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Exhibit 4.17
EXECUTION COPY
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U.S. $750,000,000
POST-PETITION CREDIT AGREEMENT
BY AND AMONG
SERVICE MERCHANDISE COMPANY, INC.
A DEBTOR AND DEBTOR-IN-POSSESSION
AS BORROWER
THE LENDERS PARTY HERETO
CITICORP USA, INC.
AS COLLATERAL AGENT AND ADMINISTRATIVE AGENT
AND
BANKBOSTON, N.A.
AS DOCUMENTATION AGENT AND COLLATERAL MONITORING AGENT
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC
AS ARRANGER AND BOOK MANAGER
DATED: AS OF MARCH 29, 1999
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS
1.1 Defined Terms..................................................................................2
1.2 Other Definitional Provisions.................................................................42
SECTION 2. AMOUNTS AND TERMS OF TERM LOANS
2.1 Term Loans....................................................................................42
2.2 Repayment of Term Loans; Amortization.........................................................42
SECTION 3. AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS AND THE INTERIM FACILITY
3.1 Revolving Credit Commitments..................................................................43
3.2 Procedure for Revolving Credit Borrowing......................................................43
3.3 Commitment Fee................................................................................44
3.4 Termination or Reduction of Commitments.......................................................44
3.5 Repayment of Revolving Loans..................................................................44
3.6 L/C Commitment................................................................................44
3.7 Procedure for Issuance of Letters of Credit...................................................46
3.8 Letter of Credit Fees, Commissions and Other Charges..........................................46
3.9 L/C Participations............................................................................47
3.10 Letter of Credit Reimbursement Obligations....................................................48
3.11 Obligations Absolute..........................................................................48
3.12 Letter of Credit Payments.....................................................................49
3.13 Letter of Credit Applications.................................................................49
3.14 Swing Line Commitment.........................................................................49
3.15 Procedure for Swing Line Borrowing............................................................50
3.16 Refunding of Swing Line Loans; Participations in Swing Line Loans.............................50
3.17 Other Fees....................................................................................52
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
4.1 Optional and Mandatory Prepayments............................................................52
4.2 Conversion and Continuation Options...........................................................53
4.3 Minimum Amounts and Maximum Number of Tranches................................................54
4.4 Interest Rates and Payment Dates..............................................................54
4.5 Computation of Interest and Fees..............................................................55
4.6 Inability to Determine Interest Rate..........................................................55
4.7 Pro Rata Treatment and Payments...............................................................56
4.8 Illegality....................................................................................57
4.9 Requirements of Law...........................................................................57
4.10 Indemnification for Taxes.....................................................................58
4.11 Indemnity.....................................................................................60
4.12 Change of Lending Office......................................................................61
4.13 Evidence of Debt..............................................................................61
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 Financial Condition...........................................................................62
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5.2 No Change.....................................................................................63
5.3 Existence; Compliance with Law................................................................63
5.4 Power; Authorization; Enforceable Obligations.................................................63
5.5 No Legal Bar..................................................................................64
5.6 No Material Litigation........................................................................64
5.7 No Default....................................................................................64
5.8 No Burdensome Restrictions....................................................................64
5.9 Taxes.........................................................................................64
5.10 Federal Regulations...........................................................................65
5.11 ERISA.........................................................................................65
5.12 Investment Company Act; Other Regulations.....................................................65
5.13 Subsidiaries..................................................................................66
5.14 Environmental Matters.........................................................................66
5.15 The Security Documents........................................................................67
5.16 Ownership of Property; Liens..................................................................67
5.17 Intellectual Property.........................................................................67
5.18 Pledged Stock.................................................................................68
5.19 Real Estate Matters...........................................................................68
5.20 [Reserved]....................................................................................68
5.21 Purpose of Loans; Use of Proceeds.............................................................68
5.22 Accuracy of Information.......................................................................68
5.23 Depositary Accounts...........................................................................68
5.24 [Reserved]....................................................................................68
5.25 Y2K Compliance................................................................................68
5.26 Priority......................................................................................69
SECTION 6. CONDITIONS
6.1 Conditions to Effectiveness...................................................................70
(a) Bankruptcy Court Order.................................................................70
(b) Execution of Loan Documents............................................................70
(c) Closing Certificate....................................................................70
(d) Corporate Proceedings of the Borrower..................................................70
(e) Borrower Incumbency Certificate........................................................70
(f) Corporate Proceedings of Subsidiaries..................................................70
(g) Subsidiary Incumbency Certificates.....................................................71
(h) Fees...................................................................................71
(i) Legal Opinions.........................................................................71
(j) Lien Searches..........................................................................71
(k) No Material Adverse Change.............................................................71
(l) No Litigation..........................................................................71
(m) Consents and Approvals.................................................................72
(n) Insurance and Bonding..................................................................72
(o) Flood Insurance........................................................................72
(p) Budget.................................................................................72
(q) Additional Matters.....................................................................72
6.2 Conditions to Each Extension of Credit........................................................72
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(a) Representations and Warranties.........................................................72
(b) No Default.............................................................................73
(c) Borrowing Base.........................................................................73
(d) No Legal Impediment....................................................................73
(e) Borrowing Base Certificate.............................................................73
(f) Interim Reserve Amount.................................................................73
(g) Bankruptcy Court Approval..............................................................73
SECTION 7. AFFIRMATIVE COVENANTS
7.1 Financial Statements..........................................................................73
7.2 Certificates; Other Information...............................................................74
7.3 Payment of Obligations........................................................................75
7.4 Maintenance of Existence; Compliance with Contractual Obligations and Requirements of
Law...........................................................................................76
7.5 Maintenance of Property; Insurance............................................................76
7.6 Inspection of Property; Books and Records; Discussions........................................76
7.7 Notices.......................................................................................76
7.8 Environmental Laws............................................................................77
7.9 Further Assurances............................................................................78
7.10 Application of Proceeds.......................................................................78
7.11 Additional Collateral.........................................................................78
7.12 Management Restructuring Consultant...........................................................79
7.13 Business Plans and Projections................................................................79
7.14 Depositary Account and Payments System; Cash Dominion.........................................79
7.15 Ongoing Y2K Reports...........................................................................79
7.16 Court Approval of This Agreement..............................................................80
SECTION 8. NEGATIVE COVENANTS
8.1 Financial Condition Covenants.................................................................80
(a) [Reserved].............................................................................80
(b) Capital Expenditures...................................................................80
8.2 Limitation on Guarantee Obligations...........................................................80
8.3 Limitation on Liens...........................................................................81
8.4 Limitation on Fundamental Changes.............................................................84
8.5 Limitation on Sale of Assets..................................................................85
8.6 Limitation on Dividends.......................................................................86
8.7 Limitation on Indebtedness....................................................................86
8.8 Limitation on Investments, Loans and Advances.................................................87
8.9 Limitation on Optional Payments and Modifications of Debt Instruments.........................88
8.10 Limitation on Transactions with Affiliates....................................................89
8.11 Limitation on Sales and Leasebacks............................................................89
8.12 Fiscal Years and Quarters.....................................................................90
8.13 Limitation on Conduct of Business.............................................................90
8.14 [Reserved]....................................................................................90
8.15 Limitation on Issuances of Capital Stock......................................................90
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8.16 Foreign Holding Companies, Inactive Subsidiaries and Special Purpose Subsidiaries.............90
8.17 Permanent Order...............................................................................90
8.18 Application to Bankruptcy Court...............................................................90
8.19 Limitation on Reclamation Payments............................................................90
8.20 Liquidation Consultant........................................................................90
SECTION 9. EVENTS OF DEFAULT.............................................................................91
SECTION 10. ADMINISTRATIVE AGENT AND THE COLLATERAL MONITORING AGENT
10.1 Appointment...................................................................................95
10.2 Delegation of Duties..........................................................................95
10.3 Exculpatory Provisions........................................................................95
10.4 Reliance by Agents............................................................................95
10.5 Notice of Default.............................................................................96
10.6 Non-Reliance on Agents and Other Lenders......................................................96
10.7 Indemnification...............................................................................97
10.8 Agent in Its Individual Capacity..............................................................97
10.9 Successor Administrative Agent................................................................97
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers........................................................................97
11.2 Notices.......................................................................................99
11.3 No Waiver; Cumulative Remedies...............................................................101
11.4 Survival of Representations and Warranties...................................................101
11.5 Payment of Expenses and Taxes; Indemnity.....................................................101
11.6 Successors and Assigns; Participations and Assignments.......................................102
11.7 Replacement of Lenders under Certain Circumstances...........................................105
11.8 Adjustments..................................................................................105
11.9 Counterparts.................................................................................106
11.10 Severability.................................................................................106
11.11 Integration..................................................................................106
11.12 Termination..................................................................................106
11.13 GOVERNING LAW................................................................................106
11.14 Acknowledgements.............................................................................106
11.15 WAIVER OF JURY TRIAL.........................................................................107
11.16 Confidentiality..............................................................................107
11.17 Section Headings.............................................................................108
11.18 Judgment Currency............................................................................108
11.19 Review of Business Plan......................................................................108
11.20 Negotiation of Revised Covenants.............................................................108
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SCHEDULES
Schedule 1.1(a) Commitments
Schedule 1.1(b) Real Estate Eligibility Conditions
Schedule 5.1 Charges and Changes
Schedule 5.2 Changes
Schedule 5.4 Consents
Schedule 5.6 Litigation
Schedule 5.7 Defaults
Schedule 5.8 Restrictions
Schedule 5.13 Subsidiaries
Schedule 5.14 Environmental Matters
Schedule 5.17 Intellectual Property Matters
Schedule 5.19 Material Real Property
Schedule 5.23 Depositary Accounts
Schedule 5.25 Y2K Compliance
Schedule 6.1(j) Lien Search Jurisdictions
Schedule 7.3 Payments on Obligations
Schedule 7.4 Compliance with Obligations
Schedule 8.2(b) Existing Guarantee Obligations
Schedule 8.3(f) Existing Liens
Schedule 8.7(f) Existing Indebtedness
Schedule 8.10 Transactions with Affiliates
Schedule 11.2 Addresses
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Master Security Agreement
Exhibit C-1 Form of Revolving Credit Note
Exhibit C-2 Form of Term Loan Note
Exhibit D Form of Swing Line Note
Exhibit E-1 Form of Emergency Order
Exhibit E-2 Form of Permanent Order
Exhibit F Form of Borrower Closing Certificate
Exhibit G Form of Opinion of Counsel
Exhibit H Form of Borrowing Base Certificate
Exhibit I Available GOB Inventory Worksheet
Exhibit J Interim Budget
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POST-PETITION CREDIT AGREEMENT
POST-PETITION CREDIT AGREEMENT, dated as of March 29, 1999, by
and among SERVICE MERCHANDISE COMPANY, INC., a Tennessee corporation and a
debtor and debtor-in-possession under chapter 11 of the Bankruptcy Code (as
hereinafter defined) (the "Borrower"), the financial institutions and other
entities identified on the signature pages hereof as a "Lender" and the
financial institutions and other entities who become parties hereto as
successors or assigns as provided herein (collectively, the "Lenders" and each
individually, a "Lender"), CITICORP USA, INC., a Delaware corporation
("Citicorp"), as collateral agent and administrative agent for the Lenders (in
such capacity, the "Administrative Agent"), and BANKBOSTON, N.A., a national
banking association ("BankBoston"), as documentation agent and collateral
monitoring agent for the Lenders (in such capacities, the "Collateral Monitoring
Agent") (as amended, modified, supplemented, extended, renewed, or refinanced
from time to time, this "Agreement").
W I T N E S S E T H:
WHEREAS, on March 15, 1999 an involuntary chapter 11 petition
was filed against the Borrower in the United States Bankruptcy Court for the
Middle District of Tennessee; and
WHEREAS, the Board of Directors of the Borrower authorized the
Borrower to commence a voluntary chapter 11 case and, on March 27, 1999 (the
"Petition Date"), the Borrower filed a voluntary petition for relief under
chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for
the Middle District of Tennessee; and
WHEREAS, the Borrower is continuing to operate its business
and manage its property as debtor and debtor-in-possession under sections 1107
and 1108 of the Bankruptcy Code; and
WHEREAS, an immediate and ongoing need exists for the Borrower
to obtain additional funds in order to continue the operation of its business as
debtor and debtor-in-possession under the Bankruptcy Code and, accordingly, the
Borrower has requested that the Lenders extend post-petition financing; and
WHEREAS, the Lenders are willing to make funds available to
the Borrower pursuant to sections 364(c)(1), (c)(2) and (c)(3) of the Bankruptcy
Code, but only for the purposes and upon the terms and subject to the conditions
set forth in this Agreement; and
WHEREAS, the Borrower has agreed to secure its obligations to
the Lenders in connection with such financing with, inter alia, security
interests in, and liens on, all of its property and assets, whether real or
personal, tangible or intangible, as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and subject to the satisfaction of the conditions set forth
herein, the Borrower, the Lenders, the Administrative Agent and the Collateral
Monitoring Agent hereby agree as follows:
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SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ABR": a fluctuating interest rate per annum as shall be in
effect from time to time, which rate per annum shall be equal at any time
to the then highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of one percent
or, if there is no nearest 1/4 of one percent, to the next higher 1/4
of one percent) of (i) 1/2 of one percent per annum, plus (ii) the
rate per annum obtained by dividing (A) the latest three-week moving
average of secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States
money market banks, such three-week moving average being determined
weekly on each Monday (or, if any such day is not a Business Day, on
the next succeeding Business Day) for the three-week period ending on
the previous Friday by Citibank on the basis of such rates reported
by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended
or terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by Citibank, by (B) a percentage equal
to 100% minus the average of the daily percentages specified during
such three-week period by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for Citibank in
respect of liabilities consisting of or including (among other
liabilities) three-month U.S. dollar nonpersonal time deposits in the
United States, plus (iii) the average during such three-week period
of the maximum annual assessment rates payable to the Federal Deposit
Insurance Corporation (or any successor) by banks which are members
of the Bank Insurance Fund for insuring U.S. dollar deposits in the
United States; and
(c) the sum (adjusted to the nearest 1/4 of one percent
or, if there is no nearest 1/4 of one percent, to the next higher 1/4
of one percent) of (i) 1/2 of one percent per annum plus (ii) the
Federal Funds Rate.
"ABR Loans": Term Loans or Revolving Loans the rate of interest
applicable to which is based upon the ABR.
"Account Debtor": any Person that is liable to make payments with
respect to an Account.
"Accounts": all "accounts" (as such term is defined in the UCC)
now owned or hereafter acquired by the Borrower or any Subsidiary Guarantor
and all Instruments and Chattel Paper now owned or hereafter acquired by
the Borrower or such Subsidiary Guarantor which
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evidence a right to payment for goods sold or leased or for services
rendered, whether or not such right has been earned by performance.
"Accounts Receivable Calculation Date": at any time, the last day
of the most recent fiscal month.
"Acquisition": as to any Person, the acquisition by such Person
of (a) Capital Stock of any other Person that is not a Subsidiary of such
Person if, after giving effect to the acquisition of such Capital Stock,
such other Person would be a Subsidiary of such Person, (b) all or
substantially all of the assets of any other Person or (c) assets
constituting one or more business units of any other Person.
"Administrative Agent": as defined in the preamble to this
Agreement, and any successor Administrative Agent appointed pursuant to
subsection 10.9.
"Affiliate": as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, either to (a) vote 5% or
more of the securities having ordinary voting power for the election of
directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
For the purposes of this Agreement, the Borrower and its Restricted
Subsidiaries shall not be deemed to be Affiliates of each other and ▇▇▇
▇▇▇▇ & Associates or its successor, solely in its capacity as a management
restructuring consultant, or any successor management restructuring
consultant solely by reason of such capacity, shall not be deemed to be an
Affiliate of the Borrower or its Subsidiaries.
"Agents": collectively, the Administrative Agent and the
Collateral Monitoring Agent.
"Aggregate Outstanding Extensions of Credit": at any time, an
amount equal to the sum of (a) the Aggregate Revolving Credit Outstandings
at such time and (b) the aggregate outstanding principal amount of Term
Loans of all the Term Lenders at such time.
"Aggregate Revolving Credit Outstandings": at any time, an amount
equal to the Revolving Credit Extensions of Credit of all the Lenders at
such time.
"Agreement": as defined in the preamble to this Agreement.
"Agreement Currency": as defined in subsection 11.18.
"Applicable Commitment Fee Rate": 0.375% per annum, which will
accrue commencing on the Closing Date as a percentage of the daily average
unused portion of the Revolving Credit Commitments, payable monthly in
arrears and on the Termination Date.
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"Applicable Margin": for each Type of Loan, subject to subsection
4.4(d), the rate per annum set forth under the relevant column heading
below:
ABR LOANS EURODOLLAR LOANS
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1.25% 2.25%
"Applicant": with respect to any Letter of Credit, the Borrower
or any Subsidiary Guarantor.
"Application": an application or request, in such form as an
Issuing Bank may specify from time to time, requesting such Issuing Bank to
open a Letter of Credit.
"Arranger and Book Manager": ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
"Asset Sale": any sale or other disposition, or series of sales
or other dispositions (including, without limitation, by merger or
consolidation, and whether by operation of law or otherwise), made on or
after the Effective Date by the Borrower and/or any of the Restricted
Subsidiaries to any Person of any asset or assets which individually yields
or in the aggregate for a series of related transactions yield proceeds or
have a fair market value in excess of $150,000; provided that, any sale or
other disposition permitted pursuant to clauses (a) through (e) and clauses
(h) through (k) of subsection 8.5 shall not constitute an Asset Sale for
purposes of this Agreement.
"Asset Sale Proceeds": with respect to any Asset Sale, cash
payments received by the Borrower or any Restricted Subsidiary (including,
without limitation, any cash payments received by way of deferred payment
of principal (but not interest) pursuant to a note or receivable or
otherwise and any cash realized from any disposition of non-cash proceeds
received by the seller, but only as and when received) from any Asset Sale
(after repayment of any Indebtedness other than the Loans due by reason of
such Asset Sale), in each case net of the amount of (i) brokers' and
advisors' fees and commissions payable in connection with such Asset Sale,
(ii) all foreign, federal, state and local taxes estimated in good faith by
the Borrower to be payable as a direct consequence of such Asset Sale,
including, without limitation, in connection with the payment of a dividend
or the making of a distribution by a Restricted Subsidiary of such payments
to the Borrower or any other Restricted Subsidiary (including, without
limitation, taxes withheld in connection with the repatriation of such
proceeds), net of any tax benefits derived in respect of such dividend or
distribution, (iii) the fees and expenses attributable to such Asset Sale,
to the extent not included in clause (i) above, and (iv) any amount
required to be paid to any Person (other than the Borrower or any
Restricted Subsidiary) owning a beneficial interest in the property or
assets subject to such Asset Sale. For purposes of this definition, (x) an
Asset Sale shall be deemed to include, without limitation, any award of
compensation for any asset or property or group thereof taken by
condemnation or eminent domain and insurance proceeds for the loss of or
damage to any asset or property if such award or proceeds equals or exceeds
$2,000,000 (per occurrence), and (y) in the case of insurance proceeds for
damage to any Operating Asset, such proceeds shall not be deemed Asset Sale
Proceeds so long as no Event of Default shall have occurred and be
continuing and if such Operating Assets are repaired within 120 days of the
receipt of such proceeds or a binding
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agreement to repair the same is entered into within such 120-day period and
such repairs are completed within one year of the date of the receipt of
such proceeds.
"Assignee": as defined in subsection 11.6(c).
"Available Accounts Receivable Amount": as of any Accounts
Receivable Calculation Date, an amount equal to up to 75% of the Eligible
Trade Accounts Receivable Amount as of such Accounts Receivable Calculation
Date.
"Available Cash Equivalents": as of any Calculation Date, an
amount equal to 100% of Cash Equivalents which have then been pledged to
the Administrative Agent pursuant to the Master Security Agreement.
"Available GOB Inventory Amount": as of any Calculation Date, an
amount equal to the GOB Inventory Amount minus the GOB Discount Amount for
the period reported on at such Calculation Date, as calculated on the
Available GOB Inventory Worksheet attached hereto as Exhibit I.
"Available Inventory Amount": as of any Calculation Date, an
amount equal to (a) 70% (subject to upward adjustment to 72.5% in the
Agents' discretion) of the Eligible Adjusted Inventory Amount (excluding
the Eligible Adjusted Inventory Amount in respect of Inventory at the OSS
Subsidiary) as of such Calculation Date, plus (b) 50% of the Eligible
Adjusted Inventory Amount for Inventory at the OSS Subsidiary as of such
Calculation Date, minus (c) the Customer Credit Liability Amount as of the
most recent Reserve Calculation Date; provided that, during the peak
seasonal inventory period of September 1st through December 10th only, the
Agents may, in their sole discretion exercised commercially reasonably,
increase the allowable percentage rate as to clause (a) of this definition
to 75%.
"Available L/C Amount": as of any Calculation Date, an amount
equal to up to 60% of the sum of (a) the aggregate undrawn face amount of
Trade Letters of Credit (including Trade Letters of Credit which have been
collateralized by Standby Letters of Credit issued by an Issuing Bank)
issued to finance the purchase of Inventory (excluding any Inventory
included in the calculation of Eligible Inventory Amount) and (b) the
aggregate Inventory Value of Inventory financed with Trade Letters of
Credit which have been fully drawn and the Reimbursement Obligations in
respect of which have been fully paid so long as, in the case of clause (a)
and (b), (i) such Inventory shall be in transit to properties owned or
leased by the Borrower or a Subsidiary Guarantor in the United States, (ii)
such Inventory is not included in the calculation of Eligible Inventory
Amount and, upon arrival in the United States, will be included in the
determination of the Eligible Inventory Amount (but not included in the
determination of the Ineligible Inventory Amount) and (iii) the
Administrative Agent or its agent or bailee shall be named as the consignee
of the applicable ▇▇▇▇ of lading or other document of title.
"Available Leasehold Amount": as of any Calculation Date, an
amount equal to the lesser of (i) 25% of the Eligible Leasehold Interests
and (ii) $25,000,000.
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"Available Mortgaged Real Property Amount": an amount equal to
the lesser of (i) 54.5% of the excess of (A) the aggregate Mortgage Value
of all parcels of Eligible Mortgaged Real Property as of the most recent
Calculation Date over (B) the sum of (I) the aggregate Real Property
Amortization Amounts for all parcels of Eligible Mortgaged Real Property at
such time, (II) the Environmental Reserve Amount at such time and (III) the
aggregate Mechanics' Lien Reserve Amounts for all parcels of Eligible
Mortgaged Real Property at such time and (ii) $82,000,000.
"Available Revolving Credit Commitment": as to any Lender, at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Credit Commitment at such time over (b) such Lender's Revolving Credit
Extensions of Credit at such time.
"BankBoston": as defined in the preamble to this Agreement.
"Bankruptcy Code": title 11, United State Code, as amended from
time to time, as applicable to the Reorganization Case.
"Bankruptcy Court": the United States Bankruptcy Court for the
Middle District of Tennessee and any other court having competent
jurisdiction over the Reorganization Cases, the Borrower or the Subsidiary
Guarantors, or any of their assets.
"benefited Lenders": as defined in subsection 11.8(a).
"Blocked Account Agreement": as defined in the Master Security
Agreement..
"Board of Governors": the Board of Governors of the Federal
Reserve System and any Governmental Authority which succeeds to the powers
and functions thereof.
"Borrower": as defined in the preamble to this Agreement.
"Borrowing Base": at any time, (i) an amount, calculated based
upon the Borrowing Base Certificate delivered pursuant to subsection 6.2(e)
and thereafter the most recent Borrowing Base Certificate delivered
pursuant to this Agreement, equal to the sum of (a) the Available Inventory
Amount as of the most recent Calculation Date, plus (b) the Available
Accounts Receivable Amount as of the most recent Accounts Receivable
Calculation Date, plus (c) the Available L/C Amount as of the most recent
Calculation Date, plus (d) the Available Mortgaged Real Property Amount as
of the most recent Calculation Date, plus (e) In-Transit Cash calculated as
of the Wednesday immediately preceding the most recent Calculation Date,
minus (f) the Interim Reserve Amount, plus (g) the Available Leasehold
Amount, plus (ii) on each Borrowing Date, the Available Cash Equivalents
amount as of such Borrowing Date. The Borrowing Base established based upon
a particular Borrowing Base Certificate shall remain in effect until the
delivery of a subsequent Borrowing Base Certificate. The Agents shall have
the right, in connection with any periodic audit or appraisal of the
Inventory performed by or on behalf of the Agents, any reports provided to
the Agents by the Borrower, or as a result of changing market conditions,
in their sole discretion exercised commercially reasonably and in
accordance with customary business practices for comparable asset based
transactions of
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$100,000,000 or more and upon at least 10 days prior written notice to the
Borrower, to require that additional reserves of the types described below
be included in the determination of the Available Inventory Amount: (a)
additional reserves relating to new categories of inventory (e.g. produce)
unrelated to the current or disclosed future business of the Borrower and
the Subsidiary Guarantors; (b) additional reserves to reflect substantial
changes in the overall composition or mix of the Inventory which have the
effect of materially reducing the Net Recoverable Value of the Inventory
taken as a whole; (c) additional reserves relating to changes in the
marketability of Inventory (including, for example, as a result of a
recession) which have the effect of materially reducing the Net Recoverable
Value of the Inventory taken as a whole; (d) additional reserves relating
to a material negative variance between the Borrower's or a Subsidiary
Guarantor's cost and the market price of a major product category (e.g., a
decline in the price of gold), and (e) additional GOB Inventory reserves.
"Borrowing Base Certificate": as defined in subsection 7.2(c).
"Borrowing Date": any Business Day specified in a notice pursuant
to subsection 3.2 or 3.15 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Business": as defined in subsection 5.14(b).
"Business Day": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by
law to close, provided that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are
not open for dealings in Dollar deposits in the London interbank market.
"Business Plan": a business plan of the Borrower and its
Subsidiaries through the period ending June 30, 2001, which shall contain
forecasted expenditures, revenues, net income and cash flow during such
period, and the Borrower's business strategy, including store openings and
closings, store consolidations, capital expenditures, expense reductions,
and similar strategic plans relating to the conduct of the business of the
Borrower and its Subsidiaries.
"Calculation Date": at any time, the last day of any period
covered by the most recent Borrowing Base Certificate.
"Capital Expenditures": for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities during such
period) by the Borrower or any Restricted Subsidiary during such period
that, in conformity with GAAP, are required to be included in "capital
expenditures", "additions to property, plant, equipment or intangibles" or
similar fixed asset accounts reflected in the consolidated balance sheet of
the Borrower and the Restricted Subsidiaries which are consolidated
Subsidiaries of the Borrower (including equipment which is purchased
simultaneously with the trade-in of existing equipment owned by the
Borrower or any Restricted Subsidiary to the extent of the gross amount of
such purchase price less the book value of the equipment being traded-in at
such time), but excluding expenditures made in connection with the
replacement or restoration of assets to the extent reimbursed or financed
from insurance proceeds paid on account of the loss of or the damage to
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the assets being replaced or restored, or from awards of compensation
arising from the taking by condemnation or eminent domain of such assets
being replaced and deducting cash amounts (including free rent) received by
the Borrower and the Restricted Subsidiaries from other Persons during such
period in reimbursement of Capital Expenditures made by the Borrower and
the Restricted Subsidiaries.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) direct obligations of, or obligations
guaranteed by, the United States of America or any agency thereof, (b)
commercial paper issued in the United States of America and rated at least
A-1 or P-1 by at least one nationally recognized rating organization, (c)
certificates of deposit issued by or eurodollar deposits made with any
Lender, any affiliate of any Lender, or any bank or trust company which has
(or the parent of which has) capital, surplus and undivided profits
aggregating at least $100,000,000 (or the equivalent amount in another
currency), (d) loan participations in respect of loans made in the United
States by any bank or trust company referred to in clause (c) above to
borrowers which have short-term ratings of at least A-1 or P-1 by at least
one nationally recognized rating organization, (e) drafts accepted by any
bank or trust company referred to in clause (c) above or any other
negotiable instrument guaranteed or endorsed with full recourse by any such
bank or trust company, (f) repurchase agreements with respect to any of the
foregoing types of securities described in clause (a), (b) and (d) above,
(g) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (a) through (f)
above, (h) obligations the return with respect to which is excluded from
gross income under Section 103 of the Tax Code, with a maturity of not more
than six months or with the right of the holder to put such obligations for
purchase at par upon not more than seven days' notice and which are rated
at least A-l or P-1 by at least one nationally recognized rating
organization, (i) (A) tax free money market funds that invest solely in the
securities described in clause (h) above or (B) money market preferred
municipal bond funds which have a term of not more than seven days and
which are rated at least AAA or the equivalent thereof by Standard & Poor's
Ratings Group or at least Aaa or the equivalent thereof by ▇▇▇▇▇'▇
Investors Services, Inc., and (j) any other securities reasonably
acceptable to the Administrative Agent which are rated at least A-1 or P-1
by at least one nationally recognized rating organization, or which are of
an equivalent credit quality in the reasonable judgment of the
Administrative Agent, provided that (i) all such obligations, commercial
paper, certificates of deposit, eurodollar deposits, loan participations,
drafts, investments, instruments, securities and repurchase agreements are
denominated in Dollars, (ii) each such obligation, commercial paper,
certificate of deposit, draft, investment, security and instrument
(including those subject to repurchase agreements) is evidenced by an
Instrument or a Security of which (and of any confirmations related
thereto) the Administrative Agent or its agents promptly take possession
unless such items are Permitted Book-Entry Securities or, at the Borrower's
or the relevant Subsidiary Guarantor's option, an Excepted Cash Equivalent
or, in the case of eurodollar deposits or loan participations, are held in
the name of the Administrative Agent or any agent therefor, and in the case
of loan participations, are evidenced by facsimile or other written
confirmation, (iii) each such obligation, certificate of
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deposit, draft, investment, security and instrument (including those
subject to repurchase agreements) matures within six months after it is
acquired by the Borrower or any Subsidiary Guarantor and (iv) each item of
such commercial paper (including those subject to repurchase agreements)
matures within three months after it is acquired by the Borrower or any
Subsidiary Guarantor.
"Cash Proceeds": all Proceeds of Collateral consisting of cash,
checks, credit card proceeds, money orders or commercial paper of any kind
whatsoever.
"Chattel Paper": with respect to the Borrower or any Subsidiary
Guarantor, all "chattel paper" (as such term is defined in the UCC) now
owned or hereafter acquired by such Borrower or Subsidiary Guarantor.
"Citicorp": as defined in the preamble to this Agreement.
"Claim": as defined in section 101(5) of the Bankruptcy Code.
"Closing Date": the date two Business Days after the date on
which the Bankruptcy Court enters the Emergency Order, on which Business
Day the conditions set forth in subsection 6.1 shall be satisfied other
than those that specifically are not required to be satisfied until the
Effective Date.
"Closing Fee": a fee, payable to each Lender, equal to 0.50% of
such Lender's total commitment set forth on Schedule 1.1(a) under the
column heading "Total", (i) two-thirds of which shall be payable on the
Closing Date and (ii) one-third of which shall be payable on the date of
entry of the Permanent Order by the Bankruptcy Court.
"Collateral": collectively, all the Security and all other
property in which the Administrative Agent is granted a Lien from time to
time hereunder or under any Security Document or Emergency Order or
Permanent Order.
"Collateral Account": the account maintained by the
Administrative Agent at Citibank, N.A. in New York, New York entitled the
"Citicorp USA, Inc., as Administrative Agent: Service Merchandise Company,
Inc. - Collateral Account".
"Collateral Monitoring Agent": as defined in the preamble to this
Agreement.
"Commitment": with respect to any Lender, such Lender's Revolving
Credit Commitment, and collectively, as to all the Lenders, the
"Commitments".
"Committee": as defined in the definition of "Permitted
Expenses".
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Tax Code.
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"Confidential Information": as defined in subsection 11.16.
"Consignment Inventory": all Inventory of the Borrower and the
Subsidiary Guarantors consisting of Inventory supplied by vendors on a
consignment basis, including without limitation, jewelry and watches
currently purchased on a consignment basis, and other categories of
Inventory to be purchased on a consignment basis in the future; provided
that the terms, arrangements and/or agreements for such Inventory shall be
on normal and typical business terms for consignment Inventory.
"Consignment Inventory Account": an account maintained by the
Administrative Agent at Citibank, N.A. (or such other bank approved by the
Administrative Agent) entitled "Citicorp USA, Inc., as Administrative
Agent: Service Merchandise Company, Inc. - Consignment Inventory Account",
into which the Borrower shall deposit, not less frequently than weekly, all
amounts due to the suppliers of Consignment Inventory consisting of (i) the
cost of the Consignment Inventory actually sold plus (ii) other expenses
due and payable to such suppliers of Consignment Inventory.
"Consolidated": when used in connection with any defined term,
and not otherwise defined, such term as it applies to any Person and its
Subsidiaries on a consolidated basis, after eliminating all intercompany
items.
"Consummation Date": the date of substantial consummation of a
Plan of Reorganization confirmed by a Final Order.
"Continuing Directors": as defined in Section 9(j).
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
material property is bound.
"Credit Agreement Obligations": the collective reference to the
unpaid principal of and interest on the Loans and the Reimbursement
Obligations and all other obligations and liabilities of the Borrower to
the Administrative Agent or the Lenders (including interest accruing at the
then applicable rate provided for herein after the maturity of the Loans or
Reimbursement Obligations and interest accruing at the then applicable rate
provided for herein after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any Letter of Credit, any of the other Loan Documents or any
other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including all
fees and disbursements of counsel to the Agents or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of this Agreement
or any other Loan Document).
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"Credit Card Issuer": any bank or other Person which issues
credit cards and extends credit to cardholders in connection with a Credit
Card Program.
"Credit Card Program": a private credit card program and/or
co-branded Visa, Mastercard or other credit card program created and
operated or maintained by the Credit Card Subsidiaries pursuant to (a) the
Private Label Credit Card Agreement, dated as of January 28, 1997, among
World Financial Network National Bank, the Borrower and Service Credit
Corp. (formerly known as Service Merchandise Co. No. 80, Inc.) or (b) any
other similar agreement or arrangement with terms and conditions reasonably
satisfactory to the Administrative Agent.
"Credit Card Subsidiaries": any direct or indirect Subsidiary of
the Borrower, and any wholly-owned Subsidiaries of such Subsidiary,
existing from time to time that are created in connection with a Credit
Card Program, as long as (i) such Subsidiaries engage in no business or
transactions other than (x) the issuance (or providing for the issuance) of
credit cards, the extension of credit to cardholders pursuant thereto, and
other transactions arising from or related thereto (including the sale or
transfer of Accounts or credit card receivables pursuant to asset backed
financing transactions) and (y) the entering into and performance of
agreements with a Credit Card Issuer that facilitate the Credit Card
Issuer's doing business in connection with a Credit Card Program and (ii)
the liabilities of the Credit Card Subsidiaries are without recourse to the
Borrower and its Restricted Subsidiaries (other than the Credit Card
Subsidiaries), provided that the Borrower and its Restricted Subsidiaries
may enter into customary commitments and/or underwriting agreements on
behalf of the Credit Card Subsidiaries for the purpose of customary
securities law or regulatory indemnifications.
"Current Assets": cash, accounts receivable, inventory and all
other assets (other than Fixed Assets) used in the operation of the
business of the Borrower and its Subsidiaries.
"Custody and Control Agreement": as defined in the Master
Security Agreement.
"Customer Credit Liability Amount": as of any Reserve Calculation
Date, an amount equal to 50% of the aggregate amount of gift certificates,
merchandise credits and special order deposits then outstanding entitling
the holders thereof to use all or a portion thereof to pay all or a portion
of the purchase price for any Inventory as of such day which are not being
held for escheatment or which have not been escheated as of such day.
"Customs Broker Inventory": any Inventory which has arrived in
the United States and is located at a customs broker's warehouse facility,
so long as such Inventory (a) is fully paid and subject only to a Lien in
favor of the Administrative Agent (other than Permitted Inventory Liens),
(b) is in the possession of such customs broker, and (c) such Inventory is
reported in a Borrowing Base Certificate separately from other Inventory
included in the calculation of the Available Inventory Amount.
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"Default": any of the events specified in Section 9 which, with
the giving of notice, the lapse of time, or both, or the satisfaction of
any other condition specified in Section 9, would become an Event of
Default.
"Depositary Bank": each bank or financial institution at which
the Borrower or any Subsidiary Guarantor maintains any depositary account
into which Cash Proceeds are deposited, including each bank or financial
institution listed on Schedule 5.23.
"Derivative Agreements": any foreign exchange contracts, interest
rate and currency swap agreements, floors, caps, collars, swaptions and
similar derivative contracts, in each case, between the Borrower or any
Subsidiary Guarantor, on the one hand, and any Lender or any Affiliate of
any Lender, on the other hand.
"Designated Material Real Property": collectively, at any time,
(a) all parcels of Material Real Property which are then subject to a first
priority Lien granted pursuant to the Master Security Agreement, (b) the
Excluded Properties, (c) all parcels of Material Real Property deemed to be
parcels of Designated Material Real Property pursuant to clause (k) or (q)
of subsection 8.3 and (d) the parcels of real property identified on
Schedule 5.19 under the heading "Other Material Real Property."
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Dollar Equivalent": at any date of determination thereof with
respect to the face amount of any Letter of Credit issued in any currency
other than Dollars or any Reimbursement Obligations in respect of any such
Letter of Credit, an amount in dollars equivalent to such face amount
calculated at the rate of exchange quoted by the Administrative Agent on
such date of determination (at the hour on such date of determination at
which it customarily makes such determination) to prime banks in the
interbank market where its foreign currency exchange operations in respect
of the currency in which such Letter of Credit is issued are then being
conducted for the spot purchase of such currency with Dollars.
"Domestic Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction (including territories) within the
United States of America, excluding the Inactive Subsidiaries,
Securitization Entities, Excluded Subsidiaries, Special Purpose
Subsidiaries and Foreign Holding Companies.
"EBITDA": with respect to any period, Consolidated Net Income of
the Borrower and its Consolidated Subsidiaries for such period plus (a) in
each case to the extent deducted in determining such Consolidated Net
Income for such period, the sum of the following (without duplication): (i)
Consolidated Interest Expense of the Borrower and its Consolidated
Subsidiaries, (ii) consolidated income tax expense of the Borrower and its
Consolidated Subsidiaries, (iii) consolidated depreciation and amortization
expense of the Borrower and its Consolidated Subsidiaries, including,
without limitation, depreciation and amortization included in selling,
general and administrative expenses of the Borrower and its Consolidated
Subsidiaries, (iv) any non-cash expenses, non-cash losses or other non-cash
charges resulting from the write-down in the valuation of any assets, (v)
any non-recurring charge or restructuring
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charge which, in accordance with GAAP is excluded from operating income,
and (vi) losses, expenses and other charges, including related severance
payments in respect of going-out-of-business sales to the extent such cash
losses, expenses and other charges do not exceed the cash proceeds received
from such sales, minus (b) to the extent added in determining such
Consolidated Net Income for such period, any non-cash gains resulting from
the write-up in the valuation of any assets, plus or minus (c) the amount
of cash received or expended in such period in respect of any amount which,
under clause (v) above, was taken into account in determining EBITDA for
such or any prior period.
"Effective Date": the date on which the conditions set forth in
subsection 6.1 are satisfied.
"Eligible Adjusted Inventory Amount": as of any Calculation Date,
(a) the Eligible Inventory Amount, plus (b) the Available GOB Inventory
Amount, minus (c) the Shrink Reserve in respect of such Eligible Inventory
Amount, in each case as of such Calculation Date.
"Eligible Assignee": as defined in subsection 11.6(c).
"Eligible Inventory Amount": as of any Calculation Date, (a) the
Inventory Value as of such Calculation Date of all Inventory of the
Borrower and the Subsidiary Guarantors that consists of finished goods,
loose diamonds or colored stones, plus (b) the Inventory Value of all
Customs Broker Inventory as of such Calculation Date, plus (c) the
Inventory Value of all Landed Inventory as of such Calculation Date, minus
(d) the sum of (i) the Ineligible Inventory Amount as of such Calculation
Date and (ii) the GOB Inventory Amount as of such Calculation Date.
"Eligible Leasehold Interests": at any date, the forced
liquidation value at such date of leasehold interests as determined by an
appraiser reasonably acceptable to the Agents.
"Eligible Mortgaged Real Property": at any time, any parcel of
Material Real Property of the Borrower or any Subsidiary Guarantor as to
which each of the following conditions has been satisfied at such time:
(a) (i) Such parcel of Material Real Property (A) is
comprised of a developed retail store, distribution center, shopping
center or office building with respect to which a certificate of
occupancy or temporary certificate of occupancy or the local
equivalent thereof (or any other similar proof of completion) shall
have been issued by the relevant Governmental Authority or the
Administrative Agent shall have received other evidence reasonably
satisfactory to it of the completion of such retail store,
distribution center, shopping center or office building or (B) is
undeveloped and has a book value (excluding soft costs) of at least
$1,000,000, (ii) a Lien on such parcel of Material Real Property
shall have been granted by the Borrower or such Subsidiary Guarantor,
as the case may be, in favor of the Administrative Agent pursuant to
the Master Security Agreement, and (iii) such Lien shall be in full
force and effect in favor of the Administrative Agent at such time.
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(b) except as otherwise permitted by the Administrative
Agent, the Administrative Agent and, in the case of clause (i), the
title insurance company issuing the policy referred to in clause (c)
of this definition shall have received (i) maps or plats of an
as-built survey of the sites of the Material Real Property certified
to the Administrative Agent and such title insurance company in a
manner reasonably satisfactory to them, dated a date reasonably
satisfactory to the Administrative Agent and such title insurance
company, by an independent professional licensed land surveyor
reasonably satisfactory to the Administrative Agent and such title
insurance company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on
such maps, plats or surveys the following: (A) the locations on such
sites of all the buildings, structures and other improvements and the
established building setback lines (where setback information is
readily obtainable); (B) the lines of streets abutting such sites and
the width thereof; (C) all access and other easements appurtenant to
such sites or necessary to use such sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting such sites, whether recorded, apparent
from a physical inspection of such sites or otherwise known to the
surveyor; (E) any encroachments on any adjoining property by the
building structures and improvements on such sites; and (F) if such
sites are described as being on a filed map, a legend or other
information relating the survey to said map or (ii) in the case of
any such parcel of Material Real Property listed on Part I of
Schedule 5.19, a copy of either (A) an as-built survey of such parcel
of Material Real Property if such parcel of Material Real Property
was developed as of the Effective Date or a boundary survey of such
parcel of Material Real Property if such parcel of Material Real
Property was undeveloped as of the Effective Date, in each case
prepared within five years prior to the Effective Date or (B) a copy
of a survey delivered pursuant to one or more of the Previous Credit
Agreements in connection with any Mortgage on such parcel of Material
Real Property.
(c) the Administrative Agent shall have received in
respect of such parcel of Material Real Property a mortgagee's title
policy (or policies) or marked-up unconditional binder (or binders)
for such insurance (or other evidence acceptable to the
Administrative Agent proving ownership thereof) dated a date
reasonably satisfactory to the Administrative Agent, and such policy
shall (A) be in an amount not less than the Mortgage Value (as of the
date such parcel of Material Real Property becomes a parcel of
Eligible Mortgaged Real Property) of such parcel of Material Real
Property, (B) be issued at ordinary rates, (C) insure that the Lien
granted pursuant to the Master Security Agreement insured thereby
creates a valid first Lien on such parcel of Material Real Property
free and clear of all defects and encumbrances, except such as may be
approved by the Administrative Agent and Permitted Mortgage Liens,
(D) name the Administrative Agent for the benefit of the Lenders as
the insured thereunder, (E) be in the form of ALTA Loan Policy - 1992
(or such local equivalent thereof as is reasonably satisfactory to
the Administrative Agent), (F) contain a comprehensive lender's
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endorsement and (G) be issued by Chicago Title Insurance Company,
First American Title Insurance Company, Lawyers Title Insurance
Corporation or any other title company reasonably satisfactory to the
Administrative Agent (including any such title companies acting as
co-insurers or reinsurers). The Administrative Agent shall have
received (x) evidence satisfactory to it that all premiums in respect
of each such policy have been paid and (y) a copy of all documents
referred to, or listed as exceptions to title, in such title policy
(or policies);
(d) the Administrative Agent shall have received an
Existing Appraisal with respect to such parcel of Material Real
Property;
(e) with respect to any such parcel of Material Real
Property acquired after the Effective Date or which is designated as
a "Phase I Property" on Schedule 5.19, a Phase I environmental report
with respect to such parcel of Material Real Property, dated a date
not more than one year prior to the date such parcel first became
Eligible Mortgaged Real Property under either of the Previous Credit
Agreements, or not more than one year prior to the date such parcel
becomes Eligible Mortgaged Real Property under this Agreement,
showing no material condition of environmental concern shall have
been delivered to the Administrative Agent and in form reasonably
satisfactory to the Administrative Agent;
(f) if such parcel of Material Real Property is subject to
a ground lease in favor of the Borrower or any Subsidiary Guarantor
as lessee, no consent shall be required under such ground lease to
mortgage or foreclose upon such parcel of Material Real Property (or
such consent shall have been obtained); and
(g) such parcel of Material Real Property shall be in
compliance, or, as applicable, the Loan Party which is the owner or
lessee thereof, shall be in compliance, with all of the terms,
covenants, conditions, representations and warranties set forth in
Schedule 1.1(b), provided that, (i) if any such term, covenant,
condition, representation or warranty shall reference any provision
of this Agreement, such reference shall be read without giving effect
to any qualification or limitation contained therein regarding a
Material Adverse Effect, and (ii) if such parcel of Material Real
Property or, as applicable, the Loan Party which is the owner or
lessee thereof ceases to be in compliance with any of the terms,
covenants, conditions, representations or warranties set forth in
Schedule 1.1(b), such parcel of Material Real Property shall cease
(effective as of the delivery of the next succeeding Borrowing Base
Certificate) to be Eligible Mortgaged Real Property during the
continuation of such non-compliance if such non-compliance could
reasonably be expected to have a material adverse effect on the value
of such parcel of Material Real Property, but such non-compliance
shall not constitute, in and of itself, a Default or Event of
Default.
If a parcel of Material Real Property of the type described in
clause (a)(i)(B) of this definition becomes a parcel of Eligible Mortgaged
Real Property and is thereafter subsequently developed such that such
parcel of Eligible Mortgaged Real Property satisfies the requirements of
clause (a)(i)(A) of this definition, the Borrower may, at its option,
deliver a
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notice to the Administrative Agent to the effect that the Borrower wishes
to cause such parcel of Material Real Property to satisfy the requirements
of this definition as if (x) such parcel of Material Real Property became a
parcel of Material Real Property as of the date of such notice, (y) such
parcel of Material Real Property was not then a parcel of Eligible
Mortgaged Real Property and (z) if applicable, such parcel of Material Real
Property was not subject to a Lien granted pursuant to the Master Security
Agreement as of the Effective Date. Upon delivery of any such notice, the
Administrative Agent shall commission a new appraisal with respect to such
parcel of Material Real Property. Upon satisfaction of the conditions set
forth in this definition following such date with respect to such parcel of
Material Real Property (other than the condition set forth in clause (e)
above, such parcel of Material Real Property shall, without duplication, be
deemed to become a parcel of Eligible Mortgaged Real Property as of the
date such conditions are satisfied and the Mortgage Value of such parcel of
Eligible Mortgaged Real Property shall be included in the Borrowing Base
effective as of the delivery of the Borrowing Base Certificate in respect
of the fiscal month in which such conditions are satisfied.
"Eligible Trade Accounts Percentage": as of any Accounts
Receivable Calculation Date, up to 85%, provided that, in connection with
each periodic audit or appraisal of the Accounts of the Borrower and the
Subsidiary Guarantors performed by or on behalf of the Administrative
Agent, the Administrative Agent shall have the right in its sole discretion
exercised commercially reasonably and in accordance with customary business
practices, upon at least 10 days prior written notice to the Borrower, to
change the "Eligible Trade Accounts Percentage" to the percentage estimated
to be the percentage of the aggregate amount of the Accounts as of such
Accounts Receivable Calculation Date which satisfy each of the following
criteria:
(a) such Account has been adjusted to reflect the return
or rejection of, or any loss of or damage to any of the Inventory
giving rise to such Account and is not subject to bona fide set-offs,
counterclaims, defenses, or disputes asserted with respect to such
Account (it being understood that such Account shall not include
material financing charges, or late or other fees);
(b) the Account Debtor with respect to such Account is not
insolvent or the subject of any bankruptcy case or insolvency
proceeding of any kind, unless such Account is due from such Account
Debtor as an administrative priority claim under the Bankruptcy Code
and the Administrative Agent, in the exercise of its reasonable
business judgment, deems the Account Debtor to be creditworthy;
(c) the Account Debtor in respect of such an Account has a
place of business within the United States of America (excluding
Puerto Rico, the Virgin Islands and any other territory of the United
States);
(d) the Account Debtor in respect of such Account is not
the United States of America or any state, territory, subdivision,
department, or agency thereof, unless all applicable requirements of
the Assignment of Claims Act of 1940 have been satisfied;
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(e) such Account does not arise out of transactions with
an employee, officer, director, Subsidiary or Affiliate of the
Borrower or any Subsidiary Guarantor;
(f) no amount payable in respect of such Account has
remained unpaid for a period exceeding sixty days after the due date
stated on the invoice therefor (excluding the amount of any net
credit balances relating to Accounts with invoice dates more than 60
days from the due date);
(g) such Account is owed by an Account Debtor which does
not then have balances on its Accounts which are more than 60 days
past due which exceed 50% of the total balance of all such Accounts
owed by such Account Debtor;
(h) such Account has not been and is not required to be
charged off or written off as uncollectible in accordance with the
customary business practice of the Borrower and the Subsidiary
Guarantors;
(i) such Account does not arise out of any claim in tort,
is not evidenced by chattel paper, a promissory note, a negotiable
instrument, or any other instrument of any kind or, if such Account
is evidenced by chattel paper, a promissory note, a negotiable
instrument or any other instrument, such chattel paper, promissory
note, negotiable instrument or other instrument has been delivered to
the Administrative Agent and is subject to a first priority security
interest in favor of the Administrative Agent;
(j) the amount of the face value of such Account listed on
any schedule of Accounts and shown on all invoices and statements
delivered to the Agent with respect to such Account is not subject to
any asserted bona fide retainages or holdbacks of any type, is
actually and absolutely owing, and is not contingent on any
condition, in each case, other than in respect of repurchase or
return agreements that (i) arise in the ordinary course of the
Borrower's business and (ii) are consistent with the Borrower or such
Subsidiary Guarantor's historical business practice;
(k) such Account does not arise out of a cash on delivery
sale; and
(l) such Account does not arise out of the sale of
samples.
In addition, to the extent that any Accounts or credit card
receivables that arise in connection with a Credit Card Program are
included in Eligible Trade Accounts Receivable at the option of the
Borrower, the Eligible Trade Accounts Percentage shall include such
reserves and the Available Accounts Receivable Amount shall reflect
eligibility criteria as the Administrative Agent shall require in its sole
discretion with respect to such Accounts and credit card receivables as a
separate class of Accounts based upon the results of any periodic audit or
appraisal of the Accounts of the Borrower and the Subsidiary Guarantors
performed by or on behalf of the Administrative Agent, provided that no
such Accounts or credit card receivables shall be included in "Eligible
Trade Accounts Receivable" until a satisfactory audit or appraisal
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of such Accounts and credit card receivables has been performed by or on
behalf of the Administrative Agent.
It is understood that, to the extent that information is not
available to determine the amount of Accounts which satisfy the criteria
described above, the Administrative Agent shall estimate the amount of such
Accounts which satisfy such criteria in determining the Eligible Trade
Accounts Percentage. The Borrower shall, at the request of the
Administrative Agent in connection with any periodic audit or appraisal of
the Accounts of the Borrower and the Subsidiary Guarantors related to the
Credit Card Program, deliver a calculation in reasonable detail of all
Accounts which satisfy the criteria described above to the extent such
information is reasonably available to the Borrower and the Subsidiary
Guarantors.
"Eligible Trade Accounts Receivable Amount": as of any Accounts
Receivable Calculation Date, an amount equal to the Eligible Trade Accounts
Percentage of the aggregate amount of all Accounts of the Borrower and the
Subsidiary Guarantors as of such Accounts Receivable Calculation Date that
satisfy all of the following criteria as of such Accounts Receivable
Calculation Date:
(a) such Account is owned solely by the Borrower or a
Subsidiary Guarantor and is evidenced by an invoice and has arisen
from the sale of goods which have been shipped or delivered to an
Account Debtor on an absolute sale basis, have not been shipped or
delivered on a consignment, approval, or sale-return basis, and are
not subject to any repurchase or return agreement or arrangement,
other than those repurchase or return agreements or arrangements that
(i) arise in the ordinary course of the Borrower's business and (ii)
are consistent with the Borrower or such Subsidiary Guarantor's
historical business practices; and
(b) such Account is subject to a Lien in favor of the
Administrative Agent and is not subject to Liens other than Permitted
Account Liens.
"Emergency Order": that certain order issued by the Bankruptcy
Court in form and substance satisfactory to the Administrative Agent, in
substantially the form of Exhibit E-1.
"Environmental Laws": any and all foreign, federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating or imposing liability or standards
of conduct concerning protection of human health or the environment, as are
now or may at any time hereafter be in effect.
"Environmental Reserve Amount": at any time, an amount equal to
the product of (a) $75,000 and (b) the number of parcels of Eligible
Mortgaged Real Property which are included in the Borrowing Base at such
time.
"Equipment": all equipment, machinery, chattels, tools, dies,
jigs, molds, parts, machine tools, furniture, furnishings, fixtures and
supplies, of every nature, now owned or hereafter acquired by the Borrower
or any Subsidiary Guarantor, wherever located, additions,
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accessories and improvements thereto and substitutions therefor and all
parts and equipment which may be attached to or which are necessary for the
operation and use of such personal property or fixtures, whether or not the
same shall be deemed to be affixed to real property and in any event all
"equipment" (as such term is defined in the UCC), but excluding Inventory.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors or other
Governmental Authority having jurisdiction with respect thereto) prescribed
for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board of Governors) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum equal
to the rate for deposits in Dollars for the period commencing on the first
day of such Interest Period and ending on the last day of such Interest
Period which appears on Telerate Page 3750 as of 11:00 A.M., London time,
two Business Days prior to the beginning of such Interest Period. If at
least two rates appear on such Telerate Page for such Interest Period, the
"Eurodollar Base Rate" shall be the arithmetic mean of such rates. If the
"Eurodollar Base Rate" cannot be determined in accordance with the
immediately preceding sentences with respect to any Interest Period, the
"Eurodollar Base Rate" with respect to each day during such Interest Period
shall be the rate per annum equal to the average (rounded upward to the
nearest 1/100th of 1%) of the respective rates notified to the
Administrative Agent by each of the Lenders as the rate at which such
Lender is offered Dollar deposits at or about 10:00 A.M. New York City
time, two Business Days prior to the beginning of such Interest Period in
the interbank eurodollar market where the eurodollar and foreign currency
and exchange operations in respect of its Eurodollar Loans are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount
of its Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Term Loans and Revolving Loans the rate of
interest applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
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"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Excepted Cash Equivalents": Cash Equivalents up to an aggregate
amount at any one time equal to the amount not required to be pledged to
the Administrative Agent by reason of subsection 8.8(b).
"Excluded Properties": those properties listed as such on
Schedule 5.19.
"Excluded Subsidiaries": SerPlus Assurance Co., Ltd., SMC
Aviation, Inc., SMC-SPE, Inc., SMC-SPE-2, Inc. and Service Credit Corp.
"Existing Appraisal": with respect to any parcel of Material Real
Property, a final complete appraisal of the value of such parcel of
Material Real Property, commissioned in connection with the Previous Credit
Agreements (and delivered to the Administrative Agent) or this Agreement
and valued on an "alternative use" basis which in the reasonable judgment
of the Administrative Agent satisfies all applicable requirements of FIRREA
and the Uniform Standards of Professional Appraisal Practice.
"Existing Credit Agreement": the Second Amended and Restated
Credit Agreement, dated as of January 20, 1999, among SMC, as borrower, the
lenders party thereto, Citicorp, as collateral and administrative agent for
such lenders, and BankBoston, as documentation agent and collateral
monitoring agent for such lenders, as amended.
"Extension of Credit": with respect to any Lender, (a) the making
of a Loan by such Lender and (b) the issuance or extension of a Letter of
Credit in which such Lender has a participating interest.
"Federal Funds Rate": means for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Final Order": an order or judgment of the Bankruptcy Court as
entered on the docket of the Clerk of the Bankruptcy Court, that has not
been reversed, stayed, modified or amended, and as to which the time to
appeal, petition for certiorari, reargument or rehearing has expired and no
proceeding for certiorari, reargument or rehearing is pending or any right
to appeal, reargue, petition for certiorari or seek rehearing has been
waived, or if an appeal, reargument, petition for certiorari, or rehearing
thereof has been sought, the order or judgment of the Bankruptcy Court has
been affirmed by the highest court to which the order was appealed
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from which the reargument or rehearing was sought, or certiorari has been
denied, and the time to take any further appeal or to seek certiorari or
further reargument or rehearing has expired.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of such lessee.
"FIRREA": the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
"First Day Orders": those orders entered by the Bankruptcy Court
on the Petition Date or within five Business Days of the Petition Date or
based on motions filed on the Petition Date.
"First Union Permitted Mortgage Financing": all Indebtedness, if
any, and other obligations of the Borrower and its Subsidiaries, now
existing or hereafter arising, under or in connection with (a) that certain
Loan Agreement dated as of October 4, 1996 by and between SMC-SPE-l, Inc.,
as borrower, and First Union National Bank of North Carolina, as lender,
and the guaranties, mortgage and security and other agreements, instruments
and other documents from time to time executed and delivered in connection
therewith and (b) that certain Loan Agreement dated as of October 4, 1996
by and between SMC-SPE-2, Inc., as borrower, and First Union National Bank
of North Carolina, as lender, and the guaranties, mortgage and security and
other agreements, instruments and other documents from time to time
executed and delivered in connection therewith, in each case, subject to
compliance with the terms hereof, as the same may now or hereafter be
amended, restated, modified, increased, extended, refinanced, replaced or
refunded.
"Fiscal Year": each fiscal year of the Borrower. Fiscal Years are
referred to herein by reference to the calendar year in which a majority of
the days comprising such Fiscal Year fall.
"Fixed Assets": plant, machinery, equipment, furniture and
fixtures, leasehold improvements and other tangible property used in the
operation of the business of the Borrower and its Subsidiaries, and
including (except in respect of the OSS Disposition) the proceeds of the
sale of all or substantially all of the Capital Stock of a Subsidiary
Guarantor (except to the extent of the allocated value of any Current
Assets included in the proceeds of such sale of Capital Stock).
"Floor Planning Facility": as to the Borrower or any Restricted
Subsidiary, any manufacturer- or vendor-sponsored Inventory financing
program (whether directly from the manufacturer or vendor or through a
third party financing source) extending loans or trade terms to the
Borrower or such Restricted Subsidiary and secured solely by such
manufacturer's or vendor's named brand or identified Inventory, subject to
the prior approval of the Administrative Agent in its reasonable discretion
and execution and delivery of an intercreditor agreement reasonably
acceptable to the Administrative Agent.
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"Foreign Holding Company": any Subsidiary organized under the
laws of any jurisdiction (including territories) within the United States
of America whose sole assets (exclusive of assets with an aggregate book
value not exceeding $5,000,000 and assets consisting of advances or loans
to the Borrower or any of its Subsidiaries) consist of the Capital Stock of
one or more Foreign Subsidiaries or other Foreign Holding Companies.
"Foreign L/C Commitment Sublimit": at any time, the lesser of (a)
$10,000,000 and (b) the Revolving Credit Commitments then in effect.
"Foreign Subsidiary": any Subsidiary of the Borrower organized
under the law of any jurisdiction outside the United States of America,
excluding Inactive Subsidiaries, but including in any event Foreign Holding
Companies.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time, provided that, solely for
purposes of determining compliance with subsection 8.1, "GAAP" shall mean
generally accepted accounting principles in the United States of America in
effect as of the Effective Date.
"GOB Deal Shrink": an amount equal to (i) the difference between
(A) the Inventory Value of the GOB Inventory and (B) the value of the GOB
Inventory as determined by a physical inventory count taken immediately
prior to the commencement of a going-out-of-business or similar sale at the
GOB Stores, or (ii) in the absence of a physical count of the GOB
Inventory, 3% of the Inventory Value of the GOB Inventory on the date of
commencement of the going-out-of-business or similar sales.
"GOB Discount Amount": an amount equal to (i) the weighted
average discount offered to customers during the applicable period of the
going-out-of-business or similar sale, expressed as a percentage,
multiplied by (ii) the GOB Inventory Amount.
"GOB Inventory": all Inventory located at GOB Stores as of the
Calculation Date after the date of commencement of a going-out-of-business
or similar sale at such GOB Stores.
"GOB Inventory Amount": as of any Calculation Date, the Inventory
Value of the GOB Inventory as of such Calculation Date, minus (a) the
Shrink Reserve in respect of such GOB Inventory as of such Calculation
Date, minus (b) the GOB Deal Shrink as of such Calculation Date, minus (c)
the Inventory Value of all GOB Inventory remaining at any GOB Store on the
91st day after the commencement of the going-out-of-business or similar
sale with respect to such GOB Store, minus (d) 35% of the Inventory Value
of the GOB Inventory located at the Initial GOB Stores as of such
Calculation Date.
"GOB Stores": the Borrower's and the Subsidiary Guarantors'
stores which are in the process of being liquidated and closed.
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"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), without duplication, any obligation, contingent or otherwise, of
the guaranteeing person (a) under a guarantee, reimbursement, indemnity or
similar obligation guaranteeing or in effect guaranteeing any Indebtedness
of any other Person, in any manner, whether directly or indirectly, (b) to
reimburse any other Person for drawings under undrawn letters of credit
issued by such other Person for the account of the guaranteeing person, or
(c) under a guarantee, reimbursement, indemnity or similar obligation to
the extent the obligations of the guaranteeing person in respect thereof
should be reflected as a liability in a consolidated balance sheet of the
guaranteeing person (or should be reflected in the notes thereto) in
accordance with GAAP, provided that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (i) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (ii) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by such guaranteeing
person in good faith.
"IE System": the Borrower's electronic inventory evaluation
system which tracks Inventory on a store-by-store basis.
"In-Transit Cash": as of the date of determination, the aggregate
amount of (i) cash and cash equivalents of the Borrower and the Subsidiary
Guarantors which is deposited into deposit accounts covered by Blocked
Account Agreements, plus (ii) the net amount receivable by the Borrower and
the Subsidiary Guarantors in respect of Visa, Mastercard or other branded
credit card receivables (after deduction of discounts and fees payable to
the processors of such credit card receivables) to the extent such amounts
are credited to deposit accounts covered by Blocked Account Agreements or
other arrangements acceptable to the Agents in their sole discretion
exercised commercially reasonably, in each case prior to the transfer of
such amounts to the Collateral Account.
"Inactive Subsidiary": any Subsidiary of the Borrower which (and
only for so long as such Subsidiary) (a) does not own assets with an
aggregate book value in excess of $5,000,000 and (b) is not then engaged in
any business.
"Indebtedness": of any Person at any date (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities and accounts payable
incurred in the ordinary course of business and payable in accordance with
the Borrower's and its Restricted Subsidiaries' customary practices and
extensions thereof), (b) any other indebtedness of such Person which is
evidenced by a note,
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bond, debenture or similar instrument, (c) all obligations (to the extent
capitalized for accounting purposes) of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or
created for the account of such Person, (e) all obligations of the types
described in the other clauses of this definition secured by any Lien on
any property owned by such Person even though such Person has not assumed
or otherwise become liable for the payment thereof and (f) all obligations
of such Person in respect of interest rate and currency hedging agreements.
For purposes of this Agreement, (x) the amount of any Indebtedness referred
to in clause (f) of the preceding sentence shall be the net amounts
(including by offset of amounts payable thereunder), including any net
termination payments, required to be paid to a counterparty rather than any
notional amount with regard to which payments may be calculated and (y) any
obligations described in clauses (a) through (e) above denominated in a
currency other than Dollars shall be determined after giving effect to
related currency swap and hedging agreements. It is understood and agreed
that "Indebtedness" of a Person (i) shall include advances or loans to such
Person under Floor Planning Facilities and (ii) shall not include (A)
obligations of such Person in respect of letters of credit to the extent
such obligations are not reflected as liabilities on the consolidated
balance sheet of such Person (excluding the notes to such balance sheet) in
accordance with GAAP or (B) obligations of such Person in respect of
consignments of Inventory to such Person.
"Indemnified Liabilities": as defined in subsection 11.5.
"Ineligible Inventory Amount": as of any Calculation Date, the
Inventory Value of all Inventory of the Borrower and the Subsidiary
Guarantors that falls in any one or more of the following categories as of
such Calculation Date:
(a) Consignment Inventory or any other Inventory that (i)
is not owned solely by the Borrower or any such Subsidiary Guarantor
or (ii) is leased by or on consignment or sale-or-return to the
Borrower or any such Subsidiary Guarantor;
(b) Inventory that is not located at (or in transit
between) property that is owned or leased by the Borrower or any
Subsidiary Guarantor, other than Landed Inventory and Customs Broker
Inventory;
(c) Inventory that is subject to a layaway purchase by any
customer;
(d) Inventory that is damaged or defective or has
otherwise been segregated for return to the vendor thereof;
(e) Inventory that is not located in the United States of
America;
(f) Inventory which is not subject to a Lien in favor of
the Administrative Agent or is subject to any Lien (other than
Permitted Inventory Liens);
(g) Inventory which is subject to a Lien in connection
with Floor Planning Facilities;
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(h) Inventory that is being repaired or is used in the
repair of other Inventory; and
(i) Inventory consisting of "Samples" which is not
included in the normal merchandising assortment but has been supplied
by vendors for consideration to be included in the merchandising
assortment.
"Initial GOB Stores": the initial 134 stores announced by the
Borrower and the Subsidiary Guarantors as the first stores to be liquidated
and closed.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Instrument": any "instrument" (as such term is defined in the
UCC) now owned or hereafter acquired by the Borrower or any Subsidiary
Guarantor.
"Intellectual Property": as defined in subsection 5.17.
"Intercompany Debt": with respect to the Borrower, any
Indebtedness of the Borrower to any Subsidiary Guarantor and, with respect
to any Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor
to the Borrower or any other Subsidiary Guarantor, including all amounts
payable in respect thereof whether in respect of principal, interest or
otherwise.
"Interest Expense": of any Person for any period, (a) the amount
of interest expense, both expensed and capitalized, of such Person and its
Consolidated Subsidiaries determined on a consolidated basis in accordance
with GAAP for such period, plus, without duplication, that portion of
payments under Financing Leases of such Person attributable to interest
expense of such Person for such period in accordance with GAAP minus (b)
the amount of interest income of such Person and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with GAAP for
such period.
"Interest Payment Date": (a) as to any ABR Loan, the last day of
each month, (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period, (c) as to any
Eurodollar Loan having an Interest Period longer than three months, each
day which is three months, or a whole multiple thereof, after the first day
of such Interest Period and the last day of such Interest Period and (d) as
to any Swing Line Loan, the last day of each month.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion,
as the case may be, given with respect thereto; and
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(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six months thereafter, as selected by
the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond, in the case of Eurodollar Loans which are Revolving Loans,
the Termination Date or, in the case of Eurodollar Loans which are
Term Loans, beyond the Term Loan Termination Date, as the case may
be;
(3) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a
calendar month; and
(4) from the Effective Date until such time as the
Administrative Agent notifies the Borrower of the completion of the
syndication of this credit facility, "Interest Period" shall mean the
period commencing on the borrowing or conversion date, as the case
may be, with respect to all Eurodollar Loans and ending seven or
fourteen days or one month thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the case may be,
given with respect thereto, and agreed to by the Administrative
Agent.
"Interim Budget": the interim budget prepared by the Borrower
detailing the Borrower's anticipated revenues, operating expenses and cash
flow from the Closing Date to the Effective Date, in the form attached
hereto as Exhibit J.
"Interim Facility": the interim revolving credit facility made
available prior to the Effective Date pursuant to section 3.1(a), as
approved by the Emergency Order.
"Interim Facility Period": the period between the Closing Date
and the earlier of (i) the Effective Date and (ii) 45 days after the
Petition Date.
"Interim Maximum Amount": as defined in subsection 3.1 of this
Agreement.
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"Interim Reserve Amount": an amount equal to (a) from the Closing
Date until the Effective Date, $75,000,000, (b) from the Effective Date
until the date (i) the Administrative Agent accepts the Business Plan and
(ii) the Borrower and the Agents mutually agree on new and revised
covenants pursuant to subsection 11.20 (such date, the "Plan Acceptance
Date"), $50,000,000 and (c) from and after the Plan Acceptance Date, zero.
"Inventory": goods now owned or hereafter acquired by the
Borrower or any Subsidiary Guarantor and held for sale or lease or to be
furnished under contracts of service or so leased or furnished, and all raw
materials, work in process or materials used or consumed in a business, and
in any event including all "inventory" (as such term is defined in the UCC)
but excluding Equipment.
"Inventory Value": with respect to any Inventory of the Borrower
or any Subsidiary Guarantor reflected on the Borrower's Borrowing Base
Certificate, the value of such Inventory valued at cost on the IE System on
a basis consistent with the Borrower's or such Subsidiary Guarantor's
current and historical accounting practice (without giving effect to
markdowns, intercompany profit, rebates and discounts, accounts payable
inventory accruals and capitalized inventory costs on the consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries in respect
of Inventory), plus freight charges incurred in connection therewith, minus
accruals for deferred volume rebates (it being understood that the amount
of freight charges and accruals for deferred volume rebates shall be
determined monthly as of the end of the most recent fiscal month,
notwithstanding the fact that Borrowing Base Certificates may be delivered
more frequently than monthly pursuant to this Agreement). The value of the
Inventory as set forth above will, without duplication for any element of
the Shrink Reserve, be calculated net of the reserve established by the
Borrower or any Subsidiary Guarantor on a basis consistent with the
Borrower's or such Subsidiary Guarantor's current and historical accounting
practice in respect of lost, misplaced or stolen Inventory at such time.
"Investment": as defined in subsection 8.8.
"Investment Securities": all Instruments and all "securities" (as
such term is defined in the UCC) now owned or hereafter acquired by the
Borrower or any Subsidiary Guarantor, other than (a) Pledged Stock, (b)
Capital Stock of any Subsidiary that is not expressly required to be
pledged pursuant this Agreement or the Master Security Agreement, (c) Cash
Equivalents and (d) any note, debenture, bond or other Instrument
evidencing Intercompany Debt.
"Issuing Banks": initially, each Lender and each Affiliate of a
Lender specified on Schedule 1.1(a) as an Issuing Bank in its capacity as
issuer of a Letter of Credit. Additional Lenders or Affiliates of
additional Lenders may from time to time be designated as "Issuing Banks"
by the Borrower (in each case, with the consent of such Lender and such
Affiliate) by written notice to such effect from the Borrower to the
Administrative Agent, provided that such designation is consented to by the
Administrative Agent (which consent by the Administrative Agent shall not
be unreasonable withheld). Each Affiliate of a Lender acting as an issuing
Bank shall be deemed to have agreed to be bound by, and shall have the
benefits of, the provisions of
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this Agreement and the other Loan Documents applicable to Issuing Banks and
shall be deemed a party hereto.
"Judgment Currency": as defined in subsection 11.18.
"Landed Inventory": any Inventory which has arrived in the United
States and cleared customs but which has not been delivered to property
that is owned or leased by the Borrower or any Subsidiary Guarantor as long
as such Inventory (a) is fully paid and subject only to a Lien in favor of
the Administrative Agent (other than Permitted Inventory Liens), (b) is in
the possession of the Borrower or any Subsidiary Guarantor or any agent
thereof and (c) is reported in a Borrowing Base Certificate separately from
other Inventory included in the calculation of the Available Inventory
Amount.
"L/C Commitment": the lesser of (a) $200,000,000 (or, during the
Interim Facility Period, $80,000,000) and (b) the Revolving Credit
Commitments then in effect.
"L/C Fee Payment Date": the last day of each month and the
Termination Date.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the Trade Letter of Credit Outstandings at such time and (b) the Standby
Letter of Credit Outstandings at such time.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders.
"Lender" and "Lenders": as defined in the preamble to this
Agreement.
"Letters of Credit": as defined in subsection 3.6(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing).
"Loan": any Term Loan, Revolving Loan or Swing Line Loan, as the
case may be.
"Loan Documents": this Agreement, the Notes, the Master Security
Agreement and all other Security Documents, each Application, the other
documents executed or delivered pursuant to subsection 6.1 by the Borrower
or any Subsidiary of the Borrower and all other instruments, agreements and
written contractual obligations between the Borrower and any Subsidiary of
the Borrower, on the one hand, and any of the Agents or the Lenders, on the
other hand, in each case delivered to either the Administrative Agent or
such Lender before, on, or after the Effective Date pursuant to or in
connection with the transactions contemplated hereby.
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"Loan Parties": the collective reference to the Borrower and the
Subsidiary Guarantors.
"Lockbox Agreement": as defined in the Master Security Agreement.
"LTCB Permitted Mortgage Financing": all Indebtedness, if any,
and other obligations of the Borrower and its Subsidiaries, now existing or
hereafter arising, under or in connection with (a) that certain Indenture
dated June 28, 1990 by and among the Borrower, ▇.▇. ▇▇▇▇▇▇ Co., Inc., The
Long-Term Credit Bank of Japan, Limited, New York Branch, as administrative
agent, and The Bank of New York (as successor trustee to Sovran
Bank/Central South), as trustee, and (b) the guaranties, mortgage and
security and other agreements, instruments and other documents from time to
time executed and delivered in connection therewith, in each case, subject
to compliance with the terms hereof, as the same may now or hereafter be
amended, restated, modified, increased extended, refinanced, replaced or
refunded.
"Majority Lenders": at any time, Lenders the Voting Percentages
of which aggregate more than 50%.
"Majority Revolving Credit Lenders": at any time, Revolving
Credit Lenders the Revolving Credit Commitment Percentages of which
aggregate more than 50%.
"Majority Term Loan Lenders": at any time, Term Loan Lenders
whose Term Loans aggregate more than 50% of the outstanding principal
amount of all Term Loans.
"Management Restructuring Consultant": ▇▇▇ ▇▇▇▇ & Associates.
"Master Security Agreement": the Master Security Agreement to be
made by the Borrower and each Subsidiary Guarantor in favor of the
Administrative Agent, in substantially the form of Exhibit B, as the same
may be amended, supplemented or otherwise modified from time to time.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, performance, property, or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole or (b) the
ability of the Borrower or any Subsidiary Guarantor, taken as a whole, to
perform their respective obligations under this Agreement or any of the
other Loan Documents or the material rights or remedies, of the
Administrative Agent or the Lenders hereunder or thereunder.
"Material Real Property": real property not subject to a
mortgage, deed of trust or other similar instrument (other than pursuant
hereto or any other Loan Document) that (a) (i) is owned in fee by the
Borrower or any Subsidiary Guarantor and is not subject to a ground lease
in favor of any other Person as lessee, (ii) is located in the United
States or Puerto Rico and (iii) (A) has been developed with a retail store,
distribution center, shopping center or office building with respect to
which a certificate of occupancy or temporary certificate of occupancy or
the local equivalent thereof (or any other similar proof of completion)
shall have been issued by the relevant Governmental Authority, (B) is being
developed with a retail store, distribution center, shopping center or
office building which is under construction as of the Effective Date or (C)
is undeveloped and has a book value (excluding soft costs) of at least
$1,000,000 or (b) (i) (A) consists of a developed retail store,
distribution center,
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shopping center or office building with respect to which a certificate of
occupancy or temporary certificate of occupancy or the local equivalent
thereof (or any other similar proof of completion) shall have been issued
by the relevant Governmental Authority, or (B) is being developed with a
retail store, distribution center, shopping center or office building which
was under construction as of the Effective Date, (ii) is located on
property which is subject to a ground lease in favor of the Borrower or any
Subsidiary Guarantor as lessee and no consent shall be required under such
ground lease to mortgage or foreclose upon such property (or such consent
shall have been obtained), (iii) is or, upon completion, will be classified
as an owned retail store, distribution center, shopping center or office
building by the Borrower or such Subsidiary Guarantor and (iv) is located
in the United States or Puerto Rico.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Mechanics' Lien Reserve Amount": with respect to any parcel of
Eligible Mortgaged Real Property at any time, an amount equal to the
excess, if any, of (a) the sum of all outstanding amounts which are then
secured by mechanics' liens on such parcel of Eligible Mortgaged Real
Property and which have been outstanding for a period in excess of one year
over (b) $200,000.
"Mortgage": a fee or ground leasehold mortgage, deed of trust or
other similar document executed and delivered in favor of the
Administrative Agent pursuant to any of the Previous Credit Agreements, as
the same may have been amended, supplemented or otherwise modified from
time to time and still in effect.
"Mortgage Value": with respect to any parcel of Eligible
Mortgaged Real Property, the lesser of (a) the maximum stated amount
secured by the Lien on such parcel of Eligible Mortgaged Real Property
granted in favor of the applicable secured mortgagee pursuant to the
relevant Mortgage and (b) the value of such parcel of Eligible Mortgaged
Real Property set forth in the Existing Appraisal delivered with respect
thereto.
"Mortgaged Property": all property of the Borrower and any
Subsidiary Guarantor in which the Administrative Agent is granted a Lien
pursuant to the Master Security Agreement or the Emergency Order or
Permanent Order.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income": of any Person for any period, net income of such
Person and its Consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP for such period.
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"Net Recoverable Value": as to the Inventory of the Borrower and
the Subsidiary Guarantors, the amount determined based upon periodic audits
or appraisals of such Inventory to be equal to the percentage of the cost
of Inventory which could be realized (net of disposal costs and expenses)
in a liquidation sale of the Inventory at such time.
"Non-Excluded Taxes": as defined in subsection 4.10.
"Notes": the collective reference to any Revolving Credit Notes
or Swing Line Notes.
"Operating Assets": assets employed by any Loan Party in the
operation of its business (including assets constituting property, plant or
equipment but excluding assets held for investment).
"OSS Disposition": the sale or other disposition of the Capital
Stock in, or all or substantially all of the assets of, the OSS Subsidiary
for fair market value and on terms and conditions reasonably satisfactory
to the Administrative Agent.
"OSS Subsidiary": the Borrower's office supply Subsidiary.
"Overdraft": at any time, the amount by which the aggregate
amount debited from any deposit, concentration, operating or disbursement
account maintained by the Borrower or any Subsidiary Guarantor with any
Lender or any Affiliate of any Lender, as a result of processing of payment
orders issued by the Borrower or such Subsidiary Guarantor or otherwise,
exceeds the aggregate funds on deposit in such account.
"Parcel": when used in connection with any parcel of real
property, means such parcel of real property, together with all of the
structures, buildings and other improvements located thereon and all other
property associated therewith and, when used in connection with any parcel
of real property subject to a ground lease in favor of the Borrower or any
Subsidiary Guarantor as lessee, means the leasehold interest in such ground
lease.
"Participant": as defined in subsection 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority
which succeeds to the powers and functions thereof.
"Permanent Facility": the revolving credit facility and term
loans made available from and after the Effective Date pursuant to section
3.1(a), as approved by the Permanent Order.
"Permanent Mortgage Financing": collectively, the LTCB Permitted
Mortgage Financing and the First Union Permitted Mortgage Financing.
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"Permanent Order": that certain order entered by the Bankruptcy
Court approving this Agreement, in form and substance satisfactory to the
Administrative Agent, in substantially the form of Exhibit E-2.
"Permitted Account Liens": the collective reference to Liens
permitted by subsections 8.3(a), 8.3(b) and 8.3(l) or securing the Previous
Credit Agreement Outstandings.
"Permitted Book-Entry Securities": securities (i) which conform
in all respects to the requirements set forth in the definition of Cash
Equivalents except that such securities are not evidenced by a certificate
and (ii) in which the Administrative Agent shall have acquired a perfected
first priority security interest or in the security entitlement with
respect thereto in the manner provided by the UCC.
"Permitted Expenses": expenses arising from claims in the
Reorganization Cases of the following parties for the following amounts:
(i)(A) allowed professional fees and disbursements incurred by the
professionals (the "Professionals") retained, pursuant to sections 327(a)
or (e) of the Bankruptcy Code under a general retainer (excepting ordinary
course professionals) or 1103(a), by the Loan Parties and up to two
statutory committees (the "Committee") appointed in the Reorganization
Cases and (B) the expenses of any member of any such Committee allowed
under section 503(b)(3)(F) of the Bankruptcy Code, in an aggregate amount,
after the occurrence and during the continuance of an Event of Default, not
to exceed the sum of $3,000,000, inclusive of any holdbacks required by the
Bankruptcy Court for post-default services, plus professional fees and
disbursements previously incurred, accrued or invoiced prior to such Event
of Default and the delivery of notice as provided below, to the extent
previously or subsequently allowed, and (ii) quarterly fees required to be
paid to the United States Trustee pursuant to 28 U.S.C. ss. 1930(a)(6) and
any fees payable to the Clerk of the Bankruptcy Court; provided that
notwithstanding the occurrence or continuance of an Event of Default, no
fees or disbursements incurred, accrued or invoiced during the pendency of
an Event of Default shall reduce the gross amount of the Permitted Expenses
prior to the delivery (by hand, facsimile or overnights delivery) to the
Borrower and counsel to the Committee of a notice by the Administrative
Agent of the Borrower's noncompliance with the terms of this Agreement and
the triggering of the dollar limitations set forth above; provided, further
that Permitted Expenses shall not include, apply to or be available for any
fees or expenses incurred by any person, including the Professionals or the
Committee, in (A) objecting to or contesting in any manner, or in raising
any defenses to, the validity, extent, perfection, priority or
enforceability of Indebtedness arising under the Previous Credit Agreements
or this Agreement (or, in either case, any other Loan Documents related
thereto) or any liens or security interests with respect thereto or any
other rights or interests of the Administrative Agent or the Lenders, or in
asserting any claims or causes of action, including, without limitation,
any actions under chapter 5 of the Bankruptcy Code, against the
Administrative Agent, the Collateral Monitoring Agent or the Lenders, (B)
preventing, hindering or delaying the Lenders' or the Administrative
Agent's enforcement or realization upon any of the Collateral (during the
continuance of an Event of Default), (C) using cash collateral or selling
any Collateral except as permitted herein, (D) incurring Indebtedness
except as permitted herein or (E) modifying the Lenders' or the
Administrative Agent's rights under this Agreement or the other Loan
Documents in a non-consensual manner. As long as no Event of Default shall
have occurred and be continuing, the
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Borrower and the Subsidiary Guarantors shall pay compensation and
reimbursement of expenses as authorized by any applicable order of the
Bankruptcy Court, as the same may be payable, and the amount shall be
Permitted Expenses. The automatic stay shall be deemed lifted with respect
to the delivery by the Administrative Agent or the Lenders of the notice
notifying the Borrower of the commencement of the limitation described
above.
"Permitted Inventory Liens": the collective reference to Liens
permitted by subsections 8.3(a), 8.3(b) and 8.3(1) or securing the Previous
Credit Agreement Outstandings.
"Permitted Mortgage Liens": the collective reference to Liens
permitted by subsections 8.3(a), 8.3(b), 8.3(e) and 8.3(l), or securing the
Previous Credit Agreement Outstandings.
"Permitted Prepetition Claim Payment": a payment (as adequate
protection or otherwise) on account of any Claim arising or deemed to have
arisen prior to the commencement of the Reorganization Cases, which is made
(i) pursuant to authority granted by a First Day Order of the Bankruptcy
Court, (ii) in connection with (A) pre-petition Consignment Inventory
Claims, (B) reclamation Claims up to $15,000,000, (C) pre-petition sales
tax and payroll tax Claims, (D) Claims in respect of the assumption of
leases and other contractual obligations, and (E) additional pre-petition
Claims of up to $15,000,000, or (iii) in satisfaction of secured
Indebtedness by application of the Proceeds received from the sale of the
specific assets securing such Indebtedness.
"Permitted Sale-Leaseback": as defined in subsection 8.11.
"Permitted Trade L/C Facility": all Indebtedness, if any, and
other obligations of the Borrower and its Subsidiaries, now existing or
hereafter arising, under or in connection with (a) any letters of credit
issued at any time for the account of the Borrower or any of its
Subsidiaries pursuant to that certain Letter of Credit Application
Agreement dated May 31, 1997 by and among Wholesale Supply Company, Inc.,
the Borrower and First American National Bank and (b) the commitment
letters, security agreements, guarantees, instruments and other documents
executed and delivered from time to time in connection therewith, in each
case, subject to compliance with the terms hereof, as the same may now or
hereafter be amended, restated, modified, increased, extended, refinanced,
replaced or refunded from time to time.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other entity
of whatever nature.
"Petition Date": as defined in the recitals hereto.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
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"Plan Acceptance Date": as defined in the definition of "Interim
Reserve Amount".
"Plan of Reorganization": a proposed plan of reorganization for
the Borrower whether filed with or confirmed by order of the Bankruptcy
Court.
"Pledged Securities": the collective reference to (i) the Pledged
Stock, (ii) all Investment Securities, (iii) all Cash Equivalents,
Permitted Book-Entry Securities and funds held or on deposit from time to
time in the Securities Accounts, and (iv) all Proceeds thereof, except as
provided for in subsection 10.9 of the Master Security Agreement.
"Pledged Stock": the shares of Capital Stock set forth on
Schedule 2 to the Master Security Agreement and other shares of Capital
Stock pledged thereunder from time to time pursuant to Section 4 thereof.
"Pledgors": the collective reference to the obligors parties to
the Master Security Agreement.
"Previous Credit Agreement Outstandings": at any date, the sum of
all the amounts outstanding at such date (whether for principal, interest,
fees, reimbursement obligations or otherwise) under any of the Previous
Credit Agreements or secured by the collateral granted pursuant to the
Existing Credit Agreement and the Emergency Order.
"Previous Credit Agreements": the Credit Agreement, dated as of
June 8, 1994, among SMC, as borrower, the lenders party thereto, and The
Chase Manhattan Bank, as administrative agent, as amended and restated by
the Amended and Restated Credit Agreement, dated as of September 10, 1997,
among SMC, as borrower, the lenders party thereto, The Chase Manhattan
Bank, as administrative agent and collateral agent for such lenders, and
Citicorp, as documentation agent for such lenders, as amended and restated
by the Existing Credit Agreement, each as amended.
"Proceeds": as defined in the UCC.
"Professionals": as defined in the definition of "Permitted
Expenses".
"Protective Advance": as defined in subsection 3.16(f).
"Qualified Stock": any stock of the Borrower which does not by
its terms mature or require repurchase or redemption thereof in whole or in
part on or prior to the first anniversary of the Termination Date or the
Term Loan Maturity Date.
"Real Property Amortization Amount": with respect to any parcel
of Eligible Mortgaged Real Property at any time, an amount equal to the
product of (a) $500,000 times (b) the number of full three-month periods
that have been elapsed since the Effective Date.
"Register": as defined in subsection 11.6(d).
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"Regulation U": Regulation U of the Board of Governors as in
effect from time to time.
"Regulation X": Regulation X of the Board of Governors as in
effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower
pursuant to subsection 3.10(a) to reimburse each Issuing Bank for amounts
drawn under any Letter of Credit issued by such Issuing Bank.
"Releasees": as defined in subsection 11.24.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reorganization Cases": the collective reference to the cases of
the Borrower and the Subsidiary Guarantors pursuant to chapter 11 of the
Bankruptcy Code pending in the Bankruptcy Court.
"Reportable Event": any of the events set forth in Section 4043
of ERISA, other than those events as to which the thirty day notice period
is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. ss. 4043.
"Required Lenders": at any time, Lenders the Voting Percentages
of which aggregate more than 66-2/3%.
"Requirement of Law": as to any Person, the Certificate or
Articles of Incorporation and Bylaws or other organizational or governing
documents of such Person, and any law, statute, ordinance, code, decree,
treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject (including, without limitation, laws, ordinances and
regulations pertaining to the zoning, occupancy and subdivision of real
property).
"Reserve Calculation Date": the date of the second Borrowing Base
Certificate of any month, in which Borrowing Base Certificate the various
reserve amounts shall be calculated and/or revised based upon the operating
results as of the end of the previous fiscal month.
"Responsible Officer": the chief executive officer, the
president, any executive vice president, the chief financial officer or the
treasurer of the Borrower or, with respect to financial matters, the chief
executive officer, the president, the executive vice president-finance, the
chief financial officer or treasurer of the Borrower, provided that, for
purposes of subsection 10.3(f) of the Master Security Agreement and
subsection 7.7 and Section 9(d) only, a "Responsible Officer" shall also
include the general counsel and any assistant treasurer of the Borrower.
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"Restricted Payments": as defined in subsection 8.6.
"Restricted Subsidiaries": collectively, the Domestic
Subsidiaries and Foreign Subsidiaries.
"Revolving Credit Commitment": as to any Lender, the obligation
of such Lender to make Revolving Loans to and/or participate in Swing Line
Loans to and/or issue or participate in Letters of Credit issued on behalf
of the Borrower in an aggregate principal and/or face amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1(a) under the heading "Revolving Credit Commitment", as
such amount may be reduced from time to time pursuant to this Agreement or
as such amount may be adjusted from time to time pursuant to subsection
11.6.
"Revolving Credit Commitment Percentage": as to any Lender (a) at
any time prior to the termination of the Revolving Credit Commitments, the
percentage of the Revolving Credit Commitments then constituted by such
Lender's Revolving Credit Commitment and (b) at any time after the
termination of the Revolving Credit Commitments, the percentage which (i)
the sum of (x) such Lender's Revolving Loans then outstanding plus (y) the
product of such Lender's Revolving Credit Commitment Percentage immediately
prior to the termination of the Revolving Credit Commitments (after giving
effect to any permitted assignment pursuant to subsection 11.6) times the
sum of (1) the aggregate principal amount of Swing Line Loans then
outstanding plus (2) the L/C Obligations then outstanding then constitutes
of (ii) the sum of (x) the aggregate principal amount of Revolving Loans of
all the Lenders then outstanding plus (y) the aggregate principal amount of
all Swing Line Loans then outstanding plus (z) the aggregate L/C
Obligations then outstanding.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to but not including the Termination Date.
"Revolving Credit Extensions of Credit": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Loans made by such Lender then outstanding and (b) such
Lender's Revolving Credit Commitment Percentage of the sum of (i) the
aggregate principal amount of Swing Line Loans then outstanding and (ii)
the L/C Obligations then outstanding.
"Revolving Credit Lender": any Lender with an unused Revolving
Credit Commitment hereunder and/or any Revolving Loans outstanding
hereunder.
"Revolving Loans": as defined in subsection 3.1(a).
"Revolving Credit Note": as defined in subsection 4.13(d).
"Sale-Leaseback": as defined in subsection 8.11.
"SEC": the Securities and Exchange Commission and any
Governmental Authority which succeeds to the powers and functions thereof.
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"Secured Obligations": all of the following, in each case whether
now existing or hereafter incurred or created, except to the extent
otherwise expressly provided in the agreements or instruments relating
thereto:
(i) the Credit Agreement Obligations;
(ii) all sums payable by the Borrower and the Subsidiary
Guarantors under the Master Security Agreement or any other Security
Document;
(iii) liabilities of the Borrower or any Subsidiary Guarantor for
Overdrafts; and
(iv) liabilities and obligations of the Borrower or any
Subsidiary Guarantor under Derivative Agreements.
When used in this Agreement or any of the other Loan Documents with respect
to any of the Secured Obligations that constitute the obligations of the
Borrower or any Subsidiary Guarantor in respect of a Letter of Credit
issued on behalf of the Borrower or such Subsidiary Guarantor or under any
Derivative Agreement or any similar obligation, the term "outstanding"
shall include, at any time, without duplication, the aggregate of the
principal, interest and other amounts then outstanding that are the subject
of such Letter of Credit or similar obligation that have not then been
reimbursed by the Borrower or the relevant Subsidiary Guarantor and the
amount then available to be drawn or demanded under such Letter of Credit
or similar obligation (assuming compliance with all conditions to drawing)
or the termination liabilities, if any, of the Borrower or the Subsidiary
Guarantor under such Derivative Agreement.
"Secured Parties": the Lenders, the Issuing Banks, the
Administrative Agent, the Collateral Monitoring Agent, each counterparty to
any Derivative Agreement entered into with the Borrower (if such
counterparty is a Lender or an affiliate of a Lender) and the beneficiaries
of each indemnification obligation of any Loan Party undertaken in any Loan
Document, and the successors and assigns of each of the foregoing.
"Securitization Entity": with respect to the Borrower or any
Subsidiary, a corporation, partnership, trust, limited liability company or
other entity that is formed by the Borrower or such Subsidiary for the
purpose of effecting or facilitating a Securitization Transaction and which
engages in no business and incurs no Indebtedness or other liabilities
other than those related to or incidental to the Securitization
Transaction.
"Securitization Transaction": a transaction or series of related
transactions pursuant to which a corporation, partnership, trust, limited
liability company or other entity incurs obligations or issues interests,
the proceeds of which are used to finance a discrete pool (which may be
fixed or revolving) of receivables, leases or other financial assets, or a
discrete portfolio of real property or equipment, subject in each case to
the approval of the Agents.
"Securities Account": any account which is maintained with the
Administrative Agent or any agent thereof pursuant to any of the Previous
Credit Agreements and still in effect on the Petition Date or any
instructions delivered by the Borrower or a Subsidiary Guarantor to
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the Administrative Agent or such agent in accordance with subsection 4.8(a)
of the Master Security Agreement, in which all Pledged Securities which are
Cash Equivalents (other than Excepted Cash Equivalents) are to be held by
the Administrative Agent or a custodian or other agent of the
Administrative Agent, subject to release upon request by the relevant
Pledgor strictly in accordance with such Previous Credit Agreements until
the Petition Date or subsection 4.8(c) of the Master Security Agreement
thereafter, and in each of which the Administrative Agent shall have a
perfected first priority security interest.
"Security": as defined in subsection 1.1 of the Master Security
Agreement.
"Security Documents": the collective reference to the Master
Security Agreement, the Blocked Account Agreements, the Custody and Control
Agreements, the Lockbox Agreements and each other agreement entered into
pursuant to subsection 11.1(b) of the Master Security Agreement.
"Senior Notes Indenture": the Indenture, dated as of October 15,
1993, between the Borrower and State Street Bank and Trust Company (as
successor trustee to The First National Bank of Boston), as trustee, as
amended, supplemented or otherwise modified from time to time.
"Shrink Reserve": as of any Calculation Date, an amount equal to
1.75% of the cost of Inventory as reflected on the IE System. Such Shrink
Reserve percentage shall adjust from time to time at the Agents' sole
discretion exercised commercially reasonably in accordance with customary
business practices, based on the results of the Borrower's cycle and
physical Inventory counts.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SMC": Service Merchandise Company, Inc., a Tennessee
corporation.
"Special Purpose Subsidiary": any Subsidiary of the Borrower
organized solely for the purpose of (a) holding a license or permit issued
by any Governmental Authority and used in connection with the business of
the Borrower and/or its Subsidiaries or (b) providing employee services for
use in the foreign operations of the Borrower or any of its Subsidiaries,
provided that such Subsidiary shall only be a "Special Purpose Subsidiary"
for so long as such Subsidiary does not own any assets (other than any such
license or permit and other than any assets with a book value not exceeding
$5,000,000 in the aggregate) and does not engage in any business other than
holding such license or permit or providing such employee services and, in
each case, activities directly related thereto.
"Standby L/C Fee Rate": at any time, the rate per annum on the
aggregate undrawn amount of Standby Letters of Credit equal to 2.0%,
provided that during the continuance of an Event of Default the Standby L/C
Fee Rate shall be 4.0% per annum.
"Standby Letter of Credit": as defined in subsection 3.6(b)(i).
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"Standby Letter of Credit Outstandings": at any time, an amount
equal to the sum of (a) the aggregate then undrawn and unexpired amount of
the then outstanding Standby Letters of Credit issued in Dollars, (b) the
Dollar Equivalent of the aggregate then undrawn and unexpired amount of
then outstanding Letters of Credit issued in currencies other than Dollars
(such Dollar Equivalent to be determined as of the date of issuance of such
Standby Letter of Credit), (c) the aggregate amount of Reimbursement
Obligations in respect of Standby Letters of Credit issued in Dollars which
have not then been paid pursuant to subsection 3.10(a) and (d) (i) the
Dollar Equivalent of the aggregate amounts of Reimbursement Obligations in
respect of Standby Letters of Credit issued in currencies other than
Dollars which have not been reimbursed pursuant to subsection 3.10(a) (such
Dollar Equivalent to be calculated as of the date such Reimbursement
Obligation becomes due and payable) and which have not been converted into
Dollars in accordance with subsection 3.10(a) and (ii) the aggregate amount
of Reimbursement Obligations in respect of Standby Letters of Credit issued
in currencies other than Dollars which have not been reimbursed pursuant to
subsection 3.10(a) and which have been converted into Dollars in accordance
with such subsection.
"Subordinated Debentures": the Borrower's 9% Senior Subordinated
Debentures due 2004 issued pursuant to the Subordinated Debt Indenture.
"Subordinated Debt Indenture": the Indenture, dated as of
February 15, 1993, between the Borrower and First American National Bank,
as trustee, as amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary set forth on Schedule
5.13 under the heading "Initial Subsidiary Guarantors", together with each
other Subsidiary that becomes a party to the Master Security Agreement in
compliance with subsection 7.11(b).
"Swing Line Commitment": the lesser of (a) $50,000,000 and (b)
the Revolving Credit Commitments then in effect.
"Swing Line Lender": Citicorp and any other Lender acceptable to
the Administrative Agent that agrees to be a Swing Line Lender.
"Swing Line Loans": as defined in subsection 3.14.
"Swing Line Note": as defined in subsection 4.13(f).
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"Tax Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Telerate Page 3750": the display page currently so designated on
the Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace that
service for the purpose of displaying comparable rates or prices).
"Term Loan": as defined in subsection 2.1.
"Term Loan Lender": any Lender with Term Loans outstanding
hereunder.
"Term Note": as defined in subsection 4.13(e).
"Termination Date": the earliest of (i) June 30, 2001, (ii) the
Consummation Date and (iii) in the case of the Revolving Loans, the date of
termination in whole of the Revolving Credit Commitments pursuant to
subsection 3.4 or Section 9.
"Trade L/C Fee Rate": at any time the rate per annum on the
aggregate undrawn amount of Trade Letters of Credit equal to 1.0%, provided
that during the continuance of any Event of Default, the Trade L/C Fee Rate
shall be 3.0% per annum.
"Trade Letter of Credit": as defined in subsection 3.6(b)(i).
"Trade Letter of Credit Outstandings": at any time, an amount
equal to the sum of (a) the aggregate then undrawn and unexpired amount of
the then outstanding Trade Letters of Credit issued in Dollars, (b) the
Dollar Equivalent of the aggregate then undrawn and unexpired amount of the
then outstanding Trade Letters of Credit issued in currencies other than
Dollars (such Dollar Equivalent to be calculated as of the date of issuance
of such Letters of Credit), (c) the aggregate amount of Reimbursement
Obligations in respect of Trade Letters of Credit issued in Dollars which
have not then been paid pursuant to subsection 3.10(a) and (d) (i) the
Dollar Equivalent of the aggregate amount of Reimbursement Obligations in
respect of Trade Letters of Credit issued in currencies other than Dollars
which have not then been paid pursuant to subsection 3.10(a) (such Dollar
Equivalent to be calculated as of the date such Reimbursement Obligation
becomes due and payable) and which have not been converted into Dollars in
accordance with subsection 3.10(a) and (ii) the aggregate amount of
Reimbursement Obligations in respect of Trade Letters of Credit issued in
currencies other than Dollars which have not been reimbursed pursuant to
subsection 3.10(a) and which have been converted into Dollars in accordance
with such subsection.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Eurodollar Loans
shall originally have been made on the same day).
"Transferee": as defined in subsection 11.6(f).
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"Transaction Costs": the fees, costs and expenses payable by the
Borrower to any Agent or Lender in connection with the execution, delivery
and performance of the Loan Documents and the transactions contemplated
thereby.
"Type": as to any Term Loan or Revolving Loan, its nature as an
ABR Loan or a Eurodollar Loan.
"UCC": the Uniform Commercial Code as in effect in the State of
New York from time to time or, where applicable as to specific Collateral,
any other relevant state.
"UCC Filing Collateral": Collateral (other than fixtures) as to
which filing financing statements under the UCC of the applicable
jurisdiction is an appropriate method of perfection of a security interest
in such Collateral.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and the International Standby Practices - ISP98,
International Chamber of Commerce Publication No. 590, each as the same may
be amended or revised from time to time.
"Voting Percentage": as to any Lender (a) at any time prior to
the termination of the Revolving Credit Commitments, the percentage which
(i) the sum of (x) such Lender's Revolving Credit Commitment plus (y) the
outstanding principal amount of such Lender's Term Loan then constitutes of
(ii) the sum of (x) the Revolving Credit Commitments of all the Lenders,
plus (y) the aggregate principal amount of Term Loans of all the Lenders
then outstanding and (b) at any time after the termination of the Revolving
Credit Commitments, the percentage which (i) the sum of (x) the principal
amount of such Lender's Loans (other than Swing Line Loans) then
outstanding plus (y) the product of such Lender's Revolving Credit
Commitment Percentage times the L/C Obligations and Swing Line Loans then
outstanding then constitutes of (ii) the sum of (x) the aggregate principal
amount of Loans of all the Lenders then outstanding plus (y) the aggregate
L/C Obligations of all the Lenders then outstanding.
"Y2K Compliance": the ability of a computer program to (i)
record, store, process, calculate, present and, where appropriate, insert
time and accurate dates and calculations for calendar dates falling on or
after (and, if applicable, spans of time including) January 1, 2000, (ii)
record, store, process, calculate and present any information and/or data
dependent on or relating to such dates in the same manner, and with the
same functionality, data integrity and performance, as the Software
records, stores, processes, calculates and presents calendar dates on or
before December 31, 1999 and in such fashion as to respond to two-digit
date input in a way that eliminates all ambiguities as to the century of
concern, and treats the year 2000 as a leap-year and correctly and
accurately regards and processes data and information with respect thereto,
and (iii) lose no functionality with respect to the introduction of
records, including but not limited to back-up and archived information
and/or data, containing dates falling on or after January 1, 2000 and "Y2K
Compliant" has the correlative meaning.
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1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any Loan Document or any
certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in any other Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The word "including" shall mean "including, without limitation"
unless the context otherwise requires.
(e) The meanings given to defined terms herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNTS AND TERMS OF TERM LOANS
2.1 TERM LOANS. On the Effective Date the Term Loan Lenders shall
make Term Loans to the Borrower in an aggregate principal amount equal to
$100,000,000, the proceeds of which will be used first to repay outstanding Term
Loans under the Existing Credit Agreement, second, if the outstanding Term Loans
under the Existing Credit Agreement are less than $100,000,000 to repay
outstanding Revolving Credit Loans under the Existing Credit Agreement, and
third to repay outstanding Revolving Credit Loans under the Permanent Facility.
After giving effect to such Term Loans under this Agreement, each Term Loan
Lender shall have outstanding a Term Loan owing to it by the Borrower in a
principal amount equal to the amount set forth opposite such Lender's name on
Schedule 1.1(a). The Term Loans may from time to time be (i) Eurodollar Loans,
(ii) ABR Loans or (iii) a combination thereof, as determined by the Borrower and
notified to the Administrative Agent in accordance with subsection 4.2.
2.2 REPAYMENT OF TERM LOANS; AMORTIZATION. The Borrower hereby agrees
to pay interest on the unpaid principal amount of the Term Loans from time to
time outstanding from the Effective Date until payment in full thereof at the
rates per annum, and on the dates, set forth in subsection 4.4. The principal
amount of the Term Loans shall be payable in eight equal quarterly installments,
each in an aggregate principal amount equal to $250,000 on the first Business
Day of the months of January, April, July and October, beginning on July 1,
1999, and a final installment in an aggregate principal amount equal to the
remaining principal balance thereof on the Termination Date. The Borrower hereby
further agrees to pay interest on the unpaid principal amount of the Term Loans
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from time to time outstanding from the Effective Date until payment in full
thereof at the rates per annum, and on the dates, set forth in subsection 4.4.
SECTION 3. AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS AND THE INTERIM
FACILITY
3.1 REVOLVING CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof, each Revolving Credit
Lender severally agrees to make revolving credit loans ("Revolving Loans") to
the Borrower from time to time during the Revolving Credit Commitment Period in
an aggregate principal amount at any one time outstanding which, when added to
such Revolving Credit Lender's Revolving Credit Commitment Percentage of an
amount equal to the sum of (i) the aggregate principal amount of Swing Line
Loans then outstanding plus (ii) the then outstanding L/C Obligations (in each
case, after giving effect to the use of proceeds of such Revolving Loans), does
not exceed the amount of such Revolving Credit Lender's Revolving Credit
Commitment, provided that no Revolving Credit Lender shall be required to make a
Revolving Loan to the extent that, after giving effect thereto, (x) other than
during the Interim Facility Period, the Aggregate Outstanding Extensions of
Credit at such time would exceed the Borrowing Base or (y) during the Interim
Facility Period, the sum of the Aggregate Outstanding Extensions of Credit at
such time and the Previous Credit Agreement Outstandings at such time would
exceed the lesser of the Borrowing Base at such time and $500,000,000. During
the Revolving Credit Commitment Period, the Borrower may use the Revolving
Credit Commitments by borrowing, prepaying and reborrowing the Revolving Loans
in whole or in part, all in accordance with the terms and conditions hereof.
(b) The Revolving Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsections
3.2 and 4.2.
3.2 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Loans are to be initially Eurodollar Loans or (b) one Business Day
prior to the requested Borrowing Date, otherwise), which notice may be given by
telephone (to be promptly confirmed in writing, including by facsimile),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, ABR Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in the
case of ABR Loans (except as otherwise provided in subsection 3.16(a)),
$5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
Available Revolving Credit Commitments are less than $5,000,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $10,000,000 or a whole multiple
of $l,000,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Revolving
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Credit Lender thereof. Each Revolving Credit Lender will make the amount of its
pro rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent specified in
subsection 11.2 prior to 1:00 P.M., New York City time, on the Borrowing Date
requested by the Borrower in Dollars and in funds immediately available to the
Administrative Agent. Such borrowing will be made available to the Borrower
promptly (but in no event later than 1:00 P.M., New York City time) by the
Administrative Agent crediting the account of the Borrower on the books of such
office of the Administrative Agent with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Credit Lenders and in
like funds as received by the Administrative Agent.
3.3 COMMITMENT FEE. The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Credit Lender a non-refundable
commitment fee for the period from and including the first day of the Revolving
Credit Commitment Period to but not including the Termination Date, computed at
a rate per annum equal to the Applicable Commitment Fee Rate then in effect on
the average daily amount of the Available Revolving Credit Commitment of such
Revolving Credit Lender during the period (net of any Swing Line Loans made by
such Revolving Credit Lender as a Swing Line Lender, to the extent and only to
the extent such Swing Line Loans are less than or equal to the unused Revolving
Credit Commitment of such Revolving Credit Lender) for which payment is made,
payable monthly in arrears on the last day of each month and on the Termination
Date (whether by stated maturity or otherwise) or such earlier date as the
Revolving Credit Commitments shall terminate as provided herein, commencing on
the first of such dates to occur after the Closing Date.
3.4 TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower shall have
the right, upon not less than two Business Days' notice to the Administrative
Agent, to terminate the Revolving Credit Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments, provided that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Loans made on the effective date thereof,
the aggregate principal amount of the Revolving Loans then outstanding, when
added to the then outstanding L/C Obligations and the aggregate principal amount
of then outstanding Swing Line Loans, would exceed the Revolving Credit
Commitments then in effect. Any such reduction shall be in an amount equal to
$10,000,000 or a whole multiple of $l,000,000 in excess thereof and shall reduce
permanently the Revolving Credit Commitments then in effect. Upon receipt of any
notice pursuant to this subsection 3.4, the Administrative Agent shall promptly
notify each Revolving Credit Lender thereof.
3.5 REPAYMENT OF REVOLVING LOANS. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Revolving
Credit Lender the then unpaid principal amount of each Revolving Loan of such
Revolving Credit Lender on the Termination Date (or such earlier date on which
the Revolving Loans become due and payable pursuant to Section 9). The Borrower
hereby further agrees to pay interest on the unpaid principal amount of the
Revolving Loans from time to time outstanding from the Effective Date until
payment in full thereof at the rates per annum, and on the dates, set forth in
subsection 4.4.
3.6 L/C COMMITMENT.
(a) Subject to the terms and conditions hereof, each Issuing Bank, in
reliance on the agreements of the other Lenders set forth in subsection 3.9(a),
agrees to issue letters of credit ("Letters of
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Credit") for the account of the Borrower on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by such Issuing Bank; provided that no Issuing Bank shall have any
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations at such time would exceed the L/C Commitment,
(ii) the Standby Letter of Credit Outstandings at such time would exceed
$125,000,000, (iii) the Aggregate Revolving Credit Outstandings at such time
would exceed the aggregate amount of the Revolving Credit Commitments at such
time, (iv) in the case of Letters of Credit issued in currencies other than
Dollars only, the L/C Obligations in respect of Letters of Credit issued in
currencies other than Dollars would exceed the Foreign L/C Commitment Sublimit
at such time, or (v) the Aggregate Outstanding Extensions of Credit at such time
would exceed the Borrowing Base at such time.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars or such other currency that as of the
date of issuance thereof is in the reasonable judgment of the relevant
Issuing Bank (which shall be binding on the L/C Participants) freely
convertible or exchangeable into Dollars as the Borrower, the relevant
Issuing Bank and the Administrative Agent may from time to time agree, and
shall be either (A) a standby letter of credit issued to support
obligations of the Borrower or a Subsidiary, contingent or otherwise (a
"Standby Letter of Credit"), or (B) a commercial letter of credit issued in
respect of the purchase of inventory or other goods or services by the
Borrower and its Subsidiaries in the ordinary course of business (a "Trade
Letter of Credit"), and
(ii) expire no later than the earlier of (A) five Business Days prior
to the Termination Date and (B) one year after the date of issuance
thereof, provided that, subject to clause (A) above, any Letter of Credit
may, at the request of the Applicant as set forth in the applicable
Application, be automatically renewed on each anniversary of the issuance
thereof for an additional period of one year or less unless the Issuing
Bank which issued such Letter of Credit shall have given at least sixty
days prior written notice to the Borrower and the beneficiary of such
Letter of Credit that such Letter of Credit will not be renewed, in which
case such Letter of Credit may, at the option of the Borrower, provide that
the beneficiary of such Letter of Credit will be entitled to draw on such
Letter of Credit at any time during the thirty days prior to the expiry
thereof.
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the law of the State of New York.
(d) No Issuing Bank shall at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause such
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
(e) On the Effective Date, all letters of credit and the
reimbursement obligations attendant thereto issued pursuant to or under any of
the Previous Credit Agreements which are then outstanding shall be from and
after such date deemed to be and become for all purposes Letters of Credit with
Reimbursement Obligations attendant thereto issued pursuant to and be
outstanding under this Agreement.
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3.7 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. An Applicant may
from time to time request that an Issuing Bank issue a Letter of Credit by
delivering (a) to such Issuing Bank at its address for notices specified herein
in such manner as may be agreed by or be reasonably acceptable to such Issuing
Bank (including by electronic transmission) an Application therefor, completed
to the satisfaction of such Issuing Bank, and such other certificates, documents
and other papers and information as such Issuing Bank may reasonably request and
(b) a notice to the Administrative Agent that such Letter of Credit has been
requested. Upon receipt of any Application, each Issuing Bank agrees to process
such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall such Issuing Bank be required to issue any Letter
of Credit earlier than two Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by such Issuing Bank
and the Borrower. Each Issuing Bank shall furnish a copy of each Letter of
Credit issued by such Issuing Bank to the Borrower and the Administrative Agent
promptly following the issuance thereof.
3.8 LETTER OF CREDIT FEES, COMMISSIONS AND OTHER CHARGES.
(a) The Borrower shall pay to the relevant Issuing Bank with respect
to each Letter of Credit issued by such Issuing Bank under this Agreement, for
the account of such Issuing Bank, a fronting fee with respect to the period from
the date of issuance of such Letter of Credit to the expiration or termination
date of such Letter of Credit, computed at a rate per annum equal to 0.25% on
the average aggregate amount available to be drawn under such Letter of Credit
during the period for which such fee is calculated. Such fronting fee shall be
payable monthly in arrears on each L/C Fee Payment Date to occur after the
issuance of such Letter of Credit and on the Termination Date or on such earlier
date as the Revolving Credit Commitments shall terminate as provided herein and
shall be nonrefundable.
(b) The Borrower shall pay to the Administrative Agent, for the
account of the L/C Participants, a letter of credit commission with respect to
each Trade Letter of Credit issued under this Agreement with respect to the
period from the date of issuance of such Trade Letter of Credit to the
expiration or termination date of such Letter of Credit, computed at a rate per
annum equal to the Trade L/C Fee Rate in effect from time to time on the average
aggregate amount available to be drawn under such Trade Letter of Credit during
the period for which such fee is calculated. Such commission shall be shared
ratably among the L/C Participants in accordance with their respective Revolving
Credit Commitment Percentages. Such commission shall be payable in arrears on
each L/C Fee Payment Date to occur after the issuance of such Letter of Credit
and on the Termination Date (or on such earlier date as the Revolving Credit
Commitments shall terminate as provided herein) and shall be nonrefundable.
(c) The Borrower shall pay to the Administrative Agent, for the
account of the L/C Participants, a letter of credit commission with respect to
each Standby Letter of Credit with respect to the period from the date of
issuance of such Standby Letter of Credit to the expiration or termination date
of such Letter of Credit, computed at a rate per annum equal to the Standby L/C
Fee Rate in effect from time to time on the average aggregate amount available
to be drawn under such Standby Letter of Credit during the period for which such
fee is calculated. Such commission shall be shared ratably among the L/C
Participants in accordance with their respective Revolving Credit Commitment
Percentages. Such commission shall be payable in arrears on each L/C Fee Payment
Date to occur after the issuance of such
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Letter of Credit and on the Termination Date (or on such earlier date as the
Revolving Credit Commitments shall terminate as provided herein) and shall be
nonrefundable.
(d) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse each Issuing Bank for such normal and customary costs and
expenses as may be agreed upon by the Borrower and such Issuing Bank in
connection with issuing, effecting payment under, amending or otherwise
administering any Letter of Credit issued by such Issuing Bank.
(e) The Administrative Agent shall, promptly following its receipt
thereof, distribute to each Issuing Bank and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
3.9 L/C PARTICIPATIONS.
(a) Each Issuing Bank irrevocably agrees to grant and hereby grants
to each L/C Participant (other than such Issuing Bank), and, to induce such
Issuing Bank to issue Letters of Credit hereunder, each such L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
such Issuing Bank, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Commitment Percentage in such Issuing Bank's
obligations and rights under each Letter of Credit issued by such Issuing Bank
hereunder and the amount of each draft paid by such Issuing Bank thereunder.
Each such L/C Participant unconditionally and irrevocably agrees with each
Issuing Bank that, if a draft is paid under any Letter of Credit issued by such
Issuing Bank for which such Issuing Bank is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Administrative Agent for the account of such Issuing Bank upon
demand an amount equal to such L/C Participant's Revolving Credit Commitment
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to any
Issuing Bank pursuant to subsection 3.9(a) in respect of any unreimbursed
portion of any payment made by such Issuing Bank under any Letter of Credit
issued by such Issuing Bank is paid to such Issuing Bank within three Business
Days after the date such payment is due, such L/C Participant shall pay to such
Issuing Bank on demand an amount equal to the product of (i) such amount, times
(ii) the daily average Federal Funds Rate, during the period from and including
the date such payment is required to the date on which such payment is
immediately available to such Issuing Bank, times (iii) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.9(a) is not in fact made available to any
Issuing Bank by such L/C Participant within three Business Days after the date
such payment is due, such Issuing Bank shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Revolving Credit Loans that
are ABR Loans hereunder. A certificate of any Issuing Bank submitted to any L/C
Participant with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after any Issuing Bank has made payment
under any Letter of Credit issued by such Issuing Bank and has received from any
L/C Participant its pro rata share
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of such payment in accordance with subsection 3.9(a), such Issuing Bank receives
any payment related to such Letter of Credit (whether directly from the Borrower
or otherwise, including proceeds of collateral applied thereto by such Issuing
Bank), or any payment of interest on account thereof, such Issuing Bank will
distribute to such L/C Participant its pro rata share thereof.
(d) If any payment received by any Issuing Bank pursuant to
subsection 3.10 with respect to any Letter of Credit issued by it shall be
required to be returned by such Issuing Bank, each L/C Participant shall pay to
such Issuing Bank its pro rata share thereof.
3.10 LETTER OF CREDIT REIMBURSEMENT OBLIGATIONS.
(a) The Borrower agrees to reimburse each Issuing Bank for the amount
of (i) any draft paid by such Issuing Bank under any Letter of Credit issued by
such Issuing Bank and (ii) any taxes, fees, charges or other costs or expenses
reasonably incurred by such Issuing Bank in connection with such payment
(including any such costs and expenses related to any conversion of any such
amount into Dollars as contemplated by the next succeeding sentence). Except as
otherwise agreed by the Borrower and the relevant Issuing Bank, each such
payment shall be made to the relevant Issuing Bank at its address for notices
specified herein in the currency in which the relevant Letter of Credit was
issued in immediately available funds in such currency, provided that if the
Borrower does not reimburse the relevant Issuing Bank for any draft paid by such
Issuing Bank under any Letter of Credit issued by such Issuing Bank in a
currency other than Dollars on the date required pursuant to subsection 3.10(b),
such Issuing Bank shall convert such amount into Dollars at the rate of exchange
then available to such Issuing Bank in the interbank market where its foreign
currency exchange operations in respect of such currency are then being
conducted and the Borrower shall thereafter be required to reimburse in Dollars
such Issuing Bank for such amount with interest pursuant to subsection 3.10(b).
(b) If any draft shall be presented for payment under any Letter of
Credit issued by any Issuing Bank, such Issuing Bank shall promptly notify the
Borrower of the date and amount thereof. The Borrower shall reimburse each
Issuing Bank pursuant to subsection 3.10(a) with respect to any drawing under
any Letter of Credit issued by such Issuing Bank on (i) the Business Day on
which such drawing is paid by such Issuing Bank, if notice of such drawing is
given to the Borrower by such Issuing Bank prior to 12:00 Noon, New York City
time, on the date such drawing is paid, or (ii) the first Business Day after
notice of such drawing is given to the Borrower by the Issuing Bank, if such
notice is given after 12:00 Noon, New York City time, on the date such drawing
is paid, and, if such drawing is reimbursed after the date of such drawing,
interest shall be payable on the amount of such drawing for the period from the
date such drawing is paid by the Issuing Bank until reimbursed by the Borrower
at the rate then applicable to Revolving Credit Loans that are ABR Loans
hereunder. If any amount payable under this subsection is not paid when due,
interest shall be payable on such amount from the date such amount becomes
payable under this subsection until payment in full thereof at the rate which
would be payable on any outstanding ABR Loans which were then overdue.
3.11 OBLIGATIONS ABSOLUTE.
(a) The Borrower's obligations under this Section 3 in respect of
Letters of Credit shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off,
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counterclaim or defense to payment which the Borrower or any Applicant may have
or have had against any Issuing Bank or any beneficiary of any Letter of Credit.
(b) The Borrower also agrees with each Issuing Bank that such Issuing
Bank shall not be responsible for, and the Borrower's Reimbursement Obligations
shall not be affected by, among other things, (i) the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or (ii) any dispute between or
among the Borrower, any Applicant and any beneficiary of any Letter of Credit or
any other party to which such Letter of Credit may be transferred or (iii) any
claims whatsoever of the Borrower or any Applicant against any beneficiary of
such Letter of Credit or any such transferee.
(c) No Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit issued by
such Issuing Bank, except for errors or omissions caused by such Issuing Bank's
gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by any
Issuing Bank under or in connection with any Letter of Credit issued by such
Issuing Bank or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the UCC and the Uniform Customs, shall be binding on the Borrower
and shall not result in any liability of such Issuing Bank to the Borrower.
3.12 LETTER OF CREDIT PAYMENTS. The responsibility of each Issuing
Bank to the Borrower in connection with any draft presented for payment under
any Letter of Credit issued by such Issuing Bank shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.
3.13 LETTER OF CREDIT APPLICATIONS. To the extent that any provision
of any Application related to any Letter of Credit is inconsistent with the
provisions of this Section 3 or any other terms of this Agreement or any other
Loan Document, the provisions of this Section 3 shall apply and such
inconsistent provision of such Application shall be of no force and effect.
3.14 SWING LINE COMMITMENT. Subject to the terms and conditions
hereof, each Swing Line Lender, in reliance on the agreements of the other
Lenders set forth in subsection 3.16, agrees to make swing line loans ("Swing
Line Loans") to the Borrower from time to time during the Revolving Credit
Commitment Period, provided that (a) no Swing Line Lender shall have any
obligation to make a Swing Line Loan if, after giving effect to any such Swing
Line Loans and the use of proceeds thereof, (i) the aggregate principal amount
of Swing Line Loans then outstanding would exceed the Swing Line Commitment,
(ii) the Aggregate Revolving Credit Outstandings at such time would exceed the
Revolving Credit Commitments in effect at such time or (iii) the Aggregate
Outstanding Extensions of Credit at such time plus, during the Interim Facility
Period, the Previous Credit Agreement Outstandings at such time, would exceed
(x) other than during the Interim Facility Period, the Borrowing Base at such
time or (y) during the Interim Facility Period, the lesser of the Borrowing Base
at such time and $500,000,000, and (b) all borrowings and prepayments of Swing
Line Loans shall be made such that the aggregate principal amount of Swing Line
Loans of each Swing Line Lender outstanding at any time
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shall be equal. During the Revolving Credit Commitment Period, the Borrower may
use the Swing Line Commitment by borrowing, prepaying and reborrowing the Swing
Line Loans in whole or in part, all in accordance with the terms and conditions
hereof. All Swing Line Loans shall be ABR Loans.
3.15 PROCEDURE FOR SWING LINE BORROWING. The Borrower may borrow
under the Swing Line Commitment during the Revolving Credit Commitment Period on
any Business Day, provided that the Borrower shall give the relevant Swing Line
Lender and the Administrative Agent irrevocable notice (which notice may be
given by telephone (to be promptly confirmed in writing, including by facsimile)
and must be received by the Swing Line Lender prior to 1:00 P.M. New York City
time) on the requested Borrowing Date specifying the amount of the requested
Swing Line Loan which shall be in an aggregate minimum amount of $l,000,000 or a
whole multiple of $100,000 in excess thereof (or, if less, the unused portion of
the Swing Line Commitment). The proceeds of the Swing Line Loan will be made
available by the relevant Swing Line Lender to the Borrower at the office of the
Swing Line Lender by 4:00 P.M., New York City time, on the Borrowing Date by
crediting the account of the Borrower at such office with such proceeds. The
Borrower may at any time and from time to time, subject to subsection 3.14,
prepay the Swing Line Loans, in whole or in part, without premium or penalty, by
notifying (which notice may be given by telephone (to be promptly confirmed in
writing, including by facsimile)) the relevant Swing Line Lender and the
Administrative Agent prior to 2:00 P.M., New York City time, on any Business Day
of the date and amount of prepayment. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein.
Partial prepayments shall be in an aggregate principal amount of $100,000 or a
whole multiple of $100,000 in excess thereof.
3.16 REFUNDING OF SWING LINE LOANS; PARTICIPATIONS IN SWING LINE
LOANS.
(a) Except as otherwise provided in subsection 3.16(f), in the event
that (i) the aggregate average daily outstanding principal amount of Swing Line
Loans during any weekly period ending on Thursday (or, in the event Thursday is
not a Business Day, on the next succeeding Business Day) of any week exceeds
$30,000,000, and (ii) the principal amount of Swing Line Loans outstanding on
the last day of such period exceeds $30,000,000, the Borrower shall, or the
Administrative Agent may, on behalf of the Borrower (which hereby irrevocably
authorizes the Administrative Agent to act on its behalf in such regard) request
each Revolving Credit Lender to make a Revolving Loan (which shall be an ABR
Loan) in an amount equal to such Lender's Revolving Credit Commitment Percentage
of the amount by which the aggregate outstanding principal amount of Swing Line
Loans on the last day of such period exceeds $20,000,000, regardless of whether
the conditions set forth in subsection 6.2 have been satisfied in connection
therewith. The Swing Line Lenders may, on behalf of the Borrower (which hereby
authorizes the Swing Line Lenders to act on its behalf in such regard), at any
time request each Revolving Credit Lender (including the Swing Line Lenders) to
make a Revolving Credit Loan (which shall be an ABR Loan) in an amount equal to
such Lender's Revolving Credit Commitment Percentage of the aggregate principal
amount of Swing Line Loans then outstanding, regardless of whether the
conditions set forth in subsection 6.2 have been satisfied in connection
therewith. Unless any of the events described in paragraph (f) of Section 9
shall have occurred with respect to the Borrower (in which event the procedures
of paragraph (c) of this subsection 3.16 shall apply) each Lender shall make the
proceeds of its Revolving Loan available to the Administrative Agent for the
account of the relevant Swing Line Lender at the Administrative Agent's office
specified in or pursuant to subsection 11.2 prior to 11:00 A.M., New York City
time, in funds immediately available in Dollars on the Business Day next
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succeeding the date such notice is given. The proceeds of such Revolving Loans
shall be immediately applied to repay the relevant Swing Line Loan. Effective on
the day such Revolving Loans are made, the relevant Swing Line Loan so paid
shall no longer be outstanding as a Swing Line Loan and shall no longer be due
under the Swing Line Note. The Borrower authorizes each Swing Line Lender, upon
written notice to the Borrower, to charge the Borrower's accounts with such
Swing Line Lender (up to the amount available in each such account) in order to
immediately pay the amount of its outstanding Swing Line Loans to the extent
amounts received from the Lenders are not sufficient to repay in full such
outstanding Swing Line Loans.
(b) Notwithstanding anything herein to the contrary, and except as
provided in subsection 3.16(f), no Swing Line Lender shall make any Swing Line
Loans if the Swing Line Lender has received written notice that the conditions
set forth in subsection 6.2 have not been satisfied in connection with the
making of such Swing Line Loans and no Swing Line Lender shall otherwise be
required to determine that, or take notice whether, the conditions precedent set
forth in subsection 6.2 have been satisfied in connection with the making of any
Swing Line Loan.
(c) If prior to the making of a Revolving Loan pursuant to subsection
3.16(a) one of the events described in paragraph (f) of Section 9 shall have
occurred and be continuing with respect to the Borrower, each Lender will, on
the date such Revolving Loan was to or would have been made pursuant to the
notice in subsection 3.16(a), purchase an undivided participating interest in
the outstanding Swing Line Loans in an amount equal to (i) its Revolving Credit
Commitment Percentage times (ii) the aggregate principal amount of Swing Line
Loans then outstanding. Each Lender will immediately transfer to the Swing Line
Lender, in immediately available funds, the amount of its participation.
(d) Whenever, at any time after any Lender has purchased a
participating interest in a Swing Line Loan, any Swing Line Lender receives any
payment on account thereof, such Swing Line Lender will distribute to such
Lender its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Lender's participating interest was outstanding and funded), provided that, in
the event that such payment received by such Swing Line Lender is required to be
returned, such Lender will return to such Swing Line Lender any portion thereof
previously distributed by such Swing Line Lender to it.
(e) Each Lender's obligation to make the Revolving Loans referred to
in subsection 3.16(a) and to purchase participating interests pursuant to
subsection 3.16(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Lender or the
Borrower may have against the relevant Swing Line Lender, the Borrower or any
other Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or an Event of Default, (iii) any adverse change in the condition
(financial or otherwise) of the Borrower, (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any Subsidiary or any other Lender, or
(v) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(f) (i) The Administrative Agent may, as a Swing Line Lender
hereunder, from time to time, after the occurrence and during the continuance of
any Default or Event of Default, and subject to clause (C) of this subsection
3.16(f), and notwithstanding the requirements of subsections
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6.2(a) and 6.2(b), make such disbursements and advances pursuant to the Loan
Documents, in the form of Swing Line Loans, which the Administrative Agent, in
its sole discretion, deems necessary or desirable to preserve or protect the
Collateral or any portion thereof or to enhance the likelihood or maximize the
amount of repayment of the Loans and other Credit Agreement Obligations;
provided that, after giving effect to any such Swing Line Loans and the use of
proceeds thereof, (A) the aggregate principal amount of Swing Line Loans then
outstanding would not exceed the Swing Line Commitment, (B) the Aggregate
Revolving Credit Outstandings at such time would not exceed the Revolving Credit
Commitment in effect at such time and (C) the Aggregate Outstanding Extensions
of Credit at such time would not exceed (x) the Borrowing Base at such time or
(y) if applicable, the Interim Maximum Amount (collectively, "Protective
Advances"). The Administrative Agent shall notify the Borrower and each Lender
in writing of such Protective Advance. All outstanding principal of, and
interest on, the Protective Advances shall constitute Credit Agreement
Obligations secured by the Collateral until paid in full by the Borrower.
3.17 OTHER FEES. The Borrower agrees to pay (i) to the Administrative
Agent the fees in the amounts and on the dates set forth in the Fee Letter dated
March 25, 1999 from Citicorp to the Borrower, and accepted by the Borrower on
the same date and (ii) to the Lenders the Closing Fee.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
4.1 OPTIONAL AND MANDATORY PREPAYMENTS.
(a) The Borrower may, at any time and from time to time, prepay the
Loans, in whole or in part, without premium or penalty (except, with respect to
Eurodollar Loans that are prepaid on a date other than the last day of the
Interest Period with respect thereto, as provided under subsection 4.11), upon
(i) in the case of prepayments of Eurodollar Loans, at least three Business
Days' irrevocable notice (which notice may be given by telephone (to be promptly
confirmed in writing, including by facsimile) to the Administrative Agent and
(ii) in the case of prepayments of ABR Loans (other than Swing Line Loans),
irrevocable notice (which notice may be given by telephone (to be promptly
confirmed in writing, including by facsimile)) to the Administrative Agent prior
to 11:30 A.M., New York City time, on the date of such prepayment, in each case
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice the
Administrative Agent shall promptly notify each affected Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to subsection 4.11 in connection therewith and, in the case of
prepayments of the Term Loans only, accrued interest to such date on the amount
prepaid. Amounts prepaid on account of the Term Loans may not be reborrowed and
will be applied to the installments thereof in the scheduled order of maturity
thereof. Partial prepayments under this subsection 4.1(a) shall be, in the case
of Eurodollar Loans, in an aggregate principal amount of $10,000,000 or a whole
multiple of $1,000,000 in excess thereof and in the case of ABR Loans, in an
aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
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(b) If, at any time, the Aggregate Outstanding Extensions of Credit
at such time exceed (x) the Borrowing Base at such time or (y) if applicable,
the Interim Maximum Amount, the Borrower shall, without notice or demand,
immediately repay Swing Line Loans then outstanding and/or, after the Swing Line
Loans have been paid in full, Revolving Loans in an aggregate principal amount
equal to the lesser of (i) the amount of such excess and (ii) the aggregate
principal amount of Swing Line Loans and Revolving Loans then outstanding,
together with interest accrued to the date of such payment or prepayment on the
principal so prepaid and any amounts payable under subsection 4.11 in connection
therewith. To the extent that after giving effect to any prepayment of Swing
Line Loans and Revolving Loans required by the preceding sentence, the Aggregate
Outstanding Extensions of Credit at such time exceed the Borrowing Base at such
time or the Interim Maximum Amount, if applicable, the Borrower shall, without
notice or demand, immediately deposit in the Collateral Account upon terms
reasonably satisfactory to the Administrative Agent an amount equal to the
lesser of (i) the aggregate then outstanding L/C Obligations and (ii) the amount
of such remaining excess. The Administrative Agent shall apply any cash
deposited in the Collateral Account (to the extent thereof) to pay any
Reimbursement Obligations which become due thereafter. To the extent that after
giving effect to any prepayment of the Revolving Loans and cash deposits
required by the preceding sentences, the Aggregate Outstanding Extensions of
Credit at such time exceed the Borrowing Base at such time or the Interim
Maximum Amount, if applicable, the Borrower shall, without notice or demand,
immediately repay the Term Loans in the scheduled order of maturity thereof in
an aggregate principal amount equal to the lesser of (i) the amount of such
excess and (ii) the aggregate principal amount of Term Loans then outstanding,
together with interest accrued to the date of such payment or prepayment on the
principal so prepaid and any amounts payable under subsection 4.11 in connection
therewith. The Borrower shall also prepay the Revolving Loans to the extent
required to comply with subsection 3.16.
(c) The Borrower shall repay the Revolving Loans, within three
Business Days after the receipt by the Borrower or any Restricted Subsidiary of
any Asset Sale Proceeds in respect of the Collateral, in an amount equal to such
Asset Sale Proceeds.
(d) The Borrower agrees that all available funds in the Collateral
Account (except for Asset Sale Proceeds) shall be applied first, pro rata, to
the amount of the Swing Line Loans and any Reimbursement Obligations then
outstanding, next to the outstanding principal amount of the Revolving Loans,
then (i) on any Business Day that any funds are on deposit in the Collateral
Account and no Default or Event of Default has occurred and is continuing, the
Borrower may direct the Administrative Agent to transfer to the Borrower's
disbursement account funds up to the difference between the Borrowing Base as
reflected in the most recent Borrowing Base Certificate and 100% of the
remaining Secured Obligations and (ii) on any Business Day that any funds are on
deposit in the Collateral Account and a Default or Event of Default has occurred
and is continuing, the Borrower may direct the Administrative Agent to transfer
to the Borrower's disbursement account funds up to the difference between the
Borrowing Base as reflected in the most recent Borrowing Base Certificate and
105% of the remaining Secured Obligations. The Borrower shall utilize funds on
deposit in the Collateral Account that are available to it pursuant to the terms
hereof prior to requesting Revolving Loans to be made hereunder.
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4.2 CONVERSION AND CONTINUATION OPTIONS.
(a) The Borrower may, subject to paragraph (b) below, elect from time
to time to convert Eurodollar Loans to ABR Loans by giving the Administrative
Agent irrevocable notice of such election prior to 1:00 P.M., New York City
time, three Business Days prior to the date of conversion, which notice may be
given by telephone (to be promptly confirmed in writing, including by
facsimile), provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Administrative Agent irrevocable notice of such election prior to 1:00 P.M.,
New York City time, three Business Days prior to the date of conversion, which
notice may be given by telephone (to be promptly confirmed in writing, including
by facsimile). Any such notice of conversion to Eurodollar Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
affected Lender thereof. All or any part of outstanding Eurodollar Loans and ABR
Loans may be converted as provided herein, provided that (i) no ABR Loan may be
converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and (ii) no ABR Loan may be converted into a Eurodollar Loan after
the date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Administrative Agent in accordance with the applicable provisions
of the term "Interest Period" set forth in subsection 1.1, of the length of the
next Interest Period to be applicable to such Eurodollar Loans, which notice may
be given by telephone (to be promptly confirmed in writing, including by
facsimile), provided that no Eurodollar Loan may be continued as such (i) when
any Event of Default has occurred and is continuing and the Administrative Agent
has notified the Borrower that it has determined that such a continuation is not
appropriate or (ii) after the date that is one month prior to the Termination
Date (in the case of continuations of Revolving Loans) or prior to the Term Loan
Maturity Date (in the case of continuations of Term Loans), and provided
further, that if the Borrower shall fail to give such notice or if such
continuation is not permitted such Eurodollar Loans shall be automatically
converted to ABR Loans on the last day of such then expiring Interest Period.
Upon receipt of any notice pursuant to this subsection 4.2(b), the
Administrative Agent shall notify each affected Lender thereof.
4.3 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All borrowings,
conversions and continuations of Eurodollar Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of Eurodollar Loans comprising each Tranche shall be equal to $10,000,000
or a whole multiple of $l,000,000 in excess thereof. In no event shall there be
more than 20 Tranches outstanding at any time.
4.4 INTEREST RATES AND PAYMENT DATES.
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such Interest Period plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.
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(c) Each Swing Line Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin for ABR Loans.
(d) Notwithstanding the rate of interest specified in this subsection
4.4 or elsewhere herein, effective immediately upon the occurrence of any Event
of Default and for so long thereafter as such Event of Default is continuing,
the principal balance of all Loans shall bear interest at a rate per annum which
is the rate that would otherwise be applicable thereto pursuant to this
Agreement plus 2% per annum. If all or a portion of (i) any interest payable on
any Loan, (ii) any commitment fee or (iii) any other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), any such overdue interest, commitment fee or other amount shall bear
interest at a rate per annum which is the rate described in paragraph (b) of
this subsection plus 2%, in each case from the date of such non-payment until
such overdue interest, commitment fee or other amount is paid in full (as well
after as before judgment).
(e) Interest shall be payable in arrears on each Interest Payment
Date, provided that (i) interest accruing pursuant to subsection 4.4(d) shall be
payable from time to time on demand and (ii) interest on the Term Loans shall
also be payable on the Term Loan Maturity Date (or such earlier date on which
the Term Loans become due and payable pursuant to Section 9) and (iii) interest
on the Revolving Loans shall also be due and payable on the Termination Date (or
such earlier date on which the Revolving Loans become due and payable pursuant
to Section 9).
4.5 COMPUTATION OF INTEREST AND FEES.
(a) Commitment fees and, whenever it is calculated on the basis of
Citibank's prime rate, interest shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed; and otherwise
interest and fees and commissions in respect of Letters of Credit shall be
calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
affected Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the ABR or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall as
soon as practicable notify the Borrower and the affected Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be presumed correct in
the absence of manifest error.
(c) Each Lender shall use its best efforts to furnish quotations of
rates to the Administrative Agent as contemplated hereby. If any of the Lenders
shall be unable or shall otherwise fail to supply such rates to the
Administrative Agent upon its request, the rate of interest shall, subject to
the provisions of this subsection 4.5, be determined on the basis of the
quotations of the remaining Lenders or Lender.
4.6 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day
of any Interest Period:
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(i) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(ii) the Administrative Agent shall have received notice from any
Lender that the making or continuation of any Eurodollar Loan has become
impracticable as a result of a contingency occurring after the date hereof
which materially and adversely affects the London interbank market,
the Administrative Agent shall give facsimile or telephonic notice thereof to
the Borrower and the affected Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans, (y) any ABR Loans that were
to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans
which the Borrower has requested to continue as such pursuant to subsection
4.2(b) shall be converted, on the first day of such Interest Period, to ABR
Loans, provided that, in the case of clause (b) above, only the Eurodollar Loan
of a Lender which delivers a notice pursuant to such clause shall be subject to
this sentence and the following sentence. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert ABR Loans to
Eurodollar Loans.
4.7 PRO RATA TREATMENT AND PAYMENTS.
(a) Except as otherwise provided in subsections 3.6 through 3.16, all
payments (including prepayments) to be made by the Borrower hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without set
off or counterclaim and shall be made prior to 1:00 P.M., New York City time, on
the due date thereof to the Administrative Agent, for the account of the
Revolving Credit Lenders or the Term Loan Lenders, as the case may be, at the
Administrative Agent's office specified in or pursuant to subsection 11.2
(except as otherwise provided herein) in Dollars and in immediately available
funds. The Administrative Agent shall distribute such payments to the Lenders
entitled to receive the same promptly upon receipt in like funds as received. If
any payment hereunder (other than payments on Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal.
Interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension)
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day. Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Term Loans shall be made pro rata
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Loan Lenders.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its portion
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of such borrowing available to the Administrative Agent, the Administrative
Agent may assume that such Lender is making such amount available to the
Administrative Agent, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest error. If
such Lender's portion of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to ABR Loans hereunder,
on demand, from the Borrower.
(c) Each borrowing by the Borrower of Revolving Loans shall be made
ratably from the Revolving Credit Lenders in accordance with their respective
and Revolving Credit Commitment Percentages. Any reduction of the Revolving
Credit Commitments shall be made ratably among the Lenders, in accordance with
their respective Revolving Credit Commitment Percentages. Each payment
(including each prepayment) by the Borrower on account of principal of and
interest on the Revolving Loans shall be made pro rata according to the
respective outstanding principal amounts of the Revolving Loans then held by the
Revolving Credit Lenders.
4.8 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, such Lender shall give
prompt notice thereof to the Borrower and the Administrative Agent and
thereafter (a) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans
shall forthwith be suspended during the period of illegality and (b) such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to ABR Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 4.11.
4.9 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof shall
increase the cost to such Lender, by an amount which such Lender deems to be
material, of making, converting into, continuing or maintaining Eurodollar Loans
or issuing or participating in Letters of Credit or reduce any amount receivable
hereunder in respect thereof including any such cost or reduced amount
receivable resulting from (i) any tax of any kind whatsoever with respect to
this Agreement, any Note, any Eurodollar Loan, any Letter of Credit issued or
participated in by it or any Application, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by subsection 4.10 and changes in the rate of tax on the overall gross
or net income of such Lender) or (ii) any reserve, special deposit, compulsory
loan or singular
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requirement against assets held by deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not otherwise
included in the determination of the Eurodollar Rate hereunder, then, in any
such case, within 15 days after demand therefor (accompanied by the certificate
contemplated by subsection 4.9(c) with respect thereto) the Borrower shall pay
such Lender such additional amount or amounts as will compensate such Lender for
such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
within 15 days after demand therefor (accompanied by the certificate
contemplated by subsection 4.9(c) with respect thereto), the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection 4.9, it shall promptly notify the Borrower (with a
copy to the Administrative Agent) of the event by reason of which it has become
so entitled, provided that no Lender shall be entitled to claim any such
additional amount (i) with respect to the period which is more than 180 days
prior to the delivery of such notice or (ii) if such Lender shall not seek as a
result of such event payment of any similar amounts from at least one other
borrower to whom it has extended credit. A certificate as to any additional
amounts payable pursuant to this subsection 4.9 submitted by such Lender to the
Borrower (with a copy to the Administrative Agent) setting forth in reasonable
detail the calculation of such amounts and the basis therefor shall be
conclusive in the absence of manifest error. The agreements in this subsection
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
4.10 INDEMNIFICATION FOR TAXES.
(a) All payments made by the Borrower under this Agreement and any
Notes shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise and excise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Note). If any such non-excluded taxes,
levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the
Administrative Agent or any Lender
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hereunder or under any Note, the amounts so payable to the Administrative Agent
or such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
subsection 4.10. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) in the case of a Lender or a Transferee that is a "bank" under
Section 881(c)(3)(A) of the Tax Code:
(A) on or before the date it becomes a party to this
Agreement (or, in the case of a Participant, on or before the date
such Participant becomes a Participant hereunder), deliver to the
Borrower and the Administrative Agent (I) two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, and (II) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the
case may be;
(B) deliver to the Borrower and the Administrative Agent
two further copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent; and
(ii) in the case of a Lender or a Transferee that is not a "bank"
under Section 881(c)(3)(A) of the Tax Code:
(A) on or before the date it becomes a party to this
Agreement (or, in the case of a Participant, on or before the date
such Participant becomes a Participant hereunder), deliver to the
Borrower and the Administrative Agent (I) a statement under penalties
of perjury that such Lender or Transferee (x) is not a "bank" under
Section 881(c)(3)(A) of the Tax Code, is not subject to regulatory or
other legal requirements as
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a bank in any jurisdiction, and has not been treated as a bank for
purposes of any tax, securities law or other filing or submission
made to any Governmental Authority, any application made to a rating
agency or qualification for any exemption from tax, securities law or
other legal requirements, (y) is not a 10-percent shareholder within
the meaning of Section 881(c)(3)(B) of the Tax Code and (z) is not a
controlled foreign corporation receiving interest from a related
person within the meaning of Section 881(c)(3)(C) of the Tax Code and
(II) a properly completed and duly executed internal Revenue Service
Form W-8 or applicable successor form;
(B) deliver to the Borrower and the Administrative Agent
two further properly completed and duly executed copies of such Form
W-8, or any successor applicable form, on or before the date that any
such Form W-8 expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form previously
delivered by it to the Borrower or upon the request of the Borrower;
and
(C) obtain such extensions of time for filing and
completing such forms or certifications as may be reasonably
requested by the Borrower or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9 provided pursuant to subsection
4.10(b)(i)(A)(II) that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 11.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
4.11 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or reasonable expense which such Lender
may sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans, after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan, after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (c) the making of a
prepayment or conversion of Eurodollar Loans on a day which is not the last day
of an Interest Period with respect thereto, which loss shall be equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid or converted, or not so borrowed, converted or continued, for
the period from the date of such prepayment or conversion or of such failure to
borrow, convert or continue to the last day of such Interest Period (or proposed
Interest Period), respectively, in each case at the applicable Eurodollar Rate
(exclusive of any Applicable Margin) for such Eurodollar Loans provided for
herein over (ii) the amount of interest (as reasonably determined by
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such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market (it being understood that the Borrower shall not be
required to indemnify any Lender for lost profits). A certificate as to any
amounts payable pursuant to this subsection 4.11 submitted by any Lender to the
Borrower (with a copy to the Administrative Agent) shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
4.12 CHANGE OF LENDING OFFICE. Each Lender agrees that if it makes
any demand for payment under subsection 4.9 or 4.10(a), or if any adoption or
change of the type described in subsection 4.8 shall occur with respect to it,
it will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 4.9 or
4.10(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 4.8.
4.13 EVIDENCE OF DEBT.
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from the Loans of such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain the Register pursuant to
subsection 11.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period (if any) applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 4.13(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, that the failure of any
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans in accordance with the
terms of this Agreement.
(d) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Revolving Loans of such Lender,
substantially in the form of Exhibit C-1 (each, "Revolving Credit Note"),
payable to the order of such Lender. Each Lender is hereby authorized to record
the date, Type and amount of each Revolving Loan of such Lender, the date and
amount of each payment or prepayment of principal thereof, each continuation of
all or a portion thereof as the same Type, each conversion of all or a portion
thereof to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period and Eurodollar Rate with respect thereto, on the schedule (or
any continuation of the schedule) annexed to and constituting a part of its
Revolving Credit Note, as the case
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may be, and any such recordation shall, to the extent permitted by applicable
law, constitute prima facie evidence of the accuracy of the information so
recorded, provided that the failure to make any such recordation (or any error
therein) shall not affect the obligation of the Borrower to repay (with
applicable interest) the Revolving Loans in accordance with the terms of this
Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Term Loan Lender, the Borrower will execute and deliver to such
Term Loan Lender a promissory note of the Borrower evidencing the Term Loan of
such Term Loan Lender, substantially in the form of Exhibit C-2 (a "Term Note"),
payable to the order of such Term Loan Lender and in a principal amount equal
to, the outstanding Term Loan of such Term Loan Lender. Each Term Loan Lender is
hereby authorized to record the date, Type and amount of the Term Loan of such
Term Loan Lender, the date and amount of each payment or prepayment of principal
thereof, each continuation of all or portion thereof as the same Type, each
conversion of all or a portion thereof to another Type and, in the case of
Eurodollar Loans, the length of each Interest Period and Eurodollar Rate with
respect thereto, on the schedule (or any continuation of the schedule) annexed
to and constituting a part of its Term Note, as the case may be, and any such
recordation shall, to the extent permitted by applicable law, constitute prima
facie evidence of the accuracy of the information so recorded, provided that the
failure to make any such recordation (or any error therein) shall not affect the
obligation of the Borrower to repay (with applicable interest) the Term Loans in
accordance with the terms of this Agreement.
(f) The Borrower agrees that, upon the request to the Administrative
Agent by any Swing Line Lender, the Borrower will execute and deliver to such
Swing Line Lender a promissory note of the Borrower evidencing the Swing Line
Loans of such Swing Line Lender, substantially in the form of Exhibit D (a
"Swing Line Note"), payable to the order of such Swing Line Lender and in a
principal amount equal to the Swing Line Commitment. Each Swing Line Lender is
hereby authorized to record the date and amount of each Swing Line Loan made by
it and the date and amount of each payment or prepayment of principal thereof on
the schedule (or any continuation of the schedule) annexed to and constituting a
part of its Swing Line Note, as the case may be, and any such recordation shall,
to the extent permitted by applicable law, constitute prima facie evidence of
the accuracy of the information so recorded, provided that the failure to make
any such recordation (or any error therein) shall not affect the obligation of
the Borrower to repay (with applicable interest) the Swing Line Loans in
accordance with the terms of this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make or continue to make the Extensions of Credit, the Borrower
hereby represents and warrants to the Administrative Agent and each Lender that:
5.1 FINANCIAL CONDITION. The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at December 28, 1997 and the
related consolidated statements of income and retained earnings and cash flows
for the Fiscal Year ended on such date, reported on by Deloitte & Touche, copies
of which have heretofore been furnished to each Lender, are complete and correct
in all material respects and present fairly the consolidated financial condition
of the Borrower and its Consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their
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consolidated cash flows for the Fiscal Year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at September 30, 1998 and the related unaudited consolidated statements of,
financial condition, income and retained earnings and cash flows for the
nine-month period ended on such date, certified by a Responsible Officer, copies
of which have heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the nine-month period then
ended (subject to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). Except as set forth on Schedule 5.1 or
as permitted by the Existing Credit Agreement, neither the Borrower nor any of
its Consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation not permitted under
subsection 8.2, material contingent liability or liability for taxes, or any
material long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the notes
thereto. Except as set forth on Schedule 5.1 or as permitted by the Existing
Credit Agreement, during the period from December 28, 1997 to and including the
date hereof, there has been no sale, transfer or other disposition by the
Borrower or any of its Consolidated Subsidiaries of any material part of its
business or property and no purchase or other acquisition of any business or
property (including any capital stock of any other Person) material in relation
to the consolidated financial condition of the Borrower and its Consolidated
Subsidiaries at December 28, 1997.
5.2 NO CHANGE. Except as set forth on Schedule 5.2 and other than the
Reorganization Cases and the events related to the Reorganization Cases, since
September 30, 1998, there has been no development or event which has had or
could reasonably be expected to have a Material Adverse Effect.
5.3 EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower and its
Restricted Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation, foreign
limited liability company or foreign limited partnership, as the case may be,
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of Law, including
the requirements of the WARN Act, except, in each case, where the failure to be
so organized, existing, in good standing or qualified, or the failure to have
such power or authority or to so comply, could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each of the
Borrower and its Restricted Subsidiaries has the power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it is a
party and (in the case of the Borrower) to borrow and obtain the other
Extensions of Credit hereunder and has taken all necessary corporate or other
action to authorize the Extensions of Credit on the terms and conditions of this
Agreement and any Notes and to authorize the execution, delivery and performance
of the Loan Documents to which it is a party. No consent or
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authorization of, filing with, notice to, or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
Extensions of Credit hereunder or with the execution, delivery, performance,
validity or enforceability of the Loan Documents to which the Borrower or any of
its Restricted Subsidiaries is a party except as may be necessary to perfect the
Liens created pursuant to the Security Documents, except as described on
Schedule 5.4 and except those which have been obtained, made or waived. This
Agreement has been, and each other Loan Document will be, duly executed and
delivered on behalf of the Borrower and each of its Restricted Subsidiaries that
is a party thereto. This Agreement constitutes, and each other Loan Document
when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower and each of its Restricted Subsidiaries that is a
party thereto enforceable against the Borrower and each such Restricted
Subsidiary in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5.5 NO LEGAL BAR. The execution, delivery and performance of the Loan
Documents to which the Borrower or any of its Restricted Subsidiaries is a
party, the Extensions of Credit hereunder and the use of the proceeds thereof
will not violate any Requirement of Law or Contractual Obligation of the
Borrower or of any of its Restricted Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than pursuant to the Loan Documents), except to
the extent (a) that any such violations (individually or in the aggregate) could
not reasonably be expected to have a Material Adverse Effect and (b) that any
such Liens would otherwise be permitted under subsection 8.3.
5.6 NO MATERIAL LITIGATION. Except as set forth on Schedule 5.6 and
other than the Reorganization Cases, no litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Restricted Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby or (b) which could reasonably be
expected to have a Material Adverse Effect.
5.7 NO DEFAULT. As of any date after the Effective Date, except as
set forth on Schedule 5.7, (i) neither the Borrower nor any of its Restricted
Subsidiaries is in default under or with respect to any Contractual Obligation
in respect of post-petition Indebtedness or other obligations greater than
$1,000,000, and (ii) no other party is in default under or with respect to any
Contractual Obligation in respect of Indebtedness or other obligations greater
than $1,000,000 owed to the Borrower or any of its Restricted Subsidiaries, in
each case which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
5.8 NO BURDENSOME RESTRICTIONS. Except as set forth on Schedule 5.8,
no Requirement of Law or Contractual Obligation of the Borrower or any of its
Restricted Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
5.9 TAXES. Each of the Borrower and its Restricted Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Borrower, are required to be filed and has paid
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all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property (including, without limitation, any Material
Real Property) and all other taxes, fees or other charges imposed on it or any
of its property by any Governmental Authority (other than any such tax returns,
taxes, fees or other charges (i) the amount or validity of which are then being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or its Subsidiaries, as the case may be, or (ii) which, if not paid or filed,
could not reasonably be expected to have a Material Adverse Effect); no tax Lien
has been filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge (other than with
respect to any such tax, fee or other charge the amount or validity of which is
then being contested in good faith by appropriate proceedings and with respect
to which reserves in conformity with GAAP have been provided on the books of the
Borrower or its Subsidiaries, as the case may be) which could reasonably be
expected to have a Material Adverse Effect.
5.10 FEDERAL REGULATIONS. No part of the proceeds of any Extension of
Credit will be used in violation of Regulation U and in no event shall "margin
stock" constitute 25% or more of the assets of the Borrower and its Restricted
Subsidiaries that are subject to the restrictions contained in Section 8.
5.11 ERISA. Other than the Reorganization Cases, neither a Reportable
Event nor an "accumulated funding deficiency" (within the meaning of Section 412
of the Tax Code or Section 302 of ERISA) which could reasonably be expected to
have a Material Adverse Effect has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to any
Plan. Each Plan has complied in all material respects with the applicable
provisions of ERISA and the Tax Code, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred, except where such a
termination could not reasonably be expected to have a Material Adverse Effect,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plan) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits, except to the extent any such excess (individually or in the
aggregate) could not reasonably be expected to have a Material Adverse Effect.
Neither the Borrower nor any Commonly Controlled Entity has had a complete or
partial withdrawal from any Multiemployer Plan, except where such withdrawal
could not reasonably be expected to have a Material Adverse Effect, and neither
the Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made, except where such liability could not reasonably be expected to
have a Material Adverse Effect. No such Multiemployer Plan is in Reorganization
or Insolvency.
5.12 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. To the
best knowledge of the Borrower, the Borrower is not subject to regulation under
any federal or state statute or regulation (other than Regulation X) which
limits its ability to incur Indebtedness.
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5.13 SUBSIDIARIES. Schedule 5.13 sets forth all the Subsidiaries of
the Borrower at the date hereof.
5.14 ENVIRONMENTAL MATTERS. To the knowledge of the Borrower, except
as set forth on Schedule 5.14:
(a) The Mortgaged Properties do not contain any Materials of
Environmental Concern in amounts or concentrations or under such conditions
which (i) constitute a violation of, or (ii) could reasonably be expected to
give rise to liability under, any Environmental Law, except in either case
insofar as such violation or liability, or any aggregation thereof, could not
reasonably be expected to have a Material Adverse Effect.
(b) The Mortgaged Properties and all operations at the Mortgaged
Properties are in compliance, and have within the periods covered by the
applicable statute of limitations been in compliance, in all material respects
with all applicable Environmental Laws, and there is no contamination at, under
or about the Mortgaged Properties or violation of any Environmental Law with
respect to the Mortgaged Properties or the business operated by the Borrower or
any of its Restricted Subsidiaries at the Mortgaged Properties (the "Business"),
except for any such noncompliance, contamination or violation (or any
aggregation thereof) which could not reasonably be expected to have a Material
Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, noncompliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Mortgaged Properties or the Business, nor does the
Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened, except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that
could reasonably be expected to have a Material Adverse Effect.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Mortgaged Properties in violation of, or in a manner or to
a location which could reasonably be expected to give rise to liability under,
any Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Mortgaged
Properties in violation of, or in a manner that could reasonably be expected to
give rise to liability under, any applicable Environmental Law except insofar as
any such violation or liability referred to in this paragraph, or any
aggregation thereof, could not reasonably be expected to have a Material Adverse
Effect.
(e) No judicial proceeding or governmental or administrative action
is pending or threatened under any Environmental Law to which the Borrower or
any Restricted Subsidiary is or could reasonably be expected to be named as a
party with respect to the Mortgaged Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to the Mortgaged Properties or the Business
except insofar as such proceeding, action, decree, order or other requirement,
or any aggregation thereof, could not reasonably be expected to have a Material
Adverse Effect.
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(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Mortgaged Properties, or arising from or
related to the operations of the Borrower or any Restricted Subsidiary in
connection with the Mortgaged Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could reasonably
give rise to liability under Environmental Laws except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, could not reasonably be expected to have a Material Adverse Effect.
(g) Each of the representations and warranties set forth in
subsections 5.14(a) through (f) is true and correct with respect to each parcel
of real property owned or operated by the Borrower or any of its Restricted
Subsidiaries (other than the Mortgaged Properties) except to the extent that the
facts and circumstances giving rise to any such failure to be so true and
correct could not reasonably be expected to have a Material Adverse Effect.
5.15 THE SECURITY DOCUMENTS. The provisions of the Master Security
Agreement are effective to create in favor of the Administrative Agent a legal
and valid security interest in all right, title and interest of the Borrower and
each Subsidiary Guarantor party thereto in the collateral described therein, and
the Administrative Agent has a fully perfected Lien on all right, title and
interest of the Borrower and each Subsidiary Guarantor in all Mortgaged Property
and security interest in all right, title and interest of the Borrower or such
Subsidiary Guarantor, as the case may be, in all "accounts", "chattel paper",
"inventory", "investment property" and "general intangibles" (each as defined in
the applicable UCC) in each case superior in right to any Liens of any third
person against such collateral or interests therein, subject only to Liens
permitted under subsection 8.3 or by the Master Security Agreement.
5.16 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each
Restricted Subsidiary has good title in fee simple to, or valid ground leasehold
interests in, their respective Material Real Properties and has good title in
fee simple to their other owned real property and valid ownership interests in
their owned personal property, in each case that is material to the operation of
their respective businesses, subject to defects in title and leasehold and other
interests which are not material to the business, operations and financial
condition of the Borrower and its Restricted Subsidiaries taken as a whole and
other than those items referred to in the applicable Mortgages or in the
schedules to the applicable Mortgages, and none of such property is subject to
any Lien other than Liens permitted under subsection 8.3.
5.17 INTELLECTUAL PROPERTY. The Borrower and each of its Restricted
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). Except as set forth on Schedule 5.17, no claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, which could reasonably be expected to have a Material
Adverse Effect, nor does the Borrower know of any valid basis for any such
claim. Except as set forth on Schedule 5.17, to the Borrower's knowledge, the
use of such Intellectual Property by the Borrower and its Restricted
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
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5.18 PLEDGED STOCK. As of the date hereof, the shares of Capital
Stock listed on Schedule A to the Master Security Agreement will constitute all
the issued and outstanding shares of Capital Stock of the issuers thereof listed
on said Schedule that are owned by the Borrower or the Subsidiary Guarantors
party to the Master Security Agreement; all such shares have been duly and
validly issued and are fully paid and nonassessable; the relevant Pledgor of
said shares is the record and beneficial owner of said shares; and said shares
are free of any Liens or options in favor of, or claims of, any other Person,
except the Lien of the Master Security Agreement (subject to Section 14 thereof)
and Liens permitted under subsection 8.3(a).
5.19 REAL ESTATE MATTERS. The real property described on Schedule
5.19 constitutes all of the Material Real Property of the Borrower or any
Subsidiary Guarantor on the date hereof.
5.20 [RESERVED].
5.21 PURPOSE OF LOANS; USE OF PROCEEDS. The proceeds of the Revolving
Loans made available pursuant to the Interim Facility will be used to pay
certain post-petition operating expenses incurred in the ordinary course of
business and other general corporate purposes. The proceeds of the Revolving
Loans and the Term Loans made on the Effective Date will be used to repay all
Term Loans and Revolving Credit Loans outstanding under the Previous Credit
Agreements and Transaction Costs and other general corporate purposes, and the
proceeds of all other Revolving Loans and all Swing Line Loans made after the
Effective Date will be used to provide working capital from time to time for the
Borrower and its Subsidiaries and for other general corporate purposes.
5.22 ACCURACY OF INFORMATION. All statements and other information
(other than statements and information constituting projections or
forward-looking statements) contained in any written documents or other
materials provided to the Administrative Agent and the Lenders by the Borrower
are, when taken as a whole, correct in all material respects and do not contain
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were made.
All statements and other information constituting projections which are
contained in any written documents or other materials provided to the
Administrative Agent and the Lenders by the Borrower were prepared based on good
faith estimates and assumptions of the Borrower believed to be reasonable at the
time such projections were prepared.
5.23 DEPOSITARY ACCOUNTS. Schedule 5.23 sets forth a true and
complete list of all bank accounts maintained by the Borrower and its Restricted
Subsidiaries as of the date hereof.
5.24 [RESERVED].
5.25 Y2K COMPLIANCE. Except as disclosed on Schedule 5.25, the
Borrower
(a) has reviewed the areas within its operations and the operations
of its Subsidiaries that utilize computers;
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(b) has completed the development of a program for testing whether
all computer systems necessary for the current operation of its business and the
business of its Subsidiaries taken as a whole are Y2K Compliant;
(c) has tested all such computer systems for Y2K compliance and
furnished to the Administrative Agent a written report of the results thereof;
(d) has developed a written course of action to make all the computer
systems utilized by it or any of its Subsidiaries and necessary for the business
of the Borrower and its Subsidiaries taken as a whole Y2K Compliant and
furnished to the Administrative Agent a copy thereof;
(e) has identified all the changes, modifications and corrections
indicated in the course of action referred to in clause (d) above;
(f) has identified those of its customers, suppliers and others who
are critical to its business and that of its Subsidiaries taken as a whole or
with whom it electronically transmits or receives data and inquired of them as
to whether the computer systems utilized by such customers, suppliers and others
and critical for their operations are Y2K Compliant, and summarized the results
of such inquiries in a written report, a copy of which it has furnished to the
Administrative Agent;
(g) has tested each computer system necessary to the business of the
Borrower and its Subsidiaries taken as a whole interfacing with customers,
suppliers and others identified pursuant to clause (f) above;
(h) has implemented all the changes, modifications and corrections
required by the tests refereed to in clause (g) above;
(i) has developed a written contingency plan for action to be taken
by the Borrower and its Subsidiaries in the event that any of the computer
systems utilized by it in its business and the business of its Subsidiaries or
by the customers, suppliers and others identified pursuant to clause (f) above
and critical for their operations is not Y2K Compliant; and
(j) has no reason to believe and does not believe that it will be
unable to complete the testing or make the modifications not yet completed that
are shown on Schedule 5.25 or implement any contingency plan referred to in
clause (i) above except for any inability that will not have a Material Adverse
Effect.
5.26 PRIORITY. Pursuant to subsections 364(c)(1), (2) and (3) of the
Bankruptcy Code and the Emergency Order and the Permanent Order, the obligations
of the Borrower hereunder and under the other Loan Documents constitute allowed
administrative expense claims in the Reorganization Cases having priority over
all administrative expenses of the kind specified in sections 503(b) or 507(b)
of the Bankruptcy Code, subject only to Permitted Expenses.
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SECTION 6. CONDITIONS
6.1 CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective upon satisfaction or waiver of the following conditions, except such
conditions that, by their terms, need only be satisfied in respect of the
Permanent Facility for the Effective Date to occur:
(a) Bankruptcy Court Order.
(i) The Bankruptcy Court shall have entered (A) for the Interim
Facility, the Emergency Order and (B) for the Permanent Facility, the
Permanent Order, each being certified by the Clerk of the Bankruptcy Court
as having been duly entered.
(ii) The First Day Orders and all motions and other documents to be
filed with and submitted to the Bankruptcy Court in connection with the
Interim Facility and the Permanent Facility and the approval thereof shall
be satisfactory in form and substance to the Administrative Agent.
(b) Execution of Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized officer
of the Borrower, with a counterpart for the Administrative Agent and each Lender
and (ii) the Master Security Agreement, executed and delivered by a duly
authorized officer of each Loan Party that is a party thereto, with a copy for
each Lender.
(c) Closing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of the Borrower, dated the
Closing Date, substantially in the form of Exhibit F, with appropriate
insertions and attachments, executed by the President, the Chief Executive
Officer or any Vice President and the Secretary or any Assistant Secretary of
the Borrower.
(d) Corporate Proceedings of the Borrower. The Administrative Agent
shall have received, with a copy for each Lender, a copy of the resolutions, in
form and substance reasonably satisfactory to the Administrative Agent, of the
Board of Directors of the Borrower authorizing (i) the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party (ii) the Extensions of Credit contemplated hereunder and (iii) the
granting by it of the Liens created pursuant to the Security Documents,
certified by the Secretary or an Assistant Secretary of the Borrower as of the
Closing Date, which certificate shall be in form and substance reasonably
satisfactory to the Administrative Agent and shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded.
(e) Borrower Incumbency Certificate. The Administrative Agent shall
have received, with a copy for each Lender, a certificate of the Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document reasonably satisfactory in form and
substance to the Administrative Agent, executed by the President, the Chief
Executive Officer or any Vice President and the Secretary or any Assistant
Secretary of the Borrower.
(f) Corporate Proceedings of Subsidiaries. The Administrative Agent
shall have received, with a copy for each Lender, a copy of the resolutions, in
form and substance reasonably
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satisfactory to the Administrative Agent, of the Board of Directors or sole
shareholder of each Restricted Subsidiary which is a party to a Loan Document
authorizing (i) the execution, delivery and performance of the Loan Documents to
which it is a party and (ii) the granting by it of the Liens created pursuant to
the Security Documents to which it is a party certified by the Secretary or an
Assistant Secretary of each such Subsidiary as of the Closing Date, which
certificate shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded.
(g) Subsidiary Incumbency Certificates. The Administrative Agent
shall have received, with a copy for each Lender, a certificate of each
Restricted Subsidiary of the Borrower which is a party to a Loan Document, dated
the Closing Date, as to the incumbency and signature of the officers of such
Subsidiary acknowledging and consenting to the execution and delivery of this
Agreement by the Borrower, reasonably satisfactory in form and substance to the
Administrative Agent, executed by the President, the Chief Executive Officer or
any Vice President and the Secretary or any Assistant Secretary of such
Subsidiary.
(h) Fees.
(i) The Administrative Agent, the Collateral Monitoring Agent, the
Arranger and Book Manager and each Lender shall have received or
concurrently receive the Transaction Costs payable on or prior to the
Effective Date and the Administrative Agent shall have been reimbursed for
all expenses for which invoices have been presented to the Borrower.
(ii) On the Closing Date the Lenders shall have been paid the first
installment of the Closing Fee, and on the date the Bankruptcy Court shall
have entered the Permanent Order, the Lenders shall have been paid the
second installment of the Closing Fee.
(i) Legal Opinions. The Administrative Agent shall have received,
with a copy for each Lender, (i) the executed legal opinion of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Borrower and the other Loan Parties,
substantially in the form of Exhibit G; and (ii) such other legal opinions as
the Administrative Agent may reasonably require.
(j) Lien Searches. On or before the Effective Date, the
Administrative Agent shall have received the results of a recent search in the
jurisdictions listed on Schedule 6.1(j) of the UCC, judgment and tax lien
filings (as indicated on such Schedule) which may have been filed with respect
to personal property of the Borrower and the Subsidiary Guarantors, and the
results of such search shall be reasonably satisfactory to the Administrative
Agent.
(k) No Material Adverse Change. Except as set forth on Schedule 5.2
and other than the Reorganization Cases and the events related to the
Reorganization Cases, there shall have occurred no material adverse change in
the business, condition (financial or otherwise), operations, performance or
properties of the Borrower and its subsidiaries since September 30, 1998.
(l) No Litigation. Other than the Reorganization Cases, there shall
exist no action, suit, investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator or governmental instrumentality
that could reasonably be expected to have a material adverse effect on the
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business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its subsidiaries.
(m) Consents and Approvals. All governmental and third party consents
and approvals necessary in connection with this Agreement and the grant of
security interests shall have been obtained (without the imposition of any
conditions that are not reasonably acceptable to the Lenders) and shall remain
in effect; and no law or regulation shall be applicable in the reasonable
judgment of the Lenders that restrains, prevents or imposes materially adverse
conditions upon the transactions contemplated hereby.
(n) Insurance and Bonding. The Lenders shall be satisfied with the
amount, types and terms and conditions of all insurance and bonding maintained
by the Borrower and its subsidiaries, and the Lenders shall have received
endorsements naming the Administrative Agent, on behalf of the Lenders, as an
additional insured and loss payee under all insurance policies to be maintained
with respect to the properties of the Borrower and its Subsidiaries forming part
of the Lenders' Collateral.
(o) Flood Insurance. To the extent required by applicable law, the
Administrative Agent shall have received (i) evidence of a policy of flood
insurance which (A) covers any parcel of Material Real Property subject to a
first priority Mortgage located in an area identified as an area having special
flood hazards by the Secretary of Housing and Urban Development or other
applicable agency, and (B) otherwise complies with such applicable law and (ii)
confirmation that the Borrower has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board of Governors.
(p) Budget The Administrative Agent shall have received the Interim
Budget.
(q) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be reasonably satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
6.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any Extension of Credit requested to be made by it on any date
(including, without limitation, its initial Extension of Credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Loan Parties in or pursuant to Section 5 and in or
pursuant to the other Loan Documents shall be true and correct in all material
respects and as of such date as if made on and as of such date, except to the
extent such representations and warranties related to a specific earlier date in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date, provided, that if such earlier date
is the "date hereof", such representation and warranty shall also be true and
correct in all material respects on and as of the Effective Date.
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(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Extension of Credit
requested to be made on such date.
(c) Borrowing Base. After giving effect to the Extensions of Credit
requested to be made on any such date and the use of proceeds thereof, the
Aggregate Outstanding Extensions of Credit at such time (plus, during the
Interim Facility Period, Previous Credit Agreement Outstandings at such time)
shall not exceed the Borrowing Base at such time.
(d) No Legal Impediment. The making of the Loans on such date does
not violate any Requirement of Law and is not enjoined, temporarily,
preliminarily or permanently.
(e) Borrowing Base Certificate. The Administrative Agent shall have
received a Borrowing Base Certificate, executed and delivered by a duly
authorized officer of the Borrower.
(f) Interim Reserve Amount. From and after the first anniversary of
the date hereof, the Interim Reserve Amount shall have been reduced to zero in
accordance with the definition of Interim Reserve Amount.
(g) Bankruptcy Court Approval. With respect to the Interim Facility,
the Emergency Order authorizing and approving the Interim Facility and, with
respect to the Permanent Facility, the Permanent Order authorizing and approving
the Permanent Facility, shall be in full force and effect and shall not have
been vacated, reversed, modified, amended or stayed without the consent of the
Required Lenders.
Each Extension of Credit to the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date thereof that, except
to the extent waived in accordance with this Agreement, the conditions contained
in this subsection have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any Letter of Credit remains outstanding or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
the Borrower shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Restricted Subsidiaries to:
7.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent with a
copy for each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each Fiscal Year of the Borrower (or, in the case of the first such
financial statements to be delivered after the Closing Date, 120 days), a copy
of the consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such year and the related consolidated statements
of income and retained earnings and of cash flows for such year, setting forth
in each case in comparative form the figures as of the end of and for the
previous Fiscal Year, reported on without a qualification as to the scope of the
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audit, by Deloitte & Touche or other independent certified public accountants of
nationally recognized standing, together with a copy of the Borrower's Form 10-K
filed with the SEC for such Fiscal Year;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each Fiscal Year
of the Borrower (or, in the case of the first such financial statements to be
delivered after the Closing Date, 60 days), the unaudited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its Consolidated Subsidiaries for
such quarter and the portion of the Fiscal Year through the end of such quarter,
setting forth in each case in comparative form the figures for the previous
Fiscal Year as set forth in the Borrower's Form 10-Q filed with the SEC for such
quarterly period, certified by a Responsible Officer as being fairly stated in
all material respects (subject to normal year-end audit adjustments);
(c) as soon as available, but in any event not later than 30 days
after the end of each fiscal month (other than a fiscal month which is also the
end of a quarterly period), an unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries in summary form as at the end of such
fiscal month and the related unaudited consolidated statement of income of the
Borrower and its Consolidated Subsidiaries in summary form for such fiscal
month, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
(d) as soon as available, but in any event not later than 60 days
after the commencement of each Fiscal Year, an annual review of the results of
operations for the preceding Fiscal Year setting forth a comparison to the
projections of the operating budget and cash flow budget for such preceding
Fiscal Year delivered to the Lenders and containing a discussion in reasonable
detail of any material differences therein; and
(e) as soon as available, but in any event not later than 120 days
after the Effective Date, the Business Plan and;
(f) as soon as available, all schedules of assets and liabilities,
all statements of financial affairs, all operating reports, all claims registers
and all other pleadings, in each case filed in the Reorganization Cases by or on
behalf of any Loan Party.
All such financial statements referred to in paragraphs (a) and (b) above shall
be complete and correct in all material respects (subject to, in the case of the
financial statements referred to in paragraph (b) above, normal year-end
adjustments) and shall be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein). The financial statements referred to in
paragraph (c) above shall be prepared in summary form and otherwise in a manner
consistent with the Borrower's current internal reporting practices.
7.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Administrative
Agent with a copy for each Lender:
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(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default or
Event of Default under subsection 8.1, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a Responsible
Officer (i) stating that such Responsible Officer has obtained no knowledge of
any Default or Event of Default with respect to the period covered by such
financial statements except as specified in such certificate and (ii) setting
forth, in reasonable detail, a calculation of the financial covenants set forth
in subsection 8.1 for the period corresponding to such financial statements;
(c) on or prior to Thursday of each week, an officer's certificate as
of the previous Sunday substantially in the form of Exhibit H (a "Borrowing Base
Certificate"), certified by a Responsible Officer as true and correct, provided
that any reserves of the types described in the definition of "Borrowing Base"
shall be calculated and/or revised in each Borrowing Base Certificate delivered
on the Reserve Calculation Date, and provided, further, that as to each
Borrowing Base Certificate, (A) Available Cash Equivalents shall be calculated
as of the date of delivery of the Borrowing Base Certificate, and (B) In-Transit
Cash shall be calculated as of the date immediately preceding the date of
delivery of the Borrowing Base Certificate;
(d) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a Responsible
Officer setting forth a list of all stores and distribution centers owned or
leased and classified as owned by the Borrower or any of its Restricted
Subsidiaries for which a certificate of occupancy or a temporary certificate of
occupancy has been issued during the period covered by such financial
statements;
(e) not later than (i) 90 days after the beginning of each Fiscal
Year of the Borrower (or in the case of the 1999 Fiscal Year, 120 days after the
Effective Date), a copy of the projections by the Borrower of the operating
budget and cash flow budget of the Borrower and its Subsidiaries for such Fiscal
Year, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the basis of
assumptions believed to have been reasonable when made and (ii) 45 days after
the first day of the third fiscal quarter of such fiscal year, a certificate of
a Responsible Officer updating such projections and budgets for any significant
changes since the delivery thereof;
(f) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
promptly after the same are filed, copies of all reports on Form 8-K which the
Borrower may make to, or file with, the SEC; and
(g) promptly, such additional financial, Collateral and other
information and business reports as the Agents (on their own behalf or on behalf
of any Lender) may from time to time reasonably request.
7.3 PAYMENT OF OBLIGATIONS. Except as set forth on Schedule 7.3 or as
otherwise required by the Bankruptcy Code or by a Final Order of the Bankruptcy
Court, pay, discharge or
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otherwise satisfy (whether by exchange, compromise, settlement or similar
satisfaction of such obligations) at or before maturity or before they become
delinquent, as the case may be, all its post-petition obligations of whatever
nature, except where (i) the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the Borrower
or its Subsidiaries, as the case may be, or (ii) the failure to so pay,
discharge or otherwise satisfy such obligation could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
7.4 MAINTENANCE OF EXISTENCE; COMPLIANCE WITH CONTRACTUAL OBLIGATIONS
AND REQUIREMENTS OF LAW. Except as set forth on Schedule 7.4, preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 8.4 and except where the failure to maintain such rights,
privileges and franchises could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect; comply with all post-petition Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect, provided, that the Borrower shall comply in all material
respects with (i) the Bankruptcy Code, (ii) the Federal Rules of Bankruptcy
Procedure and (iii) the local rules and all orders of the Bankruptcy Court.
7.5 MAINTENANCE OF PROPERTY; INSURANCE. Except as otherwise required
by the Bankruptcy Code or by a Final Order of the Bankruptcy Court, keep its
property necessary in its business in good working order and condition, ordinary
wear and tear excepted, if the failure to do so could reasonably be expected to
have a Material Adverse Effect; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by similar companies of comparable size engaged in the same or a similar
business and owning or operating similar properties in localities where the
Borrower and its Restricted Subsidiaries operate and furnish upon the written
request of the Administrative Agent information as to the insurance carried.
7.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and, upon
reasonable prior written notice, permit representatives of the Administrative
Agent or the Majority Lenders to visit and inspect any of its properties and
examine and make abstracts from the books of account of the Borrower and its
Restricted Subsidiaries at any reasonable time and as often as may reasonably be
desired and, during normal business hours, to discuss the business, operations,
properties and financial and other condition of the Borrower and its Restricted
Subsidiaries with officers and employees of the Borrower and its Restricted
Subsidiaries and, in the presence of a Responsible Officer, with its independent
certified public accountants.
7.7 NOTICES. Promptly upon a Responsible Officer becoming aware
thereof, give notice to the Administrative Agent (which shall promptly give
notice thereof to each Lender) of:
(a) the occurrence of any Default or Event of Default;
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(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Restricted Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority, which could reasonably
be expected to have a Material Adverse Effect;
(c) any claims, litigation or proceeding affecting the Borrower or
any of its Subsidiaries in which the amount involved is $20,000,000 or more to
the extent not covered by insurance or in which injunctive or similar relief is
sought which, in any such case, could reasonably be expected to have a Material
Adverse Effect;
(d) the following events, as soon as administratively practicable and
in any event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or
the termination, Reorganization or Insolvency of, any Multiemployer Plan which,
in any case, could reasonably be expected to have a Material Adverse Effect or
(ii) the institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan which, in any case, could reasonably be expected to have
a Material Adverse Effect; and
(e) if the Borrower or any of the Subsidiary Guarantors cease to
perform cycle counts in accordance with historical practices.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
7.8 ENVIRONMENTAL LAWS.
(a) Except as otherwise required by the Bankruptcy Code or by a Final
Order of the Bankruptcy Court, comply with all applicable Environmental Laws and
obtain and comply in all material respects with and maintain any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except in any such case to the extent that failure
to do so could not be reasonably expected to have a Material Adverse Effect.;
and
(b) Except as otherwise required by the Bankruptcy Code or by a Final
Order of the Bankruptcy Court, conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required under
Environmental Laws, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are being
contested in good faith by appropriate proceedings and the pendency of such
proceedings could not be reasonably expected to have a Material Adverse Effect.
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7.9 FURTHER ASSURANCES. Upon the request of the Administrative Agent
at any time, promptly perform or cause to be performed any and all acts and
execute or cause to be executed any and all documents which are necessary or, in
the reasonable opinion of the Administrative Agent, advisable to maintain in
favor of the Administrative Agent Liens on the Collateral that are duly
perfected (to the extent that the same are contemplated to be so perfected under
the terms of the Loan Documents) in accordance with all applicable Requirements
of Law.
7.10 APPLICATION OF PROCEEDS. The Borrower shall use the entire
amount of the proceeds of each Loan in accordance with subsection 5.21, provided
that nothing herein shall in any way prejudice or prevent the Administrative
Agent or the Lenders from objecting, for any reason, to any requests or
applications made for interim or final allowances of compensation for services
rendered or reimbursement of expenses incurred under section 105(a), 330 or 331
of the Bankruptcy Code by any party in interest, and provided, further, that
unless otherwise allowed by the Bankruptcy Court, the Borrower shall not use the
proceeds from any Loans for any purpose that is prohibited under the Bankruptcy
Code.
7.11 ADDITIONAL COLLATERAL.
(a) With respect to any Person that, subsequent to the Effective
Date, becomes a Domestic Subsidiary (other than a Credit Card Subsidiary)
promptly: (i) execute and deliver to the Administrative Agent a new pledge
agreement or such amendments to the Master Security Agreement as the
Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent a Lien on the Capital Stock of such Domestic Subsidiary
which is owned by the Borrower or any of its Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers executed and delivered in blank by a duly authorized
officer of the pledgor thereof, (iii) cause such new Domestic Subsidiary (A) to
become a party to the Master Security Agreement, in each case pursuant to
documentation which is in form and substance satisfactory to the Administrative
Agent, and (B) to take all actions reasonably deemed necessary or advisable by
the Administrative Agent to cause the Lien created by the Master Security
Agreement to be duly perfected (to the extent contemplated therein and in the
other Loan Documents) in accordance with all applicable Requirements of Law,
including, without limitation, the filing of financing statements in such
jurisdictions as may be requested by the Administrative Agent (it being agreed
that for any such Domestic Subsidiary that is not a debtor-in-possession, no
action shall be required pursuant to this clause (iii) to perfect a Lien in
assets that would not constitute UCC Filing Collateral or in assets constituting
UCC Filing Collateral if such perfection relates to assets constituting UCC
Filing Collateral with an aggregate book value of less than $1,000,000) and (iv)
with respect to assets of any such Domestic Subsidiary with a book value in
excess of $l,000,000 that are perfected under the laws of any jurisdiction, if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described in clauses (i), (ii) and (iii)
immediately preceding, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(b) With respect to any Person that, subsequent to the Effective
Date, becomes a Foreign Subsidiary with a net worth in excess of $l,000,000 or
Inventory with a book value in excess of $1,000,000, promptly upon the request
of the Administrative Agent: (i) execute and deliver to the Administrative Agent
a new pledge agreement or such amendments to the Master Security Agreement as
the Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent a Lien
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on the Capital Stock of such Subsidiary which is owned by the Borrower or any of
its Subsidiaries (provided that in no event shall more than 65% of the Capital
Stock of any such Subsidiary be required to be so pledged) and (ii) deliver to
the Administrative Agent any certificates representing such Capital Stock,
together with undated stock powers executed and delivered in blank by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be, and
take or cause to be taken all such other actions under the law of the
jurisdiction of organization of such Foreign Subsidiary as may be necessary or
advisable to perfect such Lien on such Capital Stock.
(c) If the Borrower or any Subsidiary Guarantor shall acquire any
Investment Securities (other than Investment Securities of any issuer
aggregating less than $1,000,000) such Loan Party shall deliver certificates
representing such Investment Securities to the Administrative Agent or its agent
or custodian (or otherwise "transfer" such Investment Security (within the
meaning of the applicable UCC) to the Administrative Agent or its agent or
custodian (or take such other action as shall be required to perfect the
security interest of the Collateral in accordance with the applicable UCC)),
together with, when necessary or appropriate, undated powers as provided in
subsection 4.1(b) of the Master Security Agreement, to be held by the
Administrative Agent (or its agent or custodian) as Pledged Securities, subject
to the terms of the Master Security Agreement, as collateral security for the
Secured Obligations.
7.12 MANAGEMENT RESTRUCTURING CONSULTANT. Unless the Administrative
Agent determines in its sole discretion that a management restructuring
consultant is no longer required, upon the Management Restructuring Consultant
ceasing for any reason to act in such capacity, the Borrower shall be required
to retain another management restructuring consultant with duties and
responsibilities substantially the same as the Management Restructuring
Consultant and otherwise satisfactory to the Administrative Agent within 60
Business Days after such resignation.
7.13 BUSINESS PLANS AND PROJECTIONS. Furnish to the Administrative
Agent annual updates of the Borrower's Business Plan and financial projections
and, not later than each August 31, an update of the Borrower's Business Plan
and financial projections through the following January 31st.
7.14 DEPOSITARY ACCOUNT AND PAYMENTS SYSTEM; CASH DOMINION. The
Borrower has established a depositary account and payment system under the
Existing Credit Agreement pursuant to which, subject to the terms of the Loan
Documents, the Administrative Agent possesses sole dominion and control over the
Borrower's and the Subsidiary Guarantors' cash. Except as set forth in the Loan
Documents, neither the Borrower nor any Subsidiary Guarantor, nor any Person or
entity claiming by, through or under the Borrower nor any Subsidiary Guarantor
shall have any control over the use of, or any right to effect a withdrawal
from, any such depositary account and such payment system. The Borrower shall
maintain such depositary account and payment system and shall, within 30 days
after the entry of the Emergency Order (or such later date approved by the
Administrative Agent), deliver to each Depositary Bank instructions reasonably
satisfactory to the Administrative Agent (i) informing each such Depositary Bank
of the Reorganization Cases and (ii) informing each such Depositary Bank of the
Bankruptcy Court's order directing that all of the Loan Parties' cash continue
to be sent to the Administrative Agent pursuant to the existing arrangements.
7.15 ONGOING Y2K REPORTS. The Borrower will certify to the
Administrative Agent each month that the representation and warranty contained
in subsection 5.25 remains true and correct
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and, if exceptions are set forth on Schedule 5.25, the progress made during the
preceding month with respect to the elimination thereof will in any event
eliminate the exception set forth on Schedule 5.25 with respect to clauses (e),
(f), (g) and (h) of Schedule 5.25 by June 30, 1999 and to clauses (i) and (j) of
Schedule 5.25 by September 30, 1999.
7.16 COURT APPROVAL OF THIS AGREEMENT. The Borrower shall use its
best efforts to obtain the approval of the Bankruptcy Court of this Agreement.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any Letter of Credit remains outstanding or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
the Borrower shall not, and (except in the case of subsection 8.1) shall not
permit any of its Restricted Subsidiaries to, directly or indirectly:
8.1 FINANCIAL CONDITION COVENANTS.
(a) [Reserved].
(b) Capital Expenditures. Make aggregate Capital Expenditures in any
Fiscal Year in excess of $50 million, provided that, for any Fiscal Year in
which the Capital Expenditures made by the Borrower and its Restricted
Subsidiaries are less than the amount permitted pursuant hereto, the Capital
Expenditure limit for the next Fiscal Year shall be increased by 50% of the
difference between the amount permitted pursuant hereto for such Fiscal Year and
such actual Capital Expenditures made during such Fiscal Year, and the
expenditures of such excess may be made at any time during the applicable
carry-forward Fiscal Year. Notwithstanding the foregoing, no Capital
Expenditures shall be made if, before or after giving effect to the making of
such Capital Expenditure, an Event of Default then exists or thereafter would
exist.
8.2 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) the Guarantee Obligations in the Master Security Agreement and
any Guarantee Obligations arising under any of the other Loan Documents;
(b) Guarantee Obligations in existence on the Effective Date and (i)
set forth on Schedule 8.2(b) or (ii) otherwise not exceeding $5,000,000 in the
aggregate;
(c) Guarantee Obligations of the Borrower or any Restricted
Subsidiary of obligations (other than the Subordinated Debentures) of any
Restricted Subsidiary or the Borrower which obligations are otherwise permitted
under this Agreement;
(d) Guarantee Obligations entered into in connection with surety,
appeal, payment and performance bonds (and other obligations of a like nature)
incurred in the ordinary course of business;
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(e) subject to subsection 8.8(e), Guarantee Obligations of the
Borrower or any Restricted Subsidiary of Indebtedness or other obligations
incurred in the ordinary course of business of Subsidiaries that are not
Subsidiary Guarantors (including, without limitation, obligations in respect of
indemnifications on behalf of Credit Card Subsidiaries as contemplated by the
proviso to the definition of Credit Card Subsidiaries, to the extent such
obligations constitute Guarantee Obligations); provided that the aggregate
amount of the Indebtedness or other obligations shall not exceed (i) in the case
of Indebtedness and other obligations in respect of non-Credit Card Program
obligations, together with Investments permitted pursuant to subsection 8.8(e),
$10,000,000 and (ii) in the case of Indebtedness and other obligations in
respect of Credit Card Program obligations, together with Investments permitted
pursuant to subsection 8.8(h), $25,000,000;
(f) Guarantee Obligations in respect of obligations of vendors to the
Borrower and its Restricted Subsidiaries created in the ordinary course of
business;
(g) Guarantee Obligations of the Borrower or any Restricted
Subsidiary of Indebtedness or other obligations of Securitization Entities
incurred in connection with Securitization Transactions;
(h) Guarantee Obligations in respect of (i) the Permitted Trade L/C
Facility and other obligations in respect of Trade Letters of Credit and (ii)
other obligations in respect of Standby Letters of Credit, provided that the
aggregate outstanding amount of all such Guarantee Obligations (not otherwise
permitted pursuant to this subsection 8.2) shall at no time exceed, in the case
of clause (i) $100,000,000, and in the case of clause (ii) $10,000,000; and
(i) Guarantee Obligations of the Borrower or any Restricted
Subsidiary incurred in the ordinary course of business in respect of obligations
(other than Indebtedness) of others and other Guarantee Obligations (in each
case not otherwise permitted pursuant to this subsection 8.2) incurred after the
Effective Date, provided that the aggregate amount of all such Guarantee
Obligations for the Borrower and its Restricted Subsidiaries shall not exceed
$15,000,000 at any one time outstanding.
8.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP (or, in the case of Foreign Subsidiaries,
generally accepted accounting principles in effect from time to time in their
respective jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', landlord's, materialmen's,
repairmen's or other like Liens (including statutory Liens and other Liens
arising by operation of law) arising in the ordinary course of business securing
amounts which do not in the aggregate impair the use thereof in the operation of
the business of the Borrower and its Restricted Subsidiaries, which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to any such
Lien;
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(c) (i) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements and (ii) Liens granted to banks in the ordinary course of business
in connection with deposit, disbursement or concentration accounts (other than
in connection with borrowed money) maintained with such banks on funds and other
items in such accounts;
(d) Liens granted and deposits made in connection with the
performance of bids, trade arrangements and real estate related contracts
entered into in the ordinary course of business (in each case, other than for
borrowed money), utilities, leases, statutory obligations, surety, appeal and
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions, subdivisions,
parcelizations and other similar encumbrances incurred in the ordinary course of
business which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the Borrower or such Restricted Subsidiary;
(f) Liens in existence on the Effective Date and (i) listed on
Schedule 8.3(f) securing Indebtedness or other obligations described on such
Schedule or (ii) otherwise securing Indebtedness or other obligations not
exceeding $8,000,000 in the aggregate;
(g) Liens securing Indebtedness or other obligations of the Borrower
and its Restricted Subsidiaries incurred after the Effective Date to finance the
acquisition, construction or completion of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise), including, without
limitation, improvements, provided that (i) such Liens are created within 180
days after such acquisition, construction or completion and (ii) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness or other obligations and the proceeds thereof; and the Indebtedness
or other obligations secured by such Liens do not exceed a principal amount of
$35,000,000.
(h) Liens on assets of any Foreign Subsidiary securing Indebtedness
of such Foreign Subsidiary and other obligations incurred in the ordinary course
of business;
(i) Liens on the fixed assets of a corporation which becomes a
Restricted Subsidiary after the Effective Date and Liens existing on fixed
assets acquired by the Borrower or a Restricted Subsidiary after the Effective
Date, in either case securing Indebtedness or other obligations, provided that
no such Liens shall cover any current assets (including Accounts or Inventory)
of the Borrower or any Restricted Subsidiary, the Capital Stock of any
Subsidiary (including, without limitation, any Securitization Entity or Credit
Card Subsidiary) or any Indebtedness of the Borrower or any Subsidiary, and
provided, further, that (A) such Liens existed at the time such corporation
became a Restricted Subsidiary or such fixed asset was acquired and were not
created in anticipation thereof, (B) any such Lien is not spread to cover any
additional property or assets of such corporation after the time such
corporation becomes a Restricted Subsidiary or such fixed asset is acquired, and
(C) the amount of Indebtedness or other obligations secured thereby is not
increased;
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(j) Liens securing Indebtedness or other obligations which refunds,
refinances extends or otherwise restructures any other Indebtedness or other
obligations to the extent such refunded or refinanced Indebtedness or other
obligation was originally permitted to be secured pursuant to this subsection,
provided that the principal amount of such Indebtedness is not increased (other
than by an amount equal to any costs and expenses incurred in connection with
such refunding or refinancing) and that no such Lien is spread to cover
additional property;
(k) Liens (not otherwise permitted hereunder) which secure
Indebtedness or other obligations not exceeding (as to the Borrower and all its
Restricted Subsidiaries) $20,000,000 in aggregate principal or face amount at
any time outstanding, provided that no such Liens shall cover any current assets
(including Accounts or Inventory) of the Borrower or any Restricted Subsidiary,
the Capital Stock of any Subsidiary (including, without limitation, any
Securitization Entity or Credit Card Subsidiary) or any Indebtedness of the
Borrower or any Subsidiary;
(l) Liens created pursuant to the Security Documents;
(m) Liens created in favor of any Person who delivers goods under a
consignment to the Borrower or a Restricted Subsidiary, provided that the
Borrower or such Restricted Subsidiary treats and designates on its books and
records such goods as "goods on consignment" for all purposes and such goods are
not included as Inventory of the Borrower or such Restricted Subsidiary, as the
case may be, on the books of the Borrower or such Restricted Subsidiary, as the
case may be;
(n) Subject to execution and delivery of intercreditor agreements
reasonably satisfactory to the Administrative Agent, Liens granted to secure the
Borrower's or any Restricted Subsidiary's obligations under any Floor Planning
Facility, provided that such Liens are limited to the goods financed pursuant to
such Floor Planning Facility and the proceeds of such goods;
(o) Liens covering Accounts, credit card receivables and related
assets owned or that may be deemed owned by the Borrower and its Restricted
Subsidiaries in connection with a Credit Card Program;
(p) Liens arising from offsets, deposits or restricted assets granted
by any Credit Card Subsidiary in respect of a Credit Card Program;
(q) Liens on real property (and related fixtures and leases) owned or
leased by the Borrower or any Restricted Subsidiary, including Designated
Material Real Property, securing Indebtedness of the Borrower and such
Restricted Subsidiary, provided that if any such Lien is granted on a parcel of
Designated Material Real Property to replace (x) any then existing Lien on any
parcel of real property which secures any Permanent Mortgage Financing or (y)
any letter of credit issued after the Effective Date to replace a Lien on any
parcel of real property which previously secured any Permanent Mortgage
Financing, in each case in accordance with the terms thereof, then (1) such
parcel of Designated Material Real Property shall cease to be a parcel of
Designated Material Real Property for purposes of this Agreement and (2) the
parcel of real property which is then or was previously subject to a Lien to
secure any Permanent Mortgage Financing (A) must have a fair market value valued
on an "alternative use" basis (as determined in good faith by the Borrower)
approximately equal to the fair market value valued on an "alternative use"
basis (as determined in good faith by the Borrower) of the
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relevant parcel of Designated Material Real Property and (B) shall be deemed to
be a parcel of Designated Material Real Property for all purposes of this
Agreement;
(r) Liens arising under or in connection with Permitted
Sale-Leasebacks;
(s) Liens (including possessory Liens) on cash (and corresponding
Liens on cash collateral accounts and all investments of amounts on deposit
therein), commercial documents relating to goods financed under the relevant
facility or trade letters of credit, such goods and the proceeds thereof, in
each case securing the Permitted Trade L/C Facility and other obligations in
respect of Trade Letters of Credit, provided that no such Lien may extend to or
cover such commercial documents, goods or related proceeds after such goods are
delivered to a warehouse, distribution center or store owned or leased by the
Borrower or a Restricted Subsidiary (it being understood that the Administrative
Agent may (and, to the extent the same is reasonably satisfactory to it, shall)
enter into one or more intercreditor agreements with respect to the Permitted
Trade L/C Facility or other Trade Letters of Credit with respect to the
foregoing); and
(t) Liens arising out of the deposit arrangement described on
Schedule 5.23;
provided that, notwithstanding the foregoing, no Lien created, incurred, assumed
or suffered to exist pursuant to this subsection 8.3 (other than Permitted
Inventory Liens and Liens permitted under subsections 8.3(h), 8.3(m), 8.3(n) and
8.3(s)) shall be a Lien on Inventory or Accounts of the Borrower or any of its
Restricted Subsidiaries.
8.4 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets except:
(a) any Restricted Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more wholly
owned Subsidiaries of the Borrower (provided that a Subsidiary Guarantor or
wholly owned Restricted Subsidiary or Restricted Subsidiaries shall be the
continuing or surviving corporation and provided, further, that if one of the
parties to such transaction (i) is a Subsidiary Guarantor then the continuing or
surviving corporation shall be a Subsidiary Guarantor or (ii) is not a
Restricted Subsidiary, no Default shall result therefrom);
(b) any Restricted Subsidiary may convey, sell, lease, transfer,
assign or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any Subsidiary Guarantor or any
wholly owned Restricted Subsidiary of the Borrower (provided that if such
selling Restricted Subsidiary is a Subsidiary Guarantor then the acquiring
Restricted Subsidiary shall be a Subsidiary Guarantor); and
(c) any Restricted Subsidiary may be merged or consolidated with or
into, or convey, sell, lease, transfer, assign or otherwise dispose of any or
all of its assets to, any Person to the extent that the sale or other
disposition of the assets of such Restricted Subsidiary would be permitted under
subsection 8.5.
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8.5 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Restricted Subsidiary,
issue or sell any shares of such Restricted Subsidiary's Capital Stock to any
Person (other than the Borrower or any Subsidiary Guarantor or, if such
Restricted Subsidiary is not (x) a wholly-owned Restricted Subsidiary, pro-rata
to the owners of the equity securities of such Restricted Subsidiary or (y) a
Subsidiary Guarantor, to any Restricted Subsidiary), except:
(a) the sale or other disposition of uneconomical, obsolete, surplus
or worn out assets in the ordinary course of business, including, without
limitation, in connection with store closures and real estate development or
divestiture activities;
(b) the sale or other disposition of Inventory and other Current
Assets in the ordinary course of business (including sales of Inventory and
other Current Assets in connection with closed stores or stores to be closed or
sold and sales of discontinued Inventory pursuant to the Business Plan) and
transfers of assets among the Borrower and the Subsidiary Guarantors pursuant to
reasonable business requirements;
(c) (i) the sale or discount of accounts receivable arising in the
ordinary course of business in connection with the compromise or collection
thereof and (ii) sales or other dispositions of Cash Equivalents in the ordinary
course of business in each case at fair market value and on commercially
reasonable terms;
(d) as permitted by subsection 8.4(b);
(e) the OSS Disposition;
(f) Asset Sales of any assets (other than, directly or indirectly,
Inventory) in connection with Permitted Sale-Leasebacks or Securitization
Transactions, provided that (i) in the case of an Asset Sale in connection with
a Permitted Sale-Leaseback to the extent otherwise permitted hereunder (other
than an Asset sale in connection with a Securitization Transaction), the
proceeds of any such Permitted Sale-Leaseback shall be entirely in cash and
shall be not less than 100% of the fair market value of the assets being sold
(as determined by the Borrower in good faith) and (ii) in the case of an Asset
Sale in connection with a Securitization Transaction (which may be in the form
of a capital contribution to the relevant Securitization Entity), the purchase
price (including the Capital Stock of any Securitization Entity owned by the
Borrower or any Restricted Subsidiary) with respect to the assets sold or
disposed shall be not less than the fair market value of such assets (as
determined by the Borrower in good faith);
(g) the sale or other disposition of any property (other than,
directly or indirectly, Inventory and other Current Assets, and other than any
sale or other disposition which is otherwise permitted under this subsection
8.5), provided that at the time of and after giving effect to such sale or
disposition, the aggregate fair market value of all assets so sold or disposed
of in any Fiscal Year pursuant to this paragraph (g) shall not exceed an amount
equal to $125,000,000;
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(h) subject to the other terms and provisions hereof, leases or
subleases (or assignments of leases) or licenses or sublicenses (or assignments
of licenses or sublicenses) of any assets in the ordinary course of business;
(i) sales and other dispositions of assets in connection with
Investments (other than Investments received in respect of the sale or
disposition of Fixed Assets) permitted under subsection 8.8;
(j) sales or other dispositions of Accounts, credit card receivables
and related assets in connection with a Credit Card Program; and
(k) issuances, sales and other dispositions of Capital Stock by any
Credit Card Subsidiary to any Person so long as after giving effect thereto,
such Credit Card Subsidiary remains a Subsidiary;
provided that the foregoing limitations are not intended to prevent the Borrower
from rejecting leases or contracts in connection with the Reorganization Cases.
8.6 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in common stock or Qualified Stock of the Borrower or
options or warrants with respect thereto) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock (including Qualified Stock) of the Borrower or any
warrants or options to purchase any such Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Restricted Subsidiary (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions and distributions
being herein called "Restricted Payments"), except that the Borrower may (i)
purchase or exchange then-existing employee stock options for consideration
consisting solely of (subject to subsection 8.15) Capital Stock of the Borrower
and (ii) may purchase or redeem up to $1,000,000 in Capital Stock solely for the
purpose of purchasing minority interests in order for such Subsidiaries to
become wholly owned Subsidiaries of the Borrower.
8.7 LIMITATION ON INDEBTEDNESS. The Borrower shall not create or
suffer to exist, or permit any Restricted Subsidiary to create or suffer to
exist, any Indebtedness except:
(a) the Credit Agreement Obligations;
(b) Guarantee Obligations permitted by subsection 8.2;
(c) [reserved];
(d) Intercompany Debt and Indebtedness of the Borrower to any
Excluded Subsidiary, provided that such Indebtedness to an Excluded Subsidiary
is (i) at all times junior and subordinate in right of payment to the Secured
Obligations and (ii) not paid until after the repayment in full of the Credit
Agreement Obligations;
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(e) Indebtedness secured by Liens permitted by subsection 8.3,
including without limitation, in respect of Floor Planning Facilities permitted
under subsection 8.3(n);
(f) Indebtedness outstanding on the Effective Date and listed on
Schedule 8.7(f) and refinancings thereof to the extent permitted under
subsection 8.9; and
(g) Indebtedness of the Borrower arising pursuant to Derivative
Agreements entered into with any Lender for the purpose of hedging the
Borrower's interest rate exposure and not for speculative purposes, and
Indebtedness in respect of cash management obligations.
8.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of any Person or consummate any
Acquisition (an "Investment"), except for:
(a) extensions of trade credit and prepaid expenses made in the
ordinary course of business;
(b) Investments in Cash Equivalents; provided that (A) the maximum
amount of cash and Cash Equivalents held in accounts (other than Consignment
Inventory Accounts) over which the Administrative Agent does not have a valid
and perfected Lien shall not exceed $15,000,000 and (B) the maximum amount of
cash and Cash Equivalents held in Consignment Inventory Accounts shall not
exceed the amounts due to suppliers of Consignment Inventory consisting of (i)
the cost of the Consignment Inventory actually sold plus (ii) other expenses due
and payable to such suppliers of Consignment Inventory;
(c) (i) loans to officers of the Borrower or any Subsidiary, (ii)
loans and advances to employees of the Borrower or its Subsidiaries for travel,
entertainment and relocation expenses in the ordinary course of business, and
(iii) loans by the Borrower to its employees (other than to officers of the
Borrower or any Subsidiary) in connection with management incentive plans,
provided that the aggregate outstanding principal amount of all such loans and
advances shall not exceed $5,000,000 at any time;
(d) Investments by the Borrower in Subsidiary Guarantors and
Investments by Restricted Subsidiaries in the Borrower and in Subsidiary
Guarantors;
(e) Investments not otherwise permitted hereunder by the Borrower and
Restricted Subsidiaries in Subsidiaries that are not Subsidiary Guarantors,
provided that, after giving effect to such Investments, the aggregate then
outstanding amount of all such Investments (including Investments in such
Subsidiaries in the nature of sales and transfers of assets (including, pursuant
to a transaction permitted under subsection 8.4) for less than fair market value
and Guarantee Obligations pursuant to subsection 8.2(e)) made subsequent to the
Effective Date pursuant to this paragraph (e), together with Guarantee
Obligations permitted pursuant to subsection 8.2(e), shall not exceed
$10,000,000, provided, further, that the conversion of any Indebtedness owed to
the Borrower or any Restricted Subsidiary by any Subsidiary into equity of such
Subsidiary shall not constitute an additional Investment in such Subsidiary by
the Borrower or such Restricted Subsidiary for purposes of the limitation
contained in the immediately preceding proviso;
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(f) Investments received in connection with the creation and
collection of accounts receivable in the ordinary course of business;
(g) Investments received as consideration in connection with any
Asset Sale or other disposition of assets permitted hereunder;
(h) Investments not otherwise permitted hereunder in Credit Card
Subsidiaries in an amount, together with Guaranteed Obligations permitted
pursuant to subsection 8.2(e), not to exceed $25,000,000 outstanding at any
time;
(i) Investments by Credit Card Subsidiaries in connection with the
Credit Card Program;
(j) loans and advances to suppliers in the ordinary course of
business consistent with past practice but in any event not in excess of an
outstanding principal amount of $500,000;
(k) purchases of Accounts, credit card receivables and related assets
by Credit Card Subsidiaries in connection with the Credit Card Program; and
(l) Acquisitions and other Investments not otherwise permitted
hereunder made by the Borrower or any of its Restricted Subsidiaries, provided
that, after giving effect thereto, (i) the aggregate outstanding amount of all
such Investments (other than Acquisitions) made at any time after the Effective
Date, shall not exceed the sum of $2,000,000 and (ii) the aggregate outstanding
amount of all such Acquisitions (including assumed Indebtedness and the fair
market value of Capital Stock issued) and other Investments made at any time
after the Effective Date shall not exceed the sum of $20,000,000.
8.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS. At any time:
(a) make any optional payment or prepayment on or optionally redeem
or purchase any Indebtedness (other than the Loans and Indebtedness of the
Borrower or any Restricted Subsidiary to the Borrower or any Restricted
Subsidiary) of the Borrower or any Subsidiary,
(b) make any optional payment or prepayment on account of the
principal of, or interest on, or secure any amendment or waiver of any terms of,
or optionally redeem or purchase, any Subordinated Debentures, or
(c) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms relating to the payment or prepayment
of principal of or interest on, any Indebtedness described in clause (a), or the
Subordinated Debentures or the Subordinated Debt Indenture (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon), provided, that the Borrower
and its Restricted Subsidiaries may prepay Indebtedness (other than the
Subordinated Debentures) permitted hereunder:
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(A) from the proceeds of new Indebtedness incurred to refinance such
Indebtedness and permitted hereunder to be incurred,
(B) under Financing Leases for stores and other property no longer
occupied or used by the Borrower or such Restricted Subsidiary in
connection with the settlement, termination or assignment of such Financing
Lease,
(C) secured by assets in connection with any sale or other
disposition of such assets permitted under subsection 8.5,
(D) consisting of Floor Planning Facilities,
(E) incurred after the Effective Date and otherwise permitted
hereunder to the extent such prepayment is financed with the proceeds of
other Indebtedness (other than Loans) permitted hereunder,
(F) consisting of Financing Leases as long as such Financing Leases
are paid in full in connection with any such prepayment and such prepayment
is made in connection with the closure or sale of a parcel of real property
subject to such Financing Lease,
(G) secured by a Lien on any parcel of Material Real Property so long
as such Indebtedness is paid in full in connection with any such prepayment
and such prepayment is financed with the proceeds of other Indebtedness
(other than Loans) permitted hereunder,
(H) that is short term Indebtedness and unsecured, and
(I) from proceeds of the issuance of Capital Stock, but only if after
giving effect to such issuance, no Default or Event of Default would have
occurred and be continuing.
8.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Except as set forth
on Schedule 8.10, enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate unless such transaction is (a) otherwise permitted under this
Agreement or (b) upon fair and reasonable terms no less favorable to the
Borrower or such Restricted Subsidiary, as the case may be, than it would obtain
in a comparable arm's length transaction with a Person which is not an
Affiliate.
8.11 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Restricted
Subsidiary of real or personal property (other than Capital Stock) which has
been or is to be sold or transferred by the Borrower or such Restricted
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Restricted Subsidiary (such arrangement, a
"Sale-Leaseback"), except for Sale-Leasebacks in the ordinary course of the
Borrower's or such Restricted Subsidiary's business, consistent with past
practice and at market rates and subject to compliance with subsection 8.5(e),
or Sale-Leasebacks in connection with Securitization Transactions ("Permitted
Sale-Leasebacks"), in each case on terms and conditions acceptable to the
Administrative Agent in its sole discretion, exercised commercially reasonably
and in
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accordance with its customary criteria. For the avoidance of doubt,
Sale-Leasebacks that result in a Financing Lease shall be treated as
Indebtedness for all purposes of this Agreement.
8.12 FISCAL YEARS AND QUARTERS. Change the last day of the Fiscal
Year of the Borrower (other than to a day on or about January 31 of any calendar
year) or permit any Fiscal Year to be less than a period of approximately 365
days or permit any fiscal quarter to be less than a period of approximately 90
days.
8.13 LIMITATION ON CONDUCT OF BUSINESS. Enter into any business
either directly or through any Restricted Subsidiary except for businesses in
which the Company and its Subsidiaries are engaged on the date of this Agreement
and businesses related or similar thereto or entered into in connection with any
of the foregoing.
8.14 [RESERVED].
8.15 LIMITATION ON ISSUANCES OF CAPITAL STOCK. Issue (a) any
preferred stock or (b) any class of redeemable common stock, provided, however,
that the Borrower may issue Qualified Stock.
8.16 FOREIGN HOLDING COMPANIES, INACTIVE SUBSIDIARIES AND SPECIAL
PURPOSE SUBSIDIARIES. Permit the aggregate book value of the assets of all
Foreign Holding Companies (exclusive of assets consisting of advances or loans
to the Borrower or any of its Subsidiaries and Capital Stock of Foreign
Subsidiaries and other Foreign Holding Companies), Inactive Subsidiaries and
Special Purpose Subsidiaries (exclusive of assets consisting of licenses or
permits) which are not Subsidiary Guarantors to exceed $25,000,000 at any time.
8.17 PERMANENT ORDER. Make or permit to be made any change, amendment
or modification, or any application or motion for any change, amendment or
modification, to the Permanent Order without the prior written consent of the
Required Lenders.
8.18 APPLICATION TO BANKRUPTCY COURT. Apply to the Bankruptcy Court
for the authority to take any action that is prohibited by the terms of this
Agreement or any of the other Loan Documents or refrain from taking any action
that is required to be taken by the terms of this Agreement or any of the other
Loan Documents.
8.19 LIMITATION ON RECLAMATION PAYMENTS. Make any reclamation payment
in excess of $15,000,000.
8.20 LIQUIDATION CONSULTANT. Replace or make any material
modification in the contractual arrangements with any Person engaged to conduct
or assist the Borrower in conducting liquidations sales, without the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld.
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SECTION 9. EVENTS OF DEFAULT.
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms hereof; or the Borrower shall fail to pay any
Reimbursement Obligation within two Business Days after such Reimbursement
Obligation becomes due in accordance with the terms hereof; or the Borrower
shall fail to pay any interest on any Loan, or any other amount payable
hereunder, within five days after any such interest or other amount becomes due
in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or which
is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of
any agreement contained in subsection 7.7(a), 7.12 or 7.14 or Section 8, or the
Borrower shall fail to deliver a Borrowing Base Certificate pursuant to
subsection 7.2(c) within two Business Days after such Borrowing Base Certificate
was due pursuant to such subsection; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this Section), and such default shall continue unremedied for a period of 30
days after the earlier of (i) the date upon which written notice thereof is
given to the Borrower by the Administrative Agent or the Majority Lenders or
(ii) the date upon which a Responsible Officer becomes aware of such default; or
(e) The Borrower or any of its Restricted Subsidiaries shall (i)
default after the commencement of the Reorganization Cases in any payment of
principal of or interest on any post-petition Indebtedness (other than the
Loans) or in the payment of any post-petition Guarantee Obligation, beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required (but after the expiration of all
grace periods applicable thereto), such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable, provided that
(x) no Default or Event of Default shall exist under this paragraph (A) unless
the aggregate amount of Indebtedness (other than Indebtedness in respect of
Floor Planning Facilities) and/or Guarantee Obligations in respect of which any
default or other event or condition referred to in this paragraph shall have
occurred shall be equal to at least $10,000,000 or (B) unless the aggregate
amount of Indebtedness in respect of Floor Planning Facilities in respect of
which any default or other event or condition referred
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to in this paragraph shall have occurred shall be equal to at least $20,000,000
and (y) clause (ii) above shall not apply to Indebtedness that becomes due
solely as a result of the voluntary sale or transfer of property or assets or
prepayments that become due as a result of any issuance of Capital Stock or
incurrence of Indebtedness (in each case to the extent such, sale, transfer,
issuance or incurrence is permitted by the terms of such Indebtedness); or
(f) [reserved]; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Tax Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event (other than the
Reorganization Cases) shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to administer or
to terminate, any Single Employer Plan, which Reportable Event or commencement
of proceedings or appointment of a trustee is, in the reasonable opinion of the
Majority Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Majority Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Restricted Subsidiaries involving in the aggregate a
liability (to the extent not paid or covered by insurance) of $15,000,000 or
more, and such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or
(i) (i) For any reason (other than any act on the part of the
Administrative Agent or any Lender or any act or failure to act (except to the
extent such act or failure to act constitutes a breach of the relevant Blocked
Account Agreement or Lockbox Agreement on the part of any Depositary Bank) the
Master Security Agreement or any Security Document ceases to be or is not in
full force and effect in any material respect and such default shall continue
unremedied for 30 days after the earlier of receipt by the Borrower of notice of
such default from the Administrative Agent or actual knowledge of such default
by a Responsible Officer, (ii) the Borrower or any of its Restricted
Subsidiaries shall assert in writing that the Master Security Agreement or any
Security Document has ceased to be or is not in full force and effect or (iii)
the Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby except to
the extent contemplated hereunder and under the other Loan Documents; or
(j) (i) Any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended) (A) shall have
acquired beneficial ownership of 50% or more of any outstanding class of Capital
Stock having ordinary voting power in the election of directors of the Borrower
or (B) shall obtain the power (whether or not exercised) to elect a majority of
the Borrower's directors, or (ii) (A) the Board of Directors of the Borrower
shall not consist of a majority of
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Continuing Directors; "Continuing Directors" shall mean the directors of the
Borrower on the Effective Date and each other director, if such other director's
nomination for election to the Board of Directors of the Borrower is recommended
by a majority of the then Continuing Directors and (B) the Chief Executive
Officer of the Borrower shall resign or be removed during the period commencing
three months prior to the date the Board of Directors shall not consist of a
majority of Continuing Directors and ending six months after such date; or
(k) Any provision of any Loan Document shall for any reason cease to
be valid and binding on the Loan Party party thereto other than by reason of the
application of applicable bankruptcy, insolvency, reorganization or other
similar laws or the application of equitable principles relating to or limiting
creditors' rights generally, or such Loan Party shall so state in writing; or
(l) Any Loan Party shall fail to comply with the terms of either the
Emergency Order or the Permanent Order in any material respect; or
(m) Any of the Reorganization Cases shall be dismissed, suspended or
converted to a case under chapter 7 of the Bankruptcy Code or a trustee shall be
appointed in any of the Reorganization Cases, or an application shall be filed
by a Loan Party for the approval of, or there shall arise, any other claim
having priority senior to or pari passu with the claims of the Administrative
Agent and the Lenders under the Loan Documents or any other claim having
priority over any or all administrative expenses of the kind specified in
sections 503(b) or 507(b) of the Bankruptcy Code (other than Permitted
Expenses); or
(n) The Bankruptcy Court shall (i) enter an order approving payment
of any pre-petition Claims other than an order approving a Permitted Prepetition
Claim Payment, (ii) enter a First Day Order not approved by the Administrative
Agent, (iii) grant relief from the automatic stay applicable under section 362
of the Bankruptcy Code to holders of security interests in respect of the
ability of such holders to foreclose on assets valued in excess of $15,000,000
in the aggregate, or (iv) except to the extent the same would not constitute a
default under any of the previous clauses, enter an order approving any
settlement or other stipulation with any creditor of the Borrower other than the
Administrative Agent and the Lenders or otherwise providing for payments as
adequate protection or otherwise to such creditor individually or in the
aggregate in excess of $1,000,000 for any and all such creditors; or
(o) A Loan Party shall make any payment (as adequate protection or
otherwise) on account of any Claim arising or deemed to have arisen prior to the
commencement of the Reorganization Cases other than a payment or payments which
would not constitute a default under Section 9(n)(ii) or a Permitted Prepetition
Claim Payment; or
(p) The Bankruptcy Court shall enter an order amending,
supplementing, vacating or otherwise modifying the Emergency Order or Permanent
Order without the consent of the Required Lenders; or
(q) The Bankruptcy Court shall enter an order appointing an examiner
with powers beyond the duty to investigate and report, as set forth in section
1106(a)(3) and (4) of the Bankruptcy Code in any of the Reorganization Cases; or
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(r) A Loan Party shall bring a motion in any of the Reorganization
Cases: (i) to obtain working capital financing from any Person other than the
Lenders under section 364(d) of the Bankruptcy Code (other than with respect to
a working capital financing used, in whole or in part, to repay in full the
Credit Agreement Obligations) or (ii) to obtain financing from any Person other
than the Lenders under section 364(c) of the Bankruptcy Code (other than with
respect to a financing used, in whole or in part, to repay in full the Credit
Agreement Obligations or otherwise permitted by this Agreement) or (iii) to
grant any Lien other than Liens upon or affecting any Collateral permitted by
the Master Security Agreement or (iv) except as otherwise provided herein, to
use any of the Collateral pursuant to section 363(c) of the Bankruptcy Code
without the prior written consent of the Required Lenders except to pay
Permitted Expenses or (v) to recover from any portions of the Collateral any
costs or expenses of preserving or disposing of such Collateral under section
506(c) of the Bankruptcy Code; or
(s) The Bankruptcy Court shall enter an order granting relief
pursuant to section 362(d) of the Bankruptcy Code (except to the extent such
would not cause a breach of clause (iii) of Section 9(n)); or
(t) The Permanent Order shall not have been entered by the Bankruptcy
Court on the 45th day after the Petition Date, or, if then entered, the
Permanent Order shall be stayed, reversed, modified, amended or vacated, in
whole or in part;
then, and in any such event, either or both of the following actions may be
taken: (i) with the consent of the Majority Lenders, the Administrative Agent
may, or upon the request of the Majority Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived. In addition, subject to any requirement of the giving
of notice by the terms of the Interim Order or the Permanent Order, the Agents
and the Lenders shall be entitled to exercise their respective rights under the
Master Security Agreement or any other Security Document.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash Collateral Account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of each
Issuing Bank and the L/C Participants, a security interest in such cash
Collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash Collateral Account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such
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Letters of Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
hereunder and under the Notes shall have been paid in full, the balance, if any,
in such cash Collateral Account shall be returned to the Borrower. The Borrower
shall execute and deliver to the Administrative Agent, for the account of each
Issuing Bank and the L/C Participants, such further documents and instruments as
the Administrative Agent may reasonably request to evidence the creation and
perfection of the security interest in such cash Collateral Account.
SECTION 10. ADMINISTRATIVE AGENT AND THE COLLATERAL MONITORING AGENT
10.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto, including, without limitation, all powers, rights
and remedies provided in the Master Security Agreement. Notwithstanding any
provision to the contrary elsewhere in this Agreement, neither Agent shall have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the either
Agent.
10.2 DELEGATION OF DUTIES. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 EXCULPATORY PROVISIONS. No Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by such Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. No Agent shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower.
10.4 RELIANCE BY AGENTS. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, facsimile, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon
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advice and statements of legal counsel (including, without limitation, counsel
to the Borrower), independent accountants and other experts selected by such
Agent. The Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. Each Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of Lenders entitled to so act in accordance
with the terms of this Agreement as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Each Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of Lenders entitled to so act in accordance with the
terms of this Agreement, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
10.5 NOTICE OF DEFAULT. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
Lenders entitled to so act in accordance with the terms of this Agreement;
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
10.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender expressly
acknowledges that no Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by either Agent hereafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by such Agent to any Lender. Each Lender represents
to the Agents that it has, independently and without reliance upon the Agents or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agents 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 analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, no Agent
shall have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower which
may come into the possession of such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
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10.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Voting Percentages in effect on the date on which indemnification is
sought, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other amounts payable
hereunder. Each Agent shall have the right to deduct any amount owed to it by
any Lender under this Agreement from any payment made by it to such Lender
hereunder.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from and generally engage in any kind of business with the Borrower as though
such Agent were not an Agent hereunder and under the other Loan Documents. With
respect to the Loans made by it or any Letter of Credit issued or participated
in by it, each Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not an Agent hereunder, and the terms "Lender" and "Lenders" shall
include such Agent in its individual capacity.
10.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 25 Business Days' notice to the Borrower and
the Lenders. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Majority Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Administrative Agent
hereunder. Effective upon such appointment and approval, the term
"Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 11. MISCELLANEOUS
11.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Majority Lenders may, or, with the written consent of the Majority Lenders or
the Administrative Agent, as applicable, may, from time to time, (a) enter into
with the applicable Loan Party or Parties written amendments, supplements or
modifications
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hereto and to the other Loan Documents for the purpose of adding, deleting or
revising any provisions to this Agreement or the other Loan Documents or
changing in any manner the rights of the Lenders or of the Borrower hereunder or
thereunder or (b) waive, on such terms and conditions as the Majority Lenders or
the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall:
(i) reduce the amount or extend the scheduled date of maturity of any
Loan or of any installment thereof, or reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the amount or extend the expiration date of any
Lender's Commitments, in each case without the consent of each Lender
adversely affected thereby,
(ii) (A) amend, modify or waive any provision of this subsection or
consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents or any
other provision of any other Loan Document, or, except as set forth in the
Master Security Agreement, release or subordinate the interest of the
Administrative Agent in the Collateral or the Subsidiary Guarantors, except
that:
(x) the Administrative Agent may release or subordinate
the Administrative Agent's interest in up to $10,000,000 of the
Collateral, with the consent of the Agents,
(y) the Administrative Agent may release or subordinate
the Administrative Agent's interest in $10,000,001 to $50,000,000 of
the Collateral, with the consent of the Required Lenders, and
(z) the Administrative Agent may release or subordinate
the Administrative Agent's interest in more than $50,000,000 of the
Collateral, with the consent of all the Lenders, or
(B) reduce the percentage specified in the definition of Majority
Lenders or Required Lenders without the written consent of all the Lenders,
(iii) increase (A) any percentage set forth in the definition of
Borrowing Base, Available Inventory Amount or Available Accounts Receivable
Amount or Available L/C Amount without the consent of all the Lenders,
provided, the Agents may increase the percentages set forth in the
definition of Borrowing Base, Available Inventory Amount, Available
Accounts Receivable Amount or Available L/C Amount by up to an additional
5% above the percentages as of the Effective Date with the consent of the
Required Lenders, (B) the amount set forth in clause (ii) of the definition
of Available Mortgaged Real Estate Amount without the consent of the
Required Lenders and the Agents or (C) the maximum aggregate amount of
Commitments hereunder without the consent of the Required Lenders,
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(iv) amend or modify the amount set forth in the definition of
Interim Reserve Amount without the consent of the Required Lenders and the
Agents,
(v) amend, modify or waive any provision of Section 2 or subsection
4.1(c) without the written consent of the Majority Term Loan Lenders or
reduce the percentage specified in the definition of Majority Term Loan
Lenders without the consent of all the Term Loan Lenders,
(vi) amend, modify or waive any provision of Section 3 or of
subsection 6.2 without the prior written consent of the Majority Revolving
Credit Lenders or reduce the percentage specified in the definition of
Majority Revolving Credit Lenders without the consent of all the Revolving
Credit Lenders,
(vii) amend, modify or waive any provision of subsection 4.7(c) of
this Agreement or of subsection 3.5(a) or 3.5(b) of the Master Security
Agreement without the written consent of the Majority Term Loan Lenders and
the Majority Revolving Credit Lenders,
(viii) amend, modify or waive any provision of subsections 3.6
through 3.13 without the consent of each Issuing Bank adversely affected in
any material respect thereby,
(ix) amend, modify or waive any provision of subsections 3.14, 3.15
or 3.16 without the consent of the Swing Line Lender, or
(x) amend, modify or waive any provision of Section 10 without the
written consent of the Agent adversely affected thereby.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders, and the Administrative Agent
shall be restored to their former positions and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. If, in
connection with any proposed amendment, supplement, modification, consent or
waiver of any provisions of this Agreement or any other Loan Documents as
contemplated by this subsection 11.1, the consent of Lenders whose Voting
Percentages aggregate at least 90% is obtained but the consent of one or more of
the other Lenders is not obtained, then the Borrower may replace each such
non-consenting Lender or Lenders with one or more replacement Lenders pursuant
to subsection 11.7 so long as at the time of such replacement, each replacement
Lender consents to the proposed amendment, supplement, modification, consent or
waiver, provided that the Borrower shall not have the right to replace any
Lender solely as a result of the exercise of such Lender's rights (and the
withholding of any required consent of such Lender) pursuant to clauses (i),
(ii) or (iii) of the first proviso of this subsection 11.1.
11.2 NOTICES. Unless otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile transmission) and shall be
deemed to have been duly given or made (a) in the case of delivery by hand
(including by overnight courier), when delivered, (b) in the case of delivery by
mail, three days
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after being deposited in the mails, postage prepaid, or (c) in the case of
delivery by facsimile transmission, when sent and receipt has been confirmed,
addressed as follows in the case of the Borrower and the Agents, and as set
forth in Schedule 11.2 in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:
The Borrower: Service Merchandise Company, Inc.
7100 Service ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer and Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇. ▇▇▇▇▇▇, Jr., Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Collateral
Monitoring Agent: BankBoston, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Administrative
Agent: Citicorp USA, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Agents or the Lenders
pursuant to subsections 3.2, 3.4, 3.6, 3.15, 4.1, 4.2 or 4.7 shall not be
effective until received. Whenever either Agent sends a notice by mail, such
Agent will use reasonable efforts to also send such notice by one of the other
means of notice permitted hereunder, provided that the failure to do so shall
not affect in any way the validity of any delivery by mail pursuant to this
subsection or otherwise result in any liability to the Agents or the Lenders.
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
11.5 PAYMENT OF EXPENSES AND TAXES; INDEMNITY. The Borrower agrees
(a) to pay or reimburse the Agents for all their reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of one counsel for all of the Agents together,
(b) (i) to pay or reimburse the Agents for all their reasonable
out-of-pocket costs and expenses incurred in connection with (A) the
enforcement or preservation of any rights under this Agreement, the other
Loan Documents and any such other documents, including, without limitation,
costs and expenses which the Administrative Agent may incur in enforcing or
protecting its Liens on or rights and interest in the Collateral, and the
fees and disbursements of counsel to the Agents, and (B) any review of
pleadings and documents related to the
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Reorganization Cases, attendance at meetings related to the Reorganization
Cases, general monitoring of the Reorganization Cases and any subsequent
chapter 7 case, and
(ii) to pay or reimburse each Lender for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other
Loan Documents and any such other documents following the occurrence and
during the continuation of a Default or an Event of Default, including,
without limitation, the fees and disbursements of counsel to each Lender,
(c) to pay, indemnify, and hold each Lender and the Agents (and their
respective directors, officers, employees and agents) harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise (other than excise taxes
imposed in lieu of net income taxes) and other similar taxes, if any, which may
be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and
(d) to pay, indemnify, and hold each Lender and the Agents (and their
respective directors, officers, employees and agents) harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits and reasonable out-of-pocket costs, expenses or disbursements
(including, without limitation, the reasonable fees and expenses of the same
counsel for all of the Lenders or the Agents (absent a conflict of interest or
inability to join the relevant actions or proceedings, in which additional
counsel may be retained by the Agents and Lenders)) of any kind or nature
whatsoever with respect to any claim, litigation, investigation or proceeding
relating to the execution, delivery, enforcement, performance and administration
of this Agreement and the other Loan Documents and any such other documents or
any use of any of the Extensions of Credit, including, without limitation, any
of the foregoing relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower, any
of its Subsidiaries or any of the Properties (all the foregoing in this clause
(d), collectively, the "Indemnified Liabilities"), provided that the Borrower
shall have no obligation hereunder to the Agents or any Lender (or their
respective directors, officers, employees or agents) with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of the
Agents or any such Lender (or their respective directors, officers, employees or
agents, as the case may be), provided, however, that in connection with the
enforcement or preservation of any rights under this Agreement or the other Loan
Documents, the Borrower shall not be required to pay or reimburse the Lenders
for more than one counsel to all of the Lenders and for one counsel to each of
the Agents. The agreements in this subsection shall survive the termination of
this Agreement and the repayment of the Loans and all other amounts payable
hereunder.
11.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Agents and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of each
Lender.
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(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any interest of such Lender in any Letter of Credit, any
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Agents shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan Documents. No
Lender shall be entitled to create in favor of any Participant, in the
participation agreement pursuant to which such Participant's participating
interest shall be created or otherwise, any right to vote on, consent to or
approve any matter relating to this Agreement or any other Loan Document except
for those specified in clauses (i) and (ii) of the proviso to subsection 11.1.
The Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in subsection 11.8(a) as
fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of subsections 4.9, 4.10 and 4.11
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if it were a Lender; provided that, in the case of
subsection 4.10, such Participant shall have complied with the requirements of
said subsection and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. Each Lender promptly shall notify the Administrative
Agent in writing of the sale of any participating interest in a Loan to any
Participant.
(c) Any Lender may, in the ordinary course of its business of making
or investing in loans and in accordance with applicable law, at any time and
from time to time assign to any Lender or any affiliate thereof or, with the
consent of the Agents (which shall not be unreasonably withheld), to an
additional bank, financial institution or other entity that is then engaged in
the business of lending money (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit A, executed by
such Assignee and such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the Agents) and
delivered to the Agents for its acceptance and recording in the Register, with a
copy thereof to the Borrower, provided that (a) in the case of any such
assignment (other than to a Lender or an Affiliate of a Lender), the sum of the
aggregate principal amount of the Loans, the aggregate amount of the L/C
Obligations and the aggregate amount of the unused Commitments being assigned
and, if such assignment is of less than all of the rights and obligations of the
assigning Lender, the sum of the aggregate principal amount of the Loans, the
aggregate amount of the L/C Obligations and the aggregate amount of the unused
Commitments remaining with the assigning Lender are each not less than
$5,000,000 (or such lesser amount as may be
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agreed to by the Borrower and the Agents), (b) assignments shall not be
required to be made on a ratable basis between the Commitments and/or Loans held
by any Lender, (c) assignments by a Revolving Credit Lender of all or a portion
of its Revolving Loans and/or Revolving Credit Commitment must be to either (i)
a commercial bank having total assets in excess of $5,000,000,000 or any of its
Affiliates, or (ii) a finance company, insurance company or other financial
institution or fund which is regularly engaged in the making of, purchasing or
investing in loans and having total assets in excess of $300,000,000 ("Eligible
Assignee"), (d) any Lender may make an assignment consisting solely of Term
Loans (without regard to the requirements of clause (a) above) so long as the
aggregate principal amount of Term Loans so assigned is at least $5,000,000, and
(e) the consent of the Borrower shall be required in connection with any
assignment to a Lender or an Affiliate of a Lender solely to the extent that
after giving effect thereto such Lender or Affiliate would be entitled to
receive any greater payment under subsection 4.9, 4.10 or 4.11 at such time than
the assigning Lender is entitled to receive at such time. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
subsection, the consent of the Borrower shall not be required (other than as to
the minimum amount of any assignment required under this paragraph).
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
11.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders may (and, in the case of any Loan or other obligation hereunder not
evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder shall be effective only upon appropriate entries with
respect thereto being made in the Register. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $5,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Borrower;
provided, however, that no such registration and processing fee shall be paid in
connection with the initial syndication of the Loans.
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(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of subsection 11.17, any and all financial information
in such Lender's possession concerning the Borrower and its Affiliates which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection do not prohibit any pledge or assignment
by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors or other applicable law or the creation
of a security interest by any Lender other than a commercial bank.
(h) So long as no Default or Event of Default shall have then
occurred and be continuing, no assignment by a Lender pursuant to this
subsection 11.6 shall be permitted without the consent of the Administrative
Agent and the Borrower if, after giving effect thereto, any Lender other than
the Agents would hold in excess of 20% of the aggregate Voting Percentages at
any such time.
11.7 REPLACEMENT OF LENDERS UNDER CERTAIN CIRCUMSTANCES. The Borrower
shall be permitted to replace any Lender which (a) requests reimbursement for
amounts owing pursuant to subsection 4.9 or 4.10, (b) has received a written
notice from the Borrower of an impending change in law that would entitle such
Lender to payment of additional amounts under subsection 4.9 or 4.10(a), unless
such Lender designates a different lending office before such change in law
becomes effective and such alternate lending office obviates the need for the
Borrower to make payments of additional amounts under subsection 4.9 or 4.10(a),
(c) is affected in the manner described in subsection 4.6(b) or 4.8 and as a
result thereof any of the actions described in subsection 4.6 or 4.8, as the
case may be, are required to be taken, (d) does not consent to any proposed
amendment, supplement, modification, consent or waiver of any provisions of this
Agreement or any other Loan Document as contemplated by the last sentence of
subsection 11.1, or (e) defaults in its obligation to make Loans or issue, or
participate in, any Letter of Credit, provided that (i) such replacement does
not conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) the Borrower
shall repay (or the replacement bank or institution shall purchase, at par) all
Loans and other amounts owing to such replaced Lender prior to the date of
replacement, (iv) the Borrower shall be liable to such replaced Lender under
subsection 4.11 if any Eurodollar Loan owing to such replaced Lender shall be
prepaid (or purchased) other than on the last day of the Interest Period
relating thereto, (v) the replacement bank or institution, if not already a
Lender, and the terms and conditions of such replacement, shall be reasonably
satisfactory to the Administrative Agent, (vi) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of
subsection 11.6 (provided that the Borrower or replacement Lender shall be
obligated to pay the registration and processing fee referred to therein), (vii)
until such time as such replacement shall be consummated, the Borrower shall pay
all additional amounts (if any) required pursuant to subsection 4.9 or 4.10, as
the case may be, and (viii) any such replacement shall not be deemed to be a
waiver of any rights which the Borrower, the Administrative Agent or any other
Lender shall have against the replaced Lender.
11.8 ADJUSTMENTS. If any Lender (a "benefited Lender") shall at any
time receive any payment of all or part of its Loans or the Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, or
otherwise),
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and, after giving effect to any such payment or the receipt of any such
collateral, such benefited Lender shall have received a greater proportionate
payment (determined in accordance with subsection 4.7) or interest in collateral
than that received by any other relevant Lender, if any, in respect of such
other relevant Lender's relevant Loans or, if applicable, the Reimbursement
Obligations owing to it, or interest thereon, such benefited Lender shall
purchase for cash from the other relevant Lenders a participating or other
similar interest in such portion of each such other relevant Lender's relevant
Loans or, if applicable, the Reimbursement Obligations owing to it, or shall
provide such other relevant Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such benefited Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders entitled to the same under this subsection, provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
11.9 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
11.10 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.11 INTEGRATION. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Agents and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Agents or any Lender relative
to the subject matter hereof or thereof not expressly set forth or referred to
herein or in the other Loan Documents.
11.12 TERMINATION. This Agreement shall terminate when the
Commitments have terminated or expired, no Loan or Letter of Credit is
outstanding (other than Letters of Credit which have been cash collateralized in
a manner substantially the same as the manner described pursuant to the
penultimate paragraph of Section 9) and the other then unpaid or accrued Credit
Agreement Obligations have been paid in full.
11.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.14 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
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(b) neither the Agents nor any Lender has any fiduciary relationship
with or fiduciary duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the
Agents and the Lenders, on the one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders or among the Borrower and the
Agents.
11.15 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.16 CONFIDENTIALITY. Each of the Administrative Agent, the
Collateral Monitoring Agent and the Lenders agrees to keep confidential all
information provided to it by the Borrower or the Administrative Agent pursuant
to or in connection with this Agreement that is designated by the Borrower in
writing as confidential (the "Confidential Information"); provided that nothing
herein shall prevent any Lender or the Administrative Agent or the Collateral
Monitoring Agent from disclosing any such Confidential Information (i) to the
Administrative Agent, the Collateral Monitoring Agent or any other Lender, (ii)
to any Transferee or prospective Transferee which receives such Confidential
Information having been made aware of the confidential nature thereof and which
has agreed in writing to be bound by the terms of this subsection 11.16, (iii)
to its directors, officers, employees, employees of affiliates, examiners and
professional advisers who have a need to know such Confidential Information in
accordance with customary banking practices and who receive such Confidential
information having been made aware of the restrictions of this subsection and,
in the case of professional advisers, having agreed to be bound thereby, (iv)
upon the request or demand of any Governmental Authority having jurisdiction
over such Lender, (v) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) in connection with the exercise of any remedy
hereunder, (vii) which is now or hereafter becomes generally available to the
public other than as a result of a disclosure by such Lender, the Collateral
Monitoring Agent or the Administrative Agent or a disclosure known to such
Lender, the Collateral Monitoring Agent or the Administrative Agent to have been
made by any person or entity to which such Lender or the Administrative Agent
has delivered such Confidential Information, (viii) which was available to such
Lender, the Collateral Monitoring Agent or the Administrative Agent prior to its
disclosure to such Lender or the Administrative Agent by the Borrower, or (ix)
which becomes available to such Lender or the Administrative Agent from a source
other than the Borrower, provided that such source is not (1) known to such
Lender, the Collateral Monitoring Agent or the Administrative Agent to be bound
by a confidentiality agreement with the Borrower or (2) known to such Lender,
the Collateral Monitoring Agent or the Administrative Agent to be otherwise
prohibited from transmitting the information to such Lender, the Collateral
Monitoring Agent or the Administrative Agent by a contractual, legal or
fiduciary obligation.
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11.17 SECTION HEADINGS. The Section and subsection headings in this
Agreement are for convenience in reference only and shall not deemed to alter or
affect the interpretation of any provisions hereof.
11.18 JUDGMENT CURRENCY. The obligation of the Borrower under this
Agreement to make payments in respect of each Reimbursement Obligation in the
currency in which it is outstanding (the "Agreement Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency (the "Judgment Currency")
except to the extent that such tender or recovery of the Judgment Currency
results in the effective receipt by the Lenders or the relevant Issuing Banks,
as the case may be, of the full amount of the Agreement Currency payable under
this Agreement and the Borrower agrees to indemnify the Lenders or the relevant
Issuing Banks, as the case may be (and the Lenders or the relevant Issuing
Banks, as the case may be, shall have an additional legal claim) for any
difference between such full amount and the amount effectively received by such
Lenders or such Issuing Banks, as the case may be, pursuant to any such tender
or recovery. Each Lender's or Issuing Bank's determination of amounts
effectively received by such Lender or Issuing Bank shall be presumed correct
absent manifest error. If a judgment in respect of the obligations of the
Borrower hereunder is rendered in a currency other than the Agreement Currency
and if, upon receipt of the full amount of such judgment in such currency and
the conversion into, and receipt of such amount in the Agreement Currency, such
amount of the Agreement Currency exceeds the obligations of the Borrower
hereunder, such excess amount shall be remitted to the Borrower by the Lenders
or the relevant Issuing Banks, as the case may be. The obligations of the
Borrower under this subsection shall survive the termination of this Agreement
and the repayment of the Loans and all other amounts payable hereunder.
11.19 REVIEW OF BUSINESS PLAN. Promptly after delivery of the
Business Plan to the Administrative Agent pursuant to subsection 7.1(e), the
Administrative Agent will (i) review the Business Plan and (ii) use reasonable
efforts to facilitate the Borrower's presentation thereof to the Lenders. In the
event the Administrative Agent does not accept the Business Plan as submitted
(which consent will not unreasonably be withheld), the Administrative Agent
promptly will provide the Borrower with an explanation of the reasons for such
rejection.
11.20 NEGOTIATION OF REVISED COVENANTS. As soon as practicable after
the Administrative Agent's acceptance of the Business Plan, the Borrower and the
Agents will (i) review the provisions of Sections 7 and 8, (ii) negotiate in
good faith to determine whether any of such provisions should be revised as a
result of the acceptance of the Business Plan and (iii) negotiate in good faith
additional provisions or covenants, including EBITDA or similar cash flow
covenants appropriate for this facility, as a result of the acceptance of the
Business Plan. Any such revised or additional provisions or covenants must be
approved by the Majority Lenders.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amended and Restated Credit Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first above written.
SERVICE MERCHANDISE COMPANY, INC.,
as the Borrower
By: /s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Name:
Title:
SIGNATURE PAGE TO SERVICE MERCHANDISE COMPANY, INC.
POST-PETITION CREDIT AGREEMENT
116
CITICORP USA, INC.,
as Administrative Agent, as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
CITIBANK, N.A.,
as an Issuing Bank
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
SIGNATURE PAGE TO SERVICE MERCHANDISE COMPANY, INC.
POST-PETITION CREDIT AGREEMENT
117
BANKBOSTON, N.A.,
as Documentation Agent and Collateral
Monitoring Agent, as a Lender, and as an
Issuing Bank
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Vice President
SIGNATURE PAGE TO SERVICE MERCHANDISE COMPANY, INC.
POST-PETITION CREDIT AGREEMENT
118
NATIONAL CITY COMMERCIAL FINANCE, INC.,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: President/CEO
SIGNATURE PAGE TO SERVICE MERCHANDISE COMPANY, INC.
POST-PETITION CREDIT AGREEMENT
119
▇▇▇▇▇▇ FINANCIAL, INC.
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Sr. Vice President
SIGNATURE PAGE TO SERVICE MERCHANDISE COMPANY, INC.
POST-PETITION CREDIT AGREEMENT
120
FOOTHILL CAPITAL CORPORATION
as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
SIGNATURE PAGE TO SERVICE MERCHANDISE COMPANY, INC.
POST-PETITION CREDIT AGREEMENT
121
▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY,
as a Lender
By: PPM FINANCE, INC.,
its Attorney-in-Fact
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SIGNATURE PAGE TO SERVICE MERCHANDISE COMPANY, INC.
POST-PETITION CREDIT AGREEMENT
122
Schedule 1.1(a)
TO CREDIT AGREEMENT
COMMITMENTS
====================================================================================================
LENDER TOTAL REVOLVER TERM LOAN
====================================================================================================
Citicorp USA, Inc. 175,000,000 151,666,667 23,333,333
----------------------------------------------------------------------------------------------------
BankBoston, N.A. 175,000,000 151,666,667 23,333,333
----------------------------------------------------------------------------------------------------
National City Commercial Finance Inc. * 100,000,000 86,666,667 13,333,333
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Financial, Inc. * 100,000,000 86,666,667 13,333,333
----------------------------------------------------------------------------------------------------
Foothill Capital Corporation * 50,000,000 43,333,333 6,666,667
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ National Life Insurance 150,000,000 130,000,000 20,000,000
Company *
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
TOTAL 750,000,000 650,000,000 100,000,000
====================================================================================================
* Managing Agents
SCHEDULE 7.10(C) TO
SERVICE MERCHANDISE COMPANY, INC.
POST PETITION CREDIT AGREEMENT
123
Schedule 11.2
TO CREDIT AGREEMENT
ADDRESS OF OTHER PARTIES
===============================================================================================================
Name of Lender Address for Notices Contact
===============================================================================================================
▇▇▇▇▇▇ Financial, Inc. ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
---------------------------------------------------------------------------------------------------------------
National City Commercial Finance, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Attn: ▇▇▇▇▇ Grogelny
Suite 400 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------
Foothill Capital Corporation 11111 Santa ▇▇▇▇▇▇ Blvd Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Suite 1500 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ National Life Insurance Company ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o PPM Finance, Inc. Suite 1100 Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------
===============================================================================================================
SCHEDULE 11.2 TO
SERVICE MERCHANDISE COMPANY, INC.
POST PETITION CREDIT AGREEMENT