AMENDED AND RESTATED
DEBTOR IN POSSESSION AND
EXIT FINANCING
LOAN AGREEMENT
BY AND AMONG
LAMONTS APPAREL, INC.,
BANKBOSTON, N.A.
CERTAIN OTHER LENDING INSTITUTIONS,
AND
BANKBOSTON, N.A., AS AGENT
DATED AS OF SEPTEMBER 26, 1997
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . 2
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Rules of Interpretation. . . . . . . . . . . . . . . . 27
Section 2. DEBTOR IN POSSESSION AND EXIT REVOLVING CREDIT FACILITIES. . 28
Section 2.1. Commitment to Lend DIP Revolving Credit Loans. . . . . 28
Section 2.2. Repayments of DIP Revolving Credit Loans. . . . . . . . 29
Section 2.3. Conversion of DIP Revolving Credit Loans into Exit
Revolving Credit Loans; Commitment to Lend Exit Revolving
Credit Loans.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.4. Repayment of Exit Revolving Credit Loans. . . . . . . . 31
Section 2.5. Reduction of Commitments. . . . . . . . . . . . . . . . 32
Section 2.6. Request for Revolving Credit Loan Advances. . . . . . . 32
Section 2.7. Other Methods of Funding; Authorized Advances. . . . . 33
Section 2.8. Revolving Credit Notes. . . . . . . . . . . . . . . . . 34
Section 2.9. Interest on Revolving Credit Loans. . . . . . . . . . . 35
Section 2.10. Conversion Options for Base Rate and Eurodollar Loans . 36
Section 2.10.1. Conversion to Different Type of Revolving
Credit Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.10.2. Continuation of Type of Revolving Credit Loan. . 36
Section 2.10.3. Eurodollar Rate Loans. . . . . . . . . . . . . 37
Section 2.11. Settlements; Failure to Make Funds Available. . . . . 37
Section 2.12. Lock Box Account and Application of Funds. . . . . . . 38
Section 2.13. Fees and Expenses. . . . . . . . . . . . . . . . . . . 41
Section 2.14. Seafirst Concentration Account. . . . . . . . . . . . . 41
Section 3. DEBTOR IN POSSESSION AND EXIT TERM LOAN. . . . . . . . . . . 42
Section 3.1. Commitment to Lend DIP Term Loan. . . . . . . . . . . . 42
Section 3.2. Repayment of DIP Term Loans. . . . . . . . . . . . . . 42
Section 3.2.1. Schedule of Installment Payments of Principal
of Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.2.2. Mandatory Prepayments. . . . . . . . . . . . . . 42
Section 3.2.3. Optional Prepayment of DIP Term Loan. . . . . . 43
Section 3.3. Conversion of DIP Term Loan into Exit Term Loan;
Commitment to Lend Exit Term Loan. . . . . . . . . . . . . . . . . . 43
Section 3.4. Repayment or Prepayment of Exit Term Loan. . . . . . . 43
Section 3.5. The Term Loan Note. . . . . . . . . . . . . . . . . . . 43
Section 3.6. Interest on Term Loan. . . . . . . . . . . . . . . . . 44
Section 3.7. Conversion Options for Base Rate and Eurodollar Loans. . 45
Section 3.7.1. Notification by Borrower. . . . . . . . . . . . 45
Section 3.7.2. Amounts, etc. . . . . . . . . . . . . . . . . . 45
Section 4. LETTER OF CREDIT FACILITY. . . . . . . . . . . . . . . . . . 45
Section 4.1. Letter of Credit Commitment. . . . . . . . . . . . . . 45
Section 4.1.1. This Agreement to Govern. . . . . . . . . . . . 46
-ii-
Section 4.1.2. Terms and Duration of Letters of Credit . . . . . 46
Section 4.1.3. Reimbursement Obligations of Revolving
Credit Banks. . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.1.4. Participations of Revolving Credit Banks. . . . . 47
Section 4.2. Reimbursement Obligations of the Borrower. . . . . . . 47
Section 4.3. Letter of Credit Payments. . . . . . . . . . . . . . . 48
Section 4.4. Obligations Absolute. . . . . . . . . . . . . . . . . . 49
Section 4.5. Reliance by Issuer. . . . . . . . . . . . . . . . . . . 50
Section 4.6. Letter of Credit Fees. . . . . . . . . . . . . . . . . 50
Section 5. CERTAIN GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . 51
Section 5.1. Capital Adequacy. . . . . . . . . . . . . . . . . . . . 51
Section 5.2. Inability to Determine Eurodollar Rate. . . . . . . . . 51
Section 5.3. Illegality. . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.4. Additional Costs, etc. . . . . . . . . . . . . . . . . . 52
Section 5.5. Certificate. . . . . . . . . . . . . . . . . . . . . . 53
Section 5.6. Indemnity. . . . . . . . . . . . . . . . . . . . . . . 53
Section 6. FEES AND PAYMENTS. . . . . . . . . . . . . . . . . . . . . . 54
Section 6.1. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.2. Payments; No Offset; Computations. . . . . . . . . . . 55
Section 7. PRIORITY AND LIENS. . . . . . . . . . . . . . . . . . . . . . 56
Section 7.1. Super-Priority Claims and Collateral Security. . . . . 56
Section 7.2. Collateral Security Perfection. . . . . . . . . . . . . 57
Section 7.3. No Discharge; Survival of Claims. . . . . . . . . . . . 57
Section 8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 58
Section 9. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . 64
Section 9.1. To Effective Date of DIP Term Loan. . . . . . . . . . . 64
Section 9.1.1. Loan Documents. . . . . . . . . . . . . . . . . . 64
Section 9.1.2. Certified Copies of Charter Documents.. . . . . . 64
Section 9.1.3. Corporate Action. . . . . . . . . . . . . . . . . 64
Section 9.1.4. Incumbency Certificate. . . . . . . . . . . . . . 64
Section 9.1.5. Perfection Certificate and Title Search Results . 64
Section 9.1.6. Financing Order.. . . . . . . . . . . . . . . . . 65
Section 9.1.7. Borrowing Base Report.. . . . . . . . . . . . . . 65
Section 9.1.8. Opinion of Counsel. . . . . . . . . . . . . . . . 65
Section 9.1.9. Payment of Fees.. . . . . . . . . . . . . . . . . 65
Section 9.1.10. Loan Request; Disbursement Instructions. . . . . 65
Section 9.1.11. Projections and Other Information; Quality of
Assets and Inventory. . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.1.12. No Material Adverse Change.. . . . . . . . . . . 66
Section 9.1.13. Purchase and Guaranty Agreement. . . . . . . . 66
Section 9.2. To the Occurrence of the Exit Facility Date. . . . . . 66
Section 9.2.1. Loan Documents . . . . . . . . . . . . . . . . . 66
Section 9.2.2. Certified Copies of Charter Documents. . . . . . 67
Section 9.2.3. Corporate Action. . . . . . . . . . . . . . . . 67
Section 9.2.4. Incumbency Certificate. . . . . . . . . . . . . 67
-iii-
Section 9.2.5. Validity of Liens. . . . . . . . . . . . . . . . 67
Section 9.2.6. Perfection Certificates and UCC Search Results. . 67
Section 9.2.7. Reorganization Plan and Confirmation Order. . . 68
Section 9.2.8. Landlord Lien Waivers; Etc. . . . . . . . . . . 69
Section 9.2.9. Certificates of Insurance. . . . . . . . . . . . 70
Section 9.2.10. Borrowing Base Report. . . . . . . . . . . . . 70
Section 9.2.11. Opinion of Counsel. . . . . . . . . . . . . . . 70
Section 9.2.12. Payment of Fees. . . . . . . . . . . . . . . . 70
Section 9.2.13. Available Cash and Borrowing Capacity; Agency
Account Agreements. . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.2.14. Post-Confirmation Capital Structure
and Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.2.15. Exit to Occur Concurrent With DIP
Maturity Date.. . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.2.16. Warrant Documents. . . . . . . . . . . . . . . 71
Section 9.2.17. Management Contracts. . . . . . . . . . . . . . 71
Section 9.2.18. Cure Payments. . . . . . . . . . . . . . . . . . 71
Section 9.2.19. Title Insurance. . . . . . . . . . . . . . . . 71
Section 9.3. To Each Loan and Issuance, Extension or Renewal of
Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.4. To Each Extension of the Term Loan Maturity Date. . . . 73
Section 10. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.1. Affirmative Covenants. . . . . . . . . . . . . . . . . 74
Section 10.2. Negative Covenants. . . . . . . . . . . . . . . . . . 81
Section 10.3. Financial Covenants. . . . . . . . . . . . . . . . . . 88
Section 10.4. Application of Financial Covenants. . . . . . . . . . 90
Section 10.5. Further Assurances. . . . . . . . . . . . . . . . . . 91
Section 11. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . 92
Section 11.1. Events of Default; Acceleration.. . . . . . . . . . . . 92
Section 11.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . 101
Section 11.3. Relief from Stay. . . . . . . . . . . . . . . . . . . 102
Section 11.4. Distribution of Collateral Proceeds.. . . . . . . . . . 103
Section 11.5. Priority. . . . . . . . . . . . . . . . . . . . . . . . 105
Section 12. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 13.1. Authorization. . . . . . . . . . . . . . . . . . . . . 106
Section 13.2. Employees and Agents. . . . . . . . . . . . . . . . . 107
Section 13.3. No Liability. . . . . . . . . . . . . . . . . . . . . 107
Section 13.4. No Representations. . . . . . . . . . . . . . . . . . 107
Section 13.5. Payments. . . . . . . . . . . . . . . . . . . . . . . 108
Section 13.6. Holders of Notes. . . . . . . . . . . . . . . . . . . 110
Section 13.7. Indemnity. . . . . . . . . . . . . . . . . . . . . . . 110
Section 13.8. Agent as Lender. . . . . . . . . . . . . . . . . . . . 110
Section 13.9. Resignation. . . . . . . . . . . . . . . . . . . . . . 111
Section 13.10. Notification of Defaults and Events of Default. . . . 111
-iv-
Section 13.11. Duties in the Case of Enforcement. . . . . . . . . . 111
Section 14. Assignment and Participation. . . . . . . . . . . . . . . . 112
Section 14.1. Conditions to Assignment by Banks.. . . . . . . . . . . 112
Section 14.2. Certain Representations and Warranties; Limitations;
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 14.3. Register. . . . . . . . . . . . . . . . . . . . . . . 114
Section 14.4. New Notes. . . . . . . . . . . . . . . . . . . . . . . 114
Section 14.5. Participations. . . . . . . . . . . . . . . . . . . . 115
Section 14.6. Disclosure. . . . . . . . . . . . . . . . . . . . . . 115
Section 14.7. Assignee or Participant Affiliated with the Borrower. 116
Section 14.8. Miscellaneous Assignment Provisions. . . . . . . . . . 116
Section 14.9. Assignment by Borrower. . . . . . . . . . . . . . . . 117
Section 15. AGENT AND BANKS AS PARTIES IN INTEREST. . . . . . . . . . . 117
Section 16. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 117
Section 16.1. Costs and Expenses. . . . . . . . . . . . . . . . . . 117
Section 16.2. Indemnification. . . . . . . . . . . . . . . . . . . . 118
Section 16.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . 118
Section 16.4. Amendment, Etc. . . . . . . . . . . . . . . . . . . . 119
Section 16.5. No Waiver. . . . . . . . . . . . . . . . . . . . . . . 121
Section 16.6. Severability. . . . . . . . . . . . . . . . . . . . . 121
Section 16.7. Governing Law. . . . . . . . . . . . . . . . . . . . . 121
Section 16.8. Transition Provision. . . . . . . . . . . . . . . . . 122
AMENDED AND RESTATED
DEBTOR IN POSSESSION AND EXIT FINANCING
LOAN AGREEMENT
This AMENDED AND RESTATED DEBTOR IN POSSESSION AND EXIT FINANCING LOAN
AGREEMENT (this "Agreement") is made as of September 26, 1997, by and among
LAMONTS APPAREL, INC., a Delaware corporation (the "Borrower"), a debtor and
debtor in possession having its principal place of business and chief executive
office at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, BANKBOSTON, N.A.
(F/K/A "THE FIRST NATIONAL BANK OF BOSTON"), a national banking association, the
other lending institutions from time to time (if any) listed on SCHEDULE 1
attached hereto and BANKBOSTON, N.A. (F/K/A "THE FIRST NATIONAL BANK OF BOSTON")
as agent for itself and such other lending institutions.
WHEREAS, on January 6, 1995 (the "Filing Date"), the Borrower filed a
petition under chapter 11 of title 11 of the United States Code in the United
States Bankruptcy Court for the Western District of Washington at Seattle; and
WHEREAS, the Borrower has continued to operate its business pursuant to
Section 1107 and 1108 of the Bankruptcy Code; and
WHEREAS, pursuant to a Debtor In Possession and Exit Financing Loan
Agreement dated as of June 4, 1996 (as amended from time to time prior to the
date hereof, the "Original Credit Agreement") by and among the Borrower, the
Banks and the Agent, the Banks made a revolving credit facility in the principal
amount of $32,000,000 with a $3,000,000 sublimit for letters of credit available
to the Borrower to provide working capital for the Borrower, to finance
purchases of inventory, to refinance certain outstanding indebtedness and for
other general corporate purposes;
WHEREAS, the Borrower has requested, among other things, to amend and
restate the Original Credit Agreement so as to provide additional financing in
the form of a term loan facility for working capital requirements and general
corporate purposes and to finance a portion of the Borrower's Reorganization
Plan (as herein defined); and
WHEREAS, subject to the terms and conditions set forth herein, the Banks
have agreed to provide such facility;
NOW, THEREFORE, in consideration of these premises and of the mutual
undertakings set forth herein, the parties hereto hereby agree to amend and
restate the Original Credit Agreement in its entirety as follows as of the
Effective Date (as hereinafter defined):
-2-
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.
SECTION 1.1 DEFINITIONS. The following terms shall have the meanings
set forth in this Section 1 or elsewhere in the provisions of this Agreement
referred to below:
ACCELERATION: See Section 11.3 hereof.
ADDITIONAL CLOSING FEE: An amount equal to the average daily principal
balance of the Term Loan during the period beginning on the first anniversary of
the Effective Date and ending on the Additional Closing Fee Calculation Date
multiplied by that percentage which would yield a fee of 5% per annum for such
period on such amount (pro rated for the actual number of days in such period).
ADDITIONAL CLOSING FEE CALCULATION DATE: The earlier of the Term Loan
Maturity Date (without giving effect to any Extension Period), or payment in
full of the Term Loan.
ADDITIONAL CLOSING FEE PREPAYMENT AMOUNT: An amount equal to the
outstanding principal balance of the Term Loan on the first anniversary of the
Effective Date multiplied by that percentage which would yield a fee of 5% per
annum for the period from such first anniversary date to the date which is 27
months following the Effective Date (pro rated for the actual number of days in
such period and regardless of any payments of principal on the Term Loan
actually paid during such period).
ADJUSTMENT DATE: The first day of the month immediately following the
month in which there occurs the receipt by the Banks and the Agent of the
Borrower's audited Financials for the previous fiscal year pursuant to Section
10.1(a)(i) hereof, commencing with the Adjustment Date pertaining to the fiscal
year ending January 31, 1998 and each fiscal year thereafter; PROVIDED that in
no event shall an Adjustment Date occur prior to the Exit Facility Date.
AFFILIATE: Any Person that would be considered to be an affiliate of the
Borrower (or of another relevant Person) under Rule 144(a) of the Rules and
Regulations of the Securities and Exchange Commission, as in effect on the
Effective Date, if the Borrower (or such other relevant Person) were issuing
securities.
AGENCY ACCOUNT AGREEMENTS: See Section 2.12 hereof.
AGENT: BankBoston, N.A. in its capacity as agent for the Banks.
-3-
AGENT'S HEAD OFFICE: The office of the Agent located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
AGENT'S SPECIAL COUNSEL: ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP or such other counsel
as may be approved by the Agent.
AGREED ADMINISTRATIVE EXPENSE PRIORITIES: (a) Amounts payable pursuant to
28 U.S.C. Section 1930(a)(6), and (b) the Escrow Amount but only to the extent
allowed by the Bankruptcy Court.
AGREEMENT: See the preamble, which term shall include this Agreement as
amended, modified, supplemented or restated and in effect from time to time.
APPLICABLE RATE: See Section 2.9(c) hereof.
APPLICABLE PRICING: As applicable, the Base Rate Margin, the Eurodollar
Rate Margin, the Letter of Credit Rate, or the Exit Commitment Fee Rate, as the
case may be.
ASSEMBLY (OR ATD): Assembly Transportation Distribution Systems, Inc., a
Washington corporation (and its successors as operator of the distribution
center of the Borrower in Kent, Washington, or any similar facility from time to
time of the Borrower).
ASSIGNMENT AND ACCEPTANCE: See Section 14.1 hereof.
BANKS: The Revolving Credit Banks and the Term Loan Lender.
BANKRUPTCY CODE: Title 11, United States Code, 11 U.S.C. Sections 101 ET
SEQ.
BANKRUPTCY COURT: The United States Bankruptcy Court for the Western
District of Washington at Seattle or such other court having jurisdiction over
the Case.
BASE RATE: The higher of (a) the annual rate of interest announced from
time to time by BkB at its head office as its "base rate" and (b) one-half of
one percent (1/2%) above the Federal Funds Effective Rate.
BASE RATE LOANS: DIP Loans and/or Exit Loans bearing interest calculated
by reference to the Base Rate.
BASE RATE MARGIN: (a) At all times prior to the Exit Facility Date, the
Base Rate Margin shall be one and one-half percent (1.5%) per annum.
(b) From the Exit Facility Date to the first Adjustment Date, the Base
Rate Margin shall be one and one-half percent (1.5%) per annum. On the first
-4-
Adjustment Date and on each subsequent Adjustment Date, by reference to the
Borrower's and its Subsidiaries' audited Financials, the Borrower's and its
Subsidiaries' (i) Consolidated EBITDA for the period of the relevant fiscal year
then most recently ended shall be calculated, and the lowest Base Rate Margin
corresponding to the results of such test on the table set forth below shall be
determined, (ii) Debt Service Coverage Ratio for the period of the relevant
fiscal year then most recently ended shall be calculated, and the lowest Base
Rate Margin corresponding to the result of such test on the table set forth
below shall be determined, (iii) Leverage Ratio determined as of the last day of
the relevant fiscal year then most recently ended shall be calculated, and the
lowest Base Rate Margin corresponding to the result of such test on the table
set forth below shall be determined. The three resulting Base Rate Margins so
indicated by applying such three tests separately shall be compared, and the
highest resulting Base Rate Margin of such three results shall then be the
applicable Base Rate Margin (until the next Adjustment Date):
Consolidated Debt Service Leverage Base Rate
EBITDA Coverage Ratio Ratio Margin
------------ -------------- ----- (Per Annum)
-----------
Tier 1 Greater than or Greater than or Less than or 0.50%
equal to equal to equal to
$12,000,000 1.50 to 1.00 5.00 to 1.00
Tier 2 Greater than or Greater than or Less than or 1.00%
equal to equal to equal to
$10,000,000 1.25 to 1.00 6.00 to 1.00
Tier 3 Greater than or Greater than or Greater than 1.50%
equal to equal to 6.00
$8,000,000 1.00 to 1.00 to 1.00
Tier 4 Less than Less than 1.00 Greater than 1.75%
$8,000,000 to 1.00 6.00 to 1.00
Notwithstanding the foregoing, (i) if the Borrower and its Subsidiaries
fail to deliver any audited Financials for the previous fiscal year when
required by Section 10.1(a)(i) hereof, then for the period commencing on the
last date on which such audited Financials were to have been delivered
continuing to the next Adjustment Date, the Base Rate Margin shall be the margin
set forth in Tier 4 in the table above, and (ii) all adjustments to the Base
Rate Margin shall take effect immediately with respect to all Base Rate Loans on
the applicable Adjustment Date.
BKB: BankBoston, N.A., (f/k/a The First National Bank of Boston), a
national banking association, in its individual capacity.
BOOK VALUE: With respect to inventory, the valuation thereof at the lower
of cost (using the retail last-in, first-out ("LIFO") method) or net realizable
value, determined in accordance with GAAP.
-5-
BORROWER: See the preamble.
BORROWING BASE: At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base Report
delivered to the Banks and the Agent pursuant to Section 10.1(a)(iv), which is
equal to:
(a) At any time prior to the Exit Facility Date:
(i) 65% of the result of (A) Eligible Inventory at such time
MINUS (B) the Inventory Shrink Reserve; MINUS
(ii) the aggregate amount of any Cure Payment Reserve.
(b) At any time on or after the Exit Facility Date:
(i) 65% of the result of (A) Eligible Inventory at such time,
MINUS (B) the Inventory Shrink Reserve; MINUS
(ii) the aggregate amount of any Landlord Lien Reserves with
respect to all Specified Leases at such time.
PROVIDED, however, that the Agent shall be entitled to make reasonable
adjustments from time to time to the Borrowing Base formula and components
thereof, including without limitation any applicable advance rate, on the basis
of inventory liquidation analyses, commercial finance examinations, or
collateral audits.
BORROWING BASE REPORT: A borrowing base report signed and certified by the
chief financial officer or assistant treasurer of the Borrower and in
substantially the form of EXHIBIT A hereto.
BUSINESS DAY: Any day on which banks in Boston, Massachusetts, are open
for the transaction of banking business and, in the case of Eurodollar Rate
Loans, also a day which is a Eurodollar Business Day.
CAPITAL ASSETS: Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); PROVIDED, that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with GAAP.
CAPITAL EXPENDITURES: With respect to any period, amounts paid or, without
duplication, Indebtedness incurred by the Borrower or any of its Subsidiaries in
connection with the purchase or lease by the Borrower or any of its Subsidiaries
during such period of Capital Assets that would be required
-6-
to be capitalized and shown on the balance sheet of such Person in accordance
with GAAP.
CAPITALIZED LEASES: Leases of real or personal property under which rental
payment obligations are required to be capitalized on a balance sheet of the
lessee thereof in accordance with GAAP.
CASE: The Borrower's reorganization case No. 95-00100 under chapter 11 of
the Bankruptcy Code pending in the Bankruptcy Court.
CASH COLLATERALIZED LETTERS OF CREDIT: An amount equal to the Maximum
Drawing Amount of Letters of Credit issued hereunder with respect to which cash
collateral in an amount equal to not less than 105% of the Maximum Drawing
Amount thereof has been pledged to the Agent pursuant to the requirements of
this Agreement to secure the Borrower's Reimbursement Obligations with respect
thereto.
CHARTER DOCUMENTS: In respect of any entity, the certificate or articles
of incorporation or organization and the by-laws of such entity, or other
constitutive documents of such entity.
CLOSING FEE: That certain fee payable to the Agent for the account of the
Term Loan Lender on the Effective Date pursuant to Section 6.1(f) hereof.
COLLATERAL: All of the property, rights and assets of the Borrower,
wherever located, whether now or hereafter acquired or arising, real or
personal, tangible or intangible, owned, licensed, leased (to the extent of the
Borrower's leasehold interests or licensee's interests therein), or consigned
(to the extent of the Borrower's interests therein), including, without
limitation, all accounts, inventory, equipment, instruments, documents, chattel
paper, securities, and deposit accounts as well as customer lists, trademarks
and all other general intangibles, and any and all products and proceeds
thereof, excluding (a) all of the Borrower's rights under Sections 544, 545,
547, 548, 549 and 550 of the Bankruptcy Code and (b) the Escrow Account, but in
any event including without limitation the Borrower's residual interest (if any)
in the Escrow Account.
COMMITMENT PERCENTAGE: With respect to each Revolving Credit Bank, the
percentage set forth on SCHEDULE 1 attached hereto as such Bank's percentage of
the aggregate DIP Commitments of all of the Revolving Credit Banks or the
aggregate Exit Commitments of all of the Revolving Credit Banks, as applicable.
COMPLIANCE CERTIFICATE: See Section 10.1(a)(iii) hereof.
CONFIRMATION ORDER: See Section 9.2.7 hereof.
-7-
CONSENT: In respect of any person or entity, any permit, license or
exemption from, approval, consent of, registration or filing with any local,
state or federal governmental or regulatory agency or authority, required under
applicable law.
CONSOLIDATED EBITDA: For any period, the result of (a) Consolidated Net
Income (or Deficit) of the Borrower and its Subsidiaries PLUS (b) the sum of (i)
interest expense, (ii) income tax expense, (iii) depreciation and amortization
charges, (iv) other non-cash charges and non-cash reserves taken and (v)
extraordinary charges or expenses associated with the Case and the Borrower's
reorganization thereunder, MINUS (c) extraordinary gains or extraordinary
income, in each case determined in accordance with GAAP, and in the case of
items (b) and (c) to the extent included in the calculation of Consolidated Net
Income (or Deficit) and in any event without duplication.
CONSOLIDATED NET INCOME (OR DEFICIT): The consolidated net income (or
deficit) of the Borrower and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, but before adjustments for accounting of
inventory on a LIFO basis, determined in accordance with GAAP.
CONSOLIDATED TANGIBLE NET WORTH: On any date of determination, the excess
of Consolidated Total Assets over Consolidated Total Liabilities, and less the
total book value of all assets of the Borrower and its Subsidiaries properly
classified as intangible assets under GAAP, including such items as goodwill,
the purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, brand names, copyrights,
patents and licenses, and rights with respect to the foregoing.
CONSOLIDATED TOTAL ASSETS: On any date of determination, all assets of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
CONSOLIDATED TOTAL INTEREST EXPENSE: For any period, the aggregate amount
of all interest required to be paid or accrued by the Borrower and its
Subsidiaries during such period on all Indebtedness of the Borrower and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of Capitalized
Leases and including commitment fees, agency fees, facility fees, balance
deficiency fees, letter of credit fees and similar fees or expenses in
connection with the borrowing of money, and excluding attorneys fees and similar
transaction expenses.
CONSOLIDATED TOTAL LIABILITIES: All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP, and,
without duplication, all Indebtedness of the Borrower and its
-8-
Subsidiaries, including without limitation, all letters of credit, whether or
not so classified.
CONVERSION REQUEST: A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Loan pursuant to Section 2.10 or
Section 3.7.1 hereof.
CURE PAYMENT RESERVE: The total sums required by the Borrower to cure
defaults under the Real Estate Leases as a condition to the assumption of the
Real Estate Leases in the Case.
DEBT SERVICE COVERAGE RATIO: For any fiscal period, the ratio of (i)
Operating Cash Flow of the Borrower and its Subsidiaries for such period to (ii)
Total Debt Service of the Borrower and its Subsidiaries for such period.
DEFAULT: An event or act which, with the giving of notice and/or the lapse
of time, would become an Event of Default.
DELINQUENT BANK: See Section 13.5(e) hereof.
DIP COMMITMENT: With respect to each Revolving Credit Bank, the amount of
such Revolving Credit Bank's commitment to make DIP Revolving Credit Loans to,
and to participate in the issuance, extension and renewal of Letters of Credit
for the account of, the Borrower up to such Revolving Credit Bank's Commitment
Percentage of an aggregate amount not to exceed the lesser of (a) $32,000,000,
and (b) the amount approved in the Financing Order, as such amount may be
reduced from time to time or terminated hereunder.
DIP LOANS: The DIP Revolving Credit Loans and the DIP Term Loan.
DIP MATURITY DATE: The date on which the DIP Commitment expires, which
shall be the earliest of (a) February 27, 1998, and (b) the effective date of a
Reorganization Plan that has been confirmed by the Confirmation Order of the
Bankruptcy Court, and (c) twenty (20) days after the entry of the Confirmation
Order by the Bankruptcy Court, if the Reorganization Plan shall not have become
effective prior to such date.
DIP REVOLVING CREDIT LOANS: Revolving credit loans made or to be made by
the Revolving Credit Banks to the Borrower pursuant to Section 2.1 hereof.
DIP REVOLVING CREDIT NOTES: See Section 2.8(a) hereof.
DIP TERM LOAN: The term loan made or to be made by the Term Loan Lender to
the Borrower on the Effective Date in the aggregate principal amount of
$10,000,000 pursuant to Section 3.1 hereof.
DIP TERM LOAN NOTE: See Section 3.5 hereof.
-9-
DIRECT COLLECTION LETTER: See Section 2.12 hereof.
DISCLOSURE STATEMENT: The Disclosure Statement pursuant to Section 1125 of
the Bankruptcy Code filed or to be filed pursuant to the Reorganization Plan.
DOLLARS OR $: Dollars in the lawful currency of the United States of
America.
DOMESTIC LENDING OFFICE: As to any Bank, the office of such Bank located
within the United States of America that will be making or maintaining Base Rate
Loans.
DRAWDOWN DATE: In respect of any Loan, the date on which such Loan is made
or to be made to the Borrower, and the date on which any Loan is converted or
continued in accordance with Section 2.10 or, as applicable, Section 3.7.1
hereof.
EFFECTIVE DATE: The first date on which the conditions set forth in
Section 9.1 and Section 9.3 hereof have been satisfied.
ELIGIBLE ASSIGNEE: Any of (a) a commercial bank organized under the laws
of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with GAAP; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, or the central bank of any country which is a member of the
OECD, PROVIDED, in each case, that such bank is acting through a branch or
agency located in the country in which it is organized or another country which
is also a member of the OECD; (d) a commercial finance company or other
financial institution organized under the laws of any State of the United States
or the District of Columbia and having a net worth, in accordance with GAAP, of
at least $500,000,000; and (e) if, but only if, an Event of Default has occurred
and is continuing, any other bank, insurance company, commercial finance company
or other financial institution or other Person approved by the Agent, such
approval not to be unreasonably withheld.
ELIGIBLE INVENTORY: An amount, equal to the Book Value and determined by
the Agent in its reasonable discretion consistent with its usual business
practices and policies, of first quality finished goods inventory owned and held
for sale by the Borrower, PROVIDED that Eligible Inventory shall not include any
inventory (i) held on consignment or not otherwise owned by the Borrower or of
-10-
a type no longer sold by the Borrower, (ii) which has been returned by a
customer unless it is of first quality, not obsolete and not subject to any Lien
or legal encumbrance (or purported ownership interest of any Person, other than
of the Borrower) pursuant to the Store Credit Card Program or any other credit
card program, (iii) which is subject to any Lien or legal encumbrance, or
purported ownership interest of any Person other than of the Borrower (other
than Liens in favor of the Agent for the benefit of the Banks and landlords
Liens), (iv) which is not in the possession of the Borrower (except as provided
in clause (v) of this definition with respect to inventory in the possession of
Assembly or the Borrower's "inventory consolidators" and other applicable
Persons referred to in clause (v)) unless the Agent has received and holds a
waiver from the party in possession of such inventory in form and substance
satisfactory to the Agent, (v) which is in the possession of Assembly, or the
applicable "inventory consolidators" for the Borrower and other applicable
Persons in possession of inventory of the Borrower in a similar capacity,
unless, from and after the Exit Facility Date, the Agent has received and holds
a waiver from such relevant Person in form and substance satisfactory to the
Agent, (vi) which is not located within the United States of America, (vii) in
which the Agent does not have a first priority perfected security interest
(subject, from and after the Exit Facility Date, only to landlords' Liens, if
any, to the extent such Liens may be entitled to priority by the operation of
Law), (viii) which has been shipped to a customer of the Borrower regardless of
whether such shipment is on a consignment basis, (ix) which is not located at a
Permitted Inventory Location, (x) which is damaged, or (xi) which the Agent in
its reasonable discretion deems obsolete or not marketable or otherwise does not
consider Eligible Inventory.
ENVIRONMENTAL LAWS: All laws pertaining to environmental matters,
including without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Federal Oil Pollution Act, the Toxic
Substances Control Act, in each case as amended, and all rules, regulations,
judgments, decrees, orders and licenses arising under all such laws.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and all rules, regulations, judgments, decrees, and orders arising thereunder.
ERISA AFFILIATE: Any Person which is treated as a single employer with the
Borrower under Section 414 of the IRC.
ESCROW ACCOUNT: The continuing escrow account presently maintained with
Seafirst by the Borrower for the sole purpose of setting aside funds, on a
-11-
monthly basis, for the payment of professional fees and expenses incurred by the
Borrower and each of the official creditors' committees and the equity committee
in connection with the Case upon, and solely to the extent of, the allowance of
such fees and expenses by the Bankruptcy Court, PROVIDED that no funds may be so
deposited therein during the continuance of an Event of Default.
ESCROW AMOUNT: At any time of determination, the amount of cash then
standing to the credit of the Escrow Account.
EURODOLLAR RATE MARGIN: (a) At all times prior to the Exit Facility Date,
the Eurodollar Rate Margin shall be two and three-quarters percent (2.75%) per
annum.
(b) From the Exit Facility Date to the first Adjustment Date, the
Eurodollar Rate Margin shall be two and three-quarters percent (2.75%) per
annum. On the first Adjustment Date and on each subsequent Adjustment Date, by
reference to the Borrowers' and its Subsidiaries' audited Financials, the
Borrower's and its Subsidiaries' (i) Consolidated EBITDA for the period of the
relevant fiscal year then most recently ended shall be calculated, and the
lowest Eurodollar Rate Margin corresponding to the results of such test on the
table set forth below shall be determined, (ii) Debt Service Coverage Ratio for
the period of the relevant fiscal year then most recently ended shall be
calculated, and the lowest Eurodollar Rate Margin corresponding to the result of
such test on the table set forth below shall be determined, (iii) Leverage Ratio
determined as of the last day of the relevant fiscal year then most recently
ended shall be calculated, and the lowest Eurodollar Rate Margin corresponding
to the result of such test on the table set forth below shall be determined. The
three resulting Eurodollar Rate Margins so indicated by applying such three
tests separately shall be compared, and the highest resulting Eurodollar Rate
Margin of such three results shall then be the applicable Eurodollar Rate Margin
(until the next such adjustment):
Consolidated Debt Service Leverage Eurodollar
EBITDA Coverage Ratio Ratio Rate Margin
------ -------------- ----- (Per Annum)
-----------
Tier 1 Greater than or Greater than or Less than or 1.75%
equal to equal to equal to
$12,000,000 1.50 to 1.00 5.00 to 1.00
Tier 2 Greater than or Greater than or Less than or 2.25%
equal to equal to equal to 6.00
$10,000,000 1.25 to 1.00 to 1.00
-12-
Tier 3 Greater than or Greater than or Greater than 2.75%
equal to equal to 6.00 to 1.00
$8,000,000 1.00 to 1.00
Tier 4 Less than Less than 1.00 Greater than 3.00%
$8,000,000 to 1.00 6.00 to 1.00
Notwithstanding the foregoing, (i) if the Borrower and its Subsidiaries
fail to deliver any audited Financials for the prior fiscal year as and when
required by Section 10.1(a)(i) hereof, then for the period commencing on the
last date on which such audited Financials were to have been delivered
continuing to the next Adjustment Date, the Eurodollar Rate Margin shall be the
margin set forth in Tier 4 in the table above, and (ii) all adjustments to the
Eurodollar Rate Margin as to any particular Eurodollar Rate Loan shall take
effect on the Drawdown Date (including the date of conversion to or continuation
as such) of each such Eurodollar Rate Loan occurring on or after the applicable
Adjustment Date.
EUROCURRENCY RESERVE RATE: For any day with respect to a Eurodollar Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Rate.
EURODOLLAR BUSINESS DAY: Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other Dollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
EURODOLLAR LENDING OFFICE: As to any Bank, the office of such Bank located
within the United States of America that will be making or maintaining
Eurodollar Rate Loans.
EURODOLLAR RATE: For any Interest Period with respect to a Eurodollar Rate
Loan, the rate of interest per annum equal to (i) the rate at which BkB's
Eurodollar Lending Office is offered Dollar deposits two Eurodollar Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations of such
Eurodollar Lending Office are customarily 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 the Eurodollar Rate Loan of BkB to
-13-
which such Interest Period applies, divided by (ii) a number equal to 1.00 minus
the Eurocurrency Reserve Rate.
EURODOLLAR RATE LOANS: Loans bearing interest calculated by reference to
the Eurodollar Rate.
EVENT OF DEFAULT: Any of the events listed in Section 11 hereof.
EXIT COMMITMENT: With respect to each Revolving Credit Bank, the amount of
such Revolving Credit Bank's commitment to make Exit Revolving Credit Loans to,
and to participate in the issuance, extension and renewal of Letters of Credit
for the account of, the Borrower up to such Revolving Credit Bank's Commitment
Percentage of an aggregate amount not to exceed the lesser of (a) if and to the
extent the DIP Commitment shall have been reduced or terminated at any time
prior to the Exit Facility Date by the Borrower or the Revolving Credit Banks
pursuant to the terms of this Agreement, the DIP Commitment in effect
immediately prior to the Exit Facility Date and (b) $32,000,000; as such amount
may be reduced from time to time or terminated hereunder.
EXIT COMMITMENT FEE RATE: From the Exit Facility Date to the first
Adjustment Date, the Exit Commitment Fee Rate shall be one half of one percent
(0.50%) per annum. On the first Adjustment Date and on each subsequent
Adjustment Date, by reference to the Borrowers' and its Subsidiaries' audited
Financials, the Borrower's and its Subsidiaries' (i) Consolidated EBITDA for the
period of the relevant fiscal year then most recently ended shall be calculated,
and the lowest Exit Commitment Fee Rate corresponding to the results of such
test on the table set forth below shall be determined, (ii) Debt Service
Coverage Ratio for the period of the relevant fiscal year then most recently
ended shall be calculated, and the lowest Exit Commitment Fee Rate corresponding
to the result of such test on the table set forth below shall be determined,
(iii) Leverage Ratio determined as of the last day of the relevant fiscal year
then most recently ended shall be calculated, and the lowest Exit Commitment Fee
Rate corresponding to the result of such test on the table set forth below shall
be determined. The three resulting Exit Commitment Fee Rates so indicated by
applying such three tests separately shall be compared, and the highest
resulting Exit Commitment Fee Rate of such three results shall then be the
applicable Exit Commitment Fee Rate (until the next such adjustment):
-14-
Exit Commitment
Consolidated Debt Service Leverage Fee Rate
EBITDA Coverage Ratio (per annum)
------ Ratio ----- -----------
-----
Tier 1 Greater than or Greater than or Less than or 0.375%
equal to equal to equal to
$12,000,000 1.50 to 1.00 5.00 to 1.00
Tier 2 Greater than or Greater than or Less than or 0.375%
equal to equal to equal to
$10,000,000 1.25 to 1.00 6.00 to 1.00
Tier 3 Greater than or Greater than or Greater than 0.50%
equal to equal to 6.00 to 1.00
$8,000,000 1.00 to 1.00
Tier 4 Less than Less than Greater than 0.50%
$8,000,000 1.00 to 1.00 6.00 to 1.00
Notwithstanding the foregoing, (i) if the Borrower and its Subsidiaries
fail to deliver any audited Financials for the prior fiscal year as and when
required by Section 10.1(a)(i) hereof, then for the period commencing on the
last date on which such audited Financials were to have been delivered
continuing to the next Adjustment Date, the Exit Commitment Fee Rate shall be
the rate set forth in Tier 4 in the table above, and (ii) all adjustments to the
Exit Commitment Fee Rate shall take effect immediately on the applicable
Adjustment Date.
EXIT FACILITY DATE: The date on which all of the conditions precedent
under Sections 9.2 and 9.3 hereof are satisfied.
EXIT LOANS: The Exit Revolving Credit Loans and the Exit Term Loan.
EXIT MATURITY DATE: The date which is the second anniversary of the Exit
Facility Date, PROVIDED that, in the event that the Exit Maturity Date is
otherwise scheduled to extend beyond the Term Loan Maturity Date, the Exit
Maturity Date shall be concurrent with the Term Loan Maturity Date.
EXIT NOTES: The Exit Revolving Credit Notes and the Exit Term Loan Note.
EXIT REVOLVING CREDIT LOANS: Any loan converted into an Exit Revolving
Credit Loan pursuant to Section 2.3(a) hereof and any loan made or to be made to
the Borrower pursuant to Section 2.3(b) hereof.
EXIT REVOLVING CREDIT NOTES: See Section 2.8(b) hereof.
EXIT TERM LOAN: Any loan converted into an Exit Term Loan pursuant to
Section 3.3 hereof.
-15-
EXIT TERM LOAN NOTE: See Section 3.5(b) hereof.
EXTENDED PERIOD: See Section 11.1 hereof.
EXTENSION DATE: The first day of any Extension Period.
EXTENSION FEE: An amount equal to the principal amount of the Term Loan
outstanding on any applicable Extension Date multiplied by 5%.
EXTENSION PERIOD: See the definition of Term Loan Maturity Date.
FEE LETTER: The letter agreement with respect to certain fees dated as of
June 4, 1996, as amended, by and between the Borrower and the Agent.
FEDERAL FUNDS EFFECTIVE RATE: For any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
funds brokers of recognized standing selected by the Agent.
FILING DATE: See the preamble.
FINANCIALS: In respect of any period, the consolidated and consolidating
balance sheet(s) of any Person and its Subsidiaries as at the end of such
period, and the related consolidated and consolidating statement of income and
consolidated statement of cash flow for such period, each setting forth in
comparative form the figures for the previous comparable fiscal period, all in
reasonable detail and prepared in accordance with GAAP; subject, in the case of
such balance sheets and statements delivered at the end of fiscal periods other
than such Person's fiscal year, to year-end audit adjustments.
FINANCING ORDER: See Section 9.1.6 hereof.
GAAP: Generally accepted accounting principles consistent with those
adopted by the Financial Accounting Standards Board and its predecessor, (a)
generally, as in effect from time to time, and (b) except as otherwise expressly
provided in this Agreement, for purposes of (i) determining compliance by the
Borrower with the financial covenants set forth herein and (ii) the computation
of the financial performance tests used in the determination of the Applicable
Pricing hereunder, such principles, as in effect for the fiscal year therein
reported in the most recent Financials submitted by the Borrower to the Agent
prior to execution of this Agreement.
-16-
GUARANTEED PENSION PLAN: See Section 11.1(b)(xvi) hereof.
▇▇▇▇▇▇ LITIGATION: The Borrower's claims against ▇▇▇▇▇▇ Investment Company
which are the subject of litigation pending in the United States District Court
for the District of Alaska as Case No. A95-0463 (HRH).
INDEBTEDNESS: In respect of any Person, all obligations, contingent and
otherwise, that in accordance with GAAP should be classified as liabilities,
including, without limitation, (a) all debt obligations, (b) all liabilities
secured by Liens, (c) all guarantees, recourse agreements, and similar
undertakings, (d) all liabilities in respect of bankers' acceptances or letters
of credit, and (e) all obligations to purchase, redeem, retire, defease or
otherwise make any payment (including mandatory dividends or distributions) in
respect of any capital stock or any warrants, rights, or options to acquire
capital stock. When used in respect of the Borrower, the term "Indebtedness"
includes the Obligations.
INTEREST PAYMENT DATE: (a) As to each Base Rate Loan, (i) the first
Business Day of each calendar month with respect to interest accrued during the
previous calendar month, including without limitation, the calendar month which
includes the Drawdown Date thereof, (ii) the DIP Maturity Date, unless the Exit
Facility Date shall have occurred, (iii), the Exit Maturity Date, if the Exit
Facility Date shall have occurred, and (iv) the Term Loan Maturity Date and (b)
as to any Eurodollar Rate Loan, (i) the last day of the Interest Period with
respect thereto, (ii) the DIP Maturity Date, unless the Exit Facility Date shall
have occurred, (iii) the Exit Maturity Date, if the Exit Facility Date shall
have occurred and (iv) the Term Loan Maturity Date.
INTEREST PERIOD: With respect to each Loan, (a) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the Borrower in a Loan Request
(i) for any Base Rate Loan, ending on the last day of each calendar month and
(ii) for any Eurodollar Rate Loan, 1, 2 or 3 months; and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in a Conversion Request; PROVIDED that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
(A) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such
-17-
Interest Period shall end on the immediately preceding Eurodollar Business
Day;
(B) if the Borrower shall fail to give notice as provided in Section
2.10.1 or Section 3.7.1, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate Loan and the
continuance of all Base Rate Loans as Base Rate Loans on the last day of
the then current Interest Period with respect thereto;
(C) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar 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 Eurodollar
Business Day of a calendar month; and
(D) any Interest Period relating to any Eurodollar Rate Loan that
would otherwise extend beyond (x) the DIP Maturity Date, if the Exit
Facility Date shall not have occurred, shall end on the DIP Maturity Date,
(y) the Exit Maturity Date, if the Exit Facility Date shall have occurred,
shall end on the Exit Maturity Date, and (z) the Term Loan Maturity Date
shall end on the Term Loan Maturity Date.
INVENTORY SHRINK RESERVE: At any time, an amount equal to the product of
(a) the Book Value of the Borrower's inventory multiplied by (b) the Inventory
Shrink Reserve Percentage then in effect.
INVENTORY SHRINK RESERVE PERCENTAGE: At the time of reference thereto, a
percentage reasonably determined by the Agent from time to time based on
commercial finance examinations of the Borrower and its inventory, with regard
to the Borrower's historical experience with respect to losses of inventory due
to shoplifting, employee theft, inventory errors, and other "shrinkage" events.
The parties acknowledge and agree that as of the Effective Date, the Inventory
Shrink Reserve Percentage is 2.6%.
IRC: The Internal Revenue Code of 1986.
LANDLORD LIEN RESERVE: At any time of reference, with respect to each
Specified Lease, an amount reasonably determined by the Agent as a reserve
against inventory located on the leasehold created by such Specified Lease with
respect to which the landlord thereof may have a common law or statutory
landlord's Lien for unpaid rental obligations senior in priority to the Liens
thereon in favor of the Agent for the benefit of the Banks.
LANDLORD WAIVER: A waiver from the lessor or sublessor of property leased
by the Borrower as lessee in substantially the form attached hereto as
-18-
EXHIBIT B and in any event in form and substance satisfactory to the Agent in
all respects.
LAW OR LAWS: Statute(s), law(s), ordinance(s), regulation(s), order(s),
writ(s), injunction(s) or decree(s) of any political or governmental body or
Tribunal (federal, state, county, municipal, foreign or domestic, or otherwise)
having competent jurisdiction, including, without limitation, Environmental
Laws.
LETTER OF CREDIT: See Section 4.1 hereof.
LETTER OF CREDIT APPLICATION: See Section 4.1 hereof.
LETTER OF CREDIT FEE: See Section 4.6 hereof.
LETTER OF CREDIT PARTICIPATION: See Section 4.1.3 hereof.
LETTER OF CREDIT RATE:
(a) At all times prior to the Exit Facility Date, the Letter of Credit
Rate shall be one and three-quarters percent (1.75%) per annum.
(b) From the Exit Facility Date to the first Adjustment Date, the Letter
of Credit Rate shall be one and three-quarters percent (1.75%) per annum. On
the first Adjustment Date and on each subsequent Adjustment Date, by reference
to the Borrowers' and its Subsidiaries' audited Financials, the Borrower's and
its Subsidiaries' (i) Consolidated EBITDA for the period of the relevant fiscal
year then most recently ended shall be calculated, and the lowest Letter of
Credit Rate corresponding to the results of such test on the table set forth
below shall be determined, (ii) Debt Service Coverage Ratio for the period of
the relevant fiscal year then most recently ended shall be calculated, and the
lowest Letter of Credit Rate corresponding to the result of such test on the
table set forth below shall be determined, (iii) Leverage Ratio determined as of
the last day of the relevant fiscal year then most recently ended shall be
calculated, and the lowest Letter of Credit Rate corresponding to the result of
such test on the table set forth below shall be determined. The three resulting
Letter of Credit Rates so indicated by applying such three tests separately
shall be compared, and the highest resulting Letter of Credit Rate of such three
results shall then be the applicable Letter of Credit Rate (until the next such
adjustment):
-19-
Consolidated Debt Service Leverage Letter of Credit
EBITDA Coverage Ratio Rate (per annum)
------ Ratio ----- ----------------
-----
Tier 1 Greater than or Greater than or Less than or 1.25%
equal to equal to equal to
$12,000,000 1.50 to 1.00 5.00 to 1.00
Tier 2 Greater than or Greater than or Less than or 1.50%
equal to equal to equal to
$10,000,000 1.25 to 1.00 6.00 to 1.00
Tier 3 Greater than or Greater than or Greater than 1.75%
equal to equal to 6.00 to 1.00
$8,000,000 1.00 to 1.00
Tier 4 Less than Less than Greater than 2.00%
$8,000,000 1.00 to 1.00 6.00 to 1.00
Notwithstanding the foregoing, (i) if the Borrower and its Subsidiaries
fail to deliver any audited Financials for the prior fiscal year as and when
required by Section 10.1(a)(i) hereof, then for the period commencing on the
last date on which such audited Financials were to have been delivered
continuing to the next Adjustment Date, the Letter of Credit Rate shall be the
rate set forth in Tier 4 in the table above, and (ii) all adjustments to the
Letter of Credit Rate shall take effect with respect to each particular Letter
of Credit immediately on the applicable Adjustment Date.
LEVERAGE RATIO: On any date of determination, the ratio of (i)
Consolidated Total Liabilities of the Borrower and its Subsidiaries to (ii)
Consolidated Tangible Net Worth of the Borrower and its Subsidiaries.
LIENS: Any lien, encumbrance, mortgage, pledge, hypothecation, charge,
restriction or other security interest of any kind securing any obligation of
any Person.
LIFO: See the definition of Book Value.
LOANS: Collectively, the DIP Loans and the Exit Loans.
LOAN DOCUMENTS: This Agreement, the Notes, the Purchase and Guaranty
Agreement, the Fee Letter, the Letter of Credit Applications (if any), the
Surety Power of Attorney, and the applicable Security Documents, in each case as
amended, modified, supplemented or restated and in effect from time to time.
LOCK BOX ACCOUNT: See Section 2.12 hereof.
-20-
LOCK BOX AGREEMENT: The Lock Box Agreement, in form and substance
satisfactory to the Agent, between the Borrower and the Agent.
MAJORITY BANKS: Both the Majority Revolving Credit Banks and the Term Loan
Lender.
MAJORITY REVOLVING CREDIT BANKS: As of any date, the Revolving Credit
Banks holding at least 51% of the outstanding principal amount of the Revolving
Credit Notes on such date; and if no such principal is outstanding, (a) prior to
the Exit Facility Date, the Revolving Credit Banks whose aggregate DIP
Commitments constitute at least 51% of the Total DIP Commitment and (b) from and
after the Exit Facility Date, the Revolving Credit Banks whose aggregate Exit
Commitments constitute at least 51% of the Total Exit Commitment.
MATERIALLY ADVERSE EFFECT: Any materially adverse effect (resulting from
any single event or any combination of multiple events) on, or change in, the
financial condition, business operations, properties, or prospects of the
Borrower, individually or taken together, or with respect to the value of the
Collateral, or material impairment (resulting from any single event or any
combination of multiple events) of the ability of the Borrower to perform its
obligations hereunder or under any of the other Loan Documents, or material
impairment (resulting from any single event or any combination of multiple
events) of the legality, validity, or enforceability of any Loan Document or the
perfection or priority of any Lien under any of the Loan Documents.
MAXIMUM DRAWING AMOUNT: The maximum aggregate amount from time to time
that the beneficiaries may draw under all outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
MAXIMUM RATE: See Section 2.9(c) hereof.
MORTGAGED PROPERTY: Any Real Estate which is subject to any Mortgage.
MORTGAGES: The mortgages (or deeds of trust, as applicable) from the
Borrower to the Agent with respect to the fee and leasehold interests of the
Borrower in the Real Estate Collateral in form and substance satisfactory to the
Borrower, the Banks, the Surety and the Agent.
NON-REAL ESTATE COLLATERAL: The Collateral other than the Real Estate
Collateral.
NOTES: Collectively, the DIP Notes and the Exit Notes.
-21-
OBLIGATIONS: All indebtedness, obligations and liabilities of the Borrower
to the Agent, the Banks and the Surety, existing on the date of this Agreement
or arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Agreement or any other Loan Document or in respect of any of
the Loans or Letters of Credit or the Notes or other instruments at any time
evidencing any thereof.
OECD: See the definition of Eligible Assignee.
OPERATING ACCOUNT: The Borrower's operating account (No. 503-20493) with
BkB.
OPERATING CASH FLOW: For any period, an amount equal (without duplication)
to (i) Consolidated EBITDA of the Borrower and its Subsidiaries for such period,
MINUS (ii) cash payments for all income taxes paid by the Borrower and its
Subsidiaries during such period, MINUS (iii) cash payments during such period on
account of Capital Expenditures by the Borrower and its Subsidiaries PLUS (iv)
to the extent otherwise deducted in the computation of Operating Cash Flow, the
sum of (A) the fees payable pursuant to Section 6.1(a) hereof, (B) the fee in
the amount of $475,000, payable to the Gordian Group on or about the Effective
Date, and (C) payments to settle prepetition tax claims as provided in the
Reorganization Plan.
ORDER: The Financing Order.
OSHA: The Occupational Safety and Health Act, as amended, and all rules,
regulations, judgments, decrees and orders arising thereunder.
PBGC: The Pension Benefit Guaranty Corporation, and any successor entity
or entities bearing similar responsibilities.
PERFECTION CERTIFICATE: The Perfection Certificate relating to the
Security Agreement, executed and delivered by the Borrower, to be in form and
substance satisfactory to the Banks and the Agent.
PERMITTED INVENTORY LOCATION(S): The retail stores and distribution
centers of the Borrower located in the United States of America and listed on
SCHEDULE 8(p) hereto, and any future retail stores of the Borrower located in
the United States of America, in each case so long as from and after the Exit
Facility Date appropriate Uniform Commercial Code financing statements or other
applicable documents showing the Borrower as debtor and the Agent as secured
party shall have been filed in the proper filing offices in a manner and form
sufficient to perfect the Agent's first priority security interest in the
-22-
inventory and other assets of the Borrower located at such store or other
facility.
PERMITTED LIENS: See Section 10.2(c) hereof.
PERMITTED PRIOR LIENS: Valid, perfected and otherwise unavoidable Liens
existing as of the Effective Date and listed and described in reasonable detail
on SCHEDULE 10.2(c) attached hereto, and, only from and after the Exit Facility
Date, landlord Liens (if any) to the extent such Liens are entitled to priority
by the operation of Law over the Liens of the Agent and the Banks under the
Security Documents.
PERSON: Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PTO: See Section 9.1.5 hereof.
PURCHASE AND GUARANTY AGREEMENT: The Purchase and Guaranty Agreement among
the Banks, the Agent, the Surety, and acknowledged by and agreed to by the
Borrower substantially in the form attached hereto as EXHIBIT C, or otherwise in
form and substance satisfactory to the Borrower, the Banks, the Agent and the
Surety, and pursuant to which the Surety guaranties the purchase or payment of
the Term Loan and the parties enter into certain intercreditor arrangements.
RATIFICATION CERTIFICATE: A certificate to be dated the Exit Facility Date
in form and substance satisfactory to the Banks, the Agent and the Surety
pursuant to which the Borrower shall ratify all of the Obligations and the Liens
securing the Obligations.
REAL ESTATE: All real property at any time owned or leased (as lessee or
sublessee) by the Borrower.
REAL ESTATE COLLATERAL: All of the Real Estate Leases and all other
Collateral which at any time consists of the Borrower's real property interests
including fixtures, but excluding the ▇▇▇▇▇▇ Litigation or any proceeds thereof.
REAL ESTATE LEASES: All store or other retail outlet leases to which the
Borrower is a party as of the date hereof or which may otherwise become a "Real
Estate Lease" pursuant to Section 10.5 hereof. Any Real Estate Lease shall
cease to be a "Real Estate Lease" for purposes of this Agreement if (a) the
Specified Amount for such Real Estate Lease has been paid in full and applied to
the prepayment of the Term Loan, as permitted by Section 10.2(m) hereof, or (b)
such Real Estate Lease has expired by its terms, with no renewal right or option
to extend.
-23-
REGISTER: See Section 14.3 hereof.
REGISTRATION RIGHTS AGREEMENT: The Grant of Registration Rights between
the Borrower and the Term Loan Lender or its nominee substantially in the form
attached as ANNEX 3 to the Warrant Agreement or otherwise in form and substance
satisfactory to the Borrower and the Term Loan Lender or its nominee.
REIMBURSEMENT OBLIGATION: The Borrower's obligation to reimburse the Agent
and the Revolving Credit Banks on account of any drawing under any Letter of
Credit as provided in Section 4.2 hereof.
REORGANIZATION PLAN: A plan or plans of reorganization in the Case.
REQUIREMENT OF LAW: In respect of any Person, any law, treaty, rule,
regulation or determination of an arbitrator, court, or other governmental
authority, in each case applicable to or binding upon such Person or affecting
any of its property.
REVOLVING CREDIT BANKS: BkB and the other lending institutions listed on
SCHEDULE 1 attached hereto as Revolving Credit Banks and any other Person who
becomes an assignee of any rights and obligations of a Revolving Credit Bank
pursuant to Section 14 hereof.
REVOLVING CREDIT LOAN REQUEST: See Section 2.6 hereof.
REVOLVING CREDIT LOANS: The DIP Revolving Credit Loans and/or the Exit
Revolving Credit Loans, as applicable.
REVOLVING CREDIT NOTES: The DIP Revolving Credit Notes and the Exit
Revolving Credit Notes.
SEAFIRST: See Section 2.14 hereof.
SEAFIRST ACCOUNT: See Section 2.14 hereof.
SECURITY AGREEMENT: The security agreement dated as of June 4, 1996
between the Borrower and the Agent, or otherwise in form and substance
satisfactory to the Borrower, the Banks and the Agent.
SECURITY DOCUMENTS: The Security Agreement, the Perfection Certificate,
the Mortgages, the Lock Box Agreement, the Trademark Agreement, the Agency
Account Agreements, the Ratification Certificate and all other security
agreements, pledge agreements, collateral assignment agreements, mortgages,
deeds of trust, assignments, or other instruments or documents, in form and
substance satisfactory to the Agent, the Surety and the Banks, which shall grant
to the Agent, for the benefit of the Agent, the
-24-
Surety and the Banks, credit support for the Obligations or Liens upon any of
the Collateral.
SETTLEMENT: The making of, or receiving of payments, in immediately
available funds, among the Revolving Credit Banks and the Agent, to the extent
necessary to cause each Revolving Credit Bank's actual share of the outstanding
amount of Revolving Credit Loans (after giving effect to any Revolving Credit
Loan Request) to be equal to each Revolving Credit Bank's Commitment Percentage
of the outstanding amount of Revolving Credit Loans (after giving effect to any
Revolving Credit Loan Request), where, prior to such event or action, the actual
share is not so equal.
SETTLEMENT AMOUNT: See Section 2.11(a) hereof.
SETTLEMENT DATE: (a) The Drawdown Date relating to any Revolving Credit
Loan Request, (b) Friday of each week, or if Friday is not a Business Day, the
Business Day immediately following such Friday, (c) the Business Day immediately
following the Agent becoming aware of the existence of an Event of Default, (d)
any Business Day on which the aggregate amount of Revolving Credit Loans
outstanding from BkB and the Agent PLUS BkB's Commitment Percentage of the sum
of the Maximum Drawing Amount and any Unpaid Reimbursement Obligations is equal
to or greater than BkB's Commitment Percentage of (i) prior to the Exit Facility
Date, the Total DIP Commitment or (ii) on or after the Exit Facility Date, the
Total Exit Commitment, or (e) the Business Day immediately following any
Business Day on which the amount of Revolving Credit Loans outstanding increases
or decreases by more than $2,000,000 as compared to the previous Settlement
Date.
SETTLING BANK: See Section 2.11(a) hereof.
SPECIAL LEASE OBLIGATIONS: See Section 10.2 hereof.
SPECIAL SHARES: See Section 9.2.7(b) hereof.
SPECIFIED AMOUNT: See Section 10.2(m)(ii)(A) hereof.
SPECIFIED LEASE: Each lease by the Borrower as Lessee of real property at
which Eligible Inventory is held and as to which the Agent has not from time to
time received evidence, in form and substance satisfactory to the Agent, that
based upon then existing law, the landlord of such property would not have or be
entitled to claim a lien on inventory superior to the security interest granted
to the Agent under the Security Agreements, securing obligations past due or
securing future obligations; PROVIDED that no lease for which the Agent shall
have received a Landlord Waiver shall be a Specified Lease.
-25-
STORE CREDIT CARD PROGRAM: The Borrower's existing private label credit
card program, evidenced by and implemented pursuant to the Store Credit Card
Program Documents, and/or any other private label credit card program for
purchases of merchandise in the Borrower's stores by its customers, on terms
substantially similar to the Store Credit Card Program in effect on the
Effective Date or on terms more favorable to the Banks and the Borrower, in each
case as shall be approved by the Agent; it being understood that the Store
Credit Card Program may not, in any event, consist of a so-called receivable
"securitization" or similar receivables purchase facility.
STORE CREDIT CARD PROGRAM DOCUMENTS: The Credit Card Plan Agreement dated
as of June 20, 1988, between the Borrower and Alliance Data Systems as successor
to National City Bank, Columbus, Ohio, a national banking association (formerly
known as BancOhio National Bank), as amended by amendments dated September 30,
1992, August 23, 1993, March 30, 1994, November 2, 1994, and December, 1996 in
the respective forms thereof delivered to the Agent prior to the Effective Date,
evidencing and relating to the Store Credit Card Program, and, to the extent
each is approved by the Agent, any amendments, modifications, and successor or
substitute documents with respect thereto, evidencing or relating to the Store
Credit Card Program as in effect from time to time.
SUBSIDIARY: In respect of any Person, any business entity of which such
Person at any time owns or controls directly or indirectly more than fifty
percent (50%) of the outstanding shares of stock or similar equity interests
having voting power, regardless of whether such right to vote depends upon the
occurrence of a contingency.
SUPER-PRIORITY CLAIM: A claim against the Borrower or its estate in the
Case which is an administrative expense claim having priority over (a) any and
all allowed administrative expenses and (b) unsecured claims now existing or
hereafter arising including, without limitation, administrative expenses of the
kind specified in Section 503(b), 506(c) or 507(b) of the Bankruptcy Code.
SURETY: Any Person, satisfactory to the Term Loan Lender and the Agent in
their sole and absolute discretion, that has agreed to guaranty the purchase or
payment of the Term Loan upon the terms of the Purchase and Guaranty Agreement.
SURETY POWER OF ATTORNEY: The Power of Attorney in form and substance
satisfactory to the Borrower, the Surety and the Agent, and pursuant to which
the Borrower grants to the Surety the right, as the Borrower's attorney-in-fact,
to take certain actions from time to time with respect to the Real Estate
Collateral.
TERM LOAN: The DIP Term Loan or the Exit Term Loan as applicable.
-26-
TERM LOAN LENDER: BkB in its capacity as lender of the Term Loan and any
other Person who becomes an assignee of any rights and obligations of the Term
Loan Lender pursuant to Section 14 hereof.
TERM LOAN MATURITY DATE: The earlier to occur of (a) the date which is 27
months following the Effective Date, and (b) either (i) the DIP Maturity Date if
the DIP Revolving Credit Loans are not prior to such date converted to Exit
Revolving Credit Loans, or (ii) the Exit Maturity Date if the DIP Revolving
Credit Loans are converted to Exit Revolving Credit Loans, provided that the
Term Loan Maturity Date may be extended by the Borrower for two consecutive one
year periods (each an "Extension Period") subject to the satisfaction of the
provisions contained in Section 9.4 hereof.
TITLE POLICY. Such ALTA standard form title insurance policy issued by
such title insurance company as approved by, and with such endorsements,
exceptions and affirmative insurance satisfactory to, the Borrower, the Agent,
the Term Loan Lender and the Surety.
TOTAL DEBT SERVICE: For any period, an amount equal to the result (without
duplication) of (a) Consolidated Total Interest Expense and any other cash
financing fees for such period, but excluding to the extent otherwise included
in the computation of Total Debt Service, the sum of (i) the fees payable
pursuant to Section 6.1(a) hereof, (ii) the fee in the amount of $475,000,
payable to the Gordian Group on or about the Effective Date, and (iii) payments
to settle prepetition tax claims as provided in the Reorganization Plan, PLUS
(b) the sum of all payments with respect to principal on Indebtedness that
became due and payable or are due to become due and payable during such period
pursuant to any agreement or instrument to which the Borrower or any of its
Subsidiaries is a party relating to the borrowing of money or the obtaining of
credit or in respect of Capitalized Leases, PROVIDED that demand obligations
shall be deemed to be due and payable during every fiscal period during which
such obligations are outstanding.
TOTAL DIP COMMITMENT: The sum of the DIP Commitments of the Revolving
Credit Banks, as in effect from time to time.
TOTAL EXIT COMMITMENT: The sum of the Exit Commitments of the Revolving
Credit Banks, as in effect from time to time.
TOTAL REVOLVER OUTSTANDINGS: At any time of determination, the sum of (a)
the aggregate principal amount of Revolving Credit Loans outstanding, PLUS (b)
the Maximum Drawing Amount of all Letters of Credit, PLUS (c) all Unpaid
Reimbursement Obligations.
TRADEMARK AGREEMENT: The Trademark Collateral Assignment and Security
Agreement dated as of a date on or prior to the Exit Facility Date
-27-
made by the Borrower in favor of the Agent and in form and substance
satisfactory to the Banks and the Agent.
TRIBUNAL: Any agency, board, business, commission, court, department,
instrumentality or tribunal of any political or government authority having
competent legislative or judicial jurisdiction.
TYPE: As to any DIP Loan or Exit Loan, its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
UCC: See Section 9.1.5 hereof.
UNIFORM CUSTOMS: The Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500 or any
successor thereto.
UNPAID REIMBURSEMENT OBLIGATION: Any Reimbursement Obligation for which
the Borrower has not reimbursed the Agent and the Banks on the date specified
in, and in accordance with, Section 4.2 hereof.
WARRANT AGREEMENT: The Warrant Agreement between the Borrower and the Term
Loan Lender, or its nominee, substantially in the form attached hereto as
EXHIBIT D, or otherwise in form and substance satisfactory to the Borrower, the
Term Loan Lender or its nominee.
WARRANT DOCUMENTS: The Warrant Agreement, the Registration Rights
Agreement and the Warrants.
WARRANTS: The Warrants substantially in the form attached as ANNEX 1 to
the Warrant Agreement or otherwise in form and substance satisfactory to the
Borrower, and Term Loan Lender or its nominee.
SECTION 1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
-28-
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the accounting
entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP, which
terms are defined in the Uniform Commercial Code as in effect in
Massachusetts, have the meanings assigned to them therein.
(h) Reference to a particular "Section " refers to that section of
this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
SECTION 2. DEBTOR IN POSSESSION AND EXIT REVOLVING CREDIT FACILITIES.
SECTION 2.1 COMMITMENT TO LEND DIP REVOLVING CREDIT LOANS.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the Revolving Credit Banks severally agrees to lend
to the Borrower such sums that the Borrower may request from time to
time up to a maximum aggregate amount outstanding (after giving effect
to all amounts requested) at any one time equal to such Revolving
Credit Bank's DIP Commitment MINUS such Revolving Credit Bank's
Commitment Percentage of the sum of the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations, from the date hereof until but not
including the DIP Maturity Date, PROVIDED that (i) the Total Revolver
Outstandings (after giving effect to all amounts requested) shall not
exceed the lesser of (A) the Total DIP Commitment, and (B) the amount
approved to be borrowed by way of DIP Revolving Credit Loans and
Letters of Credit in the Financing Order, and (ii) the Total Revolver
Outstandings (after giving effect to all amounts required) MINUS Cash
Collateralized Letters of Credit shall not exceed the Borrowing Base
then in effect.
(b) Notwithstanding the provisions of Section 2.1(a), if (i) the
Borrower in a Revolving Credit Loan Request irrevocably designates proceeds
of any Revolving Credit Loan to be used to satisfy obligations owing to a
landlord of a Real Estate Lease for which there is an amount included in
the Cure Payment Reserve, and (ii) arrangements are in place satisfactory
to the Agent for such proceeds to be paid to such landlord for
-29-
application to such cure payment amount owing to such landlord, the
Borrowing Base shall be computed for purposes of Section 2.1(a) to take
into account the reduction in the Cure Payment Reserve to be effected by
the payment of such Revolving Credit Loan proceeds to such landlord for
application as a cure payment.
(c) Except as otherwise provided herein, the DIP Revolving Credit
Loans shall be made PRO RATA in accordance with each Bank's Commitment
Percentage. Loans made to the Borrower pursuant to the Original Credit
Agreement shall constitute DIP Revolving Credit Loans under this Agreement.
SECTION 2.2 REPAYMENTS OF DIP REVOLVING CREDIT LOANS.
(a) The Borrower hereby agrees to pay each Revolving Credit Bank on
the DIP Maturity Date, unless the Exit Facility Date occurs on such date
and the DIP Revolving Credit Loans outstanding on such date are converted
into Exit Revolving Credit Loans as provided in Section 2.3 hereof, the
entire unpaid principal of and interest on such Revolving Credit Bank's DIP
Revolving Credit Note. If the Exit Facility Date does not occur on the DIP
Maturity Date, all other Obligations evidenced by the DIP Revolving Credit
Notes shall, if not sooner paid, become and be absolutely due and payable
by the Borrower on the DIP Maturity Date.
(b) The Borrower may elect to prepay the outstanding principal
of all or any part of any DIP Revolving Credit Loan, without premium
or penalty, PROVIDED that any full or partial prepayment of the
outstanding amount of any Eurodollar Rate Loan pursuant to this
Section 2.2(b) made on any day other than the last day of the Interest
Period relating thereto shall subject the Borrower to the
indemnification provisions of Section 5.6 hereof. Except as otherwise
provided in Section 2.12, the Borrower shall give the Agent written,
telegraphic or telephonic notice no later than (i) 10:00 a.m. Boston
time on the date of such prepayment of Base Rate Loans and (ii) 12:00
noon Boston time three (3) Eurodollar Business Days prior to the date
of such prepayment of Eurodollar Rate Loans, in either case specifying
the proposed date of prepayment and the principal amount to be
prepaid. Each such partial prepayment of the DIP Revolving Credit
Loans shall be applied, in the absence of instruction by the Borrower,
first to the principal of Base Rate Loans and then to the principal of
Eurodollar Rate Loans. Subject to the conditions of Section 2.1
hereof, amounts so prepaid may be reborrowed.
(c) If at any time the DIP Revolving Credit Loans outstanding
shall exceed any specific amount approved to be borrowed solely by way
of DIP Revolving Credit Loans in the Financing Order, the Borrower
-30-
shall immediately pay the amount of such excess to the Agent for pro rata
application to the DIP Revolving Credit Loans in accordance with each
Revolving Credit Bank's Commitment Percentage. If at any time the Total
Revolver Outstandings shall exceed the lesser of (i) the Total DIP
Commitment, and (ii) the amount approved to be borrowed by way of DIP
Revolving Credit Loans and Letters of Credit in the Financing Order, the
Borrower shall immediately pay the amount of such excess to the Agent for
PRO RATA application to the DIP Revolving Credit Loans in accordance with
each Bank's Commitment Percentage or, if no DIP Revolving Credit Loans are
then outstanding, to be held by the Agent as cash collateral to secure
payment of all Reimbursement Obligations up to the amount of 105% of the
Maximum Drawing Amount. If at any time the Total Revolver Outstandings
MINUS Cash Collateralized Letters of Credit shall exceed the Borrowing Base
then in effect, the Borrower shall immediately pay the amount of such
excess to the Agent for PRO RATA application to the DIP Revolving Credit
Loans in accordance with each Revolving Credit Bank's Commitment Percentage
or, if no DIP Revolving Credit Loans are then outstanding, to be held by
the Agent as cash collateral to secure payment of all Reimbursement
Obligations up to the amount of 105% of the Maximum Drawing Amount.
(d) Prior to the Exit Facility Date, during a period of thirty (30)
consecutive days during the period beginning on December 15, 1997, and
ending on January 31, 1998, the Borrower shall be required to make such
prepayments in respect of the DIP Revolving Credit Loans and to take such
other actions as shall be necessary to cause the aggregate amount of the
Total Revolver Outstandings not to exceed $21,500,000 on each day of such
period.
SECTION 2.3 CONVERSION OF DIP REVOLVING CREDIT LOANS INTO EXIT REVOLVING
CREDIT LOANS; COMMITMENT TO LEND EXIT REVOLVING CREDIT LOANS.
(a) Upon the satisfaction of the conditions precedent set forth
in Sections 9.2 and 9.3 hereof, the DIP Revolving Credit Loans
outstanding on the Exit Facility Date shall automatically convert into
Exit Revolving Credit Loans hereunder.
(b) Upon the terms and subject to the conditions of this Agreement,
each of the Revolving Credit Banks severally agrees to lend to the Borrower
such sums that the Borrower may request up to a maximum aggregate amount
outstanding (after giving effect to all amounts requested) at any one time
equal to such Revolving Credit Bank's Exit Commitment MINUS such Revolving
Credit Bank's Commitment Percentage of the sum of the Maximum Drawing
Amount
-31-
and all Unpaid Reimbursement Obligations, from the Exit Facility Date until
but not including the Exit Maturity Date, PROVIDED that (i) the Total
Revolver Outstandings (after giving effect to all amounts requested) shall
not exceed the Total Exit Commitment and (ii) the Total Revolver
Outstandings (after giving effect to all amounts requested) MINUS Cash
Collateralized Letters of Credit shall not exceed the Borrowing Base then
in effect. Except as otherwise provided herein, the Exit Revolving Credit
Loans shall be made PRO RATA in accordance with each Revolving Credit
Bank's Commitment Percentage.
SECTION 2.4 REPAYMENT OF EXIT REVOLVING CREDIT LOANS.
(a) The Borrower hereby agrees to pay each Revolving Credit Bank on
the Exit Maturity Date the entire unpaid principal of and interest on such
Revolving Credit Bank's Exit Revolving Credit Note. All other Obligations
evidenced by the Exit Revolving Credit Notes shall, if not sooner paid,
become and be absolutely due and payable by the Borrower on the Exit
Maturity Date.
(b) The Borrower may elect to prepay the outstanding principal
of all or any part of any Exit Revolving Credit Loan, without premium
or penalty, PROVIDED that any full or partial prepayment of the
outstanding amount of any Eurodollar Rate Loan pursuant to this
Section 2.4(b) made on any day other than the last day of the Interest
Period with respect thereto shall subject the Borrower to the
indemnification provisions of Section 5.6 hereof. Except as otherwise
provided in Section 2.12, the Borrower shall give the Agent written
telegraphic or telephonic notice no later than (i) 10:00 a.m. Boston
time on the date of such prepayment of Base Rate Loans and (ii) 12:00
noon Boston time three (3) Eurodollar Business Days prior to the date
of such prepayment of Eurodollar Rate Loans, in either case specifying
the proposed date of prepayment and the principal amount to be
prepaid. Each such partial prepayment of the Exit Revolving Credit
Loan shall be applied, in the absence of instruction by the Borrower,
first to the principal of Base Rate Loans and then to the principal of
Eurodollar Rate Loans. Subject to the conditions of Section 2.3(b)
hereof, amounts so prepaid may be reborrowed.
(c) If at any time the Total Revolver Outstandings shall exceed the
Total Exit Commitment then in effect, the Borrower shall immediately pay
the amount of such excess to the Agent for PRO RATA application to the Exit
Revolving Credit Loans in accordance with each Revolving Credit Bank's
Commitment Percentage or, if no Exit Revolving Credit Loans are then
outstanding, to be held by the Agent as cash collateral to secure payment
of all Reimbursement Obligations up to the amount of 105% of the Maximum
Drawing Amount. If at any time
-32-
the Total Revolver Outstandings MINUS Cash Collateralized Letters of Credit
shall exceed the Borrowing Base then in effect, the Borrower shall
immediately pay the amount of such excess to the Agent for PRO RATA
application to the Exit Revolving Credit Loans in accordance with each
Revolving Credit Bank's Commitment Percentage or, if no Exit Revolving
Credit Loans are then outstanding, to be held by the Agent as cash
collateral to secure payment of all Reimbursement Obligations up to the
amount of 105% of the Maximum Drawing Amount.
(d) From and after the Exit Facility Date, during a period of thirty
(30) consecutive days during each period beginning on December 15 of any
calendar year and ending on January 31 of the immediately following
calendar year, the Borrower shall be required to make such prepayments in
respect of the Exit Revolving Credit Loans and to take such other actions
as shall be necessary to cause the aggregate amount of the Total Revolver
Outstandings not to exceed $20,500,000 on each day of such applicable
period of thirty (30) consecutive days.
SECTION 2.5 REDUCTION OF COMMITMENTS. The Borrower may elect to reduce
the Total DIP Commitment or the Total Exit Commitment, as applicable, by a
minimum principal amount of $1,000,000 or a greater integral multiple of
$1,000,000 or to terminate the Total DIP Commitment or the Total Exit
Commitment, as applicable, upon written notice to the Agent given by 10:00 a.m.
Boston time at least two (2) Business Days prior to the date of such reduction
or termination. The Borrower shall not be entitled to reinstate the Total DIP
Commitment or the Total Exit Commitment, as applicable, following any such
reduction or termination.
SECTION 2.6 REQUEST FOR REVOLVING CREDIT LOAN ADVANCES. Except as
otherwise provided in Section 2.7 hereof, the Borrower shall notify the Agent in
writing or telephonically (each such notice, a "Revolving Credit Loan Request"),
not later than (a) 3:00 p.m. Boston time on the day of the Drawdown Date (which
date must be a Business Day) of any Base Rate Loan being requested and (b) 12:00
noon Boston time three (3) Eurodollar Business Days prior to the proposed
Drawdown Date of any Eurodollar Rate Loan. Each such Revolving Credit Loan
Request shall specify (i) the principal amount of the Revolving Credit Loan
requested (which shall be, in the case of any Eurodollar Rate Loan, in a minimum
aggregate amount of $1,000,000 or a whole multiple of $100,000 in excess
thereof), (ii) the proposed Drawdown Date of such Revolving Credit Loan, (iii)
the Interest Period for such Revolving Credit Loan and (iv) the Type of such
Revolving Credit Loan. No Revolving Credit Loan may be made as a Eurodollar
Rate Loan during the continuance of a Default or Event of Default. Promptly
upon receipt of any such notice, the Agent shall notify each of the Revolving
Credit Banks thereof. Subject to the foregoing and except as otherwise provided
in Section 2.7 hereof, so long as the DIP Commitments
-33-
or the Exit Commitments, as applicable, are then in effect and the applicable
conditions set forth in Section 9 hereof have been met, each of the Revolving
Credit Banks will make available to the Agent no later than 4:00 p.m. Boston
time on the Drawdown Date, at the Agent's Head Office, in immediately available
funds, its PRO RATA share, based upon such Revolving Credit Bank's Commitment
Percentage, of the amount requested. Except as otherwise provided in Section
2.7 hereof, upon receipt from each Revolving Credit Bank of such amount, the
Agent will make available to the Borrower the aggregate amount of such Revolving
Credit Loan by transferring such amount to the Operating Account not later than
the close of business on such Drawdown Date. The Borrower shall be deemed to
make and to have made automatic Revolving Credit Loan Requests for Base Rate
Loans from time to time at the appropriate times, and in the appropriate
amounts, necessary to credit sufficient funds to the Operating Account for
direct application to the payment when due of any and all interest, fees and
expenses payable with respect to the Loans, and scheduled principal installments
of the Term Loan pursuant to Section 3.2.1 hereof.
SECTION 2.7 OTHER METHODS OF FUNDING; AUTHORIZED ADVANCES.
Notwithstanding the notice requirement set forth in Section 2.6 hereof, but
otherwise in accordance with the terms and conditions of this Agreement,
(a) each of the Revolving Credit Banks agrees to make DIP Revolving
Credit Loans or, as the case may be, Exit Revolving Credit Loans (from and
after the Exit Facility Date) to the Borrower sufficient to pay any Unpaid
Reimbursement Obligations on the date on which such Reimbursement
Obligations become Unpaid Reimbursement Obligations;
(b) the Agent may, in its sole discretion and without conferring
with the Banks, make DIP Revolving Credit Loans or, as the case may
be, Exit Revolving Credit Loans (from and after the Exit Facility
Date) to the Borrower hereunder (i) by causing funds to be credited to
the Operating Account to cover checks or other items or charges which
the Borrower has drawn or made against such account or (ii) in amounts
as otherwise requested by the Borrower as set forth in Section 2.6;
and
(c) the Agent may, in its sole discretion and without conferring
with the Banks, make DIP Revolving Credit Loans or, as the case may
be, Exit Revolving Credit Loans (from and after the Exit Facility
Date) by causing funds in the appropriate sufficient amounts to be
credited to the Operating Account for direct application to the
payment when due of any and all interest, fees and expenses payable
hereunder.
-34-
The Borrower hereby requests and authorizes the Agent to make from time to
time such Revolving Credit Loans (A) by means of paying such Unpaid
Reimbursement Obligations, (B) by advancing funds that are credited to the
Operating Account sufficient to cover checks and other items or charges then
presented to the Operating Account, or otherwise funding the Operating Account,
and (C) by advancing funds that are credited to the Operating Account sufficient
to cover any and all interest, fees and expenses payable hereunder, and hereby
authorizes and requests the Agent to debit the Operating Account in an amount
equal to any such interest, fees and expenses. The Borrower acknowledges and
agrees that the making of such Loans shall, in each case, be subject in all
respects to provisions of this Agreement including, without limitation, the
limitations set forth in Sections 2.1 and 2.3 hereof and the requirements that
the applicable conditions in Section 9 hereof be satisfied. All actions taken
by the Agent pursuant to the provisions of this Section 2.7 shall be conclusive
and binding on the Borrower, absent manifest error. Loans made pursuant to this
Section 2.7 shall be Base Rate Loans until converted in accordance with the
provisions of this Agreement, and prior to a Settlement, interest on Loans made
pursuant to this Section 2.7 shall be for the account of the Agent.
SECTION 2.8 REVOLVING CREDIT NOTES.
(a) The obligation of the Borrower to repay to the Revolving Credit
Banks the principal of the DIP Revolving Credit Loans and interest accrued
thereon shall be evidenced by separate promissory notes dated the Effective
Date (the "DIP Revolving Credit Notes"), completed with the appropriate
insertions and in the form attached hereto as EXHIBIT E. One DIP Revolving
Credit Note shall be payable to the order of each Revolving Credit Bank in
a principal amount equal to such Revolving Credit Bank's DIP Commitment or,
if less, the outstanding amount of all DIP Revolving Credit Loans made by
such Revolving Credit Bank, plus interest accrued thereon, as set forth
below.
(b) The obligation of the Borrower to repay to the Revolving Credit
Banks the principal of the Exit Revolving Credit Loans and interest accrued
thereon shall be evidenced by separate promissory notes dated the Exit
Facility Date (the "Exit Revolving Credit Notes"), completed with the
appropriate insertions and in the form attached hereto as EXHIBIT F. One
Exit Revolving Credit Note shall be payable to the order of each Revolving
Credit Bank in a principal amount equal to such Revolving Credit Bank's
Exit Commitment or, if less, the outstanding amount of all Exit Revolving
Credit Loans made by such Revolving Credit Bank, plus interest accrued
thereon, as set forth below.
-35-
SECTION 2.9 INTEREST ON REVOLVING CREDIT LOANS.
(a) So long as no Event of Default has occurred and is continuing,
the Borrower shall pay interest on the Revolving Credit Loans as follows:
(i) the Base Rate Loans shall bear interest for the period commencing with
the respective Drawdown Dates thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum which is equal
to the sum of (A) the Base Rate PLUS (B) the Base Rate Margin as in effect
from time to time, (ii) each Eurodollar Rate Loan shall bear interest for
the period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate per annum which
is equal to the sum of (A) the Eurodollar Rate determined for such Interest
Period PLUS (B) the Eurodollar Rate Margin as in effect from time to time,
and (iii) the Borrower promises to pay interest on each Loan in arrears on
each Interest Payment Date with respect thereto.
(b) While an Event of Default is continuing amounts payable under any
of the Loan Documents, except with respect to the Term Loan and the Term
Loan Note for which provision is made in Section 3.6(b), shall bear
interest (compounded monthly and payable on demand in respect of overdue
amounts) at a rate per annum which is equal to the greater of (i) the sum
of (A) the Base Rate PLUS (B) three percent (3%) and (ii) the applicable
rate of interest otherwise applicable to the principal of any Revolving
Credit Loans included in such overdue amounts, until such amount is paid in
full (after as well as before judgment) or until such Event of Default has
been cured or waived in writing in accordance with Section 16.4 hereof.
(c) Notwithstanding any other provision of this Agreement, no
Revolving Credit Loan shall bear interest at a rate per annum (the
"Applicable Rate") greater than the Maximum Rate permitted by applicable
Law as the same exists from day to day during the term hereof (the "Maximum
Rate"). If at any time the Applicable Rate shall exceed the Maximum Rate,
thereby causing the interest on the Revolving Credit Loans to be limited to
the Maximum Rate, then any subsequent reduction in the Applicable Rate
shall not reduce the rate of interest on the Revolving Credit Loans below
the Maximum Rate until the aggregate amount of interest accrued on the
Revolving Credit Loans equals the aggregate amount of interest which would
have accrued on the Revolving Credit Loans if the Applicable Rate had at
all times been in effect.
-36-
SECTION 2.10 CONVERSION OPTIONS FOR BASE RATE AND EURODOLLAR LOANS.
SECTION 2.10.1 CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT
LOAN. The Borrower may elect from time to time to convert any
outstanding Revolving Credit Loan to a Revolving Credit Loan of
another Type, PROVIDED that (a) with respect to any such conversion of
a Eurodollar Rate Loan to a Base Rate Loan, the Borrower shall give
the Agent written notice of such election no later than 12:00 Noon
Boston time on the proposed date of such conversion; (b) with respect
to any such conversion of a Base Rate Loan to a Eurodollar Rate Loan,
the Borrower shall give the Agent written notice of such election no
later than 12:00 Noon Boston time three (3) Eurodollar Business Days
prior to the proposed date of such conversion; (c) with respect to any
such conversion of a Eurodollar Rate Loan into a Revolving Credit Loan
of another Type, such conversion shall only be made on the last day of
the Interest Period with respect thereto; and (d) no Revolving Credit
Loan may be made as, or converted into, a Eurodollar Rate Loan during
the continuance of a Default or Event of Default. On the date on
which such conversion is being made each Revolving Credit Bank shall
take such action as is necessary to fund such Loans through its
Domestic Lending Office or its Eurodollar Lending Office, as the case
may be. All or any part of outstanding Revolving Credit Loans of any
Type may be converted into a Revolving Credit Loan of another Type as
provided herein, PROVIDED that any partial conversion into a
Eurodollar Rate Loan shall be in a minimum aggregate amount of
$1,000,000 or a whole multiple of $100,000 in excess thereof. Each
Conversion Request relating to the conversion of a Revolving Credit
Loan to a Eurodollar Rate Loan shall be irrevocable by the Borrower.
The Revolving Credit Loans shall bear interest at the Base Rate unless
a Revolving Credit Loan Request or a Conversion Request for a
Eurodollar Rate Loan with respect to any Revolving Credit Loan is made
by the Borrower and such request has become effective.
SECTION 2.10.2 CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN.
Any Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by the Borrower with the notice
provisions contained in Section 2.10.1; PROVIDED that no Eurodollar
Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be converted
automatically to a Base Rate Loan on the last day of the first
Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which officers of the Agent active upon
the Borrower's account have actual knowledge. In the event that the
Borrower fails to provide any such notice with respect to the
-37-
continuation of any Eurodollar Rate Loan, such Eurodollar Rate Loan shall
be automatically converted to a Base Rate Loan on the last day of the
applicable Interest Period relating thereto. The Agent shall notify the
Revolving Credit Banks when any such automatic conversion contemplated by
this Section 2.10 is scheduled to occur.
SECTION 2.10.3 EURODOLLAR RATE LOANS. Any conversion to or from
Eurodollar Rate Loans shall be in such amounts and shall be made
pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of all Eurodollar Rate Loans having the
same Interest Period shall not be less than $1,000,000 or a whole
multiple of $100,000 in excess thereof. No more than four (4)
Eurodollar Rate Loans, comprising Revolving Credit Loans, having
different Interest Periods shall be outstanding at any time.
SECTION 2.11 SETTLEMENTS; FAILURE TO MAKE FUNDS AVAILABLE.
(a) On each Settlement Date, the Agent shall, not later than
1:00 p.m. Boston time, give telephonic or facsimile notice (i) to the
Revolving Credit Banks and the Borrower of the respective outstanding
amount of Revolving Credit Loans made by the Agent on behalf of the
Revolving Credit Banks from the immediately preceding Settlement Date
through the close of business on the prior day, (ii) to the Revolving
Credit Banks of the unfunded amount, if any, of each Revolving Credit
Loan requested pursuant to Sections 2.1 or 2.3 hereof as of such date,
and (iii) to the Revolving Credit Banks of the amount (a "Settlement
Amount") that each Revolving Credit Bank (the "Settling Bank") shall
pay to effect a Settlement of any Revolving Credit Loan. A statement
of the Agent submitted to the Revolving Credit Banks and the Borrower
or to the Revolving Credit Banks with respect to any amounts owing
under this Section 2.11 shall be PRIMA FACIE evidence of the amount
due and owing. Each Settling Bank shall, not later than 3:00 p.m.
Boston time on such Settlement Date, effect a wire transfer of
immediately available funds to the Agent in the amount of the
Settlement Amount. All funds advanced by any Revolving Credit Bank as
a Settling Bank pursuant to this Section 2.11 shall for all purposes
be treated as a Revolving Credit Loan made by such Settling Bank to
the Borrower and all funds received by any Revolving Credit Bank
pursuant to this Section 2.11 shall for all purposes be treated as a
repayment of amounts owed with respect to Revolving Credit Loans made
by such Revolving Credit Bank.
(b) The Agent may, unless notified to the contrary by any
Revolving Credit Bank prior to a Settlement Date, assume that such
Revolving Credit Bank has made or will make available to the Agent on
such Settlement Date the amount of such Revolving Credit Bank's
Settlement
-38-
Amount, and the Agent may (but it shall not be required to), in reliance
upon such assumption, make available to the Borrower a corresponding
appropriate amount of a requested Revolving Credit Loan. If any Revolving
Credit Bank makes available to the Agent such amount on a date after such
Settlement Date, such Revolving Credit Bank shall pay to the Agent on
demand an amount equal to the product of (i) the average computed for the
period referred to in clause (iii) below, of the weighted average interest
rate paid by the Agent for federal funds acquired by such Agent during each
day included in such period, TIMES (ii) the amount of such Settlement
Amount, TIMES (iii) a fraction, the numerator of which is the number of
days that elapse from and including such Settlement Date to the date on
which the amount of such Settlement Amount shall become immediately
available to such Agent, and the denominator of which is 365. A statement
of the Agent submitted to such Revolving Credit Bank with respect to any
amounts owing under this paragraph shall be PRIMA FACIE evidence of the
amount due and owing to the Agent by such Revolving Credit Bank. If such
Revolving Credit Bank's Settlement Amount is not made available to the
Agent by such Revolving Credit Bank within three (3) Business Days
following such Settlement Date, such Revolving Credit Bank shall be deemed
to be a Delinquent Bank and the provisions of Section 13.5(e) hereof shall
apply thereto.
(c) The failure or refusal of any Revolving Credit Bank to make
available to the Agent at the aforesaid time and place on any
Settlement Date the amount of its Settlement Amount (i) shall not
relieve any other Revolving Credit Bank from its several obligations
hereunder to make available to the Agent the amount of such other
Revolving Credit Bank's Settlement Amount and (ii) shall not impose
upon such other Revolving Credit Bank any liability with respect to
such failure or refusal or otherwise increase the DIP Commitment or
the Exit Commitment, as the case may be, of such other Revolving
Credit Banks.
SECTION 2.12 LOCK BOX ACCOUNT AND APPLICATION OF FUNDS.
(a) The Borrower will, subject to Section 2.14 hereof, (i) continue to
maintain a depository lock box and concentration account (the "Lock Box
Account") with the Agent and under the control of the Agent, as contemplated by
this Agreement and by the terms of the Lock Box Agreement, and (ii) except as
otherwise provided in Section 2.14 hereof, and except for those certain types of
payments described on SCHEDULE 2.12A hereto, at all times direct its account
debtors and obligors on instruments or its other obligors with respect to any of
the Non-Real Estate Collateral, including payments with respect to the Store
Credit Card Program, in each case pursuant to a notification letter (a "Direct
Collection Letter") in form and substance satisfactory to the Agent, to make all
-39-
payments on or with respect to any of the Non-Real Estate Collateral due or to
become due to the Borrower (and, except as otherwise provided below in this
Section 2.12 with respect to cash allowed to be held in the Borrower's stores
overnight and funds properly held in payroll accounts (whether for payroll or
for applicable withholding tax) or sales tax trust accounts, the Borrower will
at all times otherwise cause all cash proceeds of Collateral and other funds it
may hold or receive from time to time to be deposited and transferred) directly
to the Lock Box Account or into one or more of the deposit accounts maintained
with the institutions listed on SCHEDULE 2.12 attached hereto (other than
accounts thereon described as payroll accounts or sales tax trust accounts), for
each of which deposit accounts there shall be in full force and effect (other
than for such payroll accounts and such sales tax trust accounts) an agency
account agreement in form and substance satisfactory to the Agent (collectively,
the "Agent Account Agreements") pursuant to which all collected funds in each
such deposit account (other than amounts not to exceed $500,000 with respect to
all such accounts in the aggregate which may be retained therein on an overnight
basis as of the end of each day, except that such amount shall be zero during
the continuance of an Event of Default occurring upon the stated maturity of the
Obligations or in respect of which there is an Acceleration in effect) shall be
transferred to the Lock Box Account on a daily basis. If, notwithstanding the
issuance of such Direct Collection Letters or any prior instructions, the
Borrower receives any cash proceeds of any of the Non-Real Estate Collateral,
whether in the form of money, checks or otherwise, such Person will hold such
cash proceeds in trust for the benefit of the Agent and the Banks and deposit
such cash proceeds within one (1) Business Day following receipt thereof into
any deposit account for which an Agency Account Agreement is in effect or within
one (1) Business Day following receipt thereof turn over such cash proceeds
(other than, in any such event, an amount of cash not to exceed $500,000 with
respect to all stores in the aggregate as of the end of each day which may be
retained in the Borrower's stores on an overnight basis in addition to the
amounts to be deposited in any such deposit account on the next Business Day) to
the Agent in the identical form received by the deposit of the same to the Lock
Box Account. During the period from February 1 to October 31 of each year, the
aggregate of cash proceeds which may be retained in deposit accounts and stores
as of the end of each day may not exceed a total sum of $600,000 in addition to
the amounts in stores to be deposited on the next Business Day.
(b) Prior to the occurrence of an Event of Default, the Agent shall, on
the date of receipt by the Agent of any and all cash proceeds from account
debtors or obligors or pursuant to the Agency Account Agreements, or (as the
case may be) from the Borrower (or from Seafirst pursuant to Section 2.14) so
deposited in the Lock Box Account and on a provisional basis until final receipt
of good collected funds, apply all such cash proceeds which were deposited to
the Lock Box Account in the form of money, checks or like items as follows:
-40-
(i) FIRST, to all amounts due and payable under this
Agreement other than the outstanding principal amount of the DIP
Loans or Exit Loans, as applicable, and other than Unpaid
Reimbursement Obligations;
(ii) SECOND, to the unpaid principal amount of all DIP
Revolving Credit Loans or Exit Revolving Credit Loans, as
applicable, consisting of Base Rate Loans and all Unpaid
Reimbursement Obligations;
(iii) THIRD, to the unpaid principal amount of all DIP
Revolving Credit Loans or Exit Revolving Credit Loans, as
applicable, consisting of Eurodollar Rate Loans (with the
provisions of Section 5.6 hereof applicable thereto), or at the
Borrower's option, to provide cash collateral in an amount equal
to 105% of the principal amount of all outstanding Revolving
Credit Loans consisting of Eurodollar Rate Loans (to be applied
thereto at the end of the applicable Interest Period);
(iv) FOURTH, the Agent shall cause any excess to be
credited to the Operating Account.
(c) Following the occurrence and during the continuance of an Event of
Default, such cash proceeds shall be distributed for application as provided in
Section 11.4 hereof. All prepayments of the Revolving Credit Loans and Unpaid
Reimbursement Obligations pursuant to this Section 2.12 shall be allocated among
the Revolving Credit Banks holding the same, in proportion, as nearly as
practicable, to the respective unpaid principal amount thereof outstanding, with
adjustments to the extent practicable to equalize any prior payments not in
proportion; PROVIDED that, prior to any Settlement Date, all prepayments of the
Revolving Credit Loans and Unpaid Reimbursement Obligations shall be applied, in
accordance with this Section 2.12, first to outstanding Revolving Credit Loans
and Unpaid Reimbursement Obligations of the Agent, and then to other outstanding
Revolving Credit Loans and Unpaid Reimbursement Obligations ratably in
accordance with the outstanding amounts thereof. Section 11.4 shall apply in
the case of an Event of Default. For purposes of the foregoing provisions of
this Section 2.12, the Agent shall not be deemed to have received any such cash
proceeds on any day unless received by the Agent before 3:00 p.m. Boston time on
such day. The Borrower further acknowledges and agrees that any such
provisional credit by the Agent shall be subject to reversal, and hereby agrees
to indemnify the Agent with respect thereto, if final collection in good
collected funds of the related item is not received by the Agent in accordance
with the Agent's customary procedures and practices for collecting provisional
items.
-41-
SECTION 2.13. FEES AND EXPENSES. The Borrower agrees to pay to the
Agent for the Agent's account any and all fees, costs and expenses which the
Agent incurs in connection with the opening and maintenance of the Lock Box
Account and the Operating Account and the deposit for collection by the Agent
of any check or other item of payment. The Borrower agrees to indemnify the
Agent and to hold the Agent harmless from and against any loss, cost or
expense sustained or incurred by the Agent on account of any claims arising
in connection with the Agent's operation of the Lock Box Account or the
Operating Account or in respect of the Lock Box Agreement.
SECTION 2.14. SEAFIRST CONCENTRATION ACCOUNT. Notwithstanding the
provisions of Section 2.12 hereof, until that date which is ninety (90) days
after the Exit Facility Date, the Borrower may maintain in place its existing
concentration account arrangements with Bank of America, N.W. N.A., d/b/a
Seafirst Bank ("Seafirst"), pursuant to which all payments on or with respect
to any of the Non-Real Estate Collateral and all other funds held or received
(other than funds properly held in payroll accounts (whether for payroll or
for applicable withholding tax) or sales tax trust accounts, and other than
amounts not to exceed $500,000 in cash with respect to all stores in the
aggregate as of the end of each day which may be retained in the Borrower's
stores on an overnight basis) shall be paid or transferred daily into the
deposit accounts maintained with the depository institutions listed on
SCHEDULE 2.14 attached hereto. The Borrower hereby covenants and agrees
that (i) it shall cause each such depository institution to transfer all
collected funds in such deposit accounts (except for amounts not to exceed
$500,000) with respect to all such accounts in the aggregate which may be
retained therein on an overnight basis as of the end of each day, except that
such amount shall be zero during the continuance of an Event of Default
occurring upon the stated maturity of the Obligations or in respect of which
there is an Acceleration in effect) to the Borrower's concentration account
with Seafirst (the "Seafirst Account") on a daily or almost daily basis, (ii)
it shall at all times maintain in full force and effect an Agency Account
Agreement with Seafirst in favor of the Agent with respect to the Seafirst
Account under which all collected funds therein are transferred to the Lock
Box Account on a daily basis, for application to the Obligations in the order
(and pursuant to the procedure) set forth in Section 2.12, and (iii) the
Seafirst Account shall be closed no later than the date which is ninety (90)
days after the Exit Facility Date and all payments on or with respect to any
of the Collateral and such other funds shall thereafter be made in accordance
with the provisions of Section 2.12. The Borrower acknowledges and agrees
that the amounts of cash otherwise permitted to be retained in stores
overnight and amounts otherwise permitted to be retained in deposit accounts
overnight pursuant to Sections 2.12 and 2.14 hereof, respectively, shall be
without duplication, and shall not in any event exceed $500,000 in aggregate
amounts otherwise permitted to be held overnight in stores and $500,000 in
aggregate amounts otherwise permitted to be held overnight in
-42-
deposit accounts, respectively, whether pursuant to Section 2.12 or Section 2.14
or both, in each case in addition to amounts in stores to be deposited in
deposit accounts on the next Business Day. During the period from February 1 to
October 31 of each year, the aggregate of cash proceeds which may be retained in
deposit accounts and stores as of the end of each day may not exceed a total sum
of $600,000 in addition to amounts in stores to be deposited in deposit accounts
on the next Business Day.
SECTION 3. DEBTOR IN POSSESSION AND EXIT TERM LOAN.
SECTION 3.1. COMMITMENT TO LEND DIP TERM LOAN. Upon the terms and
subject to the conditions set forth in this Agreement, the Term Loan Lender
agrees to lend to the Borrower on the Effective Date the principal amount of
$10,000,000.
SECTION 3.2. REPAYMENT OF DIP TERM LOANS.
SECTION 3.2.1. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM
LOAN. The Borrower promises to pay to the Agent for the account of the
Term Loan Lender the principal amount of the Term Loan in consecutive
monthly payments of $25,000, such installments to be due and payable on the
last day of each month of each calendar year, commencing on the thirteenth
month following the Effective Date, with a final payment on the Term Loan
Maturity Date in an amount equal to the unpaid balance of the Term Loan.
Each such installment shall be applied first to Base Rate Loans and then to
Eurodollar Rate Loans.
SECTION 3.2.2. MANDATORY PREPAYMENTS.
(a) The Term Loan shall be subject to certain mandatory prepayments
as provided by Section 10.2(m) and (if applicable) Section 10.6 hereof;
PROVIDED, HOWEVER, that, unless otherwise instructed by the Borrower to
apply such funds immediately, the Agent shall hold any payments so received
that are to be applied to repay Eurodollar Rate Loans as cash collateral
until the end of the Interest Period relating thereto, at which time such
funds shall be so applied to such Eurodollar Rate Loans. Each such
mandatory prepayment pursuant to this Section 3.2.2 shall be applied to the
remaining payments due on the Term Loan in the inverse order of maturity,
first to Base Rate Loans and then to Eurodollar Rate Loans.
(b) In addition, the Borrower shall be required to make from time to
time, mandatory prepayments of principal on the Term Loan, in the amount
equal to one hundred percent (100%) of the exercise price of any Warrants
exercised from time to time by the Warrant holder if (i) the exercise price
of any Warrants is paid in cash, and (ii) the Term Loan Lender so
instructs. Each such prepayment shall be required to be made
-43-
concurrently with the receipt by Borrower of such exercise price in cash
and shall be applied in the manner provided in Section 3.2.2(a).
SECTION 3.2.3. OPTIONAL PREPAYMENT OF DIP TERM LOAN. Except
for the payments required by Section 3.2.1, Section 3.2.2, Section
10.2(m) and (if applicable) Section 10.6 hereof, and the conversion of
the DIP Term Loan to the Exit Term Loan pursuant to Section 3.3
hereof, the Borrower shall have no right to prepay the Term Notes as a
whole or in part before the Term Loan Maturity Date unless and until
all Revolving Credit Loans have been paid in full, all Reimbursement
Obligations have been paid or cash collateralized and all DIP
Commitments and Exit Commitments have been cancelled.
SECTION 3.3. CONVERSION OF DIP TERM LOAN INTO EXIT TERM LOAN; COMMITMENT
TO LEND EXIT TERM LOAN. Upon satisfaction of the conditions precedent set
forth Sections 9.2 and 9.3 hereof, the DIP Term Loan outstanding on the Exit
Facility Date shall automatically convert into an Exit Term Loan hereunder.
SECTION 3.4. REPAYMENT OR PREPAYMENT OF EXIT TERM LOAN. After
conversion of the DIP Term Loan into the Exit Term Loan, the provisions of
Section 3.2 shall apply MUTATIS MUTANDIS with respect to all or any portion
of the Exit Term Loan so that the Borrower may have the same payment and
prepayment rights and obligations with respect to the Exit Term Loan as it
would with respect to the DIP Term Loan.
SECTION 3.5 THE TERM LOAN NOTE.
(a) The DIP Term Loan shall be evidenced by a promissory note of the
Borrower in substantially the form of EXHIBIT G hereto (the "DIP Term Loan
Note"), dated the Effective Date and completed with appropriate insertions.
The DIP Term Loan Note shall be payable to the order of the Term Loan
Lender in a principal amount equal to $10,000,000 and representing the
obligation of the Borrower to pay to the Term Loan Lender such principal
amount or, if less, the outstanding amount of the DIP Term Loan, plus
interest accrued thereon, as set forth below.
(b) The Exit Term Loan shall be evidenced by a promissory note of the
Borrower in substantially the form of EXHIBIT H hereto (the "Exit Term Loan
Note"), dated the Exit Facility Date and completed with appropriate
insertions. The Exit Term Loan Note shall be payable to the order of the
Term Loan Lender in a principal amount equal to $10,000,000 and
representing the obligation of the Borrower to pay to the Term Loan Lender
such principal amount or, if less, the outstanding amount of the Exit Term
Loan, plus interest accrued thereon, as set forth below.
-44-
SECTION 3.6. INTEREST ON TERM LOAN.
(a) So long as no Event of Default has occurred and is continuing,
the Borrower shall pay interest on the Term Loan as follows: (i) the Base
Rate Loans shall bear interest for the period commencing with the
respective Drawdown Dates thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum which is equal
to the sum of (A) the Base Rate PLUS (B) the Base Rate Margin as in effect
from time to time, (ii) each Eurodollar Rate Loan shall bear interest for
the period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate per annum which
is equal to the sum of (A) the Eurodollar Rate determined for such Interest
Period PLUS (B) the Eurodollar Rate Margin as in effect from time to time,
and (iii) the Borrower promises to pay interest on each Term Loan in
arrears on each Interest Payment Date with respect thereto.
(b) While an Event of Default is continuing, but prior to maturity,
whether by acceleration or otherwise, amounts payable with respect to the
Term Note and the Term Loan Note shall bear interest (compounded monthly
and payable at maturity) at a rate per annum which is equal to the sum of
(A) the applicable rate of interest determined by reference to Section
3.6(a) PLUS (B) 7% per annum, until such amount is paid in full (after as
well as before judgment) or until such Event of Default has been cured or
waived in writing in accordance with Section 16.4 hereof.
(c) On and after maturity, whether by acceleration or otherwise, the
Term Loan shall bear interest (compounded monthly and payable on demand) at
a rate per annum which is equal to the sum of (A) the rate of interest
applicable to a Base Rate Revolving Credit Loan when no Event of Default
has occurred and is continuing (i.e., the Base Rate plus the Base Rate
Margin then in effect) PLUS (B) 7% per annum,
PROVIDED, HOWEVER, the amount of interest payable pursuant to Section
3.6(b) which is in excess of that certain rate of interest applicable to
the Revolving Credit Loans or Unpaid Reimbursement Obligations pursuant of
Section 2.9(b) shall, except to the extent paid from the proceeds of the
Real Estate Collateral pursuant to Section 11.4(b), be subordinated and
junior in right of payment to the Borrower's obligations in respect of the
Revolving Credit Loans and Reimbursement Obligations.
(d) Notwithstanding any other provision of this Agreement, no Term
Loan shall bear interest at an Applicable Rate greater than the Maximum
Rate. If at any time the Applicable Rate shall exceed the Maximum Rate,
thereby causing the interest on the Term Loan to be
-45-
limited to the Maximum Rate, then any subsequent reduction in the
Applicable Rate shall not reduce the rate of interest on the Term Loan
below the Maximum Rate until the aggregate amount of interest accrued on
the Term Loan equals the aggregate amount of interest which would have
accrued on the Term Loan if the Applicable Rate had at all times been in
effect.
SECTION 3.7. CONVERSION OPTIONS FOR BASE RATE AND EURODOLLAR LOANS.
SECTION 3.7.1. NOTIFICATION BY BORROWER. After the Term Loan
has been made, the provisions of Section 2.10 shall apply MUTATIS
MUTANDIS with respect to all or any portion of the Term Loan so that
the Borrower may have the same interest rate options with respect to
all or any portion of the Term Loan as it would be entitled to with
respect to the Revolving Credit Loans. The Term Loan shall bear
interest at the Base Rate unless the Borrower makes a Conversion
Request with respect to the Term Loan and such Conversion Request has
become effective.
SECTION 3.7.2. AMOUNTS, ETC. Any portion of the Term Loan
bearing interest at the Eurodollar Rate relating to any Interest
Period shall be in the amount of $1,000,000 or a whole multiple of
$100,000 in excess thereof. No Interest Period relating to the Term
Loan or any portion thereof bearing interest at the Eurodollar Rate
shall extend beyond the date on which a regularly scheduled
installment payment of the principal of the Term Loan is to be made
unless a portion of the Term Loan at least equal to such installment
payment has an Interest Period ending on such date or is then bearing
interest at the Base Rate. No more than three (3) Eurodollar Rate
Loans, comprising the Term Loan, having different Interest Periods
shall be outstanding at any time.
SECTION 4. LETTER OF CREDIT FACILITY.
SECTION 4.1. LETTER OF CREDIT COMMITMENT. Subject to the terms and
conditions hereof and the execution and delivery by the Borrower of a letter of
credit application on the Agent's customary form (a "Letter of Credit
Application"), the Agent on behalf of the Revolving Credit Banks and in reliance
upon the agreement of the Revolving Credit Banks set forth in Section 4.1.4
hereof and upon the representations and warranties of the Borrower contained
herein, agrees, in its individual capacity, to issue, extend and renew from time
to time from the date hereof until but not including the DIP Maturity Date, or,
if the Exit Facility Date occurs, the Exit Maturity Date, for the account of the
Borrower, standby and documentary letters of credit (each such letter of credit
issued hereunder, a "Letter of Credit"), in such form as may be requested by the
Borrower and agreed to by the Agent; PROVIDED, HOWEVER, that (a) at all times
prior to the Exit Facility Date, after giving effect to such request, (i) the
-46-
sum of the Maximum Drawing Amount and any Unpaid Reimbursement Obligations shall
not exceed the lesser of (A) $3,000,000 or (B) any specific amount approved by
the Bankruptcy Court solely for Letters of Credit in the Financing Order, (ii)
the Total Revolver Outstandings shall not exceed the lesser of (A) the Total DIP
Commitment or (B) the amount approved to be borrowed by way of DIP Revolving
Credit Loans and Letters of Credit in the Financing Order and (iii) the Total
Revolver Outstandings MINUS the Cash Collateralized Letters of Credit shall not
exceed the Borrowing Base then in effect, and (b) at all times from and after
the Exit Facility Date, after giving effect to such request, (i) the sum of the
Maximum Drawing Amount and any Unpaid Reimbursement Obligations shall not exceed
$3,000,000, (ii) the Total Revolver Outstandings shall not exceed the Total Exit
Commitment, and (iii) the Total Revolver Outstandings MINUS the Cash
Collateralized Letters of Credit shall not exceed the Borrowing Base then in
effect. Upon the satisfaction of the conditions precedent set forth in Sections
9.2 and 9.3 hereof, the Letters of Credit (if any) outstanding on the Exit
Facility Date shall automatically convert into Letters of Credit deemed to be
issued under the credit facility that is provided herein to be available from
and after the Exit Facility Date. Letters of Credit issued pursuant to the
Original Credit Agreement shall constitute Letters of Credit under this
Agreement.
SECTION 4.1.1. THIS AGREEMENT TO GOVERN. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In
the event that any provision of any Letter of Credit Application shall
be inconsistent with any provision of this Agreement, then the
provisions of this Agreement shall, to the extent of any such
inconsistency, govern.
SECTION 4.1.2. TERMS AND DURATION OF LETTERS OF CREDIT. Each
Letter of Credit issued, extended or renewed hereunder shall, among
other things, (a) provide for the payment of sight drafts for honor
thereunder when presented in accordance with the terms thereof and
when accompanied by the documents described therein and (b) have an
expiry date no later than the DIP Maturity Date or, if the Exit
Facility Date shall have occurred, the Exit Maturity Date. No later
than the date which is thirty (30) days prior to the Exit Maturity
Date, and with respect to each (if any) Letter of Credit issued on or
after the commencement of such thirty (30) day period, the Borrower
shall secure the Reimbursement Obligations with respect to all Letters
of Credit then outstanding by (i) providing to the Agent cash
collateral in an amount equal to 105% of the Maximum Drawing Amount of
all such Letters of Credit or (ii) providing to the Agent "back to
back" letters of credit, in an amount equal to 105% of such Maximum
Drawing Amount, which shall in each case be in form and substance and
issued by a bank satisfactory to the Agent in its sole and absolute
discretion. Such cash collateral may from time to time be released by
the Agent, and the amount of such
-47-
"back to back" letters of credit may from time to time be reduced with the
agreement of the Agent, in each case in its reasonable discretion, to an
amount equal to 105% of the Maximum Drawing Amount of the Letters of Credit
secured thereby in the event that the Maximum Drawing Amount of such
Letters of Credit secured thereby is reduced, PROVIDED that no Event of
Default exists after giving effect to any such release of cash collateral
or such reduction. Each Letter of Credit so issued, extended or renewed
shall be subject to the Uniform Customs.
SECTION 4.1.3. REIMBURSEMENT OBLIGATIONS OF REVOLVING CREDIT
BANKS. Each Revolving Credit Bank severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default or
Event of Default or any other condition precedent whatsoever, to the
extent of such Revolving Credit Bank's Commitment Percentage, to
reimburse the Agent on demand for the amount of each draft paid by the
Agent under each Letter of Credit to the extent that such amount is
not reimbursed by the Borrower pursuant to Section 4.2 hereof (such
agreement for a Revolving Credit Bank being called herein the "Letter
of Credit Participation" of such Revolving Credit Bank).
SECTION 4.1.4. PARTICIPATIONS OF REVOLVING CREDIT BANKS.
Each such payment made by a Revolving Credit Bank pursuant to Section
4.1.3 hereof shall be treated as the purchase by such Revolving Credit
Bank of a participating interest in the Borrower's Reimbursement
Obligations under Section 4.2 hereof in an amount equal to such
payment. Each Revolving Credit Bank shall share in accordance with
its participating interest in any interest which accrues pursuant to
Section 4.2 hereof.
SECTION 4.2. REIMBURSEMENT OBLIGATIONS OF THE BORROWER. In order to
induce the Agent to issue, extend and renew each Letter of Credit and the
Revolving Credit Banks to participate therein, the Borrower hereby absolutely
and unconditionally agrees to reimburse or pay to the Agent, for the account of
the Agent or (as the case may be) the Revolving Credit Banks, with respect to
each Letter of Credit issued, extended or renewed by the Agent hereunder,
(a) except as otherwise expressly provided in Sections 4.2(b)
through (e), on each date that any draft presented under such Letter
of Credit is honored by the Agent, or the Agent otherwise makes a
payment with respect thereto, (i) the amount paid by the Agent under
or with respect to such Letter of Credit, and (ii) the amount of any
taxes, fees, charges or other costs and expenses whatsoever incurred
by the Agent or any Revolving Credit Bank in connection with any
payment made by the Agent under, or with respect to, such Letter of
Credit,
-48-
(b) prior to the Exit Facility Date, upon reduction of the Total DIP
Commitment (but not the termination of such commitment) to an amount less
than the Maximum Drawing Amount, an amount equal to such difference, which
amount shall be held by the Agent for the benefit of the Agent and the
Revolving Credit Banks as cash collateral for all Reimbursement
Obligations,
(c) from and after the Exit Facility Date, upon reduction of the
Total Exit Commitment (but not the termination of such commitment) to an
amount less than the Maximum Drawing Amount, an amount equal to 105% of
such difference, which amount shall be held by the Agent for the benefit of
the Agent and the Revolving Credit Banks as cash collateral for all
Reimbursement Obligations,
(d) prior to the Exit Facility Date, upon the termination of the
Total DIP Commitment, or upon the acceleration of the Reimbursement
Obligations with respect to all Letters of Credit in accordance with
Section 11 hereof, an amount equal to 105% of the Maximum Drawing Amount,
which amount shall be held by the Agent for the benefit of the Agent and
the Revolving Credit Banks as cash collateral for all Reimbursement
Obligations, and
(e) from and after the Exit Facility Date upon the termination of the
Total Exit Commitment, or upon acceleration of the Reimbursement
Obligations with respect to all Letter of Credit in accordance with Section
11 hereof, an amount equal to 105% of the Maximum Drawing Amount, which
amount shall be held by the Agent for the benefit of the Agent and the
Revolving Credit Banks as cash collateral for all Reimbursement
Obligations.
Unless funded by a Revolving Credit Loan pursuant to Section 2.7 hereof,
each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid
by the Borrower under this Section 4.2 and not required to be funded by a
Revolving Credit Loan pursuant to Section 2.7 hereof at any time from the date
such amounts become due and payable (whether as stated in this Section 4.2, by
acceleration or otherwise) until payment in full (whether before or after
judgment) shall be payable to the Agent on demand at the rate specified in the
second sentence of Section 2.9(b) hereof for interest during the continuance of
an Event of Default.
SECTION 4.3. LETTER OF CREDIT PAYMENTS. If any draft shall be
presented or other demand for payment shall be made under any Letter of Credit,
the Agent shall notify the Borrower of the date and amount of the draft
presented or demand for payment and of the date and time when it expects to pay
such
-49-
draft or honor such demand for payment. If the Borrower fails to reimburse the
Agent as provided in Section 4.2 hereof on or before the date that such draft is
paid or other payment is made by the Agent, the Agent may at any time thereafter
notify the Revolving Credit Banks of the amount of any such Unpaid Reimbursement
Obligation. No later than 3:00 p.m. Boston time on the Business Day next
following the receipt of such notice, each Revolving Credit Bank shall make
available to the Agent, at the Agent's Head Office, in immediately available
funds, such Revolving Credit Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (a)
the average, computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, times (b) the amount equal to
such Revolving Credit Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation, times (c) a fraction, the numerator of which is the number of days
that elapse from and including the date the Agent paid the draft presented for
honor or otherwise made payment to the date on which such Revolving Credit
Bank's Commitment Percentage of such Unpaid Reimbursement obligation shall
become immediately available to the Agent, and the denominator of which is 360.
The responsibility of the Agent to the Borrower and the Revolving Credit Banks
shall be only to determine that the documents (including each draft) delivered
under each Letter of Credit in connection with such presentment shall be in
conformity in all material respects with such Letter of Credit.
SECTION 4.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under
this Section 4 shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which the Borrower may have or have had against the Agent,
any Revolving Credit Bank or any beneficiary of a Letter of Credit. The
Borrower further agrees with the Agent and the Revolving Credit Banks that the
Agent and the Revolving Credit Banks shall not be responsible for, and the
Reimbursement Obligations shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrower against the beneficiary of any Letter of Credit or
any such transferee. Neither the Agent nor any Revolving Credit 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. The Borrower agrees that any action taken or omitted by
the Agent under or in connection with each Letter of Credit and the related
drafts and documents, if done in good faith, shall be
-50-
binding upon the Borrower and shall not result in any liability on the part of
the Agent or any Revolving Credit Bank to the Borrower.
SECTION 4.5. RELIANCE BY ISSUER. To the extent not inconsistent with
Section 4.4 hereof, the Agent shall be entitled to rely, and shall be fully
protected in relying upon, any Letter of Credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document believed by it to
be genuine and correct and to have been signed, sent or made by the proper
person or entity and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement unless
it shall first have received such advice or concurrence of the Majority
Revolving Credit Banks (or, where required, all of the Revolving Credit Banks)
as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Revolving Credit Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Majority Revolving Credit Banks (or, where
required, all of the Revolving Credit Banks), and such request and any action
taken or failure to act pursuant thereto shall be binding upon the Revolving
Credit Banks and all future holders of the Notes or of a Letter of Credit
Participation.
SECTION 4.6. LETTER OF CREDIT FEES. The Borrower shall pay a fee to the
Agent, for the accounts of the Revolving Credit Banks in accordance with their
respective Commitment Percentages, in respect of each Letter of Credit (in each
case, a "Letter of Credit Fee") in an amount per annum equal to the Letter of
Credit Rate applied to the Maximum Drawing Amount of each Letter of Credit.
Such Letter of Credit Fees shall be payable pursuant hereto periodically until
each such Letter of Credit shall have been returned to the Agent or shall have
expired in accordance with its terms, and shall be payable quarterly in arrears
(except that, upon written notice from the Agent to the Borrower, such Letter of
Credit Fees shall be payable monthly in arrears) on the first Business Day of
each calendar quarter (or month, as the case may be) for the calendar quarter
(or month, as the case may be) then ended based on the average daily Maximum
Drawing Amount during such quarter (or month, as the case may be) of the
outstanding Letters of Credit, and also on the DIP Maturity Date if the Exit
Facility Date has not occurred, and on the Exit Maturity Date if the Exit
Facility Date shall have occurred. In addition, the Borrower shall, at such
time or times as such charges are customarily made by the Agent, pay fees to the
Agent for its own account in respect of each Letter of Credit in an amount equal
to the Agent's customary fees for issuance, negotiation, settlement, amendment
and processing of Letters of Credit.
-51-
SECTION 5. CERTAIN GENERAL PROVISIONS.
SECTION 5.1. CAPITAL ADEQUACY. If after the date hereof any Bank or the
Agent determines that (a) the adoption of or any change in any banking law,
rule, regulation or guideline or the administration thereof (whether or not
having the force of law), or (b) compliance by such Bank or the Agent or its
parent bank holding company with any guideline, request or directive (whether or
not having the force of law), has the effect of reducing the return on such
Bank's or the Agent's or such holding company's capital as a consequence of such
Bank's DIP Commitment, Exit Commitment, the Loans or any Letters of Credit to a
level below that which such Bank or the Agent or such holding company could have
achieved but for such adoption, change or compliance by any amount deemed by
such Bank or (as the case may be) the Agent to be material, such Bank or (as the
case may be) the Agent may notify the Borrower thereof. The Borrower agrees to
pay such Bank or the Agent the amount of the Borrower's allocable share of the
amount of such reduction in the return on capital as and when such allocable
share of the amount of such reduction is determined, upon presentation by such
Bank or (as the case may be) the Agent of a statement in the amount and setting
forth such Bank's or (as the case may be) the Agent's calculation thereof, which
statement shall be deemed true and correct absent manifest error. Each of the
Banks and the Agent agrees to allocate shares of such reduction among the
Borrower and its other customers similarly situated on a fair and
non-discriminatory basis.
SECTION 5.2. INABILITY TO DETERMINE EURODOLLAR RATE. In the event,
prior to the commencement of any Interest Period relating to any Eurodollar Rate
Loan, the Agent shall determine that adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate that would otherwise determine the
rate of interest to be applicable to any Eurodollar Rate Loan during any
Interest Period, the Agent shall forthwith give notice of such determination
(which shall be conclusive and binding on the Borrower and the Banks) to the
Borrower and the Banks. In such event (a) any Revolving Credit Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for a Base Rate Loan, (b) each
Eurodollar Rate Loan will automatically, on the last day of the then-current
Interest Period relating thereto, become a Base Rate Loan, and (c) the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended until
the Agent determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Agent shall so notify the Borrower and the Banks.
SECTION 5.3. ILLEGALITY. Notwithstanding any other provisions herein,
if any present or future law, regulation, treaty or directive or any
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice
of such
-52-
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or to convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (b) such
Bank's Loans then outstanding as Eurodollar Rate Loans, if any, shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier period as
may be required by law. The Borrower hereby agrees promptly to pay the Agent
for the account of such Bank, upon demand by such Bank, any additional amounts
necessary to compensate such Bank for any costs incurred by such Bank in making
any conversion in accordance with this Section 5.3, including any interest or
fees payable by such Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder.
SECTION 5.4. ADDITIONAL COSTS, ETC. If any present or future
applicable law, which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court or by
any governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject to any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, the Letters of Credit, such Bank's DIP
Commitment or Exit Commitment or the Loans (other than taxes based upon or
measured by the income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or
the interest on any Loans or any other amounts payable to any Bank or the
Agent under this Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Agreement) any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or Loans by, or Letters of Credit
issued by, or commitments of an office of the Agent or any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan
-53-
Documents, the Loans, the Letters of Credit, any Bank's commitment to make
Loans hereunder, or any class of loans, letters of credit or commitments of
which any of the Loans or such Bank's DIP Commitment or Exit Commitment
forms a part,
and the result of any of the foregoing is:
(i) to increase the cost to any Bank or the Agent of making, funding,
issuing, renewing, extending or maintaining any of the Loans or Letters of
Credit or such Bank's DIP Commitment or Exit Commitment, or to reduce the
amount of principal, interest, or other amounts payable to such Bank or the
Agent hereunder on account of such Loans or Letters of Credit or such DIP
Commitment or Exit Commitment, as the case may be; or
(ii) to require the Bank or the Agent to make any payment or to
forego any interest or other sum payable hereunder, the amount of which
payment or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such Bank or the
Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon ten (10) days written
notice by such Bank or (as the case may be) the Agent at any time and from time
to time requesting such additional amounts and as often as the occasion therefor
may arise, pay to such Bank or the Agent such additional amounts as will be
sufficient to compensate such Bank or the Agent for such additional cost,
reduction, payment or foregone interest or other sum.
SECTION 5.5. CERTIFICATE. A certificate setting forth any additional
amounts payable pursuant to Sections 5.1 or 5.4 and a brief explanation of such
amounts which are due, submitted by any Bank or the Agent to the Borrower, shall
be conclusive, absent manifest error, that such amounts are due and owing.
SECTION 5.6. INDEMNITY. The Borrower hereby agrees to indemnify each Bank
and to hold each Bank harmless from and against any loss, cost or expense
(including loss of anticipated profits) that such Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment of the principal amount of
or any interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by such
Bank to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans, (b) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have given) a Revolving
Credit Loan Request or a Conversion Request relating thereto in accordance with
Section 2.6, Section 2.10.1 or Section 3.7.1 hereof respectively, or (c) the
making of any payment on a Eurodollar Rate Loan or the making of any conversion
of any such Eurodollar Rate Loan to a Base Rate Loan on a day that is not the
-54-
last day of the applicable Interest Period with respect thereto, including
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain any such Loans.
SECTION 6. FEES AND PAYMENTS.
SECTION 6.1. FEES. The Borrower hereby agrees to pay the following fees
and expenses:
(a) to the Agent for its own account certain facility fees in the
amounts and at the times set forth in the Fee Letter;
(b) to the Agent for the ratable accounts of the Revolving Credit
Banks in accordance with their daily unused DIP Commitments, taking the
Settlement mechanism into account, in arrears, on the first Business Day of
each month from and after the Effective Date for the preceding month (or
portion thereof) and upon the DIP Maturity Date or any other date upon
which the Total DIP Commitment irrevocably ceases to be in effect, a
commitment fee (with respect to the period commencing on the Effective
Date) calculated at a rate per annum which is equal to one-half of one
percent (1/2%) of the average daily difference by which the Total DIP
Commitment amount exceeds the Total Revolver Outstandings during the
preceding month or portion thereof;
(c) to the Agent for the ratable accounts of the Revolving Credit
Banks in accordance with their daily unused Exit Commitments, taking the
Settlement mechanism into account, in arrears, on the first Business Day of
each month from and after the Exit Facility Date for the preceding month
(or portion thereof) and upon the Exit Maturity Date or any other date upon
which the Total Exit Commitment irrevocably ceases to be in effect, a
commitment fee (with respect to the period commencing on the Exit Facility
Date) at a rate per annum equal to the Exit Commitment Fee Rate of the
average daily difference by which the Total Exit Commitment amount exceeds
the Total Revolver Outstandings during the previous month or portion
thereof;
(d) to the Agent for the PRO RATA accounts of the Revolving Credit
Banks in accordance with their Commitment Percentages a prepayment fee (in
order to compensate the Revolving Credit Banks for the early termination of
the financing relationship hereunder, since the compensation otherwise
payable to the Revolving Credit Banks under this Agreement has been agreed
to on the contemplated basis of a long term, rather than short term,
financing relationship) in the amount of $250,000 in the event that a
Reorganization Plan shall have become effective and, in connection
therewith, for any reason, the Borrower shall have entered into working
capital financing arrangements with financial
-55-
institutions other than the Agent and the Revolving Credit Banks, which
such prepayment fee shall be payable concurrently with the "effective date"
of such Reorganization Plan;
(e) to the Agent for the Agent's own account a monthly administrative
fee payable monthly in advance on the first Business Day of each month in
the amount of $2,500;
(f) to the Agent for the account of the Term Loan Lender a
Closing Fee in the amount of $500,000 payable on the Effective Date;
(g) if the Term Loan has not been paid in full prior to the first
anniversary of the Effective Date, to the Agent for the account of Term
Loan Lender the Additional Closing Fee. The Borrower shall pay the
Additional Closing Fee on the first anniversary of the Effective Date in an
amount equal to the Additional Closing Fee Prepayment Amount, provided that
promptly following the Additional Closing Fee Calculation Date, any amount
by which the Additional Closing Fee Prepayment Amount exceeds the
Additional Closing Fee shall be refunded by the Term Loan Lender to the
Borrower or applied to any Extension Fee, if applicable, in each case
without interest; and
(h) if the Term Loan Maturity Date is extended by the Borrower as
contemplated by the provisions of Section 9.4 hereof, to the Agent for the
account of the Term Loan Lender the Extension Fee for each such extension,
payable on each applicable Extension Date, PROVIDED that, promptly
following the earlier to occur of (i) the last day of such Extension
Period, or (ii) payment in full of the Term Loan, the Borrower shall be
entitled to a refund from the Term Loan Lender of any Extension Fee
previously paid to the extent that such Extension Fee exceeded an amount
equal to the average daily principal balance of the Term Loan outstanding
during the applicable Extension Period multiplied by 5% (pro rated for the
actual number of days in such period). Any such refund shall be without
interest and shall be credited against any further Extension Fee, if
applicable, or shall otherwise be reimbursed to the Borrower upon payment
in full of the Term Loan.
The provisions of Section 6.1 shall, to the extent applicable, survive payment
in full of the Loans and all other Obligations hereunder and the termination in
full of the Total DIP Commitment and the Total Exit Commitment.
SECTION 6.2. PAYMENTS; NO OFFSET; COMPUTATIONS. All payments to be made
by the Borrower hereunder or under any of the other Loan Documents shall be made
in Dollars in immediately available funds to the Agent for the respective
accounts of the Agent and the Banks at the Agent's Head Office without setoff or
counterclaim and free and clear of and without deduction for any taxes,
-56-
levies, imposts, duties, charges, fees, deductions, withholdings, compulsory
loans, restrictions or conditions of any nature now or hereafter imposed or
levied by any jurisdiction or any political subdivision thereof or taxing or
other authority therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the Borrower
with respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Agent, for the account of the Banks
or (as the case may be) the Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional amount in
Dollars as shall be necessary to enable the Banks or the Agent to receive the
same net amount which the Banks or the Agent would have received on such due
date had no such obligation been imposed upon the Borrower. The Agent shall be
entitled to charge the Operating Account, the Lock Box Account or any account of
the Borrower with the Agent for any sum due and payable by the Borrower to the
Agent or the Banks hereunder or under any of the other Loan Documents. If any
payment hereunder is required to be made on a day which is not a Business Day,
it shall be paid on the immediately succeeding Business Day, with interest and
any applicable fees adjusted accordingly. All computations of interest or of
the commitment fees or Letter of Credit Fee payable hereunder shall be made on
the basis of actual days elapsed or to elapse and on a 360-day year. All
payments of the commitment fees, the Letter of Credit Fee, the facility fees,
the prepayment fee and all other fees payable hereunder shall be non-refundable
except as expressly provided in Section 6.1.
SECTION 7. PRIORITY AND LIENS.
SECTION 7.1. SUPER-PRIORITY CLAIMS AND COLLATERAL SECURITY.
(a) The Borrower hereby represents, warrants and covenants that, upon
entry of the Financing Order until, but not including, the Exit Facility
Date, (i) the Obligations shall at all times constitute a Super-Priority
Claim having priority, pursuant to Section 364(c)(1) of the Bankruptcy
Code, subject only to the Agreed Administrative Expense Priorities, and
except that such super-priority shall not apply to the proceeds of causes
of action under Sections 544, 545, 547, 548, 549, and 550 of the Bankruptcy
Code, (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code and the
Security Documents, the Obligations shall at all times be secured by a
first priority perfected Lien upon the Collateral, SUBJECT, HOWEVER, to (A)
Permitted Prior Liens and (B) the Agreed Administrative Expense Priorities,
and (iii) pursuant to Section 364(c)(3) of the Bankruptcy Code and the
Security Documents, the Obligations shall at all times also be secured by a
perfected Lien upon all other Collateral, subject only to Permitted Prior
Liens. So long as no Default or Event of Default shall have occurred and
be continuing, and
-57-
except as provided in the definition of Escrow Account in Section 1 hereof,
the Borrower shall be permitted to pay, as and when the same become due and
payable, administrative expenses of the kind specified in 11 U.S.C. Section
503(b) incurred in the ordinary course of business of the Borrower and
compensation and reimbursement expenses allowed and payable under 11 U.S.C.
Section 330 and 11 U.S.C. Section 331. As set forth in Section 11.4
hereof, proceeds of (i) the Non-Real Estate Collateral shall first be used
to pay in full the Total Revolver Outstandings and thereafter applied to
the Term Loan, and (ii) the Real Estate Collateral shall first be used to
pay in full the Term Loan and thereafter applied to the Total Revolver
Outstandings.
(b) At all times from and after the Exit Facility Date, all
Obligations shall be secured by a first priority perfected Lien upon the
Collateral, subject only, however, to the Permitted Prior Liens, and
provided that the Obligations shall not be secured by a Lien upon certain
trust funds to be held by the Borrower in its fiduciary capacity as
disbursing agent as provided in the Reorganization Plan. As set forth in
Section 11.4 hereof, proceeds of (i) the Non-Real Estate Collateral shall
first be used to pay in full the Total Revolver Outstandings and thereafter
applied to the Term Loan, and (ii) the Real Estate Collateral shall first
be used to pay in full the Term Loan and thereafter to the Total Revolver
Outstandings.
SECTION 7.2. COLLATERAL SECURITY PERFECTION. The Borrower agrees to take
(or cause to be taken) from time to time all action that the Agent or any Bank
may reasonably request as a matter of nonbankruptcy law to perfect and protect
the Agent's and the Banks' Liens upon the Collateral and for such Liens to
obtain the priority therefor contemplated hereby, including, without limitation,
executing and delivering (and filing) such financing statements, providing such
notices and assents of third parties, the recording of the Mortgages, obtaining
such governmental approvals and providing such other instruments and documents
in recordable form as the Agent or any Bank may reasonably request.
SECTION 7.3. NO DISCHARGE; SURVIVAL OF CLAIMS. The Borrower agrees that
(a) the Obligations shall not be discharged by the entry of an order confirming
a Reorganization Plan (and the Borrower pursuant to Section 1141(d)(4) of the
Bankruptcy Code, hereby waives any such discharge), (b) the Super-Priority Claim
granted to the Agent and Banks pursuant to the Financing Order, the Liens
granted to the Agent and Banks pursuant to the Financing Order, and the Security
Documents shall be ratified and shall be confirmed and continued, unaffected in
any manner by the entry of an order confirming a Reorganization Plan and (c) the
Borrower shall not propose or support any Reorganization Plan that is not
conditioned upon the payment in full in cash, on or prior to the
-58-
DIP Maturity Date, or if the Exit Facility Date occurs and the DIP Loans
hereunder convert to the Exit Loans as provided in Section 2.3 and Section 3.3
hereof, the Exit Maturity Date, of all of the Obligations and which does not
provide, with respect to Letters of Credit, the delivery by such date to the
Agent of all Letters of Credit for cancellation or the replacement of all
Letters of Credit by such date, and, with respect to Obligations arising
pursuant to Sections 16.1 and 16.2 hereof after such date, or the DIP Maturity
Date or Exit Maturity Date, as applicable, and thereafter for the payment in
full of all such Obligations in cash when due and payable.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent, the Surety, and the
Banks on the date hereof, on the Exit Facility Date, on the date of any
Revolving Credit Loan Request, on the date of each Letter of Credit Application,
on each Drawdown Date and on the date on which each Letter of Credit is issued,
extended or renewed that:
(a) The Borrower and each of its Subsidiaries is duly organized,
validly existing, and in good standing under the laws of its jurisdiction
of incorporation and is duly qualified and in good standing in every other
jurisdiction where the failure to be so qualified would have a Materially
Adverse Effect, and the execution, delivery and performance by each of the
Borrower and its Subsidiaries of each of the Loan Documents to which it is
a party (i) are within its corporate authority, (ii) upon entry of the
Financing Order will have been duly authorized, and (iii) do not conflict
with or contravene its Charter Documents.
(b) Upon entry of the Financing Order or, as the case may be, the
Confirmation Order, and the execution and delivery of each of the Loan
Documents by the respective parties thereto, each such Loan Document shall
constitute the legal, valid and binding obligation of the Borrower and each
of its Subsidiaries party thereto, enforceable in accordance with its
terms.
(c) No Affiliate of the Borrower or its Subsidiaries is a debtor in
the Case or a debtor in any other bankruptcy, insolvency, liquidation,
reorganization, dissolution of similar case or proceeding.
(d) Each of the Borrower and its Subsidiaries has good and marketable
title to all its material properties, subject only to Permitted Liens, and
possesses assets, including intellectual properties, franchises and
Consents, adequate for the conduct of its business as now conducted,
without known material conflict with any rights of others. Each of the
Borrower and its Subsidiaries maintains insurance from financially
responsible insurers, copies of the policies for which have previously
-59-
been delivered to the Agent and the Banks, covering such risks and in such
amounts and with such deductibles as are customary in the Borrower's and
its Subsidiaries' businesses and are adequate, and the Borrower and its
Subsidiaries have caused all insurers with respect to such insurance to
name the Agent as loss payee and additional insured under all such
insurance, with the Agent to receive from the insurers at least thirty (30)
days prior written notice of cancellation of any insurance.
(e) The Borrower's fiscal year and the fiscal year of each of its
Subsidiaries is the 12 month period ending on the Saturday closest to
January 31 of each year. Each of the fiscal quarters of such fiscal year
consists of a period of thirteen (13) fiscal weeks, divided into three (3)
fiscal months of 4, 5, and 4 fiscal weeks, respectively (in that order).
The Borrower has provided to the Agent, the Surety and the Banks its
audited consolidated Financials as at February 1, 1997, and for the fiscal
year then ended, and its unaudited monthly Financials as at the end of and
for each fiscal month thereafter through August 2, 1997. Such Financials
fairly present in all material respects the position of the Borrower as at
such dates and for such periods in accordance with GAAP consistently
applied (except that unaudited Financials are subject to year-end audit
adjustments and the provision of footnotes). The Borrower has also
provided to the Agent, the Surety and the Banks its annual and monthly
forecasts of the operations of the Borrower and such other financial
projections as the Agent and the Banks have reasonably requested, in each
case for the period from June 5, 1997, through January 30, 1999, and such
forecasts and projection have been prepared in good faith based upon
assumptions believed by the Borrower to be reasonable at the time of
preparation (it being understood that such projections are not a guaranty
of future performance and that actual results may differ, perhaps
materially, from the such projections). No information that has been
provided by the Borrower to the Agent, the Surety or any Bank contains any
material misstatement of fact or omits to state a material fact necessary
to make the statements contained therein not misleading in light of the
circumstances in which made.
(f) (i) Prior to the occurrence of the Exit Facility Date, since the
end of the fiscal periods covered by the Financials dated February 1, 1997
there has occurred no condition or event which would have a Materially
Adverse Effect, and (ii) from and after the Exit Facility Date, since the
delivery of the Financials reflecting the Reorganization Plan approved by
the Agent in connection with the Exit Facility Date, there has occurred no
condition or event which would have a Materially Adverse Effect, other than
those expressly contemplated by such Reorganization Plan;
-60-
(g) There are no legal or other proceedings or investigations pending
or threatened against the Borrower or any of its Subsidiaries before any
court, tribunal or regulatory authority which has not been resolved or
fully reserved for under the Reorganization Plan, if the Exit Facility Date
shall have occurred or which would, if adversely determined, alone or
together, have a Materially Adverse Effect.
(h) The Borrower (i) has from and after the Exit Facility Date paid
all taxes relating to the period prior to the commencement of the Case
(except as shall be deferred pursuant to the terms of the Reorganization
Plan) and (ii) has paid all taxes relating to the period subsequent to the
commencement of the Case, in each case as are due and payable (except those
being contested in good faith by appropriate proceedings and for which
adequate reserves have been taken) and has funded all employee payrolls
(including all required withholdings) as and when required.
(i) Except for entry of the Financing Order, or (with respect to the
Exit Facility Date) the Confirmation Order, the execution, delivery,
performance of its obligations, and exercise of its rights under the Loan
Documents by the Borrower, including borrowing under this Agreement and the
obtaining of Letters of Credit (i) do not require any Consents which have
not been obtained; and (ii) are not and will not be in conflict with or
prohibited or prevented by (A) any Requirement of Law, or (B) any Charter
Document, corporate minute or resolution, or any provision of any
post-petition instrument, post-petition agreement or assumed unexpired
lease or executory contract, or (with respect to all periods from and after
the Exit Facility Date) any other instrument, agreement, or contract, in
each case binding on it or affecting the property of the Borrower.
(j) The Borrower and each of its Subsidiaries is not in violation of
(i) any Charter Document, corporate minute or resolution, (ii) any
post-petition instrument, post-petition agreement or assumed unexpired
lease or executory contract, or with (with respect to all periods from and
after the Exit Facility Date) any other instrument, agreement, or contract,
in each case binding on it or affecting its property, in any such case in a
manner which could have a Materially Adverse Effect or (iii) any
Requirement of Law, in a manner which could have a Materially Adverse
Effect, including, without limitation, all applicable federal and state tax
laws, ERISA, OSHA and Environmental Laws. Neither the Borrower nor any of
its Subsidiaries is in violation of any collective bargaining agreement to
which such Person is a party in a manner which could have a Materially
Adverse Effect.
-61-
(k) With respect to all periods prior to the Exit Facility Date, in
view of the execution and delivery of the Loan Documents executed
previously and upon execution and delivery of this Agreement and the other
Loan Documents to be executed on the Effective Date and the entry of the
Financing Order, the Agent and the Banks shall have first-priority
perfected Liens in the Collateral, subject only to (i) Permitted Prior
Liens and (ii) Agreed Administrative Expense Priorities, with no financing
statements, mortgages or similar filings on record anywhere which conflict
with such first-priority Liens.
(l) With respect to all periods from and after the Exit Facility
Date, upon execution and delivery of this Agreement and the other Loan
Documents requested hereby, and upon the recording in the appropriate
recording offices of the applicable financing statements and the Mortgages
being executed by the Borrower and delivered to the Agent and the Banks
and, together with the Confirmation Order, appropriately recorded in
connection herewith, the Agent and the Banks shall have first priority
perfected Liens in the Collateral, subject only to Permitted Prior Liens,
with no financing statements, mortgages or similar filings on record
anywhere which conflict with such first-priority Liens.
(m) There are no Liens on any assets of any of the Borrower or its
Subsidiaries other than Permitted Liens, and there is no Indebtedness of
the Borrower or its Subsidiaries other than Indebtedness permitted by this
Agreement.
(n) Except as set forth on SCHEDULE 8(n) attached hereto, which such
Schedule may be updated from time to time in accordance with the provisions
of Section 10.1(k) hereof, the Borrower has no Subsidiaries and is not a
party to any partnership or joint venture. As of the Effective Date, no
Subsidiary of the Borrower has any assets.
(o) SCHEDULES 2.12 and 2.14 attached hereto set forth the account
numbers and locations of all bank accounts and investment accounts of the
Borrower and its Subsidiaries and accurately designate which such accounts
are payroll accounts and sales tax trust accounts and which are depository
accounts.
(p) SCHEDULE 8(p) attached hereto sets forth all retail stores,
distribution centers and all other locations at which assets, including
inventory, of the Borrower and its Subsidiaries are located. The assets of
the Borrower and its Subsidiaries are in the amounts and of the quality
previously represented by the Borrower to the Agent.
(q) SCHEDULE 8(q) attached hereto sets forth all patents, trademarks,
tradenames, service marks, registered copyrights, material
-62-
Consents, franchises, and applications for the foregoing of the Borrower
and its Subsidiaries, or which the Borrower or its Subsidiaries has the
right to use.
(r) SCHEDULE 8(r) attached hereto sets forth all Real Estate Leases.
True, correct and complete copies of the Real Estate Leases have been
delivered to the Term Loan Lender or the Surety prior to the date hereof.
(s) The proceeds of the Loans shall be used solely for working
capital and general corporate purposes and to finance a portion of the
Borrower's Reorganization Plan. The Borrower will obtain Letters of Credit
solely for general corporate purposes. No portion of any Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the
purpose of purchasing or carrying any "margin security" or "margin stock"
as such terms are used in Regulation U and X of the Board of Governors of
the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
(t) On and after the Exit Facility Date, there are no pre-petition or
administrative claims or Liens with respect to the Borrower or any of its
assets other than those discharged on or before the consummation of the
Reorganization Plan or those expressly contemplated by the Reorganization
Plan to survive the consummation thereof.
(u) For the period beginning on the Effective Date and ending on the
Exit Facility Date, the Financing Order has been entered, has not been
reversed, modified, amended or stayed, and remains in full force and
effect.
(v) On and after the Exit Facility Date, the Reorganization Plan,
complying with the provisions of Section 9.2.7, has become effective and
has been consummated in accordance with the terms thereof; the Confirmation
Order has been entered, has not been reversed, modified, amended or stayed
(except for modifications consented to or approved by the Agent in
writing), and remains in full force and effect; except as otherwise agreed
in writing by the Agent, all appeal periods relating thereto have expired;
and, except as otherwise agreed in writing by the Agent, no appeals
therefrom are outstanding.
(w) On the date hereof the Cure Payment Reserve is approximately
$1,100,000. The Cure Payment Reserve shall be at all times the number from
time to time set forth as such in each Borrowing Base Report.
(x) With respect to the Real Estate Leases, and subject to any
provisions of Section 10.2(m) and Section 10.6 hereof (as applicable) after
the Effective
-63-
Date, (i) each Real Estate Lease is valid and in full force and effect, and
the Borrower is the lessee under each Real Estate Lease and is in
possession of all of the premises demised by each Real Estate Lease; (ii)
none of the Real Estate Leases has been amended, modified, or supplemented
except by written instrument which has heretofore been delivered to the
Term Loan Lender or the Surety and except as may be expressly permitted
herein after the Effective Date; (iii) except as has heretofore been
disclosed in writing to the Term Loan Lender or the Surety, the Borrower
has no knowledge as of the date hereof or as of the Effective Date of any
failure, breach, default, or event of default by the lessor under any of
the Real Estate Leases in the performance of any of its material
obligations under such Real Estate Lease which such failure, breach,
default, or event of default has resulted or which in the reasonable
judgment of the Term Loan Lender would be expected to result in any
material adverse effect upon any of the Borrower's leasehold interests
under any such Real Estate Lease or the value of any such interest; (iv)
except with respect to the Borrower's failure to pay amounts owing under
the Real Estate Leases as of the Effective Date which in the aggregate do
not exceed the amount of the Cure Payment Reserve and which will have been
paid in full as of the Exit Facility Date (or such later date as may be
agreed upon in writing by the Borrower and the applicable lessor with the
written consent of the Majority Banks), and except with respect to any
defaults of the types referred to in Section 365(e)(1) of the Bankruptcy
Code existing as of the Effective Date, there is no existing breach,
default, or event of default on the part of the Borrower under any of the
Real Estate Leases which would (A) result in the lessor under any Real
Estate Lease having the right: (x) to terminate or cancel any such Real
Estate Lease; or (y) to accelerate the Borrower's monetary obligations
thereunder; or (B) in the reasonable judgment of the Term Loan Lender be
expected to result in any material adverse effect upon any of the
Borrower's leasehold interests under any such Real Estate Lease or the
value of any such interest; (v) the Borrower has not assigned, transferred,
pledged, mortgaged, or otherwise hypothecated any of the Real Estate
Collateral or any interest therein, other than to the Agent for the benefit
of the Banks and the Agent and to any holders of Permitted Liens therein;
(vi) except for licenses and subleases listed on SCHEDULE 8(x) attached
hereto and except for licenses to licensees of merchandise departments in
its retail stores expressly permitted by Section 10.2(p)(iv) hereof, the
Borrower has not sublet or licensed any of the premises demised under any
of the Real Estate Leases; and (vii) as of the date hereof and as of the
Effective Date, there has been no eminent domain proceeding, fire or
casualty or other event not constituting a failure to perform, breach,
default, or event of default by the Borrower or the lessor under any Real
Estate Lease which, either presently or with the passage of time or giving
of
-64-
notice, or both, in each such case, would entitle the lessor under any Real
Estate Lease to terminate or cancel such Real Estate Lease.
SECTION 9. CONDITIONS PRECEDENT.
SECTION 9.1. TO EFFECTIVE DATE OF DIP TERM LOAN. The obligation of the
Term Loan Lender to make the DIP Term Loan and for the Effective Date to occur
is subject to the satisfaction of the following conditions precedent:
SECTION 9.1.1. LOAN DOCUMENTS. Each of this Agreement and the DIP
Notes shall have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and
substance satisfactory to the Agent and each of the Banks.
SECTION 9.1.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the
Banks and the Surety shall have received from the Borrower a copy,
certified by a duly authorized officer of the Borrower to be true and
complete on the Effective Date, of each of its Charter Documents as in
effect on such date, and a legal existence and good standing certificate
issued by the Borrower's state of incorporation as of a recent date.
SECTION 9.1.3. CORPORATE ACTION. All corporate action necessary for
the valid execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents to which it is or is to become a
party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Agent and the Banks shall have been provided to the
Agent, the Surety and each of the Banks.
SECTION 9.1.4. INCUMBENCY CERTIFICATE. Each of the Banks and the
Surety shall have received from the Borrower an incumbency certificate,
dated as of the Effective Date, signed by a duly authorized officer of the
Borrower and giving the name and bearing a specimen signature of each
individual who shall be authorized: (i) to sign, in the name and on behalf
of the Borrower each of the Loan Documents to which the Borrower is or is
to become a party; (ii) to make Revolving Credit Loan Requests and
Conversion Requests and to apply for Letters of Credit; and (iii) to give
notices and to take other action on its behalf under the Loan Documents.
SECTION 9.1.5. PERFECTION CERTIFICATE AND TITLE SEARCH RESULTS. The
Agent shall have received from the Borrower an executed Perfection
Certificate stating such changes that have occurred since June 4, 1996,
that need to be reflected in such certificate. The Agent, the Surety and
the Term Loan Lender shall also have received the results of title searches
with respect to the Real Estate Collateral listed on SCHEDULE 9.1.5
attached hereto indicating in each case no Liens other than
-65-
Permitted Liens and otherwise in form and substance satisfactory to the
Agent, the Surety and the Term Loan Lender.
SECTION 9.1.6. FINANCING ORDER. The Bankruptcy Court shall
have entered an order in the Case (together with such Court's
financing orders dated June 3, 1996, and June 13, 1996, in the Case,
the "Financing Order") satisfactory in form and substance to the
Agent, the Surety and the Banks approving the transactions
contemplated herein and including, specifically but without limiting
the foregoing, (i) the grant to the Banks and the Agent of
super-priority status and a first-priority perfected Lien upon the
Collateral, subject to the matters referred to in Section 7.1 hereof,
pursuant to Section 364(c)(1), (2) and (3) of the Bankruptcy Code and
(ii) the grant to the Agent of limited relief from the automatic stay
of Section 362(a) of the Bankruptcy Code for the purpose of enabling
the Agent to make all filings and recordings and take all other
actions considered advisable by the Agent to protect, perfect, or
insure the priority of its security interest. The Financing Order
shall have authorized extensions of credit in the full amount of the
DIP Term Loan or otherwise in an amount satisfactory to the Banks and
the Agent, shall be in full force and effect, and (except for
modifications consented to or approved by the Agent in writing) shall
not have been reversed, modified, amended, or stayed.
SECTION 9.1.7. BORROWING BASE REPORT. The Agent shall have received
from the Borrower the most recently required Borrowing Base Report.
SECTION 9.1.8. OPINION OF COUNSEL. Each of the Banks, the
Agent and the Surety shall have received a favorable legal opinion
addressed to the Banks, the Agent and the Surety, dated as of the
Effective Date, in form and substance satisfactory to the Banks, the
Agent and the Surety, from ▇▇▇▇, ▇▇▇▇▇▇▇ & Cleveland, counsel to the
Borrower.
SECTION 9.1.9. PAYMENT OF FEES. The Borrower shall have paid to
the Agent for the account of the Term Loan Lender the Closing Fee as
provided in Section 6.1(f), together with all other fees and expense
reimbursements due and payable to the Agent or any Bank and all fees
and disbursements of the Agent's Special Counsel and of counsel to the
Surety for which the Borrower has been invoiced prior to the Effective
Date.
SECTION 9.1.10. LOAN REQUEST; DISBURSEMENT INSTRUCTIONS. The
Agent shall have received a loan request in respect of the DIP Term
Loan and disbursement instructions from the Borrower, indicating,
among other items, that the proceeds of the DIP Term Loan are to be
paid on the Effective Date.
-66-
SECTION 9.1.11. PROJECTIONS AND OTHER INFORMATION; QUALITY OF
ASSETS AND INVENTORY. The Agent shall have received and be satisfied
with all revisions, if any, made to the two-year financial projections
dated July 28, 1997 of the Borrower previously delivered to the Agent
and the Surety and all other information (financial or otherwise)
requested by the Agent and the Surety shall be in all respects
satisfactory to the Agent and the Surety. The Agent and the Surety
shall be satisfied that the assets of the Borrower and its
Subsidiaries are in the amounts and of the quality previously
represented by the Borrower to the Agent and the Surety, and the Agent
and the Surety shall have received such valuations, credit and
background checks and other reports, material and information
concerning such assets as shall satisfy the Agent and the Surety in
their sole discretion. In addition, the Agent and the Surety shall be
satisfied that the inventory of the Borrower is located at such places
and is in the amounts and of the quality and value previously
represented by the Borrower to the Agent and the Surety and the Agent
and the Surety shall have received such reports, material and other
information concerning the inventory and the Borrower's suppliers as
shall satisfy the Agent and the Surety in their sole discretion.
SECTION 9.1.12. NO MATERIAL ADVERSE CHANGE. The Agent shall be
satisfied that any changes to the Financials previously delivered to
the Agent, and any other events or circumstances that may have arisen
since the date of such Financials, would not be likely to have a
Materially Adverse Effect.
SECTION 9.1.13. PURCHASE AND GUARANTY AGREEMENT. The Borrower
shall have executed and delivered to the parties to the Purchase and
Guaranty Agreement the Borrower's acknowledgement and agreement
thereto. All of the conditions precedent set forth in Purchase and
Guaranty Agreement shall have been satisfied, and the Purchase and
Guaranty Agreement shall have become effective.
SECTION 9.2. TO THE OCCURRENCE OF THE EXIT FACILITY DATE. The Banks shall
have no obligation to make any Loan on or after the DIP Maturity Date, the Agent
will not have any obligation to issue, extend or renew any Letter of Credit on
or after the DIP Maturity Date, the DIP Loans outstanding on the DIP Maturity
Date will not convert into Exit Loans as set forth in Section 2.3(a), and
Section 3.3 hereof, and the Obligations shall become due and payable on the DIP
Maturity Date unless each of the following conditions precedent are satisfied:
SECTION 9.2.1. LOAN DOCUMENTS Each of the Mortgages and the
other Security Documents, the Exit Notes and Ratification Certificate
and any other Loan Documents not previously executed shall have been
duly
-67-
executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to the
Agent and each of the Banks.
SECTION 9.2.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of
the Banks and the Surety shall have received from the Borrower a copy,
certified by a duly authorized officer of the Borrower to be true and
complete on the Exit Facility Date, of each of its Charter Documents
as amended on such date pursuant to the Reorganization Plan with the
consent of the Agent and in effect on such date, and a legal existence
and good standing certificate issued by the Borrower's state of
incorporation as of a recent date.
SECTION 9.2.3. CORPORATE ACTION. All corporate action necessary
for the valid execution, delivery and performance by the Borrower of
the Loan Documents to which it is or is to become a party shall have
been duly and effectively taken, and evidence thereof satisfactory to
the Agent shall have been provided to the Agent, the Surety and each
of the Banks.
SECTION 9.2.4. INCUMBENCY CERTIFICATE. Each of the Banks and
the Surety shall have received from the Borrower an incumbency
certificate, dated as of the Exit Facility Date, signed by a duly
authorized officer of the Borrower and giving the name and bearing a
specimen signature of each individual who shall be authorized: (i) to
sign, in the name and on behalf of the Borrower each of the Loan
Documents to which the Borrower is or is to become a party; (ii) to
make Revolving Credit Loan Requests and Conversion Requests and to
apply for Letters of Credit; and (iii) to give notices and to take
other action on its behalf under the Loan Documents.
SECTION 9.2.5. VALIDITY OF LIENS. The Mortgages, together with
the Confirmation Order, and the other Security Documents shall be
effective to create in favor of the Agent for the benefit of the Banks
a legal, valid and enforceable security interest in and Lien upon the
Collateral having such priority as is contemplated by this Agreement.
All filings, recordings, deliveries of instruments and other actions
and arrangements necessary or desirable in the opinion of the Agent to
protect and preserve such security interests shall have been duly
effected. The Agent shall have received evidence thereof in form and
substance satisfactory to the Agent.
SECTION 9.2.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS.
The Agent shall have received from the Borrower an updated Perfection
Certificate and the results of updated Lien and title searches,
including UCC, PTO, and tax lien searches with respect to the
-68-
Collateral, and title searches with respect to the Real Estate Collateral,
indicating in each case no Liens other than Permitted Liens and otherwise
in form and substance satisfactory to the Agent and the Surety.
SECTION 9.2.7. REORGANIZATION PLAN AND CONFIRMATION ORDER.
(a) The final terms of the Reorganization Plan to be consummated
and the order of the Bankruptcy Court approving such Reorganization
Plan (the "Confirmation Order") shall be satisfactory to the Agent and
the Surety in all respects including, without limitation, the
requirement that, except as approved by the Agent and the Surety, all
prepetition claims against and all interests in the Borrower shall be
discharged and/or extinguished pursuant to the Reorganization Plan and
that no Obligations hereunder or Liens in favor of the Agent or the
Banks shall be discharged until all such Obligations shall be paid in
full in cash and that all such claims and Liens shall survive the
discharge of the Borrower under Section 1141 of the Bankruptcy Code.
The Bankruptcy Court shall have approved any amendments or
modifications to the Reorganization Plan or the Confirmation Order and
entered any and all related orders requested or approved by the Agent
and the Surety in connection therewith, and no other amendments or
modifications thereto shall have occurred. All conditions precedent
to the consummation of the Reorganization Plan shall have been met (or
the waiver thereof shall have been consented to by the Agent and the
Surety) and the substantive consummation of the Reorganization Plan
shall have occurred or shall be scheduled to occur but for the initial
Exit Loans to be made on the Exit Facility Date. The Agent and the
Surety shall be satisfied with the equity ownership of the Borrower,
the composition of the Borrower's board of directors, and the key
executive and financial management of the Borrower. The Confirmation
Order shall not have been reversed, modified, amended, or stayed,
shall be in full force and effect, and, unless otherwise agreed by the
Agent and the Surety, all appeal periods relating to the Confirmation
Order shall have expired, and, unless otherwise agreed by the Agent
and the Surety, no appeals from the Confirmation Order shall be
outstanding. Except as consented to by the Agent and the Surety, or
set forth in Section 9.2.7(b), the Bankruptcy Court's retention of
jurisdiction under the Confirmation Order shall not govern the
enforcement of the Loan Document or Security Documents from and after
the Exit Facility Date, or any rights or remedies relating thereto.
With respect to provisions of this Agreement which permit matters
provided for in the Reorganization Plan, such permission is granted
only to the extent such matters are clearly disclosed and expressly
provided for in the Reorganization Plan and only to the extent
-69-
the Reorganization Plan is expressly approved in writing by the Agent and
the Surety on or prior to the Exit Facility Date.
(b) The Reorganization Plan that has been confirmed and the
Confirmation Order shall also include, at a minimum, the following:
(i) a provision that in any future bankruptcy case in which the
Borrower is a debtor, the Agent shall have the right after an Event of
Default hereunder and otherwise in compliance herewith to cause the
sale or other disposition of the Real Estate Collateral by directing
the Borrower or any trustee appointed in such a case to assume, assign
and sell any or all of such Real Estate Collateral pursuant to
sections 363 and 365 of the Bankruptcy Code after appropriate notice
and a hearing, with the Agent's first priority Lien and security
interest to attach to the proceeds of such sale; (ii) a provision that
on the effective date of the Reorganization Plan, the Borrower shall
issue to the Term Loan Lender or its nominee, (A) the Warrants, which
will include the right to acquire up to twenty percent (on a fully
diluted basis as set forth therein) of each class of equity securities
of the reorganized Borrower for an exercise price based upon a total
equity valuation for the Borrower of $20,000,000, subject to
adjustment as set forth therein, and (B) shares (the "Special Shares")
of a special class of common stock of the reorganized Borrower equal
to a nominal percentage of the total common stock of the reorganized
Borrower which shall entitle the holders of such Special Shares to the
same rights as all holders of all other shares of common stock of the
reorganized Borrower and, in addition thereto, the special voting
rights set forth in Article IV of the Amended and Restated Certificate
of Incorporation of the Borrower attached hereto as EXHIBIT I; (iii) a
provision that on the effective date of the Reorganization Plan, all
of the Real Estate Leases are assumed; and (iv) (with respect to the
Confirmation Order only) a finding that all conditions to the
assumption of the Real Estate Leases have been satisfied as required
by Section 365(b) of the Bankruptcy Code.
SECTION 9.2.8. LANDLORD LIEN WAIVERS; ETC. The Borrower shall
have used its best efforts to obtain and deliver to the Agent Landlord
Waivers with respect to all leaseholds of Real Estate on which
inventory will be located, and the Borrower shall have delivered with
respect to all such leases without such Landlord Waivers which
constitute Specified Leases an officer's certificate of the Borrower
stating the current monthly rental obligations with respect to each
such lease and a calculation in reasonable detail of the maximum
potential claim of such nonwaiving landlord. The Borrower shall have
obtained and delivered to the Agent a waiver of all claims against the
Collateral in form and substance satisfactory to the Agent from
Assembly with respect to the Borrower's distribution facility located
in Kent, Washington and from any and all
-70-
"inventory consolidators" and other Persons in possession of inventory of
the Borrower in a similar capacity.
SECTION 9.2.9. CERTIFICATES OF INSURANCE. The Agent shall
have received (to the extent not previously delivered on the Effective
Date) (i) a certificate of insurance from an independent insurance
broker dated as of the Exit Facility Date, identifying insurers, types
of insurance, insurance limits, and policy terms, and otherwise
describing the insurance obtained in accordance with the provisions of
this Agreement and the Security Agreement, naming the Agent as loss
payee and additional insured, as applicable, and (ii) certified copies
of all policies evidencing such insurance (or certificates therefore
signed by the insurer or an agent authorized to bind the insurer).
SECTION 9.2.10. BORROWING BASE REPORT. The Agent shall have
received from the Borrower a Borrowing Base Report dated as of the
Exit Facility Date.
SECTION 9.2.11. OPINION OF COUNSEL. Each of the Banks, the
Surety and the Agent shall have received a favorable legal opinion
addressed to the Banks, the Surety and the Agent, dated as of the Exit
Facility Date, in form and substance satisfactory to the Banks, the
Surety and the Agent, from ▇▇▇▇, ▇▇▇▇▇▇▇ & Cleveland, counsel to the
Borrower.
SECTION 9.2.12. PAYMENT OF FEES. The Borrower shall have paid
to the Banks or the Agent, as appropriate, the initial portion of all
facility fees payable on the Exit Facility Date pursuant to the terms
of the Fee Letter as provided in Section 6.1(a) hereof, together with
all other fees and expense reimbursements due and payable to the Agent
or any Bank, and all fees and disbursements of the Agent's Special
Counsel, and of counsel to the Surety for which the Borrower has been
invoiced prior to the Exit Facility Date.
SECTION 9.2.13. AVAILABLE CASH AND BORROWING CAPACITY; AGENCY
ACCOUNT AGREEMENTS. After giving effect to all payments required to
be made in accordance with the Reorganization Plan and all borrowings
hereunder related thereto, the Borrower shall have cash and Exit Loan
borrowing availability (giving effect to the Borrowing Base
limitations hereof) of not less than $500,000. The Agent shall have
received the Agency Account Agreements executed by each of the
depository banks (other than with respect to payroll and sales tax
trust accounts) listed on SCHEDULE 2.12 hereto; and the Agent shall
have received all other documentation required by Section 2.12 hereof.
The Lock Box Agreement and the arrangements and documentation referred
to in Sections 2.12 and 2.14 hereof shall be in full force and effect.
The Agent must be satisfied that
-71-
all cash, checks, and other proceeds of Collateral are being deposited
and handled in accordance with the procedures provided in Sections 2.12
and 2.14 hereof and shall otherwise be satisfied with the Borrower's cash
management system.
SECTION 9.2.14. POST-CONFIRMATION CAPITAL STRUCTURE AND LIABILITIES.
The Agent shall be satisfied with all liabilities (including contingent
liabilities) and post-confirmation litigation risks that are to survive the
consummation of the Reorganization Plan and with the adequacy of
appropriate accounting reserves therefor. The Agent shall be satisfied
with the financial condition, capital structure, corporate structure,
assets, liabilities and financial projections (including cash flow) of the
Borrower and its Subsidiaries and the terms of all capital stock and
Indebtedness. No event or circumstances shall have arisen that would in
the reasonable opinion of the Agent or any Bank have a Materially Adverse
Effect.
SECTION 9.2.15. EXIT TO OCCUR CONCURRENT WITH DIP MATURITY DATE. The
Exit Facility Date must occur, if at all, on the DIP Maturity Date. The
Effective Date must have occurred previously, all conditions precedent set
forth in Section 9.1 hereof shall have been and remain satisfied, and the
Total DIP Commitment shall not have been terminated (whether by the Agent
or the Banks in accordance with the provisions of Section 11 or by the
Borrower in accordance with the provisions of Section 2.5 or otherwise),
such that there is a conversion of outstanding DIP Loans to Exit Loans on
the Exit Facility Date.
SECTION 9.2.16. WARRANT DOCUMENTS. The Warrant Documents shall have
been executed and delivered in favor of the Term Loan Lender or its
nominee, and the Special Shares shall have been issued to the Term Loan
Lender or its nominee.
SECTION 9.2.17. MANAGEMENT CONTRACTS. The management contracts of
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ with the Borrower shall have been
extended until the end of fiscal year 2001, upon terms acceptable to the
Term Loan Lender and the Surety.
SECTION 9.2.18. CURE PAYMENTS. All conditions to assumption of the
Real Estate Leases shall have been satisfied, including the making of any
cure payments on the Exit Facility Date (or such later date as may be
agreed upon in writing by the Borrower and the applicable lessor with the
written consent of the Majority Banks), all as required by Section 365(b)
of the Bankruptcy Code.
SECTION 9.2.19. TITLE INSURANCE. The Agent shall have received
a Title Policy with respect to the Mortgages covering the Real Estate
Leases
-72-
listed on SCHEDULE 9.2.19 (or commitments to issue such policy, with all
conditions to issuance of the title policy deleted by an authorized agent
of the title insurance company) together with proof of payment (or
provision therefor) of all fees and premiums for such policy.
SECTION 9.3. TO EACH LOAN AND ISSUANCE, EXTENSION OR RENEWAL OF LETTERS OF
CREDIT. The obligation of the Banks to make any Loan or of the Agent to issue,
extend or renew any Letter of Credit and the conversion of the DIP Loans to Exit
Loans as set forth in Section 2.4(a) and Section 3.3 hereof, is subject to the
satisfaction of the following further conditions precedent:
(a) Each of the representations and warranties of the Borrower
and its Subsidiaries to the Agent and the Banks herein or in any of
the other Loan Documents or any document, certificate or other paper
or notice in connection herewith shall be true and correct in all
material respects on the date of such extension of credit, except to
the extent that such representations and warranties expressly relate
to a prior date, in which case they shall be true and correct in all
materials respects as of such earlier date. Each request by the
Borrower for, and acceptance by the Borrower of, each extension of
credit shall be deemed to be a representation and warranty by the
Borrower that the applicable conditions precedent in Section 9 have
been satisfied and that, after giving effect to such extension of
credit, the Borrower shall continue to be in compliance with the
provisions hereof relating to the Borrowing Base restrictions on the
Total Revolver Outstandings.
(b) No Default or Event of Default shall have occurred and be
continuing or shall result from such extension of credit.
(c) All proceedings in connection with the transactions contemplated
hereby shall be in form and substance reasonably satisfactory to the Agent,
the Surety and the Banks, and the Agent, the Surety and the Banks shall
have received all information and documents as they shall have reasonably
requested. No change shall have occurred in any law or regulation or in
the interpretation thereof that in the reasonable opinion of the Agent or
any Bank would make it unlawful for such Bank to make such Loan or the
Agent to issue, extend or renew such Letter of Credit.
(d) With respect to DIP Loans and Letters of Credit to be issued,
extended or renewed prior to the DIP Maturity Date only, the Financing
Order shall be in full force and effect and (except for modifications
consented to or approved by the Agent and the Surety in writing) shall not
have been reversed, modified, amended or stayed. If the Financing Order is
the subject of a pending appeal in any respect, none of such
-73-
Financing Order, the making of the DIP Loans, the issuance, extension or
renewal of any Letters of Credit prior to the Exit Facility Date, or the
performance by the Borrower of any of its obligations under any of the Loan
Documents shall be the subject of a presently effective stay pending
appeal. The Borrower, the Agent and the Banks shall be entitled to rely in
good faith upon the Financing Order notwithstanding objection thereto or
appeal therefrom by any interested party. The Borrower, the Agent and the
Banks shall be permitted and required to perform their respective
obligations in compliance with this Agreement notwithstanding any such
objection or appeal unless the Financing Order has been stayed by a court
of competent jurisdiction.
(e) Except as otherwise provided in Section 2.7 hereof, the Agent
shall have received a Revolving Credit Loan Request or Letter of Credit
Application with respect to the Loan or Letter of Credit requested. The
Agent shall have received the most recent Borrowing Base Report required
hereunder as provided in Section 10.1(a)(iv).
(f) From and after the Exit Facility Date only, the Confirmation
Order shall be in full force and effect, shall not have been reversed,
modified or amended in any material respect (except for modifications
consented to or approved by the Agent and the Surety in writing), shall not
(unless otherwise agreed by the Agent) be subject to an unexpired appeals
period, and shall not (unless otherwise agreed by the Agent) be the subject
of any pending appeal.
(g) All fees and expense reimbursements due and payable to the Agent,
the Surety or any Bank hereunder shall have been paid to the Agent or (as
the case may be), the Surety or such Bank.
(h) No suit or action against any Bank, the Agent or the Surety shall
have been commenced by any official committee in the Case or any other
Person (exclusive of the Borrower, any Subsidiaries of the Borrower) which
suit or action asserts any claim or legal or equitable remedy contemplating
subordination of any claim or Lien of any of the Banks or the Agent.
SECTION 9.4. TO EACH EXTENSION OF THE TERM LOAN MATURITY DATE. The Term
Loan Maturity Date may be extended by Borrower for two (2) consecutive one
year periods subject to the satisfaction, for each such extension, of the
following conditions precedent:
(a) The Borrower shall have made a request in writing for such
extension to the Term Loan Lender and the Surety. The Term Loan Lender and
the Surety shall have been satisfied with the Collateral values supporting
the Term Loan as determined by each of the Term Loan Lender and the Surety,
based on Collateral audits, appraisals and other information obtained by
the Term
-74-
Loan Lender or the Surety in connection with any such extension request.
The Term Loan Lender and the Surety shall have made such determination
regarding collateral values based upon standards and procedures that do not
vary unreasonably from the general standards and procedures used in
connection with the Term Loan Lender's original decision to make, and the
Surety's original decision to act as surety for, the Term Loan. If the
Term Loan Lender and the Surety are so satisfied, they shall have so
indicated in writing to the Borrower by the later to occur of (i) 60 days
following receipt by the Term Loan Lender and the Surety of such request,
or (ii) 90 days prior to the then scheduled Term Loan Maturity Date, but in
no event beyond the date of the then scheduled Term Loan Maturity Date.
(b) Each of the representations and warranties of the Borrower and
its Subsidiaries to the Agent and the Banks herein or in any of the other
Loan Documents or any document, certificate or other paper or notice in
connection herewith shall be true and correct in all material respects on
the date of such proposed extension, except to the extent that such
representations and warranties expressly relate to a prior date, in which
case they shall be true and correct in all materials respects as of such
earlier date.
(c) No Default or Event of Default shall have occurred and be
continuing or shall result from such proposed extension.
(d) The Exit Maturity Date is extended for at least the same period.
(e) All fees due and payable to the Agent, the Surety or any Bank
hereunder shall have been paid to the Agent or (as the case may be), the
Surety or such Bank.
SECTION 10. COVENANTS.
SECTION 10.1. AFFIRMATIVE COVENANTS. The Borrower agrees that so long as
there are any Loans or Letters of Credit outstanding and until the termination
of the Total DIP Commitment or, if the Exit Facility Date occurs, the Total Exit
Commitment and the payment and satisfaction in full in cash of all of the
Obligations, the Borrower will, and where applicable the Borrower will cause
each of its Subsidiaries to, comply with its obligations as set forth throughout
this Agreement and to:
(a) furnish the Agent, the Banks and (unless otherwise indicated) the
Surety:
-75-
(i) as soon as available but in any event within ninety-five
(95) days after the close of each fiscal year, (A) its audited
consolidated Financials for such fiscal year, together with the
unqualified audit opinion letter with respect thereto of the
Borrower's accountants (other than, with respect only to periods prior
to the Exit Facility Date, such accountants' customary qualification
consistent with past practice with respect to the Borrower's ability
during the pendency of the Case to continue as a going concern),
together with a statement from such accountants as to the absence, to
their knowledge, of any Event of Default, and (B) its unaudited
consolidating Financials for such fiscal year; with such accountants
at all times to be one of the national, independent certified public
accounting firms presently referred to as the "Big Six" or such other
independent certified public accounting firm of recognized standing as
shall have been approved by the Agent;
(ii) as soon as available but in any event within thirty-five
(35) days after the end of each fiscal month and within fifty (50)
days after the end of each fiscal quarter, (A) its unaudited
consolidated and consolidating Financials for such period, and (B)
prior to the Exit Facility Date, an itemized accounting of all amounts
paid or credited to the Escrow Account during each such monthly or
quarterly period, in each case certified by its chief financial
officer;
(iii) together with its Financials described in clauses (i) and
(ii) above, a certificate of the Borrower in the form attached hereto
as EXHIBIT J (the "Compliance Certificate") setting forth computations
demonstrating compliance with the Borrower's and its Subsidiaries
financial covenants set forth herein, containing (in the case of the
Financials described in clause (i) above) computations in reasonable
detail of the Applicable Pricing as to be determined on the applicable
Adjustment Date pertaining to such Financials, and in each case
describing and evidencing in reasonable detail any and all applicable
reconciliations to reflect changes in GAAP since February 1, 1997 and
the differences between GAAP and the accounting principles, methods,
interpretations, and procedures utilized by the Borrower in
determining compliance with Section 10.2(b), Section 10.2(c), Section
10.3, and Section 10.4 hereof, and certifying that no Default or Event
of Default has occurred, or if it has, describing the actions taken by
the Borrower and its Subsidiaries with respect thereto;
-76-
(iv) on Tuesday of each week (or, if such Tuesday is not a
Business Day, on the first Business Day thereafter), to the Agent and
the Banks, and (only if requested by the Surety) the Surety, and at
such other time as the Agent, any Bank or the Surety may reasonably
request, a Borrowing Base Report with respect to the prior business
week (including and ending on the immediately preceding Saturday) or
such other applicable period together with, in the case of any
Borrowing Base Report delivered immediately following the end of any
fiscal month, such specific inventory pledges or collateral
designations as of the end of such month as the Agent, any Bank or the
Surety may have reasonably requested;
(v) promptly upon the filing thereof copies of all material
pleadings, notices, orders and other papers filed in the Case;
(vi) prior to the commencement of each fiscal year of the
Borrower, the Borrower's updated forecasts and projections of future
financial performance from and including such fiscal year through the
last day of the Borrower's fiscal year ending on or about January 29,
2000 or any subsequent fiscal year in which the Exit Maturity Date is
scheduled to occur;
(vii) within five (5) days after the filing or mailing thereof,
copies of all materials of a financial nature filed with the
Securities and Exchange Commission or sent to the stockholders of the
Borrower;
(viii) promptly following receipt thereof by the Borrower,
copies of all accountants management letters (if any) and related
recommendations (if any) received by the Borrower; and
(ix) from time to time such other information concerning the
Borrower, its Subsidiaries, if any, or the Case as the Agent, any Bank
or the Surety may reasonably request.
(b) keep true and accurate books of account in accordance with GAAP,
subject to year-end audit adjustments in the case of monthly and quarterly
Financials (other than those delivered with respect to the Borrower's full
fiscal year), maintain its current fiscal year and its current fiscal
quarters, and permit the Banks and the Surety through the Agent or any of
the Banks' and the Surety's other designated representatives to inspect the
Borrower's or its Subsidiaries' premises during normal business hours, to
examine and be advised as to the Borrower's and its Subsidiaries' business
records upon the request of the Agent, the Surety, or any Bank, permit from
time to time, at the
-77-
Borrower's expense to the extent provided in Section 16.1 hereof, the
Agent's commercial finance examiners, independent collateral auditors
(absent the continuance of a Default, independent collateral audits not to
exceed three (3) times in any twelve-month period) and examiners, and
independent appraisers (absent the continuance of a Default, independent
appraisals not to exceed two (2) times in any twelve-month period) to
conduct periodic commercial financial examinations, collateral audits
conducted by The Asset Support Group or other auditors acceptable to the
Agent, liquidation analyses conducted by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. or other
liquidation specialists chosen by and acceptable to the Agent and
appraisals of Real Estate by appraisers or brokers chosen by and approved
by the Term Loan Lender from time to time, in each case at the Borrower's
expense subject to Section 16.1 hereof, in each case in order to review and
verify the components of the Borrowing Base, and examinations, collateral
audits and liquidation analyses of the inventory components included in the
Borrower Base, which appraisals, audits, examinations, and analyses may
relate to appropriate adjustments in the Borrowing Base formula, advance
rates, and components and may indicate whether the information set forth in
the Borrowing Base Report most recently delivered is accurate and complete
in all materials respects based upon a review by such applicable Persons of
the inventory (including verification as to value, location, type and
appropriate shrink reserves), as well as audits, examinations, appraisals
and liquidation analyses of all other assets of the Borrower and its
Subsidiaries and all systems and procedures of the Borrower and its
Subsidiaries, including those related to cash management, and permit the
Agent and, if accompanied by a representative of the Agent, the Banks or
the Surety to communicate directly with the Borrower's independent
certified public accountants concerning the business, financial condition
and other affairs of the Borrower and its Subsidiaries;
(c) (i) maintain its and its Subsidiaries' corporate existence,
business and assets, (ii) keep its and its Subsidiaries' business and
assets adequately insured with insurers, types of insurance, insurance
limits and policy limits satisfactory to the Agent, with the Agent to be
named as loss payee and additional insured under all insurance and the
Agent entitled to receive from each insurer at least thirty (30) days prior
written notice of cancellation of any insurance, (iii) maintain its and its
Subsidiaries' chief executive offices in the United States, (iv) continue
and cause each of its Subsidiaries' to continue to engage in the same
respective businesses now conducted by them, (v) fund its payroll and that
of its Subsidiaries (including all withholdings) as and when required, and
(vi) prior to the Exit Facility Date, pay all post-petition taxes as and
when due and payable, except where contested in good faith by appropriate
proceedings for which adequate reserves have been
-78-
taken, and, on and after the Exit Facility Date, pay all taxes as and
when due and payable, after taking into account the deferral of any
priority tax claims under the Reorganization Plan and except where
contested in good faith by appropriate proceedings for which adequate
reserves have been taken, and (vii) comply with all other Requirements of
Law, including ERISA, OSHA and Environmental Laws where the failure so to
comply could have a Materially Adverse Effect;
(d) notify the Agent, the Surety and the Banks promptly in writing of
(i) the occurrence of any Default or Event of Default, (ii) any
noncompliance with ERISA, OSHA or any Environmental Law or proceeding in
respect thereof which could have a Materially Adverse Effect, (iii) any
change of address, (iv) any threatened or pending litigation or similar
proceeding affecting the Borrower or any of its Subsidiaries which if
adversely determined could have a Materially Adverse Effect, or any
material change in any such litigation or proceeding previously reported,
(v) any notice which the Borrower or any of its Subsidiaries has received
under any material supply or other contract terminating or threatening to
terminate the provisions of supply or the provisions of other goods or
services or otherwise claiming a default thereunder and (vi) any material
post-petition or post-Exit Facility Date claims against any assets or
properties of the Borrower or any of its Subsidiaries constituting
Collateral;
(e) use the proceeds of the Loans solely to provide additional funds
for working capital requirements and general corporate purposes and to
finance a portion of the Borrower's Reorganization Plan, and use Letters of
Credit solely for working capital and general corporate purposes approved
by the Revolving Credit Banks for Letters of Credit. The proceeds of the
Loans and Letters of Credit shall not be used for the carrying of "margin
security" or "margin stock" within the meaning of Regulations U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224;
(f) unless otherwise directed or approved by the Agent in writing,
cause all cash, checks and other payments or proceeds on or of Non-Real
Estate Collateral held or received by it (other than cash permitted to be
held overnight at the Borrower's stores by the provisions of Section 2.12
or, as applicable, Section 2.14 hereof), immediately upon receipt and in
the identical form received, to be paid directly into the Lock Box Account
or a deposit account which is subject to an Agency Account Agreement, or
(to the extent permitted by Section 2.14 hereof) a deposit account which is
set forth on SCHEDULE 2.14 hereto, in each case in accordance with the
requirements of Sections 2.12 or, as applicable 2.14 hereof.
Notwithstanding anything to the contrary, the Operating Account and the
Lock Box Account shall at all
-79-
times be maintained with the Agent or another financial institution
acceptable to the Agent, and, except as may be agreed by the Agent, the
Borrower shall not maintain any other deposit accounts, except for (A) the
deposit accounts described in Section 2.12 hereof for which an Agency
Account Agreement is in effect as provided in Section 2.12 hereof, (B) the
payroll accounts (whether for payroll or for applicable withholding tax)
and sales tax accounts designated as such on SCHEDULE 2.12 hereto and (C)
prior to the date which is 90 days after the Exit Facility Date, the
Seafirst Account and the other deposit accounts described in Section 2.14
hereof; nor shall the Borrower maintain investment accounts except as
permitted by Section 10.2 hereof; pursuant to the Agency Account Agreements
the Borrower shall, except as may be agreed by the Agent, cause all such
funds as are from time to time in its deposit accounts (other than funds in
its payroll and tax accounts to the extent otherwise permitted by Section
10.2(k)(iii) hereof, and other than the relevant amounts otherwise allowed
to remain in its deposit accounts as at the end of any day as provided in
Section 2.12 or, as applicable, Section 2.14 hereof) to be swept daily from
all such applicable accounts to the Lock Box Account (whether directly or,
to the extent permitted by Section 2.14, as applicable, through Seafirst);
and otherwise maintain at all times cash management systems satisfactory to
the Agent;
(g) notify the Agent, the Surety and the Banks prior to rejecting any
Real Estate Lease or other contract in the Case or making any motion in the
Case to reject any Real Estate Lease or any contract, setting forth in such
notice the reasons why such rejection (i) will be in the best interests of
the Borrower and (ii) will not have a Materially Adverse Effect, and avoid
proceeding with such rejection if in the reasonable opinion of the Agent,
the Surety or any Bank such rejection will have a Materially Adverse
Effect; and
(h) pay or cause to be paid punctually the principal and interest on
the Loans, all Reimbursement Obligations, all facility fees, commitment
fees, Letters of Credit fees, administrative fees and all fees and expenses
of any consultants, appraisers and advisors retained by the Agent or the
Surety in connection herewith, subject to Section 16.1 hereof, in each case
in accordance with the terms of this Agreement and the other Loan
Documents;
(i) keep its inventory only at Permitted Inventory Locations, unless
the Agent shall have been given thirty (30) days prior written notice of
each new store and other inventory locations and shall have taken all steps
necessary or advisable to perfect a security interest in such inventory or
such location in favor of the Agent for the benefit of the Banks shall have
been taken, and give the Agent, the Surety and the
-80-
Banks prior written notice of all store or other retail outlet closings in
accordance with Section 10.2(m) hereof;
(j) if the Borrower shall ever have, acquire or create any Subsidiary
(other than the one Subsidiary existing on the Effective Date) it shall
immediately (A) notify the Agent, the Surety and the Banks thereof, (B)
take all steps as may be necessary or advisable in the opinion of the Agent
to pledge to the Agent for the benefit of the Banks all of the capital
stock of such Subsidiary pursuant to a stock pledge agreement in form and
substance satisfactory to the Agent and the Banks, which such stock pledge
agreement shall be a Security Document hereunder, (C) cause such Subsidiary
to guaranty all of the Obligations hereunder pursuant to a guaranty in form
and substance satisfactory to the Agent and the Banks, which such guaranty
shall be a Security Document hereunder, (D) cause such Subsidiary to take
all steps as may be necessary or advisable in the opinion of the Agent to
grant to the Agent for the benefit of the Banks a first priority security
interest in all of its assets as collateral security for such guaranty,
pursuant to security documents, mortgages, pledges and other documents in
form and substance satisfactory to the Agent, each of which documents shall
be Security Documents hereunder, and, (E) deliver to the Agent and the
Banks an updated SCHEDULE 8(n) adding such new Subsidiary thereto;
(k) with respect to the Real Estate Leases, and subject to the
provisions of Section 10.2(m) and Section 10.6 hereof (as applicable) after
the Effective Date, (i) comply with all material requirements and perform
all material obligations under each Real Estate Lease if the failure to
comply or perform would (A) result in the lessor under any Real Estate
Lease having the right: (x) to terminate or cancel any such Real Estate
Lease; or (y) to accelerate the Borrower's monetary obligations thereunder;
or (B) in the reasonable judgment of the Term Loan Lender, be expected to
result in any material adverse effect upon any of the Borrower's leasehold
interests under any such Real Estate Lease or the value of any such
interest, (ii) comply with all material Requirements of Law if the failure
to comply would (A) result in the lessor under any Real Estate Lease having
the right: (x) to terminate or cancel any such Real Estate Lease; or (y) to
accelerate the Borrower's monetary obligations thereunder; or (B) in the
reasonable judgment of the Term Loan Lender, be expected to result in any
material adverse effect upon any of the Borrower's leasehold interests
under any such Real Estate Lease or the value of any such interest, (iii)
to the extent permitted under each Real Estate Lease and, if not so
permitted, use its reasonable best efforts to, designate the Agent as a
party to receive all notices and other communications from the lessor under
each Real Estate Lease, except routine invoices for and notices of
non-delinquent rent and other
-81-
charges, or routine operational matters; (iv) transmit in any event to the
Agent promptly upon receipt, by facsimile (with a copy by overnight
delivery) and otherwise as provided in Section 16.3 hereof, a complete copy
of each and every notice or other communication from the lessor under each
Real Estate Lease received by the Borrower, except routine invoices for and
notices of non-delinquent rent and other charges, or routine operational
matters; (v) exercise in a timely manner each and every renewal or
extension option contained in each and every Real Estate Lease, except as
may otherwise be agreed in writing by the Term Loan Lender in its sole
discretion; and (vi) except with respect to repair and maintenance
responsibilities which are assumed by the lessor the Borrower is being
required by the Term Loan Leunder the applicable Real Estate Lease, keep
the Real Estate Collateral relating thereto in good and workable order and
condition; and
(l) if there shall occur any default under any term, covenant or
provision of any Real Estate Lease for which there is an applicable cure
period, and if the Term Loan Lender shall give notice to the Borrower that
nder to cure such default, then the Borrower shall cure such default before
the expiration of five Business Days from the date on which the Agent or
the Term Loan Lender gives notice to the Borrower to cure such default, or
before two Business Days prior the expiration of such cure period, if
earlier; EXCLUDING, HOWEVER, from the operation of this paragraph (l), any
default under such Real Estate Lease (i) which would not (A) result in the
lessor under any Real Estate Lease having the right: (x) to terminate or
cancel any such Real Estate Lease; or (y) to accelerate the Borrower's
monetary obligations thereunder; or (B) in the reasonable judgment of the
Term Loan Lender, be expected to result in any material adverse effect upon
any of the Borrower's leasehold interests under any such Real Estate Lease
or the value of any such interest and (ii) for which the Borrower is taking
all reasonable steps to effect a cure thereof.
SECTION 10.2. NEGATIVE COVENANTS. The Borrower agrees that so long as
there are any Loans or Letters of Credit outstanding and until the termination
of the Total DIP Commitment or, if the Exit Facility Date occurs, the Total Exit
Commitment, and the payment and satisfaction in full of all the Obligations, the
Borrower will not, and the Borrower will not cause or permit any of its
Subsidiaries to:
(a) seek, or consent to (i) any modification, stay, vacation or
amendment (other than modifications consented to or approved by the Agent
in writing) to the Financing Order or the Confirmation Order; (ii) a
priority claim for any administrative expense or an unsecured claim against
the Borrower (now existing or hereafter arising of any kind or
-82-
nature whatsoever, including without limitation any administrative expense
of the kind specified in Section 503(b), 506(c) or 507(b) of the Bankruptcy
Code) equal or superior to the priority claim of the Agent and the Banks in
respect of the Obligations, in an aggregate amount (taken together with all
other such claims) in excess of $100,000, except for Agreed Administrative
Expense Priorities and the proceeds of causes of action under Sections 544
through 550 of the Bankruptcy Code; (iii) a priority claim pursuant to
Section 364 of the Bankruptcy Code equal to or superior to the priority
claim of the Agent and the Banks in respect of the Obligations in an
aggregate amount (taken together with all other such claims) in excess of
$100,000; and (iv) any Lien on any Collateral, having a priority equal or
superior to the Liens in favor of the Agent for the benefit of the Banks in
respect of the Obligations, except for Permitted Prior Liens or as
permitted under Section 7.1 hereof; or suffer or permit to exist any of the
matters referred to in the foregoing clauses (i), (ii), (iii), or (iv)
which matters, in the case only of priority claims referred to in clauses
(ii) or (iii), are allowed as such by the Bankruptcy Court;
(b) create, incur, assume, or permit to exist any Indebtedness of the
Borrower or its Subsidiaries other than (i) Indebtedness to the Agent the
Banks and the Surety arising under the Loan Documents, (ii) current
liabilities of the Borrower or its Subsidiaries not incurred through the
borrowing of money or the obtaining of credit except credit on an open
account customarily extended, (iii) Indebtedness in respect of taxes or
other governmental charges not yet due and payable or, if due, being
contested in good faith and by appropriate proceedings and for which
adequate reserves have been taken; (iv) Indebtedness in existence on the
Filing Date, and additional Indebtedness in existence on the Effective Date
which additional Indebtedness is listed and described in reasonable detail
on SCHEDULE 10.2(b) hereto, so long as all such Indebtedness (whether in
existence on the Filing Date or the Effective Date) is discharged upon the
consummation of the Reorganization Plan except as otherwise expressly
contemplated by the Reorganization Plan, (v) purchase money Indebtedness
incurred after June 4, 1996 in respect of (A) the acquisition of property
(other than inventory) or (B) obligations under Capitalized Leases not at
any time to exceed, in the aggregate for purposes of this clause (v), an
amount equal to 50% of the amount of Capital Expenditures permitted
pursuant to Section 10.3(a) since June 4, 1996, and any refinancings
thereof (not exceeding the amount refinanced) on terms no less favorable to
the Borrower, the parties agreeing that, solely for purposes of this
Section 10.2(b), obligations under new Real Estate leases in respect of new
store locations that are entered into after June 4, 1996 shall, solely to
the extent such obligations are reasonably attributable to the applicable
Real Estate (and not to
-83-
furniture, fixtures, equipment, leasehold improvements, or other personal
property) (such qualifying obligations, if any, under such new store Real
Estate leases being referred to as the "Special Lease Obligations") shall
be deemed to be obligations in respect of operating leases, notwithstanding
whether such obligations would be treated as Capitalized Lease obligations
or operating lease obligations under GAAP, (vi) the existing lease guaranty
referred to in Section 10.2(i) below, and (vii) unsecured Indebtedness in
respect of the presently-existing limited recourse arrangements under the
Store Credit Card Program with respect to not more than 50% of the amount
from time to time of the bad debts of credit card customers of the Borrower
for purchases made under the Store Credit Card Program;
(c) create or incur, assume, or permit to exist any Liens on any of
the property or assets of the Borrower or its Subsidiaries except
(collectively, "Permitted Liens") (i) Liens securing the Obligations; (ii)
those Permitted Prior Liens listed and described in reasonable detail on
SCHEDULE 10.2(c) hereto, so long as such Permitted Prior Liens are
discharged upon the consummation of the Reorganization Plan except as
otherwise expressly contemplated by the Reorganization Plan; (iii) Liens
securing taxes or other governmental charges not yet due; (iv) deposits or
pledges made in connection with social security obligations; (v) Liens of
carriers, warehousemen, mechanics and materialmen, less than 120 days old
and in respect of obligations not yet due; (vi) easements, rights-of-way,
zoning restrictions and similar minor Liens which individually and in the
aggregate do not have a Materially Adverse Effect; (vii) statutory or
common law (but not consensual or contractual) landlord's Liens relating to
leases of real property; and (viii) purchase money security interests in
property securing purchase money Indebtedness permitted by Section
10.2(b)(v), covering only the property so acquired, and Liens under
Capitalized Leases permitted by Section 10.2(b)(v) and Liens in respect of
Special Lease Obligations otherwise permitted by this Agreement (in each
case covering only the property leased thereunder);
(d) create, form or permit to exist any Subsidiaries other than the
one Subsidiary set forth on SCHEDULE 8(n) attached hereto, it being
understood that, the provisions of Section 10.1(k) hereof shall not be
construed to permit any other Subsidiaries at any time to exist, or permit
to exist any investments other than investments in (i) marketable
obligations of the United States maturing within one (1) year, (ii)
certificates of deposit, bankers' acceptances and time and demand deposits
of United States banks having total assets in excess of $1,000,000,000,
(iii) investments in the Borrower's Subsidiary made prior to the Filing
Date, (iv) investments in mutual funds investing solely in the investments
permitted in clauses (i) and (ii) above, (v) such other investments as the
-84-
Agent and the Banks may from time to time approve in writing; PROVIDED,
HOWEVER, that (A) in each such case referred to in this Section 10.2(d),
arrangements have been made to the satisfaction of the Agent and the Banks
for the perfection and protection and the preservation of the priority of
the Agent's and the Banks' Lien therein and (B) in the case of any
investments referred to in clause (i), (ii) or (iv) of this Section 10.2(d)
which do not consist of cash collateral expressly required to be delivered
and which, in fact, have been delivered to the Agent hereunder, such
investments are made only at a time when Total Revolver Outstandings are
zero (other than Letters of Credit with respect to which the Agent has
received cash collateral in the amount of 105% of the Maximum Drawing
Amount);
(e) declare, make or pay any dividends or distributions on or in
respect of its capital stock of any nature whatsoever, other than (i)
dividends payable solely in shares of common stock, (ii) distributions by a
wholly-owned Subsidiary to the Borrower, and (iii) warrants or options to
acquire stock as contemplated by the Reorganization Plan, and any stock
issued thereunder or pursuant to the exercise thereof;
(f) be or become party to a merger or consolidation, or effect any
disposition of assets (other than (x) sales of inventory in the ordinary
course and, (y) so long as no Default or Event of Default has occurred and
is continuing, and none would exist after giving effect to the transactions
proposed to be effected, dispositions of (or abandonments or losses in
respect of) leasehold improvements in connection with store closings only
as provided in subparagraph (m) hereof and dispositions of obsolete
fixtures and equipment no longer used or useful in the Borrower's business
up to an aggregate amount sold (or otherwise disposed of) in any twelve
(12) month period of $100,000 in gross cash proceeds); or purchase, lease
or otherwise acquire any stock or assets other than purchases of equipment
or inventory in the ordinary course and Capital Expenditures (but not
acquisitions of a division or business unit or line of business from
another Person) permitted under Section 10.3(a) hereof;
(g) pay, prepay, redeem or repurchase any of the Indebtedness for
borrowed money in existence on the Filing Date except (A) as provided in
the Reorganization Plan, (B) for cure payments on unexpired leases and
executory contracts, which are not financial accommodations, assumed by the
Borrower after the Filing Date, (C) other payments on such Indebtedness not
to exceed $100,000 in the aggregate, and (D) other such payments referred
to in Section 11.1(a)(xii) as permitted thereunder; or amend or modify the
terms thereof except as provided in the Reorganization Plan;
-85-
(h) after the occurrence and during the continuance of an Event of
Default, deposit or otherwise credit any amounts to the Escrow Account
without the express prior written consent of the Agent;
(i) enter into or be or become obligated under or with respect to any
guaranty or similar undertaking with respect to the Indebtedness of any
other Person, other than the Borrower's guaranty in effect on the Effective
Date of the obligations of Assembly as lessee under the existing lease of
the Borrower's distribution center located at Kent, Washington with
RREEF-IV, Inc., a Delaware corporation, as lessor;
(j) except for matters expressly provided in the Reorganization Plan,
and employee discounts for merchandise in accordance with past practices,
engage in any transaction with any executive officer, director or
shareholder of the Borrower or its Subsidiaries on terms more favorable to
such other Person than the Borrower or such Subsidiary could obtain from
third parties, or pay, or enter into any agreement requiring it to pay
salary or bonus or other compensation payments to any executive officer,
director or shareholder of the Borrower or any of its Subsidiaries in an
amount in excess of reasonable compensation commensurate with historical
and customary levels of the Borrower or such Subsidiary, as the case may be
(including reasonable seasonal and periodic increases, raises, and bonuses)
(it being agreed that certain arrangements described to the Agent in
writing prior to the execution and delivery by the Agent of this Agreement
are in compliance with this paragraph (j) of Section 10.2);
(k) except as may be agreed by the Agent (i) establish or permit to
exist any bank accounts other than those listed on SCHEDULES 2.12 and 2.14
and at the time of reference thereto permitted by Sections 2.12 and 2.14
hereof without the Agent's prior written consent, (ii) violate any Agency
Account Agreement, or the Lock Box Agreement, or (iii) deposit in any
payroll or sales tax trust accounts designated as such on SCHEDULE 2.12 and
2.14 hereto any amounts in excess of amounts necessary to pay payroll
(including applicable withholding tax) or sales tax obligations as and when
required, as the case may be, from such accounts;
(l) permit, during any of the periods in the table set forth below,
the aggregate number of stores or other retail outlets of the Borrower to
exceed the maximum number of stores and retail outlets permitted for such
period set forth opposite such period in the table below:
-86-
Period Maximum Number
------ --------------
February 2, 1997 - January 31, 1998 38
February 1, 1998 - January 30, 1999 42
January 31, 1999 - February 27, 2000 46
(m) effect any closing of any store or other retail outlet covered by
a Real Estate Lease, or fail to renew, or to exercise any option to extend
the term of, any Real Estate Lease; PROVIDED, HOWEVER, that the Borrower
may do so if the following conditions are met:
(i) the cumulative number of such closings and failures to renew
or extend does not exceed four or such greater number to which the
Agent, acting on instructions solely of the Majority Revolving Credit
Banks, shall have consented,
(ii) either:
(A) the Borrower shall have received compensation in cash
for such closing or failure to renew or extend of not less than
the amount (the "Specified Amount") set forth opposite such store
on SCHEDULE 10.2(m) which is not attached hereto but which has
been previously delivered to the Agent and the Term Loan Lender,
and such amount of compensation shall have been used to prepay
the Term Loan for application as provided in Section 3.2.2
hereof, or
(B) if such amount of cash compensation is less than the
Specified Amount or no such cash compensation is paid to the
Borrower, the Term Loan shall have been or shall be concurrently
prepaid in an amount at least equal to the Specified Amount for
application as provided in Section 3.2.2 hereof and the Agent,
acting upon the instructions solely of the Majority Revolving
Credit Banks, shall have so consented to such prepayment, and
(iii) no Default or Event of Default shall have occurred and
be continuing, and none would result from (or exist after giving
effect to) the transactions proposed to be effected.
(n) amend its Charter Documents, or permit any of its Subsidiaries to
amend its Charter Documents, in either case except in a manner which would
not (i) alter or amend the rights of the holders of the Special Shares
without the approval of such holders in accordance with the Charter
Documents of the Borrower; or (ii) be reasonably likely
-87-
to have a Materially Adverse Effect or except as provided in the
Reorganization Plan;
(o) permit to be amended or modified the Store Credit Card Program
Documents or the other documents referred to in Section 9.1.18 in any
manner adverse to the rights and interests of the Agents and the Banks; or
(p) with respect to the Real Estate Leases, and subject to any
provisions of Section 10.2(m) and Section 10.6 hereof (as applicable) after
the Effective Date, (i) transmit any communication to the lessor under any
Real Estate Lease without the approval of the Term Loan Lender (which shall
be deemed given if the Term Loan Lender or the Surety fails to object to
such communication within two Business Days after receipt of a copy of the
proposed communication in accordance with Section 16.3 hereof) if such
communication relates to or involves (A) any actual or alleged breach,
default, or event of default under the subject Real Estate Lease, (B) any
actual or proposed renewal, extension, termination, cancellation, or other
change in the term of the subject Real Estate Lease, (C) any actual or
proposed modification to or waiver of any material provision of the subject
Real Estate Lease, or (D) any other matter that would result in the lessor
under any Real Estate Lease having the right: (x) to terminate or cancel
any such Real Estate Lease; or (y) to accelerate the Borrower's monetary
obligations thereunder; or which in the reasonable judgment of the Term
Loan Lender would be expected to result in any material adverse effect upon
any of the Borrower's leasehold interests under any such Real Estate Lease,
or the value of any such interest, (ii) terminate or cancel, or agree to
terminate or cancel, any Real Estate Lease, or settle, compromise, or
adjust, or agree to settle, compromise, or adjust, any claim (other than
the ▇▇▇▇▇▇ Litigation) involving an amount in excess of two months' rent
which the Borrower may have against the lessor under any Real Estate Lease
or in connection with any of the Real Estate Collateral (including, without
limitation, any claim based upon any alleged default by any lessor or upon
any casualty or eminent domain proceeding), without the prior written
consent of the Term Loan Lender, (iii) amend, modify, or supplement, or
agree to amend, modify, or supplement, any Real Estate Lease without the
prior written consent of the Term Loan Lender, unless such amendment,
modification, or supplement is minor or immaterial or of an administrative
or operational nature and would not in the reasonable judgment of the Term
Loan Lender adversely affect the value of the Borrower's leasehold
interest; (iv) assign any Real Estate Lease or sublet or license any
portion of the premises without the prior written consent of the Term Loan
Lender, other than to the Banks, to any holders of Peritted Liens therein,
or licenses to licensees of merchandise departments in the
-88-
Borrower's retail stores if any such license does not effect any form of
leasehold interest in any portion of the premises demised to the Borrower
under any of the Real Estate Leases or if any such license does effect such
an interest, such interest is terminable on no more than 60 days notice
(which notice the Surety shall be authorized to give in the Surety Power of
Attorney upon an Event of Default or the other conditions set forth
therein), or on any sale, or other disposition of the Real Estate Lease;
(v) make any material structural alteration to any of the premises demised
by any of the Real Estate Leases which is not contemplated or provided for
by such Real Estate Lease, or remove any material constituent of the Real
Estate Collateral from its present location, in either case without the
prior written consent of the Term Loan Lender, if such alteration or
removal would (A) result in the lessor under any Real Estate Lease having
the right: (x) to terminate or cancel any such Real Estate Lease; or (y) to
accelerate the Borrower's monetary obligations thereunder; or (B) in the
reasonable judgment of the Term Loan Lender, be expected to result in any
material adverse effect upon any of the Borrower's leasehold interests
under any such Real Estate Lease or the value of any Real Estate
Collateral; or (vi) pledge, mortgage, or otherwise hypothecate any of the
Real Estate Collateral other than to the Banks and to any holders of
Permitted Liens therein.
SECTION 10.3. FINANCIAL COVENANTS. The Borrower agrees that so long as
there are any Loans or Letters of Credit outstanding and until the termination
of the Total DIP Commitment or, if the Exit Facility Date occurs, the Total Exit
Commitment and the payment and satisfaction in full in cash of all of the
Obligations, and subject to the provisions of Section 10.4 hereof regarding
application and interpretation of the financial covenants contained in this
Section 10.3, the Borrower will not, and will not permit any of its Subsidiaries
to:
(a) Make Capital Expenditures in any period described in the table
below that exceed, in the aggregate, the amount set forth opposite such
period in such table:
Period Amount
------ ------
February 2, 1997 - January 31, 1998 $2,500,000
February 1, 1998 - January 30, 1999 $6,500,000
January 31, 1999 - February 5, 2000 $5,500,000
February 6, 2000 - February 27, 2000 $1,000,000
-89-
If during any of the periods set forth in the table above (other than the
period from February 6, 2000 through February 27, 2000) the amount of
Capital Expenditures permitted by the table for that period is not
utilized, then thirty-three percent (33%) of such unutilized amount may be
utilized in (but only in) the next succeeding period, where it shall be
deemed to be utilized last, and may not be utilized in any subsequent
period.
(b) Permit at any time prior to the Exit Facility Date, Consolidated
EBITDA, determined on a cumulative basis for the period beginning on
February 4, 1996 and ending on any of the dates set forth in the table
below, to be less than the amount set forth opposite such date in such
table:
Minimum Cumulative
Consolidated EBITDA
Date Since February 4, 1996
---- ----------------------
October 4, 1997 $7,000,000
November 1, 1997 $7,300,000
November 29, 1997 $8,100,000
January 3, 1998 $14,000,000
January 31, 1998 $12,500,000
(c) Permit, prior to the Exit Facility Date as at any of the dates
set forth in the table below, the amount of the Borrower's inventory,
valued at Book Value (i) to be less than the minimum amount set forth
opposite such date in such table, or (ii) to exceed the maximum amount set
forth opposite such date in such table:
Date Minimum Amount Maximum Amount
---- -------------- --------------
August 30, 1997 $38,000,000 $46,500,000
October 4, 1997 $43,000,000 $52,500,000
November 1, 1997 $48,100,000 $58,700,000
November 29, 1997 $51,800,000 $63,300,000
January 3, 1998 $35,200,000 $43,100,000
January 31, 1998 $35,400,000 $43,300,000
(d) Permit, from and after the Exit Facility Date as at the end of
any of the fiscal quarters ending on the dates set forth in the table
below, the amount of the Borrower's inventory, valued at Book Value (i) to
be less than the minimum amount set forth opposite such date in such table,
or (ii) to exceed the maximum amount set forth opposite such date in such
table:
-90-
Date Minimum Amount Maximum Amount
---- -------------- --------------
November 1, 1997 $48,100,000 $58,700,000
January 31, 1998 $35,400,000 $43,300,000
May 2, 1998 $39,700,000 $48,100,000
August 1, 1998 $42,600,000 $51,500,000
October 31, 1998 $51,600,000 $62,400,000
January 30, 1999 $35,000,000 $46,700,000
May 1, 1999 $40,400,000 $49,000,000
July 31, 1999 $43,400,000 $52,500,000
November 6, 1999 $52,600,000 $63,600,000
February 5, 2000 $39,300,000 $47,600,000
(e) Permit, from and after the Exit Facility Date as at the end
of any of the fiscal quarters ending on the dates set forth in the
table below for the period of four consecutive fiscal quarters then
ended (or such shorter period as has elapsed since February 3, 1996),
the Debt Service Coverage Ratio as determined for such period then
ended to be less than the ratio set forth opposite such date in such
table:
Date Minimum Ratio
---- -------------
November 1, 1997 1.00 to 1.00
January 31, 1998 1.00 to 1.00
May 2, 1998 1.00 to 1.00
August 1, 1998 1.05 to 1.00
October 31, 1998 1.10 to 1.00
January 30, 1999 1.15 to 1.00
May 1, 1999 1.20 to 1.00
July 31, 1999 1.20 to 1.00
November 6, 1999 1.25 to 1.00
February 5, 2000 1.25 to 1.00
SECTION 10.4. APPLICATION OF FINANCIAL COVENANTS.
(a) During the period prior to the Exit Facility Date, the Borrower shall
comply with the financial covenants set forth in Sections 10.3(a), (b) and (c).
During the period from and after the Exit Facility Date the Borrower shall
comply with the financial covenants set forth in Sections 10.3(a), (d) and (e).
(b) The parties agree that, solely for purposes of application and
interpretation of the covenants contained in Section 10.3 hereof, (i) the
Special Lease Obligations shall be deemed to be obligations in respect of
operating leases, notwithstanding whether such obligations would be treated as
Capitalized Lease obligations or operating lease obligations under GAAP; and
(ii) each of
-91-
the applicable defined terms utilized in, and the other applicable financial
components of, such covenants shall be determined and calculated accordingly,
but only for such limited purposes of Section 10.3, as aforesaid.
(c) If the Borrower notifies the Agent that the Borrower wishes or is
required to modify its accounting principles to reflect from the Exit Facility
Date "fresh start" accounting, the Borrower, the Revolving Credit Banks and the
Agent agree to negotiate in good faith an amendment to this Agreement providing
for appropriate adjustments to the financial covenants set forth in Section
10.3, as well as to the financial performance tests used in the determination of
the Applicable Pricing hereunder. In the event that the Borrower, the Revolving
Credit Banks and the Agent are unable to agree as to such adjustments, the
Borrower agrees to refrain from so modifying its accounting principles if the
Borrower has the election to do so or, if the Borrower is required to so modify
its accounting principles, to provide to the Agent and the Revolving Credit
Banks from time to time, as and when required by the terms of this Agreement or
upon the request of the Agent, appropriate reconciliations, based upon the
accounting principles which would have been applicable absent such modification,
in order for the Agent and the Revolving Credit Banks to determine compliance
with the financial covenants set forth in Section 10.3 and the Applicable
Pricing hereunder.
SECTION 10.5. FURTHER ASSURANCES. The Borrower shall (i) execute and
deliver to the Agent a Mortgage (subject to Permitted Liens) on the Exit
Facility Date for each new store lease or other retail outlet location acquired
by the Borrower whether by fee simple or leasehold interest after the date
hereof and prior to the Exit Facility Date, and, upon the acquisition of each
new store lease or other retail outlet location acquired by the Borrower after
the Exit Facility Date, a Mortgage (subject to Permitted Liens) for each such
new store or other retail outlet location so acquired by the Borrower after the
Exit Facility Date (any lease to be considered a Real Estate Lease when so
acquired and such Mortgage whether encumbering a leasehold or fee interest, when
so executed and delivered, to be considered a Security Document) and otherwise
cause each of the Security Documents (at the times contemplated by this
Agreement) to be duly executed and delivered by the respective parties thereto,
each of which shall be in full force and effect and shall be in form and
substance satisfactory to the Agent and the Banks, and the Borrower shall cause
all filings, recordings, deliveries of instruments and other action necessary or
desirable in the opinion of the Agent to protect, perfect, and preserve such
security interests to be duly effected, and shall deliver to the Agent evidence
thereof in form and substance satisfactory to the Agent; (ii) have used its best
efforts to obtain and deliver to the Agent Landlord Waivers with respect to all
leaseholds on which inventory is or will be located; and (iii) cooperate with
the Agent, the Banks and the Surety, take such action, execute such documents
(including additional, supplemental, or confirmatory Security
-92-
Documents), and provide such information as the Agent, the Surety or any Bank
may from time to time reasonably request in order further to effect the
transactions contemplated by and the purposes of the Loan Documents, including
without limitation the delivery at the Borrower' expense of or environmental
assessmnts reasonably required by the Agent and not inconsistent with the
provisions of this Agreement.
SECTION 10.6. REAL ESTATE LEASE CURE PROVISION. If at any time a
representation or warranty of the Borrower contained in Section 8 hereof as to a
Real Estate Lease is untrue or incorrect in any material respect as of the date
on which such representation or warranty is made or deemed to have been made or
repeated, or the Borrower shall fail to comply with any affirmative or negative
covenant contained in Section 10.1 or, as the case may be, Section 10.2 hereof
as to such Real Estate Lease, the Borrower shall be entitled to cure such breach
of representation or warranty or failure to comply by prepaying to the Term Loan
Lender for application to the Term Loan pursuant to Section 3.2.2 an amount
equal to the Specified Amount for such Real Estate Lease, PROVIDED that (a) such
breach of representation or warranty or failure to comply has not, at or prior
to the time of such prepayment, resulted in an Event of Default which has
resulted in any of the Obligations having been declared due and payable prior to
their stated maturity pursuant to the terms of this Agreement, (b) the Agent,
acting upon the instructions solely of the Majority Revolving Credit Banks, has
consented to such prepayment and (c) the Agent, the Term Loan Lender and the
Surety are reimbursed for any collateral protection advances or out of pocket
costs or expenses (including reasonable attorneys' fees and expenses) made or
incurred by any of them on account of such breach of representation or warranty
or failure to comply. Upon such prepayment and reimbursement having been made,
such Real Estate Lease shall remain a "Real Estate Lease" for purposes of this
Agreement and the other Loan Documents, except that the representations and
warranties contained in Section 8 hereof and the affirmative and negative
covenants contained in Sections 10.1 and 10.2 hereof shall no longer apply as to
such Real Estate Lease.
SECTION 11. EVENTS OF DEFAULT; ACCELERATION; ETC.
SECTION 11.1. EVENTS OF DEFAULT; ACCELERATION. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) prior to the Exit Facility Date:
(i) the Borrower shall fail to comply with Section 2.2(c) or
Section 2.4(c) within one Business Day after the Agent has given
written notice of such failure to the Borrower; or the Borrower shall
otherwise fail to pay when due and payable any principal of any of the
Loans (except monthly installment payments of principal of the Term
Loan required by Section 3.2.1
-93-
hereof), or any Reimbursement Obligation not funded by a Revolving Credit
Loan pursuant to Section 2.7(a) hereof, or any cash collateral
requirements, provided for in the Loan Documents when the same becomes due
and payable;
(ii) the Borrower shall fail to pay any interest on the Loans,
monthly installment payments of principal of the Term Loan required by
Section 3.2.1 hereof, or other sums due or required to be paid under this
Agreement or any of the other Loan Documents (A) in the case of the
Borrower, within one Business Day after the Agent has given written notice
to the Borrower that such payment will not be made pursuant to Section 2.6
as requested by standing instructions of the Borrower or Section 2.7(c) in
the Agent's discretion and (B) otherwise within three (3) days after the
same becomes due and payable;
(iii) the Borrower shall fail to perform any other term, covenant or
agreement contained in Sections 2.2, 2.4, 2.12 (which failure, in the case
only of a default consisting of failure under Section 2.12 to send Direct
Collection Letters, extends as to substantially all account debtors and
obligors), 2.14, 7.3, Section 10.1(f) (which failure, in the case only of a
default consisting of a failure to send Direct Collection Letters, extends
as to substantially all account debtors and obligors), 10.2(b), (c) and (i)
(exclusive of inadvertent or immaterial failures which are capable of cure,
and are being forthwith remedied, without violation of other provisions of
the Loan Documents and which do not in the aggregate exceed the sum of
$100,000 for all of Sections 10.2(b), (c) and (i) considered together),
Section 10.1(k) (exclusive of inadvertent or immaterial failures which are
capable of cure, and are being forthwith remedied, without violation of
other provisions of the Loan Documents, and which would not (A) result in
the lessor under any Real Estate Lease having the right: (x) to terminate
or cancel any such Real Estate Lease; or (y) to accelerate the Borrower's
monetary obligations thereunder; or (B) in the reasonable judgment of the
Term Loan Lender, be expected to result in any material adverse effect upon
any of the Borrower's leasehold interests under any such Real Estate Lease
or the value of any such interest), Section 10.2(p) (exclusive of
inadvertent or immaterial failures which are capable of cure, and are being
forthwith remedied, without violation of other provisions of the Loan
Documents, and which would not (A) result in the lessor under any Real
Estate Lease having the right: (x) to terminate or cancel any such Real
Estate Lease; or (y) to accelerate the Borrower's monetary obligations
thereunder; or (B) in the reasonable judgment of the Term Loan Lender, be
expected to result in any material adverse effect upon any of the
Borrower's leasehold interests under any such Real Estate Lease or the
value of any such interest), or any other lettered paragraph of Section
10.1 (other than Section 10.1(h)), Sections 10.2, or 10.3;
-94-
(iv) the Borrower shall fail to perform any other term, covenant or
agreement contained in this Agreement or any of the other Loan Documents
within ten (10) days after the Agent has given written notice of such
failure to the Borrower;
(v) any representation or warranty of the Borrower or any of its
Subsidiaries in this Agreement or any of the other Loan Documents or in any
document, certificate or other paper or notice given in connection
therewith shall have been false or misleading in any material respect at
the time made or deemed to have been made or repeated;
(vi) the Borrower or any of its Subsidiaries shall be in default
under any agreement or agreements (other than the Loan Documents)
evidencing post-petition Indebtedness owing to the Agent or any Bank, or
any affiliates of the Agent, any Bank or the Surety; or the Borrower or any
of its Subsidiaries shall be in default under any agreement or agreements
evidencing any other post-petition Indebtedness or any pre-petition
Indebtedness or shall fail to pay any such Indebtedness when due, or within
any applicable period of grace if, with respect to any such Indebtedness
referred to in this sub-clause by order of the Bankruptcy Court issued or
previously issued at the time of reference thereto with respect to such
Indebtedness, such default or failure to pay when due thereunder would
entitle the holder thereof to relief from automatic stay of Section 362(a)
of the Bankruptcy Code, in excess of $100,000 in aggregate principal amount
of such post- and pre-petition Indebtedness; or the Borrower or any of its
Subsidiaries shall be in default under any of the terms, conditions or
provisions of any supply or other contract, such contract is terminated by
the supplier or other provider of goods or services thereunder as a result
of such default and such termination has a Materially Adverse Effect;
(vii) any material provision of any of the Loan Documents shall cease
to be in full force and effect, or the Agent's and the Banks' Liens shall
fail to constitute a perfected security interest in substantially all the
assets which constitute the Collateral, entitled to the priority
contemplated hereby, at any time;
(viii) the Bankruptcy Court or another court of competent
jurisdiction shall enter any order (A) amending, or modifying the Financing
Order without the consent or approval of the Agent, or staying, vacating or
rescinding the Financing Order, (B) appointing a chapter 11 trustee or an
examiner with enlarged powers relating to the operation of the business
(powers beyond those set forth in Section 1106(a)(3) and (4) of the
Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code in the Case,
(C) dismissing the Case or converting the
-95-
Case to a chapter 7 case, or (D) granting relief from the automatic stay to
any creditor holding or asserting a Lien or reclamation claim on any
material assets of any of the Borrower or any of its Subsidiaries in an
aggregate amount (by value of assets or by amount of the claim or Lien) in
excess of $100,000 or where the deprivation of such Borrower, such
Subsidiary of such assets will, in the reasonable opinion of the Agent,
have a Materially Adverse Effect;
(ix) an application shall be filed by the Borrower or any of its
Subsidiaries for the approval of any other Super-Priority Claim in the Case
which is PARI PASSU with or senior to the claims of the Agent and the Banks
against the Borrower, its Subsidiaries under this Agreement or any of the
other Loan Documents (unless upon giving effect to the transactions
contemplated by such application, all Obligations (whether contingent or
otherwise) shall be paid in full in cash and the Total DIP Commitment shall
be terminated), or there shall be granted any such Super-Priority Claim or
Super-Priority Claims for an amount singularly or in the aggregate, in
excess of $100,000;
(x) the Borrower shall be unable to pay its post-petition debts as
they mature or shall fail to comply with any order of the Bankruptcy Court
in any respect having, in the reasonable opinion of the Agent, a Materially
Adverse Effect; or if any of the Borrower's Subsidiaries (other than a
Subsidiary with nominal assets and liabilities) shall be unable to pay its
debts as they mature;
(xi) there shall remain undischarged for more than thirty (30) days
any final post-petition judgments or execution actions with respect to an
aggregate amount in excess of $100,000 against the Borrower, any of its
Subsidiaries, or relief from the automatic stay of Section 362(a) of the
Bankruptcy Code shall be granted to any creditor or creditors of the
Borrower, and of its Subsidiaries with respect to assets having an
aggregate value in excess of $100,000 or where the deprivation of the
Borrower, any of its Subsidiaries of such assets will, in the reasonable
opinion of the Agent, have a Materially Adverse Effect;
(xii) the Borrower shall pay or discharge any Indebtedness of the
Borrower in existence on the Filing Date, except for cure payments with
respect to the assumption after the Filing Date of unexpired leases or
executory contracts which are not financial accommodations, the payment of
regularly scheduled lease payments under pre-petition leases of Real Estate
and regularly scheduled payments under other pre-petition leases, or
unexpired leases or executory contracts that are not financial
accommodations (in each case in the ordinary course of business), the
making of regularly scheduled debt service payments with
-96-
respect to pre-petition secured Indebtedness permitted by Section 10.2(b)
hereof, honoring obligations under arrangements in respect of customer
returns of merchandise, gift certificates, and layaways of merchandise (in
each case in the ordinary course of business), payments in respect of
employee payroll and related employee benefit arrangements consistent with
past practices, and other payments on such Indebtedness not to exceed
$100,000 in the aggregate;
(xiii) the filing by the Borrower of a disclosure statement, or a
disclosure statement shall be filed by any other Person the adequacy of
which shall have been approved by the Bankruptcy Court, in the Case
incorporating a Reorganization Plan which fails to satisfy all of the
requirements of Section 7.3 and Section 9.2.7(b);
(xiv) the Borrower shall be enjoined, restrained, or in any way
prevented by the order of any Tribunal from conducting any part of its
business as a debtor in possession, or the Borrower, any of its
Subsidiaries shall be enjoined, restrained in any way prevented by the
order of any such Tribunal from conducting any part of its business, or
there shall occur any disruption to any such business which continues for
more than ten (10) days, or loss or damage to the Borrower's assets, which
in any such case results in an impairment or decrease in the value of the
assets of such Person or the Collateral in an amount in excess of $100,000;
(xv) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ or some other person reasonably satisfactory
to the Agent and the Banks shall cease to be the Chief Executive Officer
and President of the Borrower; or there shall occur any change in the
membership of the board of directors of the Borrower or any of its
Subsidiaries or in the key executive or financial management of the
Borrower or any of its Subsidiaries, which, in any such case, the Agent
reasonably believes will have a Materially Adverse Effect;
(xvi) the Borrower shall fail to comply in any material respect with
the Financing Order;
(xvii) the Borrower shall file a motion to reject any Real Estate
Lease;
(xviii) the Borrower shall file a motion in the Case (A) to use cash
collateral of the Banks under Section 363(c) of the Bankruptcy Code without
the consent of the Banks, (B) to recover from any portion of the Collateral
any costs or expenses or preserving or disposing of such Collateral under
Section 506(c) of the Bankruptcy Code, or (C) to take any other action or
actions adverse to the Banks or their rights and remedies hereunder or
under any of the other Loan Documents or the
-97-
Banks' interest in any of the Collateral, which other action or actions
would, individually or in the aggregate, have a Materially Adverse Effect;
or
(xix) a suit or action against the Banks or the Agent shall be
commenced by the Borrower, any Subsidiary of the Borrower which suit or
action asserts any claim or legal or equitable remedy contemplating
subordination of any claim or Lien of the Banks or the Agent or any such
suit or action is commenced by an official committee in the Case or any
other Person which results in the granting of any such remedy;
(b) upon and at any time from and after the Exit Facility Date:
(i) the Borrower shall fail to comply with Section 2.2(c) or Section
2.4(c) within one Business day after the Agent has given written notice of
such failure to the Borrower; or the Borrower shall otherwise fail to pay
when due and payable any principal of any Loans (except monthly installment
payments of principal of the Term Loan required by Section 3.2.1 hereof),
or any Reimbursement Obligation not funded by a Revolving Credit Loan
pursuant to Section 2.7(a) hereof, or any cash collateral requirements
provided for in the Loan Documents when the same shall have first become
due and payable;
(ii) the Borrower shall fail to pay any interest on the Loans,
monthly installment payments of principal of the Term Loan required by
Section 3.2.1 hereof, or other sums due or required to be paid under this
Agreement or any of the other Loan Documents (A) in the case of the
Borrower, within one Business Day after the Agent has given written notice
to the Borrower that such payment will not be made pursuant to Section 2.6
as requested by standing instructions of the Borrower or Section 2.7(c) in
the Agent's discretion and (B) otherwise within three (3) days after the
same becomes due and payable;
(iii) the Borrower shall fail to perform any other term, covenant or
agreement contained in Sections 2.2, 2.4, 2.12 (which failure, in the case
only of a default consisting of a failure to send Direct Collection
Letters, extends as to substantially all account debtors and obligors),
2.14, 7.3, 10.1(g) (which failure, in the case only of a default consisting
of a failure to send Direct Collection Letters, extends as to substantially
all account debtors and obligors), 10.2(b), (c) and (i) (exclusive of
inadvertent or immaterial failures which are capable of cure, and are being
forthwith remedied, without violation of other provisions of the Loan
Documents and which do not in the aggregate exceed the sum of $100,000 for
all of Sections 10.2(b), (c) and (i) considered together), Section 10.1(k)
(exclusive of inadvertent or immaterial failures which are capable of cure,
and are
-98-
being forthwith remedied, without violation of other provisions of the Loan
Documents, and which would not (A) result in the lessor under any Real
Estate Lease having the right: (x) to terminate or cancel any such Real
Estate Lease; or (y) to accelerate the Borrower's monetary obligations
thereunder; or (B) in the reasonable judgment of the Term Loan Lender, be
expected to result in any material adverse effect upon any of the
Borrower's leasehold interests under any such Real Estate Lease or the
value of any such interest), Section 10.2(p) (exclusive of inadvertent or
immaterial failures which are capable of cure, and are being forthwith
remedied, without violation of other provisions of the Loan Documents, and
which would not (A) result in the lessor under any Real Estate Lease having
the right: (x) to terminate or cancel any such Real Estate Lease; or (y) to
accelerate the Borrower's monetary obligations thereunder; or (B) in the
reasonable judgment of the Term Loan Lender, be expected to result in any
material adverse effect upon any of the Borrower's leasehold interests
under any such Real Estate Lease or the value of any such interest), or any
other lettered paragraph of Section 10.1 (other than Section 10.1(h)),
Sections 10.2, or 10.3;
(iv) the Borrower shall fail to perform any other term, covenant or
agreement contained in this Agreement or any of the other Loan Documents
within ten (10) days after the Agent has given written notice of such
failure to the Borrower;
(v) any representation or warranty of the Borrower or any of its
Subsidiaries or in this agreement or any of the other Loan Documents or in
any document, certificate or notice given in connection therewith shall
have been false or misleading in any material respect at the time made or
deemed to have been made;
(vi) after any applicable period of grace or cure, any Indebtedness
of the Borrower, any of its Subsidiaries shall not be paid when due, or
shall be declared due prior to its scheduled maturity, or any default shall
occur in any material respect under any agreement (other than the Warrant
Documents) or agreements evidencing Indebtedness owing to the Agent or any
Bank or any affiliates of the Agent or any Bank, or Indebtedness to any
other Person which permits the holder or holders of that Indebtedness to
declare the Indebtedness to become due and payable prior to its scheduled
maturity, and the aggregate amount of such Indebtedness due, declared due
or capable of being declared due and payable exceeds the sum of $100,000,
or the Borrower shall willfully and materially fail to issue the warrant
stock to be issued pursuant to the Warrants;
-99-
(vii) any material provision of any of the Loan Documents shall cease
to be in full force and effect, or the Agent's and the Banks' Liens or the
Agent's and the Banks' Liens shall fail to constitute a perfected security
interest in substantially all the assets which constitute the Collateral,
entitled to the priority contemplated hereby;
(viii) the Bankruptcy Court or another court of competent
jurisdiction shall enter any order amending, supplementing, altering,
staying, suspending, vacating, rescinding or otherwise modifying the
Confirmation Order (other than amendments consented to or approved by the
Agent) in a manner which could adversely affect the Agent or the Banks;
(ix) the Borrower or any of its Subsidiaries (A) shall make an
assignment for the benefit of creditors, (B) shall be adjudicated bankrupt
or insolvent, (C) shall seek the appointment of, or be the subject of an
order appointing, a trustee, custodian, liquidator or receiver as to all or
part of its assets, (D) shall commence, approve or consent to, or be the
subject of any case of proceeding under any bankruptcy, reorganization or
similar law and, in the case of an involuntary case or proceeding, such
case or proceeding is not dismissed within thirty (30) days following the
commencement thereof, or (E) shall be the subject of an order or decree for
relief in an involuntary case under federal bankruptcy law;
(x) the Borrower or any of its Subsidiaries (other than a Subsidiary
with nominal assets and liabilities) shall be unable to pay its debts as
they mature;
(xi) there shall remain undischarged for more than thirty (30) days
any final judgment or execution action against the Borrower or any of its
Subsidiaries that, together with other outstanding claims and execution
actions against the Borrower and its Subsidiaries exceeds $100,000 in the
aggregate;
(xii) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or any way prevented by the order of any Tribunal from
conducting any part of its business; or there shall occur any disruption to
such business which continues for more than ten (10) days, or loss or
damage to the Borrower's or any Subsidiary's assets, which in any such case
results in an impairment or decrease in the value of the assets of such
Person or the Collateral in an amount in excess of $100,000;
(xiii) there shall occur the loss, suspension or revocation of, or
failure to renew, contract, license, Consent or permit held by the Borrower
or any of its Subsidiaries, which in any such case the Agent reasonably
believes could have a Materially Adverse Effect;
-100-
(xiv) there shall occur any Change of Control; the term "Change of
Control," as used herein, means:
(A) individuals who, as of the Exit Facility Date, constituted
the Board of Directors of the Borrower (as of the Exit Facility Date,
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board of Directors of the Borrower, PROVIDED that any
individual becoming a director, subsequent to the Exit Facility Date,
whose election, or nomination for election by the Borrower's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board; or
(B) subsequent to the Exit Facility Date, any Person or group of
Persons (within the meaning of Section 13 or 14 of the Securities
Exchange Act of 1934, as amended), which were not, as of the Exit
Facility Date, stockholders, stock warrant holders, or stock option
holders of the Borrower disclosed to and approved by the Agent for
purposes of this clause (B), shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 20% or more of the issued and
outstanding shares of the capital stock of the Borrower (unless such
Persons are reasonably satisfactory to the Agent);
(xv) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ or some other person reasonably satisfactory
to the Agent and Banks shall cease to be the Chief Executive Officer and
President of the Borrower; or
(xvi) with respect to an employee benefit plan within the meaning of
Section 3.2 of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, the benefits of which are guaranteed upon termination in
full or in part by the PBGC (other than a multiemployer plan) (each a
"Guaranteed Pension Plan"), a "reportable event" within the meaning of
Section 4043 of ERISA for which the PBGC requires notice shall have
occurred which the Majority Banks reasonably believe could result in the
liability of the Borrower or any of its Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $100,000 and such
event reasonably could constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan; or a trustee shall have been appointed by the
United States District Court to administer such Guaranteed
-101-
Pension Plan; or the PBGC shall have instituted proceedings to terminate
such Guaranteed Pension Plan;
THEN, or at any time thereafter:
(A) The Agent may, and upon the request of the Majority
Revolving Credit Banks shall, subject to the conditions described
below, by written notice to the Borrower, terminate the DIP
Commitments or, if the Exit Facility Date has occurred, the Exit
Commitments and/or declare and require (i) the unpaid principal amount
of the Revolving Credit Loans and all interest accrued and unpaid
thereon forthwith to be due and payable, (ii) that cash be delivered
to the Agent in the amount of 105% of the Maximum Drawing Amount to be
held by the Agent for the benefit of the Agent and the Revolving
Credit Banks as cash collateral for all Reimbursement Obligations, and
(iii) all other amounts payable with regard to the Revolving Credit
Loans hereunder and under the other Loan Documents to be forthwith due
and payable, in each case without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived
by the Borrower, PROVIDED that in the event of an Event of Default
specified in Section 11.1(b)(ix) hereof, such termination of the Exit
Commitment shall occur, and all such amounts shall become immediately
due and payable in each case automatically and without any requirement
of notice from the Agent or any Revolving Credit Bank; and
(B) Upon the request of the Term Loan Lender, the Agent shall,
subject to the conditions described below by written notice to the
Borrower, declare and require (i) the unpaid principal balance of the
Term Loan and all interest accrued and unpaid thereon forthwith to be
due and payable, and (ii) all other amounts payable hereunder in
respect of the Term Loan to be forthwith due and payable, in each case
without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower, PROVIDED
that in the event of an Event of Default specified in Section
11.1(b)(ix) hereof, such amounts shall become immediately due and
payable in each case automatically and without any requirement of
notice from the Agent or the Term Loan Lender.
SECTION 11.2. REMEDIES. If an Event of Default shall occur and be
continuing, and whether or not the Banks shall have accelerated the maturity of
the Loans as set forth above,
-102-
(a) each Revolving Credit Bank if owed any amount with respect
to the Revolving Credit Loans or the Reimbursement Obligations may
(subject, but prior to the Exit Facility Date only, to the provisions
of Section 11.3 hereof), with the consent of the Majority Revolving
Credit Banks, but not otherwise, instruct the Agent to exercise the
rights and remedies which such Revolving Credit Bank may have with
respect to the Revolving Credit Loans, the Reimbursement Obligations
and any of the Non-Real Estate Collateral hereunder or, with respect
to the Revolving Credit Banks and the Non-Real Estate Collateral,
under any of the other Loan Documents or at law (including but not
limited to the Bankruptcy Code and the Uniform Commercial Code) or in
equity or otherwise, subject to the rights of the Term Loan Lender.
At such time as the Commitments have been terminated and the Total
Revolver Obligations have been paid in full, the Agent will act on the
instruction of the Term Loan Lender with regard to the Non-Real Estate
Collateral; and
(b) the Term Loan Lender if owed any amount with respect to the
Term Loan may (subject, but prior to the Exit Facility Date only, to
the provisions of Section 11.3 hereof), instruct the Agent to exercise
the rights and remedies which the Term Loan Lender may have with
respect to the Term Loan and any of the Real Estate Collateral
hereunder or, with respect to the Term Loan Lender and the Real Estate
Collateral, under any of the other Loan Documents or at law (including
but not limited to the Bankruptcy Code and the Uniform Commercial
Code) or in equity or otherwise. At such time as the Term Loan has
been paid in full, the Agent will act on the instruction of the
Majority Revolving Credit Banks with regard to the Real Estate
Collateral.
No remedy herein conferred upon any Bank or the Agent is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
in addition to every other remedy hereunder, now or hereafter existing at law or
in equity or otherwise.
SECTION 11.3. RELIEF FROM STAY. Prior to the Exit Facility Date only,
upon the occurrence and during the continuance of an Event of Default which has
resulted in any of the Obligations having been declared (or otherwise becoming)
due and payable prior to their stated maturity (an "Acceleration"), the Agent
may not exercise any of the Agent's and the Banks' rights or remedies relating
to the enforcement of its Liens against the Collateral or the exercise of its
rights of set-off pursuant to Section 12 hereof without obtaining from the
Bankruptcy Court relief from the automatic stay. The Agent shall, however, be
entitled to request from the Bankruptcy Court a hearing on any
-103-
request by it that the automatic stay be lifted so that the Agent may exercise
such rights and remedies and, if the Agent does do, it shall provide prompt
notice of such request to the Borrower, bankruptcy counsel to the Borrower, and
to counsel to the official creditor's committees in the Case, and the Office of
the United States Trustee, setting forth the Event of Default or Events of
Default which the Agent or the Banks believe in good faith to have occurred and
be continuing and stating that the Agent intends, upon the Bankruptcy Court
granting relief from the automatic stay for the Agent to do so, to enforce its
Liens and/or to exercise its rights of set-off. Whether or not relief from the
automatic stay is granted, during the continuance of an Event of Default the
Banks shall have no further obligation to make any additional Loans hereunder,
and the Agent shall have no obligation to issue, extend or renew any Letter of
Credit.
SECTION 11.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that
following the occurrence or during the continuance of any Event of Default, the
Agent or any Bank, as the case may be, receives any monies whether pursuant to
Section 2.12 or Section 2.14 hereof, in connection with the enforcement of any
of the Security Documents, or otherwise, with respect to the collection or
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) in respect of the collection or realization upon any of the Non-Real
Estate Collateral:
(i) FIRST, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies by
the Agent, for the exercise, protection or enforcement by the Agent of all
or any of the rights, remedies, powers and privileges of the Agent under
this Agreement or any of the other Loan Documents with respect to the
Non-Real Estate Collateral, or in respect of the Non-Real Estate Collateral
or in support of any provision of adequate indemnity to the Agent against
any taxes or liens which by law shall have, or may have, priority over the
rights of the Agent to such monies;
(ii) SECOND, to all Obligations owed to the Revolving Credit Banks in
such order or preference as the Majority Revolving Credit Banks may
determine; PROVIDED, HOWEVER, that distributions in respect of such
obligations shall be made (i) PARI PASSU among Obligations owed to the
Revolving Credit Banks with respect to the facility fees referred to in
Section 6.1(a) hereof and the Agent's administrative fee payable pursuant
to Section 6.1(e) hereof and all other Obligations owed to the Revolving
Credit Banks or the Agent and (ii) such that payments in respect of
Obligations
-104-
owing to the Revolving Credit Banks with respect to each type of Obligation
such as interest, principal, fees and expenses, shall be made among the
Revolving Credit Banks PRO RATA; and PROVIDED, FURTHER, that the Agent
shall be entitled to receive and hold cash collateral in the amount of 105%
of the aggregate Maximum Drawing Amount of outstanding Letters of Credit
and the Agent further may in its discretion make proper allowance to take
into account any other Obligations owed to the Revolving Credit Banks not
then due and payable;
(iii) THIRD, to all the Obligations owed to the Term Loan Lender and
the Surety in such order or preference as the Term Loan Lender and the
Surety may determine;
(iv) FOURTH, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks, the Agent and the
Surety of all of the Obligations, to the payment of any obligations
required to be paid pursuant to Section 9-504(1)(c) of the Uniform
Commercial Code of the Commonwealth of Massachusetts; and
(v) FIFTH, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
(b) in respect of the collection or realization upon any of the Real
Estate Collateral:
(i) FIRST, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent or the Surety in connection with the collection of
such monies by the Agent or the Surety, for the exercise, protection or
enforcement by the Agent or the Surety of all or any of the rights,
remedies, powers and privileges of the Agent under this Agreement or any of
the other Loan Documents or in respect of the Real Estate Collateral or in
support of any provision of adequate indemnity to the Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Agent to such monies;
(ii) SECOND, to all the Obligations owed to the Term Loan Lender and
the Surety in such order or preference as the Term Loan Lender and the
Surety may determine;
(iii) THIRD, to all other Obligations owed to the Revolving Credit
Banks in such order or preference as the Majority Revolving Credit Banks
may determine; PROVIDED, HOWEVER, that distributions in respect of such
obligations shall be made (i) PARI PASSU among Obligations owed to the
Revolving Credit Banks with respect to the facility fees referred to
-105-
in Section 6.1(a) hereof and the Agent's administrative fee payable
pursuant to Section 6.1(e) hereof and all other Obligations owed to the
Revolving Credit Banks and (ii) such that payments in respect of
Obligations owing to the Revolving Credit Banks with respect to each type
of Obligation such as interest, principal, fees and expenses, shall be made
among the Revolving Credit Banks PRO RATA; and PROVIDED, FURTHER, that the
Agent shall be entitled to receive and hold cash collateral in the amount
of 105% of the aggregate Maximum Drawing Amount of outstanding Letters of
Credit and the Agent further may in its discretion make proper allowance to
take into account any other Obligations owed to the Revolving Credit Banks
not then due and payable;
(iv) FOURTH, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks, the Agent and the
Surety of all of the Obligations, to the payment of any obligations
required to be paid pursuant to Section 9-504(1)(c) of the Uniform
Commercial Code of the Commonwealth of Massachusetts; and
(vi) FIFTH, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
SECTION 11.5. PRIORITY. If (a) there shall occur and continue an Event
of Default on account of any failure to make payment under any of Sections
11.1(a)(i), 11.1(a)(ii), 11.1(b)(i) or 11.1(b)(ii), whether such payment was
scheduled, or as a result of acceleration or otherwise, (b) the Borrower shall
fail to pay any Revolving Credit Loans or Reimbursement Obligations on the DIP
Maturity Date or Exit Maturity Date as applicable, or (c) the Term Loan Maturity
Date actually falls on a day which is the DIP Maturity Date or the Exit Maturity
Date, then the payment of any Obligations in respect of the Term Loan owed to
the Term Loan Lender or the Surety shall, except to the extent paid from
dispositions of Real Estate Collateral or pursuant to Section 11.4 hereof, be
subordinated and junior in right of payment to all of the other Obligations.
SECTION 12. SETOFF.
Any deposits or other sums at any time credited by or due from any of the
Banks to the Borrower and any securities or other property of the Borrower in
such Bank's possession may at all times after the occurrence and during the
continuance of an Event of Default hereunder be held and treated as collateral
security for the payment and performance of the Obligations and any and all
other liabilities, direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, of the Borrower to such Bank.
Regardless of the adequacy of any collateral, any deposits or other sums
credited by or due from any of the Banks to the Borrower may after the
occurrence and during the continuance of an Event of Default hereunder be
-106-
appropriately applied to or set-off against any of the Obligations due to such
Bank hereunder at any time without notice to the Borrower or compliance with any
other condition precedent now or hereafter imposed by statute, rule of law or
otherwise (all of which are hereby expressly waived by the Borrower), PROVIDED
however, that prior to the Exit Facility Date only, such Bank shall comply with
the requirements of Section 11.3 hereof prior to any such application or
set-off. Any assignee or loan participant of any Bank shall, to the extent of
such assignment or participation, be entitled to the set-off rights granted to
such Bank under this Section 12. Each of the Banks agrees with each other Bank
that (a) if an account to be set off is to be applied to Indebtedness of the
Borrower to such Bank, other than Indebtedness evidenced by the DIP Note or Exit
Note, as the case may be, held by such Bank, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness evidenced by such
Note held by such Bank, and (b) if such Bank shall receive from the Borrower,
whether by voluntary payment, exercise of right of set-off, counterclaim, cross
action, enforcement of the claim evidenced by the Note held by such Bank by
proceedings against the Borrower at law or in equity or otherwise, and shall
retain and apply to the payment of the Notes held by such Bank any amount in
excess of its ratable portion of the payment received by all of the Banks with
respect to the Notes held by all of the Banks, such Bank will make such
disposition and arrangements with the other Banks with respect to such excess,
either by way of distribution, PRO TANTO assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Note held by
it its proportionate payment as contemplated by this Agreement, PROVIDED that if
all or any part of such excess payment is thereafter recovered from such Bank,
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
SECTION 13. THE AGENT.
SECTION 13.1. AUTHORIZATION. (a) The Agent is authorized to take
such action on behalf of each of the Banks and to exercise all such powers as
are hereunder and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as are reasonably
incident thereto, PROVIDED that no duties or responsibilities not expressly
assumed herein or therein shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is that of an
independent contractor. The use of the term "Agent" is for convenience only and
is used to describe, as a form of convention, the independent contractual
relationship between the Agent and each of the Banks. Nothing contained in this
Agreement nor the other Loan Documents shall be construed to create an agency,
trust or other fiduciary relationship between the Agent and any of the Banks.
-107-
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the Uniform Commercial Code,
for purposes of actions for the benefit of the Agent and the Banks with respect
to all collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of the Agent as "secured party",
"mortgagee" or the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests, mortgages or
deeds of trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the Agent and the
Banks.
SECTION 13.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Agreement and the other Loan Documents. The Agent
may utilize the services of such Persons as the Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Borrower. The Surety may act as sub-agent for the Real
Estate Collateral pursuant to the terms of the Purchase and Guaranty Agreement.
SECTION 13.3. NO LIABILITY. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Agent or such
other Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
SECTION 13.4. NO REPRESENTATIONS. The Agent shall not be responsible for
the execution or validity or enforceability of this Agreement, the Notes, any of
the other Loan Documents or any instrument at any time constituting, or intended
to constitute, collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or collectability of any
such amounts owing with respect to the Notes, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on behalf of
the Borrower or any of its Subsidiaries, be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting,
-108-
or intended to constitute, collateral security for the Notes or to inspect any
of the properties, books or records of the Borrower or any of its Subsidiaries.
The Agent shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Borrower or any holder of any of the Notes shall
have been duly authorized or is true, accurate and complete. The Agent has not
made nor does it now make any representations or warranties, express or implied,
nor does it assume any liability to the Banks, with respect to the credit
worthiness or financial conditions of the Borrower, any of its Subsidiaries.
Each Bank acknowledges that it has, independently and without reliance upon the
Agent or any other Bank, and based upon such information and documents as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement.
SECTION 13.5. PAYMENTS.
(a) All payments by the Borrower to the Agent hereunder or under
any of the other Loan Documents shall be made to the Agent for the
respective accounts of the Banks and such payments shall constitute
payments by the Borrower to the Banks. Except as otherwise provided
in Section 2.12 hereof with respect to the Non-Real Estate Collateral,
not later than 1:00 p.m. Boston time, on the day of any proposed
prepayment or repayment of any Loan for which the Agent has received
notice thereof in accordance with Sections 2.2 or 2.4 hereof, the
Agent shall notify each of the affected Banks by telephone or in
writing of the Borrower's proposed prepayment or repayment of such
Loan, and, not later than 4:00 p.m. Boston time, on such date
(PROVIDED that the Agent shall have already actually received such
prepayment or repayment from the Borrower in readily available funds
not later than 3:00 p.m. Boston time on the proposed prepayment or
repayment date), the Agent agrees to distribute promptly to each
affected Bank such payment, and, in the case of payments made to any
of the Revolving Credit Banks, such Bank's PRO RATA share thereof in
accordance with its respective Commitment Percentage, or other
applicable share of such prepayment or repayment received by the Agent
for the account of the affected Banks, except as otherwise expressly
provided herein or in any of the other Loan Documents.
(b) If the Agent makes available to the Banks any prepayment or
repayment of any Loan received from it by the Borrower as set forth above
after such prepayment or repayment date, the Agent shall pay to each Bank
on demand its PRO RATA share of the amount equal to the product of (i) the
average computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds acquired
by the Agent during each day included in such period, TIMES (ii) the amount
of the prepayment or repayment of the
-109-
Loans made by the Borrower in accordance with Sections 2.2 or 2.4 hereof,
as applicable, TIMES (iii) a fraction, the numerator of which is the number
of days that elapse from and including such prepayment or repayment date to
the date on which the PRO RATA or other applicable share of the amount of
the Loans prepaid or repaid by the Borrower in accordance with Sections 2.2
or 2.4 hereof, as applicable, shall become immediately available to such
Bank, and the denominator of which is 365.
(c) If in the opinion of the Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any of
the other Loan Documents might involve it in liability, it may refrain from
making such distribution until its right to make such distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined by
such court.
(d) Each distribution of cash, property, securities or other value
received by any Bank, directly or indirectly, in respect of the Borrower's
Obligations hereunder, whether pursuant to any attachment, garnishment,
execution or other proceedings for collection thereof or pursuant to any
bankruptcy, reorganization, liquidation or other similar proceeding, after
payment of collection and other expenses as provided herein and in the
Security Documents, shall be apportioned among the Banks, and, in the case
of the Revolving Credit Banks PRO RATA in accordance with their Commitment
Percentages or other applicable shares thereof and such Bank shall promptly
pay to the Agent for distribution to the Banks as set forth herein their
respective PRO RATA shares of such cash, property, securities or other
value, unless such Bank is legally required to return such recovery, in
which case each Person receiving a portion thereof shall return to such
Bank its PRO RATA share of the sum required to be returned without
interest.
(e) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Revolving Credit Bank
that fails (i) to make available to the Agent its PRO RATA share of any
Loan as provided in Sections 2.1, 2.3 or 2.11 hereof or (ii) to comply with
the provisions of Section 12 hereof with respect to making dispositions and
arrangements with the other Banks, where such Bank's share of any payment
received, whether by set-off or otherwise, is in excess of its PRO RATA
share of such payments due and payable to all of the Banks, in each case
as, when and to the full extent required by the provisions of this
-110-
Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be
deemed a Delinquent Bank until such time as such delinquency is satisfied.
A Delinquent Bank shall be deemed to have assigned any and all payments due
to it from the Borrower, whether on account of outstanding Loans, interest,
fees or otherwise, to the remaining nondelinquent Banks for application to,
and reduction of, their respective PRO RATA shares of all outstanding
Loans. The Delinquent Bank hereby authorizes the Agent to distribute such
payments to the nondelinquent Banks in proportion to their respective PRO
RATA shares of all outstanding Loans. A Delinquent Bank shall be deemed to
have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans of the
nondelinquent Banks, the Banks' respective PRO RATA shares of all
outstanding Loans have returned to those in effect immediately prior to
such delinquency and without giving effect to the nonpayment causing such
delinquency.
SECTION 13.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of
any Note as the absolute owner thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
SECTION 13.7. INDEMNITY. The Banks agree hereby to indemnify and hold
harmless the Agent and any agent referred to in Section 13.2 from and against
any and all claims, actions and suits (whether groundless or otherwise), losses,
damages, costs, expenses (including any expenses for which the Agent has not
been reimbursed by the Borrower as required by Section 16.1 hereof), and
liabilities of every nature and character arising out of or related to this
Agreement, the Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's, or such agent's willful misconduct or gross
negligence. Such indemnification obligations shall be (a) the ratable
responsibility of the Revolving Credit Banks if such claim, action, suit, loss,
damage, cost, expense or liability is on account of the Agent acting upon the
request or instructions of the Majority Revolving Credit Banks pursuant Section
11.1(A) or Section 11.2(a), (b) the responsibility of the Term Loan Lender if
such claim, action, suit, loss, damage, cost, expense or liability is on account
of the Agent acting upon the request or instructions of the Term Loan Lender
pursuant Section 11.1(B) or Section 11.2(b), and (c) otherwise the ratable
responsibility of all of the Banks.
SECTION 13.8. AGENT AS LENDER. In its individual capacity, BkB shall have
the same obligations and the same rights, powers and privileges in respect to
its DIP Commitment, Exit Commitment and the Loans made by it, and as the holder
of any of the Notes as it would have were it not also the Agent.
-111-
SECTION 13.9. RESIGNATION.
(a) The Agent may resign at any time by giving thirty (30) days'
prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Banks shall have the right to appoint a successor Agent.
Unless an Event of Default shall have occurred and be continuing, such
successor Agent shall be reasonably acceptable to the Borrower. If no
successor Agent shall have been so appointed by the Banks and shall have
accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a financial
institution having a rating of not less than A or its equivalent by
Standard & Poor's Ratings Group. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation, the provisions of this Agreement and the other Loan Documents
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
(b) As long as any Obligations in respect of the Term Loan remain
outstanding, the resignation of the Agent shall not be effective unless and
until a successor Agent is appointed and, if such appointed successor is
not the Surety, approved by the Term Loan Lender, such approval not to be
unreasonably withheld or delayed. The Term Loan Lender shall, upon request
of the Agent, provide a list of potential successor agents acceptable to
the Term Loan Lender.
SECTION 13.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each
Bank hereby agrees that, upon learning of the existence of a Default or an
Event of Default, it shall promptly notify the Agent thereof. The Agent
hereby agrees that upon receipt of any notice under this Section 13.10 or
upon learning of the existence of a Default or Event of Default it shall
promptly notify the other Banks of the existence of such Default or Event of
Default.
SECTION 13.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, if (a)
so requested by the Revolving Credit Banks with respect to Non-Real Estate
Collateral or the Term Loan Lender with respect to the Real Estate
Collateral, and (b) the Revolving Credit Banks or (as the case may be) the
Term Loan Lender or the Surety shall have provided to the Agent such
additional indemnities and assurances against expenses and liabilities as the
Agent may
-112-
reasonably request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the Non-Real
Estate Collateral or (as the case may be) the Real Estate Collateral and
exercise all or any such other legal and equitable and other rights or remedies
as it may have in respect of such Collateral. The Revolving Credit Banks may
direct the Agent in writing as to the method and the extent of any such sale or
other disposition in respect of the Non-Real Estate Collateral and the Term Loan
Lender may direct the Agent in writing in respect of the Real Estate Collateral,
the Revolving Credit Banks or (as the case may be) the Term Loan Lender hereby
agreeing to indemnify and hold the Agent harmless from all liabilities incurred
in respect of all actions taken or omitted in accordance with such directions,
PROVIDED that the Agent need not comply with any such direction to the extent
that the Agent reasonably believes the Agent's compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction.
SECTION 14. ASSIGNMENT AND PARTICIPATION.
SECTION 14.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided
herein, each Revolving Credit Bank may assign to one or more Eligible Assignees,
and each Bank may assign to the Surety pursuant to the Purchase and Guaranty
Agreement, all or a portion of its interests, rights and obligations under this
Agreement (including, with respect to a Revolving Credit Bank, all or a portion
of its Commitment Percentage, DIP Commitment and Exit Commitment and the same
portion of the DIP Loans and Exit Loans at the time owing to it, the Notes held
by it, and its share of the Reimbursement Obligations with respect to Letters of
Credit); PROVIDED that (a) each of the Agent and, unless an Event of Default
shall have occurred and be continuing, the Borrower shall have given its prior
written consent to such assignment, which consent, in the case of the Borrower,
will not be unreasonably withheld, provided that no such Consent will be
necessary in connection with an assignment to the Surety, (b) each such
assignment by a Revolving Credit Bank shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under the
Revolving Credit Commitments, (c) each assignment of the Revolving Credit Loans
and Reimbursement Obligations shall be in an amount that is a minimum of
$7,500,000 or integral multiples of $500,000 in excess thereof and any
assignment of the Term Loan shall be in an amount equal to the entire unpaid
principal balance of the Term Loan, (d) any assignee of Revolving Credit Loans
and Reimbursement Obligations shall have joined the Purchase and Guaranty
Agreement as a party subject thereto as provided thereby, and (e) the parties to
such assignment shall execute and deliver to the Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance, substantially
in the form of EXHIBIT K attached hereto (an "Assignment and Acceptance"),
together with any Notes subject to such assignment. Upon such execution,
-113-
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (i) 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 Bank hereunder, and (ii) the assigning
Bank, if a Revolving Credit Bank, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred to in Section 14.3
hereof, and the Term Loan Lender upon assignment to the Surety of the Term Loan
and the Revolving Credit Banks upon assignment to the Surety, pursuant to the
Purchase Option referred to in the Purchase and Guaranty Agreement, of the
Revolving Credit Loans and Reimbursement Obligations, shall be released from its
or their obligations under this Agreement. The Term Loan Lender shall not
assign the Term Loan or any portion thereof in any way that would defeat the
rights of the Surety to acquire 100% of the Term Loan upon the terms of the
Purchase and Guaranty Agreement. An Assignment and Acceptance shall not be
necessary for an assignment to the Surety and shall be effective as set forth in
the Purchase and Guaranty Agreement. The Borrower hereby consents to the
assignment by the Term Loan Lender or, with respect to such Purchase Option, by
the Revolving Credit Banks to the Surety pursuant to the terms of the Purchase
and Guaranty Agreement.
SECTION 14.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS;
COVENANTS. By executing and delivering an Assignment and Acceptance, the
parties to the assignment thereunder confirm to and agree with each other and
the other parties hereto as follows: (a) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim or encumbrance, the
assigning Bank makes no representation or warranty, express or implied, and
assumes and shall have no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or the attachment, perfection or priority of
any security interest or mortgage; (b) the assigning Bank makes no
representation or warranty and assumes and shall have no responsibility with
respect to the financial condition of the Borrower and its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Borrower or any other
Person primarily or secondarily liable in respect of any of the Obligations of
any of their obligations under this Agreement or any of the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (c)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the most recent financial statements referred to in Section 8(e)
and Sections 10.1(a)(i) and (ii) hereof and such other documents
-114-
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (d) such assignee will,
independently and without reliance upon the assigning Bank, the Agent or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (e) such assignee represents and
warrants that it is an Eligible Assignee; (f) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; (g) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Bank; and (h) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance.
SECTION 14.3. REGISTER. The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register of similar list (the
"Register") for the recordation of the names and addresses of the Banks and the
Commitment Percentage, DIP Commitment, and Exit Commitment of, and principal
amount of the Loans owing to, the Banks from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and the Banks at any
reasonable time and from time to time upon reasonable prior notice. Upon each
such recordation, the assigning Bank agrees to pay to the Agent a registration
fee in the sum of $3000 unless the Surety is the assignee.
SECTION 14.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be substantially the form of
the assigned Notes. Within five (5) days
-115-
after the issuance of any new Notes pursuant to this Section 14.4, the Borrower
shall, at its reasonable expense, deliver an opinion of counsel, addressed to
the Banks and the Agent, relating to the due authorization, execution and
delivery of such new Notes and the legality, validity, binding effect and
enforceability thereof, in form and substance reasonably satisfactory to the
Agent and the Banks. The surrendered Notes shall be canceled and returned to
the Borrower.
SECTION 14.5. PARTICIPATIONS. Each Revolving Credit Bank may sell
participations to one or more banks or other entities in all or a portion of
such Bank's rights and obligations under this Agreement and the other Loan
Documents and the Term Loan Lender may sell participations to one or more banks
or other entities in up to 50% of its rights and obligations under this
Agreement and the other Loan Documents; PROVIDED that (a) each such
participation in Revolving Credit Loans and Reimbursement Obligations shall be
in an initial amount of not less than $5,000,000, and each such participation in
the Term Loan shall be in an amount not greater than 50% of the unpaid principal
of the Term Loan, with there being no more than one such participant, (or in any
lesser amount and to more than one participant if the Agent has consented
thereto), (b) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the right to approve waivers, amendments or modifications that would (i) reduce
the principal of or the interest rate on any Loans, (ii) extend the duration or
increase the amount of the DIP Commitment or Exit Commitment, as the case may
be, of such Bank as it relates to such participant, (iii) reduce the amount of
any commitment fees, facility fees or other fees to which such participant is
entitled, (iv) except for extensions of the Term Loan expressly contemplated by
Section 9.4, extend any regularly scheduled payment date for principal or
interest, or (v) release any Collateral (other than asset dispositions permitted
by the Loan Documents, and other than with respect to cash collateral in any
bankruptcy or insolvency case or proceeding after the Exit Facility Date).
SECTION 14.6. DISCLOSURE. The Borrower agrees that in addition to
disclosures made in accordance with standard and customary banking practices any
Bank may disclose information obtained by such Bank pursuant to this Agreement
to the Surety, assignees or participants and with the written consent of the
Borrower (such consent not to be unreasonably withheld) to potential assignees
or participants hereunder; PROVIDED that such assignees or participants or
potential assignees or participants shall agree (a) to treat in confidence such
information unless such information otherwise becomes public knowledge, (b) not
to disclose such information to a third party, except as required by law or
-116-
legal process, and (c) not to make use of such information for purposes of
transactions unrelated to such contemplated assignment or participation.
SECTION 14.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If
any assignee Bank is an Affiliate of the Borrower (except the Term Loan Lender
or the Surety on account of its holding of the Warrants, any warrant stock, or
the Special Shares issued with respect thereto or otherwise), then any such
assignee Bank shall have no right to vote as a Bank hereunder or under any of
the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to Section 11
hereof, and the determination of the Majority Banks shall for all purposes of
this Agreement and the other Loan Documents be made without regard to such
assignee Bank's interest in any of the Loans. If any Bank sells a participating
interest in any of the Loans to a participant, and such participant is the
Borrower or an Affiliate of the Borrower, then such transferor Bank shall
promptly notify the Agent of the sale of such participation. A transferor Bank
shall have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Agent pursuant to Section 11 hereof to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Majority Banks shall for
all purposes of this Agreement and the other Loan Documents be made without
regard to the interest of such participation.
SECTION 14.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank
shall retain its rights to be indemnified pursuant to Section 16.2 hereof with
respect to any claims or actions arising prior to the date of such assignment.
If any assignee Bank is not incorporated under the laws of the United States of
America or any state thereof, it shall, prior to the date on which any interest
or fees are payable hereunder or under any of the other Loan Documents for its
account, deliver to the Borrower and the Agent certification as to its exemption
from deduction or withholding of any United States federal income taxes.
Anything contained in this Section 14 to the contrary notwithstanding, any Bank
may at any time pledge all or any portion of its interest and rights under this
Agreement (including all or any portion of its Notes) to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or assignment or the enforcement thereof
shall release the pledgor or assignor Bank from its obligations hereunder or
under any of the other Loan Documents.
-117-
SECTION 14.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
SECTION 15. AGENT AND BANKS AS PARTIES IN INTEREST. The Borrower hereby
stipulates and agrees that the Agent and each of the Banks and the Surety is and
shall remain a party in interest in the Case and shall have the right to
participate, object and be heard in any motion or proceeding in connection
therewith and to appeal therefrom. Neither the failure to so participate,
object or be heard nor anything in this Agreement or any other Loan Documents
shall be deemed to be a waiver of the Agent's, the Surety's or any Bank's rights
or remedies thereunder or under applicable law. Without limitation of the
foregoing, the Agent and each of the Banks and the Surety shall have the right
to make any motion or raise any objection which it deems to be in its interest
(specifically including but not limited to objections to use of proceeds of the
Loans, use of Letters of Credit, payment of professional fees and expenses or
the amount thereof, sales or other transactions outside the ordinary course of
business or assumption or rejection of any unexpired lease or executory
contract) whether or not the action or inaction by the Borrower which is the
subject of such motion or objection violates or is expressly permitted by any
covenant or provisions of this Agreement or any other Loan Document.
SECTION 16. MISCELLANEOUS.
SECTION 16.1. COSTS AND EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall pay (a) to the Agent
promptly on demand all reasonable costs and expenses, including any taxes and
reasonable legal and other professional fees and expenses and reasonable fees
and expenses of the Agent's commercial finance examiners, liquidation analysis
consultants, collateral auditors (absent the continuance of a Default or an
Event of Default, not to exceed the sum of $17,500 for each audit by an
independent collateral auditor) appraisers (absent the continuance of a Default
or an Event of Default, not to exceed $15,000 per each appraisal by an
independent appraiser), and other professional advisors, incurred by the Agent,
the Term Loan Lender or the Surety in connection with its due diligence or the
preparation, negotiation, execution, syndication, amendment, and administration
of the Loan Documents, the Financing Order, and the Confirmation Order, PROVIDED
THAT (i) the Borrower shall not be required to pay both the Agent and the Surety
in connection with any examinations relating to the Real Estate Collateral, with
priority to the Surety, and the Borrower shall not be required to pay both the
Agent and the Surety in connection with examinations relating to the Non-Real
Estate Collateral, with priority to the Agent, and (ii) the Surety shall be
entitled in any case to be reimbursed the
-118-
reasonable expenses of a visit to each store location by one person, once per
calendar quarter, regardless of any such finance examinations, appraisals, and
environmental inspections otherwise conducted or to be conducted, and (b) to the
Agent and each of the Banks promptly on demand all costs and expenses (including
any taxes and reasonable legal and other professional fees and expenses and
reasonable fees and expenses of such other Persons as referred to above)
incurred by the Agent or such Bank in connection with the enforcement of or
preservation of rights under any of the Loan Documents or the administration
thereof after the occurrence of an Event of Default, or in connection with any
litigation in any way related to any Bank's or the Agent's relationship with the
Borrower and all fees, expenses and disbursements in connection with the
perfection, protection or priority of any Liens upon any of the Collateral and
in connection with any Bankruptcy Court or other court appearances. The
covenants of this Section 16.1 shall survive payment or satisfaction in full of
all other Obligations.
SECTION 16.2. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Agent, each of the Banks, the Surety and their respective officers,
employees, affiliates, agents and controlling Persons from and against any and
all losses, claims, damages and liabilities to which any such Person may be
subject arising out of or in connection with this Agreement and the other Loan
Documents or any of the transactions contemplated hereby or thereby or any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not such indemnified Person is a party hereto or thereto, and to
reimburse each of such indemnified Persons, from time to time upon its or his
demand, for any reasonable legal or other expenses incurred in connection with
investigating or defending any of the foregoing, whether or not the transactions
contemplated hereby are consummated; PROVIDED, HOWEVER, that the foregoing
indemnity will not, as to any indemnified Person, apply to losses, claims,
damages, liabilities or related expenses to the extent that they have been
determined by a court of competent jurisdiction by final non-appealable order to
arise from the bad faith, willful misconduct or gross negligence of such
indemnified Person. In litigation, or the preparation therefor, the Agent and
the Banks and the Surety will be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of such counsel. The covenants of this Section
16.2 shall survive payment or satisfaction in full of all other Obligations.
SECTION 16.3. NOTICES. Any communication to be made hereunder shall (a)
be made in writing, but unless otherwise stated, may be made by facsimile
transmission or letter, and (b) be made or delivered to the address of the party
receiving notice which is identified with its signature below (unless such party
has by five (5) days written notice specified another address), and shall be
deemed made or delivered when left at or delivered to that address, or five (5)
-119-
days after being mailed, postage prepaid, to such address, or in the case of
facsimile transmission, at the time of dispatch thereof if during normal
business hours on a Business Day in the country and city of receipt, or
otherwise at the opening of business on the following Business Day in such
destination location.
SECTION 16.4. AMENDMENT, ETC.
(a) Except as otherwise expressly provided in this
Agreement, any consent or approval required or permitted by this
Agreement to be given by all of the Banks, may be given, and any term
of this Agreement or of any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by
the Borrower of any terms of this Agreement or such other instrument
or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively
or prospectively) with, but only with the written consent of the
Majority Banks. Notwithstanding the foregoing, the rate of interest
on the Notes (other than interest accruing pursuant to Section 2.9(b)
or Section 3.6(b) following the effective date of any applicable
waiver by the Majority Banks, or, where required, all of the Banks, of
the Event of Default relating thereto), the amounts and terms and
maturity of the Notes, the dates and amounts of any required principal
or interest payments, the amount and duration of the respective DIP
Commitments and the Exit Commitments of the Banks, and the date and
amount of the commitment fees or letter of credit fees hereunder may
not be changed without the written consent of the Borrower and the
written consent of each of the Banks; the definition of Majority
Banks, any provision of the Loan Documents providing for or requiring
the approval, consent, or direction of the Agent, or of a specified
number, combination, or percentage of the Banks or holders of a
certain percentage of the DIP Commitments, the Exit Commitments, or
the Obligations, in any case with respect to any action or matter
relating to the Loan Documents, and the provisions of this Section
16.4(a) may not be amended without the written consent of all of the
Banks; SCHEDULE 2.12, SCHEDULE 2.12A, and SCHEDULE 2.14 may be amended
from time to time with the written agreement of the Agent and the
Borrower; and SCHEDULE 10.2(M) may be amended from time to time with
the written agreement of the Borrower and the Term Loan Lender with
notice to the Agent; except for the use of cash collateral in any
bankruptcy or insolvency case or proceeding after the Exit Facility
Date, and except for asset dispositions permitted by Section 10.2(f)
or Section 10.2(m) hereof, Collateral may not be released without the
written consent of all of the Banks and the Agent; and the amount of
the Agent's administrative fee or facility fees or other fees for the
Agent's own account or any fees with respect to the Letters of Credit
payable for the Agent's account, and the provisions of Section 13
hereof and the Fee Letter may not be amended without the written
consent of the Agent.
-120-
(b) Notwithstanding the foregoing:
(i) the consent of the Term Loan Lender shall not be required
for:
(A) any exercise by the Agent, or any Revolving Credit Bank
of any discretionary right that it has under this Agreement or
related documents to determine the Borrowing Base (exclusive of
any discretionary right to alter advance rates) or to monitor,
preserve or protect any of the Collateral, which monitoring,
preservation or protection would not adversely affect the Real
Estate Collateral,
(B) any amendments or waivers (1) that are favorable to the
Surety and have no adverse effect on the Term Loan Lender or the
Real Estate Collateral, or (2) which, in the Agent's reasonable
judgment, require immediate action for the protection of the
interests of the Agent, the Revolving Credit Banks and the Term
Loan Lender as a whole, and to which the Term Loan Lender has not
objected within forty-eight hours following notice of such action
to the Term Loan Lender, or
(C) minor or immaterial amendments or waivers of an
administrative or operational nature;
(ii) the Revolving Credit Banks may, without the approval of the
Term Loan Lender, make Revolving Credit Loans, and the Agent may,
without the approval of the Term Loan Lender, on a discretionary basis
issue, extend or renew Letters of Credit, notwithstanding the failure
of the Borrower to meet conditions precedent thereto in this Agreement
or any other Loan Documents, so long as, in each such case, (A) the
Borrower certifies as to the absence, and officers of the Agent active
on the Borrower's account are not aware, of the existence of any
material Default or any Event of Default, whether before or after
giving effect to such action, other than Defaults or Events of Default
that would be cured with the proceeds of such extension of credit; and
(B) after taking into account such Revolving Credit Loans and
issuance, extensions or renewals of Letters of Credit, the Borrower's
Obligations in respect of the Revolving Credit Loans and Reimbursement
Obligations would not exceed the lesser of (x) the Borrowing Base, and
(y) the sum of $35,000,000; and
(iii) the Revolving Credit Banks may, without the approval of
the Term Loan Lender, make Revolving Credit Loans, and the
-121-
Agent may, without the approval of the Term Loan Lender, on a
discretionary basis issue, extend or renew Letters of Credit, even if
the Obligations in respect of the Revolving Credit Loans and
Reimbursement Obligations would exceed the Borrowing Base, so long as
the overadvance amount so resulting does not exceed $500,000, or
remain outstanding for more than 30 days in any twelve month period,
and the Borrower certifies as to the absence, and the officers of the
Agent active on the Borrower's account are not otherwise aware, of any
material Default or any Event of Default then continuing at the time
when such overadvance is extended or which would occur after giving
effect to such action, other than (A) any Event of Default which would
otherwise be caused by the overadvance itself and (B) any Defaults or
Events of Default that would be cured with the proceeds of such
extension of credit.
SECTION 16.5. NO WAIVER. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Agent or any Bank in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Borrower or any of its
Subsidiaries shall entitle the Borrower or any Subsidiary to other or further
notice or demand in similar or other circumstances. No failure or delay by the
Agent or any Bank to exercise any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other right, power or privilege.
SECTION 16.6. SEVERABILITY. The provisions of this Agreement are
severable and if any one provision hereof shall be held invalid or unenforceable
in whole or in part in any jurisdiction, such invalidity or unenforceability
shall affect only such provision in such jurisdiction. This Agreement, together
with all exhibits and schedules hereto, expresses the entire understanding of
the parties with respect to the transactions contemplated hereby. This
Agreement and any amendment hereby may be executed in several counterparts, each
of which shall be an original, and all of which shall constitute one agreement.
In proving this Agreement, it shall not be necessary to produce more than one
such counterpart executed by the party to be charged.
SECTION 16.7. GOVERNING LAW. THIS AGREEMENT AND THE NOTES ARE CONTRACTS
UNDER SEAL UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF SAID
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW) AND, PRIOR TO THE EXIT FACILITY DATE BUT ONLY TO
-122-
THE EXTENT APPLICABLE, OR AS OTHERWISE PROVIDED IN THE REORGANIZATION PLAN, THE
PROVISIONS OF THE BANKRUPTCY CODE. The Borrower agrees that during the period
prior to the Exit Facility Date, any suit for the enforcement of this Agreement
and any other Loan Documents may be brought in the Bankruptcy Court and consents
to the nonexclusive jurisdiction of such court. The Borrower agrees that during
the period from and after the Exit Facility Date, any suit for the enforcement
of this Agreement and any of the other Loan Documents may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the nonexclusive jurisdiction of such court. The Borrower
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court. THE BORROWER, AS AN INDUCEMENT TO THE AGENT AND EACH OF THE BANKS TO
ENTER INTO THIS AGREEMENT, HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION ARISING IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER LOAN
DOCUMENT.
SECTION 16.8. TRANSITION PROVISION. This Agreement shall supersede the
Original Credit Agreement in its entirety on the Effective Date, except as
otherwise provided in this Section 16.8. On the Effective Date, the rights and
obligations of the parties under the Original Credit Agreement and the "DIP
Notes" as defined therein shall be subsumed within and be governed by this
Agreement and the DIP Revolving Credit Notes; provided, however, that (a) each
"DIP Loan" (as defined in the Original Credit Agreement) outstanding under the
Original Credit Agreement on the Effective Date shall, for purposes of this
Agreement, be a DIP Revolving Credit Loan, and (b) each "Letter of Credit" (as
defined in the Original Credit Agreement) outstanding under the Original Credit
Agreement on the Effective Date shall, for purposes of this Agreement, be a
Letter of Credit. Upon its receipt of its DIP Revolving Credit Note hereunder
on the Effective Date, each Revolving Credit Bank will promptly return to the
Borrower, marked "Cancelled," such Revolving Credit Bank's "DIP Note" (as
defined in the Original Credit Agreement) issued to such Revolving Credit Bank
under the Original Credit Agrement. All unpaid interest and all unpaid
commitment, agent's and other fees and expenses owing or accruing under or in
respect of the Original Credit Agrement for the period ending on the Effective
Date shall be paid at the times and in accordance with the method specified in
the Original Credit Agreement as if the Original Credit Agreement were in
effect.
-123-
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first above written.
LAMONTS APPAREL, INC., a Delaware corporation,
debtor and debtor in possession
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice Chairman
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
BANKBOSTON, N.A., individually and as
Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.