assignment of the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of Borrower's assets, and
shall continue to be effective or to be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Agreement and, specifically, the provisions of
Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
11.18 Confidentiality. Agent and Lenders shall maintain as confidential all
nonpublic information provided to them by the Credit Parties for a period of two
(2) years following the Commitment Termination Date, provided that, Agent and
Lenders may disclose such information (i) to Persons employed or engaged by
Agent or any Lender in evaluating, approving. structuring or administering the
Loans and the Revolving Loan Commitments, (ii) to any bona fide assignee or
participant that has agreed to comply with the covenant contained in this
Section 11.18 (and any such bona fide assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (i)
above), (iii) as required or requested by any Governmental Authority, (iv)
pursuant to legal process, or (v) in connection with the exercise of any remedy
under the Loan Documents; provided, further that, the foregoing restrictions
shall cease to apply to any information that becomes publicly available other
than by the actions of Agent, Lenders or any Persons described in clauses (i) or
(ii) above.
[signature pages follow]
57
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
WILSONS LEATHER HOLDINGS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Senior Vice President and Chief
-------------------------------
Financial Officer
-------------------------------
Revolving Loan Commitment: GENERAL ELECTRIC CAPITAL CORPORATION,
$73,927,273 (including $10,000,000 as Agent, Lender and Swing Line Lender
Swing Line Commitment)
Term Loan B Commitment:
$25,000,000 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Duly Authorized Signatory
-------------------------------
Revolving Loan Commitment: FLEET NATIONAL BANK, as Lender and
$30,400,000 Documentation Agent
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Director
-------------------------------
Revolving Loan Commitment: THE CIT GROUP/BUSINESS CREDIT, INC.,
$15,200,000 as Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Assistant Vice President
-------------------------------
Revolving Loan Commitment: FIRST UNION NATIONAL BANK, as Lender
$30,400,000 and Syndication Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
-------------------------------
S-1
Revolving Loan Commitment: U.S. BANK NATIONAL ASSOCIATION,
$25,072,727 as Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Relationship Manager
-------------------------------
Revolving Loan Commitment ▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
$15,000.000 as Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Vice President
-------------------------------
S-2
The undersigned are executing this Credit Agreement in their capacity as
Credit Parties, but only as to the representations, warranties and covenants
contained in Sections 3, 5 and 6:
Wilsons The Leather Experts Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President and
--------------------------
Chief Financial Officer
--------------------------
Wilsons Center, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President and
--------------------------
Chief Financial Officer
--------------------------
Rosedale Wilsons, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President and
--------------------------
Chief Financial Officer
--------------------------
River Hills Wilsons, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President and
--------------------------
Chief Financial Officer
--------------------------
Bermans The Leather Experts Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President and
--------------------------
Chief Financial Officer
--------------------------
S-3
SCHEDULE A
DEFINITIONS
-----------
Capitalized terms used in the Agreement shall have (unless otherwise
provided elsewhere in the Agreement) the following respective meanings and all
section references in the following definitions shall refer to Sections of the
Agreement:
"Account Debtor" shall mean any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all accounts, as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party and, in any event,
including, without limitation, (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter
received or acquired by or belonging or owing to any Credit Party, whether
rising out of goods sold or services rendered by it or from any other
transaction (including, without limitation, any such obligations which may be
characterized as an account or contract right under the Code), (b) all of each
Credit Party's rights in, to and under all purchase orders or receipts now owned
or hereafter acquired by it for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including,
without limitation, unpaid sellers' right of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including, without limitation, all rights to receive the
proceeds of said purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Advance" shall mean any Revolving Credit Advance or Swing Line Advance, as
the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power in the election of directors of such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person or (c) each of such Person's officers, directors, joint venturers and
partners. For the purposes of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of its management of policies, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that the term
"Affiliate" shall specifically exclude Agent and each Lender.
"Agent" shall mean GE or its successor appointed pursuant to Section 9.7.
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"Agreement" shall mean the Third Amended and Restated Credit Agreement by
and among Borrower, GE Capital, as Lender, Term Lender, Swing Line Lender and
Agent and the other Lenders signatory, as amended, modified, restated or
extended from time to time.
"Amended and Restated Security Agreement" shall mean the Security Agreement
and the Supplemental Security Agreement, as amended and restated as of the
Closing Date and as further amended, modified or restated, from time to time and
each Supplemental Security Agreement entered into thereafter.
"Appendices" shall have the meaning assigned to it in the recitals to the
Agreement.
"Applicable Margins" shall mean the Applicable Index Margin, Applicable
LIBOR Margin, Applicable L/C Margin and Applicable Swing Line Margin.
"Applicable Index Margin" shall mean a per annum rate of interest payable
in addition to the Index Rate on Index Rate Loans, determined by reference to
Section 1.6.
"Applicable LIBOR Margin" shall mean a per annum rate of interest payable
in addition to the LIBOR Rate on LIBOR Rate Loans, determined by reference to
Section 1.6.
"Applicable L/C Margin" shall mean the per annum letter of credit fee
payable with respect to Letter of Credit Obligations and Eligible Trade L/C
Obligations, determined by reference to Section 1.6.
"Applicable Swing Line Margin" shall mean the per annum rate of interest
payable in addition to the Commercial Paper Rate on Swing Line Loans, determined
by reference to Section 1.6.
"Approved Shipper" shall mean any reputable and creditworthy shipper or
freight forwarder that has entered into a bailee letter with Agent on terms
acceptable to Agent regarding in-transit Inventory and which transports finished
goods Inventory from overseas to Borrower's Distribution Centers or, at
Borrower's direction, to Store Guarantors' Stores.
"Assignment Agreement" shall mean an agreement substantially in form
attached hereto as Exhibit 9.1(a) and otherwise in form and substance
satisfactory to, and acknowledged by, Agent whereby a portion of any or all of
the Revolving Loan Commitments are assigned to a Lender after the Closing Date.
"Bentley" shall mean Bentley's Luggage Corp., a Florida corporation.
"Bermans" means Bermans The Leather Experts Inc., a Delaware corporation.
"Borrower" shall have the meaning assigned thereto in the recitals to the
Agreement.
"Borrowing Availability" shall have the meaning assigned to it in Section
1.1(a).
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"Borrowing Base" shall mean, as of any date of determination, the sum of:
(a) 65% of the book value of Eligible Inventory-Apparel during the
Fiscal Months of July and October of each Fiscal Year; or
(b) 70% of the book value of Eligible Inventory-Apparel during the
Fiscal Months of August and September of each Fiscal Year; or
(c) 60% of the book value of Eligible Inventory-Apparel during the
Fiscal Months of each Fiscal Year other than the Fiscal Months listed under
items (a) or (b) above; plus
(d) 60% of the book value of Eligible Inventory-Luggage plus ----
(e) $15,000,000 during the Fiscal Months of July, August, September
and October of 2001 and of each year thereafter (a "Seasonal
Over-Advance").
"Borrowing Base Certificate" shall mean a certificate to be executed and
delivered from time to time by Borrower in the form attached to the Agreement as
Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of Illinois
or the State of Minnesota and in reference to LIBOR Loans shall mean any such
day that is also a LIBOR Business Day.
"Capital Expenditures" shall mean all payments during any measuring period
(including the principal portion of payments under Capital Leases, installment
purchase agreements and other similar purchase money financing arrangements) for
any fixed assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are required to
be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet of such lessee in respect of such Capital
Lease or otherwise be disclosed in a note to such balance sheet.
"Cash Management Systems" shall have the meaning assigned to it in Section
1.8.
"Change of Control" shall mean any event, transaction or occurrence as a
result of which (a) Ultimate Parent shall cease to own and control all of the
economic and voting rights associated with all of the outstanding capital stock
of First Intermediate Parent or (b) First Intermediate Parent shall cease to own
and control all of the economic and voting rights associated with all of the
outstanding capital stock of each of its direct and indirect Subsidiaries,
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except as permitted under Section 6.1 and Section 6.8 of the Agreement and
except for the Joint Ventures and Foreign Subsidiaries or (c) a "Change of
Control" (as such term is defined in the Senior Notes Documents) shall occur or
(d) any person or group of persons (within the meaning of the Securities
Exchange Act of 1934, as amended, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 30% or more
of the issued and outstanding shares of capital Stock of Ultimate Parent having
the right to vote for the election of directors of Ultimate Parent under
ordinary circumstances or (e) during any period of twelve consecutive calendar
months, individuals who at the beginning of such period constituted the board of
directors of Ultimate Parent (together with any new directors whose election by
the board of directors of Ultimate Parent or whose nomination for election by
stockholders of Ultimate Parent was approved by a vote of at least a majority of
the directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office.
"Charges" shall mean all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including, without limitation, taxes owed
to the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (b) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Closing Date" shall mean June 19, 2001.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of Illinois; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Lender's security interest
in any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of Illinois, the term "Code" shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Collateral" shall mean the property covered by the Amended and Restated
Security Agreement, the Mortgages and the other Collateral Documents and any
other personal property, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations, including, but not limited to, the Term Collateral.
"Collateral Documents" shall mean the Amended and Restated Security
Agreement, the Mortgages, the Consignment Agreement, the Pledge Agreements, the
Guaranties, the Patent Security Agreement, the Trademark Security Agreement, the
Copyright Security
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Agreement and all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the Collateral
referred to in Schedule H.
"Collection Account" shall mean that certain account of Agent, account
number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Bankers Trust Company in New York or
any substitute Collection Account established in accordance with Schedule E
hereto.
"Commercial Paper Rate" shall mean the month-end published rate for 30-day
Dealer Commercial Paper (high grade unsecured notes sold through dealers by
major corporations in multiples of $1,000) as from time to time reported in the
"Money Rates" column in The Wall Street Journal. The rate of interest applicable
to the Swing Line Loan shall for each month be based upon the Commercial Paper
Rate as of the last Business Day of the preceding month.
"Commitments" means (a) as to any Lender, the aggregate of such Lender's
Revolving Loan Commitment (including without duplication the Swing Line Lender's
Swing Line Commitment as a subset of its Revolving Loan Commitment) and Term
Loan B Commitment as set forth on the signature page to the Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate of all Lenders' Revolving Loan Commitments (including
without duplication the Swing Line Lender's Swing Line Commitment as a subset of
its Revolving Loan Commitment) and the Term Loan B Commitment of the Term
Lender, which aggregate commitment shall be Two Hundred Fifteen Million Dollars
($215,000,000) on the Closing Date, as to each of clauses (a) and (b), as such
Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement.
"Commitment Termination Date" shall mean the earliest of (a) May 24, 2004,
(b) the date of termination of Lenders' obligations to make Advances and/or
incur Letter of Credit Obligations and Eligible Trade L/C Obligations or permit
existing Loans to remain outstanding pursuant to Section 8.2(b), and (c) the
date of indefeasible prepayment in full by Borrower of the Loans and the
cancellation and return of all Letters of Credit or the cash collateralization
of all Letter of Credit Obligations and Eligible Trade L/C Obligations pursuant
to Schedule B, and the permanent reduction of the Revolving Loan Commitment and
the Swing Line Commitment to zero dollars ($0), in accordance with the
provisions of Section 1.3(c).
"Concentration Account" shall have the meaning assigned to it on Schedule
E.
"Consignment Agreement" shall mean the Master Consignment Agreement dated
May 25, 1996 among Borrower and all of the Store Guarantors, as amended.
"Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or
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Instruments) in or under which any Credit Party may now or hereafter have any
right, title or interest, including, without limitation, any and all agreements
relating to the terms of payment or the terms of performance of any Account.
"Credit Parties" shall mean Ultimate Parent, First Intermediate Parent,
Second Intermediate Parent, Third Intermediate Parent, Borrower, and each other
Store Guarantor.
"Default" shall mean any event which, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
"Distribution Center" shall mean (i) the warehouse and distribution center
owned by Borrower or owned by Bermans and leased to and operated by Borrower,
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (ii) the
distribution center owned by OIRE Minnesota, L.L.C., as successor-in-interest to
Opus Northwest, L.L.C., and leased to and operated by Borrower, located in Maple
Grove, Minnesota, (iii) the warehouse and distribution center leased or operated
by El Portal at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ #▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, or (iv) the
warehouse and distribution center owned by Bentley located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, and "Distribution Centers" shall mean
any two or more of the foregoing, collectively.
"Documents" shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars or $" shall mean lawful currency of the United States of America.
"EBIT" shall mean, with respect to Ultimate Parent for any fiscal period or
periods, without duplication, consolidated net income from operations before
Interest Charges and income taxes determined in accordance with GAAP.
"EBIT/Cash Interest Coverage" shall mean with respect to Ultimate Parent,
as of the last day of any Fiscal Quarter for the four Fiscal Quarters then ended
(x) EBIT divided by (y) cash Interest Charges for such period.
"EBITDA" shall mean, with respect to Ultimate Parent for any fiscal period
or periods (without duplication), consolidated net income from operations before
Interest Charges, income taxes, depreciation and amortization determined in
accordance with GAAP.
"Eligible In-Transit Inventory" shall mean Inventory owned by Borrower
consisting of leather apparel and accessories and luggage and accessories and
related products, which is in-transit from the manufacturer thereof to the
Distribution Centers or by drop ship to one or more Stores operated by a Store
Guarantor and reflected on Borrower's monthly balance sheet as in-transit
inventory. In furtherance of and without limiting the foregoing: Eligible
In-Transit Inventory shall be limited to finished goods (i) in the possession of
an Approved Shipper under contract with Borrower and in which Borrower has good
title; (ii) as to which Agent for
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the benefit of Lenders has a first priority security interest through
constructive possession by means of a bailee agreement with an Approved Shipper;
(iii) which have been accepted by Borrower (F.O.B. shipping point) as conforming
goods and as to which the L/C Issuer has received an inspection certificate
signed by Borrower's agent or employee; (iv) which are fully insured against
loss under insurance naming Agent as loss payee for the benefit of Lenders; and
(v) as to which the purchase price has been paid by a draw under a corresponding
Eligible Trade L/C or otherwise.
"Eligible Inventory" shall mean Eligible Inventory-Apparel and Eligible
Inventory-Luggage.
"Eligible Inventory-Apparel" shall mean finished goods Inventory owned by
Borrower consisting of apparel, luggage, accessories and products held for sale
through Store Guarantors, historically bearing the "Wilsons" or "Bermans" names
valued on a last-in, first-out basis in accordance with GAAP, net of Reserves,
in which Agent, on behalf of Lenders, has a first priority security interest,
plus Eligible In-Transit Inventory that is otherwise Eligible Inventory-Apparel
valued at book value in accordance with GAAP.
"Eligible Inventory-Luggage" shall mean finished goods Inventory owned by
Borrower consisting of luggage, accessories and related products other than
luggage, accessories, and related products historically held for sale through
Store Guarantors bearing the "Wilsons" or "Bermans" names valued on a last-in,
first-out basis in accordance with GAAP, net of Reserve, in which Agent, on
behalf of Lenders, has a first priority security interest, plus Eligible
In-Transit Inventory that is otherwise Eligible Inventory-Luggage valued at book
value in accordance with GAAP.
"Eligible Trade L/C's" shall mean, subject to the further conditions
contained in Section 6.18 of the Agreement, documentary letters of credit issued
by an L/C Issuer for the account of Borrower for payment of the purchase price
of finished goods inventory which will be Eligible In-Transit Inventory upon
presentation of a draft under that documentary letter of credit.
"Eligible Trade L/C Obligations" shall mean all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Eligible Trade L/Cs by Agent or a Subsidiary thereof or a
reimbursement agreement or guaranty by Agent with respect to Eligible Trade
L/Cs. The amount of any such Eligible Trade L/C Obligations shall equal the
maximum amount which may be payable by Agent or Lenders thereupon or pursuant
thereto.
"El Portal" shall mean, El Portal Group, Inc., a Nevada corporation.
"Environmental Laws' shall mean all federal, state, local and foreign laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amend or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree or judgment, relative to the applicable
real estate, relating to the regulation and protection of human health, safety,
the environment and natural resources (including ambient air, surface water,
groundwater,
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wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. ▇▇.▇▇. 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. ▇▇.▇▇. 1801 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C.ss.ss.136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. ▇▇.▇▇.
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C.
▇▇.▇▇. 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. ▇▇.▇▇. 740 et
seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. ▇▇.▇▇.
1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
▇▇.▇▇. 651 et seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (42
U.S.C. ▇▇.▇▇. 300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all fees, disbursements and expenses of counsel, experts and consultants and
costs of investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim, suit, action or demand by any person
or entity, whether based in contract, tort, implied or, express warranty, strict
liability, criminal or civil statute or common law (including any thereof
arising under any Environmental Law, permit, order or agreement with any
Governmental Authority) and which relate to any health or safety condition
regulated under any Environmental Law or in connection with any other
environmental matter or Release, threatened Release or the presence of a
Hazardous Material or threatened Release of a Hazardous Material.
"Environmental Permits" shall mean all permits, licenses, administrative
orders, consent orders, consent decrees, governmental agency agreements, or
other written documents detailing required environmental performance expected of
or permitted by any Credit party by Governmental Authority.
"Equipment" means all "equipment," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located and, in any
event, including all such Credit Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and Fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade
or business (whether or not incorporated) which, together with such Credit
Party, are treated as s single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC with respect to any period after the Closing Date.
"ERISA Event" shall mean, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041 of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status.
"ESOP" shall mean a Plan which is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 8.1.
"Fees" shall mean any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated income statement,
statements of cash flows and balance sheets of Ultimate Parent and/or its
Subsidiaries delivered in accordance with Section 3.4 of the Agreement and
Schedule G to the Agreement.
"First Intermediate Parent" shall mean Wilsons Center, Inc., a Minnesota
corporation.
"Fiscal Month" shall mean any of the monthly accounting periods of Ultimate
Parent.
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"Fiscal Quarter" shall mean any of the four 13 calendar week accounting
periods of Ultimate Parent ending on or about the last day of January, April,
July and October of each year.
"Fiscal Year" shall mean any of the annual accounting periods of Ultimate
Parent ending on the Saturday closest to the last day of January of each year.
"Fixed Charges" shall mean, for any fiscal period with respect to Ultimate
Parent and its Subsidiaries on a consolidated basis, the aggregate of all
Interest Charges paid in cash during such period, plus (a) scheduled payments of
principal with respect to Indebtedness during such period, plus (b) lease
payments with respect to Stores (including base rent, percentage rent, common
area payments and real estate taxes) during such period, plus (c) the provision
for income taxes with respect to such period.
"Fixed Charges Coverage Ratio" shall mean, with respect to Ultimate Parent
and its Subsidiaries on a consolidated basis for any fiscal period, the ratio of
(x) the sum of EBITDA, plus lease payments with respect to Stores (including
base rent, percentage rent, common area payments and real estate taxes) during
such period, less the unfinanced portion of Capital Expenditures during such
period to (y) Fixed Charges.
"Fixtures" means all "fixtures" as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party.
"Foreign Subsidiaries" shall mean Wilsons (UK) Limited, Wilsons Leather
Gatsland Limited, Wilsons Leather Gatsair Limited, Wilsons Leather of Hong Kong
Limited, and any other Subsidiary of the Ultimate Parent incorporated in a
jurisdiction outside of the United States.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as from time to time in effect, consistently applied.
"GE Capital" shall mean General Electric Capital Corporation, a New York
corporation.
"GE Capital Fee Letter" shall mean that certain letter, dated as of May 24,
1999 and supplemented as of October 31, 2000 and supplemented by that certain
letter agreement dated as of the Closing Date, each between GE Capital and
Borrower with respect to certain Fees to be paid from time to time by Borrower
to GE Capital.
"General Intangibles" shall mean any "general intangibles" as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party and in
any event including without limitation all right, title and interest which such
Credit Party may now or hereafter have in or under any Contract (including the
Consignment Agreement, as amended or modified from time to time), any Licenses,
including, without limitation, all customer lists, Trademarks, service marks,
tradenames, business names, corporate names, trade styles, logos and other
source or business identifiers, and all applications therefor and reissues,
extensions or
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renewals thereof, rights in intellectual property, interests in partnerships,
joint ventures and other business associations, licenses, permits, copyrights,
trade secrets, proprietary or confidential information, inventions (whether or
not patented or patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records, goodwill (including all
goodwill associated with any Trademark registration, or Trademark licensed under
any Trademark License), all rights and claims in or under insurance policies
(including, without limitation, insurance for fire, damage, loss and casualty,
whether covering personal property, tangible rights or intangibles, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, tax refunds, rights to receive tax refunds and other
payments and rights of indemnification.
"GOB Cap" shall have the meaning assigned to it in Section 1.1(a)(v).
"GOB Percentage" shall mean the percentage assigned to Borrower' s
Inventory under the appraisal delivered to Agent pursuant to Schedule H hereto
(or, until the first such appraisal is delivered, under the appraisal delivered
to Agent prior to the Closing Date) reflecting the going-out-of-business value
of Borrower' s Inventory.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executing, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligation") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such Person (a) to purchase
or repurchase any such primary obligation, (b) to advance or supply funds (i)
for the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made or (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Parent Guaranty, the Store
Guarantors' Guaranty and any other guaranty executed by any Guarantor in favor
of Agent and Lenders in respect of the Obligations.
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"Guarantors" shall mean Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent, Third Intermediate Parent, each other Store Guarantor, and
each other Person, if any, which executes a guarantee or other similar agreement
in favor of Agent in connection with the transactions contemplated by the
Agreement and the other Loan Documents.
"Hazardous Material" shall mean any substance, material or waste, the
generation, handling, storage, treatment or disposal of which is regulated by or
forms the basis of liability now or hereafter under, any Governmental Authority
in any jurisdiction in which Borrower or any Subsidiary thereof has owned,
leased, or operated real property or disposed of hazardous materials, or by any
Federal government authority, including, without limitation, any material or
substance which is (a) defined as a "solid waste," "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" or other similar term or phrase under any Environmental Laws,
(b) petroleum, or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), any radioactive substance, methane, volative hydrocarbons or
any industrial solvent, (c) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. ▇▇.▇▇. 1251 et seq. (33 U.S.C.
▇▇.▇▇. 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.
ss. 1317), (d) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C.
ss. 6903), or (e) defined as a "hazardous substance" pursuant to Section 1012 of
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. ss. 9601 et seq. (42 U.S.C. ss. 9601).
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations, (f) all obligations of such
Person under commodity purchase or option agreements or other commodity price
hedging arrangements, in each case whether contingent or matured, (g) all
obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Index Rate" shall mean the higher of (a) the highest of the most recently
published or announced prime, corporate, base, reference or similar benchmark
rate, however
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designated, announced by any of the five (5) largest member banks of the New
York Clearing House Association and (b) one half of one percent (.5%) per annum
over the Federal funds rate, in each case as of the date of determination.
Changes in the rate of interest applicable to Index Rate Loans shall occur
simultaneously with changes in the Index Rate.
"Index Rate Loan" shall mean the Revolving Loan or any portion thereof
bearing interest by reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
including, without limitation, all certificated securities, all certificates of
deposit, and all notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Trademarks, trade
secrets and customer lists.
"Interest Charges" shall mean, with respect to any Person for any fiscal
period, the amount which, in conformity with GAAP, would be set forth opposite
the caption "Interest Expense" (or any like caption) on a consolidated income
statement of such Person and all other Persons with which such Person's
Financial Statements are to be consolidated in accordance with GAAP for the
relevant period ended on such date, including without limitation, in the case of
Ultimate Parent and its Subsidiaries, the L/C Fee and Non-Use Fee, net of
interest income and investment income.
"Interest Payment Date" means (a) as to any Index Rate Loan and the Swing
Line Loan, the first Business Day of each month to occur while such Loan is
outstanding, and (b) as to each LIBOR Loan, the last day of the LIBOR Period
applicable thereto; provided, however, that, in addition to the foregoing, each
of (x) the date upon which all of the Commitments have been terminated and the
Loans have been paid in full and (y) the Commitment Termination Date shall be
deemed to be an "Interest Payment Date" with respect to any interest which is
then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and in any event including, without limitation, all inventory, merchandise,
goods and other personal property which are held by or on behalf of any Credit
Party for sale or lease or are furnished or are to be furnished under a contract
of service, or which constitute raw materials, work in process or materials used
or consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including, without limitation, all other supplies.
"Investment Property" shall mean all "investment property," as such term is
defined in the Code, now or hereafter owned or acquired by, any Credit Party,
wherever located an, in any event, including, without limitation: (a) all
securities, whether certificated or uncertificated, including, without
limitation, stocks, bonds, interests in limited liability
A-13
companies, partnership interests, treasuries, certificates of deposit and mutual
funds shares; (b) all securities entitlements of any Credit Party, including,
without limitation, all rights of any Credit Party to any securities account and
any free credit balance or other money owing by any securities intermediary with
respect to any such account; (c) all securities accounts held by any Credit
Party; (d) all commodity contracts held by any Credit Party and (e) all
commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Joint Venture" shall mean any business enterprise, regardless of form,
domestic or foreign, in which Ultimate Parent or any of its Subsidiaries has an
equity interest which constitutes less than 100% of the total equity thereof
(other than any directors qualifying shares or similar de minimus ownership
interests required by the laws of any state or country), which business
enterprise is formed or acquired for business purposes permitted hereby
(including a Non-Core Business).
"L/C Availability" shall have the meaning ascribed thereto in Section 1.2
of the Agreement.
"L/C Issuer" shall have the meaning assigned to such term in Schedule B and
shall mean, initially, GE Capital or a subsidiary of GE Capital.
"L/C Fee" shall have the meaning ascribed thereto in Schedule B to the
Agreement.
"L/C Sublimit" shall mean $85,000,000.
"Lenders" shall mean GE Capital, the other Lenders named on the signature
page of the Agreement including without limitation the Swing Line Lender, and,
if any such Lender shall decide to assign all or any portion of the Obligations,
such term shall include such assignee.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance Letters of Credit by Agent or a Subsidiary thereof or a reimbursement
agreement or guaranty by Agent with respect to a Letter of Credit issued by any
other L/C Issuer. The amount of such Letter of Credit Obligations shall equal
the maximum amount which may be payable by Agent or Lenders pursuant thereto.
This term expressly excludes Eligible Trade L/C Obligations.
"Letters of Credit" shall mean documentary or standby letters of credit
other than Eligible Trade L/Cs issued for the account of Borrower by L/C Issuer,
and bankers' acceptances issued by Borrower, for which Agent and Lenders have
incurred Letter of Credit Obligations.
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"LIBOR Business Day" shall mean a Business Day on which banks in the city
of London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to this
Agreement and ending seven (7) days or, one, two or three months thereafter, as
selected by Borrower in an irrevocable notice to Agent as set forth in Section
1.5(e); provided that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two (2) LIBOR Business Days prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan for one month or more
that begins on the last LIBOR 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 LIBOR Period) shall end on the last LIBOR Business Day
of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a payment
or prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be no more
than ten (10) separate LIBOR Loans outstanding at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, two (2) LIBOR Business Days prior to the beginning of
each LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations
of the Board of Governors of the Federal
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Reserve system or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation
D of such Board) which are required to be maintained by a member bank of
the Federal Reserve System.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower.
"License" shall mean any Trademark License or other written license of
rights or interests in Trademarks now held or hereafter acquired by any Credit
Party.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
synthetic lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
"Loan Account" shall have the meaning assigned to it in Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
Documents and all other agreement, instruments, documents and certificates
identified in the Schedule of Documents executed and delivered to, or in favor
of, Agent and/or Lenders and including (without limitation) all other pledges,
powers of attorney, consents, assignments, contracts, notices, and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Material Credit Party, and delivered to Agent or any Lender in connection
with the Agreement or the transactions contemplated hereby. Any reference in the
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to such Agreement as
the same may be in effect at any and all times such reference becomes operative.
"Loan Parties" shall mean Ultimate Parent, First Intermediate Parent,
Borrower, Second Intermediate Parent, and Third Intermediate Parent.
"Loans" shall mean the Revolving Loan, the Term Loan B and the Swing Line
Loan.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations or financial or other condition of the Loan Parties
considered as a whole, (b) Borrower's ability to pay any of the Loans or any of
the other Obligations in accordance with the terms thereof, (c) any material
part of the Collateral or Agent's Liens, on
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behalf of itself and Lenders, on such Collateral or the priority of such Liens,
or (d) Agent's or any Lender's rights and remedies under the Agreement and the
other Loan Documents. For purposes of the foregoing, any event or occurrence
which results or could reasonably be expected to result in uninsured losses,
costs or liabilities in excess of 15% of the Borrowing Base as of any date of
determination shall be deemed to have a Material Adverse Effect.
"Material Credit Party" shall mean Ultimate Parent, First Intermediate
Parent, Second Intermediate Parent, Third Intermediate Parent, Borrower and each
other Store Guarantor that operates more than twelve (12) Stores.
"Maximum Amount" shall mean, at any particular time, an amount equal to the
Revolving Loan Commitment (including as a subpart thereof the Swing Line
Commitment) of all Lenders.
"Mortgages" shall mean each of (i) that certain mortgage dated on or about
the date hereof executed by Bermans for the benefit of Agent, on behalf of
itself and Lenders, with respect to the real property and related assets located
at 7401 ▇▇▇▇▇ Avenue North, Brooklyn Park, Hennepin County, Minnesota, (ii) that
certain mortgage dated on or about the date hereof executed by Bentley for the
benefit of Agent, on behalf of itself and Lenders, with respect to the real
property and related assets located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, each in form and substance reasonably satisfactory to Agent (in
each case as amended, restated or otherwise modified from time to time).
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making or is obligated to make contributions on behalf of participants who are
or were employed by any of them after the Closing Date.
"Non-Core Business" shall mean any retail or wholesale business other than
the retail leather apparel and accessories business and the retail luggage and
accessories business and the wholesale business consisting of selling goods
against firm purchase orders.
"Non-use Fee" shall have the meaning assigned to it in Section 1.9(b).
"Notes" shall mean the Revolving Notes, the Term B Note and the Swing Line
Note, collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned to it
in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning assigned to it
in Section 1.1(a).
"Notice of Swing Line Advance" shall have the meaning assigned to it in
Section 1.1(c)(i).
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"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including,
without limitation, all interest which accrues after the commencement of any
case or proceeding in bankruptcy after the insolvency of, or for the
reorganization of any Credit Party, whether or not allowed in such proceeding),
Fees, Charges, expenses, attorneys' fees and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan Documents.
"Overadvance" shall have the meaning assigned to it in Section 1.1(a)(iii).
"Parent Guaranty" shall mean the Amended and Restated Guaranty executed and
delivered by Ultimate Parent, First Intermediate Parent, Second Intermediate
Parent and Third Intermediate Parent, as amended, modified or restated from time
to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2; (b) pledges or
deposits securing obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation; (c)
pledges or deposits securing bids, tenders, contracts, other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee
made in the ordinary course of business; (d) deposits securing statutory
obligations of any Credit Party; (e) workers', mechanics' suppliers' or similar
liens arising in the ordinary course of business; (f) carriers', warehousemen's
or other similar possessory liens arising in the ordinary course of business;
(g) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (h) any attachment or judgment
lien not constituting an Event of Default under Section 8.1(j) of the Agreement;
(i) zoning restrictions, easements, licenses, or other restrictions on the use
of any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (j) Liens existing on the Closing Date and
listed on Schedule 6.7 hereto; (k) presently existing or hereinafter created
Liens in favor of Agent, on behalf of Lenders; and (l) Liens created after the
date hereof, by conditional sale or other title retention agreements (including,
without limitation, Capital Leases) or in connection with purchase money
Indebtedness with respect to assets acquired by any Credit Party in the ordinary
course of business, involving the incurrence of an aggregate amount of purchase
money Indebtedness and Capital Lease Obligations of not more than $10,000,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within thirty (30) days following such purchase and does not exceed
100% of the purchase price of the subject assets and including purchase money
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Indebtedness and Capital Leases incurred or assumed in connection with a
Permitted Acquisition).
"Permitted Investment" shall have the meaning assigned to it in Section
6.1.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" shall mean, at any time after the Closing Date, an employee benefit
plan, as defined in Section 3(3) of ERISA, which any Credit Party maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any Credit Party.
"Pledge Agreements" shall mean the separate Pledge Agreements, executed by
each of Ultimate Parent, First Intermediate Parent and Second Intermediate
Parent with respect to the Stock of their respective Subsidiaries and by Third
Intermediate Parent with respect to the Stock of Borrower, the Store Guarantors,
Bermans and Wilsons International, Inc., as amended, modified or restated from
time to time.
"Prior Credit Agreement" shall have the meaning assigned thereto in the
recitals of the Agreement.
"Prior Loans" shall have the meaning assigned thereto in the recitals of
the Agreement.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties for past, present or future infringement
of any Trademark or Trademark License, or for injury to the goodwill associates
with any Trademark or Trademark License, (d) any recoveries by any Credit Party
against third parties with respect to any litigation or dispute concerning any
of the Collateral, (e) dividends, distributions, interest, and Instruments
received or receivable with respect to pledged Stock or Investment Property; and
(f) any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral upon disposition or otherwise.
"Projections" shall mean (i) for the Fiscal Year ending in January of 2002,
Ultimate Parent's forecasted consolidated (a) balance sheets, (b) profit and
loss statements, (c) cash flow statements, and (d) capitalization statements;
and (ii) for the Fiscal Years ending in January of 2003 and 2004, Ultimate
Parent's forecasted consolidated profit and loss statements,
A-19
in each case prepared in a manner consistent with the historical Financial
Statements of Ultimate Parent together with appropriate supporting details and a
statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to any
Lender, (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment and Swing Line Commitment of that
Lender by (ii) the aggregate Revolving Loan Commitments and Swing Line
Commitment of all Lenders; and (b) with respect to all Loans, the percentage
obtained by dividing (i) the Commitment of that Lender by (ii) the aggregate
Commitments of all Lenders.
"Qualified Plan" shall mean a Plan which is intended to be tax-qualified
under Section 401(a) of the IRC maintained by a Credit Party after the Closing
Date.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
"Refunded Swing Line Loan" shall have the meaning assigned to it in Section
1.1(c)(iii).
"Release" shall mean, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping
of, leaching or migration of Hazardous Materials in the indoor or outdoor
environment by such person, including the movement of Hazardous Material through
or in the air, soil, surface water, ground water or property, which, in any
event, has resulted in the creation of any material unpaid liability for such
Person.
"Requisite Lenders" shall mean (a) Lenders having more than seventy-five
percent (75%) of the Commitments of all Lenders, or (b) if the Commitments have
been terminated, more than seventy-five percent (75%) of the aggregate
outstanding amount of the Loans (with Swing Line Loans being attributed to the
Lenders participating therein) and Letter of Credit Obligations and Eligible
Trade L/C Obligations; provided, that when the Term Loan B has been paid in
full, such percentage shall be reduced to sixty-six and two-thirds percent (66
2/3%) in each instance.
"Reserves" shall mean, for purposes of calculating the Borrowing Base, (a)
reserves established by Agent from time to time against the Borrowing Base
pursuant to Section 5.9 of the Agreement, (b) reserves established pursuant to
Section 5.4(c) of the Agreement, (c) reserves established pursuant to Section
1.11(c) of the Agreement and (d) subject to Section 1.7 of the Agreement, such
other reserves which Agent may, in its reasonable credit judgment, establish
from time to time. Without limiting the generality of the foregoing, shrinkage
Reserves consistent with those established by Borrower under GAAP, Reserves
established to ensure the payment of accrued and unpaid customs duties, customs
and shipping charges with respect to Eligible In-Transit Inventory, Reserves for
differences between LIFO and FIFO, and a sales and use tax Reserve for sales and
use taxes due within ninety (90) days shall be deemed to be a reasonable
exercise of Agent's credit judgment.
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"Restricted Payment" shall mean (a) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the Purchase, redemption, defeasance, sinking fund
or other retirement or a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages, or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person; and (g) any payment of management fees (or other
fees of a similar nature) by such Person to any Stockholder of such Person or
their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare
plan" as defined in Section 3(2) of ERISA, that provides for continuing coverage
or benefits for any participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary of the participant which is maintained by a
Credit Party, after the Closing Date.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
1.1(a)(i).
"Revolving Loan" shall mean as the context may require, at any time, the
sum of (i) the aggregate amount of Revolving Credit Advances outstanding to
Borrower plus (ii) the aggregate Letter of Credit Obligations and Eligible Trade
L/C Obligations incurred on behalf of Borrower.
"Revolving Loan Commitment" shall mean (a) as to any Lender, the aggregate
commitment of such Lender to make Revolving Credit Advances, Swing Line Advances
and/or incur Letter of Credit Obligations and Eligible Trade L/C Obligations as
set forth in the signature page to the Agreement or in the most recent Lender
Assignment Agreement executed by such Lender (as of the Closing Date, each
Lender's Revolving Loan Commitment is set forth on the Signature Pages hereto)
and (b) as to all Lenders, the aggregate commitment of all Lenders to make
Revolving Credit Advances, Swing Line Advances and/or incur Letter of Credit
Obligations and Eligible Trade L/C Obligations, which aggregate commitment shall
be One Hundred Ninety Million Dollars ($190,000,000) on the Closing Date, as
such amount may be adjusted, if at any, from time to time in accordance with the
Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
1.1(a)(ii).
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"Schedule of Documents" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Schedule F.
"Seasonal Over-Advances" shall mean the seasonal over-advance(s) described
in the definition of the term "Borrowing Base."
"Second Intermediate Parent" shall mean Rosedale Wilsons, Inc., a Minnesota
corporation.
"Security Agreement" shall mean the Security Agreement dated May 25, 1996
entered into among Agent, on behalf of itself and Lenders, and each Credit Party
thereto.
"Senior Notes" shall mean senior unsecured notes issued by Ultimate Parent
and guaranteed by Borrower, and all of the Guarantors (other than Ultimate
Parent), in the initial principal amount of $75,000,000, bearing interest at the
rate of 11-1/4% per annum and maturing on August 15, 2004.
"Senior Notes Documents" shall mean the Senior Notes, the Indenture dated
as of August 18, 1997 between Ultimate Parent and Norwest Bank, Minnesota, N.A.,
as trustee, governing the terms and issuance of the Senior Notes, and all
guaranties executed and delivered by Subsidiaries of Ultimate Parent with
respect to the Senior Notes as the same may be amended, supplemented, restated
or otherwise modified from time to time.
"Solvent" shall mean, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person on a going
concern basis is greater than the total amount of liabilities, including
contingent liabilities, of such Person; (b) the present fair salable value of
the assets of such Person on a going concern basis is not less than the amount
that will be required to pay the probably liability of such Person on its debts
as they become absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature; and (d) such Person is not
engaged in a business or transaction, and is not about to engage in a business
or transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pensions plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably expected to
become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interest or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity 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 Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
A-22
"Store" shall mean a location at which goods are sold at retail operated by
a Store Guarantor and shall include kiosks and holiday stores temporarily
operated by any Store Guarantor during the Christmas holiday season and located
in the United States.
"Store Guarantor" shall mean any Subsidiary of Ultimate Parent other than
(i) First Intermediate Parent, (ii) Borrower, (iii) Foreign Subsidiaries and
(iv) Joint Ventures (in each case, whether or not such Person operates a retail
store), and "Store Guarantors" shall mean all of the foregoing, collectively.
"Store Guarantors' Guaranty" shall mean the Amended and Restated Guaranty
executed by the Store Guarantors (excluding the Second Intermediate Parent and
Third Intermediate Parent) in favor of the Lenders, as amended, modified or
restated from time to time.
"Subordinated Debt" shall mean any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to the Agent
and the Lenders in their sole discretion, as to right and time of payment and as
to any other rights and remedies thereunder.
"Subsidiary" shall mean, with respect to any Person, (a) any corporation of
which an aggregate of more than fifty percent (50%) of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (B) any
partnership or limited liability company in which such Person and/or one ore
more Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner. Unless the context otherwise requires all
references to Subsidiaries in the Agreement or in the other Loan Documents shall
be deemed to refer to Subsidiaries of First Intermediate Parent.
"Supplemental Security Agreement" shall mean the Supplemental Security
Agreements dated as May 24, 1999.
"Supporting Obligations" has the meaning ascribed thereto in the Code.
"Swing Line Advance" has the meaning assigned to it in Section 1.1(c)(i).
"Swing Line Availability" has the meaning assigned to it in Section
1.1(c)(i).
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans as set forth on the
signature
A-23
page to the Agreement, which commitment constitutes a part of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean as the context may require, at any time, the
aggregate amount of Swing Line Advances outstanding to Borrower.
"Swing Line Loan Participation Certificate" shall mean a certificate
delivered pursuant to Section 1.1(c)(iv).
"Swing Line Note" has the meaning assigned to it in Section 1.1(c)(ii).
"Taxes" shall mean taxes, levies, imposes, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the federal government
or any State or political subdivision thereof.
"Term Collateral" shall mean (i) all of the assets and property of Bermans
and Bentley in which a Lien is purported to be granted by a Mortgage, and (ii)
all of the Equipment (and the Proceeds thereof) of each Credit Party covered by
the Amended and Restated Security Agreement of even date herewith, in each case
whether now existing or hereinafter acquired.
"Term Lender" shall mean GE Capital.
"Term Loan B" has the meaning assigned to it in Section 1.1(b)(i).
"Term Loan B Commitment" means, as to the Term Lender, the commitment of
the Term Lender to make Term Loan B on the Closing Date as set forth in Section
1.1(b)(i) of the Agreement, the amount of which commitment is Twenty Five
Million Dollars ($25,000,000).
"Term B Note" has the meaning assigned to it in Section 1.1(b)(i).
"Termination Date" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Document have been completely discharged and Borrower shall not
have any further right to borrow any monies thereunder.
"Third Intermediate Parent" shall mean River Hills Wilsons, Inc., a
Minnesota corporation.
"Title IV Plan" shall mean an employee pension benefit plan, as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to after the Closing Date on
behalf of participants who are or were employed by any of them.
A-24
"Trademark" or "Trademarks" shall mean any and all of the following now
owner or hereafter acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, all
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
"Trademark License" shall mean any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Trademark.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party, as amended, modified or restated from time to time.
"Unfunded Pension Liability" shall mean, at any time after the Closing
Date, the aggregate amount, if any, of the sum of (a) the amount by which the
present value of all accrued benefits under each Title IV Plan exceeds the fair
market value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV Plan using the actuarial assumptions for funding
purposes in effect under such Title IV Plan, and (b) for a period of five (5)
years following a transaction which might reasonably be expected to be covered
by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be
avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
"Ultimate Parent" shall mean Wilsons The Leather Experts Inc., a Minnesota
corporation.
"WWT" shall mean WWT, Inc., a Delaware corporation and wholly owned
subsidiary of Third Intermediate Parent.
All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of Illinois to the extent the same are used or
defined therein. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Exhibits and
Schedules, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause contained
in the Agreement or any such Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words
A-25
"including", "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons, and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations.
A-26
SCHEDULE B
LETTERS OF CREDIT
-----------------
(a) Issuance. Subject to the terms and conditions of the Agreement, Agent
agrees to incur from time to time, upon the request of Borrower on behalf of
Borrower and for Borrower's account, Letter of Credit Obligations and Eligible
Trade L/C Obligations by causing Letters of Credit and Eligible Trade L/Cs to be
issued on terms acceptable to Agent and by Agent, a subsidiary of Agent or a
bank or other legally authorized Person acceptable to Agent and Borrower (each,
an "L/C Issuer") for Borrower's account and guaranteed by Agent; provided,
however, that the aggregate amount of the sum of all such Letter of Credit
Obligations plus Eligible Trade L/C Obligations shall not at any time exceed the
lesser of (i) Eighty-Five Million Dollars ($85,000,000) (the "L/C Sublimit"), or
(ii) the Maximum Amount less the aggregate outstanding principal balance of the
Revolving Credit Advances; provided further that Letter of Credit Obligations
plus 30% of the Eligible Trade L/C Obligations for the Fiscal Months of August
and September of each year, 35% of the Eligible Trade L/C Obligations for the
Fiscal Months of July and October of each year or 40% of the Eligible Trade L/C
Obligations at all other times, as applicable, shall not exceed the Borrowing
Base less the outstanding balance of the Revolving Credit Advances and Swing
Line Advances. No such Letter of Credit Obligation or Eligible Trade L/C
Obligation shall have an expiry date which is more than one year following the
date of issuance thereof, and Agent and the Lenders shall be under no obligation
to incur Letter of Credit Obligations or Eligible Trade L/C Obligations in
respect of any Letter of Credit or Eligible Trade L/C having an expiry date
which is later than the Commitment Termination Date. The Borrower may request to
change the LC Issuer, subject to consent by Agent, which consent shall not be
unreasonably withheld.
(b) (i) Advances Automatic; Participations. When Agent makes any payment on
or pursuant to any Letter of Credit Obligation or Eligible Trade L/C Obligation,
such payment shall then be deemed automatically to constitute a Swing Line
Advance to the extent of Swing Line Availability (and if Swing Line Availability
is zero, a Revolving Credit Advance) to Borrower under the Agreement regardless
of whether a Default or Event of Default shall have occurred and be continuing
and notwithstanding Borrower's failure to satisfy the conditions precedent set
forth in Section 2 of the Agreement, and, in the case of a Revolving Credit
Advance, each Lender shall be obligated to pay its Pro Rata Share thereof in
accordance with the Agreement. The failure of any Lender to make available to
Agent for Agent's own account its Pro Rata Share of any such Revolving Credit
Advance or payment by Agent under or in respect of a Letter of Credit or
Eligible Trade L/C shall not relieve any other Lender of its obligation
hereunder to make available to Agent its Pro Rata Share thereof, but no Lender
shall be responsible for the failure of any other Lender to make available such
other Lender's Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because
of an Event of Default described in Section 8.1(h) or (i) or otherwise or
if it shall be illegal or unlawful for any Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C
B-1
Issuer, then (i) immediately and without further action whatsoever, such
Lender shall be deemed to have irrevocably and unconditionally purchased
from Agent an undivided interest and participation equal to such Lender's
Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of
Credit Obligations or Eligible Trade L/C Obligations in respect of all
Letters of Credit or Eligible Trade L/Cs then outstanding and (ii)
thereafter, immediately upon issuance of any Letter of Credit or Eligible
Trade L/C, each Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent an undivided interest and
participation in such Lender's Pro Rata Share (based on the Revolving Loan
Commitments) of the Letter of Credit Obligations or Eligible Trade L/C
Obligations with respect to such Letter of Credit or Eligible Trade L/C on
the date of such issuance. Each Lender shall fund its participation in all
payments or disbursements made under the Letters of Credit or Eligible
Trade L/Cs in the same manner as provided in the Agreement with respect to
Revolving Credit Advances.
(c) Cash Collateral. If any Letter of Credit Obligations or Eligible Trade
L/C Obligations, whether or not then due and payable, shall for any reason be
outstanding on the Commitment Termination Date, or if L/C Availability is less
than zero or would be reduced to less than zero upon the incurrence of
additional Letter of Credit Obligations or Eligible Trade L/C Obligations (an
"L/C Availability Short-Fall"), Borrower will pay to Agent for the benefit of
the Lenders cash or cash equivalents acceptable to Agent ("Cash Equivalents") in
an amount equal to the greater of (1) 100% of the maximum then available to be
drawn under each applicable Letter of Credit or Eligible Trade L/C outstanding
for the benefit of Borrower, plus such amount as Agent may request to cover
fees, costs and expenses (including attorneys' fees and expenses) which may be
incurred with respect thereto in the case of cash collateral to be provided on
the Commitment Termination Date or (2) in the amount of the L/C Availability
Short-Fall in the case where L/C Availability is or would be reduced to less
than zero. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or
financial institution acceptable to agent. The Cash Collateral Account shall be
in the name of Agent (as a cash collateral account), and shall be under the sole
dominion and control of Agent and subject to the terms of this Schedule B.
Borrower hereby pledges and grants to Agent, on behalf of Lenders, a security
interest in all such funds and Cash Equivalents held in the Cash Collateral
Account from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations, Eligible
Trade L/C Obligations and other Obligations, whether or not then due. The
Agreement, including this Schedule B, shall constitute a security agreement
under applicable law.
From time to time after funds or cash equivalents are deposited in the Cash
Collateral Account by Borrower, Agent may apply such funds or Cash Equivalents
then held in the Cash Collateral account to the payment of any amounts, in such
order as Agent may elect, as shall be or shall become due and payable by
Borrower to the Lenders with respect to such Letter of Credit Obligations or
Eligible Trade L/C Obligations and, upon the satisfaction in full of all Letter
of Credit Obligations or Eligible Trade L/C Obligations of Borrower outstanding
at the Commitment Termination Date or otherwise upon elimination of the L/C
Availability Short-Fall, to any other Obligations of Borrower then due and
payable. All sums remaining after application of funds from the Cash Collateral
Account as herein provided shall be returned to Borrower.
B-2
Agent shall at the direction of Borrower invest the funds in the Cash
Collateral Account in short term investments issued or fully guaranteed by the
United States government or an agency thereof, and to the extent not applied to
the Obligations as provided herein, interest and earnings thereon, if any, shall
be the property of Borrower.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the benefit of
the Lenders, as compensation to such Lenders for Letter of Credit Obligations
and Eligible Trade L/C Obligations incurred hereunder, (x) all costs and
expenses incurred by Agent or any Lender on account of such Letter of Credit
Obligations or Eligible Trade L/C Obligations, and (y) commencing with the month
in which any such Letter of Credit Obligations or Eligible Trade L/C Obligation
is incurred by the Lenders and on the first day of each month in arrears for
each month during which such Letter of Credit Obligation or Eligible Trade L/C
Obligation shall remain outstanding, a fee (the "L/C Fee") in an amount equal to
the Applicable L/C Margin per annum multiplied by the daily average of the
maximum amount available to be drawn under the applicable Letters of Credit and
Eligible Trade L/C's outstanding during each month. In addition, Borrower agrees
that Borrower (and not Agent or any Lender) shall be responsible for the payment
of all L/C Issuer fees, costs, and expenses in connection with the issuance of
Letters of Credit and Eligible Trade L/Cs at such times and in such amounts as
Borrower and L/C issuer shall agree, pursuant to the application and related
documentation under which any Letter of Credit or Eligible Trade L/C is issued.
The L/C Fees due under this paragraph (d) shall be calculated on the basis of a
360-day year for the actual number of days elapsed (except as may be otherwise
specified in any agreement between Borrower and the L/C Issuer) and shall be
paid to Agent for the benefit of the applicable Lenders.
(e) Requests for Letters of Credit. Borrower shall be deemed to request the
incurrence of all documentary Letter of Credit Obligations and Eligible Trade
L/C Obligations by electronically forwarding to Agent at its address as set
forth in the Agreement an application for issuance of a Letter of Credit or
Eligible Trade L/C in the form approved by the L/C Issuer or its processor.
Provided that all other criteria for incurrence of Letter of Credit Obligations
or Eligible Trade L/C Obligations are met, such application shall be
electronically forwarded to the L/C Issuer with Agent's authorization to issue
the requested Letter of Credit or Eligible Trade L/C (i) the same day as the
application is received by Agent, if such application is forwarded to Agent on
or before 12:00 noon (Chicago time) on any Business Day, or (ii) the Business
Day following the Business Day that the application is received by Agent, in all
other cases. All standby Letter of Credit Obligations shall be incurred upon
Borrower's submission of a completed written Application for Standby Letter of
Credit in the form provided by Agent. Each standby Letter of Credit shall be
issued within two Business Days following finalization of mutually satisfactory
letter of credit and drawing certificate provisions.
(f) Obligation Absolute. The obligation of Borrower to reimburse Agent and
Lenders for payments made with respect to any Letter of Credit Obligation or
Eligible Trade L/C Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the
obligations of each Lender to make payments to Agent with respect to Letters of
Credit and Eligible Trade L/Cs shall be unconditional and
B-3
irrevocable. Such obligations of Borrower and Lenders shall be paid strictly in
accordance with the terms hereof under all circumstances including the following
circumstances:
(i) any lack of validity or enforceability of any Letter of Credit or
Eligible Trade L/C or the Agreement or the other Loan Documents or any
other agreement;
(ii) the existence of any claim, set-off, defense or other right which
Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit or Eligible
Trade L/C (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection with
the Agreement, the Letter of Credit or Eligible Trade L/C, the transactions
contemplated herein or therein or any unrelated transaction (including any
underlying transaction between Borrower and the beneficiary for which the
Letter of Credit or Eligible Trade L/C was procured);
(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit or Eligible Trade L/C proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(iv) payment by L/C Issuer under any Letter of Credit or Eligible
Trade L/C against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit or
Eligible Trade L/C;
(v) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(g) Indemnification: Nature of Lender's Duties. In addition to amounts
payable as elsewhere provided in the Agreement, Borrower hereby agrees to pay
and protect, indemnify, and save harmless Agent and each Lender from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including attorneys' fees and allocated costs of internal counsel)
which Agent or any Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit or Eligible Trade L/C, or
(ii) the failure of Agent, any Lender or such L/C Issuer seeking indemnification
to honor a demand for payment under any Letter of Credit Obligation or Eligible
Trade L/C Obligation as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a result
of the gross negligence or willful misconduct of Agent or such Lender (as
finally determined by a court of competent jurisdiction). Nothing herein
contained shall be deemed to limit or expand the scope of any indemnity or
release contained in any agreement between Borrower and the L/C Issuer.
B-4
As between Agent and any Lender and Borrower, Borrower assumes all risks of
the acts and omissions of, or misuse of any Letter of Credit or Eligible Trade
L/C by beneficiaries of any Letter of Credit or Eligible Trade L/C. In
furtherance and not in limitation of the foregoing, to the fullest extent
permitted by law neither Agent nor any Lender shall be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for and issuance
of any Letter of Credit or Eligible Trade L/C, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged, (ii) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or Eligible
Trade L/C or the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any reason; (iii) for
failure of the beneficiary of any Letter of Credit or Eligible Trade L/C to
comply fully with conditions required in order to demand payment under such
Letter of Credit or Eligible Trade L/C or the failure of the L/C Issuer to
require strict compliance with such conditions; provided that, in the case of
any payment by Agent of any Letter of Credit Obligation or Eligible Trade L/C
Obligation, Agent shall be liable to the extent such payment was made solely as
a result of its gross negligence or willful misconduct (as finally determined by
a court of competent jurisdiction) in determining that the demand for payment of
such Letter of Credit Obligation or Eligible Trade L/C Obligation thereof
complies on its face with any applicable requirements for a demand for payment
thereof; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a payment under any Letter of Credit or Eligible Trade
L/C or of the proceeds thereof; (vii) for the credit of the proceeds of any
drawing under any Letter of Credit or Eligible Trade L/C; and (viii) for any
consequences arising from causes beyond the control of Agent. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or any Lender's
rights or powers hereunder or under the Agreement.
Nothing herein contained shall be deemed to waive or release any right or
claim that Borrower may have against the L/C Issuer in its capacity as such.
B-5
SCHEDULE C
INTENTIONALLY OMITTED
---------------------
C-1
SCHEDULE D
INTENTIONALLY OMITTED
---------------------
D-1
SCHEDULE E
CASH MANAGEMENT SYSTEMS
-----------------------
Borrower shall, and shall cause the Credit Parties to, establish and
maintain the Cash Management Systems described below:
(a) Until the Termination Date, each Credit Party which maintains a
depository account (each, a "Credit Party Account") with any bank (each, a
"Relationship Bank") shall instruct each of its Relationship Banks to
transfer all good funds on deposit in such Credit Party Account (less
reserves for returned items and account fees) by wire transfer or automated
clearing house procedures on a daily basis into a bank account in
Borrower's name (the "Concentration Account") at ▇▇▇▇▇▇ Trust and Savings
Bank or another bank mutually agreed upon in advance by Agent and Borrower
(the "Concentration Account Bank").
(b) Borrorwe may maintain, in its name, accounts (each a "Disbursement
Account" and collectively, the "Disbursement Accounts") into which, Agent
shall, from time to time, deposit proceeds of Revolving Credit Advances and
Swing Line Advances made to Borrower pursuant to Section 1.1 of the
Agreement.
(c) On or before the Closing Date, the Concentration Account Bank
shall enter into a new tri-party blocked account agreement or modify its
existing tri-party blocked account agreement with Agent with respect to the
Concentration Account, for the benefit of itself and Lenders, and Borrower,
in form and substance acceptable to Agent, which shall become operative on
the Closing Date. Such blocked account agreement shall provide, among other
things, that (i) all items of payment and funds deposited in the
Concentration Account and proceeds thereof deposited in such account are
held by such bank, as agent or bailee-in-possession for the Agent, on
behalf of Lenders, (ii) the bank executing such agreement has no rights of
setoff or recoupment or any other claim against such account other than for
payment of its service fees and other charges directly related to the
administration of such account and for returned checks or other items of
payment and (iii) from and after the Concentration Account Bank's receipt
of a notice (an "Activation Notice") from Agent (which Activation Notice
may be given by Agent at any time at which an Event of Default has occurred
and is continuing), to immediately forward all amounts received in the
Concentration Account to the Collection Account through daily sweeps from
such Concentration Account into the Collection Account. From and after the
date Agent has delivered an Activation Notice to the Concentration Account
Bank, Borrower shall not, and shall not cause or permit any Guarantor to,
accumulate or maintain cash in any disbursement accounts and payroll
accounts as of any date of determination in excess of checks outstanding
against such accounts as of that date and amounts necessary to meet minimum
balance requirements. Absent the issuance of an Activation Notice, Borrower
shall be entitled to transfer funds from the Concentration Account to any
place it may elect.
(d) So long as no Event of Default has occurred and is continuing, any
Store Guarantor may act to add or replace a Relationship Bank or Credit
Party Account and Borrower may replace any Concentration Account Bank or
Concentration Account; provided, however, (i) in the case of a replacement
Concentration Account Bank, prior to the time of the
E-1
opening of an account with such new Concentration Account Bank, Borrower
and such bank shall have executed and delivered to Agent a tri-party
blocked account agreement, in form and substance satisfactory to Agent.
Borrower shall close any Concentration Account (and establish a replacement
Concentration Account in accordance with the foregoing sentence) promptly
and in any event within thirty (30) days of notice from Agent that the
creditworthiness of any Concentration Account Bank is no longer acceptable
in Agent's reasonable judgment, or as promptly as practicable and in any
event within sixty (60) days of notice from Agent that the operating
performance, funds transfer and/or availability procedures or performance
with respect to the Concentration Account or the Agent's liability under
any tri-party blocked account agreement with such bank is no longer
acceptable in Agent's reasonable judgment.
(e) The Concentration Account shall be a cash collateral account, with
all cash and other items of payment in such accounts securing payment of
the Loans and all other Obligations, and in which Borrower shall have
granted a Lien to Agent, on behalf of itself and Lenders, pursuant to the
Amended and Restated Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with the Agreement and shall be applied
(and allocated) by Agent in accordance with the Agreement.
(g) Each Store Guarantor and its respective officers, employees,
agents, directors or other Persons acting for or in concert with Borrower
(each a "Related Person") agrees to (i) hold in trust for the Agent, for
the benefit of itself and Lenders, all checks, cash and other items of
payment received by such Store Guarantor or any such Related Person, and
(ii) within one (1) Business Day after receipt by such Store Guarantor or
any such Related Person of any checks, cash or other items or payment,
deposit the same into the appropriate Credit Party Account. Each Store
Guarantor acknowledges and agrees that all cash, checks or items of payment
constituting proceeds of Collateral are pledged to Agent for the benefit of
Lenders.
E-2
SCHEDULE F
SCHEDULE OF ADDITIONAL
----------------------
CLOSING DOCUMENTS
-----------------
See Attached
F-1
SCHEDULE G
FINANCIAL STATEMENTS AND PROJECTIONS - REPORTING
------------------------------------------------
Borrower shall deliver or cause to be delivered to Agent or to
Agent and to each Lender which a signatory to the Loan Agreement as of the
Closing Date or which holds 10 % or more of the Revolving Loan Commitments, as
indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within thirty (30) days
after the end of each Fiscal Month, financial information regarding
Ultimate Parent and its Subsidiaries, certified by the Chief Financial
Officer of Ultimate Parent, consisting of consolidated (i) unaudited
balance sheets as of the close of such Fiscal Month and the related
statements of income and cash flow for that portion of the Fiscal Year
ending as of the close of such Fiscal Month; (ii) unaudited statements of
income and cash flows for such Fiscal Month, setting forth in comparative
form the figures for the corresponding period in the prior year and the
figures contained in the most recent annual Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by the
certification of the Chief Financial Officer of Ultimate Parent that (x)
such financial information presents fairly in accordance with GAAP (subject
to normal year-end adjustments) the financial position and results of
operations of First Intermediate Parent and its Subsidiaries, on a
consolidated basis, in each case as at the end of such month and for the
period then ended and (y) any other information presented is true, correct
and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of
Default.
(b) Quarterly Financials. To Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, copies of the Ultimate Parent's
10-Q. Such financial information shall be accompanied by (A) a statement in
reasonable detail showing the calculations used in determining compliance
with the financial covenants set forth on Schedule I and (B) the
Certification of the Chief Financial Officer of Ultimate Parent that (i)
such financial information presents fairly in accordance with GAAP (subject
to normal year-end adjustments) the financial position, results of
operations and statements of cash flows of First Intermediate Parent and
its Subsidiaries, on a consolidated basis, as at the end of such Fiscal
Quarter and for the period then ended, (ii) any other information presented
is true, correct and complete in all material respects and that there was
no Default or Event of Default in existence as of such time or, if a
Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such
Default or Event of Default. In addition, Borrower shall deliver to Agent
and Lenders, within forty-five (45) days after the end of each Fiscal
Quarter, a management discussion and analysis which includes a comparison
to budget for that Fiscal Quarter and a comparison of performance for that
Fiscal Quarter to the corresponding period in the prior year;
(c) Operating Plan. To Agent and Lender, as soon as available, but not
later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan, approved by the
G-1
Board of Directors of Ultimate Parent, for the following Year, which will
include a statement of all of the material assumptions on which such plan
is based, will include monthly balance sheets and a monthly budget for the
following year and will integrate sales, gross profits, operating expenses,
operating profit, cash flow projections and borrowing availability
projections all prepared on the same basis and in similar detail as that on
which operating results are reported (and in the case of cash flow
projections, representing management's good faith estimates of future
financial performance based on historical performance), and including plans
for personnel, Capital Expenditures and Stores;
(d) Annual Audited Financials. To Agent and Lenders, within ninety
(90) days after the end of each Fiscal Year, copies of the Ultimate
Parent's 10-K. Such Financial Statements shall be accompanied by (i) a
statement prepared in reasonable detail by Ultimate Parent's Chief
Financial Officer showing the calculations used in determining compliance
with each of the financial covenants set forth on Schedule I, (ii) a report
from such accounting firm to the effect that, in connection with their
audit examination, nothing has come to their attention to cause them to
believe that a Default or Event of Default has occurred (or specifying
those Defaults and Events of Default that they became aware of), it being
understood that such audit examination extended only to accounting matters
and that no special investigation was made with respect to the existence of
Defaults or Events of Default, (iii) a letter addressed to Agent, on behalf
of itself and Lenders, in form and substance reasonably satisfactory to
Agent and subject to standard qualifications taken by nationally recognized
accounting firms, signed by such accounting firm acknowledging that Agent
and Lenders are entitled to rely upon such accounting firm's certification
of such audited Financial Statements, and (iv) the annual letters to such
accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters;
(e) Management Letters. To Agent and Lenders, within (10) Business
Days after receipt of by any Credit Party, copies of all management
letters, exception reports or similar letters or reports received by such
Credit Party from its independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as practicable, and
in any event within five (5) Business Days after an executive officer of
Borrower has actual knowledge of the existence of any Default, Event of
Default or other event which has had a Material Adverse Effect, telephonic
or telecopied notice specifying the nature of such Default or Event of
Default or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on
the next Business Day;
(g) SEC Filings and Press Releases. To Agent, promptly upon their
becoming available, copies of: (i) all Statements, reports, notices and
proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any Credit Party
with any securities exchange or with the Securities and Exchange Commission
or any governmental or private regulatory authority, and (iii) all press
releases and other statements made available by any Credit Party to the
public concerning material adverse changes or developments in the business
of any such Person.
G-2
(h) Senior Notes Notice. To Agent and Lenders, as soon as practicable,
copies of all material written notices given or received by any Credit
Party with respect to the Senior Notes, and, within two (2) Business Days
after any executive officer of Ultimate Parent or Borrower obtains
knowledge of any matured or unmatured event of default with respect to the
Senior Notes, notice of such event of default;
(i) Litigation. To Agent in writing, promptly upon any executive
officer of Ultimate Parent or Borrower learning thereof, notice of any
Litigation commenced or threatened against any Credit Party that (i) seeks
damages in excess of $500,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with any Plan and
seeks remedies in excess of $500,000, (iv) alleges criminal misconduct by
any Credit Party, or (v) alleges the violation of any law regarding, or
seeks remedies in excess of $500,000 in connection with, any Environmental
Liabilities and Costs,
(j) Insurance Notice. To Agent, disclosure of losses or casualties
required by Section 5.4 of the Agreement.
(k) Default Notices. To Agent, copies of (i) any and all default
notices received under or with respect to any leased location or public
warehouse where Collateral is located (other than Leased Stores), and (ii)
such other notices or documents as Agent may request in its reasonable
discretion; and
(l) Other Documents. To Agent and Lenders, such other financial and
other information respecting any Credit Party's business or financial
condition as Agent or any Lender shall, from time to time, reasonably
request.
G-3
SCHEDULE H
COLLATERAL REPORTS
------------------
(a) To Agent (and to any Lender requesting a copy of the same in writing
after the Closing Date) at the times set forth below or more frequently if an
Event of Default shall have occurred and be continuing, each of the following:
(i) monthly (or more frequently if Borrower so elects or if an Event
of Default has occurred and is continuing and Agent requests the same), on
the fifteenth (15th) day of each month (or the next Business Day if such
day is not a Business Day) as of the last day of the prior month end, a
Borrowing Base Certificate with respect to Borrower; and
(ii) monthly press releases regarding consolidated sales.
(b) To Agent, at request of Agent or following an Event of Default, a
reconciliation of the Accounts trial balance and month-end Inventory reports of
Borrower to Borrower's general ledger and to such monthly Financial Statements
delivered pursuant to such Schedule G, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(c) To Agent, at the time of delivery of each of the quarterly Financial
Statements delivered pursuant to Schedule G, a list of any applications for the
registration of any Patent, Trademark or Copyright with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency which any Credit Party thereof has flied in the prior Fiscal Quarter;
(d) Borrower, at its own expense, shall deliver to Agent, for Agent's
inspection, the results of each physical verification, if any, which Borrower or
any of its Subsidiaries may in their discretion have made, or caused any other
Person to have made on their behalf, of all or any portion of their Inventory
(and, if an Event of Default shall have occurred and be continuing, Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);
(e) Borrower, at its own expense shall deliver to Agent and Lenders, if
requested by Agent or Requisite Lenders, not more frequently than once each
Fiscal Year, a review of Inventory owned by Borrower and held by Borrower and
each Store Guarantor, prepared by Universal Asset-Based Services, Inc. or
another appraiser acceptable to Agent, and Borrower, at its own expense, shall
deliver to Agent such appraisals of its assets as Agent may request at any time
after the occurrence and during the continuance of an Event of Default, such
appraisals to be conducted by an appraiser, and in form and substance,
satisfactory to Agent; and
(f) Borrower, at its own expense, shall deliver to Agent within 30 days of
the last day of each Fiscal Month of February or March of each year (and at such
other times as requested by Agent if an Event of Default has occurred and is
continuing) an appraisal of
H-1
Borrower's assets as of the last day of such Fiscal Month (or such other time as
requested by the Agent), provided, that (i) such appraisals shall be conducted
by an appraiser selected by Agent and consented to by Borrower (which consent
cannot be unreasonably withheld by Borrower), and shall be in form and
substance, reasonably satisfactory to Agent; (ii) Borrower may, within 30 days
following the receipt by Borrower of such appraisal, dispute the assumptions set
forth therein by delivery of a written notice to Agent ("Notice of Dispute");
(iii) Agent shall use good faith efforts to resolve such dispute with Borrower
within 15 days following the receipt by Agent of the Notice of Dispute, and (iv)
until a resolution has been reached with respect to the assumptions in question,
Agent, in its sole discretion, may implement Reserves to reflect the
going-out-of-business appraisal then most recently delivered to Agent.
Notwithstanding the foregoing, if an Event of Default has occurred or is
continuing, Agent may select the appraiser without the consent of Borrower and
items (ii)-(iv) above shall not be applicable.
H-2
SCHEDULE I
FINANCIAL COVENANTS
-------------------
The Credit Parties shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Maximum Capital Expenditures. The Credit Parties on a consolidated
basis shall not make Capital Expenditures during the following periods that
exceed in the aggregate the amounts set forth opposite each of such
periods:
Maximum Capital
Period Expenditures per Period
Fiscal Year ending in January of 2001 $44,000,000
Fiscal Year ending in January of 2002 and each $47,000,000
Fiscal Year thereafter
provided, however, in the event the Credit Parties on a consolidated basis
do not expend the entire amount of Maximum Capital Expenditures Per Period
in any Fiscal Year, the Credit Parties may carry forward to the immediately
succeeding Fiscal Year any unutilized portion, but not more than
$3,000,000. All Capital Expenditures in any Fiscal Year shall first be
applied against the then Current Maximum Capital Expenditure limit and then
to the carry-forward amount."
(b) Minimum Fixed Charges Coverage Ratio. Ultimate Parent shall have
on a consolidated basis at the end of each Fiscal Quarter for the four
Fiscal Quarters then ended, commencing with the Fiscal Quarter ending in
April, 2001, a Fixed Charges Coverage Ratio of not less than 1.0 to 1.0.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a material change in the calculation of
the financial covenants, standards or terms used in the Agreement or any other
Loan Document, then the Credit Parties, Agent and Lenders agree to enter into
negotiations in order to amend such provisions of the Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Ultimate Parent and its Subsidiaries' financial
condition shall be the same after such Accounting Changes as if such Accounting
Changes had not been made; provided, however, that the agreement of Requisite
Lenders to any required amendments of such provisions shall be sufficient to
bind all Lenders. "Accounting Changes" mean (a)
I-1
changes in accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or successor thereto
or any agency with similar functions), (b) changes in accounting principles
concurred in by Borrower's certified public accountants; (c) purchase accounting
adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (d) the reversal (but not the use) of any reserves
established as a result of purchase accounting adjustments. If Agent, the Credit
Parties and Requisite Lenders agree upon the required amendments, then after
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within thirty (30) days
following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change.
I-2
SCHEDULE J
NOTICE ADDRESSES
----------------
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Wilsons Leather Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower, at
Wilsons Leather Holdings Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
J-1
With copies to:
Faegre & ▇▇▇▇▇▇ LLP
2200 ▇▇▇▇▇ Fargo Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
J-2
EXHIBIT 1.1(a)(i)
FORM OF
NOTICE OF REVOLVING CREDIT ADVANCE
----------, ------
General Electric Capital Corporation,
for itself, as Lender, Term Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: Revolving Credit Advance
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"), refers to the
Third Amended and Restated Credit Agreement, dated as of June 19, 2001 (the
"Credit Agreement", the terms defined therein being used herein as therein
defined), by and among Borrower, General Electric Capital Corporation, for
itself, as Lender, Term Lender, Swing Line Lender and as Agent for Lenders, and
Lenders, and hereby gives you notice, irrevocably, pursuant to Section 1.1 (a)
of the Credit Agreement, that the undersigned hereby requests a Revolving Credit
Advance under the Credit Agreement, and in that connection sets forth below the
information relating to such Revolving Credit Advance as required by Section
1.1(a) of the Credit Agreement:
I. New Revolving Credit Advances
(i) The date of the requested Revolving Credit Advance is ________,
_____.
(ii) The amount of the requested Revolving Credit Advance is
$________.
(iii) The requested Revolving Credit Advance is [an Index Rate Loan]
[a LIBOR Loan with a LIBOR Period of ____ days/months].
The undersigned acknowledges that unless the undersigned shall also
have complied with the requirements of Section 1.5(e) of the Credit
Agreement, the requested Revolving Credit Advance shall bear interest
by reference to the Index Rate.
II. The requested Revolving Credit Advance is to be sent to:
[Name of Bank]
[City of Bank]
Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
The undersigned hereby certifies that all of the conditions contained in
Section 2.2 of the Credit Agreement have been satisfied on the date hereof, and
will continue to be satisfied before and after giving effect to the Revolving
Credit Advance and to the application of the proceeds therefrom.
Very truly yours,
WILSONS LEATHER HOLDINGS INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT 1.1(a)(ii)
FORM OF
REVOLVING NOTE
--------------
$ June 19, 2001
--------------------------
FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a
Minnesota corporation (hereinafter referred to as "Borrower"), hereby PROMISES
TO PAY to the order of at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation, as agent, (in such capacity, "Agent"), at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as Agent may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the amount of
__________________________________ DOLLARS ($ ), or, if less, the aggregate
unpaid principal amount of all advances made to Borrower by Agent pursuant to
Section 1.1(a) of the Credit Agreement (as hereinafter defined) and represented
by this Note together with interest on the unpaid principal amount of this
Revolving Credit Note outstanding from time to time from the date hereof at the
rate or rates provided in the Credit Agreement.
This Revolving Credit Note is issued pursuant to that certain Third Amended
and Restated Credit Agreement, dated as of June 19, 2001 among Borrower, Agent,
and the Lenders named therein (as the same from time to time may be amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), and is
entitled to the benefit and security of the Loan Documents provided for therein,
to which reference is hereby made for a statement of all of the terms and
conditions under which the Revolving Credit Loan evidenced hereby is made and is
to be repaid and for a statement of Agent's and Lenders' remedies upon the
occurrence and during the continuance of an Event of Default. All capitalized
terms, unless otherwise defined herein, shall have the meanings ascribed to them
in Schedule A to the Credit Agreement.
The principal amount of the indebtedness evidenced hereby shall be payable
on May 24, 2004 and in the amounts and on the dates specified in the Credit
Agreement. Interest thereon shall be paid until such principal amount is paid in
full at such interest rates and at such times as are specified in the Credit
Agreement.
To the extent that this Revolving Credit Note evidences Obligations
outstanding under the Second Amended and Restated Credit Agreement dated as of
October 31, 2000, this Revolving Credit Note does not evidence a repayment and
refunding or novation of such Obligations, and such Obligations are in all
respects continuing.
Upon and after the occurrence of an Event of Default, this Revolving Credit
Note may, as provided in the Credit Agreement, and without demand, notice or
legal process of any kind, be declared, and, upon such declaration, immediately
shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower to the fullest extent permitted by law.
This Revolving Credit Note shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of Illinois, without regard
to conflict of law provisions.
WILSONS LEATHER HOLDINGS INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT 1.1(b)(i)
to
CREDIT AGREEMENT
----------------
FORM OF TERM B NOTE
$25,000,000 June 19, 2001
FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a
Minnesota corporation (hereinafter referred to as "Borrower"), hereby PROMISES
TO PAY to the order of at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation, as agent, (in such capacity, "Agent"), at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as Agent may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the amount of TWENTY FIVE MILLION
DOLLARS ($25,000,000).
This Term B Note is issued pursuant to that certain Third Amended and
Restated Credit Agreement, dated as of June 19, 2001 among Borrower, Agent, and
the Lenders named therein (as the same from time to time may be amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), and is
entitled to the benefit and security of the Loan Documents provided for therein,
to which reference is hereby made for a statement of all of the terms and
conditions under which the Term Loan B evidenced hereby is made and is to be
repaid and for a statement of Agent's and Lenders' remedies upon the occurrence
and during the continuance of an Event of Default. All capitalized terms, unless
otherwise defined herein, shall have the meanings ascribed to them in Schedule A
to the Credit Agreement. The principal balance of the Term Loan B, the rates of
interest applicable thereto and the date and amount of each payment made on
account of the principal thereof, shall be recorded by Agent on its books;
provided that the failure of Agent to make any such recordation shall not affect
the obligations of Borrower to make a payment when due of any amount owing under
the Credit Agreement or this Term B Note.
The principal amount of the indebtedness evidenced hereby shall be payable
on May 24, 2004 and in the amounts and on the dates specified in the Credit
Agreement. Interest thereon shall be paid until such principal amount is paid in
full at such interest rates and at such times as are specified in the Credit
Agreement.
Upon and after the occurrence of an Event of Default, this Term B Note may,
as provided in the Credit Agreement, and without demand, notice or legal process
of any kind, be declared, and, upon such declaration, immediately shall become,
due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower to the fullest extent permitted by law.
This Term B Note shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Illinois, without regard to
conflict of law provisions.
WILSONS LEATHER HOLDINGS INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT 1.1(c)(i)
FORM OF
NOTICE OF SWING LINE ADVANCE
----------------------------
--------, -----
General Electric Capital Corporation,
for itself as Lender, Term Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: Swing Line Advance
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"), refers to the
Third Amended and Restated Credit Agreement dated as of June 19, 2001 (the
"Credit Agreement", the terms defined therein being used herein as therein
defined), by and among Borrower, General Electric Capital Corporation, for
itself, as Lender, Term Lender, Swing Line Lender and as Agent for Lenders, and
Lenders, and hereby gives you notice, irrevocably, pursuant to Section 1.1(c) of
the Credit Agreement, that the undersigned hereby requests a Swing Line Advance
under the Credit Agreement, and in that connection sets forth below the
information relating to such Swing Line Advance as required by Section 1.1(c) of
the Credit Agreement:
I. New Swing Line Advances
(i) The date of the requested Swing Line Advance is ________, ____.
(ii) The amount of the requested Swing Line Advance is $_________.
II. The requested Swing Line Advance is to be sent to:
[Name of Bank]
[City of Bank] Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
The undersigned hereby certifies that all of the conditions contained in
Section 2.2 of the Credit Agreement have been satisfied on the date hereof, and
will continue to be satisfied before and after giving effect to the Swing Line
Advance and to the application of the proceeds therefrom.
Very truly yours,
WILSONS LEATHER HOLDINGS INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT 1.1(c)(ii)
FORM OF
SWING LINE NOTE
---------------
$10,000,000 June 19, 2001
FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a
Minnesota corporation (hereinafter referred to as "Borrower"), hereby PROMISES
TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, as swing line lender, (in such capacity, "Swing Line Lender"), at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other
place as Swing Line Lender may designate from time to time in writing, in lawful
money of the United States of America and in immediately available funds, the
amount of TEN MILLION DOLLARS ($10,000,000), or, if less, the aggregate unpaid
principal amount (with any refunding of such amounts as provided in the Credit
Agreement being deemed a repayment) of all advances made to Borrower by Agent
pursuant to Section 1.1(c) of the Credit Agreement (as hereinafter defined)
together with interest on the unpaid principal amount of this Swing Line Note
outstanding from time to time from the date hereof at the rate or rates provided
in the Credit Agreement
This Swing Line Note is issued pursuant to that certain Third Amended and
Restated Credit Agreement dated as of June 19, 2001 among Borrower, Agent, and
the Lenders named therein (as the same from time to time may be amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), and is
entitled to the benefit and security of the Loan Documents provided for therein,
to which reference is hereby made for a statement of all of the terms and
conditions under which the Swing Line Loan evidenced hereby is made and is to be
repaid and for a statement of Agent's and Lenders' remedies upon the occurrence
and during the continuance of an Event of Default. All capitalized terms, unless
otherwise defined herein, shall have the meanings ascribed to them in Schedule A
to the Credit Agreement.
The principal amount of the indebtedness evidenced hereby shall be payable
on May 24, 2004 and in the amounts and on the dates specified in the Credit
Agreement. Interest thereon shall be paid until such principal amount is paid in
full at such interest rates and at such times as are specified in the Credit
Agreement.
To extent that this Swing Line Note evidences Obligations outstanding under
the Second Amended and Restated Credit Agreement dated as of October 31, 2000,
this Swing Line Note does not evidence a repayment and refunding or novation of
such Obligations, and such Obligations are in all respects continuing.
Upon and after the occurrence of an Event of Default, this Swing Line Note
may, as provided in the Credit Agreement, and without demand, notice or legal
process of any kind, be declared, and, upon such declaration, immediately shall
become, due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower to the fullest extent permitted by law.
This Swing Line Note shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Illinois, without regard to
conflict of law provisions.
WILSONS LEATHER HOLDINGS INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT 1.5(e)
FORM OF NOTICE OF
CONVERSION/CONTINUATION
-----------------------
------------, -----
General Electric Capital Corporation,
for itself, as Lender, Term Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: Continuation/Conversion Notice
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"), refers to the
Third Amended and Restated Credit Agreement, dated as of June 19, 2001 (the
"Credit Agreement", the terms defined therein being used herein as therein
defined), by and among Borrower, General Electric Capital Corporation, for
itself, as Lender, Swing Line Lender and as Agent for Lenders, and Lenders, and
hereby gives you notice, irrevocably, pursuant to Section 1.5(e) of the Credit
Agreement.
Subject to the terms and conditions of the Credit Agreement and all other
Loan Documents, please:
_____ convert for the benefit of Borrower on ________, _____,
$_____________ of the outstanding principal amount of the
Revolving Loan, currently a [Index][LIBOR] Rate Loan, into a
[Index](LIBOR) Rate Loan [having an Interest Period of ______
days/month(s)];
_____ continue for the benefit of Borrower on ___________, ______,
$__________ of the outstanding principal amount of the
Revolving Loan, currently a LIBOR Rate Loan, as a LIBOR Rate
Loan having an Interest Period of _____ days/month(s);
The undersigned hereby certifies that all of the statements contained in
Section 2.2 of the Credit Agreement have been satisfied on the date hereof, and
will continue to be satisfied before and after giving effect to
conversion/continuation described herein and to the application of the proceeds
therefrom.
IN WITNESS WHEREOF, this Conversion/Continuation Notice has been duly
executed as of _____________, _______.
WILSONS LEATHER HOLDINGS INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Exhibit 4.1(b)
FORM OF
WILSONS LEATHER HOLDINGS INC.
BORROWING BASE CERTIFICATE
--------------------------
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1. Eligible Inventory - Apparel $____________
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2. Borrowing Base - Apparel (line 1 multiplied by .60, .65, .70, depending on season) $____________
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3. Eligible Inventory - Luggage $____________
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4. Borrowing Base - Luggage (line 3 multiplied by .60) $____________
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5. Total Borrowing Base (line 2 + line 4) $____________
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---------------------------------------------------------------------------------------------------------------------------------
6. Seasonal Over-Advances , if applicable $____________
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7. Total Borrowing Base with applicable Seasonal Over-Advances (line 5 + line 6) $____________
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8. Lesser of Total Borrowing Base with applicable Seasonal Over-Advances or $190,000,000 $____________
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9. Revolving Credit Advances Outstanding $____________
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10. Letters of Credit outstanding $____________
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11. 30%, 35%, or 40% of Eligible Trade L/Cs outstanding (depending on season) $____________
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12. Total outstandings (line 9 + line 10 + line 11) $____________
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---------------------------------------------------------------------------------------------------------------------------------
13. Borrowing Availability (line 8 minus line 12) $____________
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14. Term Loan B outstanding $____________
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15.a Eligible Inventory - Apparel GOB (line 1 multiplied by applicable GOB Percentage) $____________
---------------------------------------------------------------------------------------------------------------------------------
15.b. Eligible Inventory - Luggage GOB (line 3 multiplied by applicable GOB Percentage (80.8% prior $____________
to delivery of next appraisals in February or March, 2002 pursuant to subsection (f) of
Schedule H to Credit Agreement))
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15.c. GOB Sub-total (line 15a + line 15b) $____________
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---------------------------------------------------------------------------------------------------------------------------------
16. GOB Cap (line 15c multiplied by 105% in all months except for 111% in August 2001) $____________
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17. Maximum Advances Permitted Under Revolver (lesser of line 16 or the sum of lines 14 and 12) $ ____________
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Wilsons Leather Holdings, Inc. hereby certifies that the foregoing
accurately reflects its Borrowing Availability as of the date hereof in
accordance with the Third Amended and Restated Credit Agreement dated as of June
19, 2001 among it, General Electric Capital Corporation and the other parties
thereto.
Date: WILSONS LEATHER HOLDINGS INC.
----------------------------
By:
-------------------------------------
Title:
----------------------------------
EXHIBIT 9.1(a)
ASSIGNMENT AGREEMENT
--------------------
This Assignment Agreement (this "Agreement") is made as of ___________ __,
____ by and between __________________________________ ("Assignor Lender") and
________________________ ("Assignee Lender") and acknowledged and consented to
by GENERAL ELECTRIC CAPITAL CORPORATION, as agent ("Agent"). All capitalized
terms used in this Agreement and not otherwise defined herein will have the
respective meanings set forth in the Credit Agreement as hereinafter defined.
RECITALS:
---------
WHEREAS, Wilsons Leather Holdings Inc., a Minnesota corporation, (the
"Borrower"), the Credit Parties, Agent, Assignor Lender and other Persons
signatory thereto as Lenders have entered into that certain Third Amended and
Restated Credit Agreement dated as of June 19, 2001 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
pursuant to which Assignor Lender has agreed to make certain Loans to, and incur
certain Letter of Credit Obligations and Eligible Trade L/C Obligations for
Borrower;
WHEREAS, Assignor Lender desires to assign to Assignee Lender [all/a
portion] of its interest in the Loans (as described below), the Letter of Credit
Obligations and Eligible Trade L/C Obligations and the Collateral and to
delegate to Assignee Lender [all/a portion] of its Commitments and other duties
with respect to such Loans, Letter of Credit Obligations, Eligible Trade L/C
Obligations and Collateral;
WHEREAS, Assignee Lender desires to become a Lender under the Credit
Agreement and to accept such assignment and delegation from Assignor Lender; and
WHEREAS, Assignee Lender desires to appoint Agent to serve as agent for
Assignee Lender under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions, and covenants herein contained, Assignor Lender and Assignee Lender
agree as follows:
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 Assignment. Assignor Lender hereby transfers and assigns to Assignee
Lender, without recourse and without representations or warranties of any kind
(except as set forth in Section 3.2), [all/such percentage] of Assignor Lender's
right, title, and interest in [the Revolving Loan ], [the Term B Loan], [the
Loans], [Letter of Credit Obligations], [Eligible Trade
L/C Obligations], Loan Documents and Collateral as will result in Assignee
Lender having as of the Effective Date (as hereinafter defined) a Pro Rata Share
thereof, as follows:
Assignee Lender's Loans Principal Amount Pro Rata Share
----------------------- ---------------- --------------
Term Loan B $____________ ____%
Revolving Loan $____________ ____%
1.2 Delegation. Assignor Lender hereby irrevocably assigns and delegates to
Assignee Lender [all/a portion] of its Commitments and its other duties and
obligations as a Lender under the Loan Documents equivalent to [100%/___%] of
Assignor Lender's Commitment (such percentage representing a commitment of
$________).
1.3 Acceptance by Assignee Lender. By its execution of this Agreement,
Assignee Lender irrevocably purchases, assumes and accepts such assignment and
delegation and agrees to be a Lender with respect to the delegated interest
under the Loan Documents and to be bound by the terms and conditions thereof. By
its execution of this Agreement, Assignor Lender agrees, to the extent provided
herein, to relinquish its rights and be released from its obligations and duties
under the Credit Agreement.
1.4 Effective Date. Such assignment and delegation by Assignor Lender and
acceptance by Assignee Lender will be effective and Assignee Lender will become
a Lender under the Loan Documents as of [the date of this Agreement] ("Effective
Date") and upon payment of the Assigned Amount and the Assignment Fee (as each
term is defined below). [Interest and Fees accrued prior to the Effective Date
are for the account of Assignor Lender, and Interest and Fees accrued from and
after the Effective Date are for the account of Assignee Lender.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 Payment of the Assigned Amount. Assignee Lender will pay to Assignor
Lender, in immediately available funds, not later than 12:00 noon (New York
time) on the Effective Date, an amount equal to its Pro Rata Share of the then
outstanding principal amount of the Loans as set forth above in Section 1.1
[together with accrued interest, fees and other amounts as set forth on Schedule
2.1] (the "Assigned Amount").
2.2 Payment of Assignment Fee. [Assignor Lender and/or Assignee Lender]
will pay to Agent, for its own account in immediately available funds, not later
than 12:00 noon (New York time) on the Effective Date, the assignment fee in the
amount of $3,500 (the "Assignment Fee") as required pursuant to Section 9.1(a)
of the Credit Agreement.
2.3 Execution and Delivery of Notes. Following payment of the Assigned
Amount and the Assignment Fee, Assignor Lender will deliver to Agent the Notes
previously delivered to Assignor Lender for redelivery to Borrower and Agent
will obtain from Borrower for delivery to [Assignor Lender and] Assignee Lender,
new executed Notes evidencing Assignee Lender's [and Assignor Lender's
respective] Pro Rata Share[s] in the Loans after giving effect to the assignment
described in Section 1. Each new Note will be issued in the
aggregate maximum principal amount of the [applicable] Commitments [of the
Lender to whom such Note is issued] OR [the Assignee Lender].
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Assignee Lender's Representations, Warranties and Covenants. Assignee
Lender hereby represents, warrants, and covenants the following to Assignor
Lender and Agent:
(a)This Agreement is a legal, valid, and binding agreement of Assignee
Lender, enforceable according to its terms;
(b) The execution and performance by Assignee Lender of its duties and
obligations under this Agreement and the Loan Documents will not require
any registration with, notice to, or consent or approval by any
Governmental Authority;
(c) Assignee Lender is familiar with transactions of the kind and
scope reflected in the Loan Documents and in this Agreement;
(d) Assignee Lender has made its own independent investigation and
appraisal of the financial condition and affairs of each Credit Party, has
conducted its own evaluation of the Loans and Letter of Credit Obligations,
the Loan Documents and each Credit Party's creditworthiness, has made its
decision to become a Lender to Borrower under the Credit Agreement
independently and without reliance upon Assignor Lender or Agent, and will
continue to do so;
(e) Assignee Lender is entering into this Agreement in the ordinary
course of its business, and is acquiring its interest in the Loans, the
Letter of Credit Obligations and the Eligible Trade L/C Obligations for its
own account and not with a view to or for sale in connection with any
subsequent distribution; provided, however, that at all times the
distribution of Assignee Lender's property shall, subject to the terms of
the Credit Agreement, be and remain within its control;
(f) No future assignment or participation granted by Assignee Lender
pursuant to Section 9.1 of the Credit Agreement will require Assignor
Lender, Agent, or Borrower to file any registration statement with the
Securities and Exchange Commission or to apply to qualify under the blue
sky laws of any state;
(g) Assignee Lender has no loans to, written or oral agreements with,
or equity or other ownership interest in any Credit Party;
(h) Assignee Lender will not enter into any written or oral agreement
with, or acquire any equity or other ownership interest in, any Credit
Party without the prior written consent of Agent; and
(i) As of the Effective Date, Assignee Lender (i) is entitled to
receive payments of principal and interest in respect of the Obligations
without deduction for or on
account of any taxes imposed by the United States of America or any
political subdivision thereof, (ii) is not subject to capital adequacy or
similar requirements under Section 1.16(a) of the Credit Agreement, (iii)
does not require the payment of any increased costs under Section 1.16(b)
of the Credit Agreement, (iv) is not unable to fund LIBOR Loans under
Section 1.16(c) of the Credit Agreement, and (v) is not subject to any
withholding taxes in accordance with Section 1.16(d) and Assignee Lender
will indemnify Agent from and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, or expenses that
result from Assignee Lender's failure to fulfill its obligations under the
terms of Section 1.15(c) of the Credit Agreement or from any other
inaccuracy in the foregoing.
3.2 Assignor Lender's Representations, Warranties and Covenants. Assignor
Lender hereby represents, warrants and covenants the following to Assignee
Lender:
(a) Assignor Lender is the legal and beneficial owner of the Assigned
Amount;
(b) This Agreement is a legal, valid and binding agreement of Assignor
Lender, enforceable according to its terms;
(c) The execution and performance by Assignor Lender of its duties and
obligations under this Agreement and the Loan Documents will not require
any registration with, notice to or consent or approval by any Governmental
Authority;
(d) Assignor Lender has full power and authority, and has taken all
action necessary to execute and deliver this Agreement and to fulfill the
obligations hereunder and to consummate the transactions contemplated
hereby;
(e) Assignor Lender is the legal and beneficial owner of the interests
being assigned hereby, free and clear of any adverse claim, lien,
encumbrance, security interest, restriction on transfer, purchase option,
call or similar right of a third party; and
(f) This Assignment by Assignor Lender to Assignee Lender complies, in
all material respects, with the terms of the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in Section 3.2) nor Agent makes
any representations or warranties of any kind, nor assumes any responsibility or
liability whatsoever, with regard to (a) the Loan Documents or any other
document or instrument furnished pursuant thereto or the Loans, Letter of Credit
Obligations or other Obligations, (b) the creation, validity, genuineness,
enforceability, sufficiency, value or collectibility of any of them, (c) the
amount, value or existence of the Collateral, (d) the perfection or priority of
any Lien upon the Collateral, or (e) the financial condition of any Credit Party
or other obligor or the performance or observance by any Credit Party of its
obligations under any of the Loan Documents. Neither Assignor Lender nor Agent
has or will have any duty, either initially or on a continuing basis, to make
any investigation, evaluation, appraisal of, or any responsibility or liability
with respect to
the accuracy or completeness of, any information provided to Assignee Lender
which has been provided to Assignor Lender or Agent by any Credit Party. Nothing
in this Agreement or in the Loan Documents shall impose upon the Assignor Lender
or Agent any fiduciary relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in the exercise
of any power, right, or privilege hereunder or under any Loan Document will
impair such power, right, or privilege or be construed to be a waiver of any
default or acquiescence therein. No single or partial exercise of any such
power, right, or privilege will preclude further exercise thereof or of any
other right, power, or privilege. All rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.
6. NOTICES
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given will be in writing and addressed
to the respective party as set forth below its signature hereunder, or to such
other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any provision of this
Agreement will be effective without the written concurrence of Assignor Lender,
Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law. In the event any
provision of this Agreement is or is held to be invalid, illegal, or
unenforceable under applicable law, such provision will be ineffective only to
the extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement. In addition, in the event any provision of or obligation under this
Agreement is or is held to be invalid, illegal, or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations in any other jurisdictions will not in any way be
affected or impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included for
convenience of reference only, do not constitute a part of this Agreement for
any other purpose, and have no substantive effect.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE.
12. COUNTERPARTS
This Agreement and any amendments, waivers, consents, or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, will be
deemed an original and all of which shall together constitute one and the same
instrument.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
ASSIGNEE LENDER: ASSIGNOR LENDER:
By: By:
------------------------------- --------------------------------------
Title: Title:
---------------------------- -----------------------------------
Notice Address: Notice Address:
---------------------------------- -----------------------------------------
---------------------------------- -----------------------------------------
---------------------------------- -----------------------------------------
ACKNOWLEDGED AND CONSENTED TO:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
-------------------------------
Title:
----------------------------
ACKNOWLEDGED AND CONSENTED TO:
WILSONS LEATHER HOLDINGS INC.
By:
-------------------------------
Title:
----------------------------
SCHEDULE 2.1
Assignor Lender's Loans
Principal Amount
----------------
Revolving Loan $
-----------------
Term Loan B $
-----------------
Subtotal $
=================
Accrued Interest $
-----------------
Unused Line Fee $
-----------------
Other + or - $
-----------------
Total $
=================
All determined as of the Effective Date.