AMENDED AND RESTATED
DEBTOR-IN-POSSESSION
CREDIT AGREEMENT
DATED AS OF
MAY 11, 2004
AMONG
FOOTSTAR, INC.,
AS LEAD BORROWER FOR
FOOTSTAR, INC.
AND
FOOTSTAR CORPORATION,
THE LENDERS PARTY HERETO,
FLEET NATIONAL BANK,
AS ADMINISTRATIVE AGENT AND SWINGLINE LENDER,
FLEET RETAIL GROUP, INC.,
AS COLLATERAL AGENT,
GENERAL ELECTRIC CAPITAL CORPORATION
AS SYNDICATION AGENT,
AND
▇▇▇▇▇ FARGO FOOTHILL, LLC,
AS DOCUMENTATION AGENT
------------------------------------------------
FLEET NATIONAL BANK AND GECC CAPITAL MARKETS GROUP, INC.,
AS CO-LEAD ARRANGERS
TABLE OF CONTENTS
PAGE
ARTICLE I.........................................................................................................1
DEFINITIONS.......................................................................................................1
SECTION 1.1 DEFINED TERMS......................................................................1
SECTION 1.2 TERMS GENERALLY...................................................................30
SECTION 1.3 ACCOUNTING TERMS; GAAP............................................................30
ARTICLE II.......................................................................................................30
AMOUNT AND TERMS OF CREDIT.......................................................................................30
SECTION 2.1 COMMITMENTS OF THE LENDERS........................................................30
SECTION 2.2 LIMITATIONS ON REVOLVING LOANS....................................................31
SECTION 2.3 MAKING OF REVOLVING LOANS.........................................................31
SECTION 2.4 OVERADVANCES......................................................................32
SECTION 2.5 SWINGLINE LOANS...................................................................33
SECTION 2.6 LETTERS OF CREDIT.................................................................33
SECTION 2.7 SETTLEMENTS AMONG LENDERS.........................................................37
SECTION 2.8 NOTES; REPAYMENT OF LOANS.........................................................38
SECTION 2.9 INTEREST ON REVOLVING LOANS.......................................................39
SECTION 2.10 DEFAULT INTEREST..................................................................39
SECTION 2.11 CERTAIN FEES......................................................................39
SECTION 2.12 UNUSED LINE FEES..................................................................39
SECTION 2.13 LETTER OF CREDIT FEES.............................................................40
SECTION 2.14 NATURE OF FEES....................................................................40
SECTION 2.15 TERMINATION OR REDUCTION OF COMMITMENTS...........................................40
SECTION 2.16 ALTERNATE RATE OF INTEREST........................................................41
SECTION 2.17 CONVERSION AND CONTINUATION OF LOANS..............................................41
SECTION 2.18 MANDATORY PREPAYMENT; COMMITMENT TERMINATION; CASH COLLATERAL.....................42
SECTION 2.19 OPTIONAL PREPAYMENT OF REVOLVING LOANS; REIMBURSEMENT OF LENDERS..................43
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SECTION 2.20 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT................................44
SECTION 2.21 CASH RECEIPTS.....................................................................45
SECTION 2.22 APPLICATION OF PAYMENTS...........................................................45
SECTION 2.23 INCREASED COSTS...................................................................45
SECTION 2.24 CHANGE IN LEGALITY................................................................46
SECTION 2.25 PAYMENTS; SHARING OF SETOFF.......................................................47
SECTION 2.26 TAXES.............................................................................48
SECTION 2.27 SECURITY INTERESTS IN COLLATERAL..................................................50
SECTION 2.28 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS....................................50
ARTICLE III......................................................................................................51
[INTENTIONALLY OMITTED].................................................................................51
ARTICLE IV.......................................................................................................51
REPRESENTATIONS AND WARRANTIES...................................................................................51
SECTION 4.1 ORGANIZATION; POWERS..............................................................51
SECTION 4.2 AUTHORIZATION; ENFORCEABILITY.....................................................51
SECTION 4.3 GOVERNMENTAL APPROVALS; NO CONFLICTS..............................................51
SECTION 4.4 FINANCIAL CONDITION...............................................................52
SECTION 4.5 PROPERTIES........................................................................52
SECTION 4.6 LITIGATION AND ENVIRONMENTAL MATTERS..............................................53
SECTION 4.7 NO DEFAULT; COMPLIANCE WITH LAWS AND AGREEMENTS...................................54
SECTION 4.8 INVESTMENT AND HOLDING COMPANY STATUS.............................................54
SECTION 4.9 TAXES.............................................................................54
SECTION 4.10 ERISA.............................................................................54
SECTION 4.11 DISCLOSURE........................................................................55
SECTION 4.12 SUBSIDIARIES......................................................................55
SECTION 4.13 INSURANCE.........................................................................55
SECTION 4.14 LABOR MATTERS.....................................................................55
SECTION 4.15 SECURITY DOCUMENTS................................................................56
SECTION 4.16 FEDERAL RESERVE REGULATIONS.......................................................56
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SECTION 4.17 PRIORITY..........................................................................56
ARTICLE V........................................................................................................56
CONDITIONS.......................................................................................................56
SECTION 5.1 EFFECTIVE DATE....................................................................56
SECTION 5.2 CONDITIONS PRECEDENT TO EACH REVOLVING LOAN AND EACH LETTER OF CREDIT.............58
ARTICLE VI.......................................................................................................59
AFFIRMATIVE COVENANTS............................................................................................59
SECTION 6.1 FINANCIAL STATEMENTS AND OTHER INFORMATION........................................59
SECTION 6.2 NOTICES OF MATERIAL EVENTS........................................................62
SECTION 6.3 INFORMATION REGARDING COLLATERAL..................................................63
SECTION 6.4 EXISTENCE; CONDUCT OF BUSINESS....................................................63
SECTION 6.5 PAYMENT OF OBLIGATIONS............................................................63
SECTION 6.6 MAINTENANCE OF PROPERTIES.........................................................63
SECTION 6.7 INSURANCE.........................................................................64
SECTION 6.8 CASUALTY AND CONDEMNATION.........................................................64
SECTION 6.9 BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS; APPRAISALS........................64
SECTION 6.10 COMPLIANCE WITH LAWS..............................................................65
SECTION 6.11 USE OF PROCEEDS AND LETTERS OF CREDIT.............................................65
SECTION 6.12 ADDITIONAL SUBSIDIARIES; AFTER ACQUIRED REAL ESTATE...............................65
SECTION 6.13 [INTENTIONALLY OMITTED]...........................................................66
SECTION 6.14 [INTENTIONALLY OMITTED]...........................................................66
SECTION 6.15 FURTHER ASSURANCES................................................................66
ARTICLE VII......................................................................................................67
NEGATIVE COVENANTS...............................................................................................67
SECTION 7.1 INDEBTEDNESS AND OTHER OBLIGATIONS................................................67
SECTION 7.2 LIENS.............................................................................67
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SECTION 7.3 FUNDAMENTAL CHANGES...............................................................68
SECTION 7.4 INVESTMENTS; LOANS; ADVANCES; GUARANTEES AND ACQUISITIONS.........................68
SECTION 7.5 ASSET SALES; BLOCKED SALES; TRANSFERS.............................................69
SECTION 7.6 RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS.............................70
SECTION 7.7 TRANSACTIONS WITH AFFILIATES......................................................71
SECTION 7.8 RESTRICTIVE AGREEMENTS............................................................71
SECTION 7.9 AMENDMENT OF MATERIAL DOCUMENTS...................................................71
SECTION 7.10 ADDITIONAL SUBSIDIARIES...........................................................72
SECTION 7.11 EXCESS AVAILABILITY...............................................................72
SECTION 7.12 [INTENTIONALLY OMITTED]...........................................................72
SECTION 7.13 MAXIMUM CAPITAL EXPENDITURES......................................................72
SECTION 7.14 BANKRUPTCY COVENANTS..............................................................72
ARTICLE VIII.....................................................................................................73
EVENTS OF DEFAULT................................................................................................73
SECTION 8.2 [INTENTIONALLY OMITTED]...........................................................77
SECTION 8.3 WHEN CONTINUING...................................................................77
SECTION 8.4 REMEDIES ON DEFAULT...............................................................77
SECTION 8.5 APPLICATION OF PROCEEDS...........................................................77
ARTICLE IX.......................................................................................................77
THE AGENTS.......................................................................................................77
SECTION 9.1 ADMINISTRATION BY ADMINISTRATIVE AGENT............................................77
SECTION 9.2 THE COLLATERAL AGENT..............................................................78
SECTION 9.3 SHARING OF EXCESS PAYMENTS........................................................78
SECTION 9.4 AGREEMENT OF REQUIRED LENDERS.....................................................79
SECTION 9.5 LIABILITY OF AGENTS...............................................................79
SECTION 9.6 REIMBURSEMENT AND INDEMNIFICATION.................................................80
SECTION 9.7 RIGHTS OF AGENTS..................................................................80
SECTION 9.8 INDEPENDENT LENDERS AND ISSUING BANK..............................................80
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SECTION 9.9 NOTICE OF TRANSFER................................................................80
SECTION 9.10 SUCCESSOR AGENT...................................................................81
SECTION 9.11 REPORTS AND FINANCIAL STATEMENTS..................................................81
SECTION 9.12 SYNDICATION AGENT, CO-LEAD ARRANGERS AND DOCUMENTATION AGENT......................81
SECTION 9.13 PUBLIC ANNOUNCEMENTS..............................................................81
ARTICLE X........................................................................................................82
MISCELLANEOUS....................................................................................................82
SECTION 10.1 NOTICES...........................................................................82
SECTION 10.2 WAIVERS; AMENDMENTS...............................................................82
SECTION 10.3 EXPENSES; INDEMNITY; DAMAGE WAIVER................................................84
SECTION 10.4 DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT..................................86
SECTION 10.5 SUCCESSORS AND ASSIGNS............................................................87
SECTION 10.6 SURVIVAL..........................................................................89
SECTION 10.7 COUNTERPARTS; INTEGRATION; EFFECTIVENESS..........................................90
SECTION 10.8 SEVERABILITY......................................................................90
SECTION 10.9 RIGHT OF SETOFF...................................................................90
SECTION 10.10 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS........................90
SECTION 10.11 WAIVER OF JURY TRIAL..............................................................91
SECTION 10.12 HEADINGS..........................................................................91
SECTION 10.13 INTEREST RATE LIMITATION..........................................................91
SECTION 10.14 ADDITIONAL WAIVERS................................................................92
SECTION 10.15 REPLACEMENT NOTE..................................................................93
SECTION 10.16 CONFIDENTIALITY...................................................................93
SECTION 10.17 CONFLICTING PROVISIONS............................................................94
SECTION 10.18 EXISTING CREDIT AGREEMENT. .......................................................94
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EXHIBITS
A Assignment and Acceptance
B Borrowing Order
C-1 Revolving Notes
C-2 Swingline Note
D Borrowing Request
E-1 Opinion of Outside Counsel to Loan Parties
E-2 Opinion of Inhouse Counsel to Loan Parties
F Compliance Certificate
G Borrowing Base Certificate
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SCHEDULES
1.1(a) Pricing Grid - Revolving Loans
1.1(b) Lenders and Commitments
1.1(c) Existing Letters of Credit
1.2 Fiscal Periods
2.17 Interest Rate Option Notice
4.5(c)(i) Title to Properties; Real Estate Owned
4.5(c)(ii) Leased Properties
4.6 Disclosed Matters
4.12 Subsidiaries
4.13 Insurance
5.1 Holding Companies
6.1(j) Financial Reporting Requirements
7.1 Existing Indebtedness
7.2 Existing Liens
7.4 Existing Investments
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AMENDED AND RESTATED
DEBTOR-IN-POSSESSION
CREDIT AGREEMENT
THIS AMENDED AND RESTATED DEBTOR-IN-POSSESSION CREDIT AGREEMENT dated
as of May 11, 2004 among FOOTSTAR, INC., a debtor and debtor-in-possession, a
Delaware corporation, having its chief executive office at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as Lead Borrower for the Borrowers, being said FOOTSTAR,
INC., and FOOTSTAR CORPORATION, a debtor and debtor-in-possession, a Texas
corporation, having its principal place of business at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and the LENDERS party hereto; FLEET NATIONAL BANK, as
Administrative Agent and Swingline Lender, a national banking association having
a place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; FLEET
RETAIL GROUP, INC. (formerly known as Fleet Retail Finance Inc.), as Collateral
Agent for the Lenders, a Delaware corporation having its principal place of
business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; GENERAL ELECTRIC
CAPITAL CORPORATION, as syndication agent (in such capacities, the "SYNDICATION
AGENT"); and ▇▇▇▇▇ FARGO FOOTHILL, LLC, as documentation agent (in such
capacity, the "DOCUMENTATION AGENT"); in consideration of the mutual covenants
herein contained and benefits to be derived herefrom.
WHEREAS, the Borrowers, the Agents, the Syndication Agent, the
Documentation Agent and certain other lending institutions are parties to a
certain Debtor-In-Possession Credit Agreement dated as of March 4, 2004 (as
amended and in effect as of the date hereof, the "EXISTING CREDIT AGREEMENT");
and
WHEREAS, the Borrowers have requested, among other things, that the
Existing Credit Agreement be amended and restated on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth herein below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree that on the Effective Date, the Existing Credit
Agreement shall be amended and restated in its entirety by this Agreement, the
terms of which are as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following terms have
the meanings specified below:
"ACH" shall mean automated clearing house transfers.
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"ACCOUNT" shall mean any right to payment for goods sold or leased or
for services rendered, whether or not earned by performance, or any right to
payment for credit extended for goods sold or leased or services rendered.
"ACCOUNTING RESTATEMENT MATTER" shall mean that certain restatement of
the accounts payable, the retained earnings and net income of the Lead Borrower
and its Subsidiaries for prior fiscal periods through September 28, 2002.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) determined in accordance with the following
formula:
LIBO RATE
---------------------------------
1.00 - LIBOR Reserve Requirements
"ADMINISTRATIVE AGENT" means Fleet, in its capacity as administrative
agent for the Lenders hereunder, together with its successors and assigns in
such capacity.
"AFFILIATE" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"AGENTS" means collectively, the Administrative Agent and the
Collateral Agent.
"AGREEMENT" means this agreement as amended from time to time in
accordance with the terms hereof.
"ALTERNATE BASE RATE" shall mean, for any day, the higher of (a) the
annual rate of interest then most recently announced publicly by Fleet at its
head office in Boston, Massachusetts as its "Base Rate" and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. If
for any reason the Administrative Agent shall have determined in its reasonable
commercial judgment (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations thereof in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) of the first sentence
of this definition, until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in Fleet's
Base Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in Fleet's Base Rate or the Federal Funds
Effective Rate, respectively.
"APPLICABLE MARGIN" means with respect to Revolving Loans, initially,
the rates for Base Rate Loans and Eurodollar Loans set forth in Level I on the
Pricing Grid attached hereto as SCHEDULE 1.1(A). The Applicable Margin shall be
adjusted quarterly as of the first day of each fiscal quarter, commencing with
the fiscal quarter beginning October 3, 2004, based upon the average Excess
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Availability for the immediately preceding fiscal quarter, PROVIDED THAT upon
the occurrence and continuance of an Event of Default, the Applicable Margin
shall be immediately increased to Level I. Notwithstanding anything to the
contrary, upon written notice from the Administrative Agent after the occurrence
and during the continuance of any Event of Default, interest shall accrue at the
rate set forth in Section 2.10. No downward adjustment of the Applicable Margin
hereunder shall be permitted if there shall exist any Default or Event of
Default at the time of such proposed downward adjustment.
"APPRAISAL PERCENTAGE" shall mean 65%.
"APPRAISED VALUE" means the net appraised liquidation value of the Loan
Parties' Inventory (expressed as a percentage of the Cost of such Inventory) as
determined from time to time (subject to the last sentence of Section 6.9
herein) by an independent appraiser engaged by the Agents.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.5), and accepted by the Administrative Agent, in the form
of EXHIBIT A or any other form approved by the Administrative Agent.
"AVAILABILITY" means the least of (a) or (b), where:
(a) is the result of:
(i) the sum of the Commitments, MINUS
(ii) the aggregate outstanding amount of the Credit
Extensions, MINUS
(ii) the Carve Out Reserve;
(b) is the result of:
(i) the Borrowing Base; MINUS
(ii) the aggregate outstanding amount of all Credit
Extensions, MINUS
(iii) the Carve Out Reserve; MINUS
(iv) the amount of all Availability Reserves; MINUS
(v) the Kmart Reserve.
"AVAILABILITY RESERVES" means such reserves as the Agents from time to
time determine in their commercially reasonable discretion as being appropriate
to reflect the impediments which may prevent the Collateral Agent from realizing
upon the Collateral. Without limiting the generality of the foregoing,
Availability Reserves may include (but are not limited to) reserves based on
(i)(A) rent due under real property leases but not yet paid and (B) two months
rent (whether or not paid) in states where a landlord Lien could prime the
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Collateral Agent's Lien under the Security Documents (unless a landlord Lien
waiver reasonably acceptable to the Collateral Agent has been obtained
therefor); (ii) Gift Certificates and Merchandise Credit Liability (not to
exceed 50% of the outstanding amount thereof); (iii) frequent shopper programs;
(iv) layaways and customer deposits; (v) customs, duties, and other costs to
release Eligible In-Transit Inventory which is being imported into the United
States to the extent not paid; (vi) outstanding taxes and other governmental
charges, including, ad valorem, real estate, personal property, and other taxes
which might have priority over the interests of the Collateral Agent in the
Collateral and either which have not been paid when due (unless such taxes are
the subject of a bona fide dispute and are supported by funded reserves) or
which the Agents, in their discretion, believe may impede the Collateral Agent's
ability to realize upon the Collateral; (vii) challenges instituted in the
Reorganization Cases with respect to the Pre-Petition Senior Debt or Liens
relating thereto; and (viii) reserves based upon 100% of the weighted average
discount offered at retail with respect to Inventory owned by any Loan Party and
being sold in locations which are in the process of being liquidated and closed.
"BANKRUPTCY CODE" means Title 11, U.S.C., as amended from time to time
and the Federal Rules of Bankruptcy Procedure, as amended from time to time.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Southern District of New York and any other court having competent jurisdiction
over the Reorganization Cases, the Debtors or any of their assets.
"BANKRUPTCY PLAN" means a plan (within the meaning of the Bankruptcy
Code) proposed in the Reorganization Cases which is filed with and/or confirmed
by a Final Order of the Bankruptcy Court.
"BANKRUPTCY RECOVERIES" means any claim or recovery realized by the
Debtors or which the Debtors may be entitled to assert by reason of any
avoidance or other power vested in or on behalf of the Debtors or the estates of
the Debtors under Chapter 5 of the Bankruptcy Code.
"BASE RATE LOAN" shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"BLOCKED ACCOUNTS" shall have the meaning assigned to it in the
Security Agreements.
"BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
"BORROWER SECURITY AGREEMENT" means the Security Agreement among the
Borrowers and the Collateral Agent for the benefit of the Agents, the Issuing
Banks and the Lenders, and as may be further evidenced in the Borrowing Order.
"BORROWERS" means, jointly and severally, the parties named as
Borrowers in the preamble hereto.
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"BORROWING" shall mean the incurrence of (a) Loans of a single Type, on
a single date and having, in the case of Eurodollar Loans, a single Interest
Period or (b) a Swingline Loan.
"BORROWING BASE" means, at any time of calculation by the Agents,
without duplication, is the result of:
(i) the Receivables Advance Rate times the face amount of
Eligible Receivables (as set forth in the most recent Borrowing Base
Certificate required to be delivered in accordance with Section
6.1(e)), but excluding the portion of such product in excess of
$25,000,000 attributable to Accounts due from Kmart Corporation or any
of its Affiliates; PLUS
(ii) the lesser of (a) the Appraisal Percentage times the sum
of the Appraised Value of Eligible Inventory (other than the Eligible
L/C Inventory) and the Appraised Value of Eligible In-Transit
Inventory; or (b) the applicable Inventory Advance Rate times the sum
of the Cost of Eligible Inventory (other than Eligible L/C Inventory)
and the Cost of Eligible In-Transit Inventory (in each case of (a) and
(b), as set forth in the most recent Borrowing Base Certificate
required to be delivered in accordance with Section 6.1(e) and net of
Inventory Reserves applicable thereto); PLUS
(iii) the L/C Inventory Advance Rate times the Eligible L/C
Inventory, net of Inventory Reserves applicable thereto (as set forth
in the most recent Borrowing Base Certificate required to be delivered
in accordance with Section 6.1(e)).
"BORROWING BASE CERTIFICATE" has the meaning assigned to such term in
Section 6.1(e).
"BORROWING ORDER" means an order, in form attached as EXHIBIT B hereto
or otherwise satisfactory to the Agents, entered in the Reorganization Cases,
which order authorizes the creation of the credit facilities contemplated by
this Agreement, as such order may from time to time be amended with the written
consent of the Agents, the Co-Lead Arrangers and the Required Lenders. The term
"Borrowing Order" shall include the Interim Borrowing Order and the Final
Borrowing Order, as applicable.
"BORROWING REQUEST" means a request by the Lead Borrower on behalf of
the Borrowers for a Borrowing in accordance with Section 2.3.
"BREAKAGE COSTS" shall have the meaning set forth in Section 2.19(b).
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
by law to remain closed, PROVIDED THAT, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"CAPITAL EXPENDITURES" means, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Lead
Borrower and its Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Lead Borrower and its Subsidiaries for such
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period prepared in accordance with GAAP and (b) Capital Lease Obligations
incurred by the Borrowers during such period; PROVIDED THAT Capital Expenditures
shall exclude any additions to property, plant, and equipment to the extent paid
for with proceeds of insurance received with respect to any casualty relating
thereto.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CARVE OUT" has the meaning set forth in the Borrowing Order.
"CARVE OUT RESERVE" means a Reserve equal to the maximum possible
amount of the Carve Out.
"CASH COLLATERAL ACCOUNT" means an interest-bearing account established
by the Borrowers with the Collateral Agent at Fleet under the sole and exclusive
dominion and control of the Collateral Agent designated as the "Footstar Cash
Collateral Account".
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. ss. 9601 et seq.
"CHANGE IN CONTROL" shall be deemed to have occurred if after the
Closing Date (i) any person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Commission as in effect on the date hereof) shall become
the beneficial owner (within the meaning of Rule 13d-3 of such Commission as in
effect on the date hereof) of voting securities (including any options, rights
or warrants to purchase, and any securities convertible into or exchangeable
for, voting securities) of the Lead Borrower representing 35% or more of the
voting power represented by all outstanding securities of the Lead Borrower;
(ii) a majority of the seats (other than vacant seats) on the board of directors
of the Lead Borrower shall at any time be occupied by persons who were neither
(a) nominated by the management of the Lead Borrower, nor (b) appointed by
directors so nominated; or (iii) unless the disposition thereof is permitted by
Section 7.5 hereof, the Lead Borrower fails to legally or beneficially own,
directly or indirectly, 100% on a fully-diluted basis of the capital stock and
other equity interests in each of the Loan Parties which it wholly owns on the
date hereof or any Subsidiary it hereafter forms or acquires or less than 51% on
a fully-diluted basis of the capital stock and other equity interests of each of
the Meldisco/Kmart Loan Parties which it owns on the date hereof or hereafter
forms or acquires pursuant to the Kmart Agreement.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.23(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
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"CHARGES" has the meaning provided therefor in Section 10.13.
"CLOSING DATE" means March 4, 2004.
"CO-LEAD ARRANGERS" means the Administrative Agent and GECC Capital
Markets Group, Inc. and their respective successors and assigns.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means any and all "Collateral" as defined in any
applicable Security Document and any and all collateral provided for in the
Borrowing Order. The Collateral shall in no event include Bankruptcy Recoveries
(except as otherwise provided in the Borrowing Order).
"COLLATERAL AGENT" means FRG, in its capacity as collateral agent under
the Security Documents.
"COMMERCIAL LETTER OF CREDIT" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Borrowers in the ordinary
course of business of the Borrowers.
"COMMITMENT" shall mean, with respect to each Lender, the aggregate
commitment of such Lender hereunder in the amount set forth opposite its name on
SCHEDULE 1.1(B) hereto or as may subsequently be set forth in the Register from
time to time, as the same may be reduced from time to time pursuant to Section
2.15.
"COMMITMENT PERCENTAGE" shall mean, with respect to each Lender, that
percentage of the Commitments of all Lenders hereunder in the amount set forth
opposite its name on SCHEDULE 1.1(B) hereto or as may subsequently be set forth
in the Register from time to time, as the same may be reduced from time to time
pursuant to Section 2.15.
"COMPLIANCE CERTIFICATE" has the meaning set forth in Section 6.1(d).
"CONSUMMATION DATE" means the date of substantial consummation (as
defined in Section 1101 of the Bankruptcy Code and which for purposes of this
Agreement shall be no later than the effective date) of a Bankruptcy Plan
confirmed by a Final Order.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
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"COST" means the average cost of purchases, as reported on the
Borrowers' stock ledger, based upon the Borrowers' accounting practices which
are in effect on the date of this Agreement. "COST" does not include inventory
capitalization costs or other non-purchase price charges (such as freight) used
in the Lead Borrower's calculation of cost of goods sold.
"CREDIT EXTENSIONS" as of any day, shall be equal to the sum of (a) the
principal balance of all Loans then outstanding, and (b) the then amount of the
Letter of Credit Outstandings.
"DDA" shall have the meaning assigned to it in the Security Agreements.
"DEBTOR" means any Loan Party who has commenced a proceeding pursuant
to Chapter 11 of the Bankruptcy Code.
"DEFAULT" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DOCUMENTATION AGENT" means ▇▇▇▇▇ Fargo Foothill, LLC.
"DOLLARS" or "$" refers to lawful money of the United States of
America.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 5.1 are satisfied (or waived in accordance with Section 10.2).
"ELIGIBLE CREDIT CARD RECEIVABLES" means, as of the date of
determination thereof, Accounts due to a Loan Party on a non-recourse basis
(other than standard chargebacks and standard fees due to the credit card issuer
or processor) from (i) Visa, MasterCard, American Express Co., Discover, World
Financial Network National Bank (in connection with the Borrowers' private label
credit card) or JCB, and (ii) other credit card issuers and/or processors
reasonably acceptable to the Agents as arise in the ordinary course of business
for the purchase of merchandise or services which have been earned by
performance; PROVIDED THAT, none of the following shall be deemed to be Eligible
Credit Card Receivables:
(a) Accounts that are past due or Accounts that have been outstanding
for more than seven days from the date of sale;
(b) Accounts with respect to which a Loan Party does not have good,
valid and marketable title thereto, free and clear of any Lien (other than Liens
granted to the Collateral Agent, for its benefit and the ratable benefit of the
Secured Parties, pursuant to the Security Documents);
(c) Accounts that are not subject to a first priority security interest
in favor of the Collateral Agent, for the benefit of itself and the Secured
Parties (it being the intent that standard fees due by the Loan Parties and
standard chargebacks in the ordinary course by such credit card issuers and/or
processors shall not be deemed violative of this clause);
-8-
(d) Accounts which are disputed, are with recourse, or with respect to
which a claim, counterclaim, offset or chargeback has been asserted (to the
extent of such claim, counterclaim, offset or chargeback); and
(e) Accounts which the Agents determine in their reasonable commercial
judgment to be unlikely to be collected.
"ELIGIBLE HOST STORE RECEIVABLES" means, as of the date of
determination thereof, Accounts and payment intangibles owed to a Loan Party by
a Host Store on account of the retail sale of Inventory by a Loan Party at the
subject Host Store (net of rent, fees, and other amounts due and payable to the
subject account debtor under the subject lease, license, or other agreement
between such Loan Party and the subject Host Store) in which account receivable
the Collateral Agent has a first and only valid and perfected priority security
interest; PROVIDED THAT, none of the following shall be deemed to be Eligible
Host Store Receivables:
(a) All Accounts of any Host Store other than Kmart Corporation or its
Affiliates, any part of whose Accounts due to any Loan Party is more than seven
days past due in accordance with the payment terms of the lease, license, or
other agreement between such Loan Party and the subject Host Store;
(b) All Accounts of Kmart Corporation or its Affiliates, any part of
whose Accounts due to any Loan Party is more than three Business Days past due
in accordance with the payment terms of the Kmart Agreement;
(c) any Account as to which any one or more of the following events has
occurred with respect to the account debtor: death or judicial declaration of
incompetency; the filing by or against such Person of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, or other relief under the bankruptcy, insolvency, or similar laws of
the United States, any state or territory thereof, or any foreign jurisdiction,
now or hereafter in effect; the making of any general assignment by such Person
for the benefit of creditors; the appointment of a receiver or trustee for such
Person or for any of the assets of such Person, including, without limitation,
the appointment of or taking possession by a "custodian", as defined in the
Bankruptcy Code; the institution by or against such Person of any other type of
insolvency proceeding (under the bankruptcy laws of the United States or
elsewhere) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, such
Person; the sale, assignment, or transfer of all or substantially all of the
assets of such Person; the inability to pay or the nonpayment by such Person of
its debts generally as they become due; or the cessation of the business of such
Person as a going concern (each an "Insolvency Event"), provided, however, that
Accounts which were created after the date of the occurrence of an Insolvency
Event with respect to the applicable account debtor shall not be deemed to be
ineligible solely as a result of the occurrence of such Insolvency Event;
(d) Any Account, to the extent of any disputed amount or amount claimed
by the subject account debtor as being subject to any chargeback, offset, or
contra or is otherwise disputed;
-9-
(e) Any Account owed by any account debtor located in Indiana,
Minnesota, or Vermont (or any other state having requirements similar to those
set forth below) unless the relevant Loan Party (i) has received a certificate
of authority to do business, if applicable, and is in good standing in such
jurisdiction and (ii), if applicable, has filed a Notice of Business Activities
Report with the appropriate state offices for the then current year; and
(f) Accounts which the Agents determine in their reasonable commercial
judgment to be unlikely to be collected.
"ELIGIBLE IN-TRANSIT INVENTORY" shall mean, as of the date of
determination thereof, without duplication of other Eligible Inventory or any
Eligible L/C Inventory, Inventory being delivered from outside the United States
or Puerto Rico which is then being shipped for receipt within 60 days at a
warehouse facility of a Loan Party (a) not yet received at the Borrowers'
distribution centers, (b) which has been consigned to a Loan Party (along with
delivery to a Loan Party or its representative of the documents of title with
respect thereto), (c) as to which a customs broker agency agreement, reasonably
satisfactory to the Agents, is in effect, and (d) which otherwise would
constitute Eligible Inventory within the definition thereof.
"ELIGIBLE INVENTORY" shall mean, as of the date of determination
thereof, without duplication as to Eligible In-Transit Inventory or Eligible L/C
Inventory, items of Meldisco Eligible Inventory of the Loan Parties that are
finished goods, merchantable and readily saleable to the public in the ordinary
course; PROVIDED THAT, none of the following shall be Eligible Inventory:
(a) Inventory that is not owned solely by a Loan Party or the Loan
Parties do not have good and valid title thereto; Inventory that is leased or on
consignment but not owned by a Loan Party; or, unless otherwise agreed to by the
Agents in their discretion on terms acceptable to the Agents, Inventory that is
owned by the Loan Parties but that is leased or on consignment;
(b) Inventory (including any portion thereof in transit from vendors)
that is not located at a warehouse facility used by a Loan Party in the ordinary
course or at a property that is owned or leased by a Loan Party;
(c) Inventory that represents (A) goods damaged, defective or otherwise
unmerchantable, (B) goods that do not conform in all material respects to the
representations and warranties contained in this Agreement or any of the
Security Documents, or (C) goods to be returned to the vendor;
(d) Inventory that is not located in the United States of America
(excluding territories and possessions thereof other than Puerto Rico);
(e) Inventory that is not subject to a perfected first-priority
security interest in favor of the Collateral Agent for the benefit of the
Secured Parties;
-10-
(f) Inventory which consists of samples, labels, bags, packaging, and
other similar non-merchandise categories;
(g) Inventory as to which insurance in compliance with the provisions
of Section 6.7 hereof is not in effect; and
(h) Inventory which has been sold but not yet delivered.
"ELIGIBLE L/C INVENTORY" shall mean, as of the date of determination
thereof, without duplication of any Eligible Inventory or Eligible In-Transit
Inventory, Inventory (a) not yet received at the Borrowers' distribution
centers, (b) the purchase of which is supported by a Commercial Letter of Credit
having an expiry within 60 days of such date of determination, (c) as to which a
customs broker agency agreement, reasonably satisfactory to the Agents, is in
effect, and (d) which upon receipt by the applicable Loan Party would otherwise
constitute Eligible Inventory.
"ELIGIBLE RECEIVABLES" means, as of the date of determination, (a)
Eligible Credit Card Receivables, (b) Eligible Host Store Receivables, and (c)
Eligible Wholesale Receivables.
"ELIGIBLE WHOLESALE RECEIVABLES" means as of the date of determination,
without duplication as to Eligible Host Store Receivables or Eligible Credit
Card Receivables, the Accounts of any Loan Party at such date, created in the
ordinary course of business from sales of Inventory on account; PROVIDED THAT,
none of the following shall be deemed to be Eligible Wholesale Receivables:
(a) any Account not payable in Dollars;
(b) any Account which, at the date of issuance of the invoice therefor,
was by its terms payable more than 60 days after shipment of the related
Inventory or otherwise reasonably acceptable in writing to the Agents;
(c) any Account which remains unpaid for more than 90 days past the
original contractual invoice date of such Account;
(d) any Account due from any Loan Party or Affiliate of any Loan Party;
(e) any Account with respect to all or part of which a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been presented for payment and returned uncollected for any reason;
(f) any Account as to which any one or more of the following events has
occurred with respect to the account debtor: death or judicial declaration of
incompetency; the filing by or against such Person of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, or other relief under the bankruptcy, insolvency, or similar laws of
the United States, any state or territory thereof, or any foreign jurisdiction,
now or hereafter in effect; the making of any general assignment by such Person
for the benefit of creditors; the appointment of a receiver or trustee for such
Person or for any of the assets of such Person, including, without limitation,
the appointment of or taking possession by a "custodian", as defined in the
Bankruptcy Code; the institution by or against such Person of any other type of
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insolvency proceeding (under the bankruptcy laws of the United States or
elsewhere) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, such
Person; the sale, assignment, or transfer of all or substantially all of the
assets of such Person; the inability to pay or the nonpayment by such Person of
its debts generally as they become due; the cessation of the business of such
Person as a going concern; or, in the Agents' commercial judgment,
unsatisfactory general financial performance or credit standing or likelihood of
unsatisfactory general financial performance or credit standing in the near
future;
(g) any Account due from an account debtor incorporated under the laws
of any jurisdiction other than the United States of America or Puerto Rico or
any political subdivision of any of the foregoing or whose principal place of
business, residence or domicile or substantially all of whose assets is located
outside of the United States of America or Puerto Rico, unless such Account is
backed by U.S. Government insurance or a letter of credit issued or confirmed by
a bank organized under the laws of the United States of America or a State
thereof and having capital, surplus, and undivided profits in excess of
$500,000,000 (so long as such letter of credit has been delivered to the
Collateral Agent as additional Collateral under the Security Documents);
(h) all Accounts of any account debtor if more than 25% of the
aggregate amount of Accounts of such account debtor are ineligible pursuant to
clause (c) above;
(i) the disputed portion of any Account as to which there is any
unresolved dispute, defense, offset, counterclaim or other deduction with or by
the respective account debtor (or the full portion of such Account if the
account debtor is representing that it will not pay any portion of the
undisputed amount of such Account due to such disputed portion);
(j) any Account as to which either (i) the perfection, enforceability
or validity of the Collateral Agent's security interest in such Receivable, or
(ii) the Collateral Agent's right or ability to obtain direct payment to the
Collateral Agent, for the benefit of the Lenders, of the proceeds of such
Receivables, is governed by any federal or state statutory requirements other
than those of the UCC and the Bankruptcy Code;
(k) any Account as to which the Collateral Agent, for the benefit of
the Lenders, does not have a valid and enforceable first priority security
interest, subject to no other Liens;
(l) any Account representing an obligation for goods sold on
consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement;
(m) any Account for which the Loan Parties do not have in place a
wholesale accounts receivable accounting system, including without limitation
agings reporting, reasonably acceptable to the Collateral Agent; and
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(n) any Account which the Agents determine in their reasonable
commercial judgment to be unlikely to be collected.
"ENVIRONMENTAL INDEMNITY" means the Environmental Compliance and
Indemnity Agreement among the Borrowers and the Agents, in form and substance
satisfactory to the Agents.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of any Borrower directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Lead Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Lead Borrower or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by the Lead Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by the Lead Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the Lead Borrower or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Lead Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
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"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"EVENT OF DEFAULT" has the meaning assigned to such term in Section
8.1.
"EXCESS AVAILABILITY" means, as of any date of determination, the
result of (a) Availability MINUS (b) all then past due obligations of the
Debtors arising subsequent to the commencement of the Reorganization Cases which
are not current, including without limitation, accounts payable which are beyond
customary trade terms and rent obligations which are beyond applicable grace
periods.
"EXCLUDED TAXES" means, with respect to the Agents, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrowers hereunder, (a) income or franchise taxes
imposed on (or measured by) its gross or net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by a Borrower
under Section 2.28(b), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.26(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
Section 2.26(a).
"EXISTING CREDIT AGREEMENT" has the meaning set forth in the preamble
hereto.
"EXISTING LETTERS OF CREDIT" means the outstanding Letters of Credit
under the Original Credit Agreement and rolled into the Existing Credit
Agreement as listed on SCHEDULE 1.1(C) hereto.
"FACILITY GUARANTEE" means the Guaranty executed by the Facility
Guarantors in favor of the Collateral Agent for the benefit of the Agents, the
Issuing Banks and the Lenders.
"FACILITY GUARANTORS" means all Subsidiaries of each Borrower now
existing or hereafter created (other than Foreign Subsidiaries and Unrestricted
Subsidiaries), in their capacity as debtors and debtors in possession.
"FACILITY GUARANTORS COLLATERAL DOCUMENTS" means the Facility
Guarantee, the Guarantor Security Agreement, the Mortgages, and all other
security agreements, mortgages, pledge agreements, deeds of trust, and other
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instruments, documents or agreements executed and delivered by any Facility
Guarantor from time to time to secure the Facility Guarantee, and as may be
further evidenced in the Borrowing Order.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on such Business Day by the
Federal Reserve Bank of New York, or, if such day is not a Business Day, the
next succeeding Business Day, or, if such rate is not so published for any day
that is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
Fleet from three Federal funds brokers of recognized standing selected by it.
"FEE LETTERS" means, the letter entitled "Fee Letter" among the
Borrowers, Fleet National Bank and others dated as of March 4, 2004, as such
letter may from time to time be amended by the parties thereto.
"FINAL BORROWING ORDER" means a Borrowing Order entered in the
Reorganization Cases after notice and a final hearing pursuant to Rule 4001(c)
of the Federal Rules of Bankruptcy Procedure and applicable local rules, which
is a Final Order.
"FINAL ORDER" means an order or judgment of the Bankruptcy Court as
entered on the docket of the Clerk of the Bankruptcy Court, that has not been
reversed, stayed, modified or amended and as to which the time to appeal,
petition for certiorari, reargument or rehearing has expired and no proceeding
for certiorari, reargument or rehearing is pending or if an appeal, reargument,
petition for certiorari, or rehearing has been sought, the order or judgment of
the Bankruptcy Court has been affirmed by the highest court to which the order
was appealed, from which the reargument or rehearing was sought, or certiorari
has been denied and the time to take any further appeal or to seek certiorari or
further reargument or rehearing has expired.
"FINANCIAL OFFICER" means the treasurer, assistant treasurer, senior
vice president of financial reporting, the chief administrative officer or the
controller of the Lead Borrower.
"FIRST DAY ORDERS" means those orders entered by the Bankruptcy Court
on the Petition Date or based upon motions filed on the Petition Date.
"FISCAL PERIOD" means the accounting periods of the Borrowers based
upon the Borrowers' accounting practices which are in effect on the date of this
Agreement, such fiscal periods being reflected on SCHEDULE 1.2 hereto.
"FLEET" means Fleet National Bank, a national banking association, and
its successors and assigns.
"FOOTACTION INVENTORY" means Inventory held for sale in the ordinary
course of business at retail in Footaction and Uprise stores, through the
Borrower's Consumer Direct Business, or through related other Footaction or
Uprise selling channels of the Loan Parties.
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"FOOTACTION STORES" means stores selling Footaction Inventory at
retail.
"FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia.
"FOREIGN SUBSIDIARY" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or Puerto Rico or the District of Columbia.
"FRG" means Fleet Retail Group, Inc., a Delaware corporation.
"GAAP" means generally accepted accounting principles in the United
States of America.
"GIFT CERTIFICATE AND MERCHANDISE CREDIT LIABILITY" means, at any time,
the aggregate face value at such time of (a) outstanding gift certificates and
gift cards of the Loan Parties entitling the holder thereof to use all or a
portion of the certificate to pay all or a portion of the purchase price for any
Inventory, and (b) outstanding merchandise credits of the Loan Parties.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, whether
primary or otherwise, and including any obligation of the guarantor, direct or
indirect, (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment
thereof, (c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation or (d) as an
account party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation, PROVIDED THAT the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business.
"GUARANTOR SECURITY AGREEMENT" means the Security Agreement among the
Facility Guarantors and the Collateral Agent for the benefit of the Agents, the
Issuing Banks and the Lenders, and as may be further evidenced in the Borrowing
Order.
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"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement, or
other interest or currency exchange rate or commodity price hedging arrangement.
"HOST STORE" means any Person which operates retail stores at which any
Loan Party operates retail shoe departments as so-called "licensed departments".
"HOST STORE ELIGIBLE INVENTORY" means Eligible Inventory which is
footwear held for sale in the ordinary course of business by the Loan Parties in
Host Stores or through related other selling channels at retail.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others (including, without limitation, under any Synthetic
Leases), (h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances, (k) the
liquidation value of all preferred capital stock and other equity interests of
such Person which are subject to mandatory sinking fund payments, mandatory
redemption or other acceleration at any time from the date hereof to the date
which is 90 days after the Termination Date, and (l) the principal and interest
portions of all rental obligations of such Person under any Synthetic Lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing where such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in accordance with GAAP.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
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"INDEMNITEE" has the meaning provided therefor in Section 10.3(b).
"INTEREST CHARGES" means, for any period, with respect to any Person,
the sum of (a) all interest, premium payments, debt discount, fees, charges and
related expenses of such Person in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense of such Person with respect to such period
under capital leases that is treated as interest in accordance with GAAP.
"INTEREST PAYMENT DATE" means (a) with respect to any Base Rate Loan
(including any Swingline Loan, if applicable), the last day of each calendar
month, (b) with respect to any Eurodollar Loan (including any Swingline Loan, if
applicable), the last day of each calendar quarter and the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part, and
(c) the day each Loan is due (whether at maturity or by acceleration or
otherwise).
"INTEREST PERIOD" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Lead Borrower may elect, or, with respect to any Swingline
Loan, if applicable, the period commencing on the date of such Swingline Loan
and ending on the day agreed to for the last day of such Interest Period between
the Lead Borrower and the Swingline Lender, PROVIDED THAT, in each case (a) if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period, and (c) any Interest Period
which would otherwise end after the Maturity Date shall end on the Maturity
Date. For purposes hereof, the date of a Borrowing initially shall be the date
on which such Borrowing is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.
"INTERIM BORROWING ORDER" means the Borrowing Order entered in the
Reorganization Cases on March 3, 2004 prior to notice and a final hearing
pursuant to Rule 4001(c) of the Federal Rules of Bankruptcy Procedure and any
applicable local rules of the Bankruptcy Court.
"INVENTORY" has the meaning assigned to such term in the Security
Agreements.
"INVENTORY ADVANCE RATE" means the following percentages for the
periods indicated for the types of Inventory indicated:
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Meldisco Eligible Inventory:
------------------------------------ -------------------------------------
Period Inventory Advance Rate
------------------------------------ -------------------------------------
January of each year 68%
------------------------------------ -------------------------------------
February through May of each year 76%
------------------------------------ -------------------------------------
June through December of each year 78%
------------------------------------ -------------------------------------
"INVENTORY RESERVES" means such reserves as may be established from
time to time by the Agents in the Agents' commercially reasonable discretion
with respect to the determination of the salability, at retail, of the Eligible
Inventory or which reflect such other factors as affect the market value of the
Eligible Inventory. Without limiting the generality of the foregoing, Inventory
Reserves may include (but are not limited to) reserves based on (i)
obsolescence; (ii) seasonality; (iii) Shrink; (iv) imbalance; (v) change in
Inventory character; (vi) change in Inventory composition; (vii) change in
Inventory mix; (viii) markdowns (both permanent and point of sale); and (ix)
retail markons and markups inconsistent with prior period practice and
performance; industry standards; current business plans; or advertising calendar
and planned advertising events.
"ISSUING BANK" means Fleet and any successor to Fleet in such capacity.
The Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by Affiliates of the Issuing Bank, in which case the term
"Issuing Bank" shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate, if acceptable to Lead Borrower.
KMART AGREEMENT" means the Master Agreement dated as of June 9, 1995
between Kmart Corporation and the Lead Borrower (as successor to Melville
Corporation), as amended by the Agreement dated as of March 25, 1996, among
Kmart Corporation, Melville Corporation, Kmart Properties, Inc. and Footwear
Group, Inc., predecessor in interest to the Lead Borrower, and the Meldisco
License Agreements referenced in the Master Agreement, and as further amended in
a manner reasonably acceptable to the Agents in connection with the Kmart
Settlement.
"KMART DIVIDEND" means the aggregate amount of dividends and "Excess
Fees" (as defined in the Kmart Agreement) which the Loan Parties are required to
pay to Kmart Corporation (whether pursuant to Article 6.1(b)(ii) and 6.1(b)(v)
of the Kmart Agreement or otherwise).
"KMART-RELATED DEFAULT" means the occurrence of any of the following:
(a) the failure of Kmart Corporation to make any payment in full required to be
made to any Loan Party within three Business Days after the same is due under
the Kmart Agreement, (b) three Business Days after the occurrence of any
material breach by Kmart Corporation or any of its Affiliates under the Kmart
Agreement, if such breach is not cured within such three Business Day period,
(c) the taking of any action by the Borrowers or any of their Subsidiaries (i)
to terminate or reject the Kmart Agreement, (ii) to modify the Kmart Agreement,
or (iii) to modify the Kmart Stipulation in a manner adverse to the Loan Parties
or the Lenders (except with the prior written consent of the Agents, the Co-Lead
Arrangers and the Required Lenders), or (d) within 20 days after the taking of
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any action by Kmart Corporation or any of its Affiliates, to compel rejection of
the Kmart Agreement, unless within such 20 day period the Borrower has obtained
entry of a court order reasonably acceptable to Administrative Agent either (i)
denying such motion to reject or (ii) making such rejection effective not less
than 90 days after the entry of a court order directing the Borrower to reject
the Kmart Agreement.
"KMART RESERVE" means, commencing in 2005 and continuing for each year
thereafter, from February 1 of each such year through the date of the actual
payment of the Kmart Dividend to Kmart Corporation, 100% of the projected Kmart
Dividend. Such projected Kmart Dividend shall be reasonably projected by the
Lead Borrower in good faith based upon the applicable financials of the
Meldisco/Kmart Loan Parties.
"KMART SETTLEMENT" means the (a) amendment of the Kmart Agreement and
the Kmart Stipulation and (b) the Borrowers' assumption of the Kmart Agreement
and payment of all amounts due in connection therewith, in each case in form and
substance reasonably satisfactory to each of the Borrowers and the Required
Lenders, as amended in connection with any settlement by the Debtors with Kmart
that is approved by Final Order of the Bankruptcy Court.
"KMART STIPULATION" means that certain stipulation titled "Stipulation
and Order Regarding Adequate Protection with respect to Kmart Corporation" filed
in connection with the Reorganization Cases.
"L/C DISBURSEMENT" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"L/C INVENTORY ADVANCE RATE" means 50%.
"LEAD BORROWER" means Footstar, Inc., a Delaware corporation.
"LENDER" shall mean each Person having a Commitment as set forth on
SCHEDULE 1.1(B) hereto and each assignee that becomes a party to this Agreement
as set forth in Section 10.5.
"LETTER OF CREDIT" shall mean (a) a letter of credit that is (i) issued
pursuant to this Agreement for the account of any Borrower, (ii) a Standby
Letter of Credit or Commercial Letter of Credit, (iii) issued in connection with
the purchase of Inventory by any Borrower and for other purposes for which a
Borrower has historically obtained letters of credit, or for any other purpose
that is reasonably acceptable to the Administrative Agent, and (iv) in form and
substance reasonably satisfactory to the Issuing Bank, and (b) the Existing
Letters of Credit.
"LETTER OF CREDIT FEES" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.13.
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum undrawn amount that then is or at any time thereafter may become
available for drawing or payment thereunder PLUS (b) all amounts theretofore
drawn or paid under Letters of Credit for which the Issuing Bank has not then
been indefeasibly reimbursed.
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"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate of interest (rounded upwards, if necessary to the next
1/16 of 1%) which represents the offered rate for deposits in U.S. Dollars, for
a period of time comparable to such Interest Period, which appears on the
Telerate page 3750 (or the successor or replacement thereof) as of 11:00 a.m.
(London time) on that day that is two Business Days preceding the first day of
such Interest Period; provided, however, that if the rate described above does
not appear on the Telerate System on any applicable interest determination date,
the LIBO Rate for such Interest Period shall be the rate (rounded upwards as
described above, if necessary) for deposits in dollars for a period
substantially equal to such Interest Period shown on the Reuters Page "LIBO" (or
such other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time) on that day that is two
Business Days prior to the beginning of such Interest Period. If both the
Telerate and Reuters systems are unavailable, then the LIBO Rate for any
Interest Period will be determined on the basis of the offered rates for
deposits in U.S. Dollars for a period of time comparable to such Interest Period
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. (London time) on that day that is two Business Days
preceding the first day of such Interest Period, as selected by the Agent. The
principal London office of each of four major London banks will be requested to
provide a quotation of its Dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
Dollars to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at approximately 11:00
a.m. (New York City) time on that day that is two Business Days preceding the
first day of such Interest Period. In the event that the Administrative Agent is
unable to obtain any such quotation as provided above, it will be deemed that
the LIBO Rate for the proposed Interest Period cannot be determined and is
therefore unavailable. The Administrative Agent shall give notice to the Lead
Borrower of the LIBO Rate as determined for each Eurodollar Borrowing and such
notice shall be conclusive and binding, absent manifest error.
"LIBOR RESERVE REQUIREMENTS" means for any day as applied to a
Eurodollar Borrowing, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including 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) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of the Federal Reserve System.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
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"LOAN ACCOUNT" has the meaning provided therefor in Section 2.20.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Mortgages, the
Environmental Indemnity, the Letters of Credit, the Fee Letters, all Borrowing
Base Certificates, the Borrower Security Agreement, the Facility Guarantee, the
Guarantor Security Agreement, the Patent Security Agreement, the Trademark
Security Agreement, the other Security Documents, any documents or agreements
required by the Security Documents, and any other instrument or agreement
executed and delivered in connection therewith.
"LOAN PARTY" or "LOAN PARTIES" means the Borrowers and the Facility
Guarantors.
"LOANS" shall mean all loans (including, without limitation, Revolving
Loans and Swingline Loans) at any time made to the Borrowers or for account of
the Borrowers pursuant to this Agreement.
"MARGIN STOCK" has the meaning assigned to such term in Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, property, assets, or condition, financial or otherwise, of
the Lead Borrower and its Subsidiaries considered as a whole, (b) the ability of
the Lead Borrower or any Subsidiary to perform any of its obligations under any
Loan Document to which it is or will be a party, or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or any of
the material rights or remedies of the Administrative Agent, the Collateral
Agent or the Lenders hereunder or thereunder.
"MATERIAL AGREEMENTS" means (i) the Kmart Agreement; and (ii) any other
agreement material to the business of the Loan Parties, the termination,
rejection or loss of which would reasonably be expected to result in a Material
Adverse Effect, including without limitation any material agreements with Host
Stores.
"MATERIAL INDEBTEDNESS" means post-Petition Date Indebtedness (other
than the Loans and Letters of Credit) of any one or more of the Loan Parties in
an aggregate principal amount exceeding $10,000,000. For purposes of determining
the amount of Material Indebtedness at any time, the "principal amount" of the
obligations in respect of any Hedging Agreement at such time shall be the
maximum aggregate amount that a Loan Party would be required to pay if such
Hedging Agreement were terminated at that time.
"MATURITY DATE" means May 26, 2004, unless the Final Borrowing Order is
entered by that date and if the Final Borrowing Order is so entered, the
"Maturity Date" shall mean the earlier of March 4, 2006 or the confirmation of a
Bankruptcy Plan.
"MAXIMUM RATE" has the meaning provided therefor in Section 10.13.
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"MELDISCO ELIGIBLE INVENTORY" means Eligible Inventory (a) which is
Host Store Eligible Inventory, (b) held for sale on account in the ordinary
course of business at wholesale by the Loan Parties, or (c) held for sale in the
ordinary course of business at retail by the Loan Parties at Shoe Zone stores
wholly owned by the Loan Parties.
"MELDISCO STORES" means stores selling Meldisco Eligible Inventory at
retail.
"MELDISCO SUBSIDIARIES" means the Subsidiaries of the Lead Borrower
comprising the Meldisco division which sell Meldisco Eligible Inventory at
retail.
"MELDISCO/KMART LOAN PARTIES" means the Loan Parties in which Kmart
Corporation or any of its Affiliates owns a minority interest as identified as
Meldisco/Kmart on SCHEDULE 4.12.
"MINORITY LENDERS" has the meaning provided therefor in Section
10.2(c).
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGES" means, collectively, (i) the Deed of Trust, as amended,
between Footstar Corporation and the Collateral Agent for the benefit of the
Agents, the Issuing Banks and the Lenders with respect to the Real Estate
located in Mira Loma, California, and (ii) each mortgage or deed of trust, as
applicable, with respect to the owned Just for Feet parcels of Real Estate
located in Knoxville, Tennessee, Hurst, Texas and Orlando, Florida, in each case
as may be further evidenced in the Borrowing Order.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET INCOME" means, for any period, with respect to any Person, the net
income of such Person (excluding extraordinary gains but including extraordinary
losses) for that period.
"NEW LENDING OFFICE" has the meaning set forth in Section 2.26(e).
"NONCOMPLIANCE NOTICE" has the meaning provided therefor in Section
2.5(b).
"NOTES" shall mean (i) the promissory notes of the Borrowers
substantially in the form of EXHIBIT C-1, each payable to the order of a Lender,
evidencing the Revolving Loans, and (ii) the promissory note of the Borrowers
substantially in the form of EXHIBIT C-2, payable to the Swingline Lender,
evidencing the Swingline Loans.
"OBLIGATIONS" means (a) the due and punctual payment by the Loan
Parties of the following, whether now existing or hereafter arising: (i) the
principal of, and interest (whether or not allowed in the Reorganization Cases)
on the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Loan Parties under this Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon, fees on account thereof and obligations to
-23-
provide cash collateral and (iii) all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise, of the Loan Parties to the Secured Parties under
this Agreement and the other Loan Documents, including without limitation
attorneys fees and expenses, (b) the due and punctual payment and performance of
all the covenants, agreements, obligations and liabilities, whether now existing
or hereafter arising, of each Loan Party under or pursuant to this Agreement,
and the other Loan Documents, (c) the due and punctual payment and performance
of all covenants, agreements, obligations and liabilities, whether now existing
or hereafter arising, relating to any Hedging Agreements with any Lender or
Affiliate thereof, whether now existing or hereafter arising, to the extent
permitted hereunder, and (d) the due and punctual payment and performance of all
covenants, agreements, obligations and liabilities, whether now existing or
hereafter arising, relating to any transaction with either Agent, or any of
their respective Affiliates, which arises out of any cash management,
depository, investment, letter of credit, interest rate protection or other
Hedging Agreement, equipment leasing or other banking or financial services
provided by any such Person, as each may be amended from time to time.
"ORIGINAL CREDIT AGREEMENT" means that certain Credit Agreement dated
as of October 18, 2002 among the Borrowers, the Lenders party thereto, Fleet
National Bank, as administrative agent and swingline lender, Fleet Retail
Finance Inc. (now known as Fleet Retail Group, Inc.), as collateral agent,
Congress Financial Corporation and ▇▇▇▇▇ Fargo Retail Finance, LLC, as
syndication agents, JPMorgan Chase Bank, as documentation agent, and Back Bay
Capital Funding LLC, as term lender, as the same has been modified, amended,
supplemented or restated from time to time.
"OTHER TAXES" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"OVERADVANCE" means, at any time of calculation, a circumstance in
which Availability is less than zero.
"PATENT SECURITY AGREEMENT" means the Patent Security Agreement among
certain Loan Parties and the Collateral Agent for the benefit of the Agents, the
Issuing Banks and the Lenders, and as may be further evidenced in the Borrowing
Order.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERFECTION CERTIFICATE" means a certificate in the form of ANNEX 1 to
the Security Agreements or any other form approved by the Collateral Agent.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 6.5;
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(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 60 days
or are being contested in compliance with Section 6.5;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VIII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrowers or any Subsidiary;
PROVIDED THAT, except as provided in any one or more of clauses (a) through (f)
above, the term "PERMITTED ENCUMBRANCES" shall not include any Lien securing
Indebtedness.
"PERMITTED OVERADVANCE" means an Overadvance determined by the
Administrative Agent, in its reasonable discretion, which is made to maintain,
protect or preserve the Collateral and/or the Lenders' rights under the Loan
Documents; PROVIDED THAT Permitted Overadvances shall not (i) exceed the lesser
of (A) five percent of the sum of the then Borrowing Base, or (B) Ten Million
Dollars ($10,000,000), in the aggregate outstanding at any time or (ii) remain
outstanding for more than 30 consecutive Business Days (with no less than five
Business Days between each such 30-day period), unless in case of clause (ii),
the Required Supermajority Lenders otherwise agree, or (iii) be permitted to
occur more than three times in any twelve month period; and PROVIDED FURTHER
that the foregoing shall not (1) modify or abrogate any of the provisions of
Section 2.6(f) hereof regarding the Lenders' obligations with respect to L/C
Disbursements, or (2) result in any claim or liability against the
Administrative Agent (regardless of the amount of any Overadvance) for
"inadvertent Overadvances" (i.e. where an Overadvance results from changed
circumstances beyond the control of the Administrative Agent (such as a
reduction in the collateral value)), and FURTHER PROVIDED THAT in no event shall
the Administrative Agent make an Overadvance, if immediately after giving effect
thereto, the principal amount of the Credit Extensions would exceed the
Commitments.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PETITION DATE" means March 2, 2004.
-25-
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Lead
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"PRE-PETITION SENIOR DEBT" means all obligations of the Borrowers under
the Original Credit Agreement.
"PROJECTIONS" has the meaning set forth in Section 4.4(b).
"REAL ESTATE" means all land, together with the buildings, structures,
parking areas, and other improvements thereon, and fixtures relating thereto,
now or hereafter owned or leased by any Loan Party (including, but not limited
to, acquired and/or utilized pursuant to an industrial revenue or development
bond structure), including all easements, rights-of-way, and similar rights
relating thereto, and all leases, tenancies, and occupancies thereof.
"RECEIVABLES ADVANCE RATE" means 85%.
"REGISTER" has the meaning set forth in Section 10.5(c).
"REGULATION U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"RELEASE" has the meaning set forth in Section 101(22) of CERCLA.
"REORGANIZATION CASES" means the collective reference to the cases of
the Debtors pursuant to Chapter 11 of the Bankruptcy Code pending in the
Bankruptcy Court (Docket No. 22350 ET. SEQ. (jointly administered)).
"REQUIRED LENDERS" means, at any time, Lenders having Commitments in
excess of 50% of the Total Commitments, or if the Commitments have been
terminated, Lenders whose percentage of the outstanding Credit Extensions (after
settlement and repayment of all Swingline Loans by the Lenders and after taking
into account each Lender's Commitment Percentage of the Letter of Credit
Outstandings) aggregate in excess of 50% of all such Credit Extensions.
"REQUIRED SUPERMAJORITY LENDERS" shall mean, at any time, Lenders
having Commitments outstanding representing at least 66 and 2/3% of the Total
Commitments outstanding or if the Commitments have been terminated, Lenders
whose percentage of the outstanding Credit Extensions aggregate (after
settlement and repayment of all Swingline Loans by the Lenders and after taking
into account each Lender's Commitment Percentage of the Letter of Credit
Outstandings) not less than 66 and 2/3% of all such Credit Extensions.
-26-
"RESERVES" means all (if any) Inventory Reserves, Availability
Reserves, the Carve Out Reserve and the Kmart Reserve.
"RESTRICTED PAYMENT" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock or other equity interests of any Loan Party or any Subsidiary,
or any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such shares of
capital stock or other equity interests of any Loan Party or any Subsidiary or
any option, warrant or other right to acquire any such shares of capital stock
of any Loan Party or any Subsidiary; provided however, that payments due and
payable from time to time to Kmart Corporation or any of its Affiliates under
the Kmart Agreement shall not constitute a Restricted Payment hereunder.
"REVOLVER RESERVES" means the Carve Out Reserve, the Kmart Reserve and
the Availability Reserve.
"REVOLVING LOANS" means all Revolving Loans at any time made by a
Lender pursuant to Section 2.1.
"REVOLVING NOTE" has the meaning set forth in Section 2.8.
"RITE AID EAST COAST SUBSIDIARIES" means the Subsidiaries identified as
"Rite Aid East Coast" on SCHEDULE 4.12.
"S&P" means Standard & Poor's.
"SECURED PARTIES" has the meaning assigned to such term in the Security
Agreements.
"SECURITY AGREEMENTS" means the Borrower Security Agreement and the
Guarantor Security Agreement.
"SECURITY DOCUMENTS" means the Facility Guarantee, the Borrower
Security Agreement, the Guarantor Security Agreement, the Trademark Security
Agreement, the Patent Security Agreement, the Mortgages, the other Facility
Guarantors Collateral Documents, the Borrowing Order, and each other security
agreement, or other instrument or document executed and delivered pursuant to
Section 6.12 or pursuant to any of the other Loan Documents to secure any of the
Obligations.
"SETTLEMENT DATE" has the meaning provided in Section 2.7(b) hereof.
"SHRINK" means Inventory which has been lost, misplaced, stolen, or is
otherwise unaccounted for.
-27-
"STANDBY LETTER OF CREDIT" means any Letter of Credit other than a
Commercial Letter of Credit.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"SUPERPRIORITY CLAIM" shall mean a claim against any of the Debtors in
any of the Reorganization Cases which is an administrative expense claim having
priority over any or all other administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
"SYNTHETIC LEASE" means any lease or other agreement for the use or
possession of property creating obligations which do not appear as Indebtedness
on the balance sheet of the lessee thereunder but which, upon the insolvency or
bankruptcy of such Person, may be characterized as Indebtedness of such lessee
without regard to the accounting treatment.
"SWINGLINE LENDER" means Fleet, in its capacity as lender of Swingline
Loans hereunder, together with its successors and assigns in such capacity.
"SWINGLINE LIMIT" means $25,000,000 (or such other amount as may be
established in accordance with this Agreement).
"SWINGLINE LOAN" shall mean a Loan made by the Swingline Lender to the
Borrowers pursuant to Section 2.5 hereof.
"SWINGLINE NOTE" has the meaning set forth in Section 2.8.
"SYNDICATION AGENT" means General Electric Capital Corporation.
"TAXES" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TEMPORARY CASH INVESTMENTS" means each of the following:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
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(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
▇▇▇▇▇'▇;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and demand
deposit and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the
United States of America or any State thereof that has a combined
capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above
(without regard to the limitation on maturity contained in such clause)
and entered into with a financial institution satisfying the criteria
described in clause (c) above or with any primary dealer;
PROVIDED THAT, notwithstanding the foregoing, no such Temporary Cash
Investments shall be permitted unless such Temporary Cash Investments
are pledged to the Collateral Agent as additional collateral for the
Obligations pursuant to such agreements as may be reasonably required
by the Collateral Agent.
"TERMINATION DATE" shall mean the earliest to occur of (i) the Maturity
Date, or (ii) the date on which the maturity of the Loans is accelerated and the
Commitments are terminated pursuant to Section 8.1 hereof, (iii) the date on
which all Obligations are indefeasibly paid in full in cash in Dollars, no
Letters of Credit remain outstanding and the Commitments have been terminated,
or (iv) the Consummation Date.
"TOTAL COMMITMENTS" shall mean, at any time, the sum of the Commitments
at such time.
"TRADEMARK SECURITY AGREEMENT" means the Trademark Security Agreement
among certain Loan Parties and the Collateral Agent for the benefit of the
Agents, the Issuing Banks and the Lenders, and as may be further evidenced in
the Borrowing Order.
"TYPE", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"UCC" means the Uniform Commercial Code as presently in effect from
time to time in any jurisdiction applicable to any Loan Party.
"UNRESTRICTED SUBSIDIARY" means a Subsidiary of a Loan Party designated
while no Default or Event of Default exists by the Lead Borrower's board of
directors as such, PROVIDED THAT no Subsidiary may be designated as an
Unrestricted Subsidiary unless (a) it is a Foreign Subsidiary with none of its
assets included in the calculation of Borrowing Base immediately prior to such
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Subsidiary's being designated as an Unrestricted Subsidiary or (b) a closed
single store Subsidiary which is dormant and not engaged in any business
operations and have no assets.
"UNUSED LINE FEE" has the meaning set forth in Section 2.12.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2 TERMS GENERALLY. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.3 ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect on the Effective Date.
ARTICLE II
AMOUNT AND TERMS OF CREDIT
SECTION 2.1 COMMITMENTS OF THE LENDERS. (a) (i) Each Lender, severally and not
jointly with any other Lender, agrees, upon the terms and subject to the
conditions herein set forth in this Agreement including without limitation, the
conditions set forth in Article V and the limitations set forth in Section 2.2,
to extend credit to the Borrowers on a revolving basis, in the form of Revolving
Loans and Letters of Credit and in an amount not to exceed the lesser of (A)
such Lender's Commitment or (B) such Lender's Commitment Percentage of the
Borrowing Base MINUS the Revolver Reserves.
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(ii) Each Borrowing of Revolving Loans (other than Swingline
Loans) shall be made by the Lenders PRO RATA in accordance with their respective
Commitments. The failure of any Lender to make any Revolving Loan shall neither
relieve any other Lender of its obligation to fund its Loan in accordance with
the provisions of this Agreement nor increase the obligation of any such other
Lender.
SECTION 2.2 LIMITATIONS ON REVOLVING LOANS . The obligations of the Lenders to
make Revolving Loans pursuant to Section 2.1 shall be subject to the following
limitations:
(a) The aggregate outstanding amount of the Credit Extensions shall not
at any time exceed the Total Commitments.
(b) The aggregate outstanding amount of the Credit Extensions shall not at any
time exceed the sum of the Commitments, as reduced by the Borrowers from time to
time pursuant to Section 2.15.
(c) No Lender has any obligation to make any Revolving Loan if, immediately
after giving effect thereto, an Overadvance would exist.
(d) Subject to all of the other provisions of this Agreement, Revolving Loans
that are repaid may be reborrowed prior to the Termination Date. No new Credit
Extension, however, shall be made to the Borrowers after the Termination Date.
SECTION 2.3 MAKING OF REVOLVING LOANS. (a) Except as set forth in Sections 2.16
and 2.24, Revolving Loans (other than Swingline Loans) by the Lenders shall be
either Base Rate Loans or Eurodollar Loans as the Lead Borrower on behalf of the
Borrowers may request subject to and in accordance with this Section 2.3. All
Revolving Loans made pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, be Revolving Loans of the same Type. Each Lender
may fulfill its Commitment with respect to any Revolving Loan by causing any
lending office of such Lender to make such Revolving Loan; but any such use of a
lending office shall not affect the obligation of the Borrowers to repay such
Revolving Loan in accordance with the terms of the applicable Note. Each Lender
shall not, subject to its overall policy requirements and office availability,
select a lending office which would result in the payment of increased costs by
the Borrowers pursuant to Section 2.23 and will, if any said office was
selected, use reasonable efforts to transfer the Revolving Loan to a different
office to avoid such increased costs under Section 2.23. Subject to the other
provisions of this Section 2.3 and the provisions of Section 2.24, Borrowings of
Revolving Loans of more than one Type may be incurred at the same time, but no
more than five (5) Borrowings of Eurodollar Loans may be outstanding at any
time.
(b) The Lead Borrower shall give the Administrative Agent two Business
Days' prior telephonic and written notice (such written notice to include an
updated Borrowing Base Certificate and to be in the form attached as EXHIBIT D
hereto) of each Borrowing of Eurodollar Loans and same Business Day notice of
each Borrowing of Base Rate Loans. Any such notice, to be effective, must be
received by the Administrative Agent not later than 11:00 a.m., Boston time, on
the second Business Day in the case of Eurodollar Loans prior to, and on the
same Business Day in the case of Base Rate Loans as, the date on which such
Borrowing is to be made. Such notice shall be irrevocable and shall specify the
amount of the proposed Borrowing (which shall be in an integral multiple of
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$500,000, but not less than $500,000) and the date thereof (which shall be a
Business Day) and shall contain disbursement instructions. Such notice shall
specify whether the Borrowing then being requested is to be a Borrowing of Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest Period
with respect thereto. If no election of Interest Period is specified in any such
notice for a Borrowing of Eurodollar Loans, such notice shall be deemed a
request for an Interest Period of one month. If no election is made as to the
Type of Loan, such notice shall be deemed a request for Borrowing of Base Rate
Loans. The Administrative Agent shall promptly notify each Lender of its
proportionate share of such Borrowing, the date of such Borrowing, the Type of
Borrowing being requested and the Interest Period or Interest Periods applicable
thereto, as appropriate. On the borrowing date specified in such notice, each
Lender shall make its share of the Borrowing available at the office of the
Administrative Agent at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, no
later than 2:00 p.m., Boston time, in immediately available funds and such
Borrowing shall then be made available to the Borrowers by the Administrative
Agent. Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with this Section and may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrowers severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrowers to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrowers, the interest rate applicable
to Base Rate Loans. If such Lender pays such amount to the Administrative Agent,
then such amount shall constitute such Lender's Revolving Loan included in such
Borrowing. Upon receipt of the funds made available by the Lenders to fund any
Borrowing hereunder, the Administrative Agent shall disburse such funds in the
manner specified in the notice of borrowing delivered by the Lead Borrower.
SECTION 2.4 OVERADVANCES. The Agents and the Lenders have no obligation to make
any Loan or to provide any Letter of Credit if an Overadvance would result. The
Administrative Agent may, in its discretion, make Permitted Overadvances without
the consent of the Lenders and each Lender shall be bound thereby. If any
Permitted Overadvance is made, the Administrative Agent shall promptly notify
the Lenders. Any Permitted Overadvances may constitute Swingline Loans. The
making of any Permitted Overadvance is for the benefit of the Borrowers; such
Permitted Overadvances constitute Revolving Loans and Obligations. The making of
any such Permitted Overadvances on any one occasion shall not obligate the
Administrative Agent or any Lender to make or permit any Permitted Overadvances
on any other occasion or to permit such Permitted Overadvances to remain
outstanding.
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SECTION 2.5 SWINGLINE LOANS. (a) The Swingline Lender is authorized by the
Lenders to make Swingline Loans up to the Swingline Limit plus the Permitted
Overadvances in the aggregate outstanding at any time, upon a notice of
Borrowing received by the Administrative Agent and the Swingline Lender (which
notice shall be submitted by 1:00 p.m., Boston time, on the Business Day on
which such Swingline Loan is requested) (or later, if the Swingline Lender
agrees in its discretion). Swingline Loans shall be subject to periodic
settlement with the Lenders under Section 2.7 below and shall bear interest at
the rate specified in Section 2.9(c) below.
(b) Subject to Article V hereof, upon the Lead Borrower's request,
Swingline Loans will be made by the Swingline Lender for administrative
convenience. The Swingline Lender shall make Swingline Loans in reliance upon
the Borrowers' actual or deemed representations under Section 5.2 that the
applicable conditions for borrowing are satisfied. Swingline Loans may also be
made (i) as Permitted Overadvances, or (ii) if the conditions for borrowing
under Section 5.2 cannot be fulfilled. In the case of clause (ii), the Borrowers
shall give immediate notice thereof to the Administrative Agent and the
Swingline Lender (a "NONCOMPLIANCE Notice"), and the Administrative Agent shall
promptly provide each Lender with a copy of the Noncompliance Notice. If the
conditions for borrowing under Section 5.2 cannot be fulfilled, the Required
Lenders may direct the Swingline Lender to, and the Swingline Lender thereupon
shall, cease making Swingline Loans (other than Permitted Overadvances) until
such conditions can be satisfied or are waived in accordance with Section 10.2
hereof. Unless the Required Lenders so direct the Swingline Lender, the
Swingline Lender may, but is not obligated to, continue to make Swingline Loans
beginning one Business Day after the Noncompliance Notice is furnished to the
Lenders. Notwithstanding the foregoing, no Swingline Loans shall be made
pursuant to this subsection (b) (other than Permitted Overadvances) if,
immediately after giving effect thereto, an Overadvance would exist.
SECTION 2.6 LETTERS OF CREDIT. (a) Upon the terms and subject to the conditions
herein set forth, the Lead Borrower on behalf of the Borrowers may request the
Issuing Bank, at any time and from time to time after the date hereof and prior
to the Termination Date, to issue, and subject to the terms and conditions
contained herein, the Issuing Bank shall issue, for the account of the
Borrowers, one or more Letters of Credit; PROVIDED THAT no Letter of Credit
shall be issued if after giving effect to such issuance (i) the aggregate Letter
of Credit Outstandings shall exceed $75,000,000, or (ii) the aggregate Credit
Extensions (or any part thereof) would exceed the applicable limitations set
forth in Section 2.2; and PROVIDED, FURTHER, that no Letter of Credit shall be
issued if the Issuing Bank shall have received notice from the Administrative
Agent or the Required Lenders that the conditions to such issuance have not been
met. The parties hereto acknowledge that pursuant to the Original Credit
Agreement Fleet National Bank issued the Existing Letters of Credit which remain
outstanding. The parties hereto agree that such Existing Letters of Credit shall
constitute Letters of Credit of the Issuing Bank under this Agreement and the
Issuing Bank shall be entitled to reimbursement of L/C Disbursements, Letter of
Credit Fees and other rights with respect thereto pursuant to the terms of this
Agreement as if originally issued hereunder.
(b) Each Standby Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
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thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date, PROVIDED THAT each Standby Letter
of Credit may, upon the request of the Lead Borrower, include a provision
whereby such Letter of Credit shall be renewed automatically for additional
consecutive periods of 12 months or less (but not beyond the date that is five
Business Days prior to the Maturity Date) unless the Issuing Bank notifies the
beneficiary thereof at least 30 days prior to the then-applicable expiration
date that such Letter of Credit will not be renewed.
(c) Each Commercial Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date 180 days after the date of the
issuance of such Commercial Letter of Credit and (ii) the date that is five
Business Days prior to the Maturity Date.
(d) Drafts drawn under each Letter of Credit shall be reimbursed by the
Borrowers in dollars on the same Business Day of any such drawing by paying to
the Issuing Bank (or, if a Default or Event of Default then exists, the
Administrative Agent) an amount equal to such drawing not later than 1:00 p.m.,
Boston time, on (i) the date that the Borrowers shall have received notice of
such payment, if such notice is received prior to 10:00 a.m., Boston time, on
such date, or (ii) the Business Day immediately following the day that the
Borrowers receive such notice, if such notice is received after 10:00 a.m.,
Boston time on the day of receipt, PROVIDED THAT the Lead Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.3 (and subject to the limitations of Section 2.3(c)) that such payment
be financed with a Revolving Loan consisting of a Base Rate Loan or Swingline
Loan in an equivalent amount and, to the extent so financed, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting Base Rate Loan or Swingline Loan. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrowers by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make payment thereunder, PROVIDED THAT any failure to give or delay in
giving such notice shall not relieve the Borrowers of their obligation to
reimburse the Issuing Bank and the Lenders with respect to any such payment.
(e) Immediately upon the issuance of any Letter of Credit by the
Issuing Bank (or the amendment of a Letter of Credit increasing the amount
thereof), and without any further action on the part of the Issuing Bank, the
Issuing Bank shall be deemed to have sold to each Lender, and each such Lender
shall be deemed unconditionally and irrevocably to have purchased from the
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Commitment Percentage, in such
Letter of Credit, each drawing thereunder and the obligations of the Borrowers
under this Agreement and the other Loan Documents with respect thereto. Upon any
change in the Commitments pursuant to Section 10.5, it is hereby agreed that
with respect to all Letter of Credit Outstandings, there shall be an automatic
adjustment to the participations hereby created, as applicable, to reflect the
new Commitment Percentages of the assigning and assignee Lenders. Any action
taken or omitted by the Issuing Bank under or in connection with a Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for the Issuing Bank any resulting liability to any
Lender.
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(f) If the Issuing Bank shall make any L/C Disbursement, then, unless
the Borrowers shall reimburse the Issuing Bank in full on the date such payment
is made, the unpaid amount thereof shall bear interest, for each day from and
including the date such payment is made to but excluding the date that the
Borrowers reimburse the Issuing Bank therefor, at the rate per annum from time
to time applicable to Base Rate Loans which are Revolving Loans, PROVIDED THAT,
if the Borrowers fail to reimburse such Issuing Bank when due pursuant to
paragraph (d) of this Section, then Section 2.10 shall apply. Interest accrued
pursuant to this paragraph shall be for the account of the Issuing Bank, except
that interest accrued on and after the date of payment or reimbursement, as
applicable, by any Lender pursuant to paragraph (g) of this Section to the Agent
for the account of the Issuing Bank or the Lenders, as applicable, shall be for
the account of such Lender to the extent of such payment or reimbursement.
(g) In the event that the Issuing Bank makes any L/C Disbursement and
the Borrowers shall not have reimbursed such amount in full to the Issuing Bank
pursuant to this Section 2.6, the Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each Lender of such failure,
and each Lender shall promptly and unconditionally pay to the Administrative
Agent for the account of the Issuing Bank the amount of such Lender's Commitment
Percentage of such unreimbursed payment in dollars and in same day funds. If and
to the extent any Lender shall not have so made its Commitment Percentage of the
amount of such payment or reimbursement available to the Administrative Agent,
such Lender agrees to pay to the Administrative Agent for the account of the
Issuing Bank or the Lenders, as applicable, forthwith on demand, such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent at the Federal Funds Effective Rate.
Each Lender agrees to fund its Commitment Percentage of such unreimbursed
payment or reimbursement notwithstanding a failure to satisfy any applicable
lending conditions or the provisions of Sections 2.2 or 2.6, or the occurrence
of the Termination Date. The failure of any Lender to make available to the
Administrative Agent its Commitment Percentage of any such unreimbursed payment
or reimbursement under any Letter of Credit shall neither relieve any Lender of
its obligation hereunder to make available to the Issuing Bank its Commitment
Percentage of any such unreimbursed payment or reimbursement on the date
required, as specified above, nor increase the obligation of such other Lender.
Whenever any Lender has made payments to the Administrative Agent for the
account of the Issuing Bank in respect of any reimbursement obligation for any
Letter of Credit, and has not been reimbursed therefor, such Lender shall be
entitled to share ratably in all payments and collections thereafter received on
account of such reimbursement obligation.
(h) Whenever the Borrowers desire that the Issuing Bank issue a Letter
of Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit), the Lead Borrower shall give to the Issuing Bank and the Administrative
Agent at least two Business Days' prior written (including telegraphic, telex,
facsimile, electronic, internet or cable communication) notice (or such shorter
period as may be agreed upon in writing by the Issuing Bank and the Lead
Borrower) specifying the date on which the proposed Letter of Credit is to be
issued, amended, renewed or extended (which shall be a Business Day), the stated
amount of the Letter of Credit so requested, the expiration date of such Letter
of Credit, the name and address of the beneficiary thereof, and the provisions
thereof. If requested by the Issuing Bank, the Borrowers shall also submit a
letter of credit application on the Issuing Bank's standard form in connection
with any request for the issuance, amendment, renewal or extension of a Letter
of Credit.
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(i) The obligations of the Borrowers to reimburse the Issuing Bank for
any L/C Disbursement shall be unconditional and irrevocable and shall be paid in
accordance with the terms of this Agreement under all circumstances, including,
without limitation (it being understood that any such payment by the Borrowers
shall be without prejudice to, and shall not constitute a waiver of, any rights
the Borrowers might have or might acquire as a result of the payment by the
Issuing Bank of any draft or the reimbursement by the Borrowers thereof): (i)
any lack of validity or enforceability of any Letter of Credit; (ii) the
existence of any claim, setoff, defense or other right which the Borrowers may
have at any time against a beneficiary of any Letter of Credit or against any of
the Lenders, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction; (iii) any draft, demand,
certificate or other document presented under any Letter of Credit 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 the Issuing
Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrowers' obligations hereunder; or (vi) the fact that any
Event of Default shall have occurred and be continuing. None of the
Administrative Agent, the Lenders, the Issuing Bank or any of their Affiliates
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Bank,
PROVIDED THAT the foregoing shall not be construed to excuse the Issuing Bank
from liability to the Borrowers to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrowers to the extent permitted by applicable law) suffered by the Borrowers
that are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of bad faith, gross negligence, or willful misconduct on the part of the Issuing
Bank (as finally determined by a court of competent jurisdiction), the Issuing
Bank shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(j) If any Event of Default shall occur and be continuing: on the
Business Day that the Borrowers receive notice from the Administrative Agent or
the Required Lenders demanding the deposit of cash collateral pursuant to this
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paragraph, the Borrowers shall deposit in the Cash Collateral Account an amount
in cash equal to 105% of the Letter of Credit Outstandings as of such date plus
any accrued and unpaid interest thereon; each such deposit shall be held by the
Collateral Agent as Collateral for the payment and performance of the
Obligations of the Borrowers under this Agreement; the Collateral Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such Cash Collateral Account; other than any interest earned on
the investment of such deposits, which investments shall be made at the option
and sole discretion of the Collateral Agent at the request of the Borrowers and
at the Borrowers' risk and expense, such deposits shall not bear interest;
interest or profits, if any, on such investments shall accumulate in such
account; and moneys in such Cash Collateral Account shall be applied by the
Collateral Agent to reimburse the Issuing Bank for payments on account of
drawings under Letters of Credit for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers for the Letter of Credit Outstandings
at such time or, if the Loans have matured or the maturity of the Loans has been
accelerated, be applied to satisfy other Obligations of the Borrowers under this
Agreement.
SECTION 2.7 SETTLEMENTS AMONG LENDERS. (a) The Swingline Lender may (but shall
not be obligated to), at any time, on behalf of the Borrowers (which hereby
authorize the Swingline Lender to act on their behalf in that regard) request
the Administrative Agent to cause the Lenders to make Revolving Loans in an
aggregate amount equal to the below-described portion of the outstanding amount
of Swingline Loans made in accordance with Section 2.5 (the "SWINGLINE AMOUNT")
in accordance with this Section 2.7, which request may be made regardless of
whether the conditions set forth in Article V have been satisfied. Upon such
request, if at the time of such request the Commitments exceed the aggregate
outstanding principal amount of the Credit Extensions, each Lender shall make
available to the Administrative Agent the proceeds of a Revolving Loan for the
account of the Swingline Lender in an amount equal to its Commitment Percentage
of the Swingline Amount (or, if less than the Swingline Amount, of the aggregate
unutilized amount of the Commitments). If the Swingline Lender requires a
Revolving Loan to be made by the applicable Lenders as described above and the
request therefor is received prior to 1:00 p.m., Boston time, on a Business Day,
such transfers shall be made in immediately available funds no later than 3:00
p.m., Boston time, that day; and, if the request therefor is received after 1:00
p.m., Boston time, then no later than 12:00 Noon, Boston time, on the next
Business Day. The obligation of each applicable Lender to transfer such funds is
irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent or the Swingline Lender. If and to the extent any
applicable Lender shall not have so made its transfer to the Administrative
Agent, such Lender agrees to pay to the Administrative Agent, forthwith on
demand, such amount, together with interest thereon, for each day from such date
until the date such amount is paid to the Administrative Agent at the Federal
Funds Effective Rate.
(b) The amount of each Lender's Commitment Percentage of outstanding
Revolving Loans (excluding Swingline Loans) shall be computed weekly (or more
frequently in the Administrative Agent's discretion) and shall be adjusted
upward or downward based on all Revolving Loans (excluding Swingline Loans) and
repayments of Revolving Loans (excluding Swingline Loans) received by the
Administrative Agent as of 12:00 Noon, Boston time, on the first Business Day
following the end of the period specified by the Administrative Agent (such
date, the "SETTLEMENT DATE").
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(c) The Administrative Agent shall deliver to each of the Lenders
promptly after the Settlement Date a summary statement of the amount of
outstanding Revolving Loans (excluding Swingline Loans) for the period and the
amount of repayments received for the period. As reflected on the summary
statement: (x) the Administrative Agent shall transfer to each Lender its
applicable Commitment Percentage of repayments, and (y) each Lender shall
transfer to the Administrative Agent (as provided below), or the Administrative
Agent shall transfer to each Lender, such amounts as are necessary to ensure
that, after giving effect to all such transfers, the amount of Revolving Loans
(excluding Swingline Loans) made by each Lender shall be equal to such Lender's
Commitment Percentage outstanding as of such Settlement Date. If the summary
statement requires transfers to be made to the Administrative Agent by the
Lenders and is received prior to 1:00 p.m., Boston time, on a Business Day, such
transfers shall be made in immediately available funds no later than 3:00 p.m.,
Boston time, that day; and, if received after 1:00 p.m., Boston time, then no
later than 3:00 p.m., Boston time, on the next Business Day. The obligation of
each Lender to transfer such funds is irrevocable, unconditional and without
recourse to or warranty by the Administrative Agent. If and to the extent any
Lender shall not have so made its transfer to the Administrative Agent, such
Lender agrees to pay to the Administrative Agent, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent at the Federal Funds
Effective Rate.
SECTION 2.8 NOTES; REPAYMENT OF LOANS. (a) The Revolving Loans made by each
Lender shall if requested by the relevant Lender be evidenced by a revolving
note (each, a "REVOLVING NOTE") duly executed on behalf of the Borrowers, dated
the Effective Date, in substantially the form attached hereto as EXHIBIT C-1,
payable to the order of each such Lender in an aggregate principal amount equal
to such Lender's Commitment. The Swingline Loans made by the Swingline Lender
shall if requested by the Swingline Lender be evidenced by a revolving note (the
"SWINGLINE NOTE") duly executed on behalf of the Borrowers, dated the Effective
Date, in substantially the form attached hereto as EXHIBIT C-2, payable to the
order of the Swingline Lender in an aggregate principal amount equal to
$25,000,000. Neither the original nor a copy of a Revolving Note or Swingline
Note shall be required, however, to establish or prove the Obligations evidenced
thereby.
(b) The outstanding principal balance of all Swingline Loans shall be
repaid no later than the earlier of (i) 7 days after the date the Swingline Loan
is made, (ii) the Termination Date, or (iii) on the date otherwise requested by
the Swingline Lender in accordance with the provisions of Section 2.7(a). The
outstanding principal balance of all other Obligations shall be payable on the
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Termination Date (subject to earlier repayment and/or cash collateralization as
provided herein). Each Note shall bear interest from the date thereof on the
outstanding principal balance thereof as set forth in this Article II. Each
Lender is hereby authorized by the Borrowers to endorse on a schedule attached
to each Note delivered to such Lender (or on a continuation of such schedule
attached to such Note and made a part thereof), or otherwise to record in such
Lender's internal records, an appropriate notation evidencing the date and
amount of each Revolving Loan from such Lender, each payment and prepayment of
principal of any such Revolving Loan, each payment of interest on any such
Revolving Loan and the other information provided for on such schedule;
provided, HOWEVER, that the failure of any Lender to make such a notation or any
error therein shall not affect the obligation of the Borrowers to repay the
Revolving Loans made by such Lender in accordance with the terms of this
Agreement and the applicable Notes.
SECTION 2.9 INTEREST ON REVOLVING LOANS. (a) Subject to Section 2.10, each Base
Rate Loan shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as applicable) at a rate per annum
that shall be equal to the then Alternate Base Rate, PLUS the Applicable Margin
for Base Rate Loans.
(b) Subject to Section 2.10, each Eurodollar Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal, during each Interest Period applicable thereto,
to the Adjusted LIBO Rate for such Interest Period, PLUS the Applicable Margin
for Eurodollar Loans.
(c) Subject to Section 2.10, each Swingline Loan shall bear interest on
the outstanding principal amount thereof, for each day during the Interest
Period therefor (if applicable), at a rate per annum equal to the then Alternate
Base Rate, PLUS the Applicable Margin for Base Rate Loans.
(d) Accrued interest on all Revolving Loans shall be payable in arrears
on each Interest Payment Date applicable thereto, at maturity (whether on the
Maturity Date or by acceleration or otherwise), after such maturity on demand
and (with respect to Eurodollar Loans) upon any repayment or prepayment thereof
(on the amount prepaid).
SECTION 2.10 DEFAULT INTEREST. Effective upon the occurrence of any Event of
Default and at all times thereafter while such Event of Default is continuing,
at the option of the Administrative Agent or upon the direction of the Required
Lenders, interest shall accrue on all outstanding Revolving Loans (after as well
as before judgment, as and to the extent permitted by law) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the Applicable Margin in effect from time to time PLUS 2.00% per
annum, and such interest shall be payable on demand.
SECTION 2.11 CERTAIN FEES. The Borrowers shall pay to the Administrative Agent,
for the account of the Administrative Agent and the Lenders, as applicable, the
fees set forth in the applicable Fee Letter as and when payment of such fees is
due as therein set forth.
SECTION 2.12 UNUSED LINE FEES. (a) In addition to any other fee provided herein
or in the Fee Letters to be paid by the Borrowers on account of the Revolving
Loans, the Borrowers shall pay to the Administrative Agent, for the account of
the Lenders, an unused line fee (the "UNUSED LINE FEE") equal to 0.375% per
annum (on the basis of actual days elapsed in a year of 360 days) of the average
difference, during the calendar quarter just ended (or relevant period with
respect to the payment being made on the Termination Date) between (i) the
aggregate Commitments of the Lenders and (ii) the aggregate outstanding amount
of the Credit Extensions. The Unused Line Fee so accrued in any calendar quarter
shall be payable in arrears on the first Business Day of the immediately
succeeding calendar quarter, except that all Unused Line Fees so accrued as of
the Termination Date shall be payable on the Termination Date.
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SECTION 2.13 LETTER OF CREDIT FEES. (a) The Borrowers shall pay the
Administrative Agent, for the account of the Lenders, to the extent of their
required participations therein, as applicable, on the last day of each calendar
quarter, in arrears, a fee (each, a "LETTER OF CREDIT FEE") equal to the
following per annum percentages of the average face amount of the following
categories of Letters of Credit outstanding during the subject quarter:
(i) Standby Letters of Credit: The Applicable Margin for Eurodollar
Loans.
(ii) Commercial Letters of Credit: The percentage equal to one third of
the Applicable Margin for Eurodollar Loans.
(iii) After the occurrence and during the continuance of an Event of
Default, at the option of the Administrative Agent or upon the direction of
the Required Lenders, the Letter of Credit Fee shall be increased by an
amount equal to two percent (2%) per annum.
(b) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Bank, and in addition to all Letter of Credit Fees
otherwise provided for hereunder, a fronting fee of 0.125% of the face amount of
each Commercial Letter of Credit, due and payable as a condition of the issuance
of each Commercial Letter of Credit, and such other fees and charges in
connection with the issuance, negotiation, settlement, amendment and processing
of each Letter of Credit issued by the Issuing Bank as are customarily imposed
by the Issuing Bank from time to time in connection with letter of credit
transactions.
SECTION 2.14 NATURE OF FEES. All fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent, for the respective
accounts of the Administrative Agent, the Issuing Bank, and the Lenders, as
provided herein. Once paid, all fees shall be fully earned and shall not be
refundable under any circumstances, absent manifest error.
SECTION 2.15 TERMINATION OR REDUCTION OF COMMITMENTS. Upon at least two Business
Days' prior written notice to the Administrative Agent, the Borrowers may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the Commitments. Each such reduction shall be in the principal amount of
$5,000,000 or any integral multiple thereof. Each such reduction or termination
shall (i) be applied ratably to the Commitments of each Lender, and (ii) be
irrevocable when written notice thereof is given. At the effective time of each
such reduction or termination, the Borrowers shall pay to the Administrative
Agent for application as provided herein (i) all Unused Line Fees accrued on the
amount of the Commitments so terminated or reduced through the date thereof, and
(ii) any amount by which the Credit Extensions outstanding on such date exceed
the amount to which the Commitments are to be reduced effective on such date, in
each case PRO RATA based on the amount prepaid.
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SECTION 2.16 ALTERNATE RATE OF INTEREST. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period, pursuant
to the definition of LIBO Rate set forth herein; or
(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Revolving Loans (or its Revolving Loan) included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Borrowing
Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made
as a Borrowing of Base Rate Loans.
SECTION 2.17 CONVERSION AND CONTINUATION OF LOANS. The Lead Borrower on
behalf of the Borrowers shall have the right at any time, on three Business
Days' prior irrevocable telephonic notice to the Administrative Agent (which
telephonic notice, to be effective, must be received by the Administrative Agent
not later than 11:00 a.m., Boston time, on the third Business Day preceding the
date of any conversion and, at the Administrative Agent's request, shall
thereafter be confirmed in writing in form attached as SCHEDULE 2.17 hereto),
(x) to convert any outstanding Borrowings of Revolving Loans (but in no event
Swingline Loans) of one Type (or a portion thereof) to a Borrowing of Revolving
Loans of the other Type or (y) to continue an outstanding Borrowing of
Eurodollar Loans for an additional Interest Period, subject to the following:
(a) no Borrowing of Revolving Loans may be converted into, or continued as,
Eurodollar Loans at any time when an unwaived Event of Default has occurred and
is continuing (nothing contained herein being deemed to obligate the Borrowers
to incur Breakage Costs upon the occurrence of an Event of Default unless the
Obligations are accelerated);
(b) if less than a full Borrowing of Revolving Loans is converted, such
conversion shall be made PRO RATA among the Lenders in accordance with the
respective principal amounts of the Revolving Loans comprising such Borrowing
held by such Lenders immediately prior to such refinancing;
(c) the aggregate principal amount of Revolving Loans being converted into
or continued as Eurodollar Loans shall be in an integral of $500,000 and at
least $5,000,000;
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(d) each Lender shall effect each conversion by applying the proceeds of its new
Eurodollar Loan or Base Rate Loan, as the case may be, to its Revolving Loan
being so converted;
(e) the Interest Period with respect to a Borrowing of Eurodollar Loans effected
by a conversion or in respect to the Borrowing of Eurodollar Loans being
continued as Eurodollar Loans shall commence on the date of conversion or the
expiration of the current Interest Period applicable to such continuing
Borrowing, as the case may be;
(f) a Borrowing of Eurodollar Loans may be converted only on the last day of an
Interest Period applicable thereto;
(g) each request for a conversion or continuation of a Borrowing of Eurodollar
Loans which fails to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one month; and
(h) no more than five Borrowings of Eurodollar Loans may be outstanding at any
time.
If the Lead Borrower does not give notice to convert any Borrowing of Eurodollar
Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as Eurodollar Loans, in each case as provided above,
such Borrowing shall automatically be converted to a Borrowing of Base Rate
Loans at the expiration of the then-current Interest Period. The Administrative
Agent shall, after it receives notice from the Lead Borrower, promptly give each
Lender notice of any conversion, in whole or part, of any Revolving Loan made by
such Lender.
SECTION 2.18 MANDATORY PREPAYMENT; COMMITMENT TERMINATION; CASH COLLATERAL. The
outstanding Obligations shall be subject to mandatory prepayment as follows:
(a) If at any time Availability is less than zero, the Borrowers will
immediately upon notice from the Administrative Agent (i) prepay the Revolving
Loans in an amount necessary to ensure that Availability is not less than zero,
with payments first being applied to Swingline Loans, and then to Revolving
Loans, and (ii) if, after giving effect to the prepayment in full of all
outstanding Revolving Loans, Availability is less than zero, deposit cash into
the Cash Collateral Account in an amount equal to 105% of the Letters of Credit
Outstanding. Thereafter, provided no Event of Default then exists and the
Borrower is then in compliance with the cash collateral requirements set forth
in the preceding sentence, subject to the conditions set forth in Section 5.2,
cash collateral may be released to the Borrowers upon the Lead Borrower's
request and shall be utilized by the Borrowers prior to any further Revolving
Loans being made.
(b) The Revolving Loans shall be repaid daily in accordance with the provisions
of Section 5.2 prior to an Event of Default and Section 6.2 after an Event of
Default, as applicable, of the Security Agreements.
(c) Subject to the foregoing, outstanding Base Rate Loans shall be prepaid
before outstanding Eurodollar Loans are prepaid. Each partial prepayment of
Eurodollar Loans shall be in an integral multiple of $500,000. Any prepayment of
Eurodollar Loans other than on the last day of an Interest Period applicable
thereto shall be accompanied by all "Breakage Costs" (as defined below)
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associated therewith. No partial prepayment of a Borrowing of Eurodollar Loans
shall result in the aggregate principal amount of the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $5,000,000. Any
prepayment of the Revolving Loans shall not permanently reduce the Commitments.
(d) All amounts required to be applied to Revolving Loans hereunder or under
Section 5.2 prior to an Event of Default or Section 6.2 after an Event of
Default of the Security Agreements, as applicable (other than Swingline Loans)
shall be applied ratably in accordance with each Lender's Commitment Percentage.
(e) Upon the Termination Date, the credit facilities provided hereunder shall be
terminated in full and the Borrowers shall pay, in full indefeasibly in cash in
Dollars, all outstanding Loans and all other outstanding Obligations.
SECTION 2.19 OPTIONAL PREPAYMENT OF REVOLVING LOANS; REIMBURSEMENT OF LENDERS.
(a) The Borrowers shall have the right at any time and from time to time to
prepay outstanding Revolving Loans in whole or in part, (x) with respect to
Eurodollar Loans, upon at least two Business Days' prior written, telex or
facsimile notice to the Administrative Agent prior to 11:00 a.m., Boston time,
and (y) with respect to Base Rate Loans, on the same Business Day if written,
telex or facsimile notice is received by the Administrative Agent prior to 1:00
p.m., Boston time, subject to the following limitations:
(i) Subject to Section 2.18, all prepayments shall be paid to the
Administrative Agent for application, FIRST, to the prepayment of
outstanding Swingline Loans, and SECOND, to the prepayment of other
outstanding Revolving Loans ratably in accordance with each Lender's
Commitment Percentage.
(ii) Subject to the foregoing, outstanding Base Rate Loans shall be prepaid
before outstanding Eurodollar Loans are prepaid. Each partial
prepayment of Eurodollar Loans shall be in an integral multiple of
$500,000. No prepayment of Eurodollar Loans shall be permitted pursuant
to this Section 2.19 other than on the last day of an Interest Period
applicable thereto, unless the Borrowers simultaneously reimburse the
Lenders for all "Breakage Costs" (as defined below) associated
therewith. No partial prepayment of a Borrowing of Eurodollar Loans
shall result in the aggregate principal amount of the Eurodollar Loans
remaining outstanding pursuant to such Borrowing being less than
$5,000,000.
(iii) Each notice of prepayment shall specify the prepayment date, the
principal amount and Type of the Loans to be prepaid and, in the case
of Eurodollar Loans, the Borrowing or Borrowings pursuant to which such
Revolving Loans were made. Each notice of prepayment shall be
irrevocable and shall commit the Borrowers to prepay such Revolving
Loan by the amount and on the date stated therein. The Administrative
Agent shall, promptly after receiving notice from the Borrowers
hereunder, notify each Lender of the principal amount and Type of the
Revolving Loans held by such Lender which are to be prepaid, the
prepayment date and the manner of application of the prepayment.
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(b) The Borrowers shall reimburse each Lender on written demand for any
loss incurred or to be incurred by it in the reemployment of the funds
released (i) resulting from any prepayment (for any reason whatsoever,
including, without limitation, conversion to Base Rate Loans or
acceleration by virtue of, and after, the occurrence of an Event of
Default) of any Eurodollar Loan or, if applicable, Swingline Loan
required or permitted under this Agreement, if such Revolving Loan is
prepaid other than on the last day of the Interest Period for such
Revolving Loan or (ii) in the event that after the Lead Borrower
delivers a notice of borrowing under Section 2.3 in respect of
Eurodollar Loans or in respect of Swingline Loans having an Interest
Period, such Revolving Loans are not made on the first day of the
Interest Period specified in such notice of borrowing for any reason
other than a breach by such Lender of its obligations hereunder or the
delivery of any notice pursuant to Section 2.16. Such loss shall be the
amount as reasonably determined by such Lender as the excess, if any,
of (A) the amount of interest which would have accrued to such Lender
on the amount so paid or not borrowed at a rate of interest equal to
the Adjusted LIBO Rate for such Eurodollar Loan or the agreed-to rate
for such Swingline Loan, for the period from the date of such payment
or failure to borrow to the last day (x) in the case of a payment or
refinancing with Base Rate Loans other than on the last day of the
Interest Period for such Loan, of the then current Interest Period for
such Revolving Loan or (y) in the case of such failure to borrow, of
the Interest Period for such Revolving Loan which would have commenced
on the date of such failure to borrow, over (B) the amount of interest
which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the
London interbank market (collectively, "BREAKAGE COSTS"). Any Lender
demanding reimbursement for such loss shall deliver to the Borrowers
from time to time one or more certificates setting forth the amount of
such loss as determined by such Lender and setting forth in reasonable
detail the manner in which such amount was determined.
(c) In the event the Borrowers fail to prepay any Revolving Loan on the
date specified in any prepayment notice delivered pursuant to Section
2.19(a), the Borrowers on written demand by any Lender shall pay to the
Administrative Agent for the account of such Lender any amounts
required to compensate such Lender for any loss incurred by such Lender
as a result of such failure to prepay, including, without limitation,
any loss, cost or expenses incurred by reason of the acquisition of
deposits or other funds by such Lender to fulfill deposit obligations
incurred in anticipation of such prepayment. Any Lender demanding such
payment shall deliver to the Borrowers from time to time one or more
certificates setting forth the amount of such loss as determined by
such Lender and setting forth in reasonable detail the manner in which
such amount was determined.
(d) Whenever any partial prepayment of Revolving Loans is to be applied to
Swingline Loans or Eurodollar Loans, such Swingline Loans or Eurodollar
Loans shall be prepaid in the chronological order of their Interest
Payment Dates.
SECTION 2.20 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT. (a) The
Administrative Agent shall maintain an account on its books in the name of the
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Borrowers (the "LOAN ACCOUNT") which will reflect (i) all Swingline Loans and
all loans and advances made by the Lenders to the Borrowers or for the
Borrowers' account, including the Loans, (ii) all L/C Disbursements, fees and
interest that have become payable as herein set forth, and (iii) any and all
other Obligations that have become payable.
(b) The Loan Account will be credited with all amounts received by the
Administrative Agent from the Borrowers or from others for the Borrowers'
account, including without limitation all amounts received pursuant to Section
5.1 of the Borrower Security Agreement and the Guarantor Security Agreement, and
the amounts so credited shall be applied as set forth in Section 5.2 prior to an
Event of Default or Section 6.2 after an Event of Default, as applicable, of the
Borrower Security Agreement and the Guarantor Security Agreement. After the end
of each month, the Administrative Agent shall send to the Borrowers a statement
accounting for the charges, loans, advances and other transactions occurring
among and between the Administrative Agent, the Lenders and the Borrowers during
that month. The monthly statements shall, absent manifest error, be an account
stated, which is final, conclusive and binding on the Borrowers.
SECTION 2.21 CASH RECEIPTS. Notwithstanding anything in this Agreement to the
contrary, cash receipts will be handled in accordance with, and subject to, the
terms of Section 5.1, 5.2 and 6.2, as applicable, of the Security Agreements.
SECTION 2.22 APPLICATION OF PAYMENTS. Notwithstanding anything in this Agreement
to the contrary, all payments on the Obligations shall be applied in the manner
set forth in Section 5.2 prior to an Event of Default or Section 6.2 after an
Event of Default, as applicable, of the Security Agreements.
SECTION 2.23 INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender or any holding company of any
Lender (except any such reserve requirement reflected in the Adjusted
LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made
by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the actual cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the actual cost to such Lender
or the Issuing Bank of participating in, issuing or maintaining any Letter of
Credit or to reduce the amount of any sum received or receivable by such Lender
or the Issuing Bank hereunder (whether of principal, interest or otherwise),
then the Borrowers will pay to such Lender or the Issuing Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
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(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrowers will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section and setting forth in reasonable detail the manner in which such
amount or amounts were determined shall be delivered to the Borrowers and shall
be conclusive absent manifest error. The Borrowers shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within ten (10) Business Days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation.
SECTION 2.24 CHANGE IN LEGALITY. (a) Notwithstanding anything to the contrary
contained elsewhere in this Agreement, if (x) any Change in Law shall make it
unlawful for a Lender to make or maintain a Eurodollar Loan or to give effect to
its obligations as contemplated hereby with respect to a Eurodollar Loan or (y)
at any time any Lender determines in its reasonable commercial judgment that the
making or continuance of any of its Eurodollar Loans has become impracticable as
a result of a contingency occurring after the date hereof which materially
adversely affects the London interbank market or the position of such Lender in
the London interbank market, then, by written notice to the Borrowers, such
Lender may (i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrowers for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for a Base Rate
Loan unless such declaration shall be subsequently withdrawn; and (ii) require
that all outstanding Eurodollar Loans made by it be converted to Base Rate
Loans, in which event all such Eurodollar Loans shall be automatically converted
to Base Rate Loans as of the effective date of such notice as provided in
paragraph (b) below. In the event any Lender shall exercise its rights under
clause (i) or (ii) of this paragraph (a), all payments and prepayments of
principal which would otherwise have been applied to repay the Eurodollar Loans
that would have been made by such Lender or the converted Eurodollar Loans of
such Lender shall instead be applied to repay the Base Rate Loans made by such
Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans.
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(b) For purposes of this Section 2.24, a notice to the Borrowers by any
Lender pursuant to paragraph (a) above shall be effective, if lawful, and if any
Eurodollar Loans shall then be outstanding, on the last day of the then-current
Interest Period; and otherwise such notice shall be effective on the date of
receipt by the Borrowers.
SECTION 2.25 PAYMENTS; SHARING OF SETOFF. (a) The Borrowers shall make each
payment required to be made by it hereunder or under any other Loan Document
(whether of principal, interest, fees or reimbursement of drawings under Letters
of Credit, or of amounts payable under Sections 2.19(b), 2.23 or 2.26, or
otherwise) prior to 1:00 p.m., Boston time, on the date when due, in immediately
available funds, without setoff or counterclaim. Any amounts received after such
time on any date may, in the reasonable commercial judgment of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, except payments to be made directly to the Issuing
Bank (if other than the Administrative Agent) as expressly provided herein and
except that payments pursuant to Sections 2.19(b), 2.23 and 2.26 shall be made
directly to the Persons entitled thereto and payments pursuant to other Loan
Documents shall be made to the Persons specified therein. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment under any Loan Document shall be due on a day that is not a Business
Day, except with respect to Eurodollar Borrowings, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension. All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed
drawings under Letters of Credit, interest and fees then due with respect to all
Loans hereunder, such funds shall be applied pursuant to Section 5.2 prior to an
Event of Default or 6.2 after an Event of Default, as applicable, of the
Security Agreements.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in drawings under Letters of
Credit or Swingline Loans resulting in such Lender's receiving payment of a
greater proportion of the aggregate amount of its Loans and participations in
drawings under Letters of Credit and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then, subject to the
provisions and rights to payment under Section 5.2 prior to an Event of Default
or Section 6.2 after an Event of Default, as applicable, of the Security
Agreements, the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Loans and participations in drawings
under Letters of Credit and Swingline Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in drawings under
Letters of Credit and Swingline Loans, PROVIDED THAT (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrowers pursuant to and in accordance with the express terms of this
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Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in drawings under Letters of Credit to any assignee or participant, other than
to the Borrowers or any Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrowers consent to the foregoing and agree, to the
extent they may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrowers rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrowers
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrowers will not make such payment, the Administrative Agent may assume that
the Borrowers have made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders or the Issuing
Bank, as the case may be, the amount due. In such event, if the Borrowers have
not in fact made such payment, then each of the Lenders or the Issuing Bank, as
the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made by
it pursuant to this Agreement, then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.26 TAXES. (a) Any and all payments by or on account of any obligation
of the Borrowers hereunder or under any other Loan Document shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes,
PROVIDED THAT if the Borrowers shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrowers shall make such deductions and (iii) the Borrowers shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
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(c) The Borrowers shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 Business Days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrowers
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrowers by a Lender or the Issuing Bank, or by the Administrative Agent
on its own behalf or on behalf of a Lender or the Issuing Bank setting forth in
reasonable detail the manner in which such amount was determined, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrowers to a Governmental Authority, the Borrowers shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction in withholding tax shall deliver to the Borrowers and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Foreign Lender's claiming exemption
from or reduction in U.S. Federal withholding tax under Section 871(h) or 881(c)
of the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Foreign Lender
delivers a Form W-8, a certificate representing that such Foreign Lender is not
a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrowers and is not a controlled foreign corporation related to the Borrowers
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Foreign Lender claiming complete exemption from or reduced
rate of, U.S. Federal withholding tax on payments by the Borrowers under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Foreign Lender on or before the date it becomes a party to this Agreement (or,
in the case of a transferee that is a participation holder, on or before the
date such participation holder becomes a transferee hereunder) and on or before
the date, if any, such Foreign Lender changes its applicable lending office by
designating a different lending office (a "NEW LENDING OFFICE"). In addition,
each Foreign Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Foreign Lender.
Notwithstanding any other provision of this Section 2.26(e), a Foreign Lender
shall not be required to deliver any form pursuant to this 2.26(e) that such
Foreign Lender is not legally able to deliver.
(f) The Borrowers shall not be required to indemnify any Foreign Lender
or to pay any additional amounts to any Foreign Lender in respect of U.S.
Federal withholding tax pursuant to paragraph (a) or (c) above to the extent
that the obligation to pay such additional amounts would not have arisen but for
a failure by such Foreign Lender to comply with the provisions of paragraph (e)
above. Should a Lender become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrowers shall, at such Lender's expense, take
such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
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SECTION 2.27 SECURITY INTERESTS IN COLLATERAL. To secure their Obligations under
this Agreement and the other Loan Documents, the Borrowers and the Facility
Guarantors shall grant to the Collateral Agent, for its benefit and the ratable
benefit of the other Secured Parties (but subject to the provisions of Section
5.2 prior to an Event of Default and Section 6.2 after an Event of Default of
the Security Agreements, as applicable), a first-priority security interest in
all of the Collateral and a first-priority security and mortgage interest in all
of the Real Estate (subject to, however, with respect to the Mahwah, New Jersey
Real Estate, a prior security interest in favor of the first mortgagee in an
amount of no greater than $8,000,000 in principal) and to the Security
Documents, subject only to the Carve Out. The Obligations shall also be entitled
to an allowed administrative expense claim in the Reorganization Cases which is
a Superpriority Claim, subject only to the Carve Out.
SECTION 2.28 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If any Lender
requests compensation under Section 2.23, or if the Borrowers are required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.26, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the reasonable commercial
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.23 or 2.26, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrowers
hereby agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment; PROVIDED, HOWEVER, that the
Borrowers shall not be liable for such costs and expenses of a Lender requesting
compensation if (i) such Lender becomes a party to this Agreement on a date
after the Effective Date and (ii) the relevant Change in Law occurs on a date
prior to the date such Lender becomes a party hereto.
(b) If any Lender requests compensation under Section 2.23, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.26,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrowers may, at their sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.5), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), PROVIDED THAT (i) the Borrowers
shall have received the prior written consent of the Administrative Agent, the
Issuing Bank and Swingline Lender, which consent shall not unreasonably be
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in unreimbursed drawings
under Letters of Credit and Swingline Loans, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrowers (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.23 or
payments required to be made pursuant to Section 2.26, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrowers to require such assignment and delegation cease to apply.
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ARTICLE III
[Intentionally Omitted].
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to make the Loans and to issue and/or
participate in the Letters of Credit, each Loan Party represents and warrants to
the Agents and the Lenders that:
SECTION 4.1 ORGANIZATION; POWERS. Each Loan Party is duly organized and validly
existing under the laws of the jurisdiction of its incorporation, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in every jurisdiction where such qualification is required, and is
in good standing in the jurisdiction of its incorporation and in every
jurisdiction where such qualification is required.
SECTION 4.2 AUTHORIZATION; ENFORCEABILITY. The transactions contemplated hereby
and by the other Loan Documents to be entered into by each Loan Party are within
such Loan Party's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement has
been duly executed and delivered by each Loan Party that is a party hereto and
constitutes, and each other Loan Document to which any Loan Party is a party,
when executed and delivered by such Loan Party and a Borrowing Order is entered
by the Bankruptcy Court, will constitute, a legal, valid and binding obligation
of such Loan Party (as the case may be), enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 4.3 GOVERNMENTAL APPROVALS; NO CONFLICTS. The transactions to be entered
into contemplated by the Loan Documents (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except for the entry of a Borrowing Order and for such
as have been obtained or made and are in full force and effect and except
filings and recordings necessary to perfect Liens created under the Loan
Documents, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of any Loan Party or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or its
assets, or give rise to a right thereunder to require any payment to be made by
any Loan Party where such violation or default would be reasonably likely to
result in a Material Adverse Effect, and (d) will not result in the creation or
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imposition of any Lien on any asset of any Loan Party, except Liens created
under the Loan Documents.
SECTION 4.4 FINANCIAL CONDITION. (a) The Lead Borrower has heretofore furnished
to the Lenders (i) the consolidated balance sheet, and statements of income,
stockholders' equity, and cash flows for the Lead Borrower and its Subsidiaries
as of and for the fiscal year ending December 29, 2001, audited and accompanied
by the unqualified report of KPMG, LLP, (ii) the internally prepared unaudited
consolidated balance sheet, and statements of income, stockholder's equity and
cash flows for the Lead Borrower and its Subsidiaries as of and for the fiscal
year ending December 28, 2002, all certified by a Financial Officer of the Lead
Borrower; and (iii) the internally prepared unaudited consolidated balance
sheet, and statements of income, shareholder's equity and cash flows for the
Lead Borrower and its Subsidiaries of and for the fiscal quarter ending
September 27, 2003, certified by a Financial Officer of the Borrowers. Such
financial statements present fairly, in all material respects, the financial
position, results of operations and cash flows of the Lead Borrower and its
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to (i) year end audit adjustments and the absence of footnotes and (ii)
the Accounting Restatement Matter. Since the date of such audited financial
statements, there have been no changes in the assets, liabilities, financial
condition, business or prospects of the Borrowers other than changes in the
ordinary course of business, the effect of which would not reasonably be likely
to have a Material Adverse Effect, and the commencement of the Reorganization
Cases. The Fiscal Periods of the Lead Borrower and its Subsidiaries are as set
forth in SCHEDULE 1.2.
(b) The Lead Borrower has reviewed the projections for future results
of operations of the Lead Borrower and its Subsidiaries for the period through
January 1, 2005 on an quarterly basis, and, to the extent required by Agent, for
such period of on a monthly basis, in each case provided to the Agents prior to
the Effective Date (collectively, the "PROJECTIONS"), and the Lead Borrower
hereby certifies to the Administrative Agent and the Lenders that the
Projections were made in good faith upon reasonable assumptions at the time of
their preparation, which assumptions are on the date of this Agreement still
reasonable on the date hereof.
SECTION 4.5 PROPERTIES. (a) Except as disclosed in SCHEDULES 4.5(C)(I) AND
4.5(C)(II), each Loan Party has good title to, or valid leasehold interests in,
and the right to use, all assets, including without limitation all assets
reflected on its consolidated balance sheet as at December 29, 2001 or acquired
since that date (except assets sold or otherwise disposed of in the ordinary
course of business since that date), subject to no Liens except as permitted
hereunder. Each Loan Party which operates in a Host Store or other third party
retail location, whether pursuant to a Material Agreement or otherwise, owns all
of the Inventory and other Collateral purportedly owned by it as reflected in
the financial statements delivered to the Lenders from time to time hereunder
(including without limitation all such Collateral included in the Borrowing
Base), and all proceeds thereof, notwithstanding the fact that such Inventory,
other Collateral and proceeds thereof may be located in a Host Store or other
third party retail location.
(b) Each Loan Party owns, or is licensed to use, all trademarks, trade
names, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Loan Parties does not infringe upon the
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rights of any other Person, except for any such infringements that, individually
or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect. As of the Effective Date, all trademarks or service marks owned
by any Loan Party are owned by either Apache Minnesota ▇▇▇▇ ▇▇▇▇, Inc., Footstar
Corporation, Athletic Attic of Texas, Inc. or Nevada Feet, Inc. and all patents
owned by any of the Loan Parties are owned by Footstar Corporation. As of the
Effective Date, the only Loan Parties which need to be a signatory to the
Trademark Security Agreement are Apache Minnesota ▇▇▇▇ ▇▇▇▇, Inc., Footstar
Corporation, Athletic Attic of Texas, Inc. and Nevada Feet, Inc., and the
Borrowers shall not permit any other Loan Parties to register or own any
trademarks or service marks unless such Loan Parties become parties to the
Trademark Security Agreement pursuant to an instrument reasonably acceptable to
the Agents. As of the Effective Date, the only Loan Party which needs to be a
signatory to the Patent Security Agreement is Footstar Corporation, and the
Borrowers shall not permit any other Loan Parties to register or own any patents
unless such Loan Parties become parties to the Patent Security Agreement
pursuant to an instrument reasonably acceptable to the Agents.
(c) SCHEDULE 4.5(C)(I) sets forth the address (including county) of all
Real Estate that is owned by the Loan Parties as of the Effective Date, together
with a list of the holders of any mortgage or other Lien thereon. SCHEDULE
4.5(C)(II) sets forth the address (including county) of all Real Estate that is
leased by the Loan Parties as of the Effective Date, together with a list of the
names and addresses of the Landlords for such leased properties if used as
distribution centers.
(d) No Inventory is directly purchased from any Person by any of the
Subsidiaries (other than directly by Footstar Corporation in accordance with the
Borrowing Order). No Subsidiaries incur any Indebtedness or trade liabilities or
vendor payables with respect to their respective Inventory or otherwise, except
(i) liabilities arising out of store leases and utility services to such store,
and (ii) trade liabilities owed to Footstar Corporation for such Inventory. No
post-Petition trade payables owed by any Loan Party with respect to third party
warehousemen are past due.
(e) The only business of Footstar HQ, LLC is and shall remain the
business of owning the Real Estate located in Mahwah, New Jersey. Footstar HQ,
LLC does not and will not engage in any other business activities and does not
and will not hold any other assets. Each Rite Aid East Coast Subsidiary is and
shall remain an Unrestricted Subsidiary.
SECTION 4.6 LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending against or, to the knowledge of any Borrower, threatened against or
affecting any Loan Party which have not been stayed by the commencement of the
Reorganization Cases, (i) as to which there is a reasonable probability of an
adverse determination and that, if adversely determined, would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than those set forth on SCHEDULE 4.6) or (ii) that involve any of
the Loan Documents.
(b) Except for the matters set forth on SCHEDULE 4.6 and except with
respect to any other matters that, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect, no Loan Party (i)
has failed to comply with any Environmental Law or to obtain, maintain or comply
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with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the matters set forth on SCHEDULE 4.6 that, individually or in the
aggregate, has resulted in, or would reasonably be expected to result in, a
Material Adverse Effect.
SECTION 4.7 NO DEFAULT; COMPLIANCE WITH LAWS AND AGREEMENTS. No Default has
occurred and is continuing. Each Loan Party is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, material agreements and other instruments binding
upon it or its property, except where the failure to do so, individually or in
the aggregate, would not reasonably be expected to result in a Material Adverse
Effect. Each of the Material Agreements and each other material agreement
contemplated thereby and entered into in connection therewith is in full force
and effect, has not been amended or modified (except to the extent permitted
hereunder) and no default exists thereunder on the part of the Lead Borrower or
any of its Subsidiaries or, to the knowledge of the Lead Borrower or any of its
Subsidiaries, on the part of any third parties party to such agreements or any
of their affiliates. The Lead Borrower has been assigned all of the right, title
and interest of Melville Corporation under the Kmart Agreement and the Lead
Borrower has not assigned any of such right, title and interest thereunder to
any Person.
SECTION 4.8 INVESTMENT AND HOLDING COMPANY STATUS. No Loan Party is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 4.9 TAXES. Each Loan Party has timely filed or caused to be filed all
tax returns and reports required to have been filed and has paid or caused to be
paid all taxes required to have been paid by it, except (a) taxes that are being
contested in good faith by appropriate proceedings, for which such Loan Party
has set aside on its books adequate reserves, and as to which no Lien has
arisen, (b) which arose prior to the Petition Date and which are not required to
be paid during the pendency of the Reorganization Cases, or (c) to the extent
that the failure to do so would not reasonably be expected to result in a
Material Adverse Effect.
SECTION 4.10 ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $500,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $1,000,000 the fair market value of
the assets of all such underfunded Plans.
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SECTION 4.11 DISCLOSURE. The Borrowers have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which any Loan
Party is subject, and all other matters known to any of them, that, individually
or in the aggregate, would reasonably be expected to result in a Material
Adverse Effect. None of any of the reports, financial statements, certificates
or other information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; it being understood that that fiscal periods after
the fiscal year 2002 have not yet closed and the financial statements provided
in connection therewith are subject to change; PROVIDED THAT no Loan Party makes
any such representation or warranty with respect to information related to the
Accounting Restatement Matter and the financial statements being restated in
connection therewith.
SECTION 4.12 SUBSIDIARIES. SCHEDULE 4.12 sets forth the name of, state of
incorporation of, and the ownership interest of each Loan Party in, each of the
Subsidiaries of the Loan Parties as of the Effective Date. Each Unrestricted
Subsidiary that is identified on SCHEDULE 4.12 as a "Closed Store", is and shall
remain dormant, is and shall remain no longer engaged in any active business and
holds and will hold no assets. The Loan Parties are not party to any joint
venture, general or limited partnership, or limited liability company, or any
other business ventures or entities, except as listed on SCHEDULE 4.12 or as
hereafter agreed to in writing by the Agents in their commercially reasonable
discretion. All of the Subsidiaries listed on SCHEDULE 4.12 (as required to be
updated hereunder from time to time pursuant to Section 6.1) are Facility
Guarantors, except for the Foreign Subsidiaries (as identified thereon) and the
Unrestricted Subsidiaries (identified as "Closed" thereon).
SECTION 4.13 INSURANCE. SCHEDULE 4.13 sets forth a description of all insurance
maintained by or on behalf of the Borrowers and their Subsidiaries as of the
Effective Date. As of the Effective Date, all premiums in respect of such
insurance that are due and payable have been paid.
SECTION 4.14 LABOR MATTERS. As of the Effective Date, there are no strikes,
lockouts or slowdowns against any Loan Party pending or, to the knowledge of the
Borrowers, threatened. The hours worked by and payments made to employees of the
Loan Parties have not been in violation of the Fair Labor Standards Act or any
other applicable federal, state, local or foreign law dealing with such matters
to the extent that any such violation would reasonably be expected to have a
Material Adverse Effect. All payments due from any Loan Party, or for which any
claim may be made against any Loan Party, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of such member. The consummation of the transactions
contemplated by the Loan Documents will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Loan Party is bound.
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SECTION 4.15 SECURITY DOCUMENTS. The Security Documents create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security or mortgage interest in the Collateral, and the
Security Documents (and the UCC filings contemplated thereunder) constitute the
creation of a fully perfected first priority Lien on, and security or mortgage
interest, in, as applicable, all right, title and interest of the Loan Parties
thereunder in such Collateral, in each case prior and superior in right to any
other Person, other than the Carve Out. Each of the Loan Parties hereby
acknowledges and agrees that all references to the "Credit Agreement" contained
in each of the Security Documents shall hereby be deemed to be references to
this Agreement and each of the Obligations under this Agreement shall be secured
by the liens granted in favor of the Collateral Agent for the benefit of the
Secured Parties pursuant to the Security Documents.
SECTION 4.16 FEDERAL RESERVE REGULATIONS. (a) No Loan Party is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to buy or carry Margin Stock or to extend credit to others for
the purpose of buying or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose or (ii) for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board, including Regulation U or X.
(c) Less than 5% of the assets of the Borrowers on a consolidated basis
consists of Margin Stock.
SECTION 4.17 PRIORITY. Pursuant to subsections 364(c)(1), (2), and (3)
and Section 507(b) of the Bankruptcy Code and the Borrowing Order, the
obligations of the Debtors hereunder and under the other Loan Documents
constitute an allowed secured claim and an allowed Superpriority Claim, subject
only to the Carve Out.
ARTICLE V
CONDITIONS
SECTION 5.1 EFFECTIVE DATE. The obligation of the Lenders to make each Loan and
of the Issuing Bank to issue each Letter of Credit, including the initial Loan
and the initial Letter of Credit, is subject to the fulfillment (or adequate
provision for fulfillment or waiver reasonably satisfactory to the Agents) of
the following conditions precedent:
(a) The Agents (or their counsel) shall have received from each party hereto
other than the Lenders a counterpart of this Agreement signed on behalf of such
party (which may include telecopy transmission of a signed signature page of
this Agreement).
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(b) The Agents shall have received a favorable written opinion (addressed to
each Agent and the Lenders and dated the Effective Date) of (i) Weil, Gotshal &
▇▇▇▇▇▇ LLP, bankruptcy counsel for the Loan Parties substantially in the form of
EXHIBIT E-1; and (ii) ▇▇▇▇ ▇▇▇▇▇▇▇▇, inhouse assistant general counsel for
Footstar Corporation; in the form of EXHIBIT E-2; in each case in form and
substance reasonably satisfactory to the Agents, covering such matters relating
to the Loan Parties, this Agreement or the transactions contemplated hereby as
the Agents shall reasonably request. The Borrowers hereby request such counsel
to deliver such opinions.
(c) All motions and other documents to be filed with and submitted to the
Bankruptcy Court in connection with this Agreement and the approval hereof shall
be satisfactory in form and substance to the Agents. All service and notice
requirements in connection therewith shall have been timely complied with and
such requirements have been fulfilled in accordance with all applicable laws and
rules. A third Interim Borrowing Order reasonably acceptable to the Agent shall
have been entered in the Reorganization Cases, which order shall not have been
stayed, modified, appealed, reversed or otherwise affected.
(d) The Agents shall have received good standing certificates from each of the
Borrowers and certificates of the secretary or assistant secretary of each of
the Borrowers, certifying as to the legal existence of the Loan Parties and as
to resolutions authorizing the transactions contemplated by this Agreement and
other legal matters relating to each of the Borrowers, and stating that the
charters and bylaws of each of the Borrowers certified in connection with the
closing of the Original Credit Agreement and the Existing Credit Agreement
remain unmodified and in full force and effect; PROVIDED THAT prior to the Final
Borrowing Order the Agents shall have received such additional documents and
certificates as the Agents or their counsel may reasonably request relating to
the organization, existence and good standing of each Loan Party, the
authorization of the transactions contemplated by the Loan Documents and any
other legal matters relating to the Loan Parties, the Loan Documents or the
transactions contemplated thereby, all in form and substance reasonably
satisfactory to the Agents and their counsel.
(e) The Agents shall have received a Borrowing Base Certificate dated the
Effective Date, relating to the end of the most recent fiscal week required to
be delivered pursuant to Section 6.1(e), in each case executed by a Financial
Officer of the Lead Borrower.
(f) All necessary consents and approvals to the transactions contemplated hereby
shall have been obtained and shall be satisfactory to the Agents.
(g) The Agents shall be reasonably satisfied that (i) any financial statements
or other materials delivered to them contain no material misstatements of fact
or omit to state any material fact necessary in order to make the statements
contained herein or therein not misleading, (ii) any financial statements
delivered to them fairly present the business and financial condition of the
Lead Borrower and its Subsidiaries, and (iii) except for the commencement of the
Reorganization Cases and transactions approved by the Bankruptcy Court, there
has been no change in the assets, business, financial condition, income or
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prospects of the Lead Borrower and its Subsidiaries since the date of the most
recent financial information delivered to the Agents that would reasonably be
likely to result in a Material Adverse Effect.
(h) All fees due at or immediately after the Effective Date and all costs and
expenses incurred by the Agents in connection with the establishment of the
credit facility contemplated hereby (including the fees and expenses of counsel
to the Agents) shall have been paid in full.
(i) The consummation of the transactions contemplated hereby shall not (a)
violate any applicable law, statute, rule or regulation, or (b) result in a
default or event of default under any Material Agreement, and the Agents and the
Lenders shall receive a satisfactory opinion of Loan Parties' counsel to that
effect. No event shall exist which is, or solely with the passage of time, the
giving of notice or both, would be a default under any Material Agreement which
would reasonably be likely to result in a Material Adverse Effect.
(j) No material changes in governmental rules or regulations existing (or
proposed and reasonably likely to take effect), which would materially adversely
affect the Loan Parties, the Agents, or any Lender involved in this transaction
shall have occurred prior to the Effective Date.
(k) The Agents shall have received third party waivers and consents, if
necessary, for the execution, delivery or performance of the Loan Documents, in
form reasonably acceptable to the Agents.
(l) After giving effect to the Loans to be made and Letters of Credit to be
issued hereunder on the Effective Date and the application of the proceeds
thereof, Excess Availability shall be at least $40,000,000.
(m) The Term Loan (as such term is defined in the Existing Credit Agreement)
shall have been repaid in full.
(n) The sale of the Foot Locker stores and related assets shall have been fully
consummated pursuant to that certain Asset Purchase Agreement dated as of April
13, 2004.
SECTION 5.2 CONDITIONS PRECEDENT TO EACH REVOLVING LOAN AND EACH LETTER OF
CREDIT. In addition to those conditions described in Section 5.1, the obligation
of the Lenders to make each Revolving Loan and of the Issuing Bank to issue each
Letter of Credit, is subject to the following conditions precedent:
(a) NOTICE. The Administrative Agent shall have received a notice with respect
to such Borrowing or issuance, as the case may be, as required by Article II.
(b) REPRESENTATIONS AND WARRANTIES. All representations and warranties contained
in this Agreement and the other Loan Documents or otherwise made in writing in
connection herewith or therewith shall be true and correct in all material
respects on and as of the date of each Borrowing or the issuance of each Letter
of Credit hereunder with the same effect as if made on and as of such date,
other than representations and warranties that relate solely to an earlier date.
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(c) NO DEFAULT. On the date of each Borrowing hereunder and the issuance of each
Letter of Credit, the Loan Parties shall be in compliance with all of the terms
and provisions set forth herein and in the other Loan Documents to be observed
or performed and no Default or Event of Default shall have occurred and be
continuing.
(d) BORROWING BASE CERTIFICATE. The Administrative Agent shall have received the
timely delivery of the most recently required Borrowing Base Certificate, with
such Borrowing Base Certificate including schedules as reasonably required by
the Administrative Agent.
(e) BORROWING ORDER. The Borrowing Order shall be in full force and effect and
shall not have been vacated, reversed, modified, amended or stayed.
The request by the Borrowers for, and the acceptance by the Borrowers of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 5.2 have
been satisfied at that time and that after giving effect to such extension of
credit no Overadvance shall exist. The conditions set forth in this Section 5.2
are for the sole benefit of the Administrative Agent and each Lender and may be
waived by the Administrative Agent in whole or in part (unless instructed in
writing otherwise by the Required Lenders) without prejudice to the
Administrative Agent or any Lender.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been
indefeasibly paid in full and all Letters of Credit shall have expired or
terminated and all L/C Disbursements shall have been reimbursed, each Loan Party
covenants and agrees with the Agents and the Lenders that:
SECTION 6.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrowers will
furnish to the Agents:
(a) no later than September 30, 2004 with respect to the 2002 and 2003 fiscal
years of the Lead Borrower and within 90 days after the end of each fiscal year
thereafter, its consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all audited (in the case of such consolidated statements) and reported on by
KPMG, LLP or other independent public accountants of recognized national
standing (without a qualification or exception as to the scope of such audit,
unless, KPMG, LLP is not the issuer thereof) to the effect that such
consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Lead Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied; and within 90 days after the end of each fiscal year of the Lead
Borrower, an updated Perfection Certificate if required pursuant to Section 4.2
of the Security Agreements;
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(b) within 45 days after the end of each fiscal quarter of the Lead Borrower,
its consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal quarter
and the elapsed portion of the fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Lead Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year end audit adjustments and the absence of
footnotes;
(c) within 45 days after the end of each fiscal month, the internally prepared
unaudited consolidated and consolidating by division balance sheets and related
statement of operations of the Borrowers and the internally prepared unaudited
consolidated statement of cash flows of the Borrowers, each as of the end of and
for such fiscal month and the elapsed portion of the fiscal year, together with
a comparison to the results for the same period in the immediately preceding
fiscal year, all certified by one of the Lead Borrower's Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrowers on a consolidated basis and of each such division
(if applicable) in accordance with GAAP consistently applied, subject to normal
year end audit adjustments, the absence of footnotes, and, until such time as
the 2002 and 2003 fiscal year audited statements are delivered pursuant to
Section 6.1(a), the Accounting Restatement Matter;
(d) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Lead Borrower in the form
of EXHIBIT F (each, a "COMPLIANCE CERTIFICATE"): (w) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto; (x)
setting forth reasonably detailed calculations with respect to the definition of
"Applicable Margin" and demonstrating compliance with Section 7.11 (whether or
not the provisions of Section 7.11 are then applicable), and (y) stating whether
any change in GAAP or in the application thereof has occurred since the date of
the Borrowers financial statements referred to in Section 4.4 and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(e) on or before the second Tuesday after the Saturday end of each fiscal week,
a certificate in the form of EXHIBIT G (the "BORROWING BASE CERTIFICATE");
PROVIDED THAT, if an Event of Default exists, such Borrowing Base Certificate
shall be furnished more frequently as required by the Agents. Each such
Borrowing Base Certificate shall show the Borrowing Base as of the close of
business on the Saturday of the week ending 10 days prior to the Tuesday date
such Borrowing Base Certificate is required to be delivered as provided above,
with each such report and each Borrowing Base Certificate to be certified as
complete and correct on behalf of the Borrowers by a Financial Officer of the
Lead Borrower;
(f) within 10 Business Days after the end of each fiscal month, a Receivables
aging report, a statement setting forth all additional Subsidiaries other than
those set forth on SCHEDULE 4.12, and a statement as to additional stores opened
after the date of the delivery of the most recent report furnished hereunder;
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(g) concurrently with the delivery of any financial statements under clause (a)
above, a statement of the firm of independent public accountants which reported
on such statements as to (i) whether anything has come to their attention to
cause them to believe that any Default existed on the date of such statements
and (ii) confirming the calculations set forth in the officer's certificate
delivered concurrently therewith pursuant to clause (d) above; PROVIDED THAT the
foregoing shall not be construed to require that such accountants conduct any
investigation outside the regular course of their audit;
(h) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by any Loan Party
with the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with any
national securities exchange, as the case may be;
(i) promptly upon receipt thereof, copies of all reports submitted to any Loan
Party by independent certified public accountants in connection with each
annual, interim or special audit of the books of the Loan Parties or any of
their Subsidiaries made by such accountants, including any management letter
commenting on the Loan Parties' internal controls submitted by such accountants
to management in connection with their annual audit;
(j) the financial and collateral reports described on SCHEDULE 6.1(J) hereto
within 5 Business Days after the times set forth in such Schedule;
(k) notice of any intended sale (other than inventory in the ordinary course of
business) or other disposition of assets (including, without limitation, sales
or dispositions of Real Estate, 20 or more store closings at any time or 20 or
more lease rejections at any time) of any Loan Party permitted hereunder or
incurrence of any Indebtedness permitted hereunder at least five Business Days
prior to the earlier of (i) the date of filing of any motion seeking approval of
the same in the Reorganization Cases or (ii) the date of consummation of such
sale or disposition, store closing, lease rejection or incurrence of such
Indebtedness (such notice being supplemental of, and in addition to, any notices
which may be required to be furnished under the Bankruptcy Code in connection
therewith);
(l) promptly but in any event within 10 Business Days or such later time as
agreed to by the Agents, following any request therefor, such other information,
financial forecasts and projections, regarding the operations, business affairs
and financial condition of any Loan Party, or compliance with the terms of any
Loan Document, as the Agents or any Lender may reasonably request;
(m) on or before December 12, 2004, a commercially reasonable, detailed business
plan for each month during the Borrowers' fiscal year ended December 31, 2005;
such business plan to be reviewed by a third-party consulting firm reasonably
acceptable to the Administrative Agent, to be in form and substance reasonably
satisfactory to the Administrative Agent, and to include, without limitation,
(A) projected consolidated and consolidating by division balance sheets and
related projected statements of income and cash flows of the Borrowers as of and
for each fiscal month and the fiscal year; and (B) projected availability for
each fiscal month, all prepared on a consolidated basis in accordance with GAAP
consistently applied and consistent with the Borrowers' current practices and,
promptly upon availability, any significant revisions to such business plan;
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(n) concurrently with any delivery of financial statements required under clause
(c) above, a rolling 13-week cash flow statement, each such statement to be in
form and substance reasonably satisfactory to the Administrative Agent;
(o) promptly after the filing of same, all schedules of assets and liabilities,
statements of financial affairs, and any other pleadings filed in the
Reorganization Cases by or on behalf of any Debtor or the submission or
disclosure by or on behalf of any Debtor of any report or financial statement to
the Bankruptcy Court, the office of the United States Trustee or any committee
appointed in the Reorganization Cases.
SECTION 6.2 NOTICES OF MATERIAL EVENTS. The Borrowers will furnish to the
Agents prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting any Loan Party or
any Affiliate thereof that, if adversely determined, would reasonably be
expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, would reasonably be expected to result in a
Material Adverse Effect;
(d) any other development that results in, or would reasonably be expected to
result in, a Material Adverse Effect;
(e) any change in any Borrower's executive officers;
(f) any failure by any Loan Party to pay rent at any of such Loan Party's
locations, which failure continues for more than 15 days following the day on
which such rent first came due;
(g) the discharge by any Borrower of their present independent accountants or
any withdrawal or resignation by such independent accountants; and
(h) any change in the business, expected prospects, operations, or financial
affairs of any Loan Party that would reasonably be expected to result in a
Material Adverse Effect; and
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Lead Borrower setting
forth the details of the event or development requiring such notice and, if
applicable, any action taken or proposed to be taken with respect thereto.
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SECTION 6.3 INFORMATION REGARDING COLLATERAL. (a) To the extent of any change
since the closing of the Existing Credit Agreement, the Lead Borrower will
furnish to the Agents prompt written notice of any change (i) in any Loan
Party's corporate name or in any trade name used to identify it in the conduct
of its business or in the ownership of its properties, (ii) in the location of
any Loan Party's chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located (including
the establishment of any such new office or facility), (iii) in any Loan Party's
identity or corporate structure or jurisdiction of incorporation or formation or
corporate identification number, (iv) in any Loan Party's Federal Taxpayer
Identification Number. The Lead Borrower also agrees promptly to notify the
Agents if any material portion of the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section 6.1,
the Lead Borrower shall deliver to the Agents a certificate of a Financial
Officer of the Lead Borrower setting forth the information required pursuant to
Section 2 of the Perfection Certificate or confirming that there has been no
change in such information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent certificate
delivered pursuant to this Section.
SECTION 6.4 EXISTENCE; CONDUCT OF BUSINESS. Each Loan Party will, and will cause
each of the Subsidiaries to, do or cause to be done all things necessary to
comply with its respective charter, certificate of incorporation, articles of
organization, and/or other organizational documents, as applicable; and by-laws
and/or other instruments which deal with corporate governance, and to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges, franchises, patents, copyrights, trademarks and
trade names material to the conduct of its business, PROVIDED THAT the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 7.3.
SECTION 6.5 PAYMENT OF OBLIGATIONS. Each Loan Party will, and will cause each of
the Subsidiaries to, pay its post-Petition Date Indebtedness and other
obligations, including tax liabilities, before the same shall become delinquent
or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) such Loan Party or such
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, (c) such contest effectively suspends collection of the
contested obligation and enforcement of any Lien securing such obligation and
(d) the failure to make payment pending such contest would not reasonably be
expected to result in a Material Adverse Effect. Nothing contained herein shall
be deemed to limit the rights of the Agents with respect to determining Reserves
pursuant to this Agreement. Without limitation of the foregoing, each Loan Party
will, and will cause each of its Subsidiaries to, pay all post-Petition
obligations when due and owing to any third party warehousemen storing any of
the Inventory of any Loan Party.
SECTION 6.6 MAINTENANCE OF PROPERTIES. Each Loan Party will, and will cause each
of the Subsidiaries to, keep and maintain all property material to the conduct
of its business in good working order and condition, ordinary wear and tear
excepted and with the exception of store closings and asset dispositions
permitted hereunder.
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SECTION 6.7 INSURANCE. (a) Each Loan Party shall (i) maintain insurance with
financially sound and reputable insurers licensed in the United States and rated
by A.M. Best Company, Inc. with a rating of at least A- or reasonably acceptable
to the Administrative Agent (or, to the extent consistent with prudent business
practice, a program of self-insurance approved by the Administrative Agent) on
such of its property and in at least such amounts and against at least such
risks as is customary with companies in the same or similar businesses operating
in the same or similar locations, including public liability insurance against
claims for personal injury or death occurring upon, in or about or in connection
with the use of any properties owned, occupied or controlled by it (including
the insurance required pursuant to the Security Documents); (ii) maintain such
other insurance as may be required by law; and (iii) furnish to the
Administrative Agent, upon written request, full information as to the insurance
carried.
(b) Fire and extended coverage policies maintained with respect to any
Collateral shall be endorsed or otherwise amended to include (i) a
non-contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause and endorsement (regarding personal property), in
form and substance reasonably satisfactory to the Collateral Agent, which
endorsements or amendments shall provide that the insurer shall pay all proceeds
otherwise payable to the Loan Parties under the policies directly to the
Collateral Agent, (ii) a provision to the effect that none of the Loan Parties,
the Administrative Agent, the Collateral Agent, or any other party shall be a
coinsurer and (iii) such other provisions as the Collateral Agent may reasonably
require from time to time to protect the interests of the Lenders. Commercial
general liability policies shall be endorsed to name the Collateral Agent as an
additional insured with respect to liability any Agent incurs arising out of the
business operations of the Loan Parties. Each such policy referred to in this
paragraph also shall provide that it shall not be canceled, modified or not
renewed (i) by reason of nonpayment of premium except upon not less than 30
days' prior written notice thereof by the insurer to the Collateral Agent
(giving the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than 60 days' prior
written notice thereof by the insurer to the Collateral Agent. The Borrowers
shall deliver to the Collateral Agent, prior to the cancellation, modification
or nonrenewal of any such policy of insurance, a copy of a renewal or
replacement policy (or other evidence of renewal of a policy previously
delivered to the Collateral Agent) together with evidence satisfactory to the
Collateral Agent of payment of the premium therefor.
SECTION 6.8 CASUALTY AND CONDEMNATION. Each Borrower will furnish to the Agents
and the Lenders prompt written notice of any casualty or other insured damage to
any material portion of any Collateral or the commencement of any action or
proceeding for the taking of any material portion of the Collateral or any part
thereof or interest therein under power of eminent domain or by condemnation or
similar proceeding.
SECTION 6.9 BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS; APPRAISALS.
(a) Each Loan Party will, and will cause each of the Subsidiaries to,
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each Loan Party will, and will cause each of the Subsidiaries to,
permit the Agents or any representatives designated by any Agent, upon
reasonable prior notice (unless an Event of Default exists in which case no
notice shall be required), to visit during business hours and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
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(b) Each Loan Party will, and will cause each of the Subsidiaries to,
from time to time upon the request of the Agents or the Required Lenders through
the Agents, permit any Agent or professionals (including investment bankers,
consultants, accountants, lawyers and appraisers) retained by the Agents to
conduct appraisals, commercial finance examinations and other evaluations,
including, without limitation, of (i) the Borrowers' practices in the
computation of the Borrowing Base and (ii) the assets included in the Borrowing
Base and related financial information such as, but not limited to, sales, gross
margins, payables, accruals and reserves, and pay the reasonable fees and
expenses of the Agents or such professionals with respect to such evaluations
and appraisals. Without limiting the foregoing, the Agents will not undertake in
the aggregate more than four such commercial finance examinations, four
inventory appraisals, one real estate appraisal and one intellectual property
appraisal each fiscal year (unless an Event of Default exists in which case the
number of each of the foregoing shall not be limited).
SECTION 6.10 COMPLIANCE WITH LAWS. Each Loan Party will, and will cause each of
the Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, including, without
limitation, the Bankruptcy Code and the local rules and orders of the Bankruptcy
Court, except where the failure to do so, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.
SECTION 6.11 USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of Loans made
hereunder and Letters of Credit issued hereunder will be used only (a) to
refinance the Indebtedness of the Borrowers incurred in connection with the
Existing Credit Agreement and the Liens securing the same, and (b) for working
capital and general corporate purposes PROVIDED THAT the Borrowers shall not use
the proceeds of any Loan for any purpose that is prohibited under the Bankruptcy
Code or this Agreement, and PROVIDED FURTHER THAT nothing contained herein shall
prejudice or prevent the Agents and the Lenders in any way from objecting, for
any reason, to any requests or applications made by the Debtors to the
Bankruptcy Court. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
SECTION 6.12 ADDITIONAL SUBSIDIARIES; AFTER ACQUIRED REAL ESTATE. If any
additional Subsidiary is formed or acquired after the Effective Date, the Lead
Borrower will notify the Agents and the Lenders thereof and (a) if such
Subsidiary is not a Foreign Subsidiary, the Borrowers will cause such Subsidiary
to be wholly owned by a Loan Party and become a Loan Party hereunder and a party
to each applicable Security Document in the manner provided therein within 10
Business Days after such Subsidiary is formed or acquired and promptly take such
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actions to create and perfect Liens on such Subsidiary's assets to secure the
Obligations as the Agents shall reasonably request and (b) the Borrower will
cause all shares of capital stock and other equity interests of such Subsidiary
and Indebtedness of such Subsidiary owed to any Loan Party to be pledged (and
corresponding stock or other transfer powers to be delivered) within 10 Business
Days after such Subsidiary is formed or acquired (except that, if such
Subsidiary is a Foreign Subsidiary, shares of stock of such Subsidiary to be
pledged may be limited to 65% of the outstanding shares of voting stock of such
Subsidiary). With respect to any owned fee interest in any real property having
a value (together with improvements thereof) of at least $500,000 acquired after
the Effective Date by any Loan Party, such Loan Party shall promptly (i) execute
and deliver a first priority mortgage or deed of trust, as applicable, in favor
of the Collateral Agent, for the benefit of the other Secured Parties, covering
such real property, (ii) provide the Collateral Agent with (x) title and
extended coverage insurance covering such real property in an amount at least
equal to the appraised value of such real property as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Collateral Agent in
connection with such mortgage or deed of trust, each of the foregoing in form
and substance reasonably satisfactory to the Collateral Agent and (iii) if
requested by the Collateral Agent, deliver to the Collateral Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Collateral
Agent.
SECTION 6.13 [Intentionally Omitted].
SECTION 6.14 [Intentionally Omitted].
SECTION 6.15 FURTHER ASSURANCES. (a) The Borrowers will cause each Loan Party to
execute any and all further documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements and other documents), that may be required
under any applicable law, or which any Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties. The Borrowers will cause
the Loan Parties to provide to the Agents, from time to time upon request,
evidence reasonably satisfactory to the Agents as to the perfection and priority
of the Liens created or intended to be created by the Security Documents.
(b) If any material assets are acquired by any Loan Party after the
Effective Date (other than assets constituting Collateral under the Security
Agreements that become subject to the Lien of the Security Agreements upon
acquisition thereof), the Lead Borrower will notify the Agents and the Lenders
thereof, and the Borrowers will cause the Loan Parties to cause such assets to
be subjected to a Lien securing the Obligations and will take such actions as
shall be necessary or reasonably requested by any Agent or the Required Lenders
to grant and perfect such Liens, including actions described in paragraph (a) of
this Section, all at the expense of the Loan Parties.
(c) The Borrowers shall cause each of its customs brokers to deliver an
agreement to the Administrative Agent, substantially in the form previously
approved by the Administrative Agent, covering such matters as the
Administrative Agent may reasonably require. If any Loan Party enters into an
agreement with any Host Store after the Effective Date, the Loan Parties shall
deliver to the Administrative Agent a Host Store Notification (as contemplated
by the Security Agreements).
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ARTICLE VII
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been indefeasibly
paid in full and all Letters of Credit have expired or terminated and all L/C
Disbursements shall have been reimbursed, each Loan Party covenants and agrees
with the Agents and the Lenders that:
SECTION 7.1 INDEBTEDNESS AND OTHER OBLIGATIONS. (a) The Loan Parties will not,
and will not permit any Subsidiary to, create, incur, assume or permit to exist
any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the Effective Date owed to the parties and in
the amounts set forth in SCHEDULE 7.1;
(iii) Indebtedness of any Loan Party to any other Loan Party;
(iv) Guarantees by any Loan Party of Indebtedness permitted hereunder of any
other Loan Party; and
(v) purchase money Indebtedness of any Loan Party to finance the
acquisition of any tangible personal property constituting capital
assets acquired after the Effective Date, including without limitation
Capital Lease Obligations, PROVIDED THAT (A) the aggregate principal
amount of Indebtedness permitted by this clause (v) shall not exceed
$10,000,000 at any time outstanding and (B) both before and after
giving effect to such Indebtedness, no Default or Event of Default
shall exist or reasonably be likely to result therefrom.
(b) None of the Loan Parties will, nor will they permit any Subsidiary
to, issue any preferred stock or be or become liable in respect of any
obligation (contingent or otherwise) to purchase, redeem, retire, acquire or
make any other payment in respect of (1) any shares of capital stock of any Loan
Party or (2) any option, warrant or other right to acquire any such shares of
capital stock.
SECTION 7.2 LIENS. The Loan Parties will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Liens created under the Loan Documents;
(b) Liens existing prior to the commencement of the Reorganization Cases to
secure the Pre-Petition Senior Debt, and Permitted Encumbrances;
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(c) any Lien existing on the Closing Date on any property or asset (other than
Inventory and Accounts and proceeds thereof) of any Loan Party set forth in
SCHEDULE 7.2, PROVIDED THAT (i) such Lien shall not apply to any other property
or asset of any Loan Party and (ii) such Lien shall secure only those
obligations that it secures as of the Closing Date;
(d) Liens securing Indebtedness permitted by Section 7.1(a)(iv) incurred to
finance the acquisition of capital assets after the Closing Date, PROVIDED THAT
(i) such Liens and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition, (ii) the Indebtedness secured thereby
does not exceed 100% of the cost of acquiring such capital assets and (iii) such
Liens shall not apply to any other property or assets of any of the Loan
Parties;
(e) Liens which are junior in priority to the Liens of the Collateral Agent
under the Security Documents and which are granted as adequate protection for
any pre-petition secured obligations of the Borrowers; and
(f) Liens on assets of the Loan Parties granted pursuant to the Kmart
Stipulation in favor of Kmart Corporation to secure the Prepetition Setoff
Amount as defined in and pursuant thereto which are junior in priority to the
Liens of the Collateral Agent under the Security Documents and the Borrowing
Order and junior in priority to the Liens, to the extent valid and existing,
securing the Pre-Petition Senior Debt.
SECTION 7.3 FUNDAMENTAL CHANGES. (a) The Loan Parties will not merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing, (i) any Subsidiary (other than a Foreign Subsidiary
or an Unrestricted Subsidiary) may merge into a Borrower in a transaction in
which a Borrower is the surviving corporation, and (ii) any Subsidiary that is
not a Borrower may merge into any Subsidiary that is not a Borrower, PROVIDED
THAT any such merger involving a Person that is not a wholly owned Subsidiary
immediately prior to such merger shall not be permitted unless also permitted by
Section 7.4.
(b) The Loan Parties will not engage to any material extent in any
business other than businesses of the type conducted by the Loan Parties on the
date of execution of this Agreement and businesses reasonably related thereto.
SECTION 7.4 INVESTMENTS; LOANS; ADVANCES; GUARANTEES AND ACQUISITIONS. The Loan
Parties will not purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person, except:
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(a) Temporary Cash Investments;
(b) Investments existing on the date hereof by the Lead Borrower and its
Subsidiaries in their Subsidiaries, PROVIDED THAT all Subsidiaries of the Lead
Borrower (other than Foreign Subsidiaries and Unrestricted Subsidiaries) are
Facility Guarantors hereunder and all equity interests of all Subsidiaries are
pledged pursuant to the Borrower Security Agreement or the Guarantor Security
Agreement (but not more than 65% of Foreign Subsidiaries);
(c) equity investments, loans or advances made by any Loan Party to any other
Loan Party, PROVIDED THAT all such loans and advances made by any Loan Party
shall be evidenced by a promissory note, and further provided that any such
equity, investments, loans and advances shall be pledged to the Collateral Agent
pursuant to the Security Documents;
(d) investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;
(e) investments existing on the Closing Date, and set forth in detail on
SCHEDULE 7.4, to the extent such investments would not be permitted under any
other clause of this Section;
(f) loans or advances to employees for the purpose of travel, entertainment or
relocation in the ordinary course of business in an amount not to exceed
$200,000 to any employee or $2,000,000 in the aggregate at any time outstanding;
(g) Guarantees constituting Indebtedness permitted by Section 7.1;
(h) solely to the extent required under the Kmart Agreement, loans made to Kmart
in accordance with the terms and conditions of the Kmart Agreement.
SECTION 7.5 ASSET SALES; BLOCKED SALES; TRANSFERS. The Loan Parties will not,
and will not permit any of the Subsidiaries to, sell, transfer, lease or
otherwise dispose of any asset, including any capital stock or other equity
interests, nor will the Loan Parties permit any of the Subsidiaries to issue any
additional shares of its capital stock or other ownership interest in such
Subsidiary, except:
(a) sales of (i) Inventory, or (ii) used or surplus equipment or (iii) Temporary
Cash Investments, in each case in the ordinary course of business;
(b) with the authorization of the Bankruptcy Court to the extent required,
sales, transfers and dispositions among the Loan Parties; provided that such
sales, transfers or dispositions shall be made in compliance with Section 7.7;
(c) provided that no Default or Event of Default exists or shall result after
giving effect thereto, sales or other dispositions of other Inventory of the
Loan Parties not in the ordinary course of business in connection with the
closure of up to 10% of the Meldisco Stores open as of the Closing Date;
PROVIDED THAT (i) any such sales or dispositions shall be on terms and
conditions and for such consideration as shall be reasonably acceptable to the
Administrative Agent as consented to in writing prior to such sale or
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disposition (such consent not to be unreasonably withheld or delayed), (ii) any
such sales or dispositions shall be conducted by professional liquidators
reasonably acceptable to the Administrative Agent pursuant to agency agreements
in form and substance reasonably satisfactory to the Administrative Agent; and
(iii) the Loan Parties shall cause all of the net cash proceeds of such sale or
disposition (and other consideration) to be remitted to the Administrative Agent
for application to the Obligations in accordance with Section 5.2 or Section 6.2
of the Security Agreements, as applicable;
(d) provided no Default or Event of Default exists or shall result after giving
effect thereto, the sale or disposition of the assets, business and operations
relating to the Footaction Stores and the Just for Feet stores (including the
Footaction Inventory), PROVIDED THAT (i) such sale or disposition is on terms
and conditions reasonably acceptable to the Administrative Agent as consented to
prior to such sale or disposition (such consent not to be unreasonably withheld
or delayed); and (ii) the Loan Parties shall cause all of the net cash proceeds
of such sale or disposition (and other consideration) to be remitted to the
Administrative Agent for application to the Obligations in accordance with
Section 5.2 or Section 6.2 of the Security Agreements, as applicable; and
(e) any other sale or disposition as long as the proceeds therefrom are
sufficient to, and are utilized to, pay all Obligations indefeasibly in full, to
cash collateralize 105% of the Letter of Credit Outstandings and the Commitments
are thereupon terminated;
PROVIDED THAT all sales, transfers, leases and other dispositions permitted by
this Section 7.5 shall be made at arm's length and for fair value and (other
than sales, transfers and other disposition permitted under clause (b)) solely
for cash consideration and FURTHER PROVIDED THAT the authority granted under
clause (c) may be terminated in whole or in part by the Agents upon the
occurrence and during the continuance of any Event of Default.
SECTION 7.6 RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS. (a) The Loan
Parties will not, and will not permit any Subsidiary to, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, except:
(i) the Loan Parties may declare and pay dividends with respect to their
equity interests to any Loan Party which is a Subsidiary of any of the
Borrowers whether or not a Default or Event of Default exists;
(ii) As long as no Default or Event of Default exists and is continuing, the
Loan Parties may make distributions to the Lead Borrower to the extent
necessary to pay indemnities, accounting, legal and other professional
fees, and other similar general and administrative expenses incurred by
the Lead Borrower for itself and the Loan Parties; and
(iii) As long as no Event of Default exists and is continuing under Sections
8.1(a), 8.1(b) hereof or Section 5.1 of either of the Security
Agreements and as long as the time for payment of the Obligations has
not been accelerated as provided herein, the Loan Parties may make
distributions to the Lead Borrower to the extent necessary to pay
corporate taxes incurred by the Lead Borrower for itself and the Loan
Parties.
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(b) The Loan Parties will not, and will not permit any Subsidiary to,
make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:
(i) payments due from time to time hereunder;
(ii) actions required to be made pursuant to an order of the Bankruptcy
Court for adequate protection pursuant to the Bankruptcy Code;
(iii) payment of pre-petition claims authorized by the First Day Orders or
other orders entered in the Reorganization Cases, in each case to which
the Agents have consented; and
(iv) payment of the Indebtedness of the Borrowers incurred in connection
with the Existing Credit Agreement.
SECTION 7.7 TRANSACTIONS WITH AFFILIATES. The Loan Parties will not, and will
not permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions in the ordinary course of business that are at prices
and on terms and conditions not less favorable to the Loan Parties or such
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties, and (b) transactions between or among the Loan Parties not involving
any other Affiliate.
SECTION 7.8 RESTRICTIVE AGREEMENTS. The Loan Parties will not, and will not
permit any Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Loan Parties or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Loan Parties or any other Subsidiary or to guarantee Indebtedness of the
Loan Parties or any other Subsidiary, PROVIDED THAT (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by any Loan Document,
(ii) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (iii) clause (a) of the foregoing shall
not apply to customary provisions in leases restricting the assignment or
subleasing thereof.
SECTION 7.9 AMENDMENT OF MATERIAL DOCUMENTS. The Loan Parties will not, and will
not permit any Subsidiary to, amend, modify or waive any of its rights under (a)
its certificate of incorporation, by-laws or other organizational documents, (b)
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the Kmart Agreement, (c) any other Material Agreements, unless such amendment,
modification or waiver thereunder does not materially adversely affect the Loan
Parties taken as a whole or materially adversely affect the interests of the
Lenders under the Loan Documents (as determined by the Agents in their
commercially reasonable discretion), or (d) any other material instruments,
documents or agreements, unless such amendment, modification or waiver does not
materially adversely affect the Loan Parties taken as a whole or materially
adversely affect the interests of the Lenders under the Loan Documents.
SECTION 7.10 ADDITIONAL SUBSIDIARIES. The Loan Parties will not, and will not
permit any Subsidiary to, create any additional Subsidiary unless the investment
with respect thereto is permitted pursuant to Section 7.4 and the requirements
of Section 6.12 are satisfied contemporaneously therewith.
SECTION 7.11 EXCESS AVAILABILITY. The Lead Borrower and its Subsidiaries shall
maintain at all times Excess Availability in an amount equal to the lesser of
(i) $13,000,000 or (ii) ten percent (10%) of the Borrowing Base.
SECTION 7.12 [Intentionally Omitted]..
SECTION 7.13 MAXIMUM CAPITAL EXPENDITURES Neither the Lead Borrower nor any of
its Subsidiaries shall make or agree to make, or incur any obligations with
respect to, any Capital Expenditures in excess of $17,000,000 any fiscal year.
SECTION 7.14 BANKRUPTCY COVENANTS. The Debtors will not seek, consent to, or
permit to exist any of the following:
(a) Any modification, stay, vacation or amendment to the Borrowing
Order;
(b) A priority claim or administrative expense or unsecured claim
against any Debtor (now existing or hereafter arising or any kind or nature
whatsoever, including, without limitation, any administrative expense of the
kind specified in Sections 105, 326, 330, 331, 503(a), 503(b), 506(c), 507(a),
507(b), 546(c), 546(d), or 1114 of the Bankruptcy Code) equal or superior to the
priority claim of the Agents and the Lenders in respect of the Obligations,
except with respect to the Carve Out;
(c) Any Lien on any Collateral having a priority equal or superior to
the Lien of the Collateral Agent;
(d) Any order which authorizes the return of any of the Debtors' property
pursuant to Section 546(g) of the Bankruptcy Code;
(e) Any order seeking authority to take any action that is prohibited
by the terms of this Agreement or the other Loan Documents or refrain from
taking any action that is required to be taken by the terms of this Agreement or
any of the other Loan Documents;
(f) Except as otherwise permitted in Section 7.5 hereof, (i) any
rejection of the Kmart Agreement, or (ii) any rejection, assumption or
assignment of any other executory contracts or any unexpired leases which would
reasonably be expected to result in a Material Adverse Effect, without the prior
written consent of the Administrative Agent;
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(g) Any Bankruptcy Plan, unless pursuant thereto, (i) the Obligations
are indefeasibly paid in full in cash and the Commitments hereunder are
terminated upon the confirmation thereof, or (ii) to the extent any of the
Credit Extensions are not indefeasibly paid in full in cash and all of the
Commitments hereunder are not terminated upon the confirmation thereof, all of
the Lenders whose Credit Extensions have not been indefeasibly paid in full in
cash and whose Commitments have not been terminated shall have consented in
writing to such Bankruptcy Plan in advance of its submission to the Bankruptcy
Court; or
(h) Any motion, suit, action at law or in equity, other legal
proceeding or any other action to challenge any rights, liens or claims of the
Agent or any Lender or the priority or validity of any Loan made pursuant hereto
which motion, suit, action or legal proceeding (other than a motion, suit,
action or legal proceeding in connection with, relative to, or arising out of
the Kmart Agreement) shall not have been discharged, stayed or vacated within 30
days after the commencement thereof.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) the Loan Parties shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Loan Parties shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document within one
Business Day after the time such amount shall become due and payable;
(c) any representation or warranty made or deemed made by or on behalf of any
Loan Party in or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect in any material respect when made
or deemed made;
(d) the Loan Parties shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.1 or Section 5.2 of the Borrower Security
Agreement or the Guarantor Security Agreement, or Section 6.1, 6.2, 6.7, 6.9, or
6.11 of this Agreement, or in Article VII of this Agreement; PROVIDED THAT a
default in the delivery of any Borrowing Base Certificate under Section 6.1(e)
which is required to be delivered weekly shall not constitute an Event of
Default unless and until the same continues unremedied for two Business Days
(provided such two Business Day grace period shall not be available for the
remedy of any such default more than four times during any fiscal year of the
Lead Borrower);
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(e) any Loan Party shall fail to observe or perform any covenant, condition or
agreement contained in any Loan Document (other than those specified in clause
(a), (b), (c), or (d) of this Article), and such failure shall continue
unremedied for a period of 20 days after the earlier of notice thereof from the
Administrative Agent to the Lead Borrower (which notice will be given at the
request of any Lender) or the actual knowledge thereof by the Lead Borrower;
(f) any Loan Party (i) shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material Indebtedness when
and as the same shall become due and payable (after giving effect to the
expiration of any grace or cure period set forth therein), or (ii) shall
otherwise be in default in respect of any Material Indebtedness the result of
which default under this subsection (ii) is to permit such Material Indebtedness
to become due prior to its stated maturity (after giving effect to any grace or
cure period therein or written waiver thereof);
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any such Material Indebtedness or any trustee or agent on its or their behalf
to cause any such Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; or any default by any Loan Party or any other event or condition
occurs that results in any third party (other than a Loan Party) under any of
the Material Agreements (excluding the Kmart Agreement) having the right to
terminate such Material Agreement; any default by any third party (other than
any Loan Party) under any of the Material Agreements (excluding the Kmart
Agreement) which would reasonably be likely to result in a Material Adverse
Effect; or the occurrence of any Kmart-Related Default;
(h) any Loan Party shall become unable, admit in writing its inability or fail
generally to pay its post-Petition debts as they become due;
(i) any judgment for injunctive relief that results in, or creates a material
risk of resulting in, a Material Adverse Effect, or one or more judgments for
the payment of money in an aggregate amount in excess of $10,000,000, in each
case shall be rendered against any Loan Party or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed; or any action shall be legally taken
by a judgment creditor to attach or levy upon any material assets of any Loan
Party to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the reasonable commercial
opinion of the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability of the
Loan Parties in an aggregate amount exceeding $10,000,000;
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(k) (i) any challenge by or on behalf of any Loan Party to the validity of any
Loan Document or the applicability or enforceability of any Loan Document
strictly in accordance with the subject Loan Document's terms or which seeks to
void, avoid, limit, or otherwise adversely affect any security interest created
by or in any Loan Document or any payment made pursuant thereto;
(ii) any challenge by or on behalf of any other Person to the
validity of any Loan Document or the applicability or enforceability of
any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise
adversely affect any security interest created by or in any Loan
Document or any payment made pursuant thereto, in each case, as to
which an order or judgment has been entered adverse to the Agents and
the Lenders;
(iii) any Lien purported to be created under any Security
Document or the Borrowing Order shall cease to be, or shall be asserted
by any Loan Party not to be, a valid and perfected Lien on any
Collateral, with the priority required by the applicable Security
Document and/or pursuant to Section 364 of the Bankruptcy Code, except
as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents;
(l) a Change in Control shall occur;
(m) the occurrence of any uninsured loss (not inclusive of a reasonable
deductible) to any material portion of the Collateral;
(n) the indictment of, or institution of any legal process or proceeding
against, any Loan Party, under any federal, state, municipal, and other civil or
criminal statute, rule, regulation, order, or other requirement having the force
of law where the relief, penalties, or remedies sought or available include the
forfeiture of any material property of any Loan Party and/or the imposition of
any stay or other order, the effect of which could reasonably be to restrain in
any material way the conduct by the Loan Parties, taken as a whole, of their
business in the ordinary course;
(o) except as permitted under Section 7.5(c), the determination by any Loan
Party, whether by vote of such Loan Party's board of directors or otherwise to:
suspend the operation of any material portion of the Loan Parties' business in
the ordinary course, liquidate all or a material portion of the Loan Parties'
assets or store locations, or employ an agent or other third party to conduct
any so-called store closing, store liquidation or "Going-Out-Of-Business" sales
on any material portion of the Loan Parties' business;
(p) the entry of an order in the Reorganization Cases which order constitutes
the stay, amendment, modification, vacation, supplementation, appeal, or
reversal of any Borrowing Order or which otherwise adversely affects any
Borrowing Order;
(q) The appointment in the Reorganization Cases of a trustee or of any examiner
having expanded powers to operate all or any part of any Debtors' business;
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(r) The dismissal of any of the Reorganization Cases or the conversion of any of
the Reorganization Cases to a case under Chapter 7 of the Bankruptcy Code;
(s) The entry of an order which provides relief from the automatic stay
otherwise imposed pursuant to Section 362 of the Bankruptcy Code, which order
permits any creditor, other than the Collateral Agent, to realize upon, or to
exercise any right or remedy with respect to, any asset of any Debtor or to
terminate any license, franchise, lease or similar agreement, where such relief
could have a Material Adverse Effect;
(t) An application shall be filed by any Debtor for the approval of any other
super-priority claim in the Reorganization Cases which is PARI PASSU with or
senior to the claims of the Agents and the Lenders against the Debtors or there
shall arise any such super-priority claim; provided however that no Event of
Default shall be deemed to have occurred under this clause (t) if such
application provides as a condition precedent to such action that all
Obligations hereunder are indefeasibly paid in full in cash and the Commitments
hereunder are terminated;
(u) Any Debtor shall pay or discharge any pre-petition Indebtedness except as
expressly permitted hereunder;
(v) Any adequate protection is provided by any Debtor or is ordered by the
Bankruptcy Court in the Reorganization Cases in favor of any of the Debtors'
pre-petition creditors without the consent of the Agents or any such adequate
protection is modified or expanded without the consent of the Agents;
(w) Any Debtor shall fail to comply with the terms of any Borrowing Order or any
other order of the Bankruptcy Court;
(x) Any Debtor (or any committee appointed in the Reorganization Cases) shall
bring a motion in any of the Reorganization Cases: (i) except with respect to
any financing that would indefeasibly pay in full in cash the Obligations and
terminate the Commitments, to obtain working capital or other financing from any
Person other than the Lenders, (ii) except with respect to any financing that
would indefeasibly pay in full in cash the Obligations and terminate the
Commitments, to ▇▇▇▇▇ ▇ ▇▇▇▇ on any of the Collateral, (iii) to use any of the
Collateral pursuant to Section 363(c) of the Bankruptcy Code without the prior
written consent of the Agents and the Required Lenders, or (iv) to recover from
any portion of the Collateral any costs or expenses of preserving or disposing
of such Collateral under Section 506(c) of the Bankruptcy Code;
(y) The entry of an order confirming a Bankruptcy Plan that does not require
repayment in full of all Obligations on the effective date of such Bankruptcy
Plan; or
(z) the occurrence of any event or condition not covered by (a) through (y)
above that results in a Material Adverse Effect;
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then, and in every such event, and at any time thereafter during the continuance
of such event, subject to the terms of the Borrowing Order, the Administrative
Agent may and at the request of the Required Lenders shall, by notice to the
Lead Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments and any obligation, if any, to
make Swingline Loans, and thereupon the Commitments and any obligation, if any,
to make Swingline Loans shall terminate immediately, and (ii) declare the Loans
then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Loan Parties.
SECTION 8.2 [Intentionally Omitted].
SECTION 8.3 WHEN CONTINUING. For all purposes under this Agreement, each Default
and Event of Default that has occurred shall be deemed to be continuing at all
times thereafter unless it either (a) is cured or corrected to the reasonable
written satisfaction of the Lenders in accordance with Section 10.2, or (b) is
waived in writing by the Lenders in accordance with Section 10.2.
SECTION 8.4 REMEDIES ON DEFAULT. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the maturity
of the Loans shall have been accelerated pursuant hereto, the Administrative
Agent may, and shall upon the request of the Required Lenders, subject to the
terms of the Borrowing Order, proceed to protect and enforce its rights and
remedies under this Agreement, the Notes or any of the other Loan Documents by
suit in equity, action at law or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Agreement
and the other Loan Documents or any instrument pursuant to which the Obligations
are evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Agents or the Lenders. No remedy herein is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
SECTION 8.5 APPLICATION OF PROCEEDS. After the occurrence of an Event of Default
and acceleration of the Obligations, all proceeds realized from any Loan Party
or on account of any Collateral shall be applied in the manner set forth in
Section 6.2 of the Security Agreements. All amounts required to be applied to
Revolving Loans hereunder (other than Swingline Loans) shall be applied ratably
in accordance with each Lender's Commitment Percentage.
ARTICLE IX
THE AGENTS
SECTION 9.1 ADMINISTRATION BY ADMINISTRATIVE AGENT. The general administration
of the Loan Documents shall be by the Administrative Agent. The Lenders, the
Collateral Agent and the Issuing Bank each hereby irrevocably authorizes the
Administrative Agent (i) to enter into the Loan Documents to which it is a party
and (ii) at its discretion, to take or refrain from taking such actions as agent
on its behalf and to exercise or refrain from exercising such powers under the
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Loan Documents and the Notes as are delegated by the terms hereof or thereof, as
appropriate, together with all powers reasonably incidental thereto. The
Administrative Agent shall have no duties or responsibilities except as set
forth in this Agreement and the remaining Loan Documents.
SECTION 9.2 THE COLLATERAL AGENT. Each Lender, the Administrative Agent and the
Issuing Bank hereby irrevocably (i) designate FRG as Collateral Agent under this
Agreement and the other Loan Documents, (ii) authorize the Collateral Agent to
enter into the Security Documents and the other Loan Documents to which it is a
party and to perform its duties and obligations thereunder and (iii) agree and
consent to all of the provisions of the Security Documents. All Collateral shall
be held or administered by the Collateral Agent (or its duly-appointed agent)
for its benefit and for the ratable benefit of the other Secured Parties, but
subject to the terms of Section 5.2 prior to an Event of Default or Section 6.2
after an Event of Default of the Security Agreements, as applicable. Any
proceeds received by the Collateral Agent from the foreclosure, sale, lease or
other disposition of any of the Collateral and any other proceeds received
pursuant to the terms of the Security Documents or the other Loan Documents
shall be paid over to the Administrative Agent for application as provided in
Sections 2.18 or 8.5 hereof or Section 5.2 prior to an Event of Default or
Section 6.2 after an Event of Default of the Security Agreements, as applicable.
SECTION 9.3 SHARING OF EXCESS PAYMENTS. Each of the Lenders, the Agents and the
Issuing Bank agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against the Loan Parties, including, but
not limited to, a secured claim under Section 506 of the Bankruptcy Code or
other security or interest arising from, or in lieu of, such secured claim and
received by such Lender, any Agent or the Issuing Bank under any applicable
bankruptcy, insolvency or other similar law, or otherwise, obtain payment in
respect of the Obligations owed it (an "EXCESS PAYMENT") as a result of which
such Lender, such Agent or the Issuing Bank has received payment of any Loans or
other Obligations outstanding to it in excess of the amount that it would have
received if all payments at any time applied to the Loans and other Obligations
had been applied in the order of priority set forth in Section 5.2 prior to an
Event of Default or Section 6.2 after an Event of Default of the Security
Agreements, as applicable, then such Lender, Agent or the Issuing Bank shall
promptly purchase at par (and shall be deemed to have thereupon purchased) from
the other Lenders, such Agent and the Issuing Bank, as applicable, a
participation in the Loans and Obligations outstanding to such other Persons, in
an amount determined by the Administrative Agent in good faith as the amount
necessary to ensure that the economic benefit of such excess payment is
reallocated in such manner as to cause such excess payment and all other
payments at any time applied to the Loans and other Obligations to be
effectively applied in the order of priority set forth in Section 5.2 prior to
an Event of Default or Section 6.2 after an Event of Default of the Security
Agreements, as applicable; PROVIDED, that if any such excess payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be correspondingly rescinded (without interest). The Loan Parties
expressly consent to the foregoing arrangements and agrees that any Lender, any
Agent or the Issuing Bank holding (or deemed to be holding) a participation in
any Loan or other Obligation may exercise any and all rights of banker's lien,
setoff or counterclaim with respect to any and all moneys owing by such Loan
Party to such Lender, such Agent or the Issuing Bank as fully as if such Lender,
Agent or the Issuing Bank held a Note and was the original obligee thereon, in
the amount of such participation.
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SECTION 9.4 AGREEMENT OF REQUIRED LENDERS. (a) Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
only the Required Lenders, action shall be taken by the Agents for and on behalf
or for the benefit of all Lenders upon the direction of the Required Lenders,
and any such action shall be binding on all Lenders, and (ii) upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Required Supermajority Lenders, action shall be taken by the
Agents for and on behalf or for the benefit of all Lenders upon the direction of
the Required Supermajority Lenders and any such action shall be binding on all
Lenders. No amendment, modification, consent, or waiver shall be effective
except in accordance with the provisions of Section 10.2.
(b) Upon the occurrence of an Event of Default, the Agents shall
(subject to the provisions of Section 10.2) take such action with respect
thereto as may be reasonably directed by the Required Lenders; PROVIDED THAT
unless and until the Agents shall have received such directions, the Agents may
(but shall not be obligated to) take such action as it shall deem advisable in
the best interests of the Lenders. In no event shall the Agents be required to
comply with any such directions to the extent that the Agents believe that the
Agents' compliance with such directions would be unlawful.
SECTION 9.5 LIABILITY OF AGENTS. (a) Each of the Agents, when acting on behalf
of the Lenders and the Issuing Bank, may execute any of its respective duties
under this Agreement by or through any of its respective officers, agents and
employees, and none of the Agents nor their respective directors, officers,
agents or employees shall be liable to the Lenders or the Issuing Bank or any of
them for any action taken or omitted to be taken in good faith, or be
responsible to the Lenders or the Issuing Bank or to any of them for the
consequences of any oversight or error of judgment, or for any loss, except to
the extent of any liability imposed by law by reason of such Agent's own gross
negligence or willful misconduct. The Agents and their respective directors,
officers, agents and employees shall in no event be liable to the Lenders or the
Issuing Bank or to any of them for any action taken or omitted to be taken by
them pursuant to instructions received by them from the Required Lenders or the
Required Supermajority Lenders, as applicable, or in reliance upon the advice of
counsel selected by it. Without limiting the foregoing, none of the Agents, nor
any of their respective directors, officers, employees, or agents shall be
responsible to any Lender or the Issuing Bank for the due execution, validity,
genuineness, effectiveness, sufficiency, or enforceability of, or for any
statement, warranty or representation in, this Agreement, any Loan Document or
any related agreement, document or order, or shall be required to ascertain or
to make any inquiry concerning the performance or observance by any Loan Party
of any of the terms, conditions, covenants, or agreements of this Agreement or
any of the Loan Documents.
(b) None of the Agents nor any of their respective directors, officers,
employees, or agents shall have any responsibility to the Loan Parties on
account of the failure or delay in performance or breach by any Lender (other
than by the Agent in its capacity as a Lender) or the Issuing Bank of any of
their respective obligations under this Agreement or the Notes or any of the
Loan Documents or in connection herewith or therewith.
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(c) The Administrative Agent and the Collateral Agent, in such
capacities hereunder, shall be entitled to rely on any communication,
instrument, or document reasonably believed by such person to be genuine or
correct and to have been signed or sent by a person or persons believed by such
person to be the proper Person or Persons, and, such Person shall be entitled to
rely on advice of legal counsel, independent public accountants, and other
professional advisers and experts selected by such Person.
SECTION 9.6 REIMBURSEMENT AND INDEMNIFICATION. Each Lender agrees (i) to
reimburse (x) each Agent for such Lender's Commitment Percentage of any expenses
and fees incurred by such Agent for the benefit of the Lenders or the Issuing
Bank under this Agreement, the Notes and any of the Loan Documents, including,
without limitation, counsel fees and compensation of agents and employees paid
for services rendered on behalf of the Lenders or the Issuing Bank, and any
other expense incurred in connection with the operations or enforcement thereof
not reimbursed by the Loan Parties (except as otherwise provided in the Borrower
Security Agreement and Guarantor Security Agreement), and (y) each Agent for
such Lender's Commitment Percentage of any expenses of such Agent incurred for
the benefit of the Lenders or the Issuing Bank that the Loan Parties have agreed
to reimburse pursuant to Section 10.3 and has failed to so reimburse (except as
otherwise provided in the Borrower Security Agreement and Guarantor Security
Agreement), and (ii) to indemnify and hold harmless the Agents and any of their
directors, officers, employees, or agents (each, an "INDEMNIFIED PARTY"), on
demand, in the amount of such Lender's Commitment Percentage, 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 it or any
of them in any way relating to or arising out of this Agreement, the Notes or
any of the Loan Documents or any action taken or omitted by it or any of them
under this Agreement, the Notes or any of the Loan Documents to the extent not
reimbursed by the Loan Parties (except such as shall result from such
Indemnified Party's respective gross negligence, bad faith or willful
misconduct).
SECTION 9.7 RIGHTS OF AGENTS. It is understood and agreed that Fleet and FRG
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Lenders and may exercise such rights and powers,
as well as its rights and powers under other agreements and instruments to which
it is or may be party, and engage in other transactions with the Borrowers, as
though they were not the Administrative Agent or the Collateral Agent,
respectively, of the Lenders under this Agreement.
SECTION 9.8 INDEPENDENT LENDERS AND ISSUING BANK. The Lenders and the Issuing
Bank each acknowledge that they have decided to enter into this Agreement and to
make the Loans or issue the Letters of Credit hereunder based on their own
analysis of the transactions contemplated hereby and of the creditworthiness of
the Loan Parties and agrees that the Agents shall bear no responsibility
therefor.
SECTION 9.9 NOTICE OF TRANSFER. The Agents may deem and treat a Lender party to
this Agreement as the owner of such Lender's portion of the Loans for all
purposes, unless and until, and except to the extent, an Assignment and
Acceptance shall have become effective as set forth in Section 10.5(b).
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SECTION 9.10 SUCCESSOR AGENT. Any Agent may resign at any time by giving five
Business Days' written notice thereof to the Lenders, the Issuing Bank, the
other Agents and the Lead Borrower. Upon any such resignation of any Agent, the
Required Lenders shall have the right to appoint a successor Agent, which so
long as there is no Default, or Event of Default, shall be reasonably
satisfactory to the Lead Borrower (whose consent shall not be unreasonably
withheld or delayed). If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation, the retiring Agent may, on
behalf of the Lenders, the other Agents and the Issuing Bank, appoint a
successor Agent which shall be (i) a commercial bank (or affiliate thereof)
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of a least $100,000,000, (ii) or a
Lender capable of complying with all of the duties of such Agent (and the
Issuing Bank), hereunder (in the opinion of the retiring Agent and as certified
to the Lenders in writing by such successor Agent) which, in the case of (i) and
(ii) above, so long as there is no Default, or Event of Default, shall be
reasonably satisfactory to the Lead Borrower (whose consent shall not be
unreasonably withheld or delayed). Upon the acceptance of any appointment as
Agent by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Agent and the retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent's resignation hereunder as such
Agent, the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was such Agent under this
Agreement.
SECTION 9.11 REPORTS AND FINANCIAL STATEMENTS. Promptly after receipt thereof
from the Borrowers, the Administrative Agent shall remit to each Lender and the
Collateral Agent copies of all financial statements and Borrowing Base
Certificates required to be delivered by the Borrowers hereunder and all
commercial finance examinations and appraisals of the Collateral received by the
Administrative Agent.
SECTION 9.12 SYNDICATION AGENT, CO-LEAD ARRANGERS AND DOCUMENTATION AGENT.
Except as may be expressly provided in this Agreement, the Co-Lead Arrangers,
the Syndication Agent and the Documentation Agent shall have no powers, rights,
duties, responsibilities or liabilities with respect to this Agreement and the
other Loan Documents.
SECTION 9.13 PUBLIC ANNOUNCEMENTS. The Administrative Agent, the Collateral
Agent, the Syndication Agent, the Documentation Agent and the Co-Lead Arrangers
shall have the right to publicize information in respect of the financing
described herein (including their respective roles in the structuring and
financing thereof) subject to the Borrowers' prior reasonable approval of the
form and content thereof (which approval shall not be unreasonably withheld,
conditioned or delayed).
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 NOTICES. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(a) if to any Loan Party, to it at Footstar, Inc., ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) and
▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) with a copy to Weil,
Gotshal & ▇▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, Esquire (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent, the Issuing Bank or the Swingline Lender, to
Fleet National Bank, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to the Collateral Agent, to Fleet Retail Group, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇) and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a
copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(d) if to any other Lender, to it at its address (or telecopy number) set forth
on the signature pages hereto or on any Assignment and Acceptance for such
Lender.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 10.2 WAIVERS; AMENDMENTS. (a) No failure or delay by the Agents, the
Issuing Bank or any Lender in exercising any right or power hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agents, the Issuing Bank and the Lenders hereunder and under
the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the Agents, any
Lender or the Issuing Bank may have had notice or knowledge of such Default at
the time.
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(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Agents and the Loan Parties that are parties thereto, in each case
with the consent of the Required Lenders, PROVIDED THAT no such agreement shall
(i) increase the Commitment of any Lender without the written consent of such
Lender or increase the Total Commitments above an aggregate amount of
$130,000,000 without the written consent of each Lender affected thereby or
increase the Swingline Limit without the consent of each Lender, (ii) reduce the
principal amount of any Loan or L/C Disbursement or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of
each Lender affected thereby, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or L/C Disbursement, or any interest thereon,
or any fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of the Commitments, or the
Maturity Date, without the written consent of each Lender affected thereby, (iv)
change Section 2.18 hereof or Section 5.1, 5.2 or 6.2 of the Borrower Security
Agreement or the Guarantor Security Agreement, without the written consent of
each Lender, (v) change Section 2.1 or Section 2.2 without the written consent
of each Lender affected thereby; (vi) change any of the provisions of this
Section 10.2 or the definition of the term "REQUIRED LENDERS" or "REQUIRED
SUPERMAJORITY LENDERS" or any other provision of any Loan Document specifying
the number or percentage of Lenders required to waive, amend or modify any
rights thereunder or make any determination or grant any consent thereunder,
without the written consent of each Lender, (vii) release any Loan Party from
its obligations under any Loan Document, or limit its liability in respect of
such Loan Document, without the written consent of each Lender, (viii) except
for sales described in Section 7.5 or as permitted in the Security Documents,
release any material portion of the Collateral from the Liens of the Security
Documents, without the written consent of each Lender, (ix) change the
definition of the term "AVAILABILITY" or "BORROWING BASE" or any component
definition thereof if as a result thereof the amounts available to be borrowed
by the Borrowers would be increased, without the written consent of each Lender,
PROVIDED THAT the foregoing shall not limit the discretion of the Administrative
Agent to change, establish or eliminate any Reserves (other than (a) the Kmart
Reserve which shall require the consent of the Required Supermajority Lenders to
be changed or eliminated, and (b) the Carve Out Reserve which shall require the
consent of all Lenders to be changed or eliminated), (x) change the definition
of the term "Excess Availability" as set forth in Section 1.1 or modify the
provisions of Section 7.11 without the written consent of each Lender, (xi)
increase or otherwise change the definition of the Permitted Overadvance,
without the written consent of each Lender, (xii) subordinate the Obligations
hereunder, or the Liens granted hereunder or under the other Loan Documents, to
any other Indebtedness or Lien, as the case may be without the prior written
consent of each Lender, or (xiii) modify the Fee Letters without the written
consent of the Administrative Agent, and PROVIDED FURTHER THAT no such agreement
shall amend, modify or otherwise affect the rights or duties of the Agents or
the Issuing Bank without the prior written consent of the Agents or the Issuing
Bank, as the case may be.
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(c) Notwithstanding anything to the contrary contained in this Section
10.2, in the event that the Borrowers request that this Agreement or any other
Loan Document be modified, amended or waived in a manner which would require the
consent of the Lenders pursuant to Sections 10.2(b) and such amendment is
approved by the Required Lenders, but not by the requisite percentage of the
Lenders, the Borrowers, and the Required Lenders shall be permitted to amend
this Agreement without the consent of the Lender or Lenders which did not agree
to the modification or amendment requested by the Borrowers (such Lender or
Lenders, collectively the "MINORITY LENDERS") to provide for (w) the termination
of the Commitment of each of the Minority Lenders, (x) the addition to this
Agreement of one or more other financial institutions, or an increase in the
Commitment of one or more of the Required Lenders, so that the aggregate
Commitments after giving effect to such amendment shall be in the same amount as
the aggregate Commitments immediately before giving effect to such amendment,
(y) if any Loans are outstanding at the time of such amendment, the making of
such additional Loans by such new or increasing Lender or Lenders, as the case
may be, as may be necessary to repay in full the outstanding Loans (including
principal, interest, and fees) of the Minority Lenders immediately before giving
effect to such amendment and (z) such other modifications to this Agreement or
the Loan Documents as may be appropriate and incidental to the foregoing.
(d) No notice to or demand on any Loan Party shall entitle any Loan
Party to any other or further notice or demand in the same, similar or other
circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or
consent and any consent by a Lender, or any holder of a Note, shall bind any
Person subsequently acquiring a Note, whether or not a Note is so marked. No
amendment to this Agreement shall be effective against the Borrowers unless
signed by the Borrowers.
SECTION 10.3 EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Loan Parties shall
jointly and severally pay (i) all reasonable out-of-pocket expenses incurred by
the Agents and their Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Agents, outside consultants for the Agents,
appraisers, for commercial finance examinations and environmental site
assessments, in connection with the syndication of the credit facilities
provided for herein, the preparation and administration of the Loan Documents or
any amendments, modifications or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, and (iii) all reasonable out-of-pocket
expenses incurred by the Agents, the Issuing Bank or any Lender, including the
reasonable fees, charges and disbursements of any counsel and any outside
consultants for the Agents, the Issuing Bank or any Lender, for appraisers,
commercial finance examinations, and environmental site assessments, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit; PROVIDED THAT the
Lenders who are not the Agents or the Issuing Bank shall be entitled to
reimbursement for no more than one counsel representing all such Lenders (absent
a conflict of interest in which case the Lenders may engage and be reimbursed
for additional counsel).
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(b) The Loan Parties shall, jointly and severally, indemnify the
Agents, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "INDEMNITEE") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable and documented fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the transactions contemplated by the Loan Documents or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property currently or formerly owned or operated by any
Loan Party or any of the Subsidiaries, or any Environmental Liability related in
any way to any Loan Party or any of the Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, PROVIDED THAT such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the bad
faith, gross negligence or willful misconduct of such Indemnitee or any
Affiliate of such Indemnitee (or of any officer, director, employee, advisor or
agent of such Indemnitee or any such Indemnitee's Affiliates).
(c) To the extent that any Loan Party fails to pay any amount required
to be paid by it to the Agents or the Issuing Bank under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Agents or the Issuing
Bank, as the case may be, such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount, PROVIDED THAT the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agents or the Issuing Bank. For purposes hereof, a
Lender's "pro rata share" shall be determined based upon its share of the Total
Commitments at the time.
(d) To the extent permitted by applicable law, no Loan Party shall
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the transactions contemplated by the Loan Documents, any Loan or Letter of
Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
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SECTION 10.4 DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT. (a) Each Borrower
hereby irrevocably designates and appoints the Lead Borrower as that Borrower's
agent to obtain Loans and Letters of Credit hereunder, the proceeds of which
shall be available to each Borrower for those uses as those set forth herein. As
the disclosed principal for its agent, each Borrower shall be obligated to the
Agents and each Lender on account of Loans so made and Letters of Credit so
issued hereunder as if made directly by the Lenders to that Borrower,
notwithstanding the manner by which such Loans and Letters of Credit are
recorded on the books and records of the Lead Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it hereunder is
in excess of and on better terms than it otherwise could obtain on and for its
own account and that one of the reasons therefor is its joining in the credit
facility contemplated herein with all other Borrowers. Consequently, each
Borrower hereby assumes and agrees to discharge all Obligations of all other
Borrowers as if the Borrower so assuming were each other Borrower.
(c) The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a "BORROWER") on whose behalf the Lead Borrower has
requested a Loan.
(i) The Lead Borrower shall cause the transfer of the proceeds of each Loan
to the (those) Borrower(s) on whose behalf such Loan was obtained.
Neither the Agents nor any Lender shall have any obligation to see to
the application of such proceeds.
(ii) If, for any reason, and at any time during the term of this Agreement,
(A) any Borrower, including the Lead Borrower, as
agent for the Borrowers, shall be unable to, or prohibited
from carrying out the terms and conditions of this Agreement
(as determined by the Administrative Agent in the
Administrative Agent's commercially reasonable discretion); or
(B) the Administrative Agent deems it inexpedient (in
the Administrative Agent's sole and absolute discretion) to
continue making Loans and cause Letters of Credit to be issued
to or for the account of any particular Borrower, or to
channel such Loans and Letters of Credit through the Lead
Borrower,
then the Lenders may make Loans directly to, and cause the issuance of
Letters of Credit directly for the account of such of the Borrowers as
the Administrative Agent determines to be expedient, which Loans may be
made without regard to the procedures otherwise included herein.
(d) In the event that the Administrative Agent determines to forgo the
procedures included herein pursuant to which Loans and Letters of Credit are to
be channeled through the Lead Borrower, then the Administrative Agent may
designate one or more of the Borrowers to fulfill the financial and other
reporting requirements otherwise imposed herein upon the Lead Borrower.
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(e) Each of the Borrowers shall remain liable to the Agents and the
Lenders for the payment and performance of all Obligations (which payment and
performance shall continue to be secured by all Collateral granted by each of
the Borrowers) notwithstanding any determination by the Administrative Agent to
cease making Loans or causing Letters of Credit to be issued to or for the
benefit of any Borrower.
(f) The authority of the Lead Borrower to request Loans on behalf of,
and to bind, the Borrowers, shall continue unless and until the Administrative
Agent acts as provided in subparagraph (c), above, or the Administrative Agent
actually receives
(i) written notice of: (i) the termination of such authority,
and (ii) the subsequent appointment of a successor Lead Borrower, which
notice is signed by the respective Presidents of each Borrower (other
than the President of the Lead Borrower being replaced) then eligible
for borrowing under this Agreement; and
(ii) written notice from such successive Lead Borrower (i)
accepting such appointment; (ii) acknowledging that such removal and
appointment has been effected by the respective Presidents of such
Borrowers eligible for borrowing under this Agreement; and (iii)
acknowledging that from and after the date of such appointment, the
newly appointed Lead Borrower shall be bound by the terms hereof, and
that as used herein, the term "Lead Borrower" shall mean and include
the newly appointed Lead Borrower.
SECTION 10.5 SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that no Loan Party
may assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any such attempted
assignment or transfer without such consent shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Agents, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees (other than a Loan
Party or an Affiliate thereof) all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it), PROVIDED THAT (i) except in the case of an assignment
to a Lender or an Affiliate of a Lender, each of the Lead Borrower (but only if
no Default then exists or only if not assigned to an entity on an approved list
delivered to the Lead Borrower by the Agents in connection with their execution
and delivery of this Agreement), the Agents and the Issuing Bank must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed), (ii) except in the case of an assignment to a
Lender or an Affiliate of a Lender, or an assignment of the entire remaining
amount of the assigning Lender's Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless the Administrative Agent and Lead Borrower (but only if no
Default then exists) otherwise consents, (iii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations, and (iv) the parties to each assignment shall execute
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and deliver to the Administrative Agent an Assignment and Acceptance, and, after
completion of the syndication of the Loans, together with a processing and
recordation fee of $3,500. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Section 10.3). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Loan Parties, shall maintain at one of its offices in Boston, Massachusetts
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and L/C Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "REGISTER"). The entries in
the Register shall be conclusive and the Loan Parties, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Lead Borrower, the Issuing Bank and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the processing and recordation
fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Any Lender may, without the consent of the Loan Parties, the
Agents, and the Issuing Bank, sell participations to one or more banks or other
entities other than a Loan Party or Affiliate thereof (a "PARTICIPANT") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it),
PROVIDED THAT (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Loan Parties, the
Agents, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation in the Commitments, the Loans and the
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Letters of Credit Outstandings shall provide that such Lender shall retain the
sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents, PROVIDED THAT
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.2(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Loan Parties agree that each
Participant shall be entitled to the benefits of Sections 2.23, 2.25 and 2.26
and to the obligation of Section 2.28 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 10.9 as though it were a Lender, PROVIDED such
Participant agrees to be subject to Section 2.25(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.23 or 2.26 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Lead
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.26 unless
(i) the Lead Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrowers, to comply with
Section 2.26(f) as though it were a Lender and (ii) such Participant is eligible
for exemption from the withholding tax referred to therein, following compliance
with Section 2.26(f).
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest, PROVIDED THAT no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 10.6 SURVIVAL. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Agents, the Issuing Bank or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.23, 2.26 and 10.3 and
Article IX shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
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SECTION 10.7 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Agents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 5.1, this Agreement shall become effective when it shall
have been executed by the Agents and the Lenders and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 10.8 SEVERABILITY. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 10.9 RIGHT OF SETOFF. Subject to the terms of the Borrowing Order, if an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Loan Parties against any of and all the obligations
of the Loan Parties now or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement and although such obligations may be matured or unmatured
or otherwise fully secured. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender may have. Each Lender agrees promptly to notify the Lead Borrower
and the Administrative Agent after any such setoff and application made by such
Bank, provided, that the failure to give such notice shall not affect the
validity of such setoff and application. ANY AND ALL RIGHTS TO REQUIRE THE
ADMINISTRATIVE AGENT OR THE COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS PRIOR
TO THE EXERCISE BY THE LENDERS OF THEIR RIGHT OF SET-OFF UNDER THIS SECTION ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
SECTION 10.10 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW (EXCEPT SECTION 5.1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
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(b) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.1. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
(c) Each Borrower hereby submits to the nonexclusive jurisdiction of
the United States District Court for the Southern District of New York and the
District of Massachusetts and of any New York State court sitting in New York
City or any Massachusetts state court for purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. Each Borrower irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
SECTION 10.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 10.12 HEADINGS. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.13 INTEREST RATE LIMITATION. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts that are treated as interest on such Loan
under applicable law (collectively the "CHARGES"), shall exceed the maximum
lawful rate (the "MAXIMUM RATE") that may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
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SECTION 10.14 ADDITIONAL WAIVERS. (a) The Obligations are the joint and several
obligations of each Loan Party. To the fullest extent permitted by applicable
law, the obligations of each Loan Party hereunder shall not be affected by (i)
the failure of any Agent or any other Secured Party to assert any claim or
demand or to enforce or exercise any right or remedy against any other Loan
Party under the provisions of this Agreement, any other Loan Document or
otherwise, (ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, this Agreement, any other Loan
Document, or any other agreement, including with respect to any other Borrower
of the Obligations under this Agreement, or (iii) the failure to perfect any
security interest in, or the release of, any of the security held by or on
behalf of the Collateral Agent or any other Secured Party.
(b) The obligations of each Loan Party hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason (other
than the indefeasible payment in full in cash of the Obligations), including any
claim of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Loan Party hereunder shall
not be discharged or impaired or otherwise affected by the failure of any Agent
or any other Secured Party to assert any claim or demand or to enforce any
remedy under this Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Obligations,
or by any other act or omission that may or might in any manner or to any extent
vary the risk of any Loan Party or that would otherwise operate as a discharge
of any Loan Party as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations).
(c) To the fullest extent permitted by applicable law, each Loan Party
waives any defense based on or arising out of any defense of any other Loan
Party or the unenforceability of the Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any other Loan Party,
other than the indefeasible payment in full in cash of all the Obligations. The
Collateral Agent and the other Secured Parties may, at their election, foreclose
on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Loan Party, or exercise any other right or remedy
available to them against any other Loan Party, without affecting or impairing
in any way the liability of any Loan Party hereunder except to the extent that
all the Obligations have been indefeasibly paid in full in cash. Pursuant to
applicable law, each Loan Party waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Loan Party against any other Loan Party, as the case may be,
or any security.
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(d) Upon payment by any Loan Party of any Obligations, all rights of
such Loan Party against any other Loan Party arising as a result thereof by way
of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations, as more
particularly set forth in the Indemnity, Subrogation and Contribution Agreement
entered into amongst the Loan Parties. In addition, any indebtedness of any Loan
Party now or hereafter held by any other Loan Party is hereby subordinated in
right of payment to the prior payment in full of the Obligations. None of the
Loan Parties will demand, ▇▇▇ for, or otherwise attempt to collect any such
indebtedness. If any amount shall erroneously be paid to any Loan Party on
account of (a) such subrogation, contribution, reimbursement, indemnity or
similar right or (b) any such indebtedness of any Loan Party, such amount shall
be held in trust for the benefit of the Secured Parties and shall forthwith be
paid to the Collateral Agent to be credited against the payment of the
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.
SECTION 10.15 REPLACEMENT NOTE. Upon receipt of an appropriate and reasonably
acceptable affidavit of an officer of the affected Bank as to the loss, theft,
destruction or mutilation of any Note or of any other Loan Document which is not
of public record and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other Loan Document and receipt of the indemnity
described below, the Borrowers will, and will cause other Loan Parties to,
issue, in lieu thereof, a replacement Note or other Loan Document in the same
principal amount (as to any Note) and in any event of like tenor and upon such
issuance the original Note or other Loan Document shall be deemed cancelled. In
connection with any such issuance of a replacement Note or other Loan Document,
the affected Lender shall issue a written indemnification in favor of the Loan
Parties with respect to such lost, stolen or destroyed Note or other Loan
Document in form and substance reasonably satisfactory to the Loan Parties.
SECTION 10.16 CONFIDENTIALITY. Each of the Agents, the Issuing Bank and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement and any
actual or prospective counterparty or advisors to any swap or derivative
transactions relating to the Loan Parties and the Obligations, (g) with the
consent of the Loan Parties, or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Agents, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Loan Parties. For the
purposes of this Section, the term "INFORMATION" means all information received
from the Loan Parties relating to their business, other than any such
information that is available to the Agents, the Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by the Loan Parties, PROVIDED that, in
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the case of information received from the Loan Parties after the date hereof,
such information is clearly identified at the time of delivery as confidential.
Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. Notwithstanding the foregoing, effective from the date
of commencement of discussions concerning this Agreement, each party and each of
its employees, representatives or other agents may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of
this Agreement and all materials of any kind, including opinions or other tax
analyses, that have been provided to it by any other party relating to such tax
treatment and tax structure.
SECTION 10.17 CONFLICTING PROVISIONS. To the extent of any direct inconsistency
between any term, condition or provision of this Agreement and any term,
condition or provision of any Borrowing Order, the applicable term, condition,
or provision of such Borrowing Order shall govern and control.
SECTION 10.18 EXISTING CREDIT AGREEMENT. This Agreement shall supersede the
Existing Credit Agreement in its entirety, except as provided in this ss.10.18.
On the Effective Date, the rights and obligations of the parties under the
Existing Credit Agreement which remain Lenders hereunder shall be subsumed
within and be governed by this Agreement. The Borrowers and the Facility
Guarantors acknowledge and agree that the UCC financing statements previously
filed in connection with the Existing Credit Agreement and the other Security
Documents shall remain in full force and effect and shall apply as of the
Effective Date with respect to the Obligations hereunder.
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FLEET NATIONAL BANK,
as Administrative Agent, as Swingline Lender
and as Issuing Bank
By: /S/ ▇▇▇▇ ▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇ ▇▇▇▇▇
Title: VP/Managing Director
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ (ER)
(▇▇▇) ▇▇▇-▇▇▇▇ (KV) Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
FLEET RETAIL GROUP, INC.,
as Collateral Agent
By: /S/ ▇▇▇▇ ▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇ ▇▇▇▇▇
Title: Managing Director
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ (ER)
(▇▇▇) ▇▇▇-▇▇▇▇ (KV)
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
GENERAL ELECTRIC CAPITAL
CORPORATION,
as Syndication Agent and as a Lender
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Duly Authorized Signatory
Address:
201 ▇▇▇▇▇▇▇ 7
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
▇▇▇▇▇ FARGO FOOTHILL, LLC,
as Documentation Agent and as a Lender
By: /S/ ▇▇▇▇▇▇ ▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
Title: VP
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /S/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Title: Vice President
Address:
1211 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
AMSOUTH BANK,
as a Lender
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AS ATTORNEY-IN-FACT
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: EVP
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
NATIONAL CITY COMMERCIAL
FINANCE, INC.,
as a Lender
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: AVP
Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SIGNATURE PAGE TO CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
FOOTSTAR, INC.,
as Lead Borrow and as a Borrower
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President &
Chief Administrative Officer
FOOTSTAR CORPORATION,
As a Borrower
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President &
Chief Administrative Officer
SCHEDULE 1.1(A)
PRICING GRID - REVOLVING LOANS
----------------- ------------------------------------------------ ------------------------- -------------------------
Applicable Margin for Applicable Margin for
Eurodollar Loans Base Rate Loans
Level Average Excess Availability
----------------- ------------------------------------------------ ------------------------- -------------------------
I. Less than or equal to $40,000,000 2.75% 0.75%
----------------- ------------------------------------------------ ------------------------- -------------------------
II. Less than or equal to $80,000,000 but
greater than $40,000,000 2.50% 0.50%
----------------- ------------------------------------------------ ------------------------- -------------------------
III. Greater than $80,000,000 2.25% 0.25%
----------------- ------------------------------------------------ ------------------------- -------------------------
SCHEDULE 1.1(B) - LENDERS AND COMMITMENTS
--------------------------------------------------------------------------------------------------------------------
LENDERS: COMMITMENTS COMMITMENT PERCENTAGE
--------------------------------------------------------------------------------------------------------------------
Fleet National Bank $46,666,685 35.8975%
--------------------------------------------------------------------------------------------------------------------
General Electric Capital Corporation $46,666,685 35.8975%
--------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ Fargo Foothill, LLC $10,476,180 8.0586%
--------------------------------------------------------------------------------------------------------------------
The CIT Group/Business Credit, Inc. $13,968,240 10.7448%
--------------------------------------------------------------------------------------------------------------------
AmSouth Bank $6,984,120 5.3724%
--------------------------------------------------------------------------------------------------------------------
National City Business Credit, Inc. $5,238,090 4.0293%
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
TOTAL COMMITMENT $130,000,000 100.0%
--------------------------------------------------------------------------------------------------------------------
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Re: Amended and Restated Debtor-In-Possession Credit Agreement dated as of May
__, 2004 (as amended or extended from time to time, the "DIP CREDIT
AGREEMENT") among Footstar, Inc., a Delaware corporation (the "LEAD
BORROWER"), Footstar Corporation, a Texas corporation, debtors and debtors
in possession in Case No. 04-22350 ET. SEQ. (jointly administered) pending
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York (collectively, Footstar
Corporation together with the Lead Borrower, the "DEBTORS"), the various
financial institutions which are now or hereafter become parties to the DIP
Credit Agreement as Lenders, Fleet National Bank, as administrative agent
for the Lenders (the "ADMINISTRATIVE AGENT") and as Issuing Bank, Fleet
Retail Group, Inc., as Collateral Agent (the "COLLATERAL AGENT") for the
Lenders, General Electric Capital Corporation, as Syndication Agent, and
▇▇▇▇▇ Fargo Foothill, LLC, as Documentation Agent. (Capitalized terms used
herein have the meanings assigned to them in the DIP Credit Agreement.)
The Assignor identified on SCHEDULE I hereto (the "ASSIGNOR") and the
Assignee identified on SCHEDULE I hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby
irrevocably purchases and assumes from the Assignor without
recourse to the Assignor, as of the Effective Date (as defined
below), the interest described in SCHEDULE I hereto (the
"ASSIGNED INTEREST") in and to the Assignor's rights and
obligations under the DIP Credit Agreement with respect to the
Commitment contained in the DIP Credit Agreement as are set forth
on SCHEDULE I hereto (the "ASSIGNED FACILITY"), in a principal
amount for each Assigned Facility as set forth on SCHEDULE I
hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the DIP Credit
Agreement or any Loan Document or with respect to the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the DIP Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other
than that the Assignor is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (b) makes no representation
or warranty and assumes no responsibility with respect to the
financial condition of the Debtors, any of their Subsidiaries or
any other obligor or the performance or observance by the
Debtors, any of their Subsidiaries or any other obligor of any of
their respective obligations under the DIP Credit Agreement or
any other Loan Document or any other instrument or document
finished pursuant hereto or thereto; and (c) attaches any Notes
held by it evidencing the Assigned Facility, if any, and (i)
requests that the Administrative Agent, upon request by the
Assignee, exchange the attached Notes for a new Note or Notes
payable to the Assignee and (ii) if the Assignor has retained any
interest in the Assigned Facility, requests that the
Administrative Agent exchange the attached Notes for a new Note
or Notes payable to the Assignor, in each case in amounts which
reflect the assignment being made hereby (and after giving effect
to any other assignments which have become effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b)
confirms that it has received a copy of the DIP Credit Agreement,
together with copies of the financial statements most recently
delivered pursuant thereto and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent, the
Collateral 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 the DIP Credit Agreement, the other Loan Documents
or any other instrument or document finished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such
powers and discretion under the DIP Credit Agreement, the other
Loan Documents or any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be bound by the
provisions of the DIP Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms
of the DIP Credit Agreement are required to be performed by it as
a Lender.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in SCHEDULE I hereto (the
"EFFECTIVE DATE"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Administrative Agent for
acceptance by it and recording in the Register by the
Administrative Agent pursuant to Section 10.5 of the DIP Credit
Agreement, effective as of the Effective Date (which shall not,
unless otherwise agreed to by the Administrative Agent, be
earlier than five Business Days after the date of such acceptance
and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect
of the Assigned Interest including payments of principal,
interest, fees and other amounts) to the Assignor for amounts
which have accrued to the Effective Date and to the Assignee for
amounts which have accrued subsequent to the Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments
in payments by the Administrative Agent for periods prior to the
Effective Date or with respect to the making of this assignment
directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the DIP Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and under the other Loan
Documents and shall be bound by the provisions thereof and (b)
the Assignor shall, to the extent provided in this Assignment
and Acceptance, relinquish its rights and be released from its
obligations under the DIP Credit Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on SCHEDULE I hereto.
Schedule I
to Assignment and Acceptance
Name of Assignor:
-------------------------------------------------------------
-----------------------------------------------------------------------------
Name of Assignee:
-------------------------------------------------------------
Effective Date of Assignment:
-------------------------------------------------
CREDIT PRINCIPAL REVOLVING COMMITMENT
FACILITY ASSIGNED AMOUNT ASSIGNED PERCENTAGE ASSIGNED*
Revolving Commitment $______ ___.______%
___________________________ _______________________________
[Name of Assignee] [Name of Assignor]
By: By:
Title: Title:
Accepted [and consented to]:** Consented To:***
FLEET NATIONAL BANK, as FOOTSTAR, INC.
Administrative Agent
By: By:
------------------------------- -----------------------------------
Title: Title:
* Calculate the Commitment Percentage that is assigned to at least five
decimal places and show as a percentage of the aggregate relevant
Commitments.
** Required for Lenders only in the case of an Assignment to a non-Lender.
*** Required only in the case of an Assignment to a non-Lender, provided no
Default.
ARTICLE XI EXHIBIT B
FORM OF BORROWING ORDER
SEE ATTACHED
ARTICLE XII
ARTICLE XIII EXHIBIT C-1
ARTICLE XV
ARTICLE XIV
FORM OF REVOLVING NOTE
$_____________ May __, 2004
FOR VALUE RECEIVED, the undersigned, FOOTSTAR, INC. and FOOTSTAR
CORPORATION, debtors and debtors in possession in Case No. 04-22350 ET. SEQ.
(jointly administered) pending under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New York
(collectively, the "DEBTORS"), hereby unconditionally, jointly and severally,
promise to pay to the order of [ ] (the "LENDER") at the office of Fleet
National Bank (as Administrative Agent pursuant to the DIP Credit Agreement
referred to below), located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ in lawful
money of the United States of America and in immediately available funds, on the
Maturity Date the principal amount of (a) [ ] DOLLARS ($[ ]), or, if less, (b)
the aggregate unpaid principal amount of all Revolving Loans made by the Lender
to the Debtors pursuant to Section 2.1 of the DIP Credit Agreement, as
hereinafter defined. The Debtors further agree, jointly and severally, to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding at the rates and on the dates specified in the DIP
Credit Agreement.
The holder of this Revolving Note (this "NOTE") is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Revolving Loan made pursuant to the DIP Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall, absent
manifest error, constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement shall not affect
the joint and several obligations of the Debtors in respect of such Revolving
Loan.
This Note (a) is one of the Revolving Notes referred to in the Amended
and Restated Debtor-In-Possession Credit Agreement dated as of May __, 2004 (as
amended, supplemented or otherwise modified from time to time, the "DIP CREDIT
AGREEMENT"), among the Debtors, the Lender, the other banks and financial
institutions from time to time parties thereto as Lenders, Fleet National Bank,
as Administrative Agent for the Lenders and Issuing Bank, Fleet Retail Group,
Inc., as Collateral Agent for the Lenders, General Electric Capital Corporation,
as Syndication Agent, and ▇▇▇▇▇ Fargo Foothill, LLC, as Documentation Agent, and
(b) is subject to the provisions of the DIP Credit Agreement.
The Debtors have the right and the obligation in certain circumstances,
to prepay this Note in whole or part on the terms and conditions provided in the
DIP Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note may become, or may be declared to be,
immediately due and payable, all as provided in the DIP Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, notice, notice of dishonor, protest and all other demands
and notices of any kind.
All agreements involving the Debtors, the Administrative Agent, the
Collateral Agent, the Issuing Bank and/or the Lenders are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid to the Administrative Agent on behalf of any Lender for the
use or forbearance of the indebtedness evidenced hereby exceed the maximum
amount which the Lenders are permitted to receive under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision hereof or of the DIP
Credit Agreement, at the time performance of such provision shall be due, shall
involve exceeding such amount, then the obligation to be fulfilled shall
automatically be reduced to the limit of such validity, and if from any
circumstance the Lenders should ever receive as interest an amount which would
exceed such maximum amount, such amount which would be excessive interest shall
be applied to the reduction of the principal balance evidenced hereby and not to
the payment of interest. As used herein, the term "applicable law" shall mean
the law in effect as of the date hereof; provided, however, that in the event
there is a change in the law which results in a higher permissible rate of
interest, then this Note shall be governed by such new law as of its effective
date. This provision shall control every provision of all agreements involving
the Debtors, the Administrative Agent, the Collateral Agent, the Issuing Bank
and the Lenders.
The Debtors are obligated, jointly and severally, to pay all costs
incurred by the Lender in connection with the enforcement and collection of this
Note as provided in the DIP Credit Agreement.
Unless otherwise defined herein, terms defined in the DIP Credit
Agreement and used herein shall have the meanings given to them in the DIP
Credit Agreement.
EACH OF THE DEBTORS HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).
- 2 -
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED, IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW EXCEPT SECTION 5.1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
FOOTSTAR, INC.
By:
----------------------------------
Name:
Title:
FOOTSTAR CORPORATION
By:
----------------------------------
Name:
Title:
SCHEDULE A
TO REVOLVING NOTE
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
Unpaid
Amount of Amount Amount of Amount of Base Rate Principal
Base Rate Converted to Principal of Base Loans Converted to Balance of
Loans Base Rate Rate Loans Repaid Eurodollar Loans Base Rate Notation Made By
Date Loans Loans
------------- ------------ -------------- ------------------- ---------------------- --------------- -----------------
SCHEDULE B
TO REVOLVING NOTE
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Interest Period Amount of
and LIBO Rate Eurodollar Loans Unpaid
Amount Converted with Respect Converted to Principal
Amount of to Eurodollar Thereto Base Rate Loans Balance of Notation
Eurodollar Loans Loans Eurodollar Made By
Date Loan
------------- ----------------- ------------------- ----------------- ------------------ --------------- -------------
ARTICLE XVI
EXHIBIT C-2
FORM OF SWINGLINE NOTE
$25,000,000.00 May __, 2004
FOR VALUE RECEIVED, the undersigned, FOOTSTAR, INC. and FOOTSTAR
CORPORATION, debtors and debtors in possession in Case No. 04-22350 ET. SEQ.
(jointly administered) pending under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New York
(collectively, the "DEBTORS"), hereby unconditionally, jointly and severally,
promise to pay to the order of FLEET NATIONAL BANK (the "LENDER") at the office
of Fleet National Bank (as Administrative Agent pursuant to the DIP Credit
Agreement referred to below), located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ in
lawful money of the United States of America and in immediately available funds,
on the last day of the Interest Period applicable thereto as specified in the
DIP Credit Agreement the principal amount of (a) TWENTY FIVE MILLION DOLLARS
($25,000,000.00), or, if less, (b) the aggregate unpaid principal amount of all
Swingline Loans made by the Lender to the Debtors pursuant to Section 2.5 of the
DIP Credit Agreement, as hereinafter defined. The Debtors further agree, jointly
and severally, to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in the DIP Credit Agreement.
The holder of this Swingline Note (this "NOTE") is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date and amount of each Swingline Loan made pursuant to the DIP Credit Agreement
and the date and amount of each payment or prepayment of principal thereof, each
continuation thereof and the length of each Interest Period with respect
thereto. Each such endorsement shall, absent manifest error, constitute prima
facie evidence of the accuracy of the information endorsed. The failure to make
any such endorsement shall not affect the obligations of the Debtors in respect
of such Swingline Loan.
This Note (a) is the Swingline Note referred to in the Amended and
Restated Debtor-in-Possession Credit Agreement dated as of May __, 2004 (as
amended, supplemented or otherwise modified from time to time, the "DIP CREDIT
AGREEMENT"), among the Debtors, the Lender, the other banks and financial
institutions from time to time parties thereto as Lenders, Fleet National Bank,
as Administrative Agent for the Lenders and Issuing Bank; the Issuing Bank
thereunder; Fleet Retail Group, Inc., as Collateral Agent for the Lenders,
General Electric Capital Corporation, as Syndication Agent, and ▇▇▇▇▇ Fargo
Foothill, LLC, as Documentation Agent, and (b) is subject to the provisions of
the DIP Credit Agreement.
The Debtors have the right and the obligation in certain circumstances,
to prepay this Note in whole or part on the terms and conditions provided in the
DIP Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note may become, or may be declared to be,
immediately due and payable, all as provided in the DIP Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, notice, notice of dishonor, protest and all other demands
and notices of any kind.
All agreements involving the Debtors, the Administrative Agent, the
Collateral Agent, the Issuing Bank and/or the Lenders are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid to the Administrative Agent on behalf of any Lender for the
use or forbearance of the indebtedness evidenced hereby exceed the maximum
amount which the Lenders are permitted to receive under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision hereof or of the DIP
Credit Agreement, at the time performance of such provision shall be due, shall
involve exceeding such amount, then the obligation to be fulfilled shall
automatically be reduced to the limit of such validity, and if from any
circumstance the Lenders should ever receive as interest an amount which would
exceed such maximum amount, such amount which would be excessive interest shall
be applied to the reduction of the principal balance evidenced hereby and not to
the payment of interest. As used herein, the term "applicable law" shall mean
the law in effect as of the date hereof; provided, however, that in the event
there is a change in the law which results in a higher permissible rate of
interest, then this Note shall be governed by such new law as of its effective
date. This provision shall control every provision of all agreements involving
the Debtors, the Administrative Agent, the Collateral Agent, the Issuing Bank
and the Lenders.
The Debtors are obligated, jointly and severally, to pay all costs
incurred by the Lender in connection with the enforcement and collection of this
Note as provided in the DIP Credit Agreement.
Unless otherwise defined herein, terms defined in the DIP Credit
Agreement and used herein shall have the meanings given to them in the DIP
Credit Agreement.
EACH OF THE DEBTORS HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED, IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW EXCEPT SECTION 5.1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
FOOTSTAR, INC.
By:
----------------------------------
Name:
Title:
FOOTSTAR CORPORATION
By:
----------------------------------
Name:
Title:
SCHEDULE A
TO SWINGLINE NOTE
LOANS AND REPAYMENTS OF SWINGLINE LOANS
Amount of Principal of Unpaid Principal
Amount of Swingline Swingline Loans Repaid Balance of Swingline
Date Loans Loans Notation Made By
------------- ---------------------- ------------------------ ----------------------- -------------------------------
EXHIBIT D
FORM OF BORROWING REQUEST
Fleet National Bank,
as Administrative Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Amended and Restated Debtor-In-Possession Credit Agreement dated
as of May __, 2004 (as amended from time to time, the "DIP CREDIT
AGREEMENT") among Footstar, Inc., a Delaware corporation (the
"LEAD BORROWER"), Footstar Corporation, a Texas corporation,
debtors and debtors in possession in Case No. 04-22350 ET. SEQ.
(jointly administered) pending under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the Southern
District of New York (collectively, Footstar Corporation together
with the Lead Borrower, the "DEBTORS"), the various financial
institutions which are now or hereafter become parties to the
Agreement as Lenders, Fleet National Bank, as administrative
agent for the Lenders (the "ADMINISTRATIVE AGENT") and as Issuing
Bank, Fleet Retail Group, Inc., as Collateral Agent for the
Lenders, General Electric Capital Corporation, as Syndication
Agent, and ▇▇▇▇▇ Fargo Foothill, LLC, as Documentation Agent.
(Capitalized terms used herein have the meanings assigned to them
in the DIP Credit Agreement.)
Ladies and Gentleman:
Pursuant to Section 2.3(b) of the DIP Credit Agreement, the Lead Borrower hereby
confirms its request on behalf of the Debtors made on [ ] for a Revolving Loan
in the amount of $[ ] to be made on [ ]. The Lead Borrower hereby confirms its
request that such Revolving Loan be a [Base Rate] [Eurodollar] Loan. The
proceeds shall be used by the Debtors as set forth in SCHEDULE A hereto.
The representations and warranties contained in the DIP Credit Agreement and
other Loan Documents or otherwise made in writing in connection herewith or
therewith are as of the date hereof and, on the date such Loan is made will be,
true and correct in all material respects, with and without giving effect to the
requested Loan and the application of the proceeds thereof, other than
representations and warranties that relate solely to an earlier date.
The Lead Borrower hereby further confirms that at the date hereof (i) the Loan
Parties have performed and complied with all covenants and conditions in the DIP
Credit Agreement to be performed or complied with by such Loan Parties prior to
the making of the requested Loan, and (ii) no Default or Event of Default shall
have occurred and be continuing or result from such Loan.
The computation of the Borrowing Base set forth below in SCHEDULE I complies
with all the applicable provisions of the DIP Credit Agreement and the data have
been prepared from the Loan Parties' books of account and records in accordance
with GAAP applied on a consistent basis with those followed in the preparation
of the Loan Parties' financial statements and represent fairly and accurately
the status of the Borrowing Base.
Executed as an instrument under seal as of the date first above written.
FOOTSTAR, INC.
By.
-----------------------------
Duly authorized signatory
EXHIBIT A TO BORROWING REQUEST
Use of Proceeds
SCHEDULE I TO BORROWING REQUEST
Borrowing Base Certificate
EXHIBIT E-1
FORM OF OPINION OF OUTSIDE COUNSEL TO LOAN PARTIES
SEE ATTACHED.
EXHIBIT E-2
FORM OF OPINION OF IN-HOUSE COUNSEL TO LOAN PARTIES
SEE ATTACHED.
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
To: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
Fleet Retail Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Director
Fleet Retail Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: FOOTSTAR, INC. AND ITS SUBSIDIARIES
This Compliance Certificate is furnished pursuant to Section 6.1(d) of
the Amended and Restated Debtor-In-Possession Credit Agreement dated as May __,
2004 among Footstar, Inc., as Lead Borrower for Footstar, Inc. and Footstar
Corporation, debtors and debtors in possession in Case No. 04-22350 ET. SEQ.
(jointly administered) pending under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New York (each
individually, a "DEBTOR," collectively, the "DEBTORS"), the Lenders party
thereto, Fleet National Bank, as Administrative Agent (the "ADMINISTRATIVE
AGENT") and Issuing Bank, Fleet Retail Group, Inc., as Collateral Agent for the
Lenders, General Electric Capital Corporation, as Syndication Agent, and ▇▇▇▇▇
Fargo Foothill, LLC, as Documentation Agent (as amended, supplemented or
otherwise modified from time to time, the "DIP CREDIT AGREEMENT"). Unless
otherwise defined herein, the terms used in this Compliance Certificate have the
meanings ascribed thereto in the DIP Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _______________ of the Lead Borrower (must be
treasurer, assistant treasurer, senior vice president of financial reporting,
chief financial officer, chief administrative officer or controller).
2. I have reviewed the terms of the DIP Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of the
financial condition of each Debtor and its Subsidiaries for the accounting
period covered by the attached financial statements.
3. Except as set forth below in paragraph 5, the examination described
in paragraph 2 did not disclose the existence of any Default or Event of Default
during or at the end of such accounting period or as of the date of this
Certificate.
4. SCHEDULE I attached hereto sets forth financial data and
computations evidencing compliance with Sections 7.11 and 7.13 of the DIP Credit
Agreement, all of which data and computations are true, complete and correct.
5. Described below are the exceptions, if any, to paragraph 3, listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Debtors or the relevant Subsidiary has taken,
is taking, or proposes to take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth
in SCHEDULE I hereto and the financial statements delivered with this
Certificate in support thereof, are made and delivered in my capacity described
in paragraph 1 above for and on behalf of the Borrowers and their respective
Subsidiaries this _____ day of _____________, _____.
FOOTSTAR, INC., as Lead Borrower and as a Debtor
By:
--------------------------------------
Name:
Title:
FOOTSTAR CORPORATION, as a Debtor
By:
--------------------------------------
Name:
Title:
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of _________, _____ with
Sections 7.11 and 7.13 of the DIP Credit Agreement
FINANCIAL COVENANTS
A. EXCESS AVAILABILITY (SECTION 7.11)
1. MINIMUM REQUIRED EXCESS AVAILABILITY
(a) Lesser of:
$13,000,000 OR 10% of the Borrowing Base
$___________
(b) MINIMUM REQUIRED EXCESS AVAILABILITY
$___________
2. ACTUAL EXCESS AVAILABILITY
(a) Availability:
(i) Commitments MINUS outstanding Credit Extensions MINUS
Carve Out
Reserve; or $____________
(ii) Revolver Borrowing Base MINUS outstanding Credit Extensions MINUS
Carve Out Reserve, MINUS Availability Reserves MINUS Kmart
Reserve $____________
(iii) Lesser of (i) or (ii) $____________
(b) past due obligations arising post-petition $____________
(c) ACTUAL EXCESS AVAILABILITY ((2)(a)(iii) - 2(b)) $____________
3. Applicable Margin for Revolving Loans based on Pricing Grid LEVEL ___
(ADJUSTED LIBO RATE
PLUS __% AND ALTERNATE
BASE RATE PLUS ___%)
B. [INTENTIONALLY OMITTED].
C. MAXIMUM CAPITAL EXPENDITURES (SECTION 7.13)
1. MAXIMUM PERMITTED CAPITAL EXPENDITURES (for the fiscal year ended _____________) $17,000,000
2. ACTUAL CAPITAL EXPENDITURES for fiscal year to date (As of _________) $__________
EXHIBIT G
FORM OF BORROWING BASE CERTIFICATE
To: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
Fleet Retail Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Director
Fleet Retail Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: FOOTSTAR, INC. AND ITS SUBSIDIARIES
This Borrowing Base Certificate is furnished pursuant to Section 6.1(e)
of the Amended and Restated Debtor-In-Possession Credit Agreement dated as of
May __, 2004 among Footstar, Inc., as Lead Borrower for Footstar, Inc. and
Footstar Corporation debtors and debtors in possession in Case No. 04-22350 ET.
SEQ. (jointly administered) pending under Chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the Southern District of New York (each
individually, a "DEBTOR," collectively, the "DEBTORS"), the Lenders party
thereto, Fleet National Bank, as Administrative Agent (the "ADMINISTRATIVE
AGENT") and Issuing Bank, Fleet Retail Group, Inc., as Collateral Agent for the
Lenders, General Electric Capital Corporation, as Syndication Agent, and ▇▇▇▇▇
Fargo Foothill, LLC, as Documentation Agent (as amended, supplemented or
otherwise modified from time to time, the "DIP CREDIT AGREEMENT"). Unless
otherwise defined herein, the terms used in this Borrowing Base Certificate have
the meanings ascribed thereto in the DIP Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _______________ of the Lead Borrower (must be
treasurer, assistant treasurer, senior vice president of financial reporting,
chief financial officer, chief administrative officer or controller).
2. The computation of the Borrowing Base, each as set forth below in
SCHEDULE I complies with all the applicable provisions of the DIP Credit
Agreement and the data have been prepared from the Loan Parties' books of
account and records in accordance with GAAP applied on a consistent basis with
those followed in the preparation of the Loan Parties' financial statements and
represent fairly and accurately the status of the Borrowing Base.
The foregoing certifications, together with the computations attached,
are made and delivered in my capacity described in paragraph 1 above for and on
behalf of the Debtors and their respective Subsidiaries this _____ day of
_____________, _____.
FOOTSTAR, INC., as Lead Borrower and as a Debtor
By:
------------------------------------
Name:
Title:
FOOTSTAR CORPORATION, as a Debtor
By:
------------------------------------
Name:
Title:
(SCHEDULE I to be attached)
