EXHIBIT 10.1
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of May 24, 1999
among
WILSONS LEATHER HOLDINGS INC.
as Borrower,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent, Lender and Swing Line Lender
TABLE OF CONTENTS
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Page
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1. AMOUNT AND TERMS OF CREDIT.................................................................... 2
1.1. Credit Facilities..................................................................... 2
1.2. Letters of Credit..................................................................... 5
1.3. Prepayment............................................................................ 5
1.4. Use of Proceeds....................................................................... 6
1.5. Interest.............................................................................. 7
1.6. Applicable Margins.................................................................... 9
1.7. Eligible Inventory.................................................................... 9
1.8. Cash Management Systems............................................................... 10
1.9. Fees.................................................................................. 10
1.10. Receipt of Payments................................................................... 10
1.11. Application and Allocation of Payments................................................ 10
1.12. Loan Account and Accounting........................................................... 12
1.13. Indemnity............................................................................. 12
1.14. Access................................................................................ 13
1.15. Taxes................................................................................. 13
1.16. Capital Adequacy: Increased Costs: Illegality......................................... 14
1.17. Single Loan........................................................................... 16
1.18. Effect On Prior Loans; Prior Credit Agreement......................................... 16
2. CONDITIONS PRECEDENT.......................................................................... 16
2.1. Conditions to the Initial Loans....................................................... 16
2.2. Further Conditions to Each Loan....................................................... 17
3. REPRESENTATIONS AND WARRANTIES................................................................ 18
3.1. Corporate Existence; Compliance with Law............................................. 18
3.2. Executive Offices; FEIN............................................................... 18
3.3. Corporate Power, Authorization, Enforceable Obligations............................... 19
3.4. Financial Statements and Projections.................................................. 19
3.5. Material Adverse Effect............................................................... 19
3.6. Ownership of Property; Liens.......................................................... 20
3.7. Labor Matters......................................................................... 20
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness............. 20
3.9. Government Regulation................................................................. 20
3.10. Margin Regulations.................................................................... 21
3.11. Taxes................................................................................. 21
3.12. ERISA................................................................................. 21
3.13. No Litigation......................................................................... 22
3.14. Brokers............................................................................... 22
3.15. Intellectual Property................................................................. 22
3.16. Full Disclosure....................................................................... 22
3.17. Hazardous Materials................................................................... 23
3.18. Insurance............................................................................. 23
3.19. Deposit and Disbursement Accounts..................................................... 23
3.20. Government Contracts.................................................................. 23
3.21. Landlords and Trade Relations......................................................... 23
3.22. Agreements and Other Documents........................................................ 24
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3.23. Solvency............................................................................... 24
3.24. Year 2000 Representations.............................................................. 24
4. FINANCIAL STATEMENTS AND INFORMATION........................................................... 24
4.1. Reports and Notices.................................................................... 24
4.2. Communication with Accountants......................................................... 24
5. AFFIRMATIVE COVENANTS.......................................................................... 25
5.1. Maintenance of Existence and Conduct of Business....................................... 25
5.2. Payment of Obligations................................................................. 25
5.3. Books and Records...................................................................... 26
5.4. Insurance: Damage to or Destruction of Collateral...................................... 26
5.5. Compliance With Laws................................................................... 27
5.6. Employee Plans......................................................................... 27
5.7. Environmental Matters.................................................................. 27
5.8. Landlords' Agreements and Bailee Letters............................................... 28
5.9. Ownership of Assets.................................................................... 28
5.10. Additional Pledges..................................................................... 28
5.11. Depository Accounts and Investment Accounts............................................ 28
6. NEGATIVE COVENANTS............................................................................. 28
6.1. Mergers, Subsidiaries, Etc.............................................................. 28
6.2. Investments; Loans and Advances......................................................... 30
6.3. Indebtedness............................................................................ 31
6.4. Employee Loans and Affiliate Transactions............................................... 31
6.5. Capital Structure and Business.......................................................... 32
6.6. Guaranteed Indebtedness................................................................. 32
6.7. Liens................................................................................... 32
6.8. Sale of Stock and Assets................................................................ 33
6.9. ERISA................................................................................... 33
6.10. Financial Covenants.................................................................... 33
6.11. Hazardous Materials.................................................................... 33
6.12. Sale-Leasebacks........................................................................ 33
6.13. Cancellation of Indebtedness........................................................... 34
6.14. Restricted Payments.................................................................... 34
6.15. Change of Corporate Name or Location; Change of Fiscal Year............................ 34
6.16. No Impairment of Upstreaming........................................................... 34
6.17. Changes Relating to Senior Notes....................................................... 34
6.18. Eligible Trade L/Cs.................................................................... 35
7. TERM........................................................................................... 36
7.1. Termination............................................................................. 36
7.2. Survival of Obligations Upon Termination of Financing Arrangements...................... 36
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES......................................................... 36
8.1. Events of Default....................................................................... 36
8.2. Remedies................................................................................ 38
8.3. Waivers by Credit Parties............................................................... 38
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT............................................ 39
9.1. Assignment and Participations........................................................... 39
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9.2. Appointment of Agent.................................................................... 40
9.3. Agent's Reliance, Etc................................................................... 41
9.4. GE Capital and Affiliates............................................................... 41
9.5. Lender Credit Decision.................................................................. 42
9.6. Indemnification......................................................................... 42
9.7. Successor Agent......................................................................... 42
9.8. Setoff and Sharing of Payments.......................................................... 43
9.9. Advances; Payments; Information; Non-Funding Lender..................................... 43
10. SUCCESSORS AND ASSIGNS......................................................................... 47
10.1. Successors and Assigns.................................................................. 47
11. MISCELLANEOUS.................................................................................. 47
11.1. Complete Agreement; Modification of Agreement.......................................... 47
11.2. Amendments and Waivers................................................................. 48
11.3. Fees and Expenses...................................................................... 49
11.4. No Waiver.............................................................................. 50
11.5. Remedies............................................................................... 50
11.6. Severability........................................................................... 51
11.7. Conflict of Terms...................................................................... 51
11.8. Authorized Signature................................................................... 51
11.9. GOVERNING LAW.......................................................................... 51
11.10. Notices................................................................................ 52
11.11. Section Titles......................................................................... 52
11.12. Counterparts........................................................................... 52
11.13. WAIVER OF JURY TRIAL................................................................... 52
11.14. Press Releases......................................................................... 53
11.15. Reinstatement.......................................................................... 53
11.16. Advice of Counsel...................................................................... 53
11.17. No Strict Construction................................................................. 53
11.18. Confidentiality........................................................................ 54
INDEX OF EXHIBITS AND SCHEDULES
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Schedule A (Recitals) - Definitions
Schedule B (Section 1.2) - Letters of Credit
Schedule C - Intentionally Omitted
Schedule D - Intentionally Omitted
Schedule E (Section 1.9) - Cash Management System
Schedule F (Section 2.1(b)) - Schedule of Additional Closing Documents
Schedule G (Section 4.1(a)) - Financial Statements and Projections - Reporting
Schedule H (Section 4.1(b)) - Collateral Reports
Schedule I (Section 6y.10) - Financial Covenants
Schedule J (Section 11.10) - Notice Addresses
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Schedule 1.1 - Responsible Individual
Schedule 3.2 - Executive Offices
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.18 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 6.18 - Form of Transportation Certificate
Schedule 11.8 - Authorized Signatures
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(i) - Form of Notice of Swing Line Advance
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
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This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 24, 1999
among WILSONS LEATHER HOLDINGS INC., a Minnesota corporation ("Borrower"),
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GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (in its individual
capacity, "GE Capital"), for itself, as Lender, as Swing Line Lender and as
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Agent for Lenders, and the other Lenders signatory hereto from time to time.
RECITALS
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WHEREAS, Borrower and Agent, certain of the Lenders signatory hereto,
and the Credit Parties, are parties to a Credit Agreement dated as of May 25,
1996 (the "Prior Credit Agreement") pursuant to which the Agent and the other
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Lenders party thereto provided to Borrower a Revolving Loan Commitment of
$150,000,000 (such Commitment being herein referred to as the "Prior Commitment"
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and the Loans, Letter of Credit Obligations and Eligible Trade L/C Obligations
outstanding pursuant thereto being herein referred to as the "Prior Loans"); and
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WHEREAS, Borrower desires that the Prior Commitment be amended by the
Commitments set forth herein and that the terms governing the outstanding Prior
Loans be amended and restated in accordance herewith; and
WHEREAS, Borrower desires that Lenders reduce the prior revolving
credit facility to Borrower to One Hundred Twenty-Five Million Dollars
($125,000,000) and extend the maturity thereof and, Lenders are willing to
provide Borrower with Commitments in that amount upon the terms and conditions
set forth herein;
WHEREAS, Borrower desires to secure all of its obligations under the
Loan Documents by continuing its prior grant of a security interest to Agent and
granting to Agent, for the benefit of Agent and Lenders, a supplemental security
interest in and lien upon all of its existing and after-acquired personal
property other than equipment and fixtures as set forth in the Security
Agreement and the Supplemental Security Agreement;
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Schedule A. All Schedules, Disclosure Schedules,
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Exhibits and other attachments (collectively, "Appendices") hereto, or expressly
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identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1. Credit Facilities.
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(a) Revolving Credit Facility.
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(i) Subject to the terms and conditions hereof, each Lender
agrees to make available from time to time until the Commitment Termination Date
its Pro Rata Share of advances (each, a "Revolving Credit Advance"). The
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obligations of each Lender hereunder shall be several and not joint. The
aggregate amount of Revolving Credit Advances outstanding shall not exceed at
any time the lesser of (A) the Maximum Amount less the sum of 100% of the Letter
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of Credit Obligations, 100% of the Eligible Trade L/C Obligations and the Swing
Line Loan outstanding and (B) the Borrowing Base, less the sum of 100% of the
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Letter of Credit Obligations, 35% of the Eligible Trade L/C Obligations for the
period of September 1 to October 31 of each year, 40% of the Eligible Trade L/C
Obligations at all other times and 100% of the Swing Line Loan outstanding at
such time ("Borrowing Availability"). Furthermore, the Pro Rata Share of the
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Revolving Loan of any Lender shall not at any time exceed its separate Revolving
Loan Commitment. Until the Commitment Termination Date, Borrower may from time
to time borrow, repay and reborrow under this Section 1.1(a). Each Revolving
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Credit Advance shall be made on notice by Borrower to the representative of the
Agent identified on Schedule 1.1 at the address specified thereon. Those
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notices must be given no later than (1) 11:00 a.m. (Chicago time) on the
Business Day of the proposed Revolving Credit Advance, in the case of an Index
Rate Loan, or (2) 10:00 a.m. (Chicago time) on the date which is two (2)
Business Days prior to the proposed Revolving Credit Advance, in the case of a
LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance") must be
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substantially in the form of Exhibit 1.1(a)(i), and must specify the requested
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date, the amount and type of the requested Revolving Credit Advance, and such
other information as may be required by Agent and must be given in writing (by
telecopy or overnight courier) or by telephone confirmed immediately in writing.
Revolving Credit Advances in the form of Index Rate Loans must be in a minimum
amount of $25,000 and multiples of $10,000 in excess of such amount; minimum
advances and integral multiples for LIBOR Loans are set forth in Section 1.5(e).
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In the case of a Revolving Credit Advance that is not to be funded by a Swing
Line Advance, Agent shall promptly notify each Lender of the Notice of Revolving
Credit Advance. Notwithstanding the foregoing, any Revolving Credit Advance to
Borrower which is to be used solely to repay the Swing Line Loan to Borrower may
be in the aggregate principal amount of the Swing Line Loan even if less than
the foregoing minimums. If Borrower desires to have the Revolving Loan bear
interest by reference to a LIBOR Rate, it must comply with Section 1.5(e).
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(ii) Borrower shall execute and deliver to each Lender a
promissory note to evidence the Revolving Loan. Each note shall be in the
principal amount of the Revolving Loan Commitment of the applicable Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each
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a "Revolving Note" and, collectively, the "Revolving Notes"). The Revolving
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Notes shall represent the obligation of Borrower to pay the amount of the
Revolving Loan Commitment or, if less, the applicable
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Lender's Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Credit Advances made by the applicable Lender to Borrower together
with interest thereon as prescribed in Section 1.5. The entire unpaid balance of
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the Revolving Loan and all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds in Dollars on the
Commitment Termination Date.
(iii) In its discretion the Agent may (but shall have absolutely
no obligation to) make Revolving Credit Advances to Borrower on behalf of the
Lenders in amounts which cause the outstanding principal balance of the
aggregate Revolving Credit Advances to exceed Borrowing Availability (any such
excess Revolving Credit Advances are herein referred to collectively as
"Overadvances"), and no such event or occurrence shall cause or constitute a
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waiver by Agent or Lenders of any Default or Event of Default that may result
therefrom or of their right to refuse to make any further Overadvances,
Revolving Credit Advances or Swing Line Advances or incur any Letter of Credit
Obligations or Eligible Trade L/C Obligations at any time that an Overadvance
exists or would result therefrom. In addition, Overadvances may be made even if
the conditions to lending set forth in Section 2 have not been met. The
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authority of the Agent to make Overadvances is limited to an aggregate amount
not to exceed $1,500,000 at any time, shall not cause the sum of the Revolving
Loan plus the Swing Line Loan to exceed the Maximum Amount, and may be revoked
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prospectively by a written notice to Agent signed by Lenders holding fifty-one
percent (51%) or more of the Revolving Loan Commitments. The aggregate
principal balance of all Overadvances shall bear interest at the Default Rate
then applicable to Index Rate Loans. Each Overadvance shall be payable by
Borrower as and when specified by Agent at the time that such Overadvance is
made or, if not so specified by Agent, shall be payable on demand.
(b) Swing Line Facility.
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(i) Subject to the terms and conditions hereof, the Swing Line
Lender agrees to make available from time to time until the Commitment
Termination Date advances (each, a "Swing Line Advance"); provided that, except
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as set forth in Section 2.2, no Swing Line Advance may be made after the
occurrence and during the continuance of an Event of Default unless such Swing
Line Advance is approved by Requisite Lenders. The aggregate amount of Swing
Line Advances outstanding shall not exceed the lesser of (A) the Swing Line
Commitment and (B) the Borrowing Base less the sum of the outstanding balance of
the Revolving Credit Advances plus 100% of outstanding Letter of Credit
Obligations and 35% of Eligible Trade L/C Obligations for the period of
September 1 to October 31 of each year and 40% of Eligible Trade L/C Obligations
at all other times ("Swing Line Availability"). Until the Commitment Termination
-----------------------
Date, Borrower may from time to time borrow, repay and reborrow under this
Section 1.1(b). In order to minimize fluctuations in the Revolving Loan balance,
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it is intended that the Swing Line Loan shall be the first Loan borrowed and the
first Loan repaid. Each Swing Line Advance shall be made on notice by Borrower
to the representative of the Agent identified on Schedule 1.1 at the address
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specified thereon. Those notices must be given no later than 11:00 a.m. (Chicago
time) on the Business Day of the proposed Swing Line Advance. Each such notice
(a "Notice of Swing Line Advance") must be substantially in the form of Exhibit
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1.1(b)(i), and must specify the requested date, the amount of the requested
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Swing Line Advance, and such other information as may be required by Agent or
the Swing Line
3
Lender and must be given in writing (by telecopy or overnight courier) or by
telephone confirmed immediately in writing.
(ii) Borrower shall execute and deliver to the Swing Line
Lender a promissory note to evidence the Swing Line Loan. Such note shall be in
the principal amount of the Swing Line Commitment of the Swing Line Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(b)(ii) (the
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"Swing Line Note"). The Swing Line Note shall represent the obligation of
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Borrower to pay the amount of the Swing Line Commitment or, if less, the
aggregate unpaid principal amount of all Swing Line Advances made to Borrower
together with interest thereon as prescribed in Section 1.5. The entire unpaid
-----------
balance of the Swing Line Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at
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any time and from time to time in its sole and absolute discretion, but not less
frequently than once weekly, shall on behalf of Borrower (and Borrower hereby
irrevocably authorizes the Swing Line Lender to so act on its behalf) request by
telephone or telecopy each Lender (including the Swing Line Lender) to make a
Revolving Credit Advance to Borrower (which initially shall be an Index Rate
Loan, but may be converted to a LIBOR Loan) in an amount equal to such Lender's
Pro Rata Share of the principal amount of the Swing Line Loan (the "Refunded
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Swing Line Loan") outstanding on the date such notice is given. Unless any of
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the events described in Sections 8.1(h) or 8.l(i) shall have occurred (in which
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event the procedures of Section 1.1(b)(iv) shall apply) and regardless of
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whether the conditions precedent set forth in this Agreement to the making of a
Revolving Credit Advance are then satisfied, each Revolving Lender shall
disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on
behalf of the Swing Line Lender, prior to 1:00 p.m. (Chicago time), in
immediately available funds on the Business Day that such notice is given. The
proceeds of such Revolving Credit Advances shall be immediately applied to repay
the Refunded Swing Line Loan.
(iv) Participation in Swing Line Loans. If, prior to refunding
---------------------------------
a Swing Line Loan with a Revolving Credit Advance pursuant to Section
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1.1(b)(iii), one of the events described in Sections 8.1 (h) or 8.1(i) shall
----------- ---------------- ------
have occurred with respect to Borrower, then, subject to the provisions of
Section 1.1(b)(v) below, each Lender will, on the date such Revolving Credit
-----------------
Advance was to have been made to Borrower, purchase from the Swing Line Lender
an undivided participation interest in the Swing Line Loan in an amount equal to
its Pro Rata Share of such Swing Line Loan. Upon request, each Lender will
promptly transfer to the Swing Line Lender, in immediately available funds, the
amount of its participation and upon receipt thereof the Swing Line Lender will
deliver to such Lender a Swing Line Loan participation certificate, in form and
substance reasonably satisfactory to Agent, dated the date of receipt of such
funds and in such amount.
(v) Lenders' Obligations Unconditional. Each Revolving
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Lender's obligation to make Revolving Credit Advances in accordance with Section
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1.1(b)(iii) and to purchase participating interests in accordance with Section
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1.1(b)(iv) shall be absolute and unconditional and shall not be affected by any
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of the following circumstances: (A) any setoff,
4
counterclaim, recoupment, defense or other right which such Lender may have
against the Swing Line Lender, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which such participating
interest is to be purchased or (D) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. If any Revolving
Lender does not make available to the Swing Line Lender the amount required
pursuant to Section 1.1(b)(iii) or 1.1(b)(iv), as the case may be, the Swing
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Line Lender shall be entitled to recover such amount on demand from such Lender,
together with interest thereon for each day from the date of non-payment until
such amount is paid in full at the federal funds rate for the first two Business
Days and at the Index Rate thereafter.
(c) Reliance on Notices. Agent shall be entitled to rely upon, and
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shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation, Notice of Swing Line Advance or
similar notice believed by Agent to be genuine. Agent may assume that each
Person executing and delivering such a notice was duly authorized, unless the
responsible individual acting thereon for Agent has actual knowledge to the
contrary.
1.2. Letters of Credit. Subject to and in accordance with the terms
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and conditions contained herein and in Schedule B, Borrower shall have the right
to request, and the Lenders agree to incur, Eligible Trade L/C Obligations and
Letter of Credit Obligations in respect of Borrower. The aggregate Letter of
Credit Obligations and Eligible Trade L/C Obligations outstanding at any time
shall not exceed as of any date of determination, the lesser of (A) $85,000,000
and (B) $125,000,000 less the then outstanding Revolving Credit Advances and
Swing Line Loan. In addition, 100% of the Letter of Credit Obligations and 35%
of Eligible Trade L/C Obligations for the period of September 1 to October 31 of
each year and 40% of Eligible Trade L/C Obligations at all other times shall not
exceed the Borrowing Base, less the then outstanding Revolving Credit Advances
and Swing Line Loan. The determination of availability described in the
preceding two sentences is herein referred to as "L/C Availability."
1.3. Prepayment.
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(a) If at any time Borrowing Availability or L/C Availability is less
than zero, Borrower shall immediately repay the aggregate outstanding Revolving
Credit Advances and Swing Line Advances (in such order as shall minimize the
aggregate of LIBOR breakage costs and the interest costs on the Revolving Loan
and/or Swing Line Loan that remains outstanding) to the extent required to
eliminate such deficit. If any deficit remains after repayment in full of the
aggregate outstanding Revolving Credit Advances and Swing Line Advances,
Borrower shall provide cash collateral for the Letter of Credit Obligations and
Eligible Trade L/C Obligations in the manner set forth in Schedule B to the
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extent required to eliminate such deficit. Notwithstanding the foregoing, the
repayment requirements of any Overadvance made pursuant to Section 1.1(a)(iii)
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shall be determined as set forth therein.
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(b) If Ultimate Parent issues Stock, no later than the Business Day
following the date of receipt of the proceeds thereof, Borrower shall prepay the
Loans in an amount equal to 50% of such proceeds if requested by Requisite
Lenders, net of underwriting discounts and commissions and other reasonable
costs paid to non-Affiliates in connection therewith. Any such prepayment shall
be applied in accordance with clause (d) below.
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(c) Borrower may at any time on at least five (5) days' (thirty (30)
days' in the case of prepayment in full of the Loans) prior written notice to
Agent voluntarily prepay all or part of the Revolving Loan and/or the Swing Line
Loan and permanently reduce or terminate the Revolving Loan Commitment or the
Swing Line Commitment, as applicable; provided that (a) any such prepayments or
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reductions shall be in a minimum amount of $1,000,000 and integral multiples of
$250,000 in excess of such amount, (b) such voluntary prepayments or reductions
may be made or effected no more frequently than once per year following the
Closing Date, (c) any partial reduction of the Revolving Loan Commitment shall
result in a ratable reduction in the Swing Line Commitment and (d) any partial
reduction of the Revolving Loan Commitment to $100,000,000 or less shall result
in a ratable reduction in the L/C Sublimit. Any such voluntary prepayment and
any such reduction or termination of the Revolving Loan Commitment must be
accompanied by the payment of any LIBOR funding breakage costs in accordance
with Section 1.13(b). Upon any such prepayment in full and termination in full
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of the Revolving Loan Commitment and the Swing Line Commitment, Borrower's right
to request Revolving Credit Advances, request that Letter of Credit Obligations
or Eligible Trade L/C Obligations be incurred on its behalf, or request Swing
Line Advances shall simultaneously be permanently terminated.
(d) Any prepayments made by Borrower pursuant to clause (b) above or
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pursuant to Section 5.4(c) shall be applied in the following order of priority,
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in each instance until all Obligations having a higher priority have been paid
in full: first, to accrued Fees and expenses reimbursable hereunder; second, to
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accrued interest on the Swing Line Loan; third, to the principal balance of the
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Swing Line Loan; fourth, to the accrued interest on the Index Rate Loans; fifth,
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to the principal balance of the Index Rate Loans; and sixth, if L/C Availability
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is less than zero, to any Letter of Credit Obligations and Eligible Trade L/C
Obligations of Borrower to provide cash collateral therefor in the manner set
forth in Schedule B, until all such Letter of Credit Obligations and Eligible
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Trade L/C Obligations have been cash collateralized to the extent so required.
If an Event of Default shall have occurred and be continuing, the remainder of
any such prepayments shall be applied to outstanding Obligations in such order
as Agent may deem appropriate, including the cash collateralization of Letter of
Credit Obligations and Eligible Trade L/C Obligations. Otherwise the remainder
of such prepayments shall be returned to Borrower. Neither the Revolving Loan
Commitment nor the Swing Line Commitment shall be permanently reduced by the
amount of any prepayments applied to the Revolving Loan or the Swing Line Loan
pursuant to the foregoing.
1.4. Use of Proceeds. Borrower shall utilize the proceeds of the
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Revolving Credit Advances and the Swing Line Advances solely for the financing
of Borrower's ordinary working capital needs, including Capital Expenditures,
repurchases of Senior Notes in accordance with Section 6.17 and Permitted
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Investments in accordance with Section 6.1 (but
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6
excluding in any event the making of any Restricted Payment not specifically
permitted by Section 6.14).
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1.5. Interest.
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(a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders, in arrears on each applicable Interest Payment Date, at the following
rates: (i) with respect to the Revolving Credit Advances bearing interest at the
Index Rate, at a per annum rate equal to the Index Rate plus the Applicable
Index Margin, or at the election of Borrower, at a per annum rate equal to the
applicable LIBOR Rate plus the Applicable LIBOR Margin, based on the aggregate
Revolving Credit Advances outstanding from time to time; and (ii) with respect
to the Swing Line Loan at a per annum rate equal to the Commercial Paper Rate
plus the Applicable Swing Line Margin.
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of interest with respect to LIBOR Loans and the
Swing Line Loan shall be made by Agent on the basis of a three hundred sixty
(360) day year, for the actual number of days occurring in the period for which
such interest is payable. All computations of interest with respect to Index
Rate Loans, shall be made by Agent on the basis of a three hundred sixty-five
(365) day year for the actual number of days elapsed. The Index Rate shall be
determined each day based upon the Index Rate as in effect each day. Each
determination by Agent of an interest rate hereunder shall be conclusive, absent
manifest error.
(d) So long as any Event of Default shall have occurred and be
continuing, and at the election of Agent (or upon the written request of
Requisite Lenders) after written notice from Agent to Borrower, the interest
rates applicable to the Revolving Loan, the Swing Line Loan and the Letter of
Credit Fees shall be increased by two percentage points (2%) per annum above the
rate of interest or the rate of such Fees otherwise applicable hereunder
("Default Rate"), and all outstanding Obligations shall bear interest at the
--------------
Default Rate applicable to such Obligations. If such notice is issued, interest
and Letter of Credit Fees at the Default Rate shall accrue from the initial date
of such Event of Default for so long as that Event of Default shall continue and
shall be payable upon demand.
(e) So long as no Default or Event of Default shall have occurred and
be continuing, Borrower shall have the option to (i) request that any Revolving
Credit Advance (other than an Overadvance) be made as a LIBOR Loan, (ii) convert
at any time all or any part of outstanding Revolving Credit Advances (including
a Refunded Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs
in accordance with Section 1.13(b) if such conversion is made prior to the
---------------
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any LIBOR Loan as a LIBOR Loan upon the expiration of the applicable
LIBOR Period and the succeeding LIBOR Period of that continued Loan shall
commence on the last day of the
7
LIBOR Period of the Loan to be continued. Any Loan to be made or continued as,
or converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of such amount. Any such election
must be made by 10:00 a.m. (Chicago time) on the second (2nd) Business Day prior
to (1) the date of any proposed Advance which is to bear interest at the LIBOR
Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be
continued as such, or (3) the date on which Borrower wishes to convert any Index
Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in such
election. If no election is received with respect to a LIBOR Loan by 10:00 a.m.
(Chicago time) on the second (2nd) Business Day prior to the end of the LIBOR
Period with respect thereto (or if a Default or an Event of Default shall have
occurred and be continuing), that LIBOR Loan shall be converted to an Index Rate
Loan at the end of its LIBOR Period. Borrower must make such election by notice
to Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e).
--------------------------------- --------------
Borrower shall not be entitled to request or continue any Revolving Loan as, or
convert any Revolving Loan into, a LIBOR Loan unless at the time of such
request, conversion or continuation, the aggregate outstanding principal balance
of the Revolving Credit Advances plus the amount of the Swing Line Advances
equals or exceeds $5,000,000. Not more than ten (10) LIBOR Loans shall be
outstanding at any time.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
-----------
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
-------------------
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
-------- -------
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, the interest rate payable hereunder
shall be the rate(s) of interest provided in Sections 1.5(a) through (e) above,
--------------- ---
unless and until the rate of interest again exceeds the Maximum Lawful Rate, and
at that time this paragraph shall again apply. In no event shall the total
interest received by any Lender pursuant to the terms hereof exceed the amount
which such Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate. If the
Maximum Lawful Rate is calculated pursuant to this paragraph, such interest
shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by
the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
--------------
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
------------
of competent jurisdiction may otherwise order.
8
1.6. Applicable Margins. The Applicable Swing Line Margin,
------------------
Applicable Index Margin, Applicable LIBOR Margin and Applicable L/C Margin will
be adjusted (up or down) quarterly based on Ultimate Parent's consolidated
financial performance for the trailing four quarters as evidenced by its
quarterly consolidated Financial Statements in accordance with the following
grid:
----------------------------------------------------------------------------------------------------------
IF EBIT/Cash Applicable Swing Applicable Index Applicable LIBOR Applicable L/C
------------ ---------------- ---------------- ---------------- --------------
Interest Coverage Line Margin is: Margin is: Margin is: Margin is:
----------------- --------------- ---------- ---------- ----------
is:
---
----------------------------------------------------------------------------------------------------------
less than 2.0 2.25% 0.50% 2.25% 1.25%
---------------------------------------------------------------------------------------------------------
2.0 up to but not 2.00% 0.25% 2.00% 1.25%
including 3.0
---------------------------------------------------------------------------------------------------------
3.0 up to but not 1.75% 0.25% 1.75% 1.00%
including 4.0
---------------------------------------------------------------------------------------------------------
4.0 up to but not 1.50% 0.0% 1.50% 0.75%
including 5.0
---------------------------------------------------------------------------------------------------------
5.0 or more 1.25% 0.0% 1.25% 0.75%
---------------------------------------------------------------------------------------------------------
The Applicable Swing Line Margin, Applicable Index Margin, Applicable
LIBOR Margin and Applicable L/C Margin will be 1.50%, 0.0%, 1.50% and 0.75%,
respectively, as of the Closing Date and will first be subject to adjustment
prospectively on the first day of the calendar month that is more then five (5)
days following delivery to Lenders of Ultimate Parent's quarterly consolidated
Financial Statements for the Fiscal Quarter ending July 31, 1999.
After July 31, 1999, adjustments in the Applicable Swing Line Margin,
Applicable Index Margin, Applicable LIBOR Margin and Applicable L/C Margin shall
be prospective only and shall be based on Ultimate Parent's consolidated
financial performance for the trailing four quarters as of the last day of each
Fiscal Quarter as evidenced by Ultimate Parent's unaudited consolidated
Financial Statements for the first three Fiscal Quarters of each Fiscal Year and
Ultimate Parent's audited consolidated Financial Statements for each Fiscal
Year. Each increase or decrease in the above-referenced margins shall become
effective starting (i) in the case of the Swing Line Loan, Index Rate Loans and
Letter of Credit Fees on the first day of the first calendar month commencing at
least five (5) days after delivery of the applicable Financial Statements and
(ii) in the case of LIBOR Loans on the first day of each LIBOR Period commencing
after delivery of the applicable Financial Statements.
1.7. Eligible Inventory. Agent reserves the right, at any time and
------------------
from time to time after the Closing Date, subject to Section 11.2, to adjust the
advance rates against Eligible Inventory contained in the definition of
Borrowing Base and to establish Reserves against the
9
Borrowing Base in its reasonable credit judgment based on changes in the
salability of Inventory, shrinkage, Liens, unpaid liabilities or other changed
circumstances arising after the Closing Date.
1.8. Cash Management Systems. On or prior to the Closing Date,
-----------------------
Borrower will modify its existing cash management systems or establish the cash
management systems described on Schedule E (the "Cash Management Systems"). As
modified or established those Cash Management Systems will be maintained until
the Termination Date.
1.9. Fees.
----
(a) Borrower shall pay to GE Capital, individually, the Fees
specified in the GE Capital Fee Letter at the times specified for payment
therein.
(b) As additional compensation for the Lenders having Revolving Loan
Commitments, Borrower agrees to pay to Agent, for the ratable benefit of such
Lenders, in arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date, a fee for
Borrower's non-use of funds (the "Non-Use Fee") in an amount equal to three-
-----------
tenths of one percent (.30%) per annum (calculated on the basis of a 360 day
year for actual days elapsed) of the difference between (x) the Maximum Amount
(as it may be reduced from time to time) and (y) the average for the period of
the daily closing balances of the Revolving Loan and the Swing Line Loan
outstanding during the period for which the Non-Use Fee is due.
1.10. Receipt of Payments. Payments in the form of immediately
-------------------
available funds received in Agent's Collection Account before 2:00 p.m. (Chicago
time) on any Business Day will be applied against the Obligations on that day.
Payments received after 2:00 p.m. (Chicago time) on any Business Day shall be
deemed to have been received on the next Business Day.
1.11. Application and Allocation of Payments.
--------------------------------------
(a) Borrower hereby irrevocably waives as to all payments from and
after the Commitment Termination Date, the right to direct the application of
such payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to apply
any and all such payments against the Obligations as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or any other
books and records. In the absence of a specific determination by Agent with
respect thereto after the Commitment Termination Date and in all other instances
(except as otherwise expressly provided herein), payments shall be applied in
the following order of priority, in each instance until all Obligations having a
higher priority have been paid in full: (1) to Fees and Agent's expenses
reimbursable hereunder; (2) to accrued interest on the Swing Line Loan; (3) to
the outstanding principal balance of the Swing Line Loan; (4) to accrued
interest on the Index Rate Loans; (5) to the principal balance of Index Rate
Loans; (6) to accrued interest on LIBOR Rate Loan; (7) to the principal balance
of LIBOR Rate Loans; (8) if the Commitment Termination Date has occurred or if
L/C Availability is less than zero, to cash collateralize Letter of Credit
Obligations and Eligible Trade L/C Obligations in the manner described in
Schedule B and (9) to
----------
10
all other Obligations then due and payable including expenses of Lenders
reimbursable under Section 11.3.
------------
(b) Agent is authorized to, and at its sole election may, charge to
the Swing Line Loan to the extent such charge would not cause the Swing Line
Loan balance to exceed the Swing Line Commitment and then to Revolving Loan
balance on behalf of Borrower and cause to be paid all Fees, expenses, Charges,
costs (including insurance premiums in accordance with Section 5.4(a)) and
--------------
interest owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to promptly pay any such amounts
within three (3) days after the date on which such payment is due, even if such
charges would cause the Revolving Loan to exceed Borrowing Availability. At
Agent's option and to the extent permitted by law, any charges so made shall
constitute part of the Swing Line Loan or Revolving Loan hereunder.
(c) If a Default or an Event of Default has occurred and is
continuing, Agent may in its sole and absolute discretion, impose a Reserve
against Borrowing Availability for interest, Fees and expenses due and payable
or which will become due and payable hereunder on the next respective payment
dates therefor.
(d) If Borrower pays less than all of the interest due hereunder on
any Interest Payment Date, Agent shall apply such partial payment ratably to all
interest then due hereunder.
1.12. Loan Account and Accounting. Agent shall maintain a loan
---------------------------
account (the "Loan Account") on its books to record: (a) all Advances (b) all
------------
payments made by Borrower, and (c) all other debits and credits as provided in
this Agreement with respect to the Loans or any other Obligations. All entries
in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall be presumptive evidence of the amounts due and owing to Agent and Lenders
by Borrower; provided that any failure to so record or any error in so recording
--------
shall not limit or otherwise affect Borrower's duty to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions with respect
to the Loans setting forth the balance of the Loan Account. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the date
thereof, each and every such accounting shall (absent manifest error) be deemed
final, binding and conclusive upon Borrower in all respects as to all matters
reflected therein. Only those items expressly objected to in such notice shall
be deemed to be disputed by Borrower.
1.13. Indemnity.
---------
(a) Borrower shall indemnify and hold harmless each of Agent,
Lenders and their respective Affiliates, and each such Person's respective
officers, directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
------------------
claims, damages, losses, liabilities and expenses (including attorneys' fees and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such
11
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents, and in connection
with or arising out of the transactions contemplated hereunder and thereunder
and any actions or failures to act in connection therewith, including any and
all Environmental Liabilities and Costs and legal costs and expenses arising out
of or incurred in connection with disputes between or among any parties to any
of the Loan Documents; provided, that Borrower shall not be liable for any
--------
indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results solely
from that Indemnified Person's gross negligence or willful misconduct, as
finally determined by a court of competent jurisdiction. NO INDEMNIFIED PERSON
SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or is the
result of acceleration, by operation of law or otherwise); (ii) Borrower shall
default in payment when due of the principal amount of or interest on any LIBOR
Loan; (iii) Borrower shall default in making any borrowing of, conversion into
or continuation of LIBOR Loans after Borrower has given notice requesting the
same in accordance herewith; or (iv) Borrower shall fail to make any prepayment
of a LIBOR Loan after Borrower has given a notice thereof in accordance
herewith, Borrower shall indemnify and hold harmless each Lender from and
against all losses, costs and expenses resulting from or arising from any of the
foregoing. Such indemnification shall include, without limitation, any loss
(including, without limitation, loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained. For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be deemed to have
actually funded its relevant LIBOR Loan through the purchase of a deposit
bearing interest at the LIBOR Rate in an amount equal to the amount of that
LIBOR Loan and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any
-------- -------
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower and Agent with its written
calculation of all amounts payable pursuant to this Section 1.13(b), and such
---------------
calculation shall be binding on the parties hereto unless Borrower shall object
in writing within ten (10) Business Days of receipt thereof, specifying the
basis for such objection in detail. All amounts payable pursuant to this
Section 1.13(b) shall be made payable to Agent for the benefit of the requesting
---------------
Lender and shall then be funded by Agent to such Lender.
12
1.14. Access.
------
(a) Borrower shall, and in accordance with the Guaranties, shall
cause each other Credit Party who is a signatory thereto to, during normal
business hours, from time to time upon one (1) Business Day's prior notice as
frequently as Agent reasonably determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review and evaluate the Accounts, Inventory and other Collateral of any
Credit Party. If a Default or Event of Default shall have occurred and be
continuing, Borrower, Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent shall provide such access at
all times and without advance notice. Borrower, Ultimate Parent, First
Intermediate Parent, Second Intermediate Parent and Third Intermediate Parent
shall make available to Agent and its counsel, as quickly as is possible under
the circumstances, originals or copies of all books and records which Agent may
request. Borrower, Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent shall deliver any document or
instrument necessary for Agent, as it may from time to time request, to obtain
records from any service bureau or other Person which maintains records for
Borrower, First Intermediate Parent, Second Intermediate Parent and Third
Intermediate Parent shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by Borrower, Ultimate Parent,
First Intermediate Parent, Second Intermediate Parent and Third Intermediate
Parent.
(b) Borrower shall pay Agent a Fee of $575 per day per individual
(plus all out-of-pocket costs and expenses) in connection with Agent's field
examinations permitted under Section 1.14(a) above and Section 4(c) of the
--------------- ------------
Security Agreement and the Supplemental Security Agreement, including the cost
of verifying Eligible In-Transit Inventory in the possession of Approved
Shippers; provided that such Fees and expenses shall not be reimbursable by
Borrower with respect to more than two field examinations during any period of
twelve consecutive months unless an Event of Default shall have occurred and be
continuing at the time of those field examinations that exceed two during any
period of twelve consecutive months.
1.15. Taxes.
-----
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with this Section 1.15, free and clear of and
------------
without deduction for any and all present or future Taxes. Except as provided
in Section 1.16(d), if Borrower shall be required by law to deduct any Taxes
---------------
from or in respect of any sum payable hereunder under the Notes, (i) the sum
payable shall be increased as much as shall be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 1.15) Agent or Lenders, as applicable, receive an
------------
amount equal to the sum they would have received had no such deductions been
made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the
full amount deducted to the relevant taxing or other authority in accordance
with applicable law. Within thirty (30) days after the date of any payment of
Taxes,
13
Borrower shall furnish to Agent the original or a certified copy of a receipt
evidencing payment thereof.
(b) Borrower shall indemnify and, within ten (10) days of demand
therefor, pay, Agent and each Lender for the full amount of Taxes (including any
Taxes imposed by any jurisdiction on amounts payable under this Section 1.15)
------------
paid by Agent or such Lender, as appropriate, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.
1.16. Capital Adequacy: Increased Costs: Illegality.
---------------------------------------------
(a) If any Lender shall have determined that the adoption after the
date hereof of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law) from any central bank or
other Governmental Authority increases or would have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by such Lender to
Borrower and to Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any Loan, then Borrower shall from time to time, upon demand by such
Lender (with a copy such demand to Agent), pay to Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower and to Agent by such Lender, shall be conclusive and
binding on Borrower for all purposes, absent manifest error. Each Lender agrees
that, as promptly as practicable after it becomes aware of any circumstances
referred to above which would result in any such increased cost, the affected
Lender shall, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts to minimize
costs and expenses incurred by it and payable to it by Borrower pursuant to this
Section 1.16(b).
---------------
(c) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain
14
such LIBOR Loan at another branch or office of that Lender without, in that
Lender's opinion, adversely affecting it or its Loans or the income obtained
therefrom, on notice thereof and demand therefor by such Lender to Borrower
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower
shall forthwith prepay in full all outstanding LIBOR Loans owing by Borrower to
such Lender, together with interest accrued thereon (but without LIBOR breakage
costs), unless Borrower, within five (5) Business Days after the delivery of
such notice and demand, converts all such Loans into a Loan bearing interest
based on the Index Rate (which conversion shall be without LIBOR breakage
costs).
(d) Foreign Lenders. Each Lender organized under the laws of a
---------------
jurisdiction outside the United States (a "Foreign Lender") as to which payments
--------------
to be made under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Form 4224 or Form 1001
or other applicable form, certificate or document prescribed by the IRS or the
United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Prior to becoming a Lender under this
------------------------
Agreement and within fifteen (15) days after a reasonable written request of
Agent or Borrower from time to time thereafter, each Foreign Lender that becomes
a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent. No Person may become a Lender hereunder if such Person is
unable to deliver a Certificate of Exemption. If a Foreign Lender does not
provide a Certificate of Exemption to Agent and Borrower within the time periods
set forth above, Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rate and Borrower shall not be required to
pay any additional amounts as a result of such withholding; provided, that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Agent and Borrower.
(e) Replacement of Lender in Respect of Increased Costs. Within
---------------------------------------------------
fifteen (15) days after receipt by Borrower of written notice and demand from
any Lender or a participant that has purchased a participation from such Lender
(an "Affected Lender") for payment of taxes, additional amounts or increased
---------------
costs as provided in Section 1.15 or Section 1.16(a) or (b), Borrower may, at
------------ --------------- ---
its option, notify Agent and such Affected Lender of its intention to replace
the Affected Lender as follows: So long as no Default or Event of Default shall
have occurred and be continuing, Borrower, with the consent of Agent, may
obtain, at Borrower's expense, a replacement Lender ("Replacement Lender") for
------------------
the Affected Lender, which Replacement Lender must be reasonably satisfactory to
Agent. If Borrower obtains a Replacement Lender within ninety (90) days
following notice of its intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender provided that
Borrower reimbursed such Affected Lender for the additional amounts or increased
costs that it is entitled to receive under this Agreement through the date of
such sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right to
obtain a Replacement Lender, if the Affected Lender rescinds its demand for
increased costs or additional amounts within fifteen (15) days following its
receipt of Borrower's notice of intention to replace such Affected Lender.
Furthermore, if Borrower gives a notice of intention to replace and does
15
not so replace such Affected Lender within ninety (90) days thereafter,
Borrower's rights under this Section 1.16(e) shall terminate and Borrower shall
---------------
promptly pay all increased costs or additional amounts demanded by such Affected
Lender pursuant to Sections 1.15, 1.16(b) and (c).
------------- ------- ---
1.17. Single Loan. All Loans to Borrower and all of the other
-----------
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower and Guarantors
secured, until the Termination Date, by all of the Collateral.
1.18. Effect On Prior Loans; Prior Credit Agreement. The Prior Loans
---------------------------------------------
and Liens securing payment thereof shall in all respects be continuing, and this
Agreement shall not be deemed to evidence or result in a novation or repayment
and reborrowing of the Prior Loans. This Agreement and the other Loan Documents
shall supersede the Prior Credit Agreement and, to the extent replaced by Loan
Documents dated as of the Closing Date, the Loan Documents executed in
connection with the Prior Credit Agreement. From and after the Closing Date,
this Agreement shall govern the terms of the Prior Loans. To the extent not
replaced by Loan Documents dated as of the Closing Date, Loan Documents executed
in connection with the Prior Credit Agreement (other than any such Loan Document
that is specifically terminated by the parties thereto) shall continue to be
effective, and all references in those prior Loan Documents to the "Credit
Agreement" shall be deemed to refer to this Agreement without further amendment
thereof.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated
-------------------------------
to make any Loan or incur any Eligible Trade L/C Obligations or Letter of Credit
Obligations on the Closing Date, or to take, fulfill, or perform any other
action hereunder, until the following conditions have been satisfied, in Agent's
sole discretion, or waived in writing by Agent and those Lenders present at the
closing on the Closing Date:
(a) Credit Agreement: Loan Documents. This Agreement or
--------------------------------
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including all those listed in the Schedule of Documents attached
hereto as Schedule F, each in form and substance satisfactory to Agent.
----------
(b) Governmental Approvals. Agent shall have received (i)
----------------------
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including, but not limited to, all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Loan Documents or (ii) an officer's certificate
in form and substance satisfactory to Agent affirming that no such consents or
approvals are required.
16
(c) Payment of Fees. Borrower shall have paid the Fees required to
---------------
be paid on the Closing Date in the respective amounts specified in Section 1.9
-----------
(including without limitation the Fees specified in the GE Capital Fee Letter),
and shall have reimbursed Agent for all fees, costs and expenses of closing to
the extent statements therefor are presented at closing (including fees of
consultants and special loan counsel to Agent presented as of the Closing Date).
(d) Compliance with Laws. Each Credit Party shall be in compliance
--------------------
in all material respects with all applicable foreign, federal, state and local
laws and regulations, including those specifically referenced in Section 5.5.
-----------
(e) Leases. Evidence supporting the fact that each of the
------
Distribution Center leases are in full force and effect and have a remaining
term of not less than six (6) months past the Termination Date.
(f) Consignment Agreement. The Consignment Agreement shall be in
---------------------
full force and effect and shall have been executed by all Store Guarantors.
(g) Financial Statements. Agent shall have received Ultimate
--------------------
Parent's audited financial statements for the Fiscal Year ending January 30,
1999 and unaudited financial statements for the Fiscal Month ending in March of
1999.
2.2. Further Conditions to Each Loan. It shall be a further
-------------------------------
condition to the initial and each subsequent Advance and to the incurrence of
the initial and any subsequent Letter of Credit Obligations or Eligible Trade
L/C Obligations that the following statements shall be true on the date of each
such Advance or incurrence, as the case may be:
(a) All of each Credit Party's representations and warranties
contained herein or in any of the other Loan Documents shall be true and correct
in all material respects as though made on and as of such date, except to the
extent that any such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or expressly
contemplated by this Agreement.
(b) No Event of Default shall have occurred and be continuing or
would result from the making of any Advance (or the incurrence of any Letter of
Credit Obligations or Eligible Trade L/C Obligations) or, if an Event of Default
shall have occurred and be continuing or would result from the making of any
Advance (or the incurrence of any Letter of Credit Obligations or Eligible Trade
L/C Obligations), Lenders having 60% or more of the Commitments shall not have
determined by affirmative vote to cease making further Advances or incurring
additional Letter of Credit Obligations or Eligible Trade L/C Obligations as a
result of such Event of Default.
(c) After giving effect to any Revolving Credit Advance or Swing
Line Advance, Net Borrowing Availability shall be greater than zero. After
giving effect to the incurrence of any Letter of Credit Obligations or Eligible
Trade L/C Obligations, L/C Availability shall be greater than zero.
17
(d) No event or circumstance having a Material Adverse Effect shall
have occurred since the date hereof as reasonably determined by the Requisite
Lenders and Agent or, if such a Material Adverse Effect shall have occurred,
Lenders having 60% or more of the Commitments shall not have determined by
affirmative vote to cease making Advances, or incurring additional Letter of
Credit Obligations as a result of the fact that such event or circumstance has
occurred.
The request and acceptance by Borrower of the proceeds of any Loan or the
incurrence of any Letter of Credit Obligations or Eligible Trade L/C Obligations
shall be deemed to constitute, as of the date of such request or acceptance, (i)
a representation and warranty by Borrower that the conditions in this Section
-------
2.2 have been satisfied and (ii) a reaffirmation by Borrower of the granting and
---
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents. With respect to clauses (b) and (d) above, if an Event of
Default or event or circumstance having a Material Adverse Effect has occurred,
Agent shall call for a vote of Lenders with respect thereto within two (2)
Business Days following the date on which Agent learns of the occurrence
thereof. Notwithstanding the foregoing, during the period between such
occurrence and the date of such vote, each Lender may (but shall not be
obligated to) make Advances or incur additional Letter of Credit Obligations or
Eligible L/C Obligations at its individual discretion.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations and Eligible Trade L/C Obligations, the Loan Parties, jointly and
severally, make the following representations and warranties to Agent and each
Lender, each and all of which shall survive the execution and delivery of this
Agreement.
3.1. Corporate Existence; Compliance with Law. Each Credit Party (a)
----------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification
except where the failure to so qualify would not have a Material Adverse Effect;
(c) has the requisite corporate power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as now, heretofore
and proposed to be conducted; (d) has all material licenses, permits, consents
or approvals from or by, and has made all filings with, and has given all
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in compliance with
its charter and by-laws; and (f) is in compliance with all applicable provisions
of law to the extent required by Section 5.5.
-----------
3.2. Executive Offices; FEIN. As of the Closing Date, the current
-----------------------
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule 3.2. In addition, the Disclosure
----------------------- ----------
Schedule 3.2 lists the federal employer identification number of each Credit
------------
Party.
18
3.3 Corporate Power, Authorization, Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of Liens provided for therein: (a) are
within such Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not contravene any
provision of such Person's charter or bylaws; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate any performance required by, any indenture,
mortgage, or deed of trust, or any material lease, agreement or other instrument
to which such Person is a party or by which such Person or any of its property
is bound; (f) do not result in the creation or imposition of any Lien upon any
of the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(b), all of which will have been duly obtained,
--------------
made or complied with prior to the Closing Date. On or prior to the Closing
Date, each of the Loan Documents shall have been duly executed and delivered by
each Credit Party thereto and each such Loan Document shall then constitute a
legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms.
3.4. Financial Statements and Projections. Except for the
------------------------------------
Projections, all Financial Statements concerning Ultimate Parent and its
Subsidiaries which have been delivered to Agent have been prepared in accordance
with GAAP consistently applied throughout the periods covered (except as
disclosed therein and except, with respect to unaudited Financial Statements,
for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the financial condition of the Persons covered
thereby as at the dates thereof and the results of their operations for the
periods then ended. The Projections delivered to Agent and Lenders on or prior
to the date hereof have been prepared by Ultimate Parent in light of the past
operations of its Subsidiaries' businesses, but including future payments of
known contingent liabilities, and reflect projections for the Fiscal Years
ending in January 2000, 2001 and 2002. The Projections are based upon estimates
and assumptions stated therein, all of which, as of the Closing Date, Ultimate
Parent believes to be reasonable and fair in light of current conditions and
current facts known to Ultimate Parent and, as of the Closing Date, reflect
Ultimate Parent's good faith and reasonable estimates of the future financial
performance of Ultimate Parent and its Subsidiaries and of the other information
projected therein for the period set forth therein.
3.5. Material Adverse Effect. Between the date hereof and the last
-----------------------
day of the Fiscal Year ending in January, 1999, (a) no Credit Party has incurred
any obligations, contingent or non-contingent liabilities, liabilities for
Charges, long-term leases or unusual forward or long-term commitments which,
alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has been
entered into by any Credit Party or has become binding upon any Credit Party's
assets and no law or regulation applicable to any Credit Party has been adopted
which has had or could reasonably be expected to have a Material Adverse Effect,
(c) no Credit Party is in default and to the best of the Credit Parties'
knowledge no third party is in default under any material contract, lease or
other
19
agreement or instrument, which alone or in the aggregate could reasonably be
expected to have a Material Adverse Effect and (d) there has been no changes in
the Credit Party's business or financial condition, the industry in which the
Credit Parties operate or the Collateral, which alone or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
3.6. Ownership of Property; Liens.
----------------------------
(a) Disclosure Schedule 3.6 sets forth all locations owned or leased
-----------------------
by any Credit Party as of the Closing Date. Each Credit Party has good and
marketable title to, or valid leasehold interests in, all of its personal
properties and assets. As of the Closing Date, none of the properties and
assets of any Credit Party are subject to any Liens, except Permitted
Encumbrances.
3.7. Labor Matters. As of the Closing Date: (a) no strikes or other
-------------
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party in all material respects comply with the Fair Labor
Standards Act and each other federal, state, local or foreign law applicable to
such matter; (c) all material payments due from any Credit Party for employee
health and welfare insurance have been paid or accrued as a liability on the
books of such Credit Party; (d) except as set forth in Disclosure Schedule 3.7,
-----------------------
no Credit Party is a party to or bound by any collective bargaining agreement;
(e) there is no organizing activity involving any Credit Party pending or, to
any Credit Party's knowledge, threatened by any labor union or group of
employees; (f) there are no representation proceedings pending or, to any Credit
Party's knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of any Credit Party has made a pending
demand for recognition; and (g) except as set forth in Disclosure Schedule 3.7,
-----------------------
there are no complaints or charges against any Credit Party pending or
threatened to be filed with any Governmental Authority or arbitrator relating to
the employment or termination of employment by any Credit Party of any employee,
other than routine, non-material claims by individual employees or former
employees.
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------
Indebtedness. Except as set forth in Disclosure Schedule 3.8, as of the Closing
------------ -----------------------
Date no Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person.
Disclosure Schedule 3.8 sets forth the corporate organizational chart as of the
-----------------------
Closing Date for Ultimate Parent and its Subsidiaries. Except as set forth on
Disclosure Schedule 3.8, as of the Closing Date Ultimate Parent owns, directly
-----------------------
or indirectly, all of the outstanding capital stock of each of its Subsidiaries.
3.9. Government Regulation. No Credit Party is an "investment
---------------------
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940 as amended. No Credit Party is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, or any
other federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans by
Lenders to Borrower, the incurrence of the Letter of Credit Obligations and the
Eligible Trade L/C
20
Obligations on behalf of Borrower, the application of the proceeds thereof and
repayment thereof will not violate any provision of any such statute or any
rule, regulation or order issued by the Securities and Exchange Commission.
3.10. Margin Regulations. No Credit Party is engaged, nor will it
------------------
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") as now and from time
---------------------
to time hereafter in effect (such securities being referred to herein as "Margin
------
Stock"). No Credit Party owns any Margin Stock, and none of the proceeds of the
-----
Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a "purpose credit" within the meaning of Regulation T, U or X
of the Federal Reserve Board. No Credit Party will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.11. Taxes. All material tax returns, reports and statements,
-----
including, but not limited to, information returns, required by any Governmental
Authority to be filed by any Credit Party have been filed with the appropriate
Governmental Authority and all material Charges have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof (or any such fine, penalty, interest, late charge or loss has
been paid), excluding Charges or other amounts being contested in accordance
with Section 5.2(b). Proper and accurate amounts have been withheld by each
--------------
Credit Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities.
Disclosure Schedule 3.11 sets forth, as of the Closing Date, those taxable years
------------------------
for which any Credit Party's tax returns are currently being audited by the IRS
or any other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audits or otherwise currently outstanding.
Except as described on Disclosure Schedule 3.11, as of the Closing Date, no
------------------------
Credit Party has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for any Charges: (a)
under any agreement (including, without limitation, any tax sharing agreements)
or (b) to the best of each Credit Party's knowledge, as a transferee. As of the
Closing Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method
or otherwise, which would have a Material Adverse Effect.
3.12. ERISA.
-----
(a) Disclosure Schedule 3.12 lists and separately identifies all
------------------------
Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans in effect
as of the Closing Date. Each Plan is in compliance in all material respects with
the applicable provisions of ERISA and the
21
IRC, including the filing of reports required under the IRC or ERISA. No Credit
Party or ERISA Affiliate has failed to make any material contribution or pay any
material amount due as required by either Section 412 of the IRC or Section 302
of ERISA or the terms of any Plan subject to such sections. No Credit Party or
ERISA Affiliate has engaged in a prohibited transaction, as defined in Section
4975 of the IRC, in connection with any Plan, which would subject any Credit
Party to a material tax on prohibited transactions imposed by Section 4975 of
the IRC.
(b) Except as set forth in Disclosure Schedule 3.12, as of the
------------------------
Closing Date: (i) no Title IV Plan has any Unfunded Pension Liability; (ii) no
material ERISA Event or event described in Section 4062(e) of ERISA with respect
to any Title IV Plan has occurred or is reasonably expected to occur; (iii)
there are no pending, or to the knowledge of any Credit Party, threatened claims
(other than claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any plan or any person as fiduciary or
sponsor of any Plan; and (iv) no Credit party or ERISA Affiliate has incurred or
reasonably expects to incur any material liability as a result of a complete or
partial withdrawal from a Multiemployer Plan.
3.13. No Litigation. No action, claim or proceeding is now pending
-------------
or, to the knowledge of any Credit Party, threatened against any Credit Party,
before any court, board, commission, agency or instrumentality of any federal,
state, local or foreign government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
----------
which challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which is reasonably likely to be determined adversely to any Credit Party
and which, if so determined, would have a Material Adverse Effect. Except as set
forth on Disclosure Schedule 3.13, as of the Closing Date there is no Litigation
------------------------
pending or threatened which seeks damages in excess of $500,000 or injunctive
relief.
3.14. Brokers. No broker or finder acting on behalf of any Credit
-------
Party brought about the obtaining, making or closing of the Loans. No Credit
Party has any obligation to any Person in respect of any finder's or brokerage
fees in connection therewith.
3.15. Intellectual Property. As of the Closing Date, each Credit
---------------------
Party owns or has rights to use all Intellectual Property necessary to continue
to conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each material Patent, Trademark, Copyright and License for
which, as of the Closing Date, a U.S. registration has been obtained or for
which an application to register in the U.S. has been filled is listed, together
with application or registration numbers, as applicable, in Disclosure Schedule
-------------------
3.15 hereto. Each Credit Party conducts and will continue to conduct its
----
business and affairs without infringement of or interference with, in any
material respect, any Intellectual Property of any other Person.
3.16. Full Disclosure. No information contained in this Agreement,
---------------
any of the other Loan Documents, any Projections, Financial Statements or
Collateral Reports or other reports from time to time delivered hereunder or any
written statement furnished by any Material Credit Party with respect to any
Credit Party to Agent or any Lender pursuant to the terms of this
22
Agreement contains any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
The Liens granted to Agent, on behalf of itself and Lenders, pursuant to the
Collateral Documents will at all times be fully perfected first priority Liens
in and to the Collateral described therein, subject only to Permitted
Encumbrances with respect to the Collateral.
3.17. Hazardous Materials.
-------------------
(a) Except as set forth in Disclosure Schedule 3.17, as of the
------------------------
Closing Date, the Real Estate is free of contamination from any Hazardous
Material in such form and quantity so as to create any material unpaid liability
for any of the Loan Parties. In addition, Disclosure Schedule 3.17 discloses
------------------------
material environmental liabilities of any Credit Party existing as of the
Closing Date (i) that could result in Environmental Liabilities and Costs, or
(ii) associated with the Real Estate. No Credit Party has caused or suffered to
occur any Release with respect to any Hazardous Material at, under, above or
upon any of its Real Estate. No Credit Party is involved in operations that are
likely to result in the imposition of any Lien on its assets or any material
liability under any Environmental Law, and no Credit Party has permitted any
tenant or occupant of such premises to engage in any such operations.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i)
is not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate.
3.18. Insurance. Disclosure Schedule 3.18 lists all insurance
--------- ------------------------
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19. Deposit and Disbursement Accounts. Disclosure Schedule 3.19
--------------------------------- ------------------------
lists all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20. Government Contracts. Except as set forth in Disclosure
-------------------- ----------
Schedule 3.20, as of the Closing Date, no Credit Party is a party to any
-------------
contract or agreement with the federal government and no Credit Party's Accounts
are subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727).
3.21. Landlords and Trade Relations. As of the Closing Date, there
-----------------------------
exists no actual or threatened termination or cancellation of, or any material
adverse modification or change in the business relationship of any Credit Party
with any supplier material to its operations.
23
3.22. Agreements and Other Documents. Each Credit Party has
------------------------------
provided to Agent or its counsel, on behalf of Lenders, accurate and complete
copies (or summaries) of all of the following agreements or documents to which
it is subject as of the Closing Date and each of which are listed on
Disclosure Schedule 3.22: (a) instruments or documents evidencing Indebtedness
------------------------
of such Credit Party and any security interest granted by such Credit Party with
respect thereto; and (b) instruments and agreements evidencing the issuance of
any equity securities, warrants, rights or options to purchase equity securities
of each Credit Party (other than Ultimate Parent).
3.23. Solvency. Both before and after giving effect to (a) the
--------
Revolving Loan, Eligible Trade L/C Obligations and Letter of Credit Obligations,
including the Prior Loans outstanding, (b) the disbursement of the proceeds of
such Loan pursuant to the instructions of Borrower, (c) the payment and accrual
of all transaction costs in connection with the foregoing, each Material Credit
Party is Solvent.
3.24. Year 2000 Representation. The Credit Parties will complete
------------------------
Year 2000 Implementation Testing referred to in clauses (i) and (ii) of the
definition thereof on or before October 31, 1999, and, upon receipt of the
necessary information, will promptly undertake to complete the Year 2000
Implementation Testing referred to in clause (iii) of the definition thereof.
The Credit parties will take all actions necessary and commit adequate resources
to eliminate or mitigate all Year 2000 Problems on or before November 30, 1999,
except where the failure to eliminate or mitigate the same could not reasonably
be expected to have a Material Adverse Effect.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. Reports and Notices.
-------------------
(a) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver or cause to be delivered to Agent
and/or Lenders, as required, Financial Statements, notices, Projections and
other information at the times, to the Persons and in the manner set forth in
Schedule G.
----------
(b) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver or cause to be delivered to Agent
and/or Lenders, as required, the various Collateral Reports (including, without
limitation, Borrowing Base Certificates in the form of Exhibit 4.1(b) at the
--------------
times, to the Persons and in the manner set forth in Schedule H.
----------
4.2. Communication with Accountants. Ultimate Parent authorizes
------------------------------
Agent, so long as an Event of Default has occurred and is continuing, to
communicate directly with its independent certified public accountants,
including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP and authorizes and shall instruct those
accountants and advisors to disclose and make available to Agent any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including, without limitation, copies
of any issued management letters) with respect to the business, financial
condition and other affairs of any Credit Party. On or before the Closing Date,
the Credit Parties shall obtain a letter from such accountants, on
24
which the Agent shall be designated as a recipient, acknowledging that Lenders
may rely upon such certification.
5. AFFIRMATIVE COVENANTS
Each Loan Party jointly and severally agrees that it shall and shall
cause all Credit Parties from and after the date hereof and until the
Termination Date to do the following:
5.1. Maintenance of Existence and Conduct of Business. Each Credit
------------------------------------------------
Party shall: (a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises (except for mergers, sales, dispositions and other transactions
permitted in Section 6 hereof and liquidations of Store Guarantors that are not
---------
Material Credit Parties following such dispositions and transactions); (b)
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; (c) except as permitted in Section 6.8 hereof, at all
-----------
times maintain, preserve and protect all of its assets and properties used or
useful in the conduct of its business, and keep the same in good repair, working
order and condition (taking into consideration ordinary wear and tear) and from
time to time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices; and
(d) transact business only in such corporate and trade names as are set forth in
Disclosure Schedule 5.1 and as otherwise disclosed to Agent in accordance with
-----------------------
the Loan Documents.
5.2. Payment of Obligations.
----------------------
(a) Subject to Section 5.2(b), each Credit Party shall pay and
--------------
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (A) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, and (B)
lawful claims for storage and shipping charges payable to Approved Shippers.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a); provided, that (i) the imposition of such Charge does not
-------------- --------
otherwise constitute an Event of Default under Section 8.1 hereof, (ii) adequate
-----------
reserves with respect to such contest are maintained on the books of such Credit
Party, in accordance with GAAP, (iii) such contest is maintained and prosecuted
continuously and with diligence, (iv) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (v) no Lien shall be filed or
imposed to secure payment of such Charges or claims which would, with the
passage of time or otherwise, have priority over Agent's Liens with respect to
the Collateral, (vi) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable to Agent of
such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this
Section 5.2(b) are no longer met, and (vii) Agent has not advised Borrower in
--------------
writing that Agent reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
25
5.3. Books and Records. Each Credit Party shall keep adequate books
-----------------
and records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements delivered to Agent.
5.4. Insurance: Damage to or Destruction of Collateral.
-------------------------------------------------
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule 3.18 or
------------------------
substantially equivalent coverage with reputable insurers. If Borrower at any
time or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay all premiums relating thereto, Agent may at
any time or times thereafter obtain and maintain such policies of insurance and
pay such premium and take any other action with respect thereto which Agent
deems reasonably advisable. Agent shall have no obligation to obtain insurance
for any Credit Party or pay any premiums therefor. By doing so, Agent shall not
be deemed to have waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral. Borrower must
provide Agent fifteen (15) days prior written notice of any non-renewal,
cancellation or amendment of the insurance policies required above.
(b) Intentionally Omitted.
(c) Borrower shall deliver or cause to be delivered to Agent, in
form and substance satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each Loan
Party irrevocably makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent) as its true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claim under
such "All Risk" policies of insurance, endorsing the name of each such Credit
Party on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance; provided that so long as no
Event of Default shall have occurred and be continuing, Borrower shall have the
right to direct any such settlements and adjustments. The Credit Parties that
are signatories hereto shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $1,000,000 or more, whether or
not covered by insurance. If an Event of Default shall have occurred and be
continuing, Agent is hereby authorized to collect all insurance proceeds
relating to the Collateral. After deducting from such proceeds the expenses, if
any, incurred by Agent or any Credit Party in the collection or handling
thereof, Agent may, at its option, apply all net proceeds to the reduction of
the Obligations in accordance with Section 1.3(d), or permit or require Borrower
--------------
to use such money, or any part thereof, to replace the Collateral in a diligent
and expeditious manner. Notwithstanding the foregoing, if the casualty giving
rise to such insurance proceeds would not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds
26
do not exceed $5,000,000 in the aggregate, Agent shall permit Borrower to
replace the Collateral so long as no Event of Default shall have occurred and be
continuing at the time of any requested release of funds; provided that, if
-------- ----
Borrower shall not have completed the replacement of the Collateral within 270
days of such casualty, Agent may apply such insurance proceeds to the
Obligations in accordance with Section 1.3(d). Except as otherwise provided in
-------------
this Section, all insurance proceeds which are to be made available to Borrower
to replace the Collateral shall first be applied by Agent in accordance with
Section 1.3(d) (which application in accordance with Section 1.3(d) shall not
-------------- --------------
result in a permanent reduction of the Commitments), and any excess shall be
released to Borrower. Upon any application in accordance with Section 1.3(d),
--------------
Agent shall establish a Reserve against the Borrowing Base in an amount equal to
the amount of such proceeds so applied. Thereafter, such funds shall be made
available to Borrower to provide funds to replace the Collateral as follows: (i)
Borrower shall request a Swing Line Advance or Revolving Credit Advance be made
to Borrower in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Agent shall make such Swing
-----------
Line Advance or Revolving Credit Advance; and (iii) the Reserve established with
respect to such insurance proceeds shall be reduced by the amount of such Swing
Line Advance or Revolving Credit Advance.
5.5. Compliance With Laws. Each Credit Party shall comply with all
--------------------
federal, state and local laws and regulations applicable to it, including those
relating to ERISA, customs import and export laws and labor matters and
Environmental Laws, except to the extent that the failure to so comply would not
have a Material Adverse Effect.
5.6. Employee Plans. Each Credit Party shall promptly notify Agent
--------------
of (a) any violation of ERISA or the IRC with respect to any Plan which results
in a material increase in any Credit Party's obligations with respect thereto;
(b) the occurrence or likely occurrence of an ERISA Event resulting in a
material increase in Borrower's fixed liabilities under ERISA; (c) the filing
for a funding waiver under Section 412 of the IRC with respect to any Plan; (d)
the occurrence of an "accumulated funding deficiency" under Section 412 of the
IRC with respect to any Plan; (e) a material increase in the Unfunded Pension
Liability of any Title IV Plan or a material increase in the aggregate Unfunded
Pension Liability of all Title IV Plans, but only taking into account Title IV
Plans with Unfunded Pension Liability at the time of reference; and (f) a
material increase in any Credit Party's obligations under any Retiree Welfare
Plan. For purposes of clauses (e) and (f) above and Sections 6.9(d) and (e), a
----------- --- --------------- ---
"material increase" shall mean the lesser of (i) 50% or (ii) $500,000, in each
case measured from the Closing Date. In addition, the Credit Parties shall
promptly furnish to the Agent copies of the annual form 5500 filed for each
Title IV Plan.
5.7. Environmental Matters. Each Credit Party shall (a) notify
---------------------
Agent promptly after such Credit Party becomes aware of any Release upon or at
any Real Estate which is reasonably likely to result in Environmental
Liabilities and Costs in excess of $200,000, and (b) promptly forward to Agent a
copy of any order, notice, permit, application or any communication or report
received by such Credit Party in connection with any such Release, its
compliance with Environmental Laws and Environmental Permits or any other matter
relating to the Environmental Laws that may affect such premises or such Credit
Party, in each case whether
27
or not the Environmental Protection Agency, any other federal agency or any
state, local or foreign environmental agency has taken or threatened any action
in connection with any such Release or other matter. So long as any Event of
Default shall have occurred and be continuing, Borrower shall permit Agent or
its representatives to have access to all premises owned or occupied by it for
the purpose of conducting such environmental audits and testing as Agent
reasonably deems appropriate, including Phase II environmental testing. Borrower
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.8. Landlords' Agreements and Bailee Letters. Borrower shall
----------------------------------------
obtain a landlord's agreement, or bailee letter, from Bermans with respect to
the Distribution Center located in Brooklyn Park, Minnesota and from each other
lessor of a warehouse or bailee in possession of collateral property or with
respect to any other warehouse where Collateral is located. After the Closing
Date, no warehouse space shall be leased or acquired by any Credit Party, unless
and until a landlord agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location. Although the Credit Parties
are not required to obtain landlord waivers as to Store locations, (i) if an
Event of Default shall have occurred and be continuing, Agent may impose a
Reserve against Borrowing Availability equal to one month's rent as to all Store
locations and (ii) if any Store Guarantor shall default in the payment of rent
under its Store Lease, Agent may impose a Reserve against Borrowing Availability
in the amount of those defaulted rent obligations (which may exceed one month's
rent). All such landlord and bailee letters shall be in form and substance
satisfactory to Agent. Each Credit Party shall timely and fully pay and perform
its obligations under all leases and other agreements with respect to each
leased location or public warehouse where any Collateral is or may be located.
5.9. Ownership of Assets. So long as this Agreement shall remain
-------------------
in effect, Borrower shall own all Inventory held for sale by each Store
Guarantor. No Store Guarantor shall execute any agreement or take any action
inconsistent with the foregoing.
5.10. Additional Pledges. The Credit Parties signatory hereto shall
------------------
pledge or cause to be pledged to Agent for the benefit of Lenders the Stock of
the Store Guarantors created or acquired after the Closing Date.
6. NEGATIVE COVENANTS
The Loan Parties jointly and severally covenant and agree that without
the prior written consent of Agent and the Requisite Lenders, from and after the
date hereof until the Termination Date:
6.1. Mergers, Subsidiaries, Etc. No Credit Party shall directly or
--------------------------
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person, except (i) Bermans may be merged with and into Borrower or another Loan
Party, (ii) one or more Store Guarantors may be merged with any other Store
Guarantor or any Loan Party so long as such Loan Party is the survivor in any
merger involving a Loan Party; (iii)
28
cash and financial assets may be transferred among the Loan Parties so long as
no Event of Default has occurred and is continuing; (iv) the Stock or fixed
assets, Trademarks and Trademark Licenses of Store Guarantors may be transferred
to other Store Guarantors or to any Loan Party; (v) the Credit Parties may form
new wholly-owned domestic Subsidiaries; provided that (x) the aggregate initial
-------- ----
cash investment in each new domestic Subsidiary in the form of equity shall not
exceed $300,000 and (y) the Credit Parties and each new domestic Subsidiary
shall execute and deliver to Agent forms of the Loan Documents executed by or
with respect to the Loan Parties as of the Closing Date; and (vi) Ultimate
Parent or any of its Subsidiaries may (x) form or enter into Joint Ventures, (y)
create or acquire Foreign Subsidiaries or (z) acquire all or substantially all
of the assets or capital Stock of any Person (the "Target") (in each case, a
------
"Permitted Investment") subject to the satisfaction of each of the following
conditions:
(1) Agent shall receive at least twenty (20) days' prior written
notice of such proposed Permitted Investment, which notice shall include a
reasonably detailed description of that proposed Permitted Investment;
(2) all Permitted Investments shall only involve assets located
or to be located in the United States; provided that assets owned by Joint
Ventures or Foreign Subsidiaries may be located outside of the United
States so long as the investment in such Joint Ventures or Foreign
Subsidiaries, and in their respective assets, is in compliance with clause
(4) below;
(3) at the time of the Permitted Investment and after giving
effect thereto, the Loan Parties shall be in compliance with Section
6.5(b);
(4) the aggregate amount invested in Joint Ventures and Foreign
Subsidiaries shall not exceed $5,000,000 in any Fiscal Year;
(5) such Permitted Investment shall be consensual and, if
applicable, shall have been approved by the Target's board of directors;
(6) no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of the Credit
Parties and Target after giving effect to such Permitted Investment, except
(A) Loans made hereunder and (B) ordinary course trade payables, accrued
expenses and Indebtedness of the Target within the limits permitted by
Section 6.3;
(7) the sum of all amounts payable in connection with all
Permitted Investments (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected on a consolidated balance sheet
of the Credit Parties and Target) shall not exceed $20,000,000 (including
$5,000,000 of Permitted Investments involving assets outside the United
States and investments in Joint Ventures) during any Fiscal Year;
(8) the business and assets acquired in each Permitted
Investment shall
29
be free and clear of all Liens (other than Permitted Encumbrances);
(9) except for Foreign Subsidiaries and Joint Ventures, at or
prior to the closing of any Permitted Investment, Agent will be granted a
first priority perfected Lien (subject to Permitted Encumbrances) in all
assets acquired pursuant thereto or in the assets and capital stock of the
Target and the Target shall have become a Guarantor, and the Credit Parties
and the Target shall have executed such documents and taken such actions as
may be reasonably required by Agent in connection therewith; and in the
case of Foreign Subsidiaries and Joint Ventures Agent will be granted, as
applicable, a pledge of 100% of any domestic Joint Venture equity owned
directly or indirectly by Ultimate Parent, sixty-five percent (65%) of the
stock of any Foreign Subsidiary and/or the maximum percentage of any
foreign Joint Venture equity as will not result in tax liability under IRC
(S) 965;
(10) on or prior to the date of such Permitted Investment, Agent
shall have received, in form and substance reasonably satisfactory to Agent
in all material respects, copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates, lien search
results and other material documents reasonably requested by Agent;
(11) at the time of such Permitted Investment and after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing;
(12) Ultimate Parent and Target, on a consolidated basis after
giving effect to a Permitted Investment, shall have a Fixed Charge Coverage
Ratio of at least 1.0 to 1.0 on a pro forma basis for the twelve months
preceding the date of the Permitted Investment and the twelve months
following the Permitted Investments; and
(13) if the Target has incurred an operating loss for the
trailing twelve month period preceding the date of the Permitted
Investments, as determined based upon the Target's Financial Statements for
its most recent interim financial period completed not more than ninety
(90) days prior to the date of the consummation of such Permitted
Investment, Borrower shall have Borrowing Availability of at least $10
million, on a pro forma basis after giving effect to that Permitted
Investment.
Notwithstanding the foregoing, the Inventory of the Target shall not
be included in Eligible Inventory prior to completion of a successful field
audit with respect thereto.
6.2. Investments; Loans and Advances. No Credit Party shall make
-------------------------------
any investment in, or make or accrue loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of securities or
otherwise, except that (a) any Loan Party may, so long as no Default or Event of
Default has occurred and is continuing, make investments in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one year from
the date of creation thereof and having an investment rating of A-2 or P-2 or
better from either Standard & Poor's Corporation or
30
▇▇▇▇▇'▇ Investors Service, Inc., (iii) time deposits, demand deposits and
certificates of deposit, maturing no more than one year from the date of
creation thereof, issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior secured rating of "A"
or better by a nationally recognized rating agency (an "A Bank"), (iv) time
------
deposits, maturing no more than 30 days from the date of creation thereof with
an A Bank; and (v) overnight repurchase obligations issued by an A Bank; and (b)
each Credit Party may (i) maintain its existing investments in its Subsidiaries
as of the Closing Date, (ii) make unlimited investments in Borrower, (iii) make
investments in new Subsidiaries and Permitted Investments in accordance with
Section 6.1, (iv) upon prior written notice to Agent, maintain equity
-----------
investments in Store Guarantors necessary to maintain them as Solvent in an
aggregate amount not to exceed $1,000,000, (v) make intercompany loans as
permitted under Section 6.3, and (vi) make other investments not exceeding
$500,000 in the aggregate at any time outstanding.
6.3. Indebtedness. No Credit Party shall create, incur, assume or
------------
permit to exist any Indebtedness, except (a) Indebtedness secured by Permitted
Encumbrances, (b) the Loans and the other Obligations, (c) reimbursement
obligations owed by Borrower to the L/C Issuer with respect to Letters of Credit
and Eligible Trade L/Cs, (d) the Senior Notes, (e) deferred taxes, (f) unfunded
pension fund and other employee benefit plan obligations and liabilities to the
extent they are permitted to remain unfunded under applicable law, (g) existing
Indebtedness set forth in Disclosure Schedule 6.3 and refinancings thereof or
amendments or modifications thereto on terms and conditions no less favorable to
any Credit Party, Agent or any Lender, as determined by Agent, than the terms of
the Indebtedness being refinanced, amended or modified, (h) intercompany loans
among the Loan Parties for operating expenses incurred in the ordinary course of
business, (i) intercompany loans by any Loan Party in the ordinary course of
business, to Store Guarantors and intercompany loans by Store Guarantors to any
Loan Party in the ordinary course of business, (j) intercompany loans to Foreign
Subsidiaries or Joint Ventures not to exceed $2,000,000 in the aggregate;
provided that at the time any such intercompany loan is made to a Foreign
-------- ----
Subsidiary or Joint Venture no Event of Default shall have occurred and be
continuing or would result after giving effect thereto and Borrower shall have
Borrowing Availability of at least $1,000,000 after giving effect thereto, (k)
an unsecured $100,000 customs bond line from Barclays Bank for the Foreign
Subsidiaries, (l) obligations under interest rate swaps on an unsecured basis,
and (m) unsecured Indebtedness not to exceed $2,000,000 in the aggregate
assumed, incurred or reflected on the balance sheet of a Target in connection
with Permitted Investments (but not incurred in anticipation of any such
Permitted Investment).
6.4 Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any
transaction with any Affiliate thereof (other than another Credit Party) except
in the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party that would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party, except
intercompany loans permitted in clauses (h) and (i) of Section 6.3 and the
----------- --- -----------
Consignment Agreement. In addition, if any such transaction or series of related
transactions involves payments in excess of
31
$1,000,000 in the aggregate, the terms of these transactions must be disclosed
in advance to Agent (which disclosure may be in the form of a request for
issuance of an Eligible Trade L/C). All such transactions existing as of the
date hereof are described on Disclosure Schedule 6.4(a).
--------------------------
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employee of any Credit Party, except loans to their
respective employees on an arm's length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $200,000 to any employee and up to a maximum of
$1,000,000 in the aggregate at any one time outstanding.
6.5 Capital Structure and Business.
------------------------------
(a) No Credit Party shall make any changes in any of its business
objectives, purposes or operations which could in any way adversely affect the
repayment of the Loans or any of the other Obligations or could have or result
in a Material Adverse Effect. No Credit Party other than Ultimate Parent shall
(i) make any change its capital structure as described on Disclosure Schedule
-------------------
3.8 (including a change in capital structure effected through the issuance of
---
any shares of Stock, warrants or other securities convertible into Stock or any
revision of the terms of its outstanding Stock, or (ii) amend its charter or
bylaws in a manner which would adversely affect the Agent or Lenders or
Borrower's, First Intermediate Parent's or Store Guarantors' duty or ability to
repay the Obligations; provided, however, that nothing herein shall prohibit a
merger or consolidation otherwise permitted by Section 6.1 hereof.
-----------
(b) Subject to Section 6.19, no Credit Party shall engage in any
business other than the businesses currently engaged in by it or businesses
reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall incur any
-----------------------
Guaranteed Indebtedness except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Credit Party, (b) for
Guaranteed Indebtedness incurred for the benefit of any other Credit Party
consisting of payments under the Store leases or if the primary obligation is
otherwise expressly permitted by this Agreement, (c) the Barclays customs bond
for the Foreign Subsidiaries described in Section 6.3(k), and (d) guaranties of
the Senior Notes; provided that if any Person shall guarantee payment of the
Senior Notes that is not a guarantor or direct obligor with respect to the
Obligations, the Credit Parties shall cause such Person to guarantee payment of
the Obligations and grant to Agent a security interest in such Person's assets
in a manner consistent with the terms of the Loan Documents executed and
delivered by the other Credit Parties.
6.7 Liens. No Credit Party shall create, incur, assume or permit
-----
to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired) except for
Permitted Encumbrances and those existing Liens set forth on Schedule 6.7. In
------------
addition, no Credit Party shall become a party to any agreement, note, indenture
or instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases, purchase money obligations, or Licenses which
prohibit Liens upon the assets that are subject thereto.
32
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
------------------------
convey, assign or otherwise dispose of any of its properties or other assets,
including the capital Stock of any of its Subsidiaries, or any of their
Accounts, other than as permitted under Section 6.1 and (a) the sale of
-----------
Inventory in the ordinary course of business, (b) the sale, transfer, conveyance
or other disposition by a Credit Party of equipment, fixtures or Real Estate
that are obsolete or no longer used or useful in such Credit Party's business
and having a value not exceeding $2,000,000 in any single transaction or
$5,000,000 in the aggregate in any Fiscal Year, (c) the sale of other equipment
and fixtures having a value not exceeding $1,000,000 in any single transaction
or $4,000,000 in the aggregate in any Fiscal Year, (d) the sale of all of the
stock or substantially all of the assets of one or more Subsidiaries or Joint
Ventures in an arms'-length transaction in an amount not to exceed $5,000,000 in
the aggregate (and in connection with such sale, such Subsidiary or Subsidiaries
shall be released from all obligations hereunder and under the other Loan
Documents to which it is subject), and (e) the sale of the Distribution Center
located in Brooklyn Park, Minnesota by Bermans to Borrower in an arms'-length
transaction. No Credit Party, other than Ultimate Parent, shall sell or issue
any of its capital Stock (other than directors' qualifying shares) to any Person
other than a Credit Party.
6.9 ERISA. No Credit Party shall cause or permit (a) the
-----
occurrence of an ERISA Event which results, or could reasonably be expected to
result, in a distress termination of a Title IV Plan under Section 4041 of
ERISA, an involuntary termination of a Title IV Plan by the PBGC under Section
4042 of ERISA, a Lien on any property of a Credit Party or ERISA Affiliate or a
liability in excess of $500,000 being assessed against any Credit Party or ERISA
Affiliate; (b) any Title IV Plan to incur an "accumulated funding deficiency"
under Section 412 of the IRC in excess of $500,000, regardless of any waiver;
(c) any Credit Party or ERISA Affiliate to apply for a material funding waiver
under Section 412(d) of the IRC; (d) a material increase in the aggregate
Unfunded Pension Liability of all Title IV Plans, but only taking into account
Title IV Plans with Unfunded Pension Liability at the time of reference; or (e)
a material increase in any Credit Party's obligations under any Retiree Welfare
Plan.
6.10. Financial Covenants. Ultimate Parent shall not breach or fail
-------------------
to comply with any of the Financial Covenants (the "Financial Covenants") set
-------------------
forth in Schedule I.
----------
6.11. Hazardous Materials. No Credit Party shall cause or permit a
-------------------
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would violate in any material respect,
or form the basis for any material Environmental Liabilities under any
Environmental Laws or Environmental Permits or would otherwise materially and
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-
---------------
leaseback, synthetic lease or similar transaction involving any of its assets;
provided that Credit Parties may engage in a sale-leaseback transaction with
regard to it Brooklyn Park, Minnesota Distribution Center; provided that Agent
shall have received the documentation, including a landlord waiver, in form and
substance reasonably satisfactory to Agent.
33
6.13. Cancellation of Indebtedness. No Credit Party shall cancel
----------------------------
any claim or debt owing to it, except for reasonable consideration negotiated on
an arm's-length basis or in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any
-------------------
Restricted Payment, except (a) asset or Stock transfers permitted under Section
-------
6.1; (b) intercompany loans permitted under Section 6.3; (c) restricted payments
---
consisting of cash dividends paid to any Store Guarantor or to First
Intermediate Parent, Second Intermediate Parent, Third Intermediate Parent or
Ultimate Parent; (d) Ultimate Parent may pay interest on the Senior Notes when
due, so long as no Event of Default under Section 8.1(a) shall have occurred and
--------------
be continuing; and (e) Ultimate Parent may repurchase Senior Notes in accordance
with Section 6.17.
------------
6.15 Change of Corporate Name or Location; Change of Fiscal Year.
-----------------------------------------------------------
No Credit Party shall (a) change its corporate name, or (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or Collateral locations, or the location of its records concerning the
Collateral, in any case without at least twenty (20) days prior written notice
to Agent and completion by the Credit Parties of any action reasonably requested
by Agent in connection therewith, including, without limitation, to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral has been completed or taken, and provided that any such new location
--------
shall be in the continental United States. Without limiting the foregoing, no
Credit Party shall change its name, identity or corporate structure in any
manner which might make any financing or continuation statement filed in
connection herewith seriously misleading within the meaning of Section 9.402(7)
of the Code or any other then applicable provision of the Code except upon prior
written notice to Agent and Lenders and completion by the Credit Parties of any
action reasonably requested by Agent in connection therewith, including, without
limitation, any action necessary to continue the perfection of any Liens in
favor of Agent, on behalf of Lenders, in any Collateral.
6.16 No Impairment of Upstreaming. No Credit Party shall directly
----------------------------
or indirectly enter into or become bound by any agreement, instrument, indenture
or other obligation (other than this Agreement and the other Loan Documents)
which could directly or indirectly restrict, prohibit or require the consent of
any Person with respect to the payment of dividends or distributions or the
making of intercompany loans by a Subsidiary of First Intermediate Parent to any
other Subsidiary of First Intermediate Parent.
6.17 Changes Relating to Senior Notes. No Credit Party shall (a)
--------------------------------
change or amend the terms of any Senior Notes Documents if the effect of such
amendment is to: (i) increase the interest rate on such Senior Notes; (ii)
change the dates upon which payments of principal or interest are due on the
Senior Notes other than to extend such dates; (iii) change any default or event
of default other than to delete or make less restrictive any default provision
therein, or add any covenant with respect to the Senior Notes; (iv) change the
redemption or prepayment provisions of the Senior Notes other than to extend the
dates therefor or to reduce the premiums payable in connection therewith; (v)
grant any security or collateral to secure payment of the Senior Notes; or (vi)
change or amend any other term of the Senior Notes Documents if such change or
amendment would materially increase the obligations of any obligor or confer
34
additional material rights to the holder of a Senior Note in a manner adverse to
any Credit Party, Agent or any Lender, or (b) prepay, defease or purchase any
Senior Note; except that Ultimate Parent may repurchase an aggregate of
$30,000,000 of Senior Notes, minus the amount of Senior Notes repurchased by
-----
Ultimate Parent Borrower prior to the Closing Date. In addition to the
foregoing, Ultimate Parent may repurchase up to an additional $10 million of
Senior Notes in the aggregate at any time after the end of the Fiscal Year
ending in January of 2000; provided that Ultimate Parent may only repurchase
Senior Notes during any Fiscal Year if it had consolidated EBITDA of at least
$47,200,000 during the preceding Fiscal Year.
6.18 Eligible Trade L/Cs. Agent shall have no obligation to
-------------------
approve any request for a trade letter of credit for the purchase of finished
goods unless each of the following documents are required as conditions to any
draw thereon, unless Agent shall otherwise consent, and such deliveries must
constitute conditions to drawing for a trade letter of credit to constitute an
Eligible Trade L/C.
(i) the original Eligible Trade L/C, if only one draw is
permitted thereunder or if multiple draws are permitted and the
subject draw is the final draw thereunder;
(ii) all drafts and pre-approved forms of certificates
executed by Borrower's supplier, certifying that it has met the
conditions for a draw under the Eligible Trade L/C;
(iii) an inspection certificate substantially in the form
attached hereto as Schedule 6.18, executed by Borrower's employee or
-------------
agent at the point of origin of the finished goods;
(iv) a commercial invoice with respect to the purchase
order(s) against which such finished goods are being delivered and a
packaging list with respect to such goods;
(v) a non-negotiable ocean ▇▇▇▇ of lading, freight
forwarders cargo receipt, a house ▇▇▇▇ of lading or a copy of an
airway ▇▇▇▇ of lading (a "Document of Title") issued by an Approved
-----------------
Shipper with respect to the finished goods being shipped and providing
for the delivery thereof to Borrower; and
(vi) a certificate of origin.
6.19. Non-Core Businesses. The Loan Parties shall not permit (x) the
-------------------
aggregate revenue attributable to all Non-Core Businesses or (y) the EBITDA
attributable to all Non-Core Businesses, to exceed 10% of Ultimate Parent's
consolidated revenue or EBITDA, respectively, for any twelve fiscal month
period. No Permitted Investment shall be made unless at the time of such
Permitted Investment and after giving effect thereto, the requirements of this
section would be met on a pro forma basis for the trailing twelve Fiscal Months
ending on the Fiscal Month end preceding the effective date of any such
Permitted Investment.
35
7. TERM
7.1. Termination. The financing arrangements contemplated hereby
-----------
shall be in effect until the Commitment Termination Date, and the Loans and all
other Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
-----------------------------------------------------
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
------------
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of Borrower or the rights of Agent and
Lenders relating to any unpaid portion of the Loans or any other Obligations,
due or not due, liquidated, contingent or unliquidated or any transaction or
event occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon any Credit Party, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1. Events of Default. The occurrence of any one or more of the
-----------------
following events (regardless of the reason therefor) shall constitute an "Event
-----
of Default" hereunder:
----------
(a) (i) Borrower shall fail to make any payment of principal of,
or interest on, or Fees owing in respect of, the Revolving Loan, when due and
payable, or (ii) Borrower shall fail to pay or reimburse Agent or Lenders for
any expense reimbursable hereunder or under any other Loan Document or any other
Obligations within ten (10) days following Agent's demand for such reimbursement
or payment thereof.
(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the
------------ --- --- -
provisions set forth in Schedules E or I, respectively.
----------- -
(c) Borrower shall fail or neglect to perform, keep or preserve
any of the provisions of Section 4 or any provisions set forth in Schedules G or
--------- -----------
H, respectively, and the same shall remain unremedied for ten (10) days or more.
-
(d) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for twenty (20) days
-----------
or more following notice to such Credit Party.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace
36
period, and such default or breach (i) involves the failure to make any payment
when due in respect of any Indebtedness (other than the Obligations) of any
Credit Party in excess of $2,000,000 in the aggregate, or (ii) causes, or such
permits any holder of such Indebtedness or a trustee to cause, Indebtedness or a
portion thereof in excess of $2,000,000 in the aggregate to become due prior to
its stated maturity or prior to its regularly scheduled dates of payment,
regardless of whether such right is exercised, by such holder or trustee.
(f) Any representation or warranty herein or in any Loan Document
or in any written statement, report, financial statement or certificate made or
delivered to Agent or any Lender by any Credit Party shall be untrue or
incorrect in any material respect as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of
$1,000,000 or more shall be attached, seized, levied upon or subjected to a writ
or distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any
Material Credit Party a decree or order in respect of any Material Credit Party
(i) under Title 11 of the United States Code, as now constituted or hereafter
amended or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for any Material Credit Party or
any substantial part of any such Person's assets, or (iii) ordering the winding-
up or liquidation of the affairs of any Material Credit Party, and such case or
proceeding shall remain undismissed or unstayed for sixty (60) days or more or
such court shall enter a decree or order granting the relief sought in such case
or proceeding.
(i) Any Material Credit Party shall (i) file a petition seeking
relief under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of any Material Credit Party or of any substantial part of any such
Person's assets, (iii) make an assignment for the benefit of creditors, or (iv)
take any corporate action in furtherance of any of the foregoing.
(j) A final judgment or judgments for the payment of money in
excess of $1,000,000 in the aggregate at any time outstanding shall be rendered
against any Credit Party and the same shall not, within thirty (30) days after
the entry thereof, have been discharged or execution thereof stayed or bonded
pending appeal, or shall not have been discharged prior to the expiration of any
such stay.
(k) Any provision of any Loan Document shall for any reason cease
to be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has
37
ceased to be or otherwise is not valid, binding and enforceable in accordance
with its terms), or any security interest created under any Loan Document shall
cease to be a valid and perfected first priority security interest or Lien
(except as otherwise permitted herein or therein) in any of the Collateral
purported to be covered thereby other than as a result of Agent's failure to
take any action within its control.
(l) Any "Change of Control" shall occur.
8.2. Remedies.
--------
(a) (i) If any Event of Default or Material Adverse Effect shall
have occurred and be continuing, Agent may, in accordance with Section 2.2,
suspend this facility with respect to further Advances and/or the incurrence of
further Letter of Credit Obligations and Eligible Trade L/C Obligations and (ii)
if any Event of Default shall have occurred and be continuing, Agent may (and at
the request of the Requisite Lenders shall), following notice, increase the rate
of interest applicable to the Loans and the Letter of Credit Fees to the Default
Rate.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice, (i) terminate this facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations and Eligible Trade L/C
Obligations; (ii) declare all or any portion of the Obligations, including all
or any portion of any Loan to be forthwith due and payable, and require that the
Letter of Credit Obligations and Eligible Trade L/C Obligations be cash
collateralized as provided in Schedule B, all without presentment, demand,
----------
protest or further notice of any kind, all of which are expressly waived by
Borrower and each Credit Party that is a signatory hereto; and (iii) exercise
any rights and remedies provided to Agent under the Loan Documents and/or at law
or equity, including all remedies provided under the Code; provided, however,
-------- -------
that upon the occurrence of an Event of Default specified in Sections 8.1(g),
---------------
(h) or (i), Commitments to make further Advances or the incurrence of further
--- ---
Letter of Credit Obligations and Eligible Trade L/C Obligations shall
automatically terminate and all of the Obligations, including the Revolving
Loan, shall become immediately due and payable without declaration, notice or
demand by any Person.
8.3. Waivers by Credit Parties. Except as otherwise provided for in
-------------------------
this Agreement or by applicable law, each Credit Party waives (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security which might be required by any court prior to allowing
Agent to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal and exemption laws.
38
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. Assignment and Participations.
-----------------------------
(a) Any Lender may assign at any time or times, any of the Loan
Documents, any Commitment or any portion thereof or interest therein, including,
without limitation, any Lender's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not, with Borrower's
consent which shall not be unreasonably withheld or delayed; provided that so
long as any Event of Default shall have occurred and be continuing Borrower's
consent shall not be required. Any assignment by a Lender shall (i) require the
consent of Agent (which consent shall not be unreasonably withheld or delayed)
and the execution of an assignment agreement (a "Lender Assignment Agreement")
substantially in form attached hereto as Exhibit 9.1(a) and otherwise in form
--------------
and substance satisfactory to, and acknowledged by, Agent; (ii) be conditioned
on such assignee Lender representing to the assigning Lender and the Agent that
it is purchasing the applicable Loans to be assigned to it for its own account,
for investment purposes and not with a view to the distribution thereof; (iii)
if a partial assignment, be in an amount at least equal to $5,000,000 and, after
giving effect to any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $5,000,000; and (iv) include
a payment by the assigning Lender to the Agent of an assignment fee of $3,000.
In the case of an assignment by a Lender under this Section 9.1, the assignee
-----------
shall have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment.
Borrower hereby acknowledges and agrees that any assignment will give rise to a
direct obligation of Borrower to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the Commitment. In the event Agent or any Lender
assigns or otherwise transfers all or any part of a Note, Agent or any such
Lender shall so notify Borrower and Borrower shall, upon the request of Agent or
such Lender, execute new Notes in exchange for the Notes being assigned.
(b) Borrower consents to any Lender's sale of a participation, at
any time or times, in all or part of its Commitment. Any sale of a participation
by a Lender of all or any part of its Commitments shall be made with the
understandings that all amounts payable by Borrower hereunder shall be
determined as if that Lender had not sold such participation, except as provided
in the following sentence, and that the holder of any such participation shall
not be entitled to require such Lender to take or omit to take any action
hereunder except actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, any Loan in which
such holder participates, (ii) any extension of the final scheduled maturity
date of the principal amount of any Loan in which such holder participates, and
(iii) any release of all or substantially all of the Collateral (other than in
accordance with the terms of this Agreement, the Collateral Documents or the
other Loan Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8,
------------- ---- ---- ---
Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of Borrower to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence
39
neither Borrower nor any Credit Party shall have any obligation or duty to any
participant. Neither Agent nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
---------------
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
---------------
Section 1.16(c), or withholding taxes in accordance with Section 1.16(d).
--------------- ---------------
(d) Except as expressly provided in this Section 9.1, no Lender
-----------
shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(e) Borrower shall assist any Lender permitted to sell assignments
under this Section 9.1 as reasonably required to enable the assigning or selling
-----------
Lender to effect any such assignment, including the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be
requested, and the participation of management in meetings with, potential
assignees at Borrower's headquarters. Borrower shall certify the correctness,
completeness and accuracy of all descriptions of Borrower and its affairs
contained in any selling materials provided by it and all other information
provided by it and included in such materials, except that any Projections
delivered by Borrower shall only be certified by Borrower as having been
prepared by Borrower in compliance with the representations contained in Section
-------
3.4.
---
(f) A Lender may furnish any information concerning Borrower in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained herein.
9.2 Appointment of Agent. GE Capital is hereby appointed to act on
--------------------
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
-----------
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor any of its Affiliates nor any of their
respective officers, directors,
40
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages solely
caused by its or their own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
If Agent shall request instructions from Requisite Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, and Agent shall not incur liability to any
Person by reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent, be contrary to law or the terms of
this Agreement or any other Loan Document, (b) if such action would, in the
opinion of Agent, expose Agent to Environmental Liabilities and Costs or (c) if
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Requisite Lenders.
9.3. Agent's Reliance, Etc. Neither Agent nor any of its Affiliates
---------------------
nor any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for damages
solely caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Without limitation of
the generality of the foregoing, Agent: (a) may treat the payee of any Note as
the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4. GE Capital and Affiliates. With respect to its Commitments
-------------------------
hereunder, GE Capital shall have the same right and powers under this Agreement
and the other Loan
41
Documents as any other Lender and may exercise the same as though it were not
Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include GE Capital in its individual capacity. GE Capital and its
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if GE Capital were not Agent and without any duty to account therefor to
Lenders. GE Capital and its Affiliates may accept fees and other consideration
from any Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
9.5. Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4 and such other documents and
-----------
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of the Lenders holding disproportionate interests in the Loans, and
expressly consents to, and waives any claim based upon, such conflict of
interest.
9.6. Indemnification. Lenders agree to indemnify Agent (to the extent
---------------
not reimbursed by Borrower and without limiting the obligations of Borrower
hereunder), ratably according to their respective Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
-------- -------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from Agent's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction. Without limiting the foregoing, each Lender agrees to reimburse
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that Agent is not reimbursed for such
expenses by Borrower.
9.7. Successor Agent. Agent may resign at any time by giving not less
---------------
than thirty (30) days' prior written notice thereof to Lenders and Borrower.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor Agent which shall be reasonably acceptable to Borrower. If no
successor Agent shall have been so appointed by the Requisite Lenders and shall
have accepted such appointment within 30 days after the resigning Agent's giving
notice of resignation, then the resigning Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a Lender, if a Lender is willing to
accept such appointment, or otherwise shall be a commercial bank or financial
institution organized under the
42
laws of the United States of America or of any State thereof having a combined
capital and surplus of at least $300,000,000. If no successor Agent has been
appointed pursuant to the foregoing, by the 30th day after the date such notice
of resignation was given by the resigning Agent, such resignation shall become
effective and the Requisite Lenders shall thereafter perform all the duties of
Agent hereunder until such time, if any, as the Requisite Lenders appoint a
successor Agent (which shall be reasonably acceptable to Borrower) as provided
above. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent, and the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall inure to its
---------
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.
9.8. Setoff and Sharing of Payments. In addition to any rights now or
------------------------------
hereafter granted under applicable law and not by way of limitation of such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all balances held by it at any of its offices for the account of Borrower
(regardless of whether such balances are then due to Borrower) and any other
properties or assets any time held or owing by that Lender or that holder to or
for the credit or for the account of Borrower against and on account of any of
the Obligations which are not paid when due. Any Lender or holder of any Note
exercising a right to set off shall purchase for cash (and the other Lenders or
holders shall sell) such participations in each such other Lender's or holder's
Pro Rata Share of the Obligations as would be necessary to cause such Lender to
share the amount so set off with each other Lender or holder in accordance with
their respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its right to set
off with respect to amounts in excess of its Pro Rata Share of the Obligations
and may sell participations in such amount so set off to other Lenders and
holders and (b) any Lender or holders so purchasing a participation in the Loans
made or other Obligations held by other Lenders or holders may exercise all
rights of set-off, bankers' lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender or holder were a direct holder of
the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the set-off amount is
thereafter recovered from the Lender that has exercised the right of set-off,
the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.
9.9. Advances; Payments; Information; Non-Funding Lender.
---------------------------------------------------
(a) Advances; Payments; Fee Payments.
--------------------------------
(i) The parties hereto agree that, whenever possible, the Swing
Line Loan shall be the first Loan advanced and the first Loan repaid so as to
minimize fluctuations in
43
the Revolving Loan balance. Furthermore, for ease of administration, Agent may,
on behalf of Lenders, disburse funds to Borrower for requested Revolving Credit
Advances and the Revolving Loan balance may fluctuate from day to day through
Agent's disbursement of funds to, and receipt of funds from, Borrower. In order
to minimize the frequency of transfers of funds between Agent and each Lender,
Revolving Credit Advances and payments in respect thereof will be settled
according to the procedures described in Sections 9.9(a)(ii) and 9.9(a)(iii)
------------------ ----------
below. Notwithstanding these procedures, each Lender's obligation to fund its
portion of any Revolving Credit Advances made by Agent to Borrower will commence
on the date such Advances are made by Agent. Such payments will be made by each
Lender without setoff, counterclaim or reduction of any kind.
(ii) Not later than 11:00 a.m. (Chicago time) on the second
(2nd) and fifth (5th) Business Day of each week, or more frequently (including
daily) if Agent so elects (each such day being a "Settlement Date"), Agent will
---------------
advise each Lender by telephone or telecopy of the amount of such Lender's Pro
Rata Share of the balance of the Revolving Loan as of the close of business on
the first (1st) Business Day immediately preceding the Settlement Date. In the
event that payments from Agent are necessary to adjust the amount of such
Lender's portion of the Revolving Loan to such Lender's Pro Rata Share of the
Revolving Loan as of any Settlement Date, Agent will pay each Lender, in same
day funds, by wire transfer to its account not later than 2:00 p.m. (Chicago
time) on the Settlement Date. Agent may allocate payments among the Lenders so
as to cause the principal amount of the Loans oustanding from each Lender to
match that Lender's Pro Rata Share. If Agent so elects, Agent may require that
each Lender make its Pro Rata Share of any requested Revolving Credit Advance
available to Agent for disbursement prior to the funding of such Advance. If
Agent elects to require that such funds be so made available, Agent shall advise
each Lender by telephone or telecopy of the amount of such Lender's Pro Rata
Share of the requested Revolving Credit Advance no later than noon (Chicago
time) on the date of funding of each Index Rate Loan and no later that 11:00
a.m. (Chicago Time) on the date that is two (2) Business Days prior to the
proposed funding date of any LIBOR Loan, and each such Lender shall pay Agent
such amount in same day funds, by wire transfer to the Collection Account not
later than 2:00 p.m. (Chicago time) on the date of funding such Advance.
(iii) For purposes of this Section 9.9(a)(iii), the following
-------------------
terms will have the following meanings:
(A) "Daily Loan Balance" means, with respect to the
------------------
Revolving Credit Advances, an amount calculated as of the end of each
calendar day by subtracting (i) the cumulative principal amount paid
by Agent to a Lender with respect to the Revolving Credit Advances
from the Closing Date through and including such calendar day, from
(ii) the cumulative principal amount of the Revolving Credit Advances
advanced by such Lender to Agent from the Closing Date through and
including such calendar day.
(B) "Daily Interest Rate" means, with respect to the
-------------------
Revolving Credit Advances, an amount calculated by dividing the
interest rate payable to a
44
Lender on the Revolving Credit Advances (as determined pursuant to
Section 1.5 and 1.6) as of each calendar day by three hundred sixty
----------- ---
(360) days in the case of LIBOR Loans and three hundred sixty-five
(365) days in the case of Index Rate Loans.
(C) "Daily Interest Amount" means, with respect to the
---------------------
Revolving Loan, an amount calculated by multiplying the Daily Loan
Balance of the Revolving Credit Advances by the associated Daily
Interest Rate applicable to such Revolving Credit Advances.
(D) "Interest Ratio" means, with respect to the Revolving
--------------
Credit Advances, a number calculated by dividing the total amount of
interest on the Revolving Credit Advances received by Agent during the
immediately preceding month by the total amount of interest on the
Revolving Credit Advances due from Borrower during the immediately
preceding month.
On the first (1st) Business Day of each calendar month (an "Interest Settlement
-------------------
Date"), Agent will advise each Lender by telephone or telecopy of the amount of
----
such Lender's Pro Rata Share of interest and Fees paid for the benefit of
Lenders with respect to the Revolving Credit Advances as of the end of the last
day of the immediately preceding month. Provided that such Lender has made all
payments required to be made by it under this Agreement and the other Loan
Documents, Agent will pay to such Lender such Lender's Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders on the Revolving
Loans. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender to Agent in writing, as amended by such Lender from
time to time after the date hereof pursuant to the notice provisions contained
herein or in the applicable Lender Assignment Agreement) not later than 12:00
noon (Chicago time) on the next Business Day following the Interest Settlement
Date. Such Lender's Pro Rata Share of interest on Revolving Credit Advances
will be calculated by adding together such Lender's Pro Rata Share of the Daily
Interest Amounts for each calendar day of the prior month for the Revolving
Credit Advances and multiplying the total thereof by the Interest Ratio for the
Revolving Credit Advances. Consistent with the foregoing, during those periods
between Settlement Dates in which Agent has advanced more than its Pro Rata
Share of the Revolving Credit Advances, the Daily Interest Amount allocable to
the Lenders will be reduced and the interest accrued on such amounts shall be
for the account of Agent.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
---------------------------------------
each Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each Settlement Date. If such Pro Rata Share is not, in
fact, paid to Agent by such Lender when due, Agent will be entitled to recover
such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent's demand, Agent shall promptly notify Borrower and
Borrower shall immediately repay such amount to Agent. Nothing in this Section
-------
9.9 or elsewhere in this Agreement or the other Loan Documents shall be deemed
---
to require Agent to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its Commitments
45
hereunder or to prejudice any rights that Borrower may have against any Lender
as a result of any default by such Lender hereunder.
(c) Return of Payments.
------------------
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders.
-------------------
The failure of any Lender (such Lender, a "Non-Funding Lender") to
------------------
make any Revolving Credit Advance to be made by it on the date specified
therefor shall not relieve any other Lender (each such other Lender, an "Other
-----
Lender") of its obligations to make a Revolving Credit Advance on such date, but
------
neither any Other Lender nor Agent shall be responsible for the failure of any
Non-Funding Lender to make a Revolving Credit Advance to be made by such Non-
Funding Lender, and no Other Lender shall have any obligation to Agent or any
Other Lender for the failure by such Non-Funding Lender. Notwithstanding
anything set forth herein to the contrary so long as any Lender continues to be
a Non-Funding Lender, such Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Loan Document or constitute a
"Lender" (or be included in the calculation of "Requisite Lenders" hereunder)
for any voting or consent rights under or with respect to any Loan Document.
(e) Dissemination of Information.
----------------------------
Agent will use reasonable efforts to provide Lenders with any notice
of Default or Event of Default received by Agent from, or delivered by Agent to,
any Credit Party, with notice of any Event of Default of which Agent has
actually become aware and with notice of any action taken by Agent following any
Event of Default; provided, however, that Agent shall not be liable to any
Lender for any failure to do so, except to the extent that such failure is
attributable solely to Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Lenders acknowledge that
Borrower is required to provide Financial Statements and Collateral Reports to
certain of the Lenders in accordance with Schedules G and H hereto and agree
----------- -
that Agent shall have no duty to provide the same to Lenders.
46
(f) Actions in Concert.
------------------
Anything in this Agreement to the contrary notwithstanding, each
Lender hereby agrees with each other Lender that no Lender shall take any action
to protect or enforce its rights arising out of this Agreement or the Notes
(including, without limitation, exercising any rights of set-off) without first
obtaining the prior written consent of Agent or Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of the Agent.
(g) Regulation A.
------------
Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or a portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns. This Agreement and the other Loan
----------------------
Documents shall be binding on and shall inure to the benefit of each Credit
Party signatory hereto, Agent, Lenders and their respective successors and
assigns (including, in the case of any Credit Party, a debtor-in-possession on
behalf of such Credit Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Agent and Requisite
Lenders. Any such purported assignment, transfer, hypothecation or other
conveyance by any Credit Party signatory hereto without the prior express
written consent of Agent and Requisite Lenders shall be void. The terms and
provisions of this Agreement are for the purpose of defining the relative rights
and obligations of each Credit Party signatory hereto, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1. Complete Agreement; Modification of Agreement. The Loan
---------------------------------------------
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2 below. Any letter of interest, commitment letter, fee
------------
letter (other than the GE Capital Fee Letter) or confidentiality agreement
between any Credit Party and Agent or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
47
11.2. Amendments and Waivers.
----------------------
(a) Except as otherwise provided below, no amendment, modification,
termination or waiver of any provision of this Agreement or any of the Notes, or
any consent to any departure by any Credit Party therefrom, shall in any event
be effective unless the same shall be in writing and signed by Agent and each
Credit Party signatory hereto, and by Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which increases the percentage
advance rates set forth in the definition of Borrowing Base, shall be effective
unless the same shall be in writing and signed by Agent, all Lenders and each
Credit Party signatory hereto.
(c) No amendment, modification, termination or waiver shall, unless
in writing and signed by Agent and each Lender directly affected thereby, do any
of the following: (i) increase the principal amount of the Commitment of any
Lender (and all Lenders shall be deemed to be affected thereby); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan,
Letter of Credit Obligations or Eligible Trade L/C Obligations of any affected
Lender; (iii) extend the final scheduled maturity date of the principal amount
of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or
postpone any payment of interest or Fees as to any affected Lender; (v) release
any Guaranty of a Material Credit Party; (vi) except as otherwise permitted
herein or in the other Loan Documents, release the Agent's Liens upon, or permit
any Credit Party to sell or otherwise dispose of, any Collateral with a value
exceeding $5,000,000 in the aggregate other than sales of Inventory in the
ordinary course; (vii) increase the L/C Sublimit (and all Lenders shall be
deemed to be affected thereby); (viii) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Loans which shall be required
for Lenders or any of them to take any action hereunder; and (ix) amend or waive
this Section 11.2 or the definitions of the terms used in this Section 11.2
------------ ------------
insofar as the definitions affect the substance of this Section 11.2.
------------
Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent under this Agreement or any other Loan Document shall
be effective unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No notice to or demand on any Credit Party in
any case shall entitle such Credit Party or any other Credit Party to any other
or further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
------------
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, waiver or
termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the
consent of Requisite Lenders is obtained, but the consent of other
Lenders whose consent is
48
required is not obtained (each such Lender whose consent is not
obtained as described in this clause (i) or in clause (ii) below being
---------- -----------
referred to as a "Non Consenting Lender"), or
---------------------
(ii) requiring the consent of Requisite Lenders, the consent of
Lenders holding 50.1% of the aggregate Commitments is obtained, but
the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, Agent shall have the
right in its sole discretion (but shall be under no obligation) to purchase from
such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they
shall, upon Agent's request, sell and assign to Agent, all of the Commitments of
such Non-Consenting Lender for an amount equal to the principal balance of all
Loans held by the Non-Consenting Lender and all accrued interest and Fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Lender Assignment Agreement.
(e) Upon indefeasible payment in full in cash and performance of
all of the Obligations (other than indemnification Obligations under Section
-------
1.13) and termination of the Commitments, and so long as no suits, actions,
-----
proceedings or claims are pending or threatened against any Indemnified Person
asserting any damages, losses or liabilities that are Indemnified Liabilities,
Agent shall deliver to Borrower termination statements, termination letters
regarding bailee agreements and blocked account agreements and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.
11.3. Fees and Expenses. Borrower shall reimburse Agent for all out-
-----------------
of-pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in connection with the Loan
Documents and advice in connection therewith). Borrower shall reimburse Agent
(and, with respect to clauses (c), (d) and (e) below, each Lender) for all fees,
----------- --- ---
costs and expenses, including the fees, costs and expenses of counsel (including
the allocated cost of in-house counsel) or other advisors (including
environmental and management consultants) for advice, assistance, or other
representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person) in any
way relating to the Collateral, any of the Loan Documents or any other agreement
to be executed or delivered in connection therewith or herewith, whether as
party, witness, or otherwise, including any litigation, contest, dispute, suit,
case, proceeding or action, and any appeal or review thereof, in
49
connection with a case commenced by or against Borrower or any other Person that
may be obligated to Agent by virtue of the Loan Documents;
(d) any attempt to enforce any rights of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents;
(e) any work-out or restructuring of the Loans during the pendency
of one or more Events of Default, but only as to Persons who are Lenders as of
the Closing Date and who continue to hold 7.5% or more of the total Commitments;
(f) efforts to (i) consistent with the terms of the Loan Documents,
monitor the Loans or any of the other Obligations, (ii) consistent with the
terms of the Loan Documents verify, observe or assess any of the Credit Parties
or their respective affairs, and (iii) protect, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;
including, without limitation, all the attorneys' and other professional and
service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 11.3 shall be payable, on demand, by Borrower to Agent. Without
------------
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4. No Waiver. Agent's or any Lender's failure, at any time or
---------
times, to require strict performance by the Credit Parties of any provision of
this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of any Credit Party contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by Agent or any Lender, unless
such waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of Agent and Requisite Lenders and directed to
Borrower specifying such suspension or waiver.
11.5. Remedies. Agent's and Lenders' rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
50
11.6. Severability. Wherever possible, each provision of this
------------
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7. Conflict of Terms. Except as otherwise provided in this
-----------------
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.8. Authorized Signature. Until Agent shall be notified by Borrower
--------------------
to the contrary, the signature upon any Notice of Revolving Credit Advance,
Notice of Swing Line Advance, Notice of Continuation/Conversion or other notice
or certificate delivered in accordance herewith delivered pursuant hereto of an
officer of Borrower listed on Schedule 11.8 shall bind Borrower and be deemed to
-------------
be the act of Borrower affixed pursuant to and in accordance with resolutions
duly adopted by Borrower's Board of Directors.
11.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY
-------------
OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇▇
COUNTY, CITY OF CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER, AGENT AND LENDERS PERTAINING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM
--------
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF ▇▇▇▇ COUNTY,
CITY OF CHICAGO, ILLINOIS AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT SHALL
-------- -------
BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON
----- ---
51
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
----------
AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET
FORTH IN SCHEDULE J OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL
----------
BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10. Notices. Except as otherwise provided herein, whenever it is
-------
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
-------
11.10), (c) one (1) Business Day after deposit with a reputable overnight
------
courier with all charges, prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the parry to be notified and sent
to the address or facsimile number indicated on Schedule J or to such other
----------
address (or facsimile number) as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated on
Schedule J to receive copies shall in no way adversely affect the effectiveness
----------
of such notice, demand, request, consent, approval, declaration or other
communication.
11.11. Section Titles
--------------
. The Section titles and Table of Contents contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
11.12. Counterparts. This Agreement may be executed in any number
------------
of separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
--------------------
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
52
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND BORROWER
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14. Press Releases. Each Credit Party agrees that neither it nor
--------------
its Affiliates will in the future issue any press release or other public
disclosure using the name of GE Capital or its affiliates or referring to this
Agreement or the other Loan Documents without at least two (2) Business Days'
prior notice to GE Capital and without the prior written consent of GE Capital
unless (and only to the extent that) such Credit Party or Affiliate is required
to do so by law or regulation and then, in any event, such Credit Party or
Affiliate will consult with GE Capital before issuing such press release or
other public disclosure. Each Credit Party consents to the publication by Agent
of a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement and after such publication, Borrower
may make public disclosure of the same information set forth in the tombstone.
Furthermore, Borrower may make private disclosures to its suppliers of the
existence of this Agreement, the Maximum Amount hereunder, and the fact that GE
Capital acts as Agent hereunder. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.
11.15. Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment of the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11.16. Advice of Counsel. Each of the parties represents to each
-----------------
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
------------- -----
11.17. No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto
53
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
11.18. Confidentiality. Agent and Lenders shall maintain as
---------------
confidential all nonpublic information provided to them by the Credit Parties
for a period of two (2) years following the Commitment Termination Date,
provided that, Agent and Lenders may disclose such information (i) to Persons
-------- ----
employed or engaged by Agent or any Lender in evaluating, approving. structuring
or administering the Loans and the Commitments, (ii) to any bona fide assignee
or participant that has agreed to comply with the covenant contained in this
Section 11.18 (and any such bona fide assignee or participant may disclose such
-------------
information to Persons employed or engaged by them as described in clause (i)
----------
above), (iii) as required or requested by any Governmental Authority, (iv)
pursuant to legal process, or (v) in connection with the exercise of any remedy
under the Loan Documents; provided, further that, the foregoing restrictions
shall cease to apply to any information that becomes publicly available other
than by the actions of Agent, Lenders or any Persons described in clauses (i) or
-----------
(ii) above.
----
[signature pages follow]
54
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
WILSONS LEATHER HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Title: Treasurer
---------------------------------
Revolving Loan Commitment: GENERAL ELECTRIC CAPITAL
$45,000,000(including $10,000,000 CORPORATION, as Agent, Lender and Swing
Swing Line Commitment) Line Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Title: Duly Authorized Signatory
---------------------------------
Revolving Loan Commitment: BANKBOSTON, N.A., as Lender
$10,000,000
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: Managing Director
---------------------------------
Revolving Loan Commitment: FLEET BUSINESS CREDIT CORPORATION,
$10,000,000 as Lender
By: /s/ ▇▇▇▇▇▇ ▇. Master
------------------------------------
Title: Vice President
---------------------------------
Revolving Loan Commitment: THE CIT GROUP/BUSINESS CREDIT, INC., as
$10,000,000 Lender
By: /s/ ▇▇▇▇▇ ▇.
-----------------------------------
Title: Vice President
--------------------------------
S-1
Revolving Loan Commitment: FIRST UNION NATIONAL BANK, as Lender
$20,000,000
By: /s/ J.
-----------------------------------
Title: AVP
--------------------------------
Revolving Loan Commitment: U.S. BANK NATIONAL ASSOCIATION,
$15,000,000 as Lender
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: Assistant Vice President
---------------------------------
Revolving Loan Commitment ▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
$15,000,000 as Lender
By: /s/ AAP
------------------------------------
Title: Vice President
---------------------------------
S-2
The undersigned are executing this Credit Agreement in their capacity as
Credit Parties, but only as to the representations, warranties and covenants
contained in Sections 3, 5 and 6:
---------- - -
Wilsons The Leather Experts Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: Treasurer
--------------------------------
Wilsons Center, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: Treasurer
--------------------------------
Rosedale Wilsons, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: Treasurer
--------------------------------
River Hills Wilsons, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: Treasurer
--------------------------------
Bermans The Leather Experts Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: Treasurer
--------------------------------
S-3
SCHEDULE A
DEFINITIONS
-----------
Capitalized terms used in the Agreement shall have (unless otherwise
provided elsewhere in the Agreement the following respective meanings and all
section references in the following definitions shall refer to Sections of the
Agreement:
"Account Debtor" shall mean any Person who may become obligated to any
--------------
Credit Party under, with respect to, or on account of, an Account.
"Accounts' shall mean all "accounts, as such term is defined in the
--------
Code, now owned or hereafter acquired by any Credit Party and, in any event,
including, without limitation, (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter
received or acquired by or belonging or owing to any Credit Party, whether
rising out of goods sold or services rendered by it or from any other
transaction (including, without limitation, any such obligations which may be
characterized as an account or contract right under the Code), (b) all of each
Credit Party's rights in, to and under all purchase orders or receipts now owned
or hereafter acquired by it for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including,
without limitation, unpaid sellers' right of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including, without limitation, all rights to receive the
proceeds of said purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Advance" shall mean any Revolving Credit Advance or Swing Line
-------
Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person
---------
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power in the election of directors of such Person, (b)
each Person that controls, is controlled by or is under common control with such
Person or (c) each of such Person's officers, directors, joint venturers and
partners. For the purposes of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of its management of policies, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that the term
-------- -------
"Affiliate" shall specifically exclude Agent and each Lender.
---------
"Agent" shall mean GE or its successor appointed pursuant to Section
----- -------
9.7.
---
A-1
"Agreement" shall mean the Credit Agreement by and among Borrower, GE
---------
Capital, as Lender, Swing Line Lender and Agent and the other Lenders signatory
from time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the recitals to
----------
the Agreement.
"Applicable Index Margin" shall mean a per annum rate of interest
-----------------------
payable in addition to the Index Rate on Index Rate Loans, determined by
reference to Section 1.6.
-----------
"Applicable LIBOR Margin" shall mean a per annum rate of interest
-----------------------
payable in addition to the LIBOR Rate on LIBOR Rate Loans, determined by
reference to Section 1.6.
-----------
"Applicable L/C Margin" shall mean the per annum letter of credit fee
---------------------
payable with respect to Letter of Credit Obligations and Eligible Trade L/C
Obligations, determined by reference to Section 1.6.
-----------
"Applicable Swing Line Margin" shall mean the per annum rate of
----------------------------
interest payable in addition to the Commercial Paper Rate on Swing Line Loans,
determined by reference to Section 1.6.
-----------
"Approved Shipper" shall mean any reputable and creditworthy shipper
----------------
or freight forwarder transporting finished goods Inventory from overseas to
Borrower's Distribution Centers or, at Borrower's direction, to Store
Guarantors' Stores that has entered into a bailee letter with Agent on terms
acceptable to Agent regarding the in-transit Inventory.
"Bermans" means Bermans The Leather Experts Inc., a Delaware
-------
corporation.
"Borrower" shall have the meaning assigned thereto in the recitals to
--------
the Agreement.
"Borrowing Availability" shall have the meaning assigned to it in
----------------------
Section 1.1(a).
--------------
"Borrowing Base" shall mean, as of any date of determination, the sum
--------------
of (i) during the period of November 1st of each year to August 31st of the
following year, sixty percent (60%) of the book value of Eligible Inventory
(excluding Lay Away Inventory) or during the period of September 1 through
October 31 of each year, sixty-five percent (65%) of the book value of Eligible
Inventory (excluding Lay Away Inventory), plus a seasonal over-advance of
----
$7,500,000, plus (ii) sixty percent (60%) of any Lay Away Inventory valued as
follows: unpaid purchase price divided by .625 x .50.
"Borrowing Base Certificate" shall mean a certificate to be executed
--------------------------
and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
--------------
"Business Day" shall mean any day that is not a Saturday, a Sunday or
------------
a day on which banks are required or permitted to be closed in the State of
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Illinois or the State of Minnesota and in reference to LIBOR Loans shall mean
any such day that is also a LIBOR Business Day.
"Capital Expenditures" shall mean all payments during any measuring
--------------------
period (including the principal portion of payments under Capital Leases,
installment purchase agreements and other similar purchase money financing
arrangements) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
-------------
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet.
"Capital Lease Obligation" shall mean, with respect to any Capital
------------------------
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Cash Management Systems" shall have the meaning assigned to it in
-----------------------
Section 1.8.
-----------
"Change of Control" shall mean any event, transaction or occurrence as
-----------------
a result of which (a) Ultimate Parent shall cease to own and control all of the
economic and voting rights associated with all of the outstanding capital stock
of First Intermediate Parent or (b) First Intermediate Parent shall cease to own
and control all of the economic and voting rights associated with all of the
outstanding capital stock of each of its direct and indirect Subsidiaries,
except as permitted under Section 6.1 and Section 6.8 of the Agreement and
----------- ----------
except for the Joint Ventures and Foreign Subsidiaries or (c) a "Change of
Control" (as such term is defined in the Senior Notes Documents) shall occur or
(d) any person or group of persons (within the meaning of the Securities
Exchange Act of 1934, as amended, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 30% or more
of the issued and outstanding shares of capital Stock of Ultimate Parent having
the right to vote for the election of directors of Ultimate Parent under
ordinary circumstances or (e) during any period of twelve consecutive calendar
months, individuals who at the beginning of such period constituted the board of
directors of Ultimate Parent (together with any new directors whose election by
the board of directors of Ultimate Parent or whose nomination for election by
stockholders of Ultimate Parent was approved by a vote of at least a majority of
the directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office.
"Charges" shall mean all federal, state, county, city, municipal,
-------
local, foreign or other governmental taxes (including, without limitation, taxes
owed to the PBGC at the time due and payable), levies, assessments, charges,
liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any
A-3
Credit Party, (b) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is
-------------
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Closing Date" shall mean May 24, 1999.
------------
"Code" shall mean the Uniform Commercial Code as the same may, from
----
time to time, be enacted and in effect in the State of Illinois; provided,
--------
however, in the event that, by reason of mandatory provisions of law, any or all
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of the attachment, perfection or priority of Agent's or any Lender's security
interest in any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of Illinois, the term
"Code" shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Collateral" shall mean the property covered by the Security Agreement
----------
and the Supplemental Security Agreement and the other Collateral Documents and
any other personal property, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"Collateral Documents" shall mean the Security Agreement, the
--------------------
Supplemental Security Agreement, the Consignment Agreement, the Pledge
Agreements, the Guaranties, the Patent Security Agreement, the Trademark
Security Agreement, the Copyright Security Agreement and all similar agreements
entered into guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the
------------------
Collateral referred to in Schedule H.
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"Collection Account" shall mean that certain account of Agent, account
------------------
number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Bankers Trust Company in New York or
any substitute Collection Account established in accordance with Schedule E
----------
hereto.
"Commercial Paper Rate" shall mean the month-end published rate for
---------------------
30-day Dealer Commercial Paper (high grade unsecured notes sold through dealers
by major corporations in multiples of $1,000) as from time to time reported in
the "Money Rates" column in The Wall Street Journal. The rate of interest
-----------------------
applicable to the Swing Line Loan shall for each month be based upon the
Commercial Paper Rate as of the last Business Day of the preceding month.
"Commitments" shall mean (a) as to any Lender, the aggregate of such
-----------
Lender's Revolving Loan Commitment and/or Swing Line Commitment as set forth on
the signature page to the Agreement or in the most recent Lender Assignment
Agreement executed by such Lender
A-4
and (b) as to all Lenders, the aggregate of all Lenders' Revolving Loan
Commitments and Swing Line Commitments, which aggregate commitments shall be One
Hundred Twenty-Five Million Dollars ($125,000,000) on the Closing Date, as such
amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Commitment Termination Date" shall mean the earliest of (a) May 24,
---------------------------
2002, (b) the date of termination of Lenders' obligations to make Advances
and/or incur Letter of Credit Obligations and Eligible Trade L/C Obligations or
permit existing Loans to remain outstanding pursuant to Section 8.2(b), and (c)
--------------
the date of indefeasible prepayment in full by Borrower of the Loans and the
cancellation and return of all Letters of Credit or the cash collateralization
of all Letter of Credit Obligations and Eligible Trade L/C Obligations pursuant
to Schedule B, and the permanent reduction of the Revolving Loan Commitment and
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the Swing Line Commitment to zero dollars ($0), in accordance with the
provisions of Section 1.3(c).
--------------
"Concentration Account" shall have the meaning assigned to it on
---------------------
Schedule E.
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"Consignment Agreement" shall mean the Master Consignment Agreement
---------------------
dated May 25, 1996 among Borrower and all of the Store Guarantors, as amended.
"Contracts" shall mean all "contracts," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including,
without limitation, any and all agreements relating to the terms of payment or
the terms of performance of any Account.
"Credit Parties" shall mean Ultimate Parent, First Intermediate
--------------
Parent, Second Intermediate Parent, Third Intermediate Parent, Borrower, and
each other Store Guarantor.
"Default" shall mean any event which, with the passage of time or
-------
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section
------------ -------
1.5(d).
------
"Distribution Center" shall mean the warehouse and distribution center
-------------------
owned by Borrower or owned by Bermans and leased to and operated by Borrower,
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the
distribution center owned by OIRE Minnesota, L.L.C., as successor-in-interest to
Opus Northwest, L.L.C., and leased to and operated by Borrower located in Maple
Grove, Minnesota, and "Distribution Centers" shall mean both of the foregoing,
--------------------
collectively.
"Documents" shall mean any "documents," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars or $" shall mean lawful currency of the United States of
------------
America.
A-5
"EBIT" shall mean, with respect to Ultimate Parent for any fiscal
----
period or periods, without duplication, consolidated net income from operations
before Interest Charges and income taxes determined in accordance with GAAP.
"EBIT/Cash Interest Coverage" shall mean with respect to Ultimate
---------------------------
Parent, as of the last day of any Fiscal Quarter for the four Fiscal Quarters
then ended (x) EBIT divided by (y) cash Interest Charges for such period.
"EBITDA" shall mean, with respect to Ultimate Parent for any fiscal
------
period or periods (without duplication), consolidated net income from operations
before Interest Charges, income taxes, depreciation and amortization determined
in accordance with GAAP.
"Eligible In-Transit Inventory" shall mean Inventory which is in-
-----------------------------
transit from the manufacturer thereof to the Distribution Centers or by drop
ship to one or more Stores operated by a Store Guarantor and reflected on
Borrower's monthly balance sheet as in-transit inventory. In furtherance of and
without limiting the foregoing: Eligible In-Transit Inventory shall be limited
to finished goods (i) in the possession of an Approved Shipper under contract
with Borrower and in which Borrower has good title; (ii) as to which Agent for
the benefit of Lenders has a first priority security interest through
constructive possession by means of a bailee agreement with an Approved Shipper;
(iii) which have been accepted by Borrower (F.O.B. shipping point) as conforming
goods and as to which the L/C Issuer has received an inspection certificate
signed by Borrower's agent or employee; (iv) which are fully insured against
loss under insurance naming Agent as loss payee for the benefit of Lenders; and
(v) as to which the purchase price has been paid by a draw under a corresponding
Eligible Trade L/C or otherwise paid.
"Eligible Inventory" shall mean finished goods and Lay Away Inventory
------------------
valued on a first-in, first-out basis (at the lower of cost or market) in
accordance with GAAP, net of Reserves, in which Agent, on behalf of Lenders, has
a first priority security interest, plus Eligible In-Transit Inventory valued at
----
book value in accordance with GAAP.
"Eligible Trade L/C's" shall mean, subject to the further conditions
--------------------
contained in Section 6.19 of the Agreement, trade letters of credit issued by
------------
the L/C Issuer for the account of Borrower for payment of the purchase price of
finished goods inventory which will be Eligible In-Transit Inventory upon
presentation of a draft under that trade letter of credit.
"Eligible Trade L/C Obligations" shall mean all outstanding
------------------------------
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent with respect to
any Eligible Trade L/C. The amount of any such Eligible Trade L/C Obligations
shall equal the maximum amount which may be payable by Agent or Lenders
thereupon or pursuant thereto.
"Environmental Laws' shall mean all federal, state, local and foreign
------------------
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amend or supplemented from time to time, and any applicable
judicial or administrative interpretation
A-6
thereof, including any applicable judicial or administrative order, consent
decree or judgment, relative to the applicable real estate, relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. (S)(S) 9601 et seq.) ("CERCLA"); the Hazardous Material
------
Transportation Act, as amended (49 U.S.C. (S)(S) 1801 et seq.); the U.S.C.
------
Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 (S)(S) 136 et
--
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. (S)(S)
---
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C.
------
(S)(S) 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. (S)(S) 740 et
------ --
seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. (S)(S)
---
1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
------
(S)(S) 651 et seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (42
------
U.S.C. (S)(S) 300(f) et seq.), and any and all regulations promulgated
------
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
-----------------------------------
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all fees, disbursements and expenses of counsel, experts and consultants and
costs of investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim, suit, action or demand by any person
or entity, whether based in contract, tort, implied or, express warranty, strict
liability, criminal or civil statute or common law (including any thereof
arising under any Environmental Law, permit, order or agreement with any
Governmental Authority) and which relate to any health or safety condition
regulated under any Environmental Law or in connection with any other
environmental matter or Release, threatened Release or the presence of a
Hazardous Material or threatened Release of a Hazardous Material.
"Environmental Permits" shall mean all permits, licenses,
---------------------
administrative orders, consent orders, consent decrees, governmental agency
agreements, or other written documents detailing required environmental
performance expected of or permitted by any Credit party by Governmental
Authority.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
-----
(or any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any
---------------
trade or business (whether or not incorporated) which, together with such Credit
Party, are treated as s single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC with respect to any period after the Closing Date.
"ERISA Event" shall mean, with respect to any Credit Party or any
-----------
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b)
A-7
the withdrawal of any Credit Party or ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041 of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status.
"ESOP" shall mean a Plan which is intended to satisfy the requirements
----
of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section
----------------
8.1.
"Fees" shall mean any and all fees payable to Agent or any Lender
----
pursuant to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated income statement,
--------------------
statements of cash flows and balance sheets of Ultimate Parent and/or its
Subsidiaries delivered in accordance with Section 3.4 of the Agreement and
-----------
Schedule G to the Agreement.
----------
"First Intermediate Parent" shall mean Wilsons Center, Inc., a
-------------------------
Minnesota corporation.
"Fiscal Month" shall mean any of the monthly accounting periods of
------------
Ultimate Parent.
"Fiscal Quarter" shall mean any of the four 13 calendar week
--------------
accounting periods of Ultimate Parent ending on or about the last day of
January, April, July and October of each year.
"Fiscal Year" shall mean any of the annual accounting periods of
-----------
Ultimate Parent ending on the Saturday closest to the last day of January of
each year.
"Fixed Charges" shall mean, for any fiscal period with respect to
-------------
Ultimate Parent and its Subsidiaries on a consolidated basis, the aggregate of
all Interest Charges paid in cash during such period, plus (a) scheduled
payments of principal with respect to Indebtedness during such period, plus (b)
lease payments with respect to Stores (including base rent, percentage rent,
common area payments and real estate taxes) during such period, plus (c) the
provision for income taxes with respect to such period.
A-8
"Fixed Charges Coverage Ratio" shall mean, with respect to Ultimate
----------------------------
Parent and its Subsidiaries on a consolidated basis for any fiscal period, the
ratio of (x) the sum of EBITDA, plus lease payments with respect to Stores
----
(including base rent, percentage rent, common area payments and real estate
taxes) during such period, less the unfinanced portion of Capital Expenditures
----
during such period to (y) Fixed Charges.
"Foreign Subsidiaries" shall mean Wilsons (UK) Limited, Wilsons
--------------------
Leather Gatsland Limited, Wilsons Leather Gatsair Limited, Wilsons Leather of
Hong Kong Limited, and any other Subsidiary of the Ultimate Parent incorporated
in a jurisdiction outside of the United States.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America as from time to time in effect, consistently applied.
"GE Capital" shall mean General Electric Capital Corporation, a New
----------
York corporation.
"GE Capital Fee Letter" shall mean that certain letter, dated as of
---------------------
the Closing Date, between GE Capital and Borrower with respect to certain Fees
to be paid from time to time by Borrower to GE Capital.
"General Intangibles" shall mean any "general intangibles" as such
-------------------
term is defined in the Code, now owned or hereafter acquired by any Credit Party
and in any event including without limitation all right, title and interest
which such Credit Party may now or hereafter have in or under any Contract
(including the Consignment Agreement, as amended or modified from time to time),
any Licenses, including, without limitation, all customer lists, Trademarks,
service marks, tradenames, business names, corporate names, trade styles, logos
and other source or business identifiers, and all applications therefor and
reissues, extensions or renewals thereof, rights in intellectual property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including all goodwill associated with any Trademark
registration, or Trademark licensed under any Trademark License), all rights and
claims in or under insurance policies (including, without limitation, insurance
for fire, damage, loss and casualty, whether covering personal property,
tangible rights or intangibles, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, tax refunds, rights
to receive tax refunds and other payments and rights of indemnification.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, and any agency, department or
other entity exercising executing, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
A-9
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
-----------------------
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligation") of any other Person (the "primary obligor") in
------------------ ---------------
any manner, including any obligation or arrangement of such Person (a) to
purchase or repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made or (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Parent Guaranty, the Store
----------
Guarantors' Guaranty and any other guaranty executed by any Guarantor in favor
of Agent and Lenders in respect of the Obligations.
"Guarantors" shall mean Ultimate Parent, First Intermediate Parent,
----------
Second Intermediate Parent, Third Intermediate Parent, each other Store
Guarantor, and each other Person, if any, which executes a guarantee or other
similar agreement in favor of Agent in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" shall mean any substance, material or waste, the
------------------
generation, handling, storage, treatment or disposal of which is regulated by or
forms the basis of liability now or hereafter under, any Governmental Authority
in any jurisdiction in which Borrower or any Subsidiary thereof has owned,
leased, or operated real property or disposed of hazardous materials, or by any
Federal government authority, including, without limitation, any material or
substance which is (a) defined as a "solid waste," "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" or other similar term or phrase under any Environmental Laws,
(b) petroleum, or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), any radioactive substance, methane, volative hydrocarbons or
any industrial solvent, (c) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. (S)(S) 1251 et seq. (33 U.S.C.
------
(S)(S) 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.
(S)1317), (d) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901, et seq. (42 U.S.C.
------
(S) 6903), or (e) defined as a "hazardous substance" pursuant to Section 1012 of
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. (S) 9601 et seq. (42 U.S.C. (S) 9601).
------
"Indebtedness" of any Person shall mean without duplication (a) all
------------
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for
A-10
which is deferred six (6) months or more, but excluding obligations to trade
creditors incurred in the ordinary course of business that are not overdue by
more than six (6) months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of credit, bankers'
acceptances and surety bonds, whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property ), (e)
all Capital Lease Obligations, (f) all obligations of such Person under
commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"Index Rate" shall mean the higher of (a) the highest of the most
----------
recently published or announced prime, corporate, base, reference or similar
benchmark rate, however designated, announced by any of the five (5) largest
member banks of the New York Clearing House Association and (b) one half of one
percent (.5%) per annum over the Federal funds rate, in each case as of the date
of determination. Changes in the rate of interest applicable to Index Rate
Loans shall occur simultaneously with changes in the Index Rate.
"Index Rate Loan" shall mean the Revolving Loan or any portion thereof
---------------
bearing interest by reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined in
-----------
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
including, without limitation, all certificated securities, all certificates of
deposit, and all notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Trademarks,
---------------------
trade secrets and customer lists.
"Interest Charges" shall mean, with respect to any Person for any
----------------
fiscal period, the amount which, in conformity with GAAP, would be set forth
opposite the caption "Interest Expense" (or any like caption) on a consolidated
income statement of such Person and all other Persons with which such Person's
Financial Statements are to be consolidated in accordance with GAAP for the
relevant period ended on such date, including without limitation, in the case of
Ultimate Parent and its Subsidiaries, the L/C Fee and Non-Use Fee, net of
interest income and investment income.
A-11
"Interest Payment Date" means (a) as to any Index Rate Loan and the
---------------------
Swing Line Loan, the first Business Day of each month to occur while such Loan
is outstanding, and (b) as to each LIBOR Loan, the last day of the LIBOR Period
applicable thereto; provided, however, that, in addition to the foregoing, each
-------- -------
of (x) the date upon which all of the Commitments have been terminated and the
Loans have been paid in full and (y) the Commitment Termination Date shall be
deemed to be an "Interest Payment Date" with respect to any interest which is
then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is defined in the
---------
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and in any event including, without limitation, all inventory, merchandise,
goods and other personal property which are held by or on behalf of any Credit
Party for sale or lease or are furnished or are to be furnished under a contract
of service, or which constitute raw materials, work in process or materials used
or consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including, without limitation, all other supplies.
"Investment Property" shall mean all "investment property," as such
-------------------
term is defined in the Code, now or hereafter owned or acquired by, any Credit
Party, wherever located an, in any event, including, without limitation: (a)
all securities, whether certificated or uncertificated, including, without
limitation, stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit and mutual funds shares; (b) all
securities entitlements of any Credit Party, including, without limitation, all
rights of any Credit Party to any securities account and any free credit balance
or other money owing by any securities intermediary with respect to any such
account; (c) all securities accounts held by any Credit Party; (d) all commodity
contracts held by any Credit Party and (e) all commodity accounts held by any
Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
---
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
---
thereto.
"Joint Venture" shall mean any business enterprise, regardless of
-------------
form, domestic or foreign, in which Ultimate Parent or any of its Subsidiaries
has an equity interest which constitutes less than 100% of the total equity
thereof (other than any directors qualifying shares or similar de minimus
ownership interests required by the laws of any state or country), which
business enterprise is formed or acquired for business purposes permitted hereby
(including a Non-Core Business).
"Lay Away Inventory" shall mean finished goods as to which retail
------------------
Store customers have made a deposit and possession of which is retained by a
Store Guarantor pending payment in full of the purchase price and which has been
removed from inventory account records pursuant to the recording of a sale
transaction.
A-12
"L/C Availability" shall have the meaning ascribed thereto in Section
---------------- -------
1.2 of the Agreement.
---
"L/C Issuer" shall have the meaning assigned to such term in Schedule
---------- --------
B.
-
"Lender Assignment Agreement" shall mean an agreement substantially in
---------------------------
form attached hereto as Exhibit 9.1(a) and otherwise in form and substance
--------------
satisfactory to, and acknowledged by, Agent whereby a portion of any or all of
the Commitments are assigned to a Lender after the Closing Date.
"Lenders" shall mean GE Capital, the other Lenders named on the
-------
signature page of the Agreement including without limitation the Swing Line
Lender, and, if any such Lender shall decide to assign all or any portion of the
Obligations, such term shall include such assignee.
"L/C Fee" shall have the meaning ascribed thereto in Schedule B to the
------- ----------
Agreement.
"L/C Sublimit" shall mean $85,000,000.
------------
"Letter of Credit Obligations" shall mean all outstanding obligations
----------------------------
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of a reimbursement agreement or guaranty by Agent with respect to any
Letter of Credit. The amount of such Letter of Credit Obligations shall equal
the maximum amount which may be payable by Agent or Lenders thereupon or
pursuant thereto. This term expressly excludes Eligible Trade L/C Obligations.
"Letters of Credit" shall mean trade or standby letters of credit
-----------------
other than Eligible Trade L/Cs issued for the account of Borrower by L/C Issuer,
and bankers' acceptances issued by Borrower, for which Agent and Lenders have
incurred Letter of Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks in the
------------------
city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing interest
----------
by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
------------
commencing on a LIBOR Business Day selected by Borrower pursuant to this
Agreement and ending seven (7) days or, one, two or three months thereafter, as
selected by Borrower in an irrevocable notice to Agent as set forth in Section
--------
1.5(e); provided that the foregoing provision relating to LIBOR Periods is
------ --------
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not
a LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such LIBOR
A-13
Period into another calendar month in which event such LIBOR Period shall
end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior to
such date;
(c) any LIBOR Period pertaining to a LIBOR Loan for one month or
more that begins on the last LIBOR Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar
month at the end of such LIBOR Period) shall end on the last LIBOR Business
Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such
Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be no
more than ten (10) separate LIBOR Loans outstanding at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
----------
equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, two (2) LIBOR Business Days prior to the beginning of
each LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
-----
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations
of the Board of Governors of the Federal Reserve system or other
governmental authority having jurisdiction with respect thereto, as now and
from time to time in effect) for Eurocurrency funding (currently referred
to as "Eurocurrency liabilities" in Regulation D of such Board) which are
required to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate
News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to
Agent and Borrower.
"License" shall mean any Trademark License or other written license of
-------
rights or interests in Trademarks now held or hereafter acquired by any Credit
Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
----
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or
A-14
nature whatsoever (including any synthetic lease or title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
---------- ------------
"Loan Account" shall have the meaning assigned to it in Section 1.12.
------------ ------------
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
--------------
Documents and all other agreement, instruments, documents and certificates
identified in the Schedule of Documents executed and delivered to, or in favor
of, Agent and/or Lenders and including (without limitation) all other pledges,
powers of attorney, consents, assignments, contracts, notices, and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Material Credit Party, and delivered to Agent or any Lender in connection
with the Agreement or the transactions contemplated hereby. Any reference in
the Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to such Agreement as
the same may be in effect at any and all times such reference becomes operative.
"Loan Parties" shall mean Ultimate Parent, First Intermediate Parent,
------------
Borrower, Second Intermediate Parent, and Third Intermediate Parent.
"Loans" shall mean the Revolving Loan and the Swing Line Loan.
-----
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, assets, operations or financial or other condition of the Loan
Parties considered as a whole, (b) Borrower's ability to pay any of the Loans or
any of the other Obligations in accordance with the terms thereof, (c) any
material part of the Collateral or Agent's Liens, on behalf of itself and
Lenders, on such Collateral or the priority of such Liens, or (d) Agent's or any
Lender's rights and remedies under the Agreement and the other Loan Documents.
For purposes of the foregoing, any event or occurrence which results or could
reasonably be expected to result in uninsured losses, costs or liabilities in
excess of 15% of the Borrowing Base as of any date of determination shall be
deemed to have a Material Adverse Effect.
"Material Credit Party" shall mean Ultimate Parent, First Intermediate
---------------------
Parent, Second Intermediate Parent, Third Intermediate Parent, Borrower and each
other Store Guarantor that operates more than twelve (12) Stores.
"Maximum Amount" shall mean, at any particular time, an amount equal
--------------
to the Revolving Loan Commitment (including as a subpart thereof the Swing Line
Commitment) of all Lenders.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making or is obligated
A-15
to make contributions on behalf of participants who are or were employed by any
of them after the Closing Date.
"Net Borrowing Availability" shall mean, as of the date of
--------------------------
determination thereof, the Borrowing Base at such time less the sum of (i) the
----
then outstanding aggregate Revolving Credit Advances, plus (ii) 100% of Letter
----
of Credit Obligations and (x) 35% of Eligible Trade L/C Obligations for the
period September 1 to October 31 of each year or (y) 40% of Eligible Trade L/C
Obligations at all other times, plus (iii) the then outstanding Swing Line Loan.
----
"Non-Core Business" shall mean any retail or wholesale business other
-----------------
than (i) the retail leather goods and accessories business and (ii) businesses
subject to substantial federal or state regulatory schemes that are not
applicable to retail and wholesale businesses generally.
"Non-use Fee" shall have the meaning assigned to it in Section 1.9(b).
----------- --------------
"Notes" shall mean the Revolving Notes and the Swing Line Note,
-----
collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned to
---------------------------------
it in Section 1.5(e).
--------------
"Notice of Revolving Credit Advance" shall have the meaning assigned
----------------------------------
to it in Section 1.1(a).
--------------
"Notice of Swing Line Advance" shall have the meaning assigned to it
----------------------------
in Section 1.1(b)(i).
-----------------
"Obligations" shall mean all loans, advances, debts, liabilities and
-----------
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest
(including, without limitation, all interest which accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of, or
for the reorganization of any Credit Party, whether or not allowed in such
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"Overadvance" shall have the meaning assigned to it in Section
----------- -------
1.1(a)(iii).
-----------
"Parent Guaranty" shall mean the Amended and Restated Guaranty
---------------
executed and delivered by Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent, as amended, modified or
restated from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
successor thereto.
A-16
"Permitted Encumbrances" shall mean the following encumbrances: (a)
----------------------
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2; (b) pledges
-----------
or deposits securing obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation; (c)
pledges or deposits securing bids, tenders, contracts, other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee
made in the ordinary course of business; (d) deposits securing statutory
obligations of any Credit Party; (e) workers', mechanics' suppliers' or similar
liens arising in the ordinary course of business; (f) carriers', warehousemen's
or other similar possessory liens arising in the ordinary course of business;
(g) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (h) any attachment or judgment
lien not constituting an Event of Default under Section 8.1(j) of the Agreement;
--------------
(i) zoning restrictions, easements, licenses, or other restrictions on the use
of any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (j) Liens existing on the Closing Date and
listed on Schedule 6.7 hereto; (k) presently existing or hereinafter created
------------
Liens in favor of Agent, on behalf of Lenders; and (l) Liens created after the
date hereof, by conditional sale or other title retention agreements (including,
without limitation, Capital Leases) or in connection with purchase money
Indebtedness with respect to assets acquired by any Credit Party in the ordinary
course of business, involving the incurrence of an aggregate amount of purchase
money Indebtedness and Capital Lease Obligations of not more than $10,000,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within thirty (30) days following such purchase and does not exceed
100% of the purchase price of the subject assets).
"Permitted Investment" shall have the meaning assigned to it in
--------------------
Section 6.1.
"Person" shall mean any individual, sole proprietorship, partnership,
------
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean, at any time after the Closing Date, an employee
----
benefit plan, as defined in Section 3(3) of ERISA, which any Credit Party
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any Credit Party.
"Pledge Agreements" shall mean the separate Pledge Agreements,
-----------------
executed by each of Ultimate Parent, First Intermediate Parent and Second
Intermediate Parent with respect to the Stock of their respective Subsidiaries
and by Third Intermediate Parent with respect to the Stock of Borrower, the
Store Guarantors, Bermans and Wilsons International, Inc., as amended, modified
or restated from time to time.
"Prior Commitments" shall have the meaning assigned thereto in the
-----------------
recitals to the Agreement.
"Prior Credit Agreement" shall have the meaning assigned thereto in
----------------------
the recitals of the Agreement.
"Prior Loans" shall have the meaning assigned thereto in the recitals
-----------
of the Agreement.
"Proceeds" shall mean "proceeds," as such term is defined in the Code
--------
and, in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties for past, present or future infringement
of any Trademark or Trademark License, or for injury to the goodwill associates
with any Trademark or Trademark License, (d) any recoveries by any Credit Party
against third parties with respect to any litigation or dispute concerning any
of the Collateral, and (e) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral upon disposition or
otherwise.
"Projections" shall mean (i) for the Fiscal Year ending in January of
-----------
2000, Ultimate Parent's forecasted consolidated (a) balance sheets, (b) profit
and loss statements, (c) cash flow statements, and (d) capitalization
statements; and (ii) for the Fiscal Years ending in January of 2001, 2002 and
2003, Ultimate Parent's forecasted consolidated profit and loss statements, in
each case prepared in a manner consistent with the historical Financial
Statements of Ultimate Parent together with appropriate supporting details and a
statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to
--------------
any Lender, or with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment and Swing Line Commitment of that
Lender by (ii) the aggregate Revolving Loan Commitments and Swing Line
Commitment of all Lenders.
"Qualified Plan" shall mean a Plan which is intended to be tax-
--------------
qualified under Section 401(a) of the IRC maintained by a Credit Party after the
Closing Date.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
----------- -----------
"Refunded Swing Line Loan" shall have the meaning assigned to it in
------------------------
Section 1.1(b)(iii).
-------------------
"Release" shall mean, as to any Person, any release, spill, emission,
-------
leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping
of, leaching or migration of Hazardous Materials in the indoor or outdoor
environment by such person, including the
movement of Hazardous Material through or in the air, soil, surface water,
ground water or property, which, in any event, has resulted in the creation of
any material unpaid liability for such Person.
"Requisite Lenders" shall mean (a) Lenders having more than sixty-six
-----------------
and two-thirds percent 66 2/3%) of the Commitments of all Lenders, or (b) if the
Commitments have been terminated, more than sixty-six and two-thirds percent (66
2/3%) of the aggregate outstanding amount of the Loans (with Swing Line Loans
being attributed to the Lenders participating therein) and Letter of Credit
Obligations and Eligible Trade L/C Obligations.
"Reserves" shall mean, for purposes of calculating the Borrowing Base,
--------
(a) reserves established by Agent from time to time against the Borrowing Base
pursuant to Section 5.9 of the Agreement, (b) reserves established pursuant to
-----------
Section 5.4(c) of the Agreement, (c) reserves established pursuant to Section
-------------- -------
1.11(c) of the Agreement and (d) subject to Section 1.7 of the Agreement, such
------- -----------
other reserves which Agent may, in its reasonable credit judgment, establish
from time to time. Without limiting the generality of the foregoing, shrinkage
Reserves consistent with those established by Borrower under GAAP, Reserves
established to ensure the payment of accrued and unpaid customs and shipping
charges with respect to Eligible In-Transit Inventory, a lay-away payment refund
Reserve with respect to Lay-Away Inventory, and a sales and use tax Reserve for
sales and use taxes due within ninety (90) days shall be deemed to be a
reasonable exercise of Agent's credit judgment.
"Restricted Payment" shall mean (a) the declaration or payment of any
------------------
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the Purchase, redemption, defeasance, sinking fund
or other retirement or a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Senior Notes; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages, or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person; and (g) any payment of management fees (or other
fees of a similar nature) by such Person to any Stockholder of such Person or
their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a
--------------------
"welfare plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant which is maintained by
a Credit Party, after the Closing Date.
A-19
"Revolving Credit Advance" shall have the meaning assigned to it in
------------------------
Section 1.1(a)(i).
-----------------
"Revolving Loan" shall mean as the context may require, at any time,
--------------
the sum of (i) the aggregate amount of Revolving Credit Advances outstanding to
Borrower plus (ii) the aggregate Letter of Credit Obligations and Eligible Trade
----
L/C Obligations incurred on behalf of Borrower.
"Revolving Loan Commitment" shall mean (a) as to any Lender, the
-------------------------
aggregate commitment of such Lender to make Revolving Credit Advances, Swing
Line Advances and/or incur Letter of Credit Obligations and Eligible Trade L/C
Obligations as set forth in the signature page to the Agreement or in the most
recent Lender Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances, Swing Line Advances and/or incur Letter of Credit Obligations and
Eligible Trade L/C Obligations, which aggregate commitment shall be One Hundred
Twenty-Five Million Dollars ($125,000,000) on the Closing Date, as such amount
may be adjusted, if at any, from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
-------------- -------
1.1(a)(ii).
----------
"Schedule of Documents" shall mean the schedule, including all
---------------------
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Schedule F.
----------
"Seasonal Over-Advance" shall mean the $7,500,000 seasonal over-
---------------------
advance described in clause (ii) of the term "Borrowing Base."
"Second Intermediate Parent" shall mean Rosedale Wilsons, Inc., a
--------------------------
Minnesota corporation.
"Security Agreement" shall mean the Security Agreement dated May 25,
------------------
1996 entered into among Agent, on behalf of itself and Lenders, and each Credit
Party thereto, as amended, modified or restated from time to time.
"Senior Notes" shall mean senior unsecured notes issued by Ultimate
------------
Parent and guaranteed by Borrower, and all of the Guarantors (other than
Ultimate Parent), in the initial principal amount of $75,000,000, bearing
interest at the rate of 11-1/4% per annum and maturing on August 15, 2004.
"Senior Notes Documents" shall mean the Senior Notes, the Indenture
----------------------
dated as of August 18, 1997 between Ultimate Parent and Norwest Bank, Minnesota,
N.A., as trustee, governing the terms and issuance of the Senior Notes, and all
guaranties executed and delivered by Subsidiaries of Ultimate Parent with
respect to the Senior Notes as the same may be amended, supplemented, restated
or otherwise modified from time to time.
A-20
"Solvent" shall mean, with respect to any Person on a particular date,
-------
that on such date (a) the fair value of the property of such Person on a going
concern basis is greater than the total amount of liabilities, including
contingent liabilities, of such Person; (b) the present fair salable value of
the assets of such Person on a going concern basis is not less than the amount
that will be required to pay the probably liability of such Person on its debts
as they become absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature; and (d) such Person is not
engaged in a business or transaction, and is not about to engage in a business
or transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pensions plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably expected to
become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or limited
-----
partnership interest or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Store" shall mean a retail leather specialty goods store operated by
-----
a Store Guarantor and shall include kiosks and holiday stores temporarily
operated by any Store Guarantor during the Christmas holiday season and located
in the United States.
"Store Guarantor" shall mean any Subsidiary of Ultimate Parent other
---------------
than (i) First Intermediate Parent, (ii) Borrower, (iii) Foreign Subsidiaries
and (iv) Joint Ventures (in each case, whether or not such Person operates a
retail store), and "Store Guarantors" shall mean all of the foregoing,
----------------
collectively.
"Store Guarantors' Guaranty" shall mean the Amended and Restated
--------------------------
Guaranty executed by the Store Guarantors (excluding the Second Intermediate
parent and Third Intermediate Parent) in favor of the Lenders, as amended,
modified or restated from time to time.
"Subordinated Debt" shall mean any Indebtedness of any Credit Party
-----------------
subordinated to the Obligations in a manner and form satisfactory to the Agent
and the Lenders in their sole discretion, as to right and time of payment and as
to any other rights and remedies thereunder.
"Subsidiary" shall mean, with respect to any Person, (a) any
----------
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with
A-21
respect to which any such Person and/or one or more Subsidiaries of such Person,
or with respect to which any such Person has the right to vote or designate the
vote of fifty percent (50%) or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (B) any partnership or limited liability
company in which such Person and/or one ore more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%) or of which
any such Person is a general partner or may exercise the powers of a general
partner. Unless the context otherwise requires all references to Subsidiaries in
the Agreement or in the other Loan Documents shall be deemed to refer to
Subsidiaries of First Intermediate Parent.
"Supplemental Security Agreement" shall mean the Supplemental Security
-------------------------------
Agreement of even date herewith entered into among Agent, on behalf of itself
and Lenders, and each Credit Party thereto, as amended, modified or restated
from time to time.
"Swing Line Advance" has the meaning assigned to it in Section
------------------ -------
1.1(b)(i).
---------
"Swing Line Availability" has the meaning assigned to it in Section
----------------------- -------
1.1(b)(i).
---------
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
---------------------
commitment of the Swing Line Lender to make Swing Line Loans as set forth on the
signature page to the Agreement, which commitment constitutes a part of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
-----------------
"Swing Line Loan" shall mean as the context may require, at any time,
---------------
the aggregate amount of Swing Line Advances outstanding to Borrower.
"Swing Line Loan Participation Certificate" shall mean a certificate
-----------------------------------------
delivered pursuant to Section 1.1(b)(iv).
------------------
"Swing Line Note" has the meaning assigned to it in Section
--------------- -------
1.1(b)(ii).
"Taxes" shall mean taxes, levies, imposes, deductions, Charges or
-----
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the federal government
or any State or political subdivision thereof.
"Termination Date" shall mean the date on which the Loans have been
----------------
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Document have been completely discharged and Borrower shall not
have any further right to borrow any monies thereunder.
"Third Intermediate Parent" shall mean River Hills Wilsons, Inc., a
-------------------------
Minnesota corporation.
"Third Party Interactives" means all Persons with whom any Credit
------------------------
Party exchanges data electronically in the ordinary course of business,
including, without limitation,
A-22
customers, suppliers, third-party vendors, subcontractors, processors-
converters, shippers and warehousemen.
"Title IV Plan" shall mean an employee pension benefit plan, as
-------------
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to after the
Closing Date on behalf of participants who are or were employed by any of them.
"Trademark" or "Trademarks" shall mean any and all of the following
--------- ----------
now owner or hereafter acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, all
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
"Trademark License" shall mean any and all rights now owned or
-----------------
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Trademark.
"Trademark Security Agreements" shall mean the Trademark Security
-----------------------------
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party, as amended, modified or restated from time to time.
"Unfunded Pension Liability" shall mean, at any time after the Closing
--------------------------
Date, the aggregate amount, if any, of the sum of (a) the amount by which the
present value of all accrued benefits under each Title IV Plan exceeds the fair
market value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV Plan using the actuarial assumptions for funding
purposes in effect under such Title IV Plan, and (b) for a period of five (5)
years following a transaction which might reasonably be expected to be covered
by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be
avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
"Ultimate Parent" shall mean Wilsons The Leather Experts Inc., a
---------------
Minnesota corporation.
"Year 2000 Assessment" shall mean a comprehensive written assessment
--------------------
of the nature and extent of each Credit Party's Year 2000 Problems and Year 2000
Date-Sensitive
A-23
Systems/Components, including, without limitation, Year 2000 Problems regarding
data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" means, as to each Credit Party, all
----------------------------
actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination of
such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"Year 2000 Corrective Plan" means, with respect to each Credit Party,
-------------------------
a comprehensive plan to eliminate all of its Year 2000 Problems, including
without limitation (i) computer code enhancements or revisions, (ii) upgrades or
replacements of Year 2000 Date-Sensitive Systems/Components, (iii) test and
validation procedures, (iv) an implementation time line and budget and (v)
designation of specific employees who will be responsible for planning,
coordinating and implementing each phase or subpart of the Year 2000 Corrective
Plan.
"Year 2000 Date-Sensitive System/Component" means, as to any Person,
-----------------------------------------
any system software, network software, applications software, data base,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs, other network-related hardware, and other computer-related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" means, as to each Credit Party, (i)
--------------------------------
the performance of test and validation procedures regarding Year 2000 Corrective
Actions on a unit basis and on a systemwide basis; (ii) the performance of test
and validation procedures regarding data exchanges among the Credit Parties'
Year 2000 Date-Sensitive Systems/Components and data exchanges with Third Party
Interactives, and (iii) the design and implementation of additional Year 2000
Corrective Actions, the need for which has been demonstrated by test and
validation procedures.
"Year 2000 Problems" means, with respect to each Credit Party,
------------------
limitations on the capacity or readiness of any such Credit Party's Year 2000
Date-Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after January 1, 2000 (including leap year computations), including, without
limitation, exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Credit Parties and exchanges of information among the
Credit Parties and Year 2000 Date-Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
All other undefined terms contained in any of the Loan Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code as in effect in the
A-24
State of Illinois to the extent the same are used or defined therein. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
the Agreement as a whole, including all Exhibits and Schedules, as the same may
from time to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons, and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations.
A-25
SCHEDULE B
LETTERS OF CREDIT
-----------------
(a) Issuance. Subject to the terms and conditions of the Agreement,
--------
Agent agrees to incur from time to time, upon the request of Borrower on behalf
of Borrower and for Borrower's account, Letter of Credit Obligations and
Eligible Trade L/C Obligations by causing Letters of Credit and Eligible Trade
L/Cs to be issued on terms acceptable to Agent and by a bank or other legally
authorized Person acceptable to Agent and Borrower (each, an "L/C Issuer") for
----------
Borrower's account and guaranteed by Agent; provided, however, that the
-------- -------
aggregate amount of the sum of all such Letter of Credit Obligations plus
----
Eligible Trade L/C Obligations shall not at any time exceed the lesser of (i)
Eighty-Five Million Dollars ($85,000,000) (the "L/C Sublimit"), or (ii) the
------------
Maximum Amount less the aggregate outstanding principal balance of the Revolving
----
Credit Advances; provided further that Letter of Credit Obligations plus 35% of
-------- -------
Eligible Trade L/C Obligations during the period of September 1 through October
31 of each year or 40% of Eligible Trade L/C Obligations at all other times
shall not exceed the Borrowing Base less the outstanding balance of the
----
Revolving Credit Advances and Swing Line Advances. No such Letter of Credit
Obligation or Eligible Trade L/C Obligation shall have an expiry date which is
more than one year following the date of issuance thereof, and Agent and the
Lenders shall be under no obligation to incur Letter of Credit Obligations or
Eligible Trade L/C Obligations in respect of any Letter of Credit or Eligible
Trade L/C having an expiry date which is later than the Commitment Termination
Date. The Borrower may request to change the LC Issuer, subject to consent by
Agent, which consent shall not be unreasonably withheld.
(b) (i) Advances Automatic; Participations. When Agent makes any
----------------------------------
payment on or pursuant to any Letter of Credit Obligation or Eligible Trade L/C
Obligation, such payment shall then be deemed automatically to constitute a
Swing Line Advance to the extent of Swing Line Availability (and if Swing Line
Availability is zero, a Revolving Credit Advance) to Borrower under the
Agreement regardless of whether a Default or Event of Default shall have
occurred and be continuing and notwithstanding Borrower's failure to satisfy the
conditions precedent set forth in Section 2 of the Agreement, and, in the case
---------
of a Revolving Credit Advance, each Lender shall be obligated to pay its Pro
Rata Share thereof in accordance with the Agreement. The failure of any Lender
to make available to Agent for Agent's own account its Pro Rata Share of any
such Revolving Credit Advance or payment by Agent under or in respect of a
Letter of Credit or Eligible Trade L/C shall not relieve any other Lender of its
obligation hereunder to make available to Agent its Pro Rata Share thereof, but
no Lender shall be responsible for the failure of any other Lender to make
available such other Lender's Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Section 8.1(h) or (i) or otherwise or if it
-------------- ---
shall be illegal or unlawful for any Lender to be deemed to have assumed a
ratable share of the reimbursement obligations owed to an L/C Issuer, then (i)
immediately and without further action whatsoever, such Lender shall be deemed
to have irrevocably and unconditionally purchased from Agent an undivided
interest and
B-1
participation equal to such Lender's Pro Rata Share (based on the Revolving Loan
Commitments) of the Letter of Credit Obligations or Eligible Trade L/C
Obligations in respect of all Letters of Credit or Eligible Trade L/Cs then
outstanding and (ii) thereafter, immediately upon issuance of any Letter of
Credit or Eligible Trade L/C, each Lender shall be deemed to have irrevocably
and unconditionally purchased from Agent an undivided interest and participation
in such Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the
Letter of Credit Obligations or Eligible Trade L/C Obligations with respect to
such Letter of Credit or Eligible Trade L/C on the date of such issuance. Each
Lender shall fund its participation in all payments or disbursements made under
the Letters of Credit or Eligible Trade L/Cs in the same manner as provided in
the Agreement with respect to Revolving Credit Advances.
(c) Cash Collateral. If any Letter of Credit Obligations or Eligible
---------------
Trade L/C Obligations, whether or not then due and payable, shall for any reason
be outstanding on the Commitment Termination Date, or if L/C Availability is
less than zero or would be reduced to less than zero upon the incurrence of
additional Letter of Credit Obligations or Eligible Trade L/C Obligations (an
"L/C Availability Short-Fall"), Borrower will pay to Agent for the benefit of
the Lenders cash or cash equivalents acceptable to Agent ("Cash Equivalents") in
----------------
an amount equal to the greater of (1) 100% of the maximum then available to be
drawn under each applicable Letter of Credit or Eligible Trade L/C outstanding
for the benefit of Borrower, plus such amount as Agent may request to cover
----
fees, costs and expenses (including attorneys' fees and expenses) which may be
incurred with respect thereto in the case of cash collateral to be provided on
the Commitment Termination Date or (2) in the amount of the L/C Availability
Short-Fall in the case where L/C Availability is or would be reduced to less
than zero. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or
-----------------------
financial institution acceptable to agent. The Cash Collateral Account shall be
in the name of Agent (as a cash collateral account), and shall be under the sole
dominion and control of Agent and subject to the terms of this Schedule B.
----------
Borrower hereby pledges and grants to Agent, on behalf of Lenders, a security
interest in all such funds and Cash Equivalents held in the Cash Collateral
Account from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations, Eligible
Trade L/C Obligations and other Obligations, whether or not then due. The
Agreement, including this Schedule B, shall constitute a security agreement
----------
under applicable law.
From time to time after funds or cash equivalents are deposited in the
Cash Collateral Account by Borrower, Agent may apply such funds or Cash
Equivalents then held in the Cash Collateral account to the payment of any
amounts, in such order as Agent may elect, as shall be or shall become due and
payable by Borrower to the Lenders with respect to such Letter of Credit
Obligations or Eligible Trade L/C Obligations and, upon the satisfaction in full
of all Letter of Credit Obligations or Eligible Trade L/C Obligations of
Borrower outstanding at the Commitment Termination Date or otherwise upon
elimination of the L/C Availability Short-Fall, to any other Obligations of
Borrower then due and payable. All sums remaining after application of funds
from the Cash Collateral Account as herein provided shall be returned to
Borrower.
B-2
Agent shall at the direction of Borrower invest the funds in the Cash
Collateral Account in short term investments issued or fully guaranteed by the
United States government or an agency thereof, and to the extent not applied to
the Obligations as provided herein, interest and earnings thereon, if any, shall
be the property of Borrower.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the
-----------------
benefit of the Lenders, as compensation to such Lenders for Letter of Credit
Obligations and Eligible Trade L/C Obligations incurred hereunder, (x) all costs
and expenses incurred by Agent or any Lender on account of such Letter of Credit
Obligations or Eligible Trade L/C Obligations, and (y) commencing with the month
in which any such Letter of Credit Obligations or Eligible Trade L/C Obligation
is incurred by the Lenders and on the first day of each month in arrears for
each month during which such Letter of Credit Obligation or Eligible Trade L/C
Obligation shall remain outstanding, a fee (the "L/C Fee") in an amount equal to
-------
the Applicable L/C Margin per annum multiplied by the daily average of the
maximum amount available to be drawn under the applicable Letters of Credit and
Eligible Trade L/C's outstanding during each month. In addition, Borrower
agrees that Borrower (and not Agent or any Lender) shall be responsible for the
payment of all L/C Issuer fees, costs, and expenses in connection with the
issuance of Letters of Credit and Eligible Trade L/Cs at such times and in such
amounts as Borrower and L/C issuer shall agree, pursuant to the application and
related documentation under which any Letter of Credit or Eligible Trade L/C is
issued. The L/C Fees due under this paragraph (d) shall be calculated on the
-------------
basis of a 360-day year for the actual number of days elapsed (except as may be
otherwise specified in any agreement between Borrower and the L/C Issuer) and
shall be paid to Agent for the benefit of the applicable Lenders.
(e) Request for Lender Guaranties. Borrower shall be deemed to
-----------------------------
request the incurrence of a Letter of Credit Obligation or an Eligible Trade L/C
Obligation by electronically forwarding to Agent at its address as set forth in
the Agreement an application for issuance of a Letter of Credit or Eligible
Trade L/C in the form approved by the L/C Issuer. Provided that all other
criteria for incurrence of Letter of Credit Obligations or Eligible Trade L/C
Obligations are met, such application shall be electronically forwarded to the
L/C Issuer with Agent's authorization to issue the requested Letter of Credit or
Eligible Trade L/C (i) the same day as the application is received by Agent, if
such application is forwarded to Agent on or before 12:00 noon (Chicago time) on
any Business Day, or (ii) the Business Day following the Business Day that the
application is received by Agent, in all other cases.
(f) Obligation Absolute. The obligation of Borrower to reimburse
-------------------
Agent and Lenders for payments made with respect to any Letter of Credit
Obligation or Eligible Trade L/C Obligation shall be absolute, unconditional and
irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of each Lender to make payments to Agent with
respect to Letters of Credit and Eligible Trade L/Cs shall be unconditional and
irrevocable. Such obligations of Borrower and Lenders shall be paid strictly in
accordance with the terms hereof under all circumstances including the following
circumstances:
B-3
(i) any lack of validity or enforceability of any Letter of
Credit or Eligible Trade L/C or the Agreement or the other Loan Documents
or any other agreement;
(ii) the existence of any claim, set-off, defense or other right
which Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit or Eligible
Trade L/C (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection with
the Agreement, the Letter of Credit or Eligible Trade L/C, the transactions
contemplated herein or therein or any unrelated transaction (including any
underlying transaction between Borrower and the beneficiary for which the
Letter of Credit or Eligible Trade L/C was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit or Eligible Trade L/C proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(iv) payment by L/C Issuer under any Letter of Credit or
Eligible Trade L/C against presentation of a demand, draft or certificate
or other document which does not comply with the terms of such Letter of
Credit or Eligible Trade L/C;
(v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(g) Indemnification: Nature of Lender's Duties. In addition to
-------------------------------------------
amounts payable as elsewhere provided in the Agreement, Borrower hereby agrees
to pay and protect, indemnify, and save harmless Agent and each Lender from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including attorneys' fees and allocated costs of internal
counsel) which Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit or Eligible
Trade L/C, or (ii) the failure of Agent, any Lender or such L/C Issuer seeking
indemnification to honor a demand for payment under any Letter of Credit
Obligation or Eligible Trade L/C Obligation as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority, in each case other than to the extent
solely as a result of the gross negligence or willful misconduct of Agent or
such Lender (as finally determined by a court of competent jurisdiction).
Nothing herein contained shall be deemed to limit or expand the scope of any
indemnity or release contained in any agreement between Borrower and the L/C
Issuer.
As between Agent and any Lender and Borrower, Borrower assumes all
risks of the acts and omissions of, or misuse of any Letter of Credit or
Eligible Trade L/C by beneficiaries of any Letter of Credit or Eligible Trade
L/C. In furtherance and not in limitation
B-4
of the foregoing, to the fullest extent permitted by law neither Agent nor any
Lender shall be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection
with the application for and issuance of any Letter of Credit or Eligible Trade
L/C, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged, (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or Eligible Trade L/C or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) for failure of the beneficiary
of any Letter of Credit or Eligible Trade L/C to comply fully with conditions
required in order to demand payment under such Letter of Credit or Eligible
Trade L/C or the failure of the L/C Issuer to require strict compliance with
such conditions; provided that, in the case of any payment by Agent of any
Letter of Credit Obligation or Eligible Trade L/C Obligation, Agent shall be
liable to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment of such Letter of
Credit Obligation or Eligible Trade L/C Obligation thereof complies on its face
with any applicable requirements for a demand for payment thereof; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in order
to make a payment under any Letter of Credit or Eligible Trade L/C or of the
proceeds thereof; (vii) for the credit of the proceeds of any drawing under any
Letter of Credit or Eligible Trade L/C; and (viii) for any consequences arising
from causes beyond the control of Agent. None of the above shall affect, impair,
or prevent the vesting of any of Agent's or any Lender's rights or powers
hereunder or under the Agreement.
Nothing herein contained shall be deemed to waive or release any right
or claim that Borrower may have against the L/C Issuer in its capacity as such.
B-5
SCHEDULE C
INTENTIONALLY OMITTED
---------------------
C-1
SCHEDULE D
INTENTIONALLY OMITTED
---------------------
D-1
SCHEDULE E
CASH MANAGEMENT SYSTEMS
-----------------------
Borrower shall, and shall cause the Credit Parties to, establish and
maintain the Cash Management Systems described below:
(a) Until the Termination Date, each Credit Party which
maintains a depository account (each, a "Credit Party Account") with any bank
--------------------
(each, a "Relationship Bank") shall instruct each of its Relationship Banks to
-----------------
transfer all good funds on deposit in such Credit Party Account (less reserves
for returned items and account fees) by wire transfer or automated clearing
house procedures on a daily basis into a bank account in Borrower's name (the
"Concentration Account") at ▇▇▇▇▇▇ Trust and Savings Bank or another bank
mutually agreed upon in advance by Agent and Borrower (the "Concentration
Account Bank").
(b) Borrower may maintain, in its name, accounts (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") into
which, Agent shall, from time to time, deposit proceeds of Revolving Credit
Advances and Swing Line Advances made to Borrower pursuant to Section 1.1 of the
-----------
Agreement.
(c) On or before the Closing Date, the Concentration Account
Bank shall enter into a new tri-party blocked account agreement or modify its
existing tri-party blocked account agreement with Agent with respect to the
Concentration Account, for the benefit of itself and Lenders, and Borrower, in
form and substance acceptable to Agent, which shall become operative on the
Closing Date. Such blocked account agreement shall provide, among other things,
that (i) all items of payment and funds deposited in the Concentration Account
and proceeds thereof deposited in such account are held by such bank, as agent
or bailee-in-possession for the Agent, on behalf of Lenders, (ii) the bank
executing such agreement has no rights of setoff or recoupment or any other
claim against such account other than for payment of its service fees and other
charges directly related to the administration of such account and for returned
checks or other items of payment and (iii) from and after the Concentration
Account Bank's receipt of a notice (an "Activation Notice") from Agent (which
Activation Notice may be given by Agent at any time at which an Event of Default
has occurred and is continuing), to immediately forward all amounts received in
the Concentration Account to the Collection Account through daily sweeps from
such Concentration Account into the Collection Account. From and after the date
Agent has delivered an Activation Notice to the Concentration Account Bank,
Borrower shall not, and shall not cause or permit any Guarantor to, accumulate
or maintain cash in any disbursement accounts and payroll accounts as of any
date of determination in excess of checks outstanding against such accounts as
of that date and amounts necessary to meet minimum balance requirements. Absent
the issuance of an Activation Notice, Borrower shall be entitled to transfer
funds from the Concentration Account to any place it may elect.
(d) So long as no Event of Default has occurred and is
continuing, any Store Guarantor may act to add or replace a Relationship Bank or
Credit Party Account and Borrower may replace any Concentration Account Bank or
Concentration Account; provided, however, (i) in the case of a replacement
-------- -------
Concentration Account Bank, prior to the time of the
E-1
opening of an account with such new Concentration Account Bank, Borrower and
such bank shall have executed and delivered to Agent a tri-party blocked account
agreement, in form and substance satisfactory to Agent. Borrower shall close any
Concentration Account (and establish a replacement Concentration Account in
accordance with the foregoing sentence) promptly and in any event within thirty
(30) days of notice from Agent that the creditworthiness of any Concentration
Account Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within sixty (60) days of notice from
Agent that the operating performance, funds transfer and/or availability
procedures or performance with respect to the Concentration Account or the
Agent's liability under any tri-party blocked account agreement with such bank
is no longer acceptable in Agent's reasonable judgment.
(e) The Concentration Account shall be a cash collateral
account, with all cash and other items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which Borrower shall have
granted a Lien to Agent, on behalf of itself and Lenders, pursuant to the
Security Agreement and the Supplemental Security Agreement.
(f) All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with the Agreement and shall be applied
(and allocated) by Agent in accordance with the Agreement.
(g) Each Store Guarantor and its respective officers, employees,
agents, directors or other Persons acting for or in concert with Borrower (each
a "Related Person") agrees to (i) hold in trust for the Agent, for the benefit
of itself and Lenders, all checks, cash and other items of payment received by
such Store Guarantor or any such Related Person, and (ii) within one (1)
Business Day after receipt by such Store Guarantor or any such Related Person of
any checks, cash or other items or payment, deposit the same into the
appropriate Credit Party Account. Each Store Guarantor acknowledges and agrees
that all cash, checks or items of payment constituting proceeds of Collateral
are pledged to Agent for the benefit of Lenders.
E-2
SCHEDULE F
----------
SCHEDULE OF ADDITIONAL
-----------------------
CLOSING DOCUMENTS
-----------------
See Attached
F-1
SCHEDULE G
FINANCIAL STATEMENTS AND PROJECTIONS - REPORTING
------------------------------------------------
Borrower shall deliver or cause to be delivered to Agent or to Agent
and to each Lender which a signatory to the Loan Agreement as of the Closing
Date or which holds 10 % or more of the Commitments, as indicated, the
following:
(a) Monthly Financials. To Agent and Lenders, within thirty (30) days
------------------
after the end of each Fiscal Month, financial information regarding Ultimate
Parent and its Subsidiaries, certified by the Chief Financial Officer of
Ultimate Parent, consisting of consolidated (i) unaudited balance sheets as of
the close of such Fiscal Month and the related statements of income and cash
flow for that portion of the Fiscal Year ending as of the close of such Fiscal
Month; (ii) unaudited statements of income and cash flows for such Fiscal Month,
setting forth in comparative form the figures for the corresponding period in
the prior year and the figures contained in the most recent annual Projections
for such Fiscal Year, all prepared in accordance with GAAP (subject to normal
year-end adjustments). Such financial information shall be accompanied by the
certification of the Chief Financial Officer of Ultimate Parent that (x) such
financial information presents fairly in accordance with GAAP (subject to normal
year-end adjustments) the financial position and results of operations of First
Intermediate Parent and its Subsidiaries, on a consolidated basis, in each case
as at the end of such month and for the period then ended and (y) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.
(b) Quarterly Financials. To Agent and Lenders, within forty-five
--------------------
(45) days after the end of each Fiscal Quarter, copies of the Ultimate Parent's
10-Q. Such financial information shall be accompanied by (A) a statement in
reasonable detail showing the calculations used in determining compliance with
the financial covenants set forth on Schedule I and (B) the Certification of the
Chief Financial Officer of Ultimate Parent that (i) such financial information
presents fairly in accordance with GAAP (subject to normal year-end adjustments)
the financial position, results of operations and statements of cash flows of
First Intermediate Parent and its Subsidiaries, on a consolidated basis, as at
the end of such Fiscal Quarter and for the period then ended, (ii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default. In addition, Borrower shall deliver to Agent and Lenders,
within forty-five (45) days after the end of each Fiscal Quarter, a management
discussion and analysis which includes a comparison to budget for that Fiscal
Quarter and a comparison of performance for that Fiscal Quarter to the
corresponding period in the prior year;
(c) Operating Plan. To Agent and Lender, as soon as available, but
--------------
not later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan, approved by the
G-1
Board of Directors of Ultimate Parent, for the following Year, which will
include a statement of all of the material assumptions on which such plan is
based, will include monthly balance sheets and a monthly budget for the
following year and will integrate sales, gross profits, operating expenses,
operating profit, cash flow projections and borrowing availability projections
all prepared on the same basis and in similar detail as that on which operating
results are reported (and in the case of cash flow projections, representing
management's good faith estimates of future financial performance based on
historical performance), and including plans for personnel, Capital Expenditures
and Stores;
(d) Annual Audited Financials. To Agent and Lenders, within ninety
-------------------------
(90) days after the end of each Fiscal Year, copies of the Ultimate Parent's 10-
K. Such Financial Statements shall be accompanied by (i) a statement prepared
in reasonable detail by Ultimate Parent's Chief Financial Officer showing the
calculations used in determining compliance with each of the financial covenants
set forth on Schedule I, (ii) a report from such accounting firm to the effect
----------
that, in connection with their audit examination, nothing has come to their
attention to cause them to believe that a Default or Event of Default has
occurred (or specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended only to
accounting matters and that no special investigation was made with respect to
the existence of Defaults or Events of Default, (iii) a letter addressed to
Agent, on behalf of itself and Lenders, in form and substance reasonably
satisfactory to Agent and subject to standard qualifications taken by nationally
recognized accounting firms, signed by such accounting firm acknowledging that
Agent and Lenders are entitled to rely upon such accounting firm's certification
of such audited Financial Statements, and (iv) the annual letters to such
accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters;
(e) Management Letters. To Agent and Lenders, within (10) Business
------------------
Days after receipt of by any Credit Party, copies of all management letters,
exception reports or similar letters or reports received by such Credit Party
from its independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as practicable,
---------------
and in any event within five (5) Business Days after an executive officer of
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event which has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day;
(g) SEC Filings and Press Releases. To Agent, promptly upon their
------------------------------
becoming available, copies of: (i) all Statements, reports, notices and proxy
statements made publicly available by any Credit Party to its security holders;
(ii) all regular and periodic reports and all registration statements and
prospectuses, if any, filed by any Credit Party with any securities exchange or
with the Securities and Exchange Commission or any governmental or private
regulatory authority, and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material adverse changes
or developments in the business of any such Person.
G-2
(h) Senior Notes Notice. To Agent and Lenders, as soon as
-------------------
practicable, copies of all material written notices given or received by any
Credit Party with respect to the Senior Notes, and, within two (2) Business Days
after any executive officer of Ultimate Parent or Borrower obtains knowledge of
any matured or unmatured event of default with respect to the Senior Notes,
notice of such event of default;
(i) Litigation. To Agent in writing, promptly upon any executive
----------
officer of Ultimate Parent or Borrower learning thereof, notice of any
Litigation commenced or threatened against any Credit Party that (i) seeks
damages in excess of $500,000, (ii) seeks injunctive relief, (iii) is asserted
or instituted against any Plan, its fiduciaries or its assets or against any
Credit Party or ERISA Affiliate in connection with any Plan and seeks remedies
in excess of $500,000, (iv) alleges criminal misconduct by any Credit Party, or
(v) alleges the violation of any law regarding, or seeks remedies in excess of
$500,000 in connection with, any Environmental Liabilities and Costs,
(j) Insurance Notice. To Agent, disclosure of losses or casualties
----------------
required by Section 5.4 of the Agreement.
-----------
(k) Default Notices. To Agent, copies of (i) any and all default
---------------
notices received under or with respect to any leased location or public
warehouse where Collateral is located (other than Leased Stores), and (ii) such
other notices or documents as Agent may request in its reasonable discretion;
and
(l) Other Documents. To Agent and Lenders, such other financial and
---------------
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall, from time to time, reasonably request.
G-3
SCHEDULE H
COLLATERAL REPORTS
------------------
(a) To Agent (and to any Lender requesting a copy of the same in
writing after the Closing Date) at the times set forth below or more frequently
if an Event of Default shall have occurred and be continuing, each of the
following:
(i) monthly (or more frequently if Borrower so elects or if an
Event of Default has occurred and is continuing and Agent requests the
same), on the fifteenth (15th) day of each month (or the next Business Day
if such day is not a Business Day) as of the last day of the prior month
end, a Borrowing Base Certificate with respect to Borrower;
(ii) monthly on the second Business Day of each month, a monthly
sales tracking report in the form historically prepared by Borrower for the
Store Guarantors.
(b) To Agent, at request of Agent or following an Event of Default, a
reconciliation of the Accounts trial balance and month-end Inventory reports of
Borrower to Borrower's general ledger and to such monthly Financial Statements
delivered pursuant to such Schedule G, in each case accompanied by such
----------
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(c) To Agent, at the time of delivery of each of the quarterly
Financial Statements delivered pursuant to Schedule G, a list of any
-----------
applications for the registration of any Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency which any Credit Party thereof has flied in the
prior Fiscal Quarter;
(d) Borrower, at its own expense, shall deliver to Agent, for Agent's
inspection, the results of each physical verification, if any, which Borrower or
any of its Subsidiaries may in their discretion have made, or caused any other
Person to have made on their behalf, of all or any portion of their Inventory
(and, if an Event of Default shall have occurred and be continuing, Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);
(e) Borrower, at its own expense shall deliver to Agent and Lenders,
if requested by Agent or Requisite Lenders, not more frequently than once each
Fiscal Year, a review of Inventory owned by Borrower and held by Borrower and
each Store Guarantor, prepared by Universal Asset-Based Services, Inc. or
another appraiser acceptable to Agent, and Borrower, at its own expense, shall
deliver to Agent such appraisals of its assets as Agent may request at any time
after the occurrence and during the continuance of an Event of Default, such
appraisals to be conducted by an appraiser, and in form and substance,
satisfactory to Agent; and
H-1
SCHEDULE I
FINANCIAL COVENANTS
-------------------
The Credit Parties shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Maximum Capital Expenditures. The Credit Parties on a
----------------------------
consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods:
Maximum Capital
Period Expenditures per Period
Fiscal Year ending in January of 2000 $27,000,000
Fiscal Year ending in January of 2001 $25,400,000
Fiscal Year ending in January of 2002 $25,200,000
provided, however, in the event the Credit Parties on a consolidated basis do
not expend the entire amount of Maximum Capital Expenditures Per Period in any
Fiscal Year, the Credit Parties may carry forward to the immediately succeeding
Fiscal Year any unutilized portion, but not more than $3,000,000. All Capital
Expenditures in any Fiscal Year shall first be applied against the then Current
Maximum Capital Expenditure limit and then to the carry-forward amount.
(b) Minimum Fixed Charges Coverage Ratio. Ultimate Parent shall have
------------------------------------
on a consolidated basis at the end of each Fiscal Quarter for the four Fiscal
Quarters then ended, commencing with the Fiscal Quarter ending in October, 1999,
a Fixed Charges Coverage Ratio of not less than 1.0:1.0.
Unless otherwise specifically provided herein, any accounting term
used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. If any "Accounting
Changes" (as defined below) occur and such changes result in a material change
in the calculation of the financial covenants, standards or terms used in the
Agreement or any other Loan Document, then the Credit Parties, Agent and Lenders
agree to enter into negotiations in order to amend such provisions of the
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating Ultimate Parent and its Subsidiaries'
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been
I-1
made; provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" mean (a) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (b)
changes in accounting principles concurred in by Borrower's certified public
accountants; (c) purchase accounting adjustments under A.P.B. 16 and/or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (d) the reversal (but not
the use) of any reserves established as a result of purchase accounting
adjustments. If Agent, the Credit Parties and Requisite Lenders agree upon the
required amendments, then after amendments have been executed and the underlying
Accounting Change with respect thereto has been implemented, any reference to
GAAP contained in the Agreement or in any other Loan Document shall, only to the
extent of such Accounting Change, refer to GAAP, consistently applied after
giving effect to the implementation of such Accounting Change. If Agent,
Borrower and Requisite Lenders cannot agree upon the required amendments within
thirty (30) days following the date of implementation of any Accounting Change,
then all Financial Statements delivered and all calculations of financial
covenants and other standards and terms in accordance with the Agreement and the
other Loan Documents shall be prepared, delivered and made without regard to the
underlying Accounting Change.
I-2
SCHEDULE J
NOTICE ADDRESSES
----------------
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Wilsons Leather Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
---
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower, at
Wilsons Leather Holdings Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
J-1
With copies to:
Faegre & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
J-2
EXHIBIT 1.1(a)(i)
FORM OF
NOTICE OF REVOLVING CREDIT ADVANCE
__________, ______
General Electric Capital Corporation,
for itself, as Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: Revolving Credit Advance
------------------------
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"), refers to
the Amended and Restated Credit Agreement, dated as of May 24, 1999 (the "Credit
Agreement", the terms defined therein being used herein as therein defined), by
and among Borrower, General Electric Capital Corporation, for itself, as Lender,
Swing Line Lender and as Agent for Lenders, and Lenders, and hereby gives you
notice, irrevocably, pursuant to Section 1.1 (a) of the Credit Agreement, that
the undersigned hereby requests a Revolving Credit Advance under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Credit Advance as required by Section 1.1(a) of the Credit
Agreement:
I. New Revolving Credit Advances
-----------------------------
(i) The date of the requested Revolving Credit Advance is ________,
_____.
(ii) The amount of the requested Revolving Credit Advance is
$________.
(iii) The requested Revolving Credit Advance is [an Index Rate Loan]
[a LIBOR Loan with a LIBOR Period of ____ days/months].
The undersigned acknowledges that unless the undersigned shall
also have complied with the requirements of Section 1.5(e) of
the Credit Agreement, the requested Revolving Credit Advance
shall bear interest by reference to the Index Rate.
II. The requested Revolving Credit Advance is to be sent to:
[Name of Bank]
[City of Bank]
Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
The undersigned hereby certifies that all of the conditions
contained in Section 2.2 of the Credit Agreement have been satisfied on the date
-----------
hereof, and will continue to be satisfied before and after giving effect to the
Revolving Credit Advance and to the application of the proceeds therefrom.
Very truly yours,
WILSONS LEATHER HOLDINGS INC.
By:____________________________
Name:__________________________
Title:_________________________
EXHIBIT 1.1(a)(ii)
FORM OF
REVOLVING NOTE
--------------
$_________________ May 24, 1999
FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a
Minnesota corporation (hereinafter referred to as "Borrower"), hereby PROMISES
TO PAY to the order of at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation, as agent, (in such capacity, "Agent"), at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as Agent may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the amount of ______________________
DOLLARS ($ ), or, if less, the aggregate unpaid principal amount of all advances
made to Borrower by Agent pursuant to Section 1.1(a) of the Credit Agreement (as
--------------
hereinafter defined) together with interest on the unpaid principal amount of
this Revolving Credit Note outstanding from time to time from the date hereof at
the rate or rates provided in the Credit Agreement.
This Revolving Credit Note is issued pursuant to that certain Amended
and Restated Credit Agreement dated as of May 24, 1999 among Borrower, Agent,
and the Lenders named therein (as the same from time to time may be amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), and is
entitled to the benefit and security of the Loan Documents provided for therein,
to which reference is hereby made for a statement of all of the terms and
conditions under which the Revolving Credit Loan evidenced hereby is made and is
to be repaid and for a statement of Agent's and Lenders' remedies upon the
occurrence and during the continuance of an Event of Default. All capitalized
terms, unless otherwise defined herein, shall have the meanings ascribed to them
in Schedule A to the Credit Agreement.
----------
The principal amount of the indebtedness evidenced hereby shall be
payable on May 24, 2002 and in the amounts and on the dates specified in the
Credit Agreement. Interest thereon shall be paid until such principal amount is
paid in full at such interest rates and at such times as are specified in the
Credit Agreement.
Upon and after the occurrence of an Event of Default, this Revolving
Credit Note may, as provided in the Credit Agreement, and without demand, notice
or legal process of any kind, be declared, and, upon such declaration,
immediately shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower to the fullest extent permitted by law.
This Revolving Credit Note shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Illinois, without
regard to conflict of law provisions.
WILSONS LEATHER HOLDINGS INC.
By:____________________________
Name:__________________________
Title:_________________________
EXHIBIT 1.1(b)(i)
FORM OF
NOTICE OF SWING LINE ADVANCE
----------------------------
________, _____
General Electric Capital Corporation,
for itself as Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: Swing Line Advance
------------------
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"), refers to
the Amended and Restated Credit Agreement dated as of May 24, 1999 (the "Credit
------
Agreement", the terms defined therein being used herein as therein defined), by
---------
and among Borrower, General Electric Capital Corporation, for itself, as Lender,
Swing Line Lender and as Agent for Lenders, and Lenders, and hereby gives you
notice, irrevocably, pursuant to Section 1.1(b) of the Credit Agreement, that
--------------
the undersigned hereby requests a Swing Line Advance under the Credit Agreement,
and in that connection sets forth below the information relating to such Swing
Line Advance as required by Section 1.1(b) of the Credit Agreement:
--------------
I. New Swing Line Advances
(i) The date of the requested Swing Line Advance is ________,
____.
(ii) The amount of the requested Swing Line Advance is
$_________.
II. The requested Swing Line Advance is to be sent to:
[Name of Bank]
[City of Bank] Beneficiary:
Account No.:[number]
ABA No.:[number]
Attn: [name]
The undersigned hereby certifies that all of the conditions contained
in Section 2.2 of the Credit Agreement have been satisfied on the date hereof,
-----------
and will continue to be satisfied before and after giving effect to the Swing
Line Advance and to the application of the proceeds therefrom.
Very truly yours,
WILSONS LEATHER HOLDINGS INC.
By:__________________________
Name:________________________
Title:_______________________
EXHIBIT 1.1(b)(ii)
FORM OF
SWING LINE NOTE
---------------
$10,000,000 May 24, 1999
FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a
Minnesota corporation (hereinafter referred to as "Borrower"), hereby PROMISES
TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, as swing line lender, (in such capacity, "Swing Line Lender"), at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at such other place
as Swing Line Lender may designate from time to time in writing, in lawful money
of the United States of America and in immediately available funds, the amount
of TEN MILLION DOLLARS ($10,000,000), or, if less, the aggregate unpaid
principal amount (with any refunding of such amounts as provided in the Credit
Agreement being deemed a repayment) of all advances made to Borrower by Agent
pursuant to Section 1.1(b) of the Credit Agreement (as hereinafter defined)
--------------
together with interest on the unpaid principal amount of this Swing Line Note
outstanding from time to time from the date hereof at the rate or rates provided
in the Credit Agreement
This Swing Line Note is issued pursuant to that certain Amended and
Restated Credit Agreement dated as of May 24, 1999 among Borrower, Agent, and
the Lenders named therein (as the same from time to time may be amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), and is
entitled to the benefit and security of the Loan Documents provided for therein,
to which reference is hereby made for a statement of all of the terms and
conditions under which the Swing Line Loan evidenced hereby is made and is to be
repaid and for a statement of Agent's and Lenders' remedies upon the occurrence
and during the continuance of an Event of Default. All capitalized terms,
unless otherwise defined herein, shall have the meanings ascribed to them in
Schedule A to the Credit Agreement.
----------
The principal amount of the indebtedness evidenced hereby shall be
payable on May 24, 2002 and in the amounts and on the dates specified in the
Credit Agreement. Interest thereon shall be paid until such principal amount is
paid in full at such interest rates and at such times as are specified in the
Credit Agreement.
Upon and after the occurrence of an Event of Default, this Swing Line
Note may, as provided in the Credit Agreement, and without demand, notice or
legal process of any kind, be declared, and, upon such declaration, immediately
shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower to the fullest extent permitted by law.
This Swing Line Note shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Illinois, without regard to
conflict of law provisions.
WILSONS LEATHER HOLDINGS INC.
By:__________________________
Name:________________________
Title:_______________________
EXHIBIT 1.5(e)
FORM OF NOTICE OF
CONVERSION/CONTINUATION
-----------------------
____________, _____
General Electric Capital Corporation,
for itself, as Lender, Swing Line Lender
and as Agent for Lenders
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Re: Continuation/Conversion Notice
------------------------------
Ladies and Gentlemen:
The undersigned, Wilsons Leather Holdings Inc. ("Borrower"), refers to
the Amended and Restated Credit Agreement, dated as of May 24, 1999 (the "Credit
Agreement", the terms defined therein being used herein as therein defined), by
and among Borrower, General Electric Capital Corporation, for itself, as Lender,
Swing Line Lender and as Agent for Lenders, and Lenders, and hereby gives you
notice, irrevocably, pursuant to Section 1.5(e) of the Credit Agreement.
--------------
Subject to the terms and conditions of the Credit Agreement and all
other Loan Documents, please:
_____ convert for the benefit of Borrower on ________, _____,
$_____________ of the outstanding principal amount of the Revolving
Loan, currently a [Index][LIBOR] Rate Loan, into a [Index](LIBOR) Rate
Loan [having an Interest Period of ______ days/month(s)];
_____ continue for the benefit of Borrower on ___________, ______,
$__________ of the outstanding principal amount of the Revolving Loan,
currently a LIBOR Rate Loan, as a LIBOR Rate Loan having an Interest
Period of _____ days/month(s);
The undersigned hereby certifies that all of the statements contained
in Section 2.2 of the Credit Agreement have been satisfied on the date hereof,
-----------
and will continue to be satisfied before and after giving effect to
conversion/continuation described herein and to the application of the proceeds
therefrom.
IN WITNESS WHEREOF, this Conversion/Continuation Notice has been duly
executed as of __________, _____.
WILSONS LEATHER HOLDINGS INC.
By:__________________________
Name:________________________
Title:_______________________
EXHIBIT 4.1(b)
--------------
FORM OF
WILSONS LEATHER HOLDINGS INC.
BORROWING BASE CERTIFICATE
--------------------------
1. Eligible Inventory (finished goods, including Eligible
In-Transit Inventory, net of reserves determined in
accordance with GAAP), less Lay Away Inventory $___________
2. Borrowing Base (line 1 multiplied by .60 or .65,
depending on season) $___________
3. Lay Away Inventory (unpaid purchase price divided
.625 x .50) $___________
4. (line 3 multiplied by .60) $___________
5. Borrowing Base (line 2 plus line 4) $___________
6. Seasonal Over-Advance, if applicable $7,500,000
7. Total Borrowing Base $___________
8. Lesser of Total Borrowing Base or $125,000,000 $___________
9. Revolving Credit Advances outstanding $___________
10. Stand-by Letters of Credit outstanding * $___________
11. 35% or 40% of Eligible Trade L/Cs outstanding
(depending on season) * $___________
12. Total outstandings (total of lines 9, 10 and 11) $___________
13. Borrowing Availability (line 8 minus line 12) $___________
Wilsons Leather Holdings, Inc. hereby certifies that the foregoing
accurately reflects its Borrowing Availability as of the date hereof (except
that Lay Away Inventory may be stated at zero, if Borrower elects not to
calculate it) in accordance with the Amended and Restated Credit Agreement dated
as of May 24, 1999 among it, General Electric Capital Corporation and the other
parties thereto.
Date:______________ WILSONS LEATHER HOLDINGS INC.
By:________________________________
Title:_____________________________
* Total Letters of Credit and Eligible Trade L/Cs outstanding shall not exceed
$85,000,000.
EXHIBIT 9.1(a)
ASSIGNMENT AGREEMENT
--------------------
This Assignment Agreement (this "Agreement") is made as of ___________
__, ____ by and between __________________________________ ("Assignor Lender")
and ________________________ ("Assignee Lender") and acknowledged and consented
to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent ("Agent"). All capitalized
terms used in this Agreement and not otherwise defined herein will have the
respective meanings set forth in the Credit Agreement as hereinafter defined.
RECITALS:
--------
WHEREAS, Wilsons Leather Holdings Inc., a Minnesota corporation, (the
"Borrower"), the Credit Parties, Agent, Assignor Lender and other Persons
signatory thereto as Lenders have entered into that certain Amended and Restated
Credit Agreement dated as of May 24, 1999 (as amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement") pursuant to
----------------
which Assignor Lender has agreed to make certain Loans to, and incur certain
Letter of Credit Obligations and Eligible Trade L/C Obligations for Borrower;
WHEREAS, Assignor Lender desires to assign to Assignee Lender [all/a
portion] of its interest in the Loans (as described below), the Letter of Credit
Obligations and Eligible Trade L/C Obligations and the Collateral and to
delegate to Assignee Lender [all/a portion] of its Commitments and other duties
with respect to such Loans, Letter of Credit Obligations, Eligible Trade L/C
Obligations and Collateral;
WHEREAS, Assignee Lender desires to become a Lender under the Credit
Agreement and to accept such assignment and delegation from Assignor Lender; and
WHEREAS, Assignee Lender desires to appoint Agent to serve as agent
for Assignee Lender under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions, and covenants herein contained, Assignor Lender and Assignee Lender
agree as follows:
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 Assignment. Assignor Lender hereby transfers and assigns to
----------
Assignee Lender, without recourse and without representations or warranties of
any kind (except as set forth in Section 3.2), [all/such percentage] of Assignor
-----------
Lender's right, title, and interest in [the Revolving Loan ], [the Loans],
[Letter of Credit Obligations], [Eligible Trade L/C Obligations], Loan Documents
and Collateral as will result in Assignee Lender having as of the Effective Date
(as hereinafter defined) a Pro Rata Share thereof, as follows:
Assignee Lender's Loans Principal Amount Pro Rata Share
----------------------- ---------------- --------------
Revolving Loan $_________ ____%
1.2 Delegation. Assignor Lender hereby irrevocably assigns and
----------
delegates to Assignee Lender [all/a portion] of its Commitments and its other
duties and obligations as a Lender under the Loan Documents equivalent to
[100%/___%] of Assignor Lender's Revolving Loan Commitment (such percentage
representing a commitment of $ ___________).
1.3 Acceptance by Assignee Lender. By its execution of this
-----------------------------
Agreement, Assignee Lender irrevocably purchases, assumes and accepts such
assignment and delegation and agrees to be a Lender with respect to the
delegated interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, Assignor Lender agrees,
to the extent provided herein, to relinquish its rights and be released from its
obligations and duties under the Credit Agreement.
1.4 Effective Date. Such assignment and delegation by Assignor
--------------
Lender and acceptance by Assignee Lender will be effective and Assignee Lender
will become a Lender under the Loan Documents as of [the date of this Agreement]
("Effective Date") and upon payment of the Assigned Amount and the Assignment
Fee (as each term is defined below). [Interest and Fees accrued prior to the
Effective Date are for the account of Assignor Lender, and Interest and Fees
accrued from and after the Effective Date are for the account of Assignee
Lender.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 Payment of the Assigned Amount. Assignee Lender will pay to
------------------------------
Assignor Lender, in immediately available funds, not later than 12:00 noon (New
York time) on the Effective Date, an amount equal to its Pro Rata Share of the
then outstanding principal amount of the Loans as set forth above in Section 1.1
-----------
[together with accrued interest, fees and other amounts as set forth on Schedule
2.1] (the "Assigned Amount").
2.2 Payment of Assignment Fee. [Assignor Lender and/or Assignee
-------------------------
Lender] will pay to Agent, for its own account in immediately available funds,
not later than 12:00 noon (New York time) on the Effective Date, the assignment
fee in the amount of $3,500 (the "Assignment Fee") as required pursuant to
Section 9.1(a) of the Credit Agreement.
2.3 Execution and Delivery of Notes. Following payment of the
-------------------------------
Assigned Amount and the Assignment Fee, Assignor Lender will deliver to Agent
the Notes previously delivered to Assignor Lender for redelivery to Borrower and
Agent will obtain from Borrower for delivery to [Assignor Lender and] Assignee
Lender, new executed Notes evidencing Assignee Lender's [and Assignor Lender's
respective] Pro Rata Share[s] in the Loans after giving effect to the assignment
described in Section 1. Each new Note will be issued in the aggregate maximum
---------
principal amount of the [applicable] Commitment [of the Lender to whom such Note
is issued] OR [the Assignee Lender].
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Assignee Lender's Representations, Warranties and Covenants.
-----------------------------------------------------------
Assignee Lender hereby represents, warrants, and covenants the following to
Assignor Lender and Agent:
(a) This Agreement is a legal, valid, and binding agreement of
Assignee Lender, enforceable according to its terms;
(b) The execution and performance by Assignee Lender of its duties
and obligations under this Agreement and the Loan Documents will not require any
registration with, notice to, or consent or approval by any Governmental
Authority;
(c) Assignee Lender is familiar with transactions of the kind and
scope reflected in the Loan Documents and in this Agreement;
(d) Assignee Lender has made its own independent investigation and
appraisal of the financial condition and affairs of each Credit Party, has
conducted its own evaluation of the Loans and Letter of Credit Obligations, the
Loan Documents and each Credit Party's creditworthiness, has made its decision
to become a Lender to Borrower under the Credit Agreement independently and
without reliance upon Assignor Lender or Agent, and will continue to do so;
(e) Assignee Lender is entering into this Agreement in the ordinary
course of its business, and is acquiring its interest in the Loans, the Letter
of Credit Obligations and the Eligible Trade L/C Obligations for its own account
and not with a view to or for sale in connection with any subsequent
distribution; provided, however, that at all times the distribution of Assignee
Lender's property shall, subject to the terms of the Credit Agreement, be and
remain within its control;
(f) No future assignment or participation granted by Assignee Lender
pursuant to Section 9.1 of the Credit Agreement will require Assignor Lender,
Agent, or Borrower to file any registration statement with the Securities and
Exchange Commission or to apply to qualify under the blue sky laws of any state;
(g) Assignee Lender has no loans to, written or oral agreements with,
or equity or other ownership interest in any Credit Party;
(h) Assignee Lender will not enter into any written or oral agreement
with, or acquire any equity or other ownership interest in, any Credit Party
without the prior written consent of Agent; and
(i) As of the Effective Date, Assignee Lender (i) is entitled to
receive payments of principal and interest in respect of the Obligations without
deduction for or on account of any taxes imposed by the United States of America
or any political subdivision thereof, (ii) is not subject to capital adequacy or
similar requirements under Section
1.16(a) of the Credit Agreement, (iii) does not require the payment of any
increased costs under Section 1.16(b) of the Credit Agreement, (iv) is not
unable to fund LIBOR Loans under Section 1.16(c) of the Credit Agreement, and
(v) is not subject to any withholding taxes in accordance with Section 1.16(d)
and Assignee Lender will indemnify Agent from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, or
expenses that result from Assignee Lender's failure to fulfill its obligations
under the terms of Section 1.15(c) of the Credit Agreement or from any other
inaccuracy in the foregoing.
3.2 Assignor Lender's Representations, Warranties and Covenants.
-----------------------------------------------------------
Assignor Lender hereby represents, warrants and covenants the following to
Assignee Lender:
(j) Assignor Lender is the legal and beneficial owner of the Assigned
Amount;
(k) This Agreement is a legal, valid and binding agreement of
Assignor Lender, enforceable according to its terms;
(l) The execution and performance by Assignor Lender of its duties
and obligations under this Agreement and the Loan Documents will not require any
registration with, notice to or consent or approval by any Governmental
Authority;
(m) Assignor Lender has full power and authority, and has taken all
action necessary to execute and deliver this Agreement and to fulfill the
obligations hereunder and to consummate the transactions contemplated hereby;
(n) Assignor Lender is the legal and beneficial owner of the
interests being assigned hereby, free and clear of any adverse claim, lien,
encumbrance, security interest, restriction on transfer, purchase option, call
or similar right of a third party; and
(o) This Assignment by Assignor Lender to Assignee Lender complies,
in all material respects, with the terms of the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in Section 3.2) nor Agent
------------
makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Loans, Letter
of Credit Obligations or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the Collateral, or (e) the financial condition of
any Credit Party or other obligor or the performance or observance by any Credit
Party of its obligations under any of the Loan Documents. Neither Assignor
Lender nor Agent has or will have any duty, either initially or on a continuing
basis, to make any investigation, evaluation, appraisal of, or any
responsibility or liability with respect to the accuracy or completeness of, any
information provided to Assignee Lender which has been provided to Assignor
Lender or Agent by any Credit Party. Nothing in this Agreement or in the
Loan Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in the
exercise of any power, right, or privilege hereunder or under any Loan Document
will impair such power, right, or privilege or be construed to be a waiver of
any default or acquiescence therein. No single or partial exercise of any such
power, right, or privilege will preclude further exercise thereof or of any
other right, power, or privilege. All rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.
6. NOTICES
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given will be in writing and addressed
to the respective party as set forth below its signature hereunder, or to such
other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any provision of
this Agreement will be effective without the written concurrence of Assignor
Lender, Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law.
In the event any provision of this Agreement is or is held to be invalid,
illegal, or unenforceable under applicable law, such provision will be
ineffective only to the extent of such invalidity, illegality, or
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of the Agreement. In addition, in the event any provision
of or obligation under this Agreement is or is held to be invalid, illegal, or
unenforceable in any jurisdiction, the validity, legality, and enforceability of
the remaining provisions or obligations in any other jurisdictions will not in
any way be affected or impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included for
convenience of reference only, do not constitute a part of this Agreement for
any other purpose, and have no substantive effect.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE.
12. COUNTERPARTS
This Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, will be
deemed an original and all of which shall together constitute one and the same
instrument.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.
ASSIGNEE LENDER: ASSIGNOR LENDER:
____________________________________ ______________________________________
By:_________________________________ By:___________________________________
Title:______________________________ Title:________________________________
Notice Address: Notice Address:
____________________________________ ______________________________________
____________________________________ ______________________________________
____________________________________ ______________________________________
ACKNOWLEDGED AND CONSENTED TO:
GENERAL ELECTRIC CAPITAL CORPORATION
By:_________________________________
Title:______________________________
ACKNOWLEDGED AND CONSENTED TO:
WILSONS LEATHER HOLDINGS INC.
By:_________________________________
Title:______________________________
SCHEDULE 2.1
Assignor Lender's Loans
Principal Amount
----------------
Revolving Loan $__________
Subtotal $
==========
Accrued Interest $__________
Unused Line Fee $__________
Other + or - $__________
Total $
==========
All determined as of the Effective Date.