1
Exhibit 10.2
$50,000,000
SUBORDINATED CREDIT AGREEMENT
DATED AS OF
DECEMBER 11, 2000
BY AND BETWEEN
VALUE CITY DEPARTMENT STORES, INC.
AS BORROWER
AND
SCHOTTENSTEIN STORES CORPORATION
AS LENDER
2
Exhibit 10.2
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS AND TERMS...........................................................................1
1.1. Certain Defined Terms 1
1.2. Computation of Time Periods 13
1.3. Accounting Terms 13
1.4. Terms Generally 14
SECTION 2. AMOUNT AND TERMS OF LOANS......................................................................14
2.1. Commitments for Loans 14
2.2. Minimum Borrowing Amounts, etc. 14
2.3. Procedures for Borrowing 14
2.4. Disbursement of Funds 15
2.5. Notes 15
2.6. Conversions of General Revolving Loans 15
2.7. Interest 15
2.8. Interest Periods 17
2.9. Increased Costs, Illegality, etc. 18
2.10. Breakage Compensation 19
SECTION 3. FEES; COMMITMENTS..............................................................................19
3.1. Fees 19
3.2. [Intentionally omitted.] 20
3.3. Mandatory Termination/Adjustments of Commitments, etc. 20
3.4 Mandatory Prepayment, Income Tax Refund 20
SECTION 4. PAYMENTS.......................................................................................20
4.1. Voluntary Prepayments 20
4.2. Mandatory Prepayments 21
4.3. Method and Place of Payment 22
4.4. Net Payments 23
SECTION 5. CONDITIONS PRECEDENT...........................................................................23
5.1. Conditions Precedent at Closing Date 23
5.2. Conditions Precedent to All Credit Events 25
SECTION 6. REPRESENTATIONS AND WARRANTIES.................................................................25
6.1. Corporate Status, etc. 25
6.2. Subsidiaries 25
6.3. Corporate Power and Authority, etc. 25
6.4. No Violation 25
6.5. Governmental Approvals 26
6.6. Litigation 26
6.7. Use of Proceeds; Margin Regulations 26
3
Exhibit 10.2
6.8. No Material Adverse Change. 26
6.9. Tax Returns and Payments 26
6.10. Title to Properties, etc. 26
6.11. Lawful Operations, etc. 26
6.12. Environmental Matters 27
6.13. Compliance with ERISA 27
6.14. Intellectual Property, etc. 27
6.15. Investment Company Act, etc. 28
6.16. Burdensome Contracts; Labor Relations 28
6.17. Existing Indebtedness 28
6.18. Security Interests 28
6.19. True and Complete Disclosure 28
SECTION 7. AFFIRMATIVE COVENANTS..........................................................................29
7.1. Reporting Requirements 29
7.2. Books, Records and Inspections 31
7.3. Insurance 31
7.4. Payment of Taxes and Claims 31
7.5. Corporate Franchises 31
7.6. Good Repair 32
7.7. Compliance with Statutes, etc. 32
7.8. Compliance with Environmental Laws 32
7.9. Fiscal Years, Fiscal Quarters 32
7.10. Certain Subsidiaries to Join in Subsidiary Guaranty 33
7.11. Casualty and Condemnation 33
7.12. Landlord/Mortgagee Waivers; Bailee Letters 33
SECTION 8. NEGATIVE COVENANTS.............................................................................34
8.1. Changes in Business 34
8.2. Consolidation, Merger, Acquisitions, Asset Sales, etc. 34
8.3. Liens 35
8.4. Indebtedness 36
8.5. Advances, Investments, Loans and Guaranty Obligations 37
8.6. Dividends, etc. 38
8.7. Limitation on Certain Restrictive Agreements 38
8.8. Prepayments and Refinancings of Other Debt, etc. 38
8.9. Transactions with Affiliates 39
8.10. Organizational Documents, etc. 39
8.11. Plan Terminations, Minimum Funding, etc. 39
8.12. Minimum Principal Outstanding 39
SECTION 9. SUBORDINATION..................................................................................39
9.1. Priority of Senior Indebtedness over Obligations 39
9.2. Payment Over of Proceeds Upon Dissolution, Etc. 40
9.3. Suspension of Payment And Remedies When Senior Indebtedness
in Default. 41
9.4. Payment Permitted if No Default 41
4
Exhibit 10.2
9.5. Subrogation to Rights of Holders of Senior Indebtedness 41
9.6. Provisions Solely to Define Relative Rights. 41
9.7. No Waiver of Subordination Provisions. 42
9.8. Notice to Lender. 42
9.9. Reliance on Judicial Order or Certificate of Liquidating Agent. 42
9.10 Continuing Agreement; Assignments Under the Senior Facility 42
SECTION 10. EVENTS OF DEFAULT..............................................................................43
10.1. Events of Default 43
10.2. Acceleration, etc. 44
10.3. Application of Liquidation Proceeds 45
SECTION 11. MISCELLANEOUS..................................................................................45
11.1. Payment of Expenses etc. 45
11.2. Right of Setoff 46
11.3. Notices 47
11.4. Benefit of Agreement 47
11.5. No Waiver: Remedies Cumulative 47
11.6. [Intentionally omitted.] 47
11.7. Calculations: Computations 47
11.8. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial 47
11.9. Counterparts 48
11.10. Effectiveness; Integration 48
11.11. Headings Descriptive 48
11.12. Amendment or Waiver 48
11.13. Survival of Indemnities 48
11.14. [Intentionally omitted.] 48
11.15. Lender Register 48
11.16. General Limitation of Liability 48
11.17. No Duty 49
11.18. [Intentionally omitted.] 49
11.19. Survival of Representations and Warranties 49
11.20. Severability. 49
11.21. Independence of Covenants. 49
11.22. Interest Rate Limitation. 49
5
Exhibit 10.2
CREDIT AGREEMENT, dated as of December 11, 2000, between the following:
(i) VALUE CITY DEPARTMENT STORES, INC., an Ohio corporation
(herein, together with its successors and assigns, the "BORROWER"); and
(ii) SCHOTTENSTEIN STORES CORPORATION, a Delaware corporation
(the "LENDER").
PRELIMINARY STATEMENTS:
1. The Borrower requires funds to meet its ongoing working capital
needs and for other general corporate purposes.
2. The Borrower has requested, and the Lender has agreed, that the
Lender loan the Borrower funds on the terms and conditions set forth in this
Agreement.
AGREEMENT:
In consideration of the premises and the mutual agreements contained
herein, the Borrower and the Lender hereby agree as follows:
SECTION 1. DEFINITIONS AND TERMS.
1.1. CERTAIN DEFINED TERMS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires:
"ACQUISITION" shall mean and include (i) any acquisition on a going
concern basis (whether by purchase, lease or otherwise) of any facility and/or
business operated by any person who is not a Subsidiary of the Borrower, and
(ii) acquisitions of a majority of the outstanding equity or other similar
interests in any such person (whether by merger, stock purchase or otherwise).
"AFFILIATE" shall mean, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such person. A person shall be deemed to control a second
person if such first person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such second person or (ii) to direct or cause the
direction of the management and policies of such second person, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, (x) a director, officer or employee of a person shall not, solely
by reason of such status, be considered an Affiliate of such person; and (y)
neither the Lender nor any Lender shall in any event be considered an Affiliate
of the Borrower or any other Credit Party or any of their respective
Subsidiaries.
6
Exhibit 10.2
"AGREEMENT" shall mean this Credit Agreement, as the same may be from
time to time further modified, amended and/or supplemented.
"APPLICABLE COMMITMENT FEE RATE" shall have the meaning provided in
section 3.1(a).
"APPLICABLE EURODOLLAR MARGIN" shall have the meaning provided in
section 2.7(e).
"ASSET SALE" shall mean the sale, transfer or other disposition
(including by means of Sale and Lease-Back Transactions, and by means of
mergers, consolidations, and liquidations of a corporation, partnership or
limited liability company of the interests therein of the Borrower or any
Subsidiary) by the Borrower or any Subsidiary to any person other than the
Borrower or any Subsidiary of any of their respective assets, PROVIDED that the
term Asset Sale specifically excludes any sales, transfers or other dispositions
of inventory, or obsolete or excess furniture, fixtures, equipment or other
property, tangible or intangible, in each case in the ordinary course of
business.
"AUTHORIZED OFFICER" shall mean any officer or employee of the Borrower
designated as such in writing to the Lender by the Borrower.
"BANKRUPTCY CODE" shall have the meaning provided in section 10.1(h).
"BORROWER" shall have the meaning provided in the first paragraph of
this Agreement.
"BORROWING" shall mean the incurrence of General Revolving Loans
consisting of one Type of Loan, by the Borrower from the Lender.
"BUSINESS DAY" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the city in which the Payment Office is located a legal holiday or a day on
which banking institutions are authorized by law or other governmental actions
to close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day which
is a Business Day described in clause (i) and which is also a day for trading by
and between banks in U.S. dollar deposits in the interbank Eurodollar market.
"CAPITAL LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities identified as "capital lease
obligations" (or any similar words) on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP.
"CASH EQUIVALENTS" shall mean any of the following:
(i) securities issued or directly and fully guaranteed or
insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith
7
Exhibit 10.2
and credit of the United States of America is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition;
(ii) U.S. dollar denominated time deposits, certificates of
deposit and bankers' acceptances of (x) the Senior Lender or (y) any
bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from ▇▇▇▇▇'▇ is at least P-1 or the
equivalent thereof (any such bank, an "APPROVED BANK"), in each case
with maturities of not more than 180 days from the date of acquisition;
(iii) commercial paper issued by the Senior Lender or any
Approved Bank or by the parent company of the Senior Lender or any
Approved Bank and commercial paper issued by, or guaranteed by, any
industrial or financial company with a short- term commercial paper
rating of at least A-1 or the equivalent thereof by S&P or at least P-1
or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or
the equivalent of each thereof, from S&P or Moody's, as the case may
be, and in each case maturing within 270 days after the date of
acquisition;
(iv) investments in money market funds substantially all the
assets of which are comprised of securities of the types described in
clauses (i) through (iii) above; and
(v) investments in money market funds access to which is
provided as part of "sweep" accounts maintained with the Senior Lender
or an Approved Bank.
"CASH PROCEEDS" shall mean, with respect to (i) any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale, and (ii) any Event of Loss, the aggregate cash payments, including all
insurance proceeds and proceeds of any award for condemnation or taking,
received in connection with such Event of Loss.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section 9601 ET SEQ.
"CHANGE OF CONTROL" shall mean and include any of the following:
(i) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the
Borrower's Board of Directors (together with any new directors whose
election by the Borrower's Board of Directors was, or whose nomination
for election by the Borrower's shareholders was (prior to the
commencement of the proxy or consent solicitation relating thereto),
approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved),
cease for any reason to constitute a majority of the directors then in
office;
(ii) any person or group (as such term is defined in section
13(d)(3) of the 1934 Act), other than the Borrower, any trustee or
other fiduciary holding securities
8
Exhibit 10.2
under an employee benefit plan of the Borrower and the Current Holder
Group, shall acquire, directly or indirectly, beneficial ownership
(within the meaning of Rule 13d-3 and 13d-5 of the ▇▇▇▇ ▇▇▇) of more
than 30%, on a fully diluted basis, of the economic or voting interest
in the Borrower's capital stock;
(iii) the shareholders of the Borrower approve a merger or
consolidation of the Borrower with any other person, OTHER than a
merger or consolidation which would result in the voting securities of
the Borrower outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted or
exchanged for voting securities of the surviving or resulting entity)
more than 75% of the combined voting power of the voting securities of
the Borrower or such surviving or resulting entity outstanding after
such merger or consolidation;
(iv) the shareholders of the Borrower approve a plan of
complete liquidation of the Borrower or an agreement or agreements for
the sale or disposition by the Borrower of all or substantially all of
the Borrower's assets; and/or
(v) any "change in control" or any similar term as defined in
any of the documents governing the Subordinated Bridge Debt.
"CLOSING DATE" shall mean the date, on or after the Effective Date,
upon which the conditions specified in section 5.1 are satisfied. It is expected
that the Closing Date will be December 11, 2000; if it is a different date, the
Lender will give written notice of the different date to all of the other
parties hereto.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"COLLATERAL" shall mean any collateral covered by any Security
Document.
"COMMITMENT" shall mean an amount up to the principal sum of
$50,000,000, as the same may be reduced from time to time pursuant to section
3.3, terminated pursuant to 10.2 or adjusted from time to time pursuant to
section 11.4; PROVIDED, HOWEVER, that any amounts in excess of the principal sum
of $20,000,000 shall be advanced in the sole discretion of the Lender.
"COMMITMENT FEE" shall have the meaning provided in section 3.1(a).
"CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, all
amortization expenses of the Borrower and its Subsidiaries, all as determined
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events amounts expended or capitalized under Capital Leases
but excluding any amount representing capitalized
9
Exhibit 10.2
interest) by the Borrower and its Subsidiaries during that period that, in
conformity with GAAP, are or are required to be included in the property, plant
or equipment reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries. Notwithstanding the foregoing, amounts expended to complete, or
capitalized in connection with the completion of, Permitted Acquisitions, shall
not constitute Consolidated Capital Expenditures.
"CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, all
depreciation expenses of the Borrower and its Subsidiaries, all as determined
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED EBITDA" shall mean, for any period, Consolidated Net
Income for such period; PLUS (A) the sum of the amounts for such period included
in determining such Consolidated Net Income of (i) Consolidated Interest
Expense, (ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation
Expense, (iv) Consolidated Amortization Expense, and (v) non cash losses and
charges which are properly classified as extraordinary or nonrecurring; LESS (B)
gains on sales of assets and other extraordinary gains and other non-recurring
non-cash gains; all as determined for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP; EXCEPT that in computing
Consolidated Net Income for purposes of this definition, there shall be excluded
therefrom (x) the income, (or loss) of any entity (other than Subsidiaries of
the Borrower) in which the Borrower or any of its Subsidiaries has a joint or
minority interest, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of its Subsidiaries during
such period, and (y) the income of any Subsidiary of the Borrower to the extent
that the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary; and PROVIDED
that, notwithstanding anything to the contrary contained herein, the Borrower's
Consolidated EBITDA for any Testing Period shall (x) include the appropriate
financial items for any person or business unit which has been acquired by the
Borrower for any portion of such Testing Period prior to the date of
acquisition, and (y) exclude the appropriate financial items for any person or
business unit which has been disposed of by the Borrower for the portion of such
Testing Period prior to the date of disposition.
"CONSOLIDATED INCOME TAX EXPENSE" shall mean, for any period, all
provisions for taxes based on the net income of the Borrower or any of its
Subsidiaries (including, without limitation, any additions to such taxes, and
any penalties and interest with respect thereto), all as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, total
interest expense (including that which is capitalized and that which is
attributable to Capital Leases, in accordance with GAAP) of the Borrower and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries including, without limitation,
net costs under Hedge Agreements, but excluding, however, any amortization or
charge off of deferred financing costs, all as determined in accordance with
GAAP.
"CONSOLIDATED NET INCOME" shall mean for any period, the net income (or
loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single
10
Exhibit 10.2
accounting period determined in conformity with GAAP, PROVIDED that there shall
be excluded therefrom (i) the income (or loss) of any entity (other than
Subsidiaries of the Borrower) in which the Borrower or any of its Subsidiaries
has a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of its Subsidiaries during
such period, and (ii) the income of any Subsidiary of the Borrower to the extent
that the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean at any time for the
determination thereof (i) all amounts that, in conformity with GAAP, would be
included under the caption "total stockholders' equity" (or any like caption) on
a consolidated balance sheet of the Borrower as at such date, PLUS (ii) the
outstanding principal balance of the Subordinated Bridge Debt as at such date,
REDUCED BY (iii) the sum (without duplication), on a consolidated basis, of the
following, to the extent reflected as consolidated assets: (A) any write-up in
the book value of any assets subsequent to the date of the most recent financial
statements referred to in section 7.8(a) of the Senior Facility, (B) goodwill,
(C) organizational expenses, research and development expenses, patents,
trademarks, copyrights licenses and other intangible assets, (D) unamortized
debt discount and expense, (E) securities which are not readily marketable, (F)
cash or Cash Equivalents held in a sinking or other analogous fund established
for the purpose of redemption, retirement or prepayment of capital stock or
Indebtedness, and (G) any items not included in the foregoing clauses (A)
through (F) that are treated as intangibles in accordance with GAAP, PROVIDED
that in no event shall Consolidated Tangible Net Worth include any amounts in
respect of Redeemable Stock.
"CONSOLIDATED TOTAL DEBT"shall mean the sum (without duplication) of
the principal amount (using Capitalized Lease Obligations in lieu of principal
amount, in the case of any Capital Lease, or present value, based on the
implicit interest rate, in lieu of principal amount, in the case of a Synthetic
Lease, or higher of stated or liquidation value, in lieu of principal amount, in
the case of Redeemable Stock) of all Indebtedness (other than the Subordinated
Bridge Debt) of the Borrower and of each of its Subsidiaries, all as determined
on a consolidated basis; PROVIDED that so long as there is no payment default
under the Borrower's Guaranty Obligation with respect to the Indebtedness of
VCM, Ltd., an Ohio limited liability company, and the maturity of such
Indebtedness has not been accelerated, only 50% of such Guaranty Obligation of
the Borrower shall be included in Consolidated Total Debt.
"CREDIT DOCUMENTS" shall mean this Agreement, the Note, the Subsidiary
Guaranty, and each Security Document.
"CREDIT EVENT" shall mean the making of any Loans.
"CREDIT PARTY" shall mean the Borrower and each of its Subsidiaries
which is a party to any Credit Document.
"CURRENT HOLDER GROUP" shall mean (i) those persons who are officers
and directors of the Borrower at the Effective Date, (ii) the spouses, heirs,
legatees, descendants and blood
11
Exhibit 10.2
relatives to the third degree of consanguinity of any such person, (iii) the
executors and administrators of the estate of any such person, and any court
appointed guardian of any such person, (iv) any trust for the benefit of any
such person referred to in the foregoing clauses (i) and (ii) or any other
persons, or organized for charitable purposes, so long as one or more members of
the Current Holder Group has the exclusive or joint right to control the voting
and disposition of securities held by such trust, (v) any entity beneficially
owned by any such person referred to in the foregoing clauses (i) and (ii), and
(vi) Schottenstein Stores Corporation.
"DEFAULT" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"DOLLARS", "U.S. DOLLARS", "DOLLARS" and the sign "$" each means lawful
money of the United States.
"EFFECTIVE DATE" shall have the meaning provided in section 11.10.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued under any such law
(hereafter "CLAIMS"), including, without limitation, (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the storage, treatment or Release (as defined
in CERCLA) of any Hazardous Materials or arising from alleged injury or threat
of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any binding and
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment issued to or
rendered against the Borrower or any of its Subsidiaries relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. Section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.;
the Safe Drinking Water Act, 42 U.S.C. Section 3803 ET SEQ.; the Oil Pollution
Act of 1990, 33 U.S.C. Section 2701 ET SEQ.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 ET SEQ., the
Hazardous Material Transportation Act, 49 U.S.C. Section 1801 ET SEQ. and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 ET SEQ. (to the extent
it regulates occupational exposure to Hazardous Materials); and any state and
local or foreign counterparts or equivalents, in each case as amended from time
to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the
Effective Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
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Exhibit 10.2
"ERISA AFFILIATE" shall mean each person (as defined in section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of section 414(b),(c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
"EURODOLLAR LOANS" shall mean each Loan bearing interest at the rates
provided in section 2.7(b).
"EURODOLLAR RATE" shall mean with respect to each Interest Period for a
Eurodollar Loan, (A) either (i) the rate per annum for deposits in Dollars of
amounts in same day funds comparable to the outstanding principal amount of the
Eurodollar Loan for which an interest rate is then being determined for a
maturity most nearly comparable to such Interest Period which appears on page
3750 of the Dow ▇▇▇▇▇ Telerate Screen as of 11:00 A.M. (local time at the Notice
Office) on the date which is two Business Days prior to the commencement of such
Interest Period, or (ii) if such a rate does not appear on such page, an
interest rate per annum equal to the average (rounded upward to the nearest
whole multiple of 1/16 of 1% per annum, if such average is not such a multiple)
of the rate per annum at which deposits in Dollars are offered to each of the
Reference Banks (as defined in the Senior Facility) by prime banks in the London
interbank Eurodollar market for deposits of amounts in Dollars in same day funds
comparable to the outstanding principal amount of the Eurodollar Loan for which
an interest rate is then being determined with maturities comparable to the
Interest Period to be applicable to such Eurodollar Loan, determined as of 11:00
A.M. (London time) on the date which is two Business Days prior to the
commencement of such Interest Period, in each case divided (and rounded upward
to the nearest whole multiple of 1/16th of 1%) by (B) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves and without benefit of credits for proration, exceptions or offsets
which may be available from time to time) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"EVENT OF DEFAULT" shall have the meaning provided in section 10.1.
"EVENT OF LOSS" shall mean, with respect to any property, (i) the
actual or constructive total loss of such property or the use thereof, resulting
from destruction, damage beyond repair, or the rendition of such property
permanently unfit for normal use from any casualty or similar occurrence
whatsoever, (ii) the destruction or damage of a portion of such property from
any casualty or similar occurrence whatsoever under circumstances in which such
damage cannot reasonably be expected to be repaired, or such property cannot
reasonably be expected to be restored to its condition immediately prior to such
destruction or damage, within 90 days after the occurrence of such destruction
or damage, (iii) the condemnation, confiscation or seizure of, or requisition of
title to or use of, any property, or (iv) in the case of any property located
upon a Leasehold, the termination or expiration of such Leasehold.
"EXISTING INDEBTEDNESS" shall have the meaning provided in section
6.17.
13
Exhibit 10.2
"EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning provided in
section 6.17.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Lender from three Federal Funds brokers of
recognized standing selected by the Lender.
"FEES" shall mean all amounts payable pursuant to, or referred to in,
section 3.1.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary (i) which is not
incorporated in the United States and substantially all of whose assets and
properties are located, or substantially all of whose business is carried on,
outside the United States, or (ii) substantially all of whose assets consist of
Subsidiaries that are Foreign Subsidiaries as defined in clause (i) of this
definition.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of section 9,
including defined terms as used therein, are subject (to the extent provided
therein) to sections 1.3 and 11.7(a).
"GENERAL REVOLVING LOAN" shall have the meaning provided in section
2.1.
"GENERAL REVOLVING NOTE" shall have the meaning provided in section
2.5(a).
"GUARANTY OBLIGATIONS" shall mean as to any person (without
duplication) any obligation of such person guaranteeing any Indebtedness
("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such person, whether or not contingent, (a) to purchase any such
primary Indebtedness or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary Indebtedness or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary Indebtedness of the
ability of the primary obligor to make payment of such primary Indebtedness, or
(d) otherwise to assure or hold harmless the owner of such primary Indebtedness
against loss in respect thereof, PROVIDED, HOWEVER, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary Indebtedness in respect of which such Guaranty Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such person in good faith.
"HAZARDOUS MATERIALS" shall mean (i) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde
14
Exhibit 10.2
foam insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; and (ii) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", "restricted
hazardous materials", "extremely hazardous wastes", "restrictive hazardous
wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants",
or words of similar meaning and regulatory effect, under any applicable
Environmental Law.
"HEDGE AGREEMENT" shall mean (i) any interest rate swap agreement, any
interest rate cap agreement, any interest rate collar agreement or other similar
agreement or arrangement designed to protect against fluctuations in interest
rates, and (ii) any currency swap agreement, forward currency purchase agreement
or similar agreement or arrangement designed to protect against fluctuations in
currency exchange rates.
"INCOME TAX REFUND" means a payment in an amount up to the amount of
the Borrower's pending tax refund (which the Borrower estimates to be
$30,000,000).
"INDEBTEDNESS" of any person shall mean without duplication:
(i) all indebtedness of such person for borrowed money;
(ii) all bonds, notes, debentures and similar debt securities
of such person;
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such person;
(iv) the face amount of all letters of credit issued for the
account of such person and, without duplication, all drafts drawn
thereunder;
(v) all obligations, contingent or otherwise, of such person
in respect of bankers' acceptances;
(vi) all Indebtedness of a second person secured by any Lien
on any property owned by such first person, whether or not such
indebtedness has been assumed;
(vii) all Capitalized Lease Obligations of such person;
(viii) the present value, determined on the basis of the
implicit interest rate, of all basic rental obligations under all
Synthetic Leases of such person;
(ix) all obligations of such person to pay a specified
purchase price for goods or services whether or not delivered or
accepted, I.E., take-or-pay and similar obligations;
(x) all net obligations of such person under Hedge Agreements;
(xi) the full outstanding balance of trade receivables, notes
or other instruments sold with full recourse (and the portion thereof
subject to potential recourse,
15
Exhibit 10.2
if sold with limited recourse), other than in any such case any
thereof sold solely for purposes of collection of delinquent accounts;
(xii) the stated value, or liquidation value if higher, of all
Redeemable Stock of such person; and
(xiii) all Guaranty Obligations of such person;
PROVIDED that (x) neither trade payables nor other similar accrued expenses, in
each case arising in the ordinary course of business, nor obligations in respect
of insurance policies or performance or surety bonds which themselves are not
guarantees of Indebtedness (nor drafts, acceptances or similar instruments
evidencing the same nor obligations in respect of letters of credit supporting
the payment of the same), shall constitute Indebtedness; and (y) the
Indebtedness of any person shall in any event include (without duplication) the
Indebtedness of any other entity (including any general partnership in which
such person is a general partner) to the extent such person is liable thereon as
a result of such person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide expressly
that such person is not liable thereon.
"INTEREST PERIOD" with respect to any Eurodollar Loan shall mean the
interest period applicable thereto, as determined pursuant to section 2.8.
"LEASEHOLDS" of any person means all the right, title and interest of
such person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"LENDER" shall have the meaning provided in the first paragraph of this
Agreement.
"LENDER REGISTER" shall have the meaning provided in section 11.15.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"LIMITED" shall mean The Limited, Inc. and its Affiliates.
"LIMITED AGREEMENT" shall mean that certain agreement and security
agreement dated as of December, 2000 by and between the Borrower and Limited as
the same may be amended, restated and supplemented from time to time.
"LIMITED INVENTORY" shall mean the merchandise inventory of the
Borrower subject to a lien in favor of Limited pursuant to the Limited
Agreement.
"LOAN" shall have the meaning provided in section 2.1.
"MARGIN STOCK" shall have the meaning provided in Regulation U.
16
Exhibit 10.2
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, operations, property, assets, liabilities or financial condition of,
(i) when used with reference to the Borrower or any of its Subsidiaries, the
Borrower and its Subsidiaries, taken as a whole, or (ii) when used with
reference to any other person, such person and its Subsidiaries, taken as a
whole, as the case may be.
"MATERIAL SUBSIDIARY" shall mean, at any time, with reference to any
person, any Subsidiary of such person (i) that has assets at such time
comprising 15% or more of the consolidated assets of such person and its
Subsidiaries, or (ii) whose operations in the current fiscal year are expected
to, or whose operations in the most recent fiscal year did (or would have if
such person had been a Subsidiary for such entire fiscal year), represent 15% or
more of the consolidated earnings before interest, taxes, depreciation and
amortization of such person and its Subsidiaries for such fiscal year.
"MATURITY DATE" shall mean the day after the later of (i) the Maturity
Date as defined in the Senior Facility and (ii) payment in full of all
obligations under and termination in full of all lending obligations and
commitments under the Senior Facility, unless earlier terminated.
"MINIMUM BORROWING AMOUNT" shall mean with respect to(A) Prime Rate
Loans, $1,000,000, with minimum increments thereafter of $500,000, or (B)
Eurodollar Loans, $1,000,000, with minimum increments thereafter of $1,000,000.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. and its
successors.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in
section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan, other
than a Multiemployer Plan, to which the Borrower or any ERISA Affiliate, and one
or more employers other than the Borrower or an ERISA Affiliate, is making or
accruing an obligation to make contributions or, in the event that any such plan
has been terminated, to which the Borrower or an ERISA Affiliate made or accrued
an obligation to make contributions during any of the five plan years preceding
the date of termination of such plan.
"NET CASH PROCEEDS" shall mean, with respect to (i) any Asset Sale, the
Cash Proceeds resulting therefrom net of (A) reasonable and customary expenses
of sale incurred in connection with such Asset Sale, and other reasonable and
customary fees and expenses incurred, and all state, and local taxes paid or
reasonably estimated to be payable by such person, as a consequence of such
Asset Sale and the payment of principal, premium and interest of Indebtedness
(other than the Obligations) secured by the asset which is the subject of the
Asset Sale and required to be, and which is, repaid under the terms thereof as a
result of such Asset Sale, (B) amounts of any distributions payable to holders
of minority interests in the relevant person or in the relevant property or
assets and (C) incremental federal, state and local income taxes paid or payable
as a result thereof; and (ii) any Event of Loss, the Cash Proceeds resulting
therefrom net of (A) reasonable and customary expenses incurred in connection
with such Event
17
Exhibit 10.2
of Loss, and local taxes paid or reasonably estimated to be payable by such
person, as a consequence of such Event of Loss and the payment of principal,
premium and interest of Indebtedness (other than the Obligations) secured by the
asset which is the subject of the Event of Loss and required to be, and which
is, repaid under the terms thereof as a result of such Event of Loss, (B)
amounts of any distributions payable to holders of minority interests in the
relevant person or in the relevant property or assets and (C) incremental
federal, state and local income taxes paid or payable as a result thereof.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"NOTE" shall mean the General Revolving Note.
"NOTICE OF BORROWING" shall have the meaning provided in section
2.3(a).
"NOTICE OF CONVERSION" shall have the meaning provided in section 2.6.
"NOTICE OFFICE" shall mean the office of the Lender located at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
"OBLIGATIONS" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing by the
Borrower or any other Credit Party to the Lender pursuant to the terms of this
Agreement or any other Credit Document.
"OPERATING LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is not accounted for as a Capital Lease on the balance
sheet of that person.
"PAYMENT OFFICE" shall mean the Notice Office, or such other office,
located in a city in the United States Eastern Time Zone, as the Lender may
designate to the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to section 4002 of ERISA, or any successor thereto.
"PERMITTED ACQUISITION" shall mean and include any Acquisition as to
which all of the following conditions are satisfied:
(i) such Acquisition involves a line or lines of business
which is complementary to the lines of business in which the Borrower
and its Subsidiaries, considered as an entirety, are engaged on the
Effective Date, UNLESS the Lender specifically approves or consents to
such Acquisition in writing;
(ii) such Acquisition is not actively opposed by the Board of
Directors (or similar governing body) of the selling person or the
person whose equity interests are to be acquired, UNLESS the Lender
specifically approves or consents to such Acquisition in writing; and
18
Exhibit 10.2
(iii) the cumulative aggregate consideration for such
Acquisition and all other Permitted Acquisitions completed after the
Closing Date, including the principal amount of any assumed
Indebtedness and (without duplication) any Indebtedness of any acquired
person or persons, does not exceed $5,000,000, UNLESS the Lender
specifically approves or consents to such Acquisition;
PROVIDED, that the term Permitted Acquisition specifically excludes any loans,
advances or minority investments otherwise permitted pursuant to section 8.5.
"PERMITTED LIENS" shall mean Liens described in section 8.3.
"PERSON" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" shall mean any multiemployer or single-employer plan as defined
in section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute by) the Borrower or a Subsidiary of the
Borrower or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Borrower, or a Subsidiary of
the Borrower or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"PRIME RATE" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the greater of (i) the rate of interest established by the
Senior Agent at its principal office, from time to time, as its prime rate,
whether or not publicly announced, which interest rate may or may not be the
lowest rate charged by it for commercial loans or other extensions of credit;
and (ii) the Federal Funds Effective Rate in effect from time to time PLUS 1/2
of 1% per annum.
"PRIME RATE LOAN" shall mean each Loan bearing interest at the rate
provided in section 2.7(a).
"PROHIBITED TRANSACTION" shall mean a transaction with respect to a
Plan that is prohibited under section 4975 of the Code or section 406 of ERISA
and not exempt under section 4975 of the Code or section 408 of ERISA.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ.
"REAL PROPERTY" of any person shall mean all of the right, title and
interest of such person in and to land, improvements and fixtures, including
Leaseholds.
"REDEEMABLE STOCK" shall mean with respect to any person, any capital
stock or similar equity interests of such person that (i) is by its terms
subject to mandatory redemption, in whole or in part, pursuant to a sinking
fund, scheduled redemption or similar provisions, at any time prior to the
latest Maturity Date; or (ii) otherwise is required to be repurchased or retired
on a scheduled date or dates, upon the occurrence of any event or circumstance,
at the option of the holder or holders thereof, or otherwise, at any time prior
to the latest Maturity Date under this
19
Exhibit 10.2
Agreement, other than any such repurchase or retirement occasioned by a "change
of control" or similar event.
"REGULATION D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"REGULATION U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REPORTABLE EVENT" shall mean an event described in section 4043 of
ERISA or the regulations thereunder with respect to a Plan, other than those
events as to which the notice requirement is waived under subsections .22, .23,
.25, .27, .28, .30, .31, .32, .34, .35, .63, .64, .65 or .67 of PBGC Regulation
section 4043.
"SALE AND LEASE-BACK TRANSACTION" shall mean any arrangement with any
person providing for the leasing by the Borrower or any Subsidiary of any
property (except for temporary leases for a term, including any renewal thereof,
of not more than one year and except for leases between the Borrower and a
Subsidiary or between Subsidiaries), which property has been or is to be sold or
transferred by the Borrower or such Subsidiary to such person.
"S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., and its successors.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECURITY AGREEMENTS" shall have the meaning provided in section
5.1(c).
"SECURITY DOCUMENTS" shall mean the Security Agreements, the Pledge
Agreement and each other document pursuant to which any Lien or security
interest is granted by any Credit Party to the Lender as security for any of the
Obligations.
"SENIOR AGENT" shall mean National City Bank, its successor and assigns
in such capacity, in its capacity as administrative agent and collateral agent
under the amended and restated credit agreement, as amended, between, INTER
ALIA, National City Bank and the Borrower.
"SENIOR FACILITY" shall mean the credit agreement, security agreement,
pledge agreement, and each other document entered into from time to time in
connection therewith by and between, INTER ALIA, National City Bank, as
administrative agent and collateral agent, and Value City Department Stores,
Inc., as borrower, dated as of March 15, 2000, as any of the same shall be
amended, waived, supplemented, restated or otherwise modified from time to time.
20
Exhibit 10.2
"SENIOR INDEBTEDNESS" shall mean all obligations of any Credit Party
under the Senior Facility, and any replacement, substitution, or refinancing of
the Senior Facility. Without limiting the foregoing, Senior Indebtedness
includes the principal of and premium, if any, and interest (including interest
accruing after the occurrence of an event of default or after the filing of a
petition initiating any proceeding pursuant to any bankruptcy law, whether or
not allowed) on all obligations of every nature of the Borrower or such
Subsidiary Guarantor from time to time owed to the lenders under the Senior
Facility.
STANDARD PERMITTED LIENS" shall mean the following:
(i) Liens for taxes not yet delinquent or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
(ii) Liens in respect of property or assets imposed by law
which were incurred in the ordinary course of business, such as
carriers', warehousemen's, materialmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, which do not
in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the
business of the Borrower or any Subsidiary;
(iii) Liens created by this Agreement or the other Credit
Documents;
(iv) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under section
10.1(g);
(v) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; and mechanic's Liens, carrier's Liens, and other Liens to
secure the performance of tenders, statutory obligations, contract
bids, government contracts, performance and return-of-money bonds and
other similar obligations, incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed
money), whether pursuant to statutory requirements, common law or
consensual arrangements;
(vi) Leases or subleases granted to others not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries and any interest or title of a lessor under any lease not
in violation of this Agreement;
(vii) easements, rights-of-way, zoning or deed restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries
considered as an entirety;
(viii) Liens arising from financing statements regarding
property subject to leases not in violation of the requirements of this
Agreement, PROVIDED that such Liens
21
Exhibit 10.2
are only in respect of the property subject to, and secure only, the
respective lease (and any other lease with the same or an affiliated
lessor); and
(ix) rights of consignors of goods, whether or not perfected
by the filing of a financing statement under the UCC.
"SUBORDINATED BRIDGE DEBT" shall mean the Borrower's issuance of
subordinated indebtedness in the aggregate principal amount of $75,000,000,
pursuant to a Senior Subordinated Convertible loan agreement dated as of March
15, 2000, between the Borrower and Prudential Securities Credit Corp., LLC, as
amended, modified, supplemented, restated or assigned from time to time,
including without limitation, any subordinated indebtedness which is convertible
to any other security of the Borrower or any of its Subsidiaries or Affiliates
and continuing subsequent to any such conversion of any Indebtedness.
"SUBSIDIARY" of any person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"SUBSIDIARY GUARANTOR" shall mean any Subsidiary which is a party to
the Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" shall have the meaning provided in section
5.1(c).
"SYNTHETIC LEASE" shall mean any lease (i) which is accounted for by
the lessee as an Operating Lease, and (ii) under which the lessee is intended to
be the "owner" of the leased property for Federal income tax purposes.
"TAXES" shall have the meaning provided in section 4.4.
"TESTING PERIOD" shall mean for any determination, a single period
consisting of the four consecutive fiscal quarters of the Borrower then last
ended (whether or not such quarters are all within the same fiscal year), EXCEPT
that if a particular provision of this Agreement indicates that a Testing Period
shall be of a different specified duration, such Testing Period shall consist of
the particular fiscal quarter or quarters of the Borrower then last ended which
are so indicated in such provision.
"TYPE" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Prime Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
22
Exhibit 10.2
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"UNITED STATES" and "U.S." each means United States of America.
"UNUTILIZED COMMITMENT" for the Lender at any time shall mean the
excess of (i) the Commitment at such time over (ii) the principal amount of
General Revolving Loans made by the Lender and outstanding at such time.
"WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the Borrower at
least 95% of whose capital stock, equity interests and partnership interests,
other than director's qualifying shares or similar interests, are owned directly
or indirectly by the Borrower.
"WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
e-mail transmission, telegraph or cable.
1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
1.3. ACCOUNTING TERMS. Except as otherwise specifically provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; PROVIDED that, if the
Borrower notifies the Lender that the Borrower requests an amendment to any
provision of section 8 or 9 hereof to eliminate the effect of any change
occurring after the Effective Date in GAAP or in the application thereof to such
provision, regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance with the requirements of this
Agreement.
1.4. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any person shall be construed to include such person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular
23
Exhibit 10.2
provision hereof, (d) all references herein to sections, Annexes and Exhibits
shall be construed to refer to sections of, and Annexes and Exhibits to, this
Agreement, and (e) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all real property, tangible
and intangible assets and properties, including cash, securities, accounts and
contract rights, and interests in any of the foregoing.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1. COMMITMENTS FOR LOANS. Subject to and upon the terms and
conditions herein set forth, the Lender agrees to make a loan or loans (each a
"LOAN" and, collectively, the "LOANS") to the Borrower to the extent of the
Commitment, which Loans shall be drawn, as set forth below:
Loans to the Borrower (each a "GENERAL REVOLVING LOAN" and,
collectively, the "GENERAL REVOLVING LOANS") (i) may be made at any
time and from time to time on and after the Closing Date and prior to
the Maturity Date; (ii) shall be made only in U.S. Dollars; (iii)
except as otherwise provided, may, at the option of the Borrower, be
incurred and maintained as, or converted into, General Revolving Loans
that are either Prime Rate Loans or Eurodollar Loans, PROVIDED that all
General Revolving Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of General
Revolving Loans of the same Type; and (iv) may be repaid or prepaid and
reborrowed in accordance with the provisions hereof.
2.2. MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount of
each Borrowing by the Borrower shall not be less than the Minimum Borrowing
Amount. More than one Borrowing may be incurred by the Borrower on any day,
PROVIDED that (i) if there are two or more Borrowings on a single day which
consist of Eurodollar Loans, each such Borrowing shall have a different initial
Interest Period, and (ii) at no time shall there be more than 10 Borrowings that
are Eurodollar Loans outstanding hereunder.
2.3. PROCEDURES FOR BORROWING. (a) NOTICE OF BORROWING. Whenever the
Borrower desires to incur Loans, it shall give the Lender at its Notice Office
and in the case of any Borrowing of (1) Eurodollar Loans to be made hereunder,
prior to 11:00 A.M. (local time at its Notice Office), at least three Business
Days' prior written or telephonic notice thereof (in the case of telephonic
notice, promptly confirmed in writing if so requested by the Lender), or (2)
Prime Rate Loans to be made hereunder, prior to 11:00 A.M. (local time at its
Notice Office), at least one Business Day's prior written or telephonic notice
thereof (in the case of telephonic notice, promptly confirmed in writing if so
requested by the Lender). Each such notice (each such notice, a "NOTICE OF
BORROWING") shall (if requested by the Lender to be confirmed in writing) be
substantially in the form of Exhibit B-1, and in any event shall be irrevocable
and shall specify: (i) the aggregate principal amount of the Loans to be made
pursuant to such Borrowing; (ii) the date of the Borrowing (which shall be a
Business Day); (iii) whether the Borrowing shall consist of Prime Rate Loans or
Eurodollar Loans; and (iv) if the requested Borrowing consists of Eurodollar
Loans, the Interest Period to be initially applicable thereto.
(b) ACTIONS BY LENDER ON TELEPHONE NOTICE. Without in any way limiting
the obligation of the Borrower to confirm in writing any telephonic notice
permitted to be given
24
Exhibit 10.2
hereunder, the Lender may act prior to receipt of written confirmation without
liability upon the basis of such telephonic notice believed by the Lender in
good faith to be from an Authorized Officer of the Borrower entitled to give
telephonic notices under this Agreement on behalf of the Borrower. In each such
case, the Lender's record of the terms of such telephonic notice shall be
conclusive absent manifest error.
2.4. DISBURSEMENT OF FUNDS. (a) No later than 2:00 P.M. (local time at
the Payment Office) on the date specified in each Notice of Borrowing, the
Lender will make available the requested Borrowing.
2.5. NOTES. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loans made to it by the Lender shall be evidenced by a
promissory note substantially in the form of Exhibit A (the "GENERAL REVOLVING
NOTE").
(b) The General Revolving Note shall: (i) be executed by the Borrower;
(ii) be payable to the order of the Lender and be dated on or prior to the date
the first Loan evidenced thereby is made; (iii) be in a stated principal amount
equal to the Commitment and be payable in the principal amount of General
Revolving Loans evidenced thereby; (iv) mature on the Maturity Date; (v) bear
interest as provided in section 2.7 in respect of the Prime Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby; (vi) be subject to
mandatory prepayment as provided in section 4.2; and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(c) The Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any Note, endorse on the reverse side thereof or the grid attached
thereto the outstanding principal amount of Loans evidenced thereby. Failure to
make any such notation or any error in any such notation shall not affect the
Borrower's obligations in respect of such Loans.
2.6. CONVERSIONS OF GENERAL REVOLVING LOANS. The Borrower shall have
the option to convert on any Business Day all or a portion at least equal to the
applicable Minimum Borrowing Amount of the outstanding principal amount of the
outstanding Loans comprising a Borrowing into a Borrowing or Borrowings of the
other Type of Loan PROVIDED that: (i) no partial conversion of a Borrowing of
Eurodollar Loans shall reduce the outstanding principal amount of the Eurodollar
Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount
applicable thereto; (ii) any conversion of Eurodollar Loans into Prime Rate
Loans shall be made on, and only on, the last day of an Interest Period for such
Eurodollar Loans; (iii) Prime Rate Loans may only be converted into Eurodollar
Loans if no Default or Event of Default is in existence on the date of the
conversion unless the Lender otherwise agrees; and (iv) Borrowings of Eurodollar
Loans resulting from this section 2.6 shall conform to the requirements of
section 2.2. Each such conversion shall be effected by the Borrower giving the
Lender at its Notice Office, prior to 11:00 A.M. (local time at such Notice
Office), at least three Business Days' (or prior to 11:00 A.M. (local time at
such Notice Office) one Business Day's, in the case of a conversion into Prime
Rate Loans), prior written notice (or telephonic notice, promptly confirmed in
writing if so requested by the Lender) (each a "NOTICE OF CONVERSION"),
substantially in the form of Exhibit B-2, specifying the Loans to be so
converted, the Type of Loans to be converted into and, if to be converted into a
Borrowing of Eurodollar Loans, the
25
Exhibit 10.2
Interest Period to be initially applicable thereto. For the avoidance of doubt,
the prepayment or repayment of any Loans out of the proceeds of other Loans by
the Borrower is not considered a conversion of Loans into other Loans.
2.7. INTEREST. (a) INTEREST ON PRIME RATE LOANS. The unpaid principal
amount of each General Revolving Loan that is a Prime Rate Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a fluctuating rate per annum which shall at all
times be equal to the Prime Rate in effect from time to time PLUS the Applicable
Prime Rate Margin (as defined below).
(b) INTEREST ON EURODOLLAR LOANS. The unpaid principal amount of each
Eurodollar Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be the Applicable Eurodollar Margin (as defined below) for such
Eurodollar Loan PLUS the relevant Eurodollar Rate.
(c) DEFAULT INTEREST. Notwithstanding the above provisions, if a
Default or Event of Default is in existence, all outstanding amounts of
principal and, to the extent permitted by law, all overdue interest, in respect
of each Loan shall bear interest, payable on demand, at a fluctuating rate per
annum equal to 2% per annum above the interest rate from time to time in effect
pursuant to section 2.7(a) hereof. If any amount (other than the principal of
and interest on the Loans) payable by the Borrower under the Credit Documents is
not paid when due, such amount shall bear interest, payable on demand, at a
fluctuating rate per annum equal to 2% per annum above the interest rate from
time to time in effect pursuant to section 2.7(a) hereof.
(d) ACCRUAL AND PAYMENT OF INTEREST. Interest shall accrue from and
including the date of any Borrowing to but excluding the date of any prepayment
or repayment thereof and shall be payable in the case of any Loan (A) which is a
Prime Rate Loan, quarterly in arrears on the last Business Day of January,
April, July, and October, (B) which is a Eurodollar Loan, on the last day of
each Interest Period applicable thereto, and in the case of an Interest Period
in excess of three months, on the dates which are successively three months
after the commencement of such Interest Period, and (C) on any prepayment or
conversion (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) APPLICABLE MARGINS. As used herein, the term "APPLICABLE PRIME RATE
MARGIN", as applied to any Loan which is a Prime Rate Loan, and the term
"APPLICABLE EURODOLLAR MARGIN", as applied to any Loan which is a Eurodollar
Loan, means the particular rate per annum determined by the Lender in accordance
with the Pricing Grid Table which appears below and the following provisions:
(i) [INTENTIONALLY OMITTED.]
(ii) Commencing with the fiscal quarter of the Borrower ended
on or nearest to January 31, 2001, and continuing for each fiscal
quarter thereafter, the Lender will determine the Applicable Prime Rate
Margin or Applicable Eurodollar Margin for any Loan in accordance with
the Pricing Grid Table, based on the Borrower's ratio of (x)
26
Exhibit 10.2
Consolidated Total Debt as of the end of the fiscal quarter, to (y)
Consolidated EBITDA for the Testing Period ended with such fiscal
quarter, as identified in such Table. Changes in the Applicable Prime
Rate Margin or Applicable Eurodollar Margin based upon changes in such
ratio shall become effective on the same day as equivalent changes
become effective under the terms of the Senior Facility.
(iii) Notwithstanding the above provisions, during any period
when a Default or an Event of Default has occurred and is continuing,
then the Applicable Prime Rate Margin and the Applicable Eurodollar
Margin shall each be the highest rate per annum indicated therefor in
the Pricing Grid Table, regardless of the Borrower's ratio of
Consolidated Total Debt to Consolidated EBITDA at such time.
(iv) Any changes in the Applicable Prime Rate Margin or the
Applicable Eurodollar Margin shall be determined by the Lender in
accordance with the above provisions and the Lender will promptly
provide notice of such determinations to the Borrower. Any such
determination by the Lender pursuant to this section 2.7(e) shall be
conclusive and binding absent manifest error.
27
Exhibit 10.2
PRICING GRID TABLE
(EXPRESSED IN BASIS POINTS)
-------------------------------------------------------------------------------------------------------------------
RATIO OF APPLICABLE APPLICABLE APPLICABLE
CONSOLIDATED TOTAL DEBT EURODOLLAR PRIME RATE COMMITMENT
TO MARGIN MARGIN FEE RATE
CONSOLIDATED EBITDA
-------------------------------------------------------------------------------------------------------------------
Equal to or greater than 3.50 to 1.00 325.00 175.00 50.00
-------------------------------------------------------------------------------------------------------------------
Equal to or greater than 3.25 to 1.00 but 300.00 150.00 50.00
less than 3.50 to 1.00
-------------------------------------------------------------------------------------------------------------------
Equal to or greater than 3.00 to 1.00 less 275.00 125.00 50.00
than 3.25 to 1.00
-------------------------------------------------------------------------------------------------------------------
Equal to or greater than 2.50 to 1.00 but 250.00 100.00 37.50
less than 3.00 to 1.00
-------------------------------------------------------------------------------------------------------------------
Equal to or greater than 2.00 to 1.00 but 225.00 75.00 37.50
less than 2.50 to 1.00
-------------------------------------------------------------------------------------------------------------------
Equal or greater than 1.50 to 1.00 but less 200.00 50.00 30.00
than 2.00 to 1.00
-------------------------------------------------------------------------------------------------------------------
Equal or greater than 1.00 to 1.00 but less 175.00 50.00 25.00
than 1.50 to 1.00
-------------------------------------------------------------------------------------------------------------------
Less than 1.00 to 1.00 150.00 50.00 25.00
-------------------------------------------------------------------------------------------------------------------
(f) COMPUTATIONS OF INTEREST. All computations of interest hereunder
shall be made in accordance with section 11.7(b).
2.8. INTEREST PERIODS. (a) At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 11:00 A.M. (local time at the applicable
Notice Office) on the third Business Day prior to the expiration of an Interest
Period applicable to a Borrowing of Eurodollar Loans, it shall have the right to
elect an Interest Period, by giving the Lender written or telephonic notice (in
the case of telephonic notice, promptly confirmed in writing if so requested by
the Lender) of the particular Interest Period selected for such Borrowing, which
Interest Period shall, at the option of the Borrower, be a one, two, three or
six month period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Prime Rate
Loans) and each Interest Period occurring thereafter in respect
28
Exhibit 10.2
of such Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period for any Loan may be selected which
would end after the Maturity Date; and
(v) no Interest Period may be elected at any time when a
Default or an Event of Default is then in existence unless the Lender
otherwise agrees.
(b) If upon the expiration of any Interest Period the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing to Prime Rate Loans
effective as of the expiration date of such current Interest Period.
2.9. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that the Lender
has determined on a reasonable basis (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising after the
Effective Date affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that the Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder in an
amount which the Lender reasonably deems material with respect to any
Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a
change in the rate of taxes or similar charges) because of (x) any
change since the Effective Date in any applicable law, governmental
rule, regulation, guideline, order or request (whether or not having
the force of law), or in the interpretation or administration thereof
and including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves includable in the Eurodollar Rate pursuant
to the definition thereof) and/or (y) other circumstances adversely
affecting the interbank Eurodollar market or the position of the Lender
in such market; or
29
Exhibit 10.2
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by the Lender in good
faith with any change since the Effective Date in any law, governmental
rule, regulation, guideline or order, or the interpretation or
application thereof, or would conflict with any thereof not having the
force of law but with which the Lender customarily complies or has
become impracticable as a result of a contingency occurring after the
Effective Date which materially adversely affects the interbank
Eurodollar market;
THEN, and in any such event, the Lender shall (x) on or promptly following such
date or time and (y) within 10 Business Days of the date on which such event no
longer exists give notice (by telephone confirmed in writing) to the Borrower of
such determination. Thereafter (x) in the case of clause (i) above, Eurodollar
Loans shall no longer be available until such time as the Lender notifies the
Borrower that the circumstances giving rise to such notice by the Lender no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred or
converted shall be deemed rescinded by the Borrower or, in the case of a Notice
of Borrowing, shall, at the option of the Borrower, be deemed converted into a
Notice of Borrowing for Prime Rate Loans to be made on the date of Borrowing
contained in such Notice of Borrowing, (y) in the case of clause (ii) above, the
Borrower shall pay to the Lender, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as the Lender shall determine) as shall be
required to compensate the Lender, for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to the Lender, showing the basis for the calculation thereof, which basis must
be reasonable, submitted to the Borrower by the Lender shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in section 2.9(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in section 2.9(a)(ii) or (iii), the Borrower may (and in
the case of a Eurodollar Loan affected pursuant to section 2.9(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, by giving the Lender telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified by
the Lender pursuant to section 2.9(a)(ii) or (iii), cancel said Borrowing,
convert the related Notice of Borrowing into one requesting a Borrowing of Prime
Rate Loans or require the Lender to make its requested Loan as a Prime Rate
Loan, or (ii) if the affected Eurodollar Loan is then outstanding, upon at least
one Business Day's notice to the Lender, require the Lender to convert each such
Eurodollar Loan.
(c) Notwithstanding anything in this Agreement to the contrary, the
Lender shall not be entitled to compensation or payment or reimbursement of
other amounts under section 2.9 or 4.4 for any amounts incurred or accruing more
than 120 days prior to the giving of notice to the Borrower of additional costs
or other amounts of the nature described in such sections.
2.10. BREAKAGE COMPENSATION. The Borrower shall compensate the Lender,
upon its written request (which request shall set forth the detailed basis for
requesting and the method of calculating such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or
30
Exhibit 10.2
reemployment of deposits or other funds required by the Lender to fund its
Eurodollar Loans) which the Lender may sustain: (i) if for any reason (other
than a default by the Lender) a Borrowing of Eurodollar Loans does not occur on
a date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not rescinded or withdrawn by the Borrower or deemed rescinded or
withdrawn pursuant to section 2.9(a)); (ii) if any repayment, prepayment or
conversion of any of its Eurodollar Loans occurs on a date which is not the last
day of an Interest Period applicable thereto; (iii) if any prepayment of any of
its Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay its Eurodollar Loans when required by the terms of this
Agreement or (y) an election made pursuant to section 2.9(b).
SECTION 3. FEES; COMMITMENTS.
3.1. FEES. (a) The Borrower agrees to pay to the Lender a commitment
fee (the "COMMITMENT FEE") for the period from and including the Effective Date
to, but not including, the Maturity Date or, if earlier, the date upon which the
Commitment has been terminated, computed for each day at a rate per annum equal
to the Applicable Commitment Fee Rate for such day on the Lender's Unutilized
Commitment for such day. The Commitment Fee shall be due and payable in arrears
on the last Business Day of each January, April, July and October and on the
Maturity Date or, if earlier, the date upon which the Commitment has been
terminated.
As used herein, the term "APPLICABLE COMMITMENT FEE RATE" means the
particular rate per annum determined by the Lender in accordance with the
Pricing Grid Table which appears in section 2.7(e) hereof, based on the
Borrower's ratio of Consolidated Total Debt to Consolidated EBITDA as referred
to in such Pricing Grid Table, and the following provisions:
(i) [INTENTIONALLY OMITTED.]
(ii) Commencing with the fiscal quarter of the Borrower ended
on or nearest to January 31, 2001, and continuing for each fiscal
quarter thereafter, the Lender will determine the Applicable Commitment
Fee Rate in accordance with the Pricing Grid Table, based on the
Borrower's ratio of (x) Consolidated Total Debt as of the end of the
fiscal quarter, to (y) Consolidated EBITDA for the Testing Period ended
with such fiscal quarter, as identified in such Table. Changes in the
Applicable Commitment Fee Rate based upon changes in such ratio shall
become effective on the same day as equivalent changes become effective
under the terms of the Senior Facility.
(iii) [INTENTIONALLY OMITTED.]
(iv) Notwithstanding the above provisions, during any period
when a Default or an Event of Default has occurred and is continuing,
then the Applicable Commitment Fee Rate shall be the highest rate per
annum indicated therefor in the Pricing Grid Table, regardless of the
Borrower's ratio of Consolidated Total Debt to Consolidated EBITDA at
such time.
31
Exhibit 10.2
(v) Any changes in the Applicable Commitment Fee Rate shall be
determined by the Lender in accordance with the above provisions and
the Lender will promptly provide notice of such determinations to the
Borrower. Any such determination by the Lender pursuant to this section
3.1(a) shall be conclusive and binding absent manifest error.
(b) All computations of Fees shall be made in accordance with section
11.7(b).
3.2. [INTENTIONALLY OMITTED.]
3.3. MANDATORY TERMINATION/ADJUSTMENTS OF COMMITMENTS, ETC.
(a) The Commitment shall terminate on the Maturity Date.
(b) The Commitment shall be permanently reduced, without premium or
penalty, at the time that any mandatory prepayment of General Revolving Loans
would be made pursuant to section 4.2(b), (c), (d) or (e) if General Revolving
Loans were then outstanding in the full amount of the Commitment then in effect,
in an amount equal to the required prepayment of principal of General Revolving
Loans which would be required to be made in such circumstance. Any such
reduction shall apply to permanently reduce the Commitment. The Borrower will
provide at least three Business Days' prior written notice (or telephonic notice
confirmed in writing) to the Lender at its Notice Office of any reduction of the
Commitment pursuant to this section 3.3(b), specifying the date and amount of
the reduction.
3.4 MANDATORY PREPAYMENT, INCOME TAX REFUND. In the event that over
$20,000,000 of the Commitment is outstanding at the time the Borrower receives
the Income Tax Refund and as long as no Default or Event of Default under Senior
Indebtedness has occurred and is continuing, the Borrower shall make a mandatory
prepayment to the Lender of an amount of proceeds received on the Income Tax
Refund sufficient to reduce the principal amount outstanding under this
Agreement to $20,000,000.
SECTION 4. PAYMENTS.
4.1. VOLUNTARY PREPAYMENTS. Subject to section 8.12, the Borrower shall
have the right to prepay any Loans, in whole or in part, without premium or
penalty, from time to time on the following terms and conditions:
(a) the Borrower shall give the Lender at the Notice Office
written or telephonic notice (in the case of telephonic notice,
promptly confirmed in writing if so requested by the Lender) of its
intent to prepay Loans, the amount of such prepayment and (in the case
of Eurodollar Loans) the specific Borrowing(s) pursuant to which made,
which notice shall be received by the Lender by
(x) 11:00 A.M. (local time at the Notice Office)
three Business Days prior to the date of such prepayment, in
the case of any prepayment of Eurodollar Loans, or
32
Exhibit 10.2
(y) 11:00 A.M. (local time at the Notice Office) one
Business day prior to the date of such prepayment, in the case
of any prepayment of Prime Rate Loans,
(b) each partial prepayment of any such Borrowing shall be in
an aggregate principal of at least $1,000,000 or an integral multiple
of $500,000 in excess thereof, in the case of Prime Rate Loans, and at
least $1,000,000 or an integral multiple of $1,000,000 in excess
thereof, in the case of Eurodollar Loans;
(c) no partial prepayment of any Loans made pursuant to a
Borrowing shall reduce the aggregate principal amount of such Loans
outstanding pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto;
(d) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied PRO RATA among such Loans; and
(e) each prepayment of Eurodollar Loans pursuant to this
section 4.1 on any date other than the last day of the Interest Period
applicable thereto, in the case of Eurodollar Loans, shall be
accompanied by any amounts payable in respect thereof under section
2.10.
4.2. MANDATORY PREPAYMENTS. In each case subject to section 8.12, the
Loans shall be subject to mandatory prepayment in accordance with the following
provisions:
(a) IF OUTSTANDING GENERAL REVOLVING LOANS EXCEED COMMITMENT.
If on any date (after giving effect to any other payments on such date)
the sum of (i) the aggregate outstanding principal amount of General
Revolving Loans exceeds the Commitment as then in effect, the Borrower
shall prepay on such date that principal amount of General Revolving
Loans in an aggregate amount at least equal to such excess and
conforming in the case of partial prepayments of any Loans to the
applicable requirements as to the amounts of partial prepayments which
are contained in section 4.1.
(b MANDATORY PREPAYMENT---CERTAIN PROCEEDS OF ASSET SALES. If
during any fiscal year of the Borrower, and only if the Borrower's
obligations under the Senior Facility have been fully satisfied and all
lending commitments thereunder terminated, the Borrower and its
Subsidiaries have received cumulative Cash Proceeds during such fiscal
year from one or more Asset Sales of at least $1,000,000, not later
than the third Business Day following the date of receipt of any Cash
Proceeds in excess of such amount, an amount, conforming to the
requirements as to the amount of partial prepayments contained in
section 4.1, at least equal to 100% of the Net Cash Proceeds then
received in excess of such amount from any Asset Sale, shall be applied
as a mandatory prepayment of principal of the outstanding General
Revolving Loans; provided, that (i) if no Default or Event of Default
shall have occurred and be continuing, (ii) the Borrower and its
Subsidiaries have scheduled Consolidated Capital Expenditures during
the following 12 months, and (iii) the Borrower notifies the Lender of
the amount and nature thereof and of its intention to reinvest all or a
portion of such Net Cash Proceeds in such
33
Exhibit 10.2
Consolidated Capital Expenditures during such 12 month period, then no
such prepayment shall be required to the extent the Borrower so
indicates that such reinvestment will take place. If at the end of any
such 12 month period any portion of such Net Cash Proceeds has not been
so reinvested, the Borrower will immediately make a prepayment of the
outstanding General Revolving Loans as provided above in an amount,
conforming to the requirements as to amount of prepayments contained in
section 4.1, at least equal to such remaining amount.
(c MANDATORY PREPAYMENT---CERTAIN PROCEEDS OF EQUITY SALES.
Only if the Borrower's obligations under the Senior Facility have been
fully satisfied and all lending commitments thereunder terminated, and
not later than the Business Day following the date of the receipt by
the Borrower and/or any Subsidiary of the cash proceeds (which cash
proceeds are net of underwriting discounts and commissions, placement
agent fees and other customary fees and costs associated therewith)
from any sale or issuance of equity securities by the Borrower or any
Subsidiary after the Closing Date (other than (i) any inter-company
sale to the Borrower or any Subsidiary and (ii) any sale or issuance to
management, employees (or key employees) or directors pursuant to stock
option or similar plans for the benefit of management, employees (key
employees) or directors generally), the Borrower will prepay General
Revolving Loans in an aggregate amount, conforming to the requirements
as to the amounts of partial prepayments of General Revolving Loans
which are contained in section 4.1, which is not less than (x) 100% of
such net proceeds, or (y) if less, an amount equal to the then
aggregate outstanding principal amount of the General Revolving Loans,
if any.
(d MANDATORY PREPAYMENT---CERTAIN PROCEEDS OF DEBT SECURITIES.
Only if the Borrower's obligations under the Senior Facility have been
fully satisfied and all lending commitments thereunder terminated, not
later than the Business Day following the date of the receipt by the
Borrower of the cash proceeds (net of underwriting discounts and
commissions, placement agent fees and other customary fees and costs
associated therewith) from any sale or issuance of debt securities by
the Borrower after the Closing Date in an underwritten public offering,
Rule 144A offering, or private placement with one or more institutional
investors, the Borrower will prepay General Revolving Loans in an
aggregate amount, conforming to the requirements as to the amounts of
partial prepayments of General Revolving Loans which are contained in
section 4.1, which is not less than (x) 100% of such net proceeds, or
(y) if less, an amount equal to the then aggregate outstanding
principal amount of the General Revolving Loans, if any.
(e MANDATORY PREPAYMENT---CERTAIN PROCEEDS OF AN EVENT OF
LOSS. Only if the Borrower's obligations under the Senior Facility have
been fully satisfied and all lending commitments thereunder terminated,
and if during any fiscal year of the Borrower, the Borrower and its
Subsidiaries have received cumulative Net Cash Proceeds during such
fiscal year from one or more Events of Loss of at least $1,000,000, not
later than the third Business Day following the date of receipt of any
Net Cash Proceeds in excess of such amount, an amount, conforming to
the requirements as to the amount of partial prepayments contained in
section 4.1, at least equal to 100% of the Net Cash
34
Proceeds then received in excess of such amount from any Event of Loss,
shall be applied as a mandatory prepayment of principal of the
outstanding Loans, if any.
Notwithstanding the foregoing, in the event any property
suffers an Event of Loss and (i) the Net Cash Proceeds received in any
fiscal year as a result of such Event of Loss are more than $1,000,000,
(ii) no Default or Event of Default has occurred and is continuing, and
(iii) the Borrower notifies the Lender in writing that it intends to
rebuild, restore or replace the affected property, that such
rebuilding, restoration or replacement can be accomplished within 18
months out of such Net Cash Proceeds and other funds available to the
Borrower, THEN no such prepayment of the Loans shall be required if the
Borrower immediately deposits such Net Cash Proceeds in a cash
collateral deposit account over which the Lender shall have sole
dominion and control, and which shall constitute part of the Collateral
under the Security Documents and may be applied as provided in section
10.3 if an Event of Default occurs and is continuing. So long as no
Default or Event of Default has occurred and is continuing, the Lender
is authorized to disburse amounts from such cash collateral deposit
account to or at the direction of the Borrower for application to the
costs of rebuilding, restoration or replacement of the affected
property. Any amounts not so applied to the costs of rebuilding,
restoration or replacement or as provided in section 10.3 shall be
applied to the prepayment of the Loans as provided above.
(f CHANGE OF CONTROL. On the date of which a Change of Control
occurs, at the Lender's option no further Borrowings shall be made.
(g PARTICULAR LOANS TO BE PREPAID. With respect to each
repayment or prepayment of Loans required by this section 4.2, the
Borrower shall designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which such repayment or
prepayment is to be made, PROVIDED that (i) the Borrower shall first so
designate all Loans that are Prime Rate Loans and Eurodollar Loans with
Interest Periods ending on the date of repayment or prepayment prior to
designating any other Eurodollar Loans for repayment or prepayment,
(ii) if the outstanding principal amount of Eurodollar Loans made
pursuant to a Borrowing is reduced below the applicable Minimum
Borrowing Amount as a result of any such repayment or prepayment, then
all the Loans outstanding pursuant to such Borrowing shall be converted
into Prime Rate Loans, and (iii) each repayment and prepayment of any
Loans made pursuant to a Borrowing shall be applied PRO RATA among such
Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Lender shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation,
to minimize breakage costs owing under section 2.10. Any repayment or
prepayment of Eurodollar Loans pursuant to this section 4.2 shall in
all events be accompanied by such compensation as is required by
section 2.10.
4.3. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Lender,
not later than 11:00 A.M. (local time at the Payment Office) on the date when
due and shall be made in immediately available funds and in lawful money of the
United States of America at the Payment Office, it being understood that written
notice by the Borrower to the Lender to make a payment from the
35
Exhibit 10.2
funds in the Borrower's account at the Payment Office shall constitute the
making of such payment to the extent of such funds held in such account. Any
payments under this Agreement which are made later than 11:00 A.M. (local time
at the Payment Office) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
4.4. NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under the Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. All such payments will be made free and clear of,
and without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax, imposed on or
measured by the net income or net profits of the Lender pursuant to the laws of
the jurisdiction under which the Lender is organized or the jurisdiction in
which the principal office of the Lender is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities with respect to
such non excluded taxes, levies imposts, duties, fees, assessments or other
charges (all such nonexcluded taxes levies, imposts, duties, fees assessments or
other charges being referred to collectively as "TAXES"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes and
such additional amounts as may be necessary so that every payment by it of all
amounts due hereunder, under the Note or under any other Credit Document, after
withholding or deduction for or on account of any Taxes will not be less than
the amount provided for herein or in the Note or in such other Credit Document.
If any amounts are payable in respect of Taxes pursuant to the preceding
sentence, the Borrower agrees to reimburse the Lender, upon the written request
of the Lender for taxes imposed on or measured by the net income or profits of
the Lender pursuant to the laws of the jurisdiction in which the Lender is
organized or in which the principal office of the Lender is located or under the
laws of any political subdivision or taxing authority of any such jurisdiction
in which the principal office of the Lender is located and for any withholding
of income or similar taxes imposed by the United States of America as the Lender
shall determine are payable by, or withheld from, the Lender in respect of such
amounts so paid to or on behalf of the Lender pursuant to the preceding sentence
and in respect of any amounts paid to or on behalf of the Lender pursuant to
this sentence, which request shall be accompanied by a statement from the Lender
setting forth, in reasonable detail, the computations used in determining such
amounts. The Borrower will furnish to the Lender within 45 days after the date
the payment of any Taxes, or any withholding or deduction on account thereof, is
due pursuant to applicable law certified copies of tax receipts, or other
evidence satisfactory to the Lender, evidencing such payment by the Borrower.
The Borrower will indemnify and hold harmless the Lender, and reimburse the
Lender upon its written request, for the amount of any Taxes so levied or
imposed and paid or withheld by the Lender.
(b If the Lender, in its sole opinion, determines that it has finally
and irrevocably received or been granted a refund in respect of any Taxes paid
as to which indemnification has been paid by the Borrower pursuant to this
section, it shall promptly remit such refund (including any interest received in
respect thereof), net of all out-of-pocket costs and expenses; PROVIDED,
36
Exhibit 10.2
that the Borrower agrees to promptly return any such refund (plus interest) to
the Lender in the event the Lender is required to repay such refund to the
relevant taxing authority. The Lender shall provide the Borrower with a copy of
any notice of assessment from the relevant taxing authority (redacting any
unrelated confidential information contained therein) requiring repayment of
such refund. Nothing contained herein shall impose an obligation on the Lender
to apply for any such refund.
(c Reference is hereby made to the provisions of section 2.9(c) for
certain limitations upon the rights of the Lender under this section.
SECTION 5. CONDITIONS PRECEDENT.
5.1. CONDITIONS PRECEDENT AT CLOSING DATE. The obligation of the Lender
to make Loans is subject to the satisfaction of each of the following conditions
on the Closing Date:
(a EFFECTIVENESS; NOTES. On or prior to the Closing Date, (i)
the Effective Date shall have occurred and (ii) there shall have been
delivered to the Lender the Note executed by the Borrower, in each
case, in the amount, maturity and as otherwise provided herein.
(b FEES, ETC. The Borrower shall have paid or caused to be
paid all fees required to be paid by it on or prior to such date
pursuant to section 3.1 hereof and all reasonable fees and expenses of
the Lender and of special counsel to the Lender which have been
invoiced on or prior to such date in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents
and the consummation of the transactions contemplated hereby and
thereby.
(c OTHER CREDIT DOCUMENTS. The Credit Parties named therein
shall have duly executed and delivered and there shall be in full force
and effect, and original counterparts shall have been delivered to the
Lender of, (i) the Subsidiary Guaranty (as modified, amended or
supplemented from time to time in accordance with the terms thereof and
hereof, the "SUBSIDIARY GUARANTY"), substantially in the form attached
hereto as Exhibit C-1, (ii) the Security Agreements (as modified,
amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "SECURITY AGREEMENTS"), substantially in the
form attached hereto as Exhibit C-2, (iii) the Pledge Agreement (as
modified, amended or supplemented from time to time in accordance with
the terms thereof and hereof, the "PLEDGE AGREEMENT"), substantially in
the form attached hereto as Exhibit C-3, and (iv) the Collateral
Assignment of Trademarks and Security Agreement (as modified, amended
or supplemented from time to time in accordance with the terms thereof
and hereof, the "COLLATERAL ASSIGNMENT OF TRADEMARKS"), substantially
in the form attached hereto as Exhibit C-4.
(d CORPORATE RESOLUTIONS AND APPROVALS. The Lender shall have
received certified copies of the resolutions of the Board of Directors
of the Borrower and each other Credit Party, approving the Credit
Documents to which the Borrower, and each other Credit Party, as the
case may be, is or may become a party, and of all documents evidencing
other necessary corporate action and governmental approvals, if any,
with
37
Exhibit 10.2
respect to the execution, delivery and performance by the Borrower or
any such other Credit Party of the Credit Documents to which it is or
may become a party.
(e [INTENTIONALLY OMITTED.]
(f [INTENTIONALLY OMITTED.]
(g RECORDATION OF SECURITY DOCUMENTS, DELIVERY OF COLLATERAL,
TAXES, ETC. The Security Documents (or proper notices or financing
statements in respect thereof) shall have been duly recorded, published
and filed in such manner and in such places as is required by law to
establish, perfect, preserve and protect the rights and security
interests of the parties thereto and their respective successors and
assigns, all collateral items required to be physically delivered to
the Lender thereunder shall have been so delivered, accompanied by any
appropriate instruments of transfer, and all taxes, fees and other
charges then due and payable in connection with the execution,
delivery, recording, publishing and filing of such instruments and the
issue and delivery of the Note shall have been paid in full.
(h [INTENTIONALLY OMITTED.]
(i [INTENTIONALLY OMITTED.]
(j [INTENTIONALLY OMITTED.]
(k SENIOR FACILITY. (i) Counterparts of the second amendment
to the Senior Facility shall have been executed by, INTER ALIA, the
Borrower and the Senior Agent, (ii) the counterparts so executed shall
have been delivered to the Senior Agent, and copies shall been
furnished to the Lender, and (iii) the Senior Facility shall be in full
force and effect.
(l SUBORDINATED BRIDGE DEBT. The Lender shall have consummated
the purchase of all the Subordinated Bridge Debt and the Lender and the
Senior Agent shall have agreed to restructure the subordination
provisions of the Subordinated Bridge Debt in the form of Exhibit D or
in form otherwise satisfactory to the required lenders of the Senior
Facility in their reasonable discretion, if all Subordinated Bridge
Debt has not been converted to equity of the Borrower on or prior to
March 15, 2001.
(m PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incidental to the transactions
contemplated hereby shall be satisfactory in substance and form to the
Lender and the Lender and its special counsel shall have received all
such counterpart originals or certified or other copies of such
documents as the Lender or its special counsel may reasonably request.
and thereafter this Agreement shall be binding upon and inure to the benefit of
the Borrower and the Lender and their respective permitted successors and
assigns.
38
Exhibit 10.2
5.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligations of the
Lender to make each Loan is subject, at the time thereof, to the satisfaction of
the following conditions:
(a [INTENTIONALLY OMITTED.]
(b NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
each Credit Event and also after giving effect thereto, (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties of the Credit Parties contained herein or in the other
Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had
been made on and as of the date of such Credit Event, except to the
extent that such representations and warranties expressly relate to an
earlier specified date, in which case such representations and
warranties shall have been true and correct in all material respects as
of the date when made.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Lender that all of the
applicable conditions specified in section 5.1 and/or 5.2, as the case may be,
exist as of that time. All of the certificates, legal opinions and other
documents and papers referred to in this section 5, unless otherwise specified,
shall be delivered to the Lender.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and to make
the Loans, the Borrower makes the following representations and warranties to,
and agreements with, the Lender, all of which shall survive the execution and
delivery of this Agreement and each Credit Event:
6.1. CORPORATE STATUS, ETC. Each of the Borrower and its Subsidiaries
(i) is a duly organized or formed and validly existing corporation, partnership
or limited liability company, as the case may be, in good standing under the
laws of the jurisdiction of its formation and has the corporate, partnership or
limited liability company power and authority, as applicable, to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage, and (ii) has duly qualified and is authorized to
do business in all jurisdictions where it is required to be so qualified except
where the failure to be so qualified would not have a Material Adverse Effect.
6.2. SUBSIDIARIES. Annex I hereto lists, as of the date hereof, each
Subsidiary of the Borrower (and the direct and indirect ownership interest of
the Borrower therein).
6.3. CORPORATE POWER AND AUTHORITY, ETC. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is party and has taken all
necessary corporate or other organizational action to authorize the execution,
delivery and performance of the Credit Documents to which it is party. Each
Credit Party has duly executed and delivered each Credit Document to which it is
party and each Credit Document to which it is party constitutes the legal, valid
and binding
39
Exhibit 10.2
agreement or obligation of such Credit Party enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
6.4. NO VIOLATION. Neither the execution, delivery and performance by
any Credit Party of the Credit Documents to which it is party nor compliance
with the terms and provisions thereof (i) will contravene any provision of any
law, statute, rule, regulation, order, writ, injunction or decree of any court
or governmental instrumentality applicable to such Credit Party or its
properties and assets, (ii) will conflict with or result in any breach of, any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien (other than the Liens created pursuant to the Security
Documents) upon any of the property or assets of such Credit Party pursuant to
the terms of any promissory note, bond, debenture, indenture, mortgage, deed of
trust, credit or loan agreement, or any other material agreement or other
instrument, to which such Credit Party is a party or by which it or any of its
property or assets are bound or to which it may be subject, or (iii) will
violate any provision of the certificate or articles of incorporation, code of
regulations or by-laws, or other charter documents of such Credit Party.
6.5. GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required as a
condition to (i) the execution, delivery and performance by any Credit Party of
any Credit Document to which it is a party, or (ii) the legality, validity,
binding effect or enforceability of any Credit Document to which any Credit
Party is a party, EXCEPT for the filing and recording of financing statements
and other documents necessary in order to perfect the Liens created by the
Security Documents.
6.6. LITIGATION. There are no actions, suits or proceedings pending or,
to, the knowledge of the Borrower, threatened with respect to the Borrower or
any of its Subsidiaries (i) that have, or could reasonably be expected to have,
a Material Adverse Effect, or (ii) which question the validity or enforceability
of any of the Credit Documents, or of any action to be taken by any Credit Party
pursuant to any of the Credit Documents to which it is a party.
6.7. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all Loans
shall be utilized working capital and other general corporate purposes of the
Borrower. No proceeds of any Loans hereunder shall be used to pay or prepay the
principal of the Subordinated Bridge Debt or any subordinated indebtedness
issued to refinance the Subordinated Bridge Debt.
(b No part of the proceeds of any Credit Event will be used directly or
indirectly to purchase or carry Margin Stock, or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock, in violation of the
provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System. The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying any Margin Stock. At no time would
more than 25% of the value of the assets of the Borrower or of the Borrower and
its consolidated Subsidiaries that are subject to any "arrangement" (as such
term is used in section 221.2(g) of such Regulation U) hereunder be represented
by Margin Stock.
40
Exhibit 10.2
6.8. NO MATERIAL ADVERSE CHANGE. From and after the date hereof, there
has been no change in the condition, business or affairs of the Borrower and its
Subsidiaries taken as a whole, or their properties and assets considered as an
entirety, except for changes, none of which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect.
6.9. TAX RETURNS AND PAYMENTS. Each of the Borrower and each of its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Borrower and each of its Subsidiaries has established on its books such charges,
accruals and reserves in respect of taxes, assessments, fees and other
governmental charges for all fiscal periods as are required by GAAP. The
Borrower knows of no proposed assessment for additional federal, foreign or
state taxes for any period, or of any basis therefor, which, individually or in
the aggregate, taking into account such charges, accruals and reserves in
respect thereof as the Borrower and its Subsidiaries have made, could reasonably
be expected to have a Material Adverse Effect.
6.10. TITLE TO PROPERTIES, ETC. The Borrower and each of its
Subsidiaries has good and marketable title, in the case of real property, and
good title (or valid Leaseholds, in the case of any leased property), in the
case of all other property, to all of its properties and assets free and clear
of Liens other than Liens permitted by section 8.3. The interests of the
Borrower and each of its Subsidiaries in the properties reflected in the most
recent balance sheet referred to in Section 7.1, taken as a whole, were
sufficient, in the judgment of the Borrower, as of the date of such balance
sheet for purposes of the ownership and operation of the businesses conducted by
the Borrower and such Subsidiaries.
6.11. LAWFUL OPERATIONS, ETC. The Borrower and each of its Subsidiaries
(i) holds all necessary federal, state and local governmental licenses,
registrations, certifications, permits and authorizations necessary to conduct
its business, and (ii) is in full compliance with all material requirements
imposed by law, regulation or rule, whether federal, state or local, which are
applicable to it, its operations, or its properties and assets, including
without limitation, applicable requirements of Environmental Laws, EXCEPT for
any failure to obtain and maintain in effect, or noncompliance, which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
6.12. ENVIRONMENTAL MATTERS. (a) The Borrower and each of its
Subsidiaries is in compliance with all Environmental Laws governing its
business, EXCEPT to the extent that any such failure to comply (together with
any resulting penalties, fines or forfeitures) would not reasonably be expected
to have a Material Adverse Effect. All licenses, permits, registrations or
approvals required for the conduct of the business of the Borrower and each of
its Subsidiaries under any Environmental Law have been secured and the Borrower
and each of its Subsidiaries is in substantial compliance therewith, EXCEPT for
such licenses, permits, registrations or approvals the failure to secure or to
comply therewith is not reasonably likely to have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has received written notice, or
otherwise knows, that it is in any respect in noncompliance with, breach of or
default under any
41
Exhibit 10.2
applicable writ, order, judgment, injunction, or decree to which the Borrower or
such Subsidiary is a party or which would affect the ability of the Borrower or
such Subsidiary to operate any real property and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both,
would constitute noncompliance, breach of or default thereunder, EXCEPT in each
such case, such noncompliance, breaches or defaults as would not reasonably be
expected to, in the aggregate, have a Material Adverse Effect. There are no
Environmental Claims pending or, to the best knowledge of the Borrower,
threatened wherein an unfavorable decision, ruling or finding would reasonably
be expected to have a Material Adverse Effect. There are no facts,
circumstances, conditions or occurrences on any Real Property now or at any time
owned, leased or operated by the Borrower or any of its Subsidiaries or on any
property adjacent to any such Real Property, which are known by the Borrower or
as to which the Borrower or any such Subsidiary has received written notice,
that could reasonably be expected (i) to form the basis of an Environmental
Claim against the Borrower or any of its Subsidiaries or any Real Property of
the Borrower or any of its Subsidiaries, or (ii) to cause such Real Property to
be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property under any Environmental Law, except in
each such case, such Environmental Claims or restrictions that individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect.
(b Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any such Real Property,
in each case where such occurrence or event is not in compliance with
Environmental Laws and is reasonably likely to have a Material Adverse Effect.
6.13. COMPLIANCE WITH ERISA. Compliance by the Borrower with the
provisions hereof and Credit Events contemplated hereby will not involve any
prohibited transaction within the meaning of ERISA or section 4975 of the Code.
The Borrower and each of its Subsidiaries, (i) has fulfilled all obligations
under minimum funding standards of ERISA and the Code with respect to each Plan
that is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has satisfied
all respective contribution obligations in respect of each Multiemployer Plan
and each Multiple Employer Plan, (iii is in compliance in all material respects
with all other applicable provisions of ERISA and the Code with respect to each
Plan, each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not
incurred any liability under the Title IV of ERISA to the PBGC with respect to
any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust
established thereunder. No Plan or trust created thereunder has been terminated,
and there have been no Reportable Events, with respect to any Plan or trust
created thereunder or with respect to any Multiemployer Plan or Multiple
Employer Plan, which termination or Reportable Event will or could result in the
termination of such Plan, Multiemployer Plan or Multiple Employer Plan and give
rise to a material liability of the Borrower or any ERISA Affiliate in respect
thereof. Neither the Borrower nor any ERISA Affiliate has any contingent
liability with respect to any post-retirement "welfare benefit plan" (as such
term is defined in ERISA) except as has been disclosed to the Lender in writing.
6.14. INTELLECTUAL PROPERTY, ETC. The Borrower and each of its
Subsidiaries has obtained or has the right to use all material patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights
with respect to the foregoing necessary for the present and planned future
conduct of its business, without any known conflict with the rights of others,
42
Exhibit 10.2
EXCEPT for such patents, trademarks, servicemarks, trade names, copyrights,
licenses and rights, the loss of which, and such conflicts, which in any such
case individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
6.15. INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of its
Subsidiaries is subject to regulation with respect to the creation or incurrence
of Indebtedness under the Investment Company Act of 1940, as amended, the ICC
Termination Act of 1995, as amended, the Federal Power Act, as amended, the
Public Utility Holding Company Act of 1935, as amended, or any applicable state
public utility law.
6.16. BURDENSOME CONTRACTS; LABOR RELATIONS. Neither the Borrower nor
any of its Subsidiaries (i) is subject to any burdensome contract, agreement,
corporate restriction, judgment, decree or order, (ii) is a party to any labor
dispute affecting any bargaining unit or other group of employees generally,
(iii) is subject to any material strike, slow down, workout or other concerted
interruptions of operations by employees of the Borrower or any Subsidiary,
whether or not relating to any labor contracts, (iv) is subject to any
significant pending or, to the knowledge of the Borrower, threatened, unfair
labor practice complaint, before the National Labor Relations Board, (v) is
subject to any significant pending or, to the knowledge of the Borrower,
threatened, grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement, (vi) is subject to any significant
pending or, to the knowledge of the Borrower, threatened, significant strike,
labor dispute, slowdown or stoppage, or (vii) is, to the knowledge of the
Borrower, involved or subject to any union representation organizing or
certification matter with respect to the employees of the Borrower or any of its
Subsidiaries, EXCEPT (with respect to any matter specified in any of the above
clauses), for such matters as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
6.17. EXISTING INDEBTEDNESS. Annex II sets forth a true and complete
list, as of the date or dates set forth therein, of all Indebtedness of the
Borrower and each of its Subsidiaries, on a consolidated basis, which (i) has an
outstanding principal amount of at least $250,000, or may be incurred pursuant
to existing commitments or lines of credit, or (ii) is secured by any Lien on
any property of the Borrower or any Subsidiary, and which will be outstanding on
the Closing Date after giving effect to the initial Borrowing hereunder, other
than the Indebtedness created under the Credit Documents (all such Indebtedness,
whether or not in a principal amount meeting such threshold and required to be
so listed on Annex II, herein the "EXISTING INDEBTEDNESS"). As and to the extent
the Lender has so requested, the Borrower has provided to the Lender prior to
the date of execution hereof true and complete copies (or summary descriptions)
of all agreements and instruments governing the Indebtedness listed on Annex II
(the "EXISTING INDEBTEDNESS AGREEMENTS").
6.18. SECURITY INTERESTS. Once executed and delivered, and until
terminated in accordance with the terms thereof, each of the Security Documents
creates, as security for the obligations purported to be secured thereby, a
valid and enforceable perfected security interest in and Lien on all of the
Collateral subject thereto from time to time, in favor of the Lender, superior
to and prior to the rights of all third persons other than holders of Senior
Indebtedness and subject to no other Liens, EXCEPT that the Collateral under the
Security Documents may be subject to Permitted Liens. No filings or recordings
are required in order to perfect the security
43
Exhibit 10.2
interests created under any Security Document except for filings or recordings
required in connection with any such Security Document which shall have been
made, or for which satisfactory arrangements have been made, upon or prior to
the execution and delivery thereof. All recording, stamp, intangible or other
similar taxes required to be paid by any person under applicable legal
requirements or other laws applicable to the property encumbered by the Security
Documents in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement thereof have been paid.
6.19. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the Borrower
or any of its Subsidiaries in writing to the Lender for purposes of or in
connection with this Agreement or any transaction contemplated herein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of such person in writing to the Lender will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time in light of
the circumstances under which such information was provided, except that any
such future information consisting of financial projections prepared by
management of the Borrower is only represented herein as being based on good
faith estimates and assumptions believed by such persons to be reasonable at the
time made, it being recognized by the Lender that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ materially from the
projected results. As of the Effective Date, there is no fact known to the
Borrower or any of its Subsidiaries which has, or could reasonably be expected
to have, a Material Adverse Effect which has not theretofore been disclosed in
writing to the Lender.
SECTION 7. AFFIRMATIVE COVENANTS.
The Borrower hereby covenants and agrees that so long as this Agreement
is in effect and until such time as the Commitment has been terminated, the Note
is not outstanding and the Loans, together with interest, Fees and all other
Obligations hereunder, have been paid in full:
7.1. REPORTING REQUIREMENTS. The Borrower will furnish to the Lender:
(a ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within 90 days after the close of each fiscal year of the Borrower, the
consolidated and consolidating balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income, of stockholder's equity and
of cash flows for such fiscal year, in each case setting forth comparative
figures for the preceding fiscal year, all in reasonable detail and accompanied
by the opinion with respect to such consolidated financial statements of
independent public accountants of recognized national standing selected by the
Borrower, which opinion shall be unqualified and shall (i) state that such
accountants audited such consolidated financial statements in accordance with
generally accepted auditing standards, that such accountants believe that such
audit provides a reasonable basis for their opinion, and that in their opinion
such consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Borrower and its
44
Exhibit 10.2
consolidated subsidiaries as at the end of such fiscal year and the consolidated
results of their operations and cash flows for such fiscal year in conformity
with generally accepted accounting principles, or (ii) contain such statements
as are customarily included in unqualified reports of independent accountants in
conformity with the recommendations and requirements of the American Institute
of Certified Public Accountants (or any successor organization).
(b QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the quarterly accounting periods
in each fiscal year of the Borrower, the unaudited condensed consolidated and
consolidating balance sheets of the Borrower and its consolidated Subsidiaries
as at the end of such quarterly period and the related unaudited condensed
consolidated and consolidating statements of income and of cash flows for such
quarterly period, and setting forth, in the case of such unaudited consolidated
statements of income and of cash flows, comparative figures for the related
periods in the prior fiscal year, and which consolidated financial statements
shall be certified on behalf of the Borrower by the Chief Financial Officer or
other Authorized Officer of the Borrower, subject to changes resulting from
normal year-end audit adjustments.
(c OFFICER'S COMPLIANCE CERTIFICATES. At the time of the delivery of
the financial statements provided for in sections 7.1(a) and (b), a certificate
on behalf of the Borrower of the Chief Financial Officer or other Authorized
Officer of the Borrower to the effect that, to the best knowledge of the
Borrower, no Default or Event of Default exists or, if any Default or Event of
Default does exist, specifying the nature and extent thereof.
(d ANNUAL BUDGETS AND FORECASTS. Not later than 45 days after the
commencement of the first fiscal quarter in any fiscal year of the Borrower and
its Subsidiaries, a consolidated budget in reasonable detail for such entire
fiscal year, and (if and to the extent prepared by management of the Borrower)
for any subsequent fiscal years, as customarily prepared by management for its
internal use, setting forth, with appropriate discussion, the forecasted balance
sheet, income statement, operating cash flows and capital expenditures of the
Borrower and its Subsidiaries for the period covered thereby, and the principal
assumptions upon which forecasts and budget are based.
(e AUDITORS' INTERNAL CONTROL COMMENT LETTERS, ETC. Promptly upon
receipt thereof, a copy of each letter or memorandum commenting on internal
accounting controls and/or accounting or financial reporting policies followed
by the Borrower and/or any of its Subsidiaries, which is submitted to the
Borrower by its independent accountants in connection with any annual or interim
audit made by them of the books of the Borrower or any of its Subsidiaries.
(f NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event within
three Business Days, in the case of clause (i) below, or five Business Days, in
the case of clause (ii) below, after the Borrower or any of its Subsidiaries
obtains knowledge thereof, notice of
(i) the occurrence of any event that constitutes a Default or
Event of Default, which notice shall specify the nature thereof, the
period of existence thereof and what action the Borrower proposes to
take with respect thereto, and
45
Exhibit 10.2
(ii) any litigation or governmental or regulatory
investigation or proceeding pending against or involving the Borrower
or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the ability of
the Borrower to perform its obligations hereunder or under any other
Credit Document.
(G ERISA. Promptly, and in any event within 10 days after the Borrower,
any Subsidiary of the Borrower or any ERISA Affiliate knows of the occurrence of
any of the following, the Borrower will deliver to the Lender a certificate on
behalf of the Borrower of an Authorized Officer setting forth the full details
as to such occurrence and the action, if any, that the Borrower, such Subsidiary
or such ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by the Borrower,
the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto:
(i that a Reportable Event has occurred with respect
to any Plan;
(ii the institution of any steps by the Borrower, any
ERISA Affiliate, the PBGC or any other person to terminate any
Plan;
(iii the institution of any steps by the Borrower or
any ERISA Affiliate to withdraw from any Plan;
(iv the institution of any steps by the Borrower or
any Subsidiary to withdraw from any Multiemployer Plan or
Multiple Employer Plan, if such withdrawal could result in
withdrawal liability (as described in Part 1 of Subtitle E of
Title IV of ERISA) in excess of $1,000,000;
(v a non-exempt "prohibited transaction" within the
meaning of section 406 of ERISA in connection with any Plan;
(vi that a Plan has an Unfunded Current Liability
exceeding $1,000,000;
(vii any material increase in the contingent
liability of the Borrower or any Subsidiary with respect to
any post-retirement welfare liability; or
(viii the taking of any action by, or the threatening
of the taking of any action by, the Internal Revenue Service,
the Department of Labor or the PBGC with respect to any of the
foregoing.
(h ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 10
Business Days after, an officer of the Borrower obtains actual knowledge
thereof, notice of any of the following environmental matters which involves any
reasonable likelihood (in the Borrower's reasonable judgment) of resulting in a
Material Adverse Effect: (i) any pending or threatened (in writing)
Environmental Claim against the Borrower or any of its Subsidiaries or any Real
46
Exhibit 10.2
Property owned or operated by the Borrower or any of its Subsidiaries; (ii) any
condition or occurrence on or arising from any Real Property owned or operated
by the Borrower or any of its Subsidiaries that (A) results in noncompliance by
the Borrower or any of its Subsidiaries with any applicable Environmental Law or
(B) would reasonably be expected to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any such Real Property; (iii
any condition or occurrence on any Real Property owned, leased or operated by
the Borrower or any of its Subsidiaries that could reasonably be expected to
cause such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by the Borrower or any of its Subsidiaries of
such Real Property under any Environmental Law; and (iv) the taking of any
removal or remedial action in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned, leased or operated by the
Borrower or any of its Subsidiaries as required by any Environmental Law or any
governmental or other administrative agency. All such notices shall describe in
reasonable detail the nature of the Environmental Claim and the Borrower's or
such Subsidiary's response thereto.
(i SEC REPORTS AND REGISTRATION STATEMENTS. Promptly upon transmission
thereof or other filing with the SEC, copies of all registration statements
(other than the exhibits thereto and any registration statement on Form S-8 or
its equivalent) and annual, quarterly or current reports that the Borrower or
any of its Subsidiaries files with the SEC.
(j DOCUMENTS AND REPORTS, ETC., RELATING TO THE SUBORDINATED BRIDGE
DEBT OR ANY SUBORDINATED BRIDGE DEBT REFINANCING. Promptly upon execution and
delivery or transmission or receipt thereof, copies of (1) any new Subordinated
Bridge Debt documents or Subordinated Debt refinancing documents, and any
amendments or modifications of previously delivered Subordinated Bridge Debt
documents or Subordinated Debt refinancing documents, (2) any notices of
"default", "event of default" or breach (or any notices of similar intent or
effect) given or received under any Subordinated Bridge Debt document or
Subordinated Bridge Debt refinancing document, and (3) all financial reports and
calculations given by the Borrower under any Subordinated Bridge Debt document
or Subordinated Bridge Debt refinancing document (to the extent not duplicative
of financial reporting hereunder).
(k OTHER INFORMATION. With reasonable promptness, such other
information or documents (financial or otherwise) relating to the Borrower or
any of its Subsidiaries as the Lender may reasonably request from time to time.
7.2. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause
each of its Subsidiaries to, (i) keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Borrower or such Subsidiaries, as the case may
be, in accordance with GAAP, in the case of the Borrower, or which are
reconcilable to a GAAP presentation, in the case of any Subsidiary; and (ii)
permit, upon at least five Business Days' notice to the Chief Financial Officer
or any other Authorized Officer of the Borrower, officers and designated
representatives of the Lender to visit and inspect any of the properties or
assets of the Borrower and any of its Subsidiaries in whomsoever's possession
(but only to the extent the Borrower or such Subsidiary has the right to do so
to the extent in the possession of another person), and to examine (and make
copies of or take extracts from) the books of account of the Borrower and any of
its Subsidiaries and discuss the affairs, finances and accounts of the Borrower
and of any of its Subsidiaries with, and be advised as to
47
Exhibit 10.2
the same by, its and their officers and independent accountants and independent
actuaries, if any, all at such reasonable times and intervals and to such
reasonable extent as the Lender may request.
7.3. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, (i) maintain insurance coverage by such insurers and in such
forms and amounts and against such risks as are generally consistent with the
insurance coverage maintained by the Borrower and its Subsidiaries at the date
hereof, and (ii) forthwith upon the Lender's written request, furnish to the
Lender such information about such insurance as the Lender may from time to time
reasonably request, which information shall be prepared in form and detail
satisfactory to the Lender and certified by an Authorized Officer of the
Borrower.
7.4. PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries; PROVIDED that neither the Borrower nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP; and PROVIDED,
FURTHER, that the Borrower will not be considered to be in default of any of the
provisions of this sentence if the Borrower or any Subsidiary fails to pay any
such amount which, individually or in the aggregate, is immaterial to the
Borrower and its Subsidiaries considered as an entirety.
7.5. CORPORATE FRANCHISES. The Borrower will do, and will cause each of
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its corporate or other organizational
existence, rights, authority and franchises, PROVIDED that nothing in this
section 7.5 shall be deemed to prohibit (i) any transaction permitted by section
8.2; (ii) the termination of existence of any Subsidiary if (A) the Borrower
determines that such termination is in its best interest and (B) such
termination is not adverse in any material respect to the Lender; or (iii) the
loss of any rights, authorities or franchises if the loss thereof, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
7.6. GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business in whomsoever's possession they may be, are kept in good
repair, working order and condition, normal wear and tear excepted, and that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements, thereto, to the extent and in the manner customary for
companies in similar businesses.
7.7. COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause
each of its Subsidiaries to, comply, in all material respects, with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, other than those (i)
being contested in good faith by appropriate proceedings, as to which adequate
reserves
48
Exhibit 10.2
are established to the extent required under GAAP, and (ii) the noncompliance
with which would not have, and which would not be reasonably expected to have, a
Material Adverse Effect or a material adverse effect on the ability of the
Borrower to perform its obligations under any Credit Document.
7.8. COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of the
covenants contained in section 7.7 hereof:
(a) The Borrower will, and will cause each of its Subsidiaries
to, (i) comply, in all material respects, with all Environmental Laws
applicable to the ownership, lease or use of all Real Property now or
hereafter owned, leased or operated by the Borrower or any of its
Subsidiaries, and promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, except for such
noncompliance as would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse
effect on the ability of the Borrower to perform its obligations under
any Credit Document; and (ii) keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such
Environmental Laws which are not permitted under section 8.3.
(b) Without limitation of the foregoing, if the Borrower or
any of its Subsidiaries shall generate, use, treat, store, release or
dispose of, or permit the generation, use, treatment, storage, release
or disposal of, Hazardous Materials on any Real Property now or
hereafter owned, leased or operated by the Borrower or any of its
Subsidiaries, or transport or permit the transportation of Hazardous
Materials to or from any such Real Property, any such action shall be
effected only in the ordinary course of business and in any event in
compliance, in all material respects, with all Environmental Laws
applicable thereto, except for such noncompliance as would not have,
and which would not be reasonably expected to have, a Material Adverse
Effect or a material adverse effect on the ability of the Borrower to
perform its obligations under any Credit Document.
(c) If required to do so under any applicable order of any
governmental agency, the Borrower will undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Borrower or any of
its Subsidiaries in accordance with, in all material respects, the
requirements of all applicable Environmental Laws and in accordance
with, in all material respects, such orders of all governmental
authorities, except (i) to the extent that the Borrower or such
Subsidiary is contesting such order in good faith and by appropriate
proceedings and for which adequate reserves have been established to
the extent required by GAAP, or (ii) for such noncompliance as would
not have, and which would not be reasonably expected to have, a
Material Adverse Effect or a material adverse effect on the ability of
the Borrower to perform its obligations under any Credit Document.
7.9. FISCAL YEARS, FISCAL QUARTERS. The Borrower will, for consolidated
financial reporting purposes, continue to use the Saturday ending on or nearest
to January 31 as the end of its fiscal year and the dates determined in
accordance with the National Retail Federation's 4-5-4
49
Exhibit 10.2
Suggested Retail Calendar as the end of its first three fiscal quarters, subject
to any changes in such fiscal year or fiscal quarters made as provided below. If
the Borrower shall change (x) its fiscal year or fiscal quarters, or (y) any of
its Subsidiaries' fiscal years or fiscal quarters (other than the fiscal year or
fiscal quarters of a person which becomes a Subsidiary, made at the time such
person becomes a Subsidiary, to conform to the Borrower's fiscal year and fiscal
quarters or to conform to the fiscal year or fiscal quarters which the Borrower
generally utilizes for its Subsidiaries), the Borrower will promptly, and in any
event within 30 days following any such change, deliver a notice to the Lender
describing such change and any material accounting entries made in connection
therewith and stating whether such change will have any impact upon any
financial computations to be made hereunder, and if any such impact is foreseen,
describing in reasonable detail the nature and extent of such impact. If the
Lender determines that any such change will have any impact upon any financial
computations to be made hereunder which is adverse to it, the Borrower will, if
so requested by the Lender, enter into an amendment to this Agreement, in form
and substance satisfactory to the Lender, modifying any of the financial
covenants or related provisions hereof in such manner as the Lender determine is
necessary to eliminate such adverse effect.
7.10. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY. (a) In the
event that at any time after the Closing Date
(x) the Borrower has any Subsidiary (other than a Foreign
Subsidiary as to which section 7.10(b) applies) which is not a party to
the Subsidiary Guaranty, or
(y) an Event of Default shall have occurred and be continuing
and the Borrower has any Subsidiary which is not a party to the
Subsidiary Guaranty,
the Borrower will notify the Lender in writing of such event, identifying the
Subsidiary in question and referring specifically to the rights of the Lender
under this section. The Borrower will, within 30 days following request therefor
from the Lender, cause such Subsidiary to deliver to the Lender (i) a joinder
supplement, satisfactory in form and substance to the Lender, duly executed by
such Subsidiary, pursuant to which such Subsidiary joins in the Subsidiary
Guaranty as a guarantor thereunder, and (ii) if such Subsidiary is a
corporation, resolutions of the Board of Directors of such Subsidiary, certified
by the Secretary or an Assistant Secretary of such Subsidiary as duly adopted
and in full force and effect, authorizing the execution and delivery of such
joinder supplement, or if such Subsidiary is not a corporation, such other
evidence of the authority of such Subsidiary to execute such joinder supplement
as the Lender may reasonably request.
(b) Notwithstanding the foregoing provisions of this section 7.10, the
Borrower shall not, unless an Event of Default shall have occurred and be
continuing, be required to pledge (or cause to be pledged) more than 65% of the
stock or other equity interests in any first tier Foreign Subsidiary, or any of
the stock or other equity interests in any other Foreign Subsidiary, or to cause
a Foreign Subsidiary to join in the Subsidiary Guaranty or to become a party to
any Security Agreement or any other Security Document, if (i) to do so would
subject the Borrower to liability for additional United States income taxes by
virtue of section 956 of the Code in an amount the Borrower considers material,
and (ii) the Borrower provides the Administrative Agent with documentation,
including computations prepared by the Borrower's internal tax
50
Exhibit 10.2
officer, its independent accountants or tax counsel, reasonably acceptable to
the Lender, in support thereof.
7.11. CASUALTY AND CONDEMNATION. (a) The Borrower will promptly (and in
any event within 10 days) furnish to the Lender written notice of any Event of
Loss involving any property included in the Collateral which is reasonably
believed to be in excess of $500,000.
(b) If any Event of Loss results in Net Cash Proceeds (whether in the
form of insurance proceeds, a condemnation award or otherwise), a portion or all
of which is required to be applied as a prepayment of the Loans or to the
rebuilding or restoration of any affected property pursuant to section 4.2, the
Lender is authorized to collect such Net Proceeds and, if received by any Credit
Party, the Borrower will, or will cause any applicable Credit Party, to pay over
such Net Proceeds to the Lender.
7.12. LANDLORD/MORTGAGEE WAIVERS; BAILEE LETTERS. If requested to do so
by the Lender, the Borrower will promptly (and in any event within 60 days
following any such request) use commercially reasonable efforts to obtain, and
thereafter the Borrower will use its best efforts to maintain in effect, (a)
lien waivers from landlords and mortgagees having any interest in any Real
Property on which any tangible items of Collateral, having a minimum value as
specified by the Lender in such request, are located, substantially in the form
provided by, or otherwise reasonably acceptable to, the Lender (it being
understood that no lien waivers shall be required where the underlying lease or
other document itself contains a lien waiver covering inventory and equipment
which the Lender considers adequate, and further, it is expressly understood
that no lien waivers will be requested for locations other than warehouse
locations), and (b) bailee letters, substantially in the form provided by, or
otherwise reasonably acceptable to, the Lender, from persons unrelated to any of
the Credit Parties who are parties to the Security Agreements to whom any
tangible items of Collateral having a minimum value as specified by the Lender
in such request, have been delivered for storage, use, consignment or similar
purposes; PROVIDED, HOWEVER, than in no case will the Lender have rights with
respect to Collateral greater than or senior to the rights of the Senior Agent.
SECTION 8. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that on the Effective Date and
thereafter for so long as this Agreement is in effect and until such time as the
Commitment has been terminated, no Notes remain outstanding and the Loans,
together with interest, Fees and all other Obligations incurred hereunder are
paid in full:
8.1. CHANGES IN BUSINESS. Neither the Borrower nor any of its
Subsidiaries will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Borrower and its Subsidiaries, would be substantially changed from the
business of owning and operating retail department stores, specialty stores, and
wholesale and e-commerce activities related to the current line of sales and
other business engaged in by the Borrower and its Subsidiaries on the date
hereof.
8.2. CONSOLIDATION, MERGER, ACQUISITIONS, ASSET SALES, ETC. The
Borrower will not, and will not permit any Subsidiary to, (1) wind up, liquidate
or dissolve its affairs, (2) enter into
51
Exhibit 10.2
any transaction of merger or consolidation, (3) make or otherwise effect any
Acquisition, (4) sell or otherwise dispose of any of its property or assets
outside the ordinary course of business, or otherwise make or otherwise effect
any Asset Sale, or (5) agree to do any of the foregoing at any future time,
EXCEPT that the following shall be permitted:
(a) CERTAIN INTERCOMPANY MERGERS, ETC. If no Default or Event
of Default shall have occurred and be continuing or would result
therefrom, (i) the merger, consolidation or amalgamation of any
Wholly-Owned Subsidiary with or into the Borrower or another
Wholly-Owned Subsidiary, so long as in any merger, consolidation or
amalgamation involving the Borrower, the Borrower is the surviving or
continuing or resulting corporation, (ii) the liquidation or
dissolution of any Wholly-Owned Subsidiary of the Borrower, and (iii)
the transfer or other disposition of any property by the Borrower to
any Wholly-Owned Subsidiary or by any Wholly-Owned Subsidiary to the
Borrower or any other Wholly-Owned Subsidiary of the Borrower, shall
each be permitted.
(b) PERMITTED ACQUISITIONS. If no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any Subsidiary may make any Acquisition which is a
Permitted Acquisition, PROVIDED that all of the conditions contained in
the definition of the term Permitted Acquisition are satisfied.
(c) PERMITTED DISPOSITIONS. If no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any of its Subsidiaries may (i) sell any property, land or
building (including any related receivables or other intangible assets)
to any person which is not a Subsidiary of the Borrower, or (ii) sell
the entire capital stock (or other equity interests) and Indebtedness
of any Subsidiary owned by the Borrower or any other Subsidiary to any
person which is not a Subsidiary of the Borrower, or (iii) permit any
Subsidiary to be merged or consolidated with a person which is not an
Affiliate of the Borrower, or (iv) consummate any other Asset Sale with
a person who is not a Subsidiary of the Borrower; PROVIDED that:
(A) the consideration for such transaction represents
fair value (as determined by management of the Borrower), and
at least 90% of such consideration consists of cash,
(B) the aggregate consideration for all such
transactions completed in any fiscal year does not exceed
$10,000,000,
(C) in the case of any such transaction involving
consideration in excess of $1,000,000, at least five Business
Days prior to the date of completion of such transaction the
Borrower shall have delivered to the Lender an officer's
certificate executed on behalf of the Borrower by an
Authorized Officer of the Borrower, which certificate shall
contain a description of the proposed transaction, the date
such transaction is scheduled to be consummated, the estimated
purchase price or other consideration for such transaction,
financial information pertaining to compliance with the
preceding clause (A), and which
52
Exhibit 10.2
shall (if requested by the Lender) include a certified copy of
the draft or definitive documentation pertaining thereto, and
(D) contemporaneously therewith, the Borrower prepays
Loans as and to the extent contemplated by section 4.2(b).
(d) LEASES. The Borrower or any of its Subsidiaries may enter
into leases of property or assets not constituting Acquisitions,
PROVIDED such leases are not otherwise in violation of this Agreement.
(e) CAPITAL EXPENDITURES: The Borrower and it Subsidiaries
shall be permitted to make the Consolidated Capital Expenditures,
PROVIDED such Consolidated Capital Expenditures are not otherwise in
violation of this Agreement.
(f) PERMITTED INVESTMENTS. The Borrower and it Subsidiaries
shall be permitted to make the investments permitted pursuant to
section 8.5.
8.3. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with or without
recourse to the Borrower or any of its Subsidiaries, other than for purposes of
collection of delinquent accounts in the ordinary course of business) or assign
any right to receive income, or file or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute, EXCEPT that the foregoing restrictions shall not
apply to:
(a) STANDARD PERMITTED LIENS: the Standard Permitted Liens;
(b) LIENS SECURING SENIOR INDEBTEDNESS: Liens securing Senior
Indebtedness, including, but not limited to, Liens granted in
connection with the Senior Facility;
(c) EXISTING LIENS, ETC.: Liens (i) in existence on the
Effective Date which are listed, and the Indebtedness secured thereby
and the property subject thereto on the Effective Date described, in
Annex III, or (ii) arising out of the refinancing, extension, renewal
or refunding of any Indebtedness secured by any such Liens, PROVIDED
that the principal amount of such Indebtedness is not increased and
such Indebtedness is not secured by any additional assets; and
(d) PURCHASE MONEY LIENS AND LIENS ON ACQUIRED PROPERTIES:
Liens which
(i) are placed upon equipment or machinery or
improvements to Real Property (including the associated Real
Property) used in the ordinary course of business of the
Borrower or any Subsidiary at the time of (or within 180 days
53
Exhibit 10.2
after) the acquisition of such equipment or machinery or the
completion of such improvements by the Borrower or any such
Subsidiary to secure Indebtedness incurred to pay or finance
all or a portion of the purchase price or other cost thereof,
PROVIDED that the Lien encumbering the equipment or machinery
so acquired or the Real Property so improved does not encumber
any other asset of the Borrower or any such Subsidiary; or
(ii) are existing on property or other assets at the
time acquired by the Borrower or any Subsidiary or on assets
of a person at the time such person first becomes a Subsidiary
of the Borrower; PROVIDED that (A) any such Liens were not
created at the time of or in contemplation of the acquisition
of such assets or person by the Borrower or any of its
Subsidiaries; (B) in the case of any such acquisition of a
person, any such Lien attaches only to the property and assets
of such person; and (C) in the case of any such acquisition of
property or assets by the Borrower or any Subsidiary, any such
Lien attaches only to the property and assets so acquired and
not to any other property or assets of the Borrower or any
Subsidiary;
PROVIDED that (1) the Indebtedness secured by any such Lien does not
exceed 100% of the fair market value of the property and assets to
which such Lien attaches, determined at the time of the acquisition or
improvement of such property or asset or the time at which such person
becomes a Subsidiary of the Borrower (except in the circumstances
described in clause (ii) above to the extent such Liens constituted
customary purchase money Liens at the time of incurrence and were
entered into in the ordinary course of business), and (2) the
Indebtedness secured thereby is permitted by section 8.4(c).
(e) LIMITED INVENTORY: Liens of Limited on the Limited
Inventory pursuant to the Limited Agreement.
8.4. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT:
(a) CREDIT DOCUMENTS: Indebtedness incurred under this
Agreement and the other Credit Documents;
(b) EXISTING INDEBTEDNESS: Existing Indebtedness; and any
refinancing, extension, renewal or refunding of any such Existing
Indebtedness not involving an increase in the principal amount thereof
or a reduction of more than 10% in the remaining weighted average life
to maturity thereof (computed in accordance with standard financial
practice); PROVIDED that any Existing Indebtedness identified in Annex
III or referred to in section 5.1 as being intended to be refinanced by
Loans incurred hereunder may not be otherwise refinanced;
54
Exhibit 10.2
(c) PRIORITY DEBT: in addition to the Indebtedness permitted
by section 8.4(b) above, the following Indebtedness (collectively,
"PRIORITY DEBT"):
(i) Indebtedness consisting of Capital Lease
Obligations of the Borrower and its Subsidiaries,
(ii) Indebtedness consisting of Synthetic Lease
Obligations of the Borrower and its Subsidiaries,
(iii) Indebtedness (other than the Obligations and
any Designated Hedge Agreements (as defined in the Senior
Facility)) secured by a Lien on any property of the Borrower
or any Subsidiary,
(iv) Senior Indebtedness, and
(v) other Indebtedness of Subsidiaries of the
Borrower (exclusive of Indebtedness owed pursuant to any of
the Credit Documents, or to the Borrower or a Wholly-Owned
Subsidiary of the Borrower);
(d) SUBORDINATED BRIDGE DEBT: the following:
(i) the Subordinated Bridge Debt (including
the subordinated Subsidiary Guaranties provided for
therein), as outstanding on the Closing Date and as
subject to the terms of the documents governing the
Subordinated Bridge Debt, as in effect on the Closing
Date, with only such subsequent changes and
modifications as are expressly provided for in this
Agreement; and
(ii) any refinancing, extension, renewal or
refunding of the Subordinated Bridge Debt effected in
compliance with this Agreement;
(e) INTERCOMPANY DEBT: Indebtedness of the Borrower to any of
its Subsidiaries, and Indebtedness of any of the Borrower's
Subsidiaries to the Borrower or to another Subsidiary of the Borrower,
to the extent permitted under section 8.5.
8.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS. The
Borrower will not, and will not permit any of its Subsidiaries to, (1) lend
money or credit or make advances to any person, (2) purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, or other investment in, any person, (3) create, acquire
or hold any Subsidiary, (4) be or become a party to any joint venture, member of
a limited liability company or partner of a partnership, or (5) be or become
obligated under any Guaranty Obligations (other than those created in favor of
the Lender pursuant to the Credit Documents), EXCEPT:
(a) the Borrower or any of its Subsidiaries may invest in cash
and Cash Equivalents;
55
Exhibit 10.2
(b) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal course
of business;
(c) the Borrower and its Subsidiaries may acquire and hold
receivables owing to them in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(d) investments acquired by the Borrower or any of its
Subsidiaries (i) in exchange for any other investment held by the
Borrower or any such Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other investment, or (ii) as a result of a foreclosure by the
Borrower or any of its Subsidiaries with respect to any secured
investment or other transfer of title with respect to any secured
investment in default;
(e) loans and advances to employees for business-related
travel expenses, moving expenses, costs of replacement homes, business
machines or supplies, automobiles and other similar expenses, in each
case incurred in the ordinary course of business, shall be permitted;
(f) investments in the capital of any Wholly-Owned Subsidiary
which is not a Foreign Subsidiary;
(g) to the extent not permitted by the foregoing clauses,
existing investments in any Subsidiaries (and any increases thereof
attributable to increases in retained earnings);
(h) to the extent not permitted by the foregoing clauses,
existing loans, advances, investments and guarantees;
(i) any unsecured Guaranty Obligations permitted by section
8.4;
(j) investments of the Borrower and its Subsidiaries in Hedge
Agreements;
(k) loans and advances by any Subsidiary of the Borrower to
the Borrower, PROVIDED that the Indebtedness represented thereby
constitutes subordinated indebtedness;
(l) loans and advances by the Borrower or by any Subsidiary of
the Borrower to, or other investments in, any Subsidiary of the
Borrower which is (i) a Subsidiary Guarantor, (ii) a Wholly-Owned
Subsidiary, and (iii) not a Foreign Subsidiary;
(m) loans and advances by any Subsidiary of the Borrower which
is not a Subsidiary Guarantor to, or other investments by any such
Subsidiary in, any other Subsidiary of the Borrower which is a
Wholly-Owned Subsidiary;
(n) the Acquisitions permitted by section 8.2;
56
Exhibit 10.2
(o) loans, advances and investments of any person which are
outstanding at the time such person becomes a Subsidiary of the
Borrower as a result of an Acquisition permitted by section 8.2, but
not any increase in the amount thereof; and
(p) any other loans, advances, investments (whether in the
form of cash or contribution of property, and if in the form of a
contribution of property, such property shall be valued for purposes of
this clause at the fair value thereof as reasonably determined by the
Borrower) and Guaranty Obligations, in or to or for the benefit of, any
corporation, partnership, limited liability company, joint venture or
other business entity, which is not itself a Subsidiary of the Borrower
or owned or controlled by any director, officer or employee of the
Borrower or any of its Subsidiaries, not otherwise permitted by the
foregoing clauses, made after December 31, 1999 (such loans, advances
and investments and Guaranty Obligations, collectively, "BASKET
INVESTMENTS AND GUARANTEES"), shall be permitted to be incurred if (i)
no Event of Default shall have occurred and be continuing, or would
result therefrom, and (ii) the aggregate cumulative amount of such
Basket Investments and Guarantees (taking into account any repayments
of loans or advances), does not exceed $5,000,000; PROVIDED that if the
Subordinated Bridge Debt is retired in full out of the net proceeds of
an offering involving the issuance by the Borrower of shares of its
capital stock (other than Redeemable Stock), then effective immediately
after giving effect to such issuance and such retirement, the foregoing
amount shall be increased from $5,000,000 to $7,500,000.
8.6. DIVIDENDS, ETC. The Borrower will not permit any of its
Subsidiaries which is not a Wholly-Owned Subsidiary to directly or indirectly
declare, order, pay or make any dividend (other than dividends payable solely in
its own capital stock of the same class) or other distribution on or in respect
of any capital stock of any class of such Subsidiary, whether by reduction of
capital or otherwise, without the prior written approval of the Lender.
8.7. LIMITATION ON CERTAIN RESTRICTIVE AGREEMENTS. The Borrower will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist or become effective, any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Subsidiary to create, incur or suffer to exist
any Lien upon any of its property or assets as security for Indebtedness, or (b)
the ability of any such Subsidiary to pay dividends or make any other
distributions on its capital stock or any other interest or participation in its
profits owned by the Borrower or any Subsidiary of the Borrower, or pay any
Indebtedness owed to the Borrower or a Subsidiary of the Borrower, or to make
loans or advances to the Borrower or any of the Borrower's other Subsidiaries,
or transfer any of its property or assets to the Borrower or any of the
Borrower's other Subsidiaries, EXCEPT for such restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest, (iv) customary provisions restricting
assignment of any licensing agreement entered into in the ordinary course of
business, (v) customary provisions restricting the transfer or further
encumbering of assets subject to Liens permitted under section 8.3 (b) or (c),
(vi) restrictions contained in the Existing Indebtedness Agreements as in effect
on the Closing Date (and similar restrictions governing any Indebtedness
incurred in connection with the refinancing of the Existing Indebtedness), (vii)
customary restrictions affecting only a Subsidiary of the Borrower under any
agreement or instrument governing any of the
57
Exhibit 10.2
Indebtedness of a Subsidiary permitted pursuant to 8.4, (viii) any document
relating to Indebtedness secured by a Lien permitted by section 8.3, insofar as
the provisions thereof limit grants of junior liens on the assets securing such
Indebtedness, and (ix) any Operating Lease or Capital Lease, insofar as the
provisions thereof limit grants of a security interest in, or other assignments
of, the related leasehold interest to any other person.
8.8. PREPAYMENTS AND REFINANCINGS OF OTHER DEBT, ETC. The Borrower will
not, and will not permit any of its Subsidiaries to, make (or give any notice in
respect thereof) any voluntary or optional payment or prepayment or redemption
or acquisition for value of (including, without limitation, by way of depositing
with the trustee with respect thereto money or securities before due for the
purpose of paying when due) or exchange of, or refinance or refund, any
Indebtedness of the Borrower or its Subsidiaries which has an outstanding
principal balance (or Capitalized Lease Obligation, in the case of a Capital
Lease, or present value, based on the implicit interest rate, in the case of a
Synthetic Lease) greater than $1,000,000 (other than the Obligations and
intercompany loans and advances among the Borrower and its Subsidiaries, and
other than the Subordinated Bridge Debt as agreed by the holders of Senior
Indebtedness and the Lender, and other than Senior Indebtedness); PROVIDED that
the Borrower or any Subsidiary may refinance or refund any such Indebtedness if
the aggregate principal amount thereof (or Capitalized Lease Obligation, in the
case of a Capital Lease, or present value, based on the implicit interest rate,
in the case of a Synthetic Lease) is not increased and the weighted average life
to maturity thereof (computed in accordance with standard financial practice) is
not reduced by more than 10%.
8.9. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and
in the case of a Subsidiary, the Borrower or another Subsidiary) other than in
the ordinary course of business of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a person other than an Affiliate,
EXCEPT (i) sales of goods to an Affiliate for use or distribution outside the
United States which in the good faith judgment of the Borrower complies with any
applicable legal requirements of the Code, or (ii) agreements and transactions
with and payments to officers, directors and shareholders which are either (A)
entered into in the ordinary course of business and not prohibited by any of the
provisions of this Agreement, or (B) entered into outside the ordinary course of
business, approved by the directors or shareholders of the Borrower, and not
prohibited by any of the provisions of this Agreement.
8.10. ORGANIZATIONAL DOCUMENTS, ETC. The Borrower will not, and will
not permit any of its Subsidiaries to, amend, modify or otherwise change any of
the terms or provisions in any of its constituent documents as in effect on the
date hereof, EXCEPT for changes that do not affect in any way the Borrower's or
any Subsidiary's rights and obligations to enter into and perform the Credit
Documents to which it is a party and to pay all of the Obligations under all of
the Credit Documents and that otherwise do not have a Material Adverse Effect.
8.11. PLAN TERMINATIONS, MINIMUM FUNDING, ETC. The Borrower will not,
and will not permit any ERISA Affiliate to, (i) terminate any Plan or plans so
as to result in liability of the
58
Exhibit 10.2
Borrower or any ERISA Affiliate to the PBGC in excess of, in the aggregate, the
amount which is equal to 5% of the Borrower's Consolidated Tangible Net Worth as
of the date of the then most recent financial statements furnished to the Lender
pursuant to the provisions of this Agreement, (ii) permit to exist one or more
events or conditions which reasonably present a material risk of the termination
by the PBGC of any Plan or Plans with respect to which the Borrower or any ERISA
Affiliate would, in the event of such termination, incur liability to the PBGC
in excess of such amount in the aggregate, or (iii) fail to comply with the
minimum funding standards of ERISA and the Code with respect to any Plan.
8.12. MINIMUM PRINCIPAL OUTSTANDING. Until the Senior Facility and all
commitments thereunder are terminated and all obligations thereunder and all
other Senior Indebtedness is paid in full in immediately available funds,
notwithstanding anything to the contrary herein, the Borrower will not permit
the aggregate outstanding principal amount of the Loans to be less than
$20,000,000 prior to the later of (i) receipt by the Senior Agent, or its
successor assignee, of audited financial statements for the fiscal year ended
February 2, 2002 that demonstrates Consolidated EBITDA for such fiscal year of
no less than $100,000,000, and (ii) April 30, 2002.
SECTION 9. SUBORDINATION.
The Borrower covenants and agrees that, to the extent and in the manner
hereinafter set forth in this section 9, (1) the Obligations, and (2) the
security interest granted under the Security Documents, and (3) any rights and
remedies the Lender may have to secure payment of the Obligations under this
Agreement or any other Credit Document, including but not limited to, any action
the Lender may take pursuant to a Credit Document to enforce its rights with
respect to the Collateral, are hereby expressly made subordinate and subject in
right of payment as PROVIDED in this section 9 to the prior payment in full, in
cash or Cash Equivalents of all Senior Indebtedness, whether outstanding on the
Closing Date or thereafter incurred, all in accordance with this section 9;
provided that the Indebtedness evidenced by this Agreement in all respects shall
rank prior to all existing and future Indebtedness of the Borrower that is
expressly subordinated to the Obligations of the Borrower and to the
Subordinated Bridge Indebtedness.
This section 9 shall constitute a continuing offer to all persons who
as of the date hereof hold Senior Indebtedness, or, in reliance upon such
provisions, become holders of, or continue to hold Senior Indebtedness; and such
provisions are made for the benefit of the holders of Senior Indebtedness; and
such holders are made obligees hereunder and they or each of them may enforce
such provisions.
9.1. PRIORITY OF SENIOR INDEBTEDNESS OVER OBLIGATIONS. From and after
the date hereof, notwithstanding anything to the contrary herein, until the
Senior Indebtedness is paid in full and all credit commitments with respect
thereto have been terminated in writing by a representative holder of all Senior
Indebtedness (a "SENIOR REPRESENTATIVE"):
(a) Any security interest and pledge granted by a Credit Party to
holders of Senior Indebtedness regarding the Collateral to secure the
Senior Indebtedness shall have priority over any security interest and
pledge granted by a Credit Party to
59
Exhibit 10.2
the Lender to secure the Obligations, and any security interest and
pledge granted by a Credit Party to the Lender to secure the
Obligations shall be, and at all times remain, inferior and subordinate
to any security interest and pledge granted by a Credit Party to
holders of Senior Indebtedness;
(b) The Lender will not take any action whatsoever to enforce any of
its rights with respect to the Collateral.
9.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the event of
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, involving or relative to a Credit Party or to a Credit Party's
assets, or (b) any liquidation, dissolution or other winding up of a Credit
Party, whether voluntary or involuntary and whether or not involving insolvency
or bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshaling of assets or liabilities of a Credit Party, then and in any such
event:
(1) the holders of Senior Indebtedness shall be entitled to
receive payment in full in cash or Cash Equivalents or in any other form
acceptable to the holders of Senior Indebtedness, of all amounts due on or in
respect of all Senior Indebtedness, before the Lender is entitled to receive any
payment or distribution of any kind or character on account of the principal of,
or interest on the Indebtedness evidenced by this Agreement;
(2) any payment or distribution of assets of a Credit Party of
any kind or character, whether in cash, property or securities, by set-off or
otherwise, to which the Lender would be entitled but for the provisions of this
section 9 shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their representative or representatives, ratably according to
the aggregate amounts remaining unpaid on account of the Senior Indebtedness
held or represented by each, to the extent necessary to make payment in full in
cash or Cash Equivalents or in any other form acceptable to the holders of
Senior Indebtedness, of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(3) if, notwithstanding the foregoing provisions of this
section 9.2, the Lender has received any payment or distribution of assets of a
Credit Party of any kind or character, whether in cash, property or securities,
in respect of principal of or interest on the Indebtedness evidenced by this
Agreement before all Senior Indebtedness is paid in full, then and in such event
such payment or distribution shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent
or other person making payment or distribution of assets of the Borrower for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full in cash or Cash
Equivalents or in any other form acceptable to the holders of Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness.
The consolidation of a Credit Party with, or the merger of a Credit
Party with or into, another person or the liquidation or dissolution of a Credit
Party following the sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the Credit Party's
60
Exhibit 10.2
properties or assets to another person consistent with the terms of the Credit
Documents shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of a Credit Party for the purposes of this section 9.2 if the
person formed by such consolidation or the surviving person of such merger or
the person which acquires by sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the Credit Party's properties
or assets, as the case may be, as a part of such consolidation, merger, sale,
assignment, conveyance, transfer, lease or other disposition, complies with the
terms of this Agreement and agrees, in writing, to be bound thereby.
9.3. SUSPENSION OF PAYMENT AND REMEDIES WHEN SENIOR INDEBTEDNESS IN
DEFAULT.
(a) Notwithstanding anything to the contrary herein, upon the
occurrence of a Default or an Event of Default under a document
governing Senior Indebtedness (a "SENIOR INDEBTEDNESS DEFAULT"), (1) no
payment or distribution of any assets of a Credit Party of any kind or
character shall be made by a Credit Party on account of principal of or
interest on the Obligations of a Credit Party, and (2) the Lender shall
not exercise any of its rights or remedies under any Credit Document
until the earlier to occur of (i) such Senior Indebtedness Default
shall have been cured or waived or shall have ceased to exist and (ii)
the Senior Indebtedness with respect to which such Senior Indebtedness
Default shall have occurred shall have been discharged or paid in full
in cash or Cash Equivalents or in any other form acceptable to the
holders of such Senior Indebtedness, after which the Borrower shall
resume making any and all required payments in respect of the
Obligations, including any missed payments.
(b) If, notwithstanding the foregoing, the Borrower shall make
any payment or distribute any assets or the proceeds thereof to the
Lender prohibited by the foregoing provisions of this section 9.3, then
and in such event such payment shall be paid over and delivered
forthwith to the Senior Representative, or as a court of competent
jurisdiction shall direct.
9.4. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this section
9 or elsewhere in this Agreement shall prevent the Borrower, at any time except
(1) during the pendency of any case, proceeding, dissolution, liquidation or
other winding up, assignment for the benefit of creditors or other marshalling
of assets and liabilities of the Borrower referred to in section 9.2, or (2)
under the conditions described in section 9.3, from making payments at any time
of principal or scheduled fees or interest on the Obligations or any mandatory
prepayment required by section 3.4. For avoidance of doubt, nothing in this
section 9 shall require the Lender to disgorge any payment the Lender receives
at a time when its receipt of such payment and the Borrower's making of such
payment is not prohibited by the provisions of this section 9.
9.5. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS. Subject
to the payment in full of all Senior Indebtedness in cash or Cash Equivalents or
in any other form acceptable to the holders of Senior Indebtedness, the Lender
shall be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property, securities, Collateral
61
Exhibit 10.2
and proceeds thereof, applicable to the Senior Indebtedness until the Senior
Indebtedness shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property, securities, Collateral and proceeds thereof, to which the Lender would
be entitled except for the provisions of this section 9, and no payments over
pursuant to the provisions of this section 9 to the holders of Senior
Indebtedness by the Lender, shall, as among the Borrower, its creditors (other
than holders of Senior Indebtedness), and the Lender, be deemed to be a payment
or distribution by the Borrower to or on account of the Senior Indebtedness.
If any payment or distribution to which the Lender would otherwise have
been entitled but for the provisions of this section 9 shall have been applied,
pursuant to the provisions of this section 9, to the payment of any and all
amounts payable under Senior Indebtedness of the Borrower, then and in such case
the Lender shall be entitled to receive from the holders of such Senior
Indebtedness at the time outstanding any payments or distributions received by
the holders of such Senior Indebtedness in excess of the amount sufficient to
pay any and all amounts payable under or in respect of such Senior Indebtedness
in full in cash or Cash Equivalents.
9.6. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The provisions of
this section 9 are intended solely for the purpose of defining the relative
rights of the Lender on the one hand and the holders of Senior Indebtedness on
the other hand. Nothing contained in this section 9 or elsewhere in this
Agreement is intended to or shall (a) impair, as among the Borrower, its
creditors (other than holders of Senior Indebtedness) and the Lender, the
Obligations of the Borrower, which are absolute and unconditional, to pay to the
Lender the Obligations as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Borrower of the Lender and creditors of the Borrower (other than the holders of
Senior Indebtedness).
The failure to make a payment on account of principal of or interest on
the Indebtedness evidenced by this Agreement by reason of any provision of this
section 9 shall not be construed as preventing the occurrence of a Default or an
Event of Default hereunder.
9.7. NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act
on the part of the Borrower or by any act or failure to act by any such
holder, or by any noncompliance by the Borrower with the terms,
provisions and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
section 9.7 and notwithstanding any other provision contained herein,
the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Lender, without incurring
responsibility to the Lender and without impairing or releasing the
subordination provided in this section 9 or the obligations hereunder
of the Lender to the holders of Senior Indebtedness, do any one or more
of the following: (1) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness
or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release or
otherwise deal
62
Exhibit 10.2
with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any person liable in any manner for the
collection or payment of Senior Indebtedness; and (4) exercise or
refrain from exercising any rights against the Borrower and any other
person.
9.8. NOTICE TO LENDER.
(a) The Borrower shall give prompt written notice to the
Lender of any fact known to the Borrower that would prohibit the making
of any payment to or by the Lender in respect of the Obligations.
(b) The Lender shall be entitled to rely on the delivery to it
of a written notice to the Lender and the Borrower by a person
representing himself to be a Senior Representative or a holder of
Senior Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a Senior Representative or
a holder of Senior Indebtedness (or a trustee, fiduciary or agent
therefor). In the event that the Lender determines in good faith that
further evidence is required with respect to the right of any person as
a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this section 9, the Lender may request that
such person furnish evidence to the reasonable satisfaction of the
Lender as to the amount of Senior Indebtedness held by such person, the
extent to which such person is entitled to participate in such payment
or distribution and any other facts pertinent to the rights of such
person under this section 9, and if such evidence is not furnished, the
Lender may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment.
9.9. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Borrower referred to in this
section 9, the Lender and the Borrower shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Lender, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this section 9, provided that the foregoing shall apply only if such court has
been fully apprised of the provisions of this section 9.
9.10 CONTINUING AGREEMENT; ASSIGNMENTS UNDER THE SENIOR FACILITY. The
provisions of this section 9 constitute a continuing agreement and shall (i)
remain in full force and effect until the payment in full of the Senior
Indebtedness, (ii) be binding upon the Lender, the Borrower and their respective
successors and assigns, if any, and (iii) inure to the benefit of, and be
enforceable by holders of Senior Indebtedness and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(iii), any lender under the Senior Facility may assign or otherwise transfer all
or any portion of its rights and obligations under the Senior Facility
(including, without limitation, all or any portion of any note to be held
63
Exhibit 10.2
by it) to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof granted to such
lender under the Senior Facility herein.
SECTION 10. EVENTS OF DEFAULT.
10.1. EVENTS OF DEFAULT. Any of the following specified events (each an
"EVENT OF DEFAULT") shall constitute an Event of Default hereunder:
(a) PAYMENTS: the Borrower shall (i) default in the payment
when due of any principal of the Loans; or (ii) default, and such
default shall continue for five or more days, in the payment when due
of any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document; or
(b) REPRESENTATIONS, ETC.: any representation, warranty or
statement made by the Borrower or any other Credit Party herein or in
any other Credit Document or in any statement or certificate delivered
or required to be delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or
deemed made; or
(c) CERTAIN COVENANTS: the Borrower shall default in the due
performance or observance by it of any term, covenant or agreement
contained in section 7.1(a)(i), or sections 8.2 through 8.6, inclusive,
of this Agreement; or
(d) OTHER COVENANTS: the Borrower shall default in the due
performance or observance by it of any term, covenant or agreement
contained in this Agreement or any other Credit Document, other than
those referred to in section 10.1(a) or (b) or (c) above, and such
default is not remedied within 30 days after the earlier of (i) an
officer of the Borrower obtaining actual knowledge of such default and
(ii) the Borrower receiving written notice of such default from the
Lender (any such notice to be identified as a "notice of default" and
to refer specifically to this paragraph); or
(e) CROSS DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any
of its Subsidiaries shall (i) default in any payment with respect to
(x) any Indebtedness (other than the Obligations) owed to any lender,
including, but not limited to, Senior Indebtedness, (y) any
Indebtedness which constitutes Subordinated Bridge Debt or refinancing
thereof, or (z) any other Indebtedness having an aggregate unpaid
principal amount of $1,000,000 or greater, and in any such case such
default shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness,
or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto (and
all grace periods applicable to such observance, performance or
condition shall have expired), or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness to become due prior to its
stated maturity; or any such Indebtedness of the Borrower or any of its
Subsidiaries shall be
64
Exhibit 10.2
declared to be due and payable, or shall be required to be prepaid
(other than by a regularly scheduled required prepayment or redemption,
prior to the stated maturity thereof); or
(f) OTHER CREDIT DOCUMENTS: the Subsidiary Guaranty or any
Security Document (once executed and delivered) shall cease for any
reason (other than termination in accordance with its terms) to be in
full force and effect; or any Credit Party shall default in any payment
obligation thereunder; or any Credit Party shall default in any
material respect in the due performance and observance of any other
obligation thereunder and such default shall continue unremedied for a
period of at least 30 days after notice by the Lender; or any Credit
Party shall (or seek to) disaffirm or otherwise limit its obligations
thereunder otherwise than in strict compliance with the terms thereof;
or
(g) JUDGMENTS: one or more judgments or decrees shall be
entered against the Borrower and/or any of its Subsidiaries involving a
liability (other than a liability covered by insurance, as to which the
carrier has adequate claims paying ability and has not reserved its
rights) of $1,000,000 or more in the aggregate for all such judgments
and decrees for the Borrower and its Subsidiaries) and any such
judgments or decrees shall not have been vacated, discharged or stayed
or bonded pending appeal within 30 days (or such longer period, not in
excess of 60 days, during which enforcement thereof, and the filing of
any judgment lien, is effectively stayed or prohibited) from the entry
thereof; or
(h) BANKRUPTCY, ETC.: any of the following shall occur:
(i) the Borrower, or any of its Subsidiaries which,
alone or when combined or consolidated with any other
Subsidiary which itself is the subject of a case or proceeding
referred to below, would be a Material Subsidiary (the
Borrower and each of such other persons, each a "PRINCIPAL
PARTY") shall commence a voluntary case concerning itself
under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "BANKRUPTCY CODE"); or
(ii) an involuntary case is commenced against any
Principal Party under the Bankruptcy Code and the petition is
not controverted within 10 days, or is not dismissed within 60
days, after commencement of the case; or
(iii) a custodian (as defined in the Bankruptcy Code)
is appointed for, or takes charge of, all or substantially all
of the property of any Principal Party; or
(iv) any Principal Party commences (including by way
of applying for or consenting to the appointment of, or the
taking of possession by, a rehabilitator, receiver, custodian,
trustee, conservator or liquidator (collectively, a
"CONSERVATOR") of itself or all or any substantial portion of
its property) any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency, liquidation, rehabilitation,
conservatorship or
65
Exhibit 10.2
similar law of any jurisdiction whether now or hereafter in
effect relating to such Principal Party; or
(v) any such proceeding is commenced against any
Principal Party to the extent such proceeding is consented by
such person or remains undismissed for a period of 60 days; or
(vi) any Principal Party is adjudicated insolvent or
bankrupt; or
(vii) any order of relief or other order approving
any such case or proceeding is entered; or
(viii) any Principal Party suffers any appointment of
any conservator or the like for it or any substantial part of
its property which continues undischarged or unstayed for a
period of 60 days; or
(ix) any Principal Party makes a general assignment
for the benefit of creditors; or
(x) any corporate (or similar organizational) action
is taken by any Principal Party for the purpose of effecting
any of the foregoing; or
(i) ERISA: (A) any of the events described in clauses (i)
through (viii) of section 7.1(b) shall have occurred; or (B) there
shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk
of incurring a liability; and (C) any such event or events described in
clause (A) or (B), individually, and/or in the aggregate, in the
opinion of the Lender, has had, or could reasonably be expected to
have, a Material Adverse Effect; or
(j) MATERIAL ADVERSE EFFECT: any event or circumstance shall
occur or exist which has a Material Adverse Effect upon the Borrower,
as compared to the business, operations, property, assets, liabilities
or condition (financial or otherwise) of the Borrower and its
Subsidiaries.
10.2. ACCELERATION, ETC. Subject to sections 8.12 and 9, upon the
occurrence of any Event of Default, and at any time thereafter, if any Event of
Default shall then be continuing, the Lender may, by written notice to the
Borrower, take any or all of the following actions, without prejudice to the
rights of the Lender to enforce its claims against the Borrower or any other
Credit Party in any manner permitted under applicable law:
(a) declare the Commitment terminated, whereupon the
Commitment of the Lender shall forthwith terminate immediately without
any other notice of any kind;
(b) declare the principal of and any accrued interest in
respect of all Loans, and all obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; and/or
66
Exhibit 10.2
(c) take such other actions and exercise any other right or
remedy available under any of the Credit Documents or applicable law;
PROVIDED that, again subject to sections 8.12 and 9, if an Event of Default
specified in section 10.1(h) shall occur with respect to the Borrower, the
result which would occur upon the giving of written notice by the Lender as
specified in clauses (a) and/or (b) above shall occur automatically without the
giving of any such notice.
10.3. APPLICATION OF LIQUIDATION PROCEEDS. Subject to section 9, all
monies received by the Lender from the exercise of remedies hereunder or under
the other Credit Documents or under any other documents relating to this
Agreement shall, unless otherwise required by the terms of the other Credit
Documents or by applicable law, be applied as follows:
(i) FIRST, to the payment of all expenses (to the extent not
paid by the Borrower) incurred by the Lender in connection with the
exercise of such remedies, including, without limitation, all
reasonable costs and expenses of collection, attorneys' fees, court
costs and any foreclosure expenses;
(ii) SECOND, to the payment of interest then accrued on the
outstanding Loans;
(iii) THIRD, to the payment of any fees then accrued and
payable to the Lender under this Agreement in respect of the Loans;
(iv) FOURTH, to the payment of the principal balance then
owing on the outstanding Loans;
(v) FIFTH, to the payment to the Lender of any amounts then
accrued and unpaid under sections 2.9, 2.10 and 4.4 hereof;
(vi) SIXTH, to the payment of all other amounts owed by the
Borrower to the Lender under this Agreement or any other Credit
Document; and
(vii) FINALLY, any remaining surplus after all of the
Obligations have been paid in full, to the Borrower or to whomsoever
shall be lawfully entitled thereto.
SECTION 11. MISCELLANEOUS.
11.1. PAYMENT OF EXPENSES ETC. The Borrower agrees to:
(a) whether or not the transactions herein contemplated are
consummated, pay (or reimburse the Lender) all reasonable out-of-pocket
costs and expenses of such persons in connection with the negotiation,
preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein, the delivery of
documents on the Closing Date pursuant to section 5.1 and the initial
Borrowing hereunder.
67
Exhibit 10.2
(b) pay (or reimburse the Lender) all reasonable out-of-pocket
costs and expenses of the Lender in connection with any amendment,
waiver or consent relating to any of the Credit Documents which is
requested by any Credit Party, including, without limitation, (i) the
reasonable fees and disbursements of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
incurred in connection with the Credit Documents, and (ii) the
reasonable fees and disbursements of any counsel to any Lender
(including allocated costs of internal counsel);
(c) pay (or reimburse the Lender) all reasonable out-of-pocket
costs and expenses of the Lender in connection with the enforcement of
any of the Credit Documents or the other documents and instruments
referred to therein, including, without limitation, the reasonable fees
and disbursements of counsel to the Lender;
(d) without limitation of the preceding clause (d), in the
event of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of the Borrower or any of its Subsidiaries, pay
all costs of collection and defense, including reasonable attorneys'
fees in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due
and payable together with all required service or use taxes;
(e) pay and hold the Lender harmless from and against any and
all present and future stamp and other similar taxes with respect to
the foregoing matters and save the Lender harmless from and against any
and all liabilities with respect to or resulting from any delay or
omission to pay such taxes; and
(f) indemnify the Lender, its officers, directors, employees,
representatives and agents (collectively, the "INDEMNITEES") from and
hold each of them harmless against any and all losses, liabilities,
claims, damages or expenses reasonably incurred by any of them as a
result of, or arising out of, or in any way related to, or by reason of
(i) any investigation, litigation or other proceeding
(whether or not the Lender is a party thereto) related to the
entering into and/or performance of any Credit Document or the
use of the proceeds of any Loans hereunder or the consummation
of any transactions contemplated in any Credit Document, other
than any such investigation, litigation or proceeding arising
solely out of any examination of the Lender by any regulatory
or other governmental authority having jurisdiction over it,
or
(ii) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the
surface or subsurface of any Real Property owned, leased or at
any time operated by the Borrower or any of its Subsidiaries,
the release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or
not owned or operated by the Borrower or any of its
Subsidiaries, if the Borrower or any such Subsidiary could
have or is alleged to have any responsibility in respect
thereof, the non-compliance of any such Real Property with
foreign, federal, state and local laws, regulations and
68
Exhibit 10.2
ordinances (including applicable permits thereunder)
applicable thereto, or any Environmental Claim asserted
against the Borrower or any of its Subsidiaries, in respect of
any such Real Property,
including, in each case, without limitation, the reasonable documented
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred
by reason of the gross negligence or willful misconduct of the person
to be indemnified or of any other Indemnitee who is such person or an
Affiliate of such person).
To the extent that the undertaking to indemnify, pay or hold harmless any person
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Borrower shall make the maximum contribution to
the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
11.2. RIGHT OF SETOFF. Subject to sections 8.12 and 9, in addition to
any rights now or hereafter granted under applicable law or otherwise, and not
by way of limitation of any such rights, upon the occurrence of an Event of
Default, the Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to the Borrower
or to any other person, any such notice being hereby expressly waived, to set
off and to appropriate and apply any and all deposits (general or special) and
any other Indebtedness at any time held or owing by the Lender to or for the
credit or the account of the Borrower against and on account of the Obligations
and liabilities of the Borrower to the Lender under this Agreement or under any
of the other Credit Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not the Lender shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
11.3. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission, e-mail transmission or
cable communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Borrower, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇);
if to the Lender, at its Notice Office; or at such other address as shall be
designated by any party in a written notice to the other parties hereto. All
such notices and communications shall be mailed, telegraphed, telexed,
telecopied, transmitted electronically or cabled or sent by overnight courier,
and shall be effective when received.
11.4. BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, PROVIDED that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Lender, and, PROVIDED, FURTHER, that the Lender may only assign
or transfer its rights and obligations hereunder with the consent of the Senior
Agent (such consent not to be unreasonably withheld).
69
Exhibit 10.2
11.5. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part
of the Lender in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrower and the
Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Lender would otherwise have. No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Lender to any other or further action in any circumstances without notice
or demand.
11.6. [INTENTIONALLY OMITTED.]
11.7. CALCULATIONS: COMPUTATIONS. (a) The financial statements to be
furnished to the Lender pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by the Borrower
to the Lender); PROVIDED, that if at any time the computations determining
compliance with section 8 utilize accounting principles different from those
utilized in the financial statements furnished to the Lender, such computations
shall set forth in reasonable detail a description of the differences and the
effect upon such computations.
(b) All computations of interest on Eurodollar Loans hereunder and all
computations of Commitment Fee and other Fees hereunder shall be made on the
actual number of days elapsed over a year of 360 days. All computations of
interest on Prime Rate Loans hereunder shall be made on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as applicable.
11.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE
OF OHIO GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the Court of Common Pleas of Franklin County, Ohio, or of the
United States District Court for the Southern District of Ohio, and, by
execution and delivery of this Agreement, the Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower at its
address for notices pursuant to section 11.3, such service to become effective
30 days after such mailing or at such earlier time as may be provided under
applicable law. Nothing herein shall affect the right of the Lender to
70
Exhibit 10.2
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in section 11.8(a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Lender.
11.10. EFFECTIVENESS; INTEGRATION. This Agreement shall become
effective on the date (the "EFFECTIVE DATE") on which the Borrower and the
Lender shall have signed a copy hereof (whether the same or different copies).
This Agreement, the other Credit Documents and any separate letter agreements
with respect to fees payable to the Lender, constitute the entire contract among
the parties relating to the subject matter hereof and thereof and supersede any
and all previous agreements and understandings, oral or written, relating to the
subject matter hereof or thereof.
11.11. HEADINGS DESCRIPTIVE. The headings of the several sections and
other portions of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
11.12. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof
or thereof may be changed, waived, discharged or terminated UNLESS such change,
waiver, discharge or termination is in writing signed by the Borrower and the
Lender
11.13. SURVIVAL OF INDEMNITIES. All indemnities set forth herein
including, without limitation, in section 2.9, 2.10, or 11.1 shall survive the
execution and delivery of this Agreement and the making and repayment of Loans.
11.14. [INTENTIONALLY OMITTED.]
11.15. LENDER REGISTER. The Borrower hereby designates the Lender to
serve as its agent, solely for purposes of this section 11.15, to maintain a
register (the "LENDER REGISTER") on or in which it will record the Commitments
of the Lender, the Loans made to the Borrower by
71
Exhibit 10.2
the Lender and each repayment and prepayment in respect of the principal amount
of such Loans of the Lender. Failure to make any such recordation, or (absent
manifest error) any error in such recordation, shall not affect the Borrower's
obligations in respect of such Loans. The Borrower agrees to indemnify the
Lender from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Lender in performing its duties under this section 11.15. The Lender Register
shall be available for inspection by the Borrower at any reasonable time and
from time to time upon reasonable prior notice.
11.16. GENERAL LIMITATION OF LIABILITY. No claim may be made by the
Borrower or any other person against the Lender, or the Affiliates,
shareholders, directors, officers, employees, attorneys or agents of the Lender
for any damages other than actual compensatory damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any of the other
Credit Documents, or any act, omission or event occurring in connection
therewith; and the Borrower hereby, to the fullest extent permitted under
applicable law, waives, releases and agrees not to ▇▇▇ or counterclaim upon any
such claim for any special, consequential or punitive damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
11.17. NO DUTY. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such person may act) retained by the Lender with respect to the
transactions contemplated by the Credit Documents shall have the right to act
exclusively in the interest of the Lender, and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, to any of its Subsidiaries, or to any other person,
with respect to any matters within the scope of such representation or related
to their activities in connection with such representation. The Borrower agrees,
on behalf of itself and its Subsidiaries, not to assert any claim or
counterclaim against any such persons with regard to such matters, all such
claims and counterclaims, now existing or hereafter arising, whether known or
unknown, foreseen or unforeseeable, being hereby waived, released and forever
discharged.
11.18. [INTENTIONALLY OMITTED.]
11.19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties herein shall survive the making of Loans hereunder, the execution
and delivery of this Agreement, the Note and the other documents the forms of
which are attached as Exhibits hereto, the issue and delivery of the Note, any
disposition thereof by any holder thereof, and any investigation made by the
Lender or on its behalf. All statements contained in any certificate or other
document delivered to the Lender by or on behalf of the Borrower or of its
Subsidiaries pursuant hereto or otherwise specifically for use in connection
with the transactions contemplated hereby shall constitute representations and
warranties by the Borrower hereunder, made as of the respective dates specified
therein or, if no date is specified, as of the respective dates furnished to the
Lender.
11.20. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability
72
Exhibit 10.2
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
11.21. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action, event, condition or
circumstance is not permitted by any of such covenants, the fact that it would
be permitted by an exception to, or would otherwise be within the limitations or
restrictions of, another covenant, shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or event, condition or
circumstance exists.
11.22. INTEREST RATE LIMITATION. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the "CHARGES"), shall exceed the maximum
lawful rate (the "MAXIMUM RATE") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this section shall be cumulated and the interest and Charges
payable to the Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Prime Rate to the date of repayment, shall have
been received by the Lender.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK.]
73
Exhibit 10.2
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
VALUE CITY DEPARTMENT STORES, INC.
BY:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CHIEF FINANCIAL OFFICER & TREASURER
SCHOTTENSTEIN STORES CORPORATION,
AS LENDER
BY:
ITS: