Exhibit 10.2
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 28, 2002
among
CRESCENT JEWELERS INC.,
CRESCENT JEWELERS,
and
CERTAIN OF THEIR SUBSIDIARIES PARTY HERETO,
as the Credit Parties,
THE LENDING INSTITUTIONS NAMED HEREIN,
as the Lenders,
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Documentation Agent
and
BANK OF AMERICA, N.A.,
as Administrative Agent
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................................................1
Section 1.1 Definitions.................................................................................1
Section 1.2 Accounting Terms...........................................................................31
Section 1.3 Interpretive Provisions....................................................................31
ARTICLE 2 CREDIT FACILITIES.....................................................................................32
Section 2.1 Commitments................................................................................32
Section 2.2 Method of Borrowing........................................................................33
Section 2.3 Interest...................................................................................34
Section 2.4 Repayment..................................................................................34
Section 2.5 Notes......................................................................................35
Section 2.6 Additional Provisions Relating to Letters of Credit........................................35
Section 2.7 Additional Provisions Relating to Revolving Loans..........................................40
Section 2.8 Maximum Interest Rate......................................................................41
ARTICLE 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........................................................42
Section 3.1 Default Rate...............................................................................42
Section 3.2 Continuation and Conversion................................................................43
Section 3.3 Prepayments................................................................................43
Section 3.4 Termination of Credit Facility.............................................................44
Section 3.5 Fees.......................................................................................45
Section 3.6 Taxes, Yield Protection, and Illegality....................................................46
Section 3.7 Pro Rata Treatment.........................................................................50
Section 3.8 Sharing of Payments........................................................................50
Section 3.9 Certain Limitations........................................................................51
Section 3.10 Payments, Computations, Etc...............................................................52
Section 3.11 Evidence of Debt..........................................................................54
Section 3.12 Bank Products.............................................................................54
ARTICLE 4 CONDITIONS............................................................................................55
Section 4.1 Closing Conditions.........................................................................55
Section 4.2 Conditions to all Extensions of Credit.....................................................58
ARTICLE 5 REPRESENTATIONS AND WARRANTIES........................................................................59
Section 5.1 Financial Condition........................................................................59
Section 5.2 No Changes or Restricted Payments..........................................................59
Section 5.3 Organization; Existence; Compliance with Law...............................................60
Section 5.4 Power; Authorization; Enforceable Obligations..............................................60
Section 5.5 No Legal Bar...............................................................................61
Section 5.6 No Material Litigation and Disputes........................................................61
Section 5.7 No Defaults................................................................................61
Section 5.8 Ownership and Operation of Property........................................................61
Section 5.9 Intellectual Property......................................................................61
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Section 5.10 No Burdensome Restrictions................................................................62
Section 5.11 Taxes.....................................................................................62
Section 5.12 ERISA.....................................................................................62
Section 5.13 Use of Proceeds; Governmental Regulations, Etc............................................63
Section 5.14 Subsidiaries..............................................................................64
Section 5.15 Purpose of Extensions of Credit...........................................................64
Section 5.16 Environmental Matters.....................................................................64
Section 5.17 No Material Misstatements.................................................................65
Section 5.18 Labor Matters.............................................................................65
Section 5.19 Security Documents........................................................................66
Section 5.20 Location of Real Property and Leased Premises.............................................67
Section 5.21 Solvency..................................................................................67
Section 5.22 ▇▇▇▇▇▇▇▇'▇ Subordinated Debt Documents....................................................67
Section 5.23 Bank Accounts; Merchant Accounts..........................................................67
ARTICLE 6 AFFIRMATIVE COVENANTS.................................................................................67
Section 6.1 Information Covenants......................................................................68
Section 6.2 Preservation of Existence and Franchises...................................................72
Section 6.3 Books and Records..........................................................................72
Section 6.4 Compliance with Law........................................................................72
Section 6.5 Payment of Taxes and Other Indebtedness....................................................72
Section 6.6 Insurance..................................................................................72
Section 6.7 Maintenance of Property....................................................................73
Section 6.8 Performance of Obligations.................................................................73
Section 6.9 Use of Proceeds............................................................................73
Section 6.10 Audits/Inspections........................................................................73
Section 6.11 Financial Covenants.......................................................................74
Section 6.12 New Subsidiaries; Addition of Subsidiaries as Borrowers and Guarantors....................75
Section 6.13 Guaranties of the Obligations.............................................................75
Section 6.14 Additional Collateral; Further Assurances.................................................75
Section 6.15 Landlord and Mortgagee Agreements.........................................................76
Section 6.16 Bank as Depository........................................................................76
Section 6.17 Interest Rate Protection..................................................................77
ARTICLE 7 NEGATIVE COVENANTS....................................................................................77
Section 7.1 Indebtedness...............................................................................77
Section 7.2 Liens......................................................................................78
Section 7.3 Nature of Business.........................................................................78
Section 7.4 Merger and Consolidation, Dissolution, and Acquisitions....................................78
Section 7.5 Asset Dispositions.........................................................................79
Section 7.6 Investments................................................................................80
Section 7.7 Restricted Payments........................................................................80
Section 7.8 Modifications and Payments in Respect of Other Funded Debt.................................80
Section 7.9 Transactions with Affiliates...............................................................80
Section 7.10 Fiscal Year; Organizational Documents.....................................................81
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Section 7.11 Ownership of Subsidiaries; Limitations on Parent..........................................81
Section 7.12 No Further Negative Pledges...............................................................81
Section 7.13 Limitation on Management Fees.............................................................81
Section 7.14 Limitation on Foreign Subsidiaries........................................................82
Section 7.15 Inventory Classification..................................................................82
ARTICLE 8 EVENTS OF DEFAULT.....................................................................................82
Section 8.1 Events of Default..........................................................................82
Section 8.2 Acceleration; Remedies.....................................................................84
ARTICLE 9 AGENCY PROVISIONS.....................................................................................85
Section 9.1 Appointment and Authorization..............................................................85
Section 9.2 Delegation of Duties.......................................................................86
Section 9.3 Liability of the Agent.....................................................................86
Section 9.4 Reliance by the Agent......................................................................86
Section 9.5 Notice of Default..........................................................................87
Section 9.6 Credit Decision............................................................................87
Section 9.7 Indemnification............................................................................87
Section 9.8 The Agent in Individual Capacity...........................................................88
Section 9.9 Successor Agent............................................................................88
Section 9.10 Withholding Tax...........................................................................89
Section 9.11 Collateral Matters........................................................................90
Section 9.12 Restrictions on Actions by the Lenders; Sharing of Payments...............................91
Section 9.13 Agency for Perfection; Appointment of Collateral Agent....................................92
Section 9.14 Payments by the Agent to the Lenders......................................................92
Section 9.15 Field Audit and Examination Reports; Disclaimer by the Lenders............................93
Section 9.16 Relation Among the Lenders................................................................93
Section 9.17 Settlement................................................................................93
Section 9.18 Documentation Agent.......................................................................97
ARTICLE 10 MISCELLANEOUS........................................................................................97
Section 10.1 Notices...................................................................................97
Section 10.2 Right of Setoff...........................................................................97
Section 10.3 Benefit of Agreement; Assignments.........................................................98
Section 10.4 No Waiver; Remedies Cumulative...........................................................101
Section 10.5 Expenses; Indemnification................................................................101
Section 10.6 Amendments, Waivers, and Consents........................................................103
Section 10.7 Counterparts.............................................................................105
Section 10.8 Headings.................................................................................105
Section 10.9 Survival.................................................................................105
Section 10.10 Governing Law; Choice of Forum; Service of Process......................................105
Section 10.11 Waiver of Jury Trial....................................................................107
Section 10.12 Severability............................................................................107
Section 10.13 Entirety................................................................................108
Section 10.14 Binding Effect; Termination.............................................................108
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Section 10.15 Confidentiality.........................................................................108
Section 10.16 Other Security and Guaranties...........................................................109
Section 10.17 Agency of Crescent for Each Other Credit Party..........................................109
Section 10.18 Joint and Several Liability.............................................................109
Section 10.19 Contribution and Indemnification Among the Borrowers....................................110
Section 10.20 Additional Borrowers and Guarantors.....................................................111
Section 10.21 Express Waivers By the Credit Parties in Respect of Cross Guaranties
and Cross Collateralization..........................................................111
Section 10.22 Conflict................................................................................114
Section 10.23 Amendment and Restatement...............................................................115
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SCHEDULES
Schedule 1.1A Existing Letters of Credit
Schedule 1.1B Investments
Schedule 1.1C Liens
Schedule 1.1D Lenders and Commitments
Schedule 5.2 Changes and Restricted Payments
Schedule 5.6 Litigation
Schedule 5.9 Intellectual Property
Schedule 5.14 Subsidiaries
Schedule 5.18 Labor Matters
Schedule 5.20 Real Properties; Locations of Collateral; Chief Executive Offices/Principal Places of Business
Schedule 5.23 Bank Accounts; Merchant Accounts
Schedule 6.6 Insurance
Schedule 7.1 Indebtedness
Schedule 7.9 Transactions with Affiliates
Schedule 10.1 Lenders' Addresses
EXHIBITS
Exhibit A Form of Revolving Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Notice of Continuation/Conversion
Exhibit D Form of Officer's Compliance Certificate
Exhibit E Form of Assignment and Acceptance
v
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 28, 2002
("Agreement"), is by and among the lending institutions from time to time
parties hereto (such lending institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), The CIT Group/Business Credit,
Inc., as documentation agent, Bank of America, N.A., as administrative agent for
the Lenders (in its capacity as the administrative agent, the "Agent"), Crescent
Jewelers Inc., a Delaware corporation, and Crescent Jewelers, a California
corporation, and each of its Subsidiaries party hereto.
RECITALS:
A. Capitalized terms used in this Agreement shall have the meanings
specified in Article 1.
B. Crescent, the Parent, Bank of America, N.A., and certain other lending
institutions are party to that certain Credit Agreement dated as of September
15, 1999 (as amended, the "Original Credit Agreement") whereby certain credit
facilities were made available to Crescent on the terms and conditions set forth
therein.
C. The Borrowers have requested that the Original Credit Agreement be
amended and restated to make available to the Borrowers a revolving credit
facility for loans and letters of credit in the aggregate principal amount of
$50,000,000, which extensions of credit the Borrowers will use for the purposes
permitted pursuant to Section 6.9, and to amend certain other provisions as set
forth herein.
D. The Lenders have agreed to amend and restate the Original Credit
Agreement and make available to the Borrowers a revolving credit facility upon
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ACH Transactions" means any cash management or related services
including, without limitation, the automated clearinghouse transfer of funds by
Bank of America for the account of any Borrower pursuant to agreement or
overdrafts.
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"Acquisition" means the purchase or acquisition by any Person of any
Capital Stock of another Person or all or any substantial portion of the
Property (other than Capital Stock) of another Person, whether or not involving
a merger or consolidation with such other Person.
"Adjusted Base Rate" means the Base Rate plus the Applicable Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the Applicable
Percentage.
"Adjusted Net Earnings from Operations" means, for the Consolidated Group
for any period, the net income after provision for income taxes for such period,
as determined in accordance with GAAP and reported on the financial statements
of the Consolidated Group, excluding any and all of the following included in
such net income: (a) gain or loss arising from the sale of any capital assets;
(b) gain arising from any write-up in the book value of any asset; (c) earnings
of any Person, substantially all the assets of which have been acquired by a
member of Consolidated Group in any manner, to the extent realized by such other
Person prior to the date of acquisition; (d) earnings of any Person (excluding a
member of the Consolidated Group) in which a member of the Consolidated Group
has an ownership interest unless (and only to the extent) such earnings shall
actually have been received by a member of the Consolidated Group in the form of
cash distributions; (e) earnings of any Person to which assets of a member of
the Consolidated Group shall have been sold, transferred, or disposed of, or
into which a member of the Consolidated Group shall have been merged, or which
has been a party with a member of the Consolidated Group to any consolidation or
other form of reorganization, prior to the date of such transaction; (f) gain
arising from the acquisition of debt or equity securities of a member of the
Consolidated Group or from cancellation or forgiveness of Indebtedness; (g) gain
arising from extraordinary items, as determined in accordance with GAAP, or from
any other non-recurring transaction; and (h) non-cash expenses resulting from
the Parent reacquiring or otherwise taking back its Capital Stock in connection
with the forgiveness of Indebtedness of the Parent existing on the Closing Date
of up to $1,000,000 in the aggregate during the term of this Agreement owing by
employees of the Borrowers in connection with purchases of Capital Stock by such
employees under the Crescent Jewelers Inc. 1992 Restricted Stock Purchase Plan.
"Adjusted Tangible Net Worth" means, as of any date and determined in
accordance with GAAP, (a) total assets, minus (b) total liabilities, plus (c)
Subordinated Debt, minus, (d) intangible assets, minus (e) notes receivable from
Affiliates and Investments in Affiliates, minus (f) the aggregate amount of
Installment Contracts for which any portion of a payment is more than ninety
(90) days past due on a "contractual" basis.
"Adjusted Tangible Net Worth Requirement" means as of the end of each
Fiscal Period of the Parent ending after the Closing Date, an amount equal to
the amount specified corresponding to the applicable Fiscal Period end in the
following table, respectively:
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Adjusted Tangible Net Worth
Fiscal Period End Requirement
Each Fiscal Period ending after
the Closing Date through and $47,000,000
including June 28, 2003
Fiscal Period ending August 2, $47,000,000, plus the cumulative
2003 and each Fiscal Period amount of all Adjusted Tangible
ending thereafter Net Worth Requirement Increases
"Adjusted Tangible Net Worth Requirement Increase" means an amount
determined for the Parent and its Subsidiaries on a consolidated basis as of the
end of any Fiscal Year, commencing with the Fiscal Year ending August 2, 2003,
equal to the sum of (a) fifty percent (50.0%) of the amount (not less than zero)
of Net Income for each Fiscal Year ending after the Closing Date, plus (b)
seventy-five percent (75.0%) of the net amount of all equity proceeds received
by any Credit Party after the Closing Date (other than equity proceeds received
from another Credit Party).
"Administrative Agent's Fee Letter" means that certain letter agreement,
dated concurrently herewith, between the Agent and the Borrowers, as such letter
agreement may be amended, restated, or otherwise modified from time to time.
"Affiliate" means, with respect to any Person (the "subject Person"), any
other Person (a) directly or indirectly controlling or controlled by or under
direct or indirect common control with the subject Person or (b) directly or
indirectly owning or holding ten percent (10.0%) or more of the Capital Stock of
the subject Person. For purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" has the meaning specified in the introductory paragraph of this
Agreement.
"Agent-Related Persons" means the Agent, together with its Affiliates, and
the officers, directors, employees, counsel, representatives, agents, and
attorneys-in-fact of the Agent and its Affiliates.
"Agents' Fee Letter" means that certain letter agreement, dated
concurrently herewith, among the Agent, CIT (in its capacity as the
documentation agent hereunder), and the Borrowers, as such letter agreement may
be amended, restated, or otherwise modified from time to time.
"Aggregate Revolving Commitment Amount" means the aggregate amount of
Revolving Commitments in effect from time to time, such amount being fifty
million Dollars ($50,000,000) on the Closing Date.
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"Agreement" has the meaning specified in the introductory paragraph and
includes, without limitation, all amendments, restatements, or other
modifications hereto from time to time.
"Anniversary Date" means an anniversary of the Closing Date.
"Applicable Lending Office" means, for each Lender, the office of such
Lender (or of an Affiliate of such Lender) as such Lender may from time to time
specify to the Agent and the Borrowers by written notice as the office by which
such Lender's Eurodollar Loans are made and maintained.
"Applicable Percentage" means, as of the Closing Date,
(a) with respect to Base Rate Loans and all other Obligations other
than Eurodollar Loans, 0.25%,
(b) with respect to Eurodollar Loans, 2.75%,
(c) with respect to the Unused Line Fee, 0.375%, and
(d) with respect to the Letter of Credit Fee, 2.75%,
in each case subject to adjustment from time to time thereafter to the
applicable percentage specified corresponding to the Fixed Charge Coverage Ratio
of the Consolidated Group as set forth below, respectively:
FIXED CHARGE COVERAGE RATIO BASE RATE EURODOLLAR UNUSED LINE LETTER OF
LOANS LOANS FEE CREDIT FEE
Less than 1.10 to 1.00 0.50% 3.00% 0.50% 3.00%
Greater than or equal to 1.10 to 1.00 0.25% 2.75% 0.375% 2.75%
but less than 1.25 to 1.00
Greater than or equal to 1.25 to 1.00 0.00% 2.50% 0.375% 2.50%
but less than 1.50 to 1.00
Greater than or equal to 1.50 to 1.00 0.00% 2.25% 0.375% 2.25%
For the purpose of determining any such adjustments to the Applicable
Percentage, the Fixed Charge Coverage Ratio shall be determined for the
immediately preceding four (4) Fiscal Quarters based upon the financial
statements of the Consolidated Group for each of the Consolidated Group's
respective Fiscal Quarters, beginning with the Fiscal Quarter ending August 2,
2003, delivered to the Agent and the Lenders as required by Section 6.1(a) (with
respect to the financial statements for the last Fiscal Quarters of each Fiscal
Year) or Section 6.1(b) (with respect to the financial statements for each of
the other Fiscal Quarters of each Fiscal Year), and any such adjustment, if any,
shall become effective prospectively on and
Page 4
after the first day of the calendar month which begins at least five (5) days
after the date of delivery of such financial statements to the Agent and the
Lenders. Concurrently with the delivery of such financial statements, the
Borrowers shall deliver to the Agent and the Lenders a certificate, signed by an
Executive Officer of Crescent or the treasurer or corporate controller, of
Crescent, setting forth in reasonable detail the basis for the continuance of,
or any change in, the Applicable Percentage. In the event the Borrowers fail to
timely deliver any such financial statements, in addition to any other remedy
provided for in this Agreement, the Applicable Percentage shall be deemed to be
equal to the highest level set forth in the preceding table, until the first day
of the first calendar month following the delivery of such financial statements
at which time the Applicable Percentage shall be determined, prospectively, in
accordance with the terms hereof. If a Default or Event of Default exists at the
time any reduction in the Applicable Percentage is to be implemented, such
reduction shall not occur until the first day of the first calendar month
following the date on which such Default or Event of Default is waived by the
requisite Lenders.
"Asset Disposition" means (a) the sale, lease, or other disposition of any
Property by any member of the Consolidated Group (including the Capital Stock of
a Subsidiary but excluding Capital Stock of the Parent), and (b) receipt by any
member of the Consolidated Group of any cash insurance proceeds or condemnation
award payable by reason of theft, loss, physical destruction or damage, taking,
or similar event with respect to any of its Property. For purposes hereof "Asset
Disposition" shall not include, in any event, (v) the sale of inventory in the
ordinary course of business, (w) the sale, lease, or other disposition of
machinery and equipment which is obsolete or no longer used or useful in the
conduct of the Borrowers' business, (x) the sale or disposition of Investments
included in clause (a) of the definition of Permitted Investments, and (y) the
issuance of Capital Stock of a Subsidiary to any member of the Consolidated
Group or the issuance of Capital Stock of a Subsidiary pro rata to all of its
holders in a manner that does not dilute the ownership interest of the members
of the Consolidated Group therein.
"Assignment and Acceptance" has the meaning specified in Section 10.3(b).
"Bank of America" means Bank of America, N.A., and its successors.
"Bank Product Reserves" means all reserves which the Agent from time to
time establishes in its sole discretion for the Bank Products then provided or
outstanding.
"Bank Products" means any one or more of the following types of services
or facilities extended to any Credit Party by Bank of America or any Affiliate
of Bank of America in reliance on Bank of America's agreement to indemnify such
Affiliate: (a) credit cards; (b) ACH Transactions; (c) cash management,
including, without limitation, controlled disbursement services; and (d) Hedging
Agreements.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded, or replaced from time to time.
Page 5
"Bankruptcy Event" means, with respect to any Person, the occurrence of
any of the following with respect to such Person: (a) a court or governmental
agency having jurisdiction shall enter a decree or order for relief in respect
of such Person in an involuntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, or sequestrator (or similar
official) of such Person or for any substantial part of its Property or order
the winding up or liquidation of its affairs; (b) there shall be commenced
against such Person an involuntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, or any case,
proceeding or other action for the appointment of a receiver, liquidator,
assignee, custodian, trustee, or sequestrator (or similar official) of such
Person or for any substantial part of such Person's Property or for the winding
up or liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged, or unbonded
for a period of sixty (60) consecutive days; (c) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency, or other similar law
now or hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, or
sequestrator (or similar official) of such Person or for any substantial part of
its Property or make any general assignment for the benefit of creditors; or (d)
such Person shall be unable to, or shall admit in writing its inability to, pay
its debts generally as they become due.
"Base Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by Bank of America in Charlotte,
North Carolina as its "prime rate" (the "prime rate" being a rate set by the
Bank of America based upon various factors including Bank of America's costs and
desired return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate). Any change in the prime rate announced by Bank of America
shall take effect at the opening of business on the day specified in the public
announcement of such change. Each interest rate based upon the Base Rate shall
be adjusted simultaneously with any change in the Base Rate
"Base Rate Loan" means any Loan bearing interest at a rate determined by
reference to the Base Rate.
"Borrower" means, separately and individually, any of Crescent and any
other Person who becomes a party to this Agreement as a "Borrower" pursuant to
the terms hereof, jointly, severally, and collectively, and "Borrowers" means
more than one or all of the foregoing Persons, jointly, severally, and
collectively, as the context requires.
"Borrowing Base" means, as of any day, an amount equal to the sum of (a)
the Receivables Advance Rate multiplied by the Net Balance of the Borrowers'
Eligible Installment Contracts, plus (b) the lesser of (i) fifty percent (50.0%)
of the Borrowers' Eligible Inventory, (ii) eighty-five percent (85.0%) of the
Net Recovery Value of the Borrowers' inventory, or (iii) $25,000,000, minus (c)
Reserves.
"Borrowing Base Certificate" has the meaning specified in Section 6.1(d).
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"Business Day" means a day other than a Saturday, Sunday, or other day on
which commercial banks in Pasadena, California or Charlotte, North Carolina are
authorized or required by law to close, except that, when used in connection
with a Eurodollar Loan, such day shall also be a day on which dealings between
banks are carried on in Dollar deposits in London, England.
"Businesses" has the meaning specified in Section 5.16(a).
"Capital Adequacy Regulation" means any guideline, request, or directive
of any central bank or other Governmental Authority, or any other law, rule, or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid during
any period) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges or in connection with a Capital Lease or Synthetic
Lease.
"Capital Lease" means, as applied to any Person, any lease of any Property
by that Person as lessee which, in accordance with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that Person.
"Capital Stock" means (a) in the case of a corporation, capital stock, (b)
in the case of an association or business entity, any and all shares, interests,
participations, rights, or other equivalents (however designated) of capital
stock, (c) in the case of a partnership, partnership interests (whether general
or limited), (d) in the case of a limited liability company, membership
interests, and (e) any other units, rights, securities, equity interests,
participations, or equivalent evidences of ownership that confer on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than twelve (12) months from
the date of acquisition, (b) Dollar denominated time deposits and certificates
of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000, or (iii) any bank
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from ▇▇▇▇▇'▇ Investor
Service, Inc. ("▇▇▇▇▇'▇") is at least P-1 or the equivalent thereof (any such
bank being an "Approved Bank"), in each case with maturities of not more than
270 days from the date of acquisition, (c) commercial paper and variable or
fixed rate notes issued by a Lender or any Approved Bank (or by the parent
company thereof) or any variable rate notes issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing within six (6)
months of the date of acquisition, (d) repurchase agreements entered into
Page 7
by any Person with a bank or trust company (including any of the Lenders) or
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States in which such Person shall have a perfected first priority security
interest (subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the repurchase
obligations, and (e) Investments, classified in accordance with GAAP as current
assets, in money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable financial
institutions having capital of at least $500,000,000 and the portfolios of which
are limited to Investments of the character described in the foregoing clauses
(a) through (d).
"Change of Control" means the occurrence of any of the following events:
(a) ▇▇▇▇▇▇▇ Ean ▇▇▇▇▇ shall fail to own and control, directly or indirectly,
Voting Stock of the Parent in an amount sufficient to elect a majority of the
Parent's board of directors, or (b) during any period of up to twelve (12)
consecutive months, commencing after the Closing Date, individuals who at the
beginning of such twelve (12) month period were directors of the Parent
(together with any new director whose election by the Parent's board of
directors or whose nomination for election by the Parent's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors of the Parent then in office, or (c)
Crescent (except for the preferred stock issued to ▇▇▇▇▇▇▇▇'▇ pursuant to the
▇▇▇▇▇▇▇▇'▇ Stock Sale), or any of its Subsidiaries, ceases to be a wholly-owned
Subsidiary of the Parent, excluding any such Subsidiary of Crescent which is the
subject of a transaction permitted by Section 7.4 or Section 7.5.
"CIT" means The CIT Group/Business Credit, Inc., and its successors.
"Closing Date" means the date of this Agreement.
"Collateral" means a collective reference to the collateral which is
identified in, and at any time will be covered by, the Collateral Documents.
"Collateral Adjustment Percent" means, calculated as of the last day of
each Fiscal Period, the sum of (a) the Past Due Percent, plus (b) the Net
Charge-off Percent.
"Collateral Documents" means a collective reference to the Security
Agreements, the Mortgages (if any), and such other documents executed and
delivered in connection with the attachment and perfection of the Agent's Liens
arising thereunder, including, without limitation, UCC financing statements and
patent and trademark filings.
"Commitment Period" means the period from and including the Closing Date
to but not including the earlier of (a) the Termination Date or (b) the date on
which the Commitments terminate in accordance with the provisions of this
Agreement.
Page 8
"Commitments" means any of the Revolving Commitments and/or the LOC
Commitments.
"Consolidated Group" means the Parent and its Subsidiaries (including,
without limitation, Crescent).
"Consumer Protection Laws" means the Truth in Lending Act (and Regulation
Z promulgated thereunder), Equal Credit Opportunity Act, Fair Credit Reporting
Act, Fair Debt Collection Practices Act, ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Financial Privacy
Act, anti-discrimination and fair lending laws and all other federal and state
laws, regulations, orders, directives, or similar requirements of any
Governmental Authority intended for the protection of consumers in connection
with the extension of consumer credit.
"Continue", "Continuation", and "Continued" refer to the continuation
pursuant to Section 3.2 of a Eurodollar Loan from one Interest Period to the
next Interest Period.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any material agreement (including, without
limitation, the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt Documents), instrument, or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert", "Conversion", and "Converted" refer to a conversion pursuant to
Section 3.2 or Section 3.6 of a Base Rate Loan into a Eurodollar Loan or of a
Eurodollar Loan into a Base Rate Loan.
"Credit Documents" means two or more of this Agreement, the Notes, the LOC
Documents (excluding any Letter of Credit), the Guaranty Agreements, the
Administrative Agent's Fee Letter, the Agents' Fee Letter, the Collateral
Documents, any agreement entered into in connection with any Bank Products, and
all other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto (in each case as the same may be
amended, restated, or otherwise modified from time to time), and "Credit
Document" means any one of them.
"Credit Parties" means, collectively, the Borrowers and the Guarantors,
and "Credit Party" means any one of such Persons.
"Crescent" means Crescent Jewelers, a California corporation, and its
successors and assigns.
"Default" means any event, act, or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a) has failed to
make a Loan or purchase a Participation Interest required pursuant to the terms
of this Agreement within one Business Day of when due, (b) other than as set
forth in clause (a) preceding, has failed to pay to
Page 9
the Agent or any other Lender an amount owed by such Lender pursuant to the
terms of this Agreement within one Business Day of when due, unless such amount
is subject to a good faith dispute or discount, or (c) has been deemed insolvent
or has become subject to a bankruptcy or insolvency proceeding or with respect
to which (or with respect to any of the assets of which) a receiver, trustee, or
similar official has been appointed.
"Designated Account" has the meaning set forth in Section 2.7(a).
"Discretionary Over-Advances" has the meaning set forth in Section 2.1(a).
"Dollars" and "$" means dollars in lawful currency of the United States.
Unless otherwise specified, all payments under this Agreement shall be made in
Dollars.
"Domestic Credit Party" means any Credit Party which is incorporated or
organized under the laws of any state of the United States or the District of
Columbia.
"Domestic Subsidiary" means any Subsidiary which is incorporated or
organized under the laws of any state of the United States or the District of
Columbia.
"EBITDA" means, for any period, the sum of (a) Adjusted Net Earnings from
Operations, plus (b) to the extent deducted in determining Adjusted Net Earnings
from Operations, (i) Interest Expense, plus (ii) taxes, plus (iii) depreciation
and amortization, in each case on a consolidated basis determined in accordance
with GAAP.
"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender, (c)
a commercial bank, commercial finance company, or other asset based lender
having total assets in excess of $1,000,000,000, and (d) any other Person
reasonably acceptable to the Agent and, if no Default or Event of Default
exists, the Borrowers; provided, however, that no Borrower nor an Affiliate of
any Borrower shall qualify as an Eligible Assignee.
"Eligible Installment Contracts" means, for each Borrower as of any date
of determination and without duplication, those Installment Contracts which the
Agent, in its reasonable discretion, determines are eligible, but excluding,
without limiting the Agent's discretionary rights (a) any Installment Contract
which is (i) not subject to a perfected, first priority (subject to incohate
Liens for government charges or assessments not yet due) Lien in favor of the
Agent to secure the Total Obligations, (ii) subject to any other Lien that is
not a Permitted Lien, or (iii) evidences a transaction not in compliance with
any Requirement of Law, (b) any Installment Contract for which payment
thereunder is doubtful or is determined to be uncollectible (including, without
limitation, any Installment Contract under which any payment is more than sixty
(60) days past due on a "contractual" basis), (c) any Installment Contract which
is modified or rewritten, (d) any Installment Contract with a term of more than
twenty-four (24) months, (e) any Installment Contract for which the obligations
of the debtor thereunder are evidenced by a note, chattel paper, or other
instrument, unless the covenants set forth in the Security Agreement applicable
to such note, chattel paper, or instrument have been complied with, (f) any
Installment Contract for which the debtor thereunder is not solvent or is
subject to
Page 10
any bankruptcy or insolvency proceeding of any kind or which has died or been
declared judicially incompetent, (g) any Installment Contract for which the
debtor thereunder is located outside of the United States (unless payment for
the goods shipped is secured by an irrevocable letter of credit in form and
substance and from an institution acceptable to the Agent and with respect to
which the letter-of-credit rights (as defined in the UCC) have been assigned to
the Agent pursuant to documents in form and substance acceptable to the Agent),
(h) any Installment Contract which is contingent or which is subject to offset,
discount, or deduction (in each case to the extent of such offset, discount, or
deduction) or which is subject to any counterclaim, dispute, or other defense to
payment, (i) any Installment Contract under which any Subsidiary, employee, or
Affiliate of a Borrower is the debtor, (j) any Installment Contract representing
a sale to the government of the United States or any subdivision thereof unless
the Federal Assignment of Claims Act (or other similar Requirement of Law) has
been complied with to the satisfaction of the Agent with respect to such
Installment Contract, (k) any Installment Contract with respect to which any of
the representations, warranties, covenants, and agreements contained in the
Credit Documents are not or have ceased to be complete and correct or have been
breached, (l) any Installment Contract which represents a sale on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or other repurchase or return basis, (m) any Installment Contract arising from a
transaction which does not conform to the credit criteria of a Borrower in
effect at the time such Installment Contract is entered into, (n) any
Installment Contract owing from a debtor the Agent reasonably determines is not
creditworthy, (o) any Installment Contract under which the initial payment is
more than forty-five (45) days from the original date of sale, (p) any
Installment Contract under which the merchandise purchased by the debtor has
been repossessed or a Borrower has demanded return of such merchandise, (q) any
Installment Contract arising in a transaction in which the goods covered thereby
have not been delivered, (r) the portion of any sales tax included in any
Installment Contract, (s) any Installment Contract which has payment terms which
are not fully amortizing within twenty-four (24) months after the date of sale
with respect thereto, and (t) any Installment Contract which fails to meet such
other specifications and requirements as may from time to time be established by
the Agent in its reasonable discretion.
"Eligible Inventory" means, for each Borrower as of any date of
determination and without duplication, the lower of the aggregate book value
(based on a FIFO or a moving average cost valuation, consistently applied) or
fair market value of finished goods inventory owned by such Borrower, less
reserves against inventory shrinkage as are reasonably satisfactory to the Agent
and other appropriate reserves determined in accordance with GAAP. Without
limiting the foregoing, Eligible Inventory excludes any event (a) inventory
which is (i) not subject to a perfected, first priority (subject to inchoate
Liens for government charges or assessments not yet due) Lien in favor of the
Agent to secure the Total Obligations or (ii) subject to any other Lien that is
not a Permitted Lien, (b) inventory which is defective, obsolete, or not in good
or merchantable condition or fails to meet standards for sale or use imposed by
governmental agencies, departments, or divisions having regulatory authority
over such goods, (c) inventory which is not useable or salable at prices
approximating its cost in the ordinary course of the business (including,
without duplication, the amount of any reserves for obsolescence, unsalability,
or decline in value), (d) inventory located outside of the United States or in
transit (other than between locations operated by the Borrowers), (e) inventory
which is leased or on consignment, (f) inventory that has been returned to a
Borrower, unless such inventory meets all
Page 11
of the other requirements of eligibility contained herein, or repossessed by a
Borrower, (g) inventory that is located in a public warehouse or in possession
of a bailee or in a facility (other than a retail store operated by a Borrower)
leased by a Borrower if the applicable warehouseman, bailee, or lessor has not
delivered to the Agent, if requested by the Agent, a subordination or waiver
agreement, in form and substance satisfactory to the Agent, (h) inventory that
is not finished goods or is raw materials, work-in-process, chemicals, samples,
prototypes, supplies, or packing and shipping materials, (i) inventory that is
subject to a third party's trademark or other proprietary right, unless the
Agent is satisfied that it could sell such inventory on satisfactory terms
during the existence of an Event of Default, (j) inventory which is to be
returned to any vendor, (k) any capitalized costs included in inventory, and (l)
inventory which fails to meet such other specifications and requirements as may
from time to time be established by the Agent in its reasonable discretion.
"Environmental Laws" means any and all lawful and applicable federal,
state, local, and foreign, statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements, and other governmental restrictions relating to the environment or
to emissions, discharges, releases, or threatened releases of Materials of
Environmental Concern into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with any
member of the Consolidated Group within the meaning of Section 4001(a)(14) of
ERISA, or is a member of a group which includes any member of the Consolidated
Group and which is treated as a single employer under Sections 414(b) or (c) of
the Internal Revenue Code.
"ERISA Affiliate Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with respect to which any
ERISA Affiliate that is not a member of the Consolidated Group is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" within the meaning of Section 3(5) of ERISA.
"ERISA Event" means (a) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the meaning
of Section 4062(e) of ERISA), (b) the withdrawal by any member of the
Consolidated Group from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section 4001(a)(2) of
ERISA), or the termination of a Multiple Employer Plan, (c) the distribution of
a notice of intent to terminate or the actual termination of a Plan pursuant to
Section 4041(a)(2) or 4041A of ERISA, (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section 4042 of
ERISA, (e) any event or condition which might
Page 12
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, (f) the complete or partial
withdrawal of any member of the Consolidated Group from a Multiemployer Plan,
(g) the conditions for imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan, or (h) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section 307 of
ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate based upon
the Eurodollar Rate.
"Eurodollar Rate" means, for any Interest Period, with respect to
Eurodollar Loans, the rate of interest per annum determined pursuant to the
following formula:
Offshore Base Rate
Eurodollar Rate = --------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1.00%) in effect on such day
applicable to member banks under regulations issued from time to
time by the Federal Reserve Board for determining the maximum
reserve requirement (including any emergency, supplemental, or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"). The
Eurodollar Rate for each outstanding Eurodollar Loan shall be
adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Offshore Base Rate" means the rate per annum appearing on Telerate
Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the Offshore Base Rate shall be,
for any Interest Period, the rate per annum appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates. If for any
reason none of the foregoing rates is available, the Offshore Base
Rate shall be, for any Interest Period, the rate per annum
determined by the Agent as the rate of interest at which Dollar
deposits in the approximate amount of the Eurodollar Loan comprising
part of such borrowing would be offered by Bank of America's London
Branch to major banks in the offshore Dollar market at their request
at or about 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period.
Page 13
"Event of Default" has the meaning specified in Section 8.1.
"Excluded Property" means, with respect to any member of the Consolidated
Group, including any Person that becomes a member of the Consolidated Group
after the Closing Date, any Property of such member of the Consolidated Group
which, subject to the terms of Section 7.12, is subject to a Lien of the type
described in clause (h) of the definition of "Permitted Liens" pursuant to
documents which prohibit such member of the Consolidated Group from granting any
other Liens in such Property.
"Executive Officer" of any Person means any of the chief executive
officer, chief operating officer, president, chief accounting officer, and chief
financial officer of such Person.
"Existing Letters of Credit" means the letters of credit identified on
Schedule 1.1A.
"Extension of Credit" means, as to any Lender, the making of, or
participation in, a Loan by such Lender (including Continuations and Conversions
thereof) or the issuance or extension of, or participation in, a Letter of
Credit by such Lender.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1.00%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to Bank of
America on such day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fees" means all fees payable by the Borrowers pursuant to Section 3.5.
"Fiscal Period" means one of the three fiscal periods in a Fiscal Quarter,
each of which is approximately one calendar month in duration. There are twelve
(12) Fiscal Periods in each Fiscal Year.
"Fiscal Quarter" means one of the four thirteen week, or if applicable
fourteen week, quarters in a Fiscal Year, with the first of such quarters
beginning on the first day of a Fiscal Year and ending on Saturday of the
thirteenth (or fourteenth, if applicable) week in such quarter.
Page 14
"Fiscal Year" means, with respect to each member of the Consolidated
Group, the Fiscal Year for financial accounting purposes consisting of 52 or 53
weeks ending on the Saturday closest to July 31 of each year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of EBITDA
divided by Fixed Charges.
"Fixed Charges" means, for any period, the sum of (a) the cash portion of
Interest Expense for such period (including interest paid on the ▇▇▇▇▇▇▇▇'▇
Subordinated Debt), plus (b) payments of Funded Debt (including the ▇▇▇▇▇▇▇▇'▇
Subordinated Debt, mandatory commitment reductions, sinking fund payments,
payments in respect of the principal component of Capital Leases, Synthetic
Leases, and the like relating thereto) and the Indebtedness referred to in
paragraph 2 of Schedule 7.1 for such period other than payments of (i) principal
of the Loans and (ii) reimbursement obligations in respect of Letters of Credit,
plus (c) Capital Expenditures, minus any cash received (including the proceeds
of any insurance or condemnation award to the extent such proceeds are used to
purchase or acquire any fixed asset or improvement) upon the disposal of any
capital asset which is not applied to, (i) the repayment of any Indebtedness
other than the Loans or reimbursement obligations in respect of Letters of
Credit or (ii) payment of any fees, costs, and expenses of such disposal, plus
(d) Restricted Payments, plus (e) federal, state, local, and foreign income
taxes paid in cash, in each case determined in accordance with GAAP.
"Foreign Subsidiary" means a Subsidiary which is not a Domestic
Subsidiary.
"▇▇▇▇▇▇▇▇'▇" means ▇▇▇▇▇▇▇▇'▇ Inc., a Delaware corporation, and its
successors and assigns.
"▇▇▇▇▇▇▇▇'▇ Intercreditor Agreement" means that certain Subordination
Agreement, dated as of the Closing Date, among the Agent, Crescent, the Parent,
and ▇▇▇▇▇▇▇▇'▇ Inc., a Delaware corporation, as such agreement may be amended,
restated, or otherwise modified from time to time.
"▇▇▇▇▇▇▇▇'▇ Stock Sale" means the issuance or sale of Capital Stock of
Crescent to ▇▇▇▇▇▇▇▇'▇, pursuant to the Stock Purchase Agreement, dated
concurrently herewith, among ▇▇▇▇▇▇▇▇'▇ and Crescent, as such agreement may be
amended, restated, or otherwise modified from time to time consistent with the
▇▇▇▇▇▇▇▇'▇ Intercreditor Agreement.
"▇▇▇▇▇▇▇▇'▇ Subordinated Debt" means the Subordinated Debt owing by
Crescent to ▇▇▇▇▇▇▇▇'▇, pursuant to the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt Documents.
"▇▇▇▇▇▇▇▇'▇ Subordinated Debt Documents" means the Note Purchase Agreement
dated concurrently herewith, among ▇▇▇▇▇▇▇▇'▇ and Crescent and such other
agreements, certificates, documents, and instruments executed or delivered in
connection therewith, as such agreements, certificates, documents, and
instruments may be amended, restated, or otherwise modified from time to time
consistent with the ▇▇▇▇▇▇▇▇'▇ Intercreditor Agreement.
Page 15
"Funded Debt" means, with respect to any Person (the "subject Person"),
without duplication, (a) all obligations of the subject Person for borrowed
money (other than, to the extent it may be included herein, trade debt incurred
in the ordinary course of business), (b) all obligations of the subject Person
evidenced by bonds, debentures, notes, or similar instruments, or upon which
interest payments are customarily made (other than, to the extent it may be
included herein, trade debt incurred in the ordinary course of business), (c)
all purchase money Indebtedness (including for purposes hereof, indebtedness and
obligations in respect of conditional sale or title retention arrangements
relating to Property purchased (other than customary reservations of title under
agreements with suppliers entered into in the ordinary course of business,
including, without limitation, the consignment of inventory and all obligations
issued or assumed as the deferred purchase price of Property or services
purchased) excluding trade debt incurred in the ordinary course of business,
which would appear as liabilities on a balance sheet) of the subject Person,
including, without limitation, the principal portion of all obligations of the
subject Person outstanding under Capital Leases, (d) all Support Obligations of
the subject Person with respect to Funded Debt of another Person, (e) the
maximum available amount of all standby letters of credit issued or bankers'
acceptances facilities for the account of the subject Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (f) all
Funded Debt of another Person secured by a Lien on any Property of the subject
Person, whether or not such Funded Debt has been assumed by the subject Person,
provided that for purposes hereof the amount of such Funded Debt shall be
limited to the amount of such Funded Debt as to which there is recourse to the
subject Person or the fair market value of the property which is subject to the
Lien, if less, (g) the outstanding attributed principal amount under any
Securitization Transaction to which the subject Person is a party, (h) the
principal portion of obligations outstanding under Synthetic Leases under which
the subject Person is the lessee, and (i) the maximum amount of all contingent
obligations (including earn-out payments incurred in connection with
Acquisitions consummated prior to the Closing Date. The Funded Debt of the
subject Person shall include the Funded Debt of any partnership or joint venture
in which the subject Person is a general partner or joint venturer, but only to
the extent to which there is recourse to the subject Person for the payment of
such Funded Debt.
"Funding Date" means any date on which any of the following occur: (a) a
borrowing hereunder consisting of Revolving Loans made on the same day by the
Lenders to the Borrowers, or any of them, or (b) by Bank of America in the case
of a borrowing funded by Non-Ratable Loans, or (c) by the Agent in the case of a
borrowing consisting of a Discretionary Over-Advance, or (d) the issuance of a
Letter of Credit hereunder.
"GAAP" means generally accepted accounting principles in the United States
applied on a consistent basis and subject to the terms of Section 1.2.
"Governmental Authority" means any nation or government, any state,
province, municipality, or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory, or administrative functions of or
pertaining to the government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by and of the
foregoing,
Page 16
and any department, agency, board, commission tribunal, committee, or
instrumentality of any of the foregoing.
"Gross Installment Contract Payments" means, as of any date of
determination with respect to each Installment Contract, the outstanding balance
thereof including all unearned interest, premiums for insurance and product
warranties, and other fees and charges, whether earned or unearned, owing by the
debtor thereunder.
"Guarantors" means the Parent and each other Person which may hereafter
become a Guarantor by execution of a guaranty agreement reasonably acceptable to
the Agent, together with their successors and assigns, and "Guarantor" means any
one of such Persons.
"Guaranty Agreement" means any agreement executed and delivered by a
Credit Party which guarantees the payment or performance of the Total
Obligations, and "Guaranty Agreements" means two or more of such agreements,
collectively, as any such agreement may be amended, restated, or otherwise
modified from time to time.
"Hedging Agreement" means an interest rate protection agreement or foreign
currency exchange agreement, as such agreement may be amended, restated, or
otherwise modified from time to time.
"Indebtedness" means, with respect to any Person (the "subject Person"),
without duplication, (a) all Funded Debt of the subject Person, (b) all
obligations of such Person under take-or-pay or similar arrangements or under
commodities agreements, (c) 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, or payable out of the proceeds of production
from, Property owned or acquired, whether or not the obligations secured thereby
have been assumed, (d) all Support Obligations with respect to Indebtedness of
another Person, (e) all obligations under Hedging Agreements, (f) all preferred
Capital Stock which by the terms thereof could be (at the request of the holders
thereof or otherwise) subject to mandatory sinking fund payments, redemption, or
other acceleration (other than as a result of a Change of Control or an Asset
Disposition that does not in fact result in a redemption of such preferred
Capital Stock) at any time during the term of this Agreement, and (g) the
Indebtedness of any partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"Installment Contract" means any loan agreement, installment sale
contract, or other form of instrument or document evidencing obligations owing
by a retail purchaser to a Borrower with respect to financial accommodations
provided by such Borrower to such purchaser in connection with a sale of
merchandise to such purchaser.
"Intellectual Property" has the meaning specified in Section 5.9.
Page 17
"Interest Expense" means, for any period, interest expense determined in
accordance with GAAP on a consolidated basis and including the amortization of
debt discount and premium, the interest component of Capital Leases and
Synthetic Leases and the implied interest component under Securitization
Transactions.
"Interest Payment Date" means (a) as to any Base Rate Loan, the last day
of each calendar month and the Termination Date and (b) as to any Eurodollar
Loan, (i) the last day of each Interest Period for such Loan or, with respect to
any Interest Period of greater than three (3) months in duration, the last day
of the third month, (ii) the date of repayment of principal of such Loan, and
(iii) the Termination Date. If an Interest Payment Date falls on a date which is
not a Business Day, such Interest Payment Date shall be deemed to be the next
succeeding Business Day.
"Interest Period" means, with respect to any Eurodollar Loan, a period of
one, two, three, or six months duration, as a Borrower may elect, commencing in
each case on the date of the borrowing (including Conversions, Continuations,
and renewals); provided, however, (a) if any Interest Period would end on a day
which is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that if the next succeeding Business Day falls
in the next succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Termination Date, and (c) if an
Interest Period begins on a day for which there is no numerically corresponding
day in the calendar month in which the Interest Period is to end, such Interest
Period shall end on the last day of such calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute thereto, as interpreted by
the rules and regulations issued thereunder, in each case as in effect from time
to time. References to sections of the Internal Revenue Code shall be construed
also to refer to any successor sections.
"Investment" in any Person means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities, or otherwise) of
Capital Stock, bonds, notes, debentures, partnership, joint ventures, or other
ownership interests or other securities of such Person, (b) any deposit with, or
advance, loan, or other extension of credit to, such Person (other than deposits
made in connection with the purchase of equipment or other assets in the
ordinary course of business), or (c) any other capital contribution to or
investment in such Person, including, without limitation, any Support
Obligations (including any support for a letter of credit issued on behalf of
such Person) incurred for the benefit of such Person, but excluding any
Restricted Payment to such Person.
"Issuing Lender" means Bank of America.
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph of this Agreement.
"Letter of Credit" means any Existing Letter of Credit and any letter of
credit issued by the Issuing Lender for the account of a Borrower in accordance
with the terms of Section 2.1(b).
Page 18
"Letter of Credit Fee" has the meaning specified in Section 3.5(b).
"Leverage Ratio" means, as of any date and determined in accordance with
GAAP, the ratio of (a) total liabilities divided by (b) Adjusted Tangible Net
Worth.
"Licenses" means all licenses, permits, and other grants of authority
obtained or required to be obtained from any Governmental Authority in
connection with the management or operation of the business of the members of
the Consolidated Group or the ownership, lease, license, or use of any Property
of the members of the Consolidated Group.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority, or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed by a Person authorized to do so
under the UCC as adopted and in effect in the relevant jurisdiction or other
similar recording or notice statute, and any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans (including the Non-Ratable
Loans and the Discretionary Over-Advances) and the Base Rate Loans and
Eurodollar Loans comprising such Loans.
"LOC Commitment" means the commitment of the Issuing Lender to issue, and
of the Lenders to participate in, Letters of Credit and LOC Obligations
hereunder.
"LOC Committed Amount" means the maximum amount of LOC Obligations
hereunder, as specified in Section 2.1(b).
"LOC Documents" means, with respect to any Letter of Credit, such Letter
of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments,
guarantees, or other documents (whether general in application or applicable
only to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or at risk or (b) any collateral security
for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the maximum amount
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (b) the aggregate amount
of all drawings under Letters of Credit honored by the Issuing Lender but not
reimbursed by the Borrowers.
"Margin Stock" means "margin stock" or any "margin security" as defined in
Regulation T, Regulation U, and Regulation X.
"Material Adverse Effect" means a material adverse effect on (a) the
condition (financial or otherwise), operations, business, assets, or liabilities
of the Consolidated Group taken as a
Page 19
whole, (b) the ability of any Credit Party or other party thereto to perform any
material obligation under the Credit Documents to which it is a party, or (c)
the material rights and remedies of the Agent and the Lenders under the Credit
Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Laws, including, without limitation, asbestos,
polychlorinated biphenyls, and urea-formaldehyde insulation.
"Maximum Rate" means, at any time, the maximum rate of interest the
Lenders may lawfully contract for, charge, or receive in respect of the Total
Obligations as allowed by any Requirement of Law.
"Merchant Account" means, in respect of a Credit Party, any account,
agreement or arrangement between such Credit Party and another Person pursuant
to which such other Person gives or makes available credit to such Credit Party
in respect of credit card transactions generated by such Person.
"Merchant Account Agreement" means an agreement evidencing a Merchant
Account, and any renewal, extension, modification, amendment or restatement
thereof.
"Mortgaged Property" means the Property which is the subject of a Mortgage
as referenced therein.
"Mortgages" means those mortgages, deeds of trust, security deeds, or like
instruments given to the Agent, for the benefit of the Agent and the Lenders, to
secure the Total Obligations, as such agreements may be amended, restated, or
otherwise and modified from time to time.
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan (other than a Multiemployer Plan)
which any member of the Consolidated Group or any ERISA Affiliate and at least
one employer other than the members of the Consolidated Group or any ERISA
Affiliate are contributing sponsors.
"Net Balance" means, as of any date of determination, the Gross
Installment Contract Payments of an Installment Contract, less all unearned
interest, fees, and charges (including premiums for insurance and product
warranties) owing by the debtor thereunder.
"Net Charge-off Percent" means the percent, calculated as of the last day
of each Fiscal Period, equal to (a) the aggregate amount of all Net Charge-offs
of the Borrowers during each of the six (6) Fiscal Periods immediately preceding
the date of calculation, multiplied by two (2), divided by (b) the sum of the
Net Balance owing under all Installment Contracts of the Borrowers outstanding
as of the last day of each such Fiscal Period, divided by six (6).
Page 20
"Net Charge-offs" means, for any period, the aggregate amount of all
unpaid payments under Installment Contracts which have been charged-off by the
Borrowers during such period, as reduced by the amount of all cash recoveries
with respect to Installment Contracts which have been charged-off during
previous periods or such period.
"Net Income" means, for any period, the net income of the Consolidated
Group determined on a consolidated basis in accordance with GAAP.
"Net Recovery Value" means, with respect to any inventory, the net
recovery value thereof in an orderly liquidation net of all costs of liquidation
thereof, as reasonably determined by the Agent based upon a written appraisal
prepared by an experienced and reputable independent appraiser acceptable to the
Agent on a valuation basis, and in form and substance, satisfactory to the
Agent.
"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings specified in
Section 2.7(e).
"Note" or "Notes" means any of the Revolving Notes.
"Notice of Borrowing" means a written notice of borrowing, in
substantially the form of Exhibit B, as required by Section 2.2(a)(i).
"Notice of Continuation/Conversion" means a written notice of Continuation
or Conversion, in substantially the form of Exhibit C, as required by Section
3.2.
"Obligations" means, collectively, the Revolving Loans and the LOC
Obligations.
"Operating Lease" means, as applied to any Person, any lease by such
Person as lessee (including, without limitation, leases which may be terminated
by the lessee at any time) of any Property which is not a Capital Lease.
"Original Credit Agreement has the meaning specified in Recital B.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges, or similar levies (excluding, in
the case of each Lender and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Lender's or the Agent's
net income) which arise from any payment made hereunder or from the execution,
delivery, or registration of, or otherwise with respect to, this Agreement or
any other Credit Documents.
"Participant" means any commercial bank, financial institution, or other
Person not an Affiliate of the Credit Parties who shall have been granted the
right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation agreement
in form and substance satisfactory to such Lender.
Page 21
"Parent" means Crescent Jewelers Inc., a Delaware corporation, and its
successors and assigns.
"Participation Interest" means the purchase by a Lender of a participation
in LOC Obligations as provided in Section 2.6(b) and in Loans as provided in
Section 3.8.
"Past Due Percent" means the percent, calculated as of the last day of
each Fiscal Period, equal to (a) the Gross Installment Contract Payments owing
under all Installment Contracts owing to the Borrowers (excluding Installment
Contracts which have been charged-off or for which the subject merchandise has
been repossessed or demanded to be returned) as to which any portion of an
installment due thereunder is thirty (30) days or more past due as determined on
a "contractual" basis as of the last day of each of the six (6) Fiscal Periods
immediately preceding the date of calculation, divided by (b) the Gross
Installment Contract Payments owing under all Installment Contracts (excluding
Installment Contracts which have been charged-off or for which the subject
merchandise has been repossessed or demanded to be returned) as of the last day
of each of the six (6) Fiscal Periods immediately preceding the date of
calculation.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Distributions" means (a) any Restricted Payment by a Credit
Party to a Borrower or by a Credit Party that is not a Borrower to another
Credit Party that is not a Borrower and (b) any payment with respect to
Crescent's Capital Stock issued pursuant to the ▇▇▇▇▇▇▇▇'▇ Stock Sale which is
permitted under the ▇▇▇▇▇▇▇▇'▇ Intercreditor Agreement.
"Permitted Investments" means Investments which are (a) cash and Cash
Equivalents, (b) accounts receivable created, acquired, or made in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, (c) Investments consisting of Capital Stock, obligations,
securities, or other Property received in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt obligors, (d)
Investments existing as of the Closing Date and set forth in Schedule 1.1B, (e)
advances or loans to directors, officers, and employees in the ordinary course
of business for reasonable business expenses that do not exceed $500,000 in the
aggregate at any one time outstanding, (f) Investments by members of the
Consolidated Group in their Subsidiaries and Affiliates existing on the Closing
Date, (g) Investments by members of the Consolidated Group in and to Domestic
Credit Parties, and (h) other Investments of a nature not contemplated in
clauses (a) through (g) preceding in an amount not to exceed $500,000 in the
aggregate at any time outstanding.
"Permitted Liens" means:
(a) Liens in favor of the Agent to secure the Total Obligations;
(b) Liens in favor of Bank of America or an Affiliate of Bank of
America pursuant to a Hedging Agreement permitted hereunder, but only (i)
to the extent such Liens secure obligations under such Hedging Agreement
permitted under Section 7.1,
Page 22
(ii) to the extent such Liens are on the same collateral as to which the
Agent, for the benefit of the Agent and the Lenders, also has a Lien, and
(iii) so long as the obligations under such Hedging Agreement and the
indebtedness, liabilities, and obligations of the Credit Parties hereunder
and under the other Credit Documents shall share pari passu in the
collateral subject to such Liens;
(c) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments, or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale, or loss on account thereof);
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, and materialmen and other Liens imposed by law or
pursuant to customary reservations or retentions of title arising in the
ordinary course of business, provided that such Liens secure only amounts
not yet due and payable or, if due and payable, are unfiled and no other
action has been taken to enforce the same or are being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property
subject to any such Lien is not yet subject to foreclosure, sale, or loss
on account thereof);
(e) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by any member of the Consolidated Group in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, and other types of social security, or to secure the
performance of tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds, and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(f) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the attachments or the judgments
secured shall, within thirty (30) days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall have been
discharged within thirty (30) days after the expiration of any such stay;
(g) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title, and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(h) Liens on Property of any Person securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases) of such
Person to the extent permitted under Section 7.1(c), provided that any
such Lien attaches only to the Property financed or leased and such Lien
attaches concurrently with or within ninety (90) days after the
acquisition thereof;
Page 23
(i) leases or subleases granted to others not interfering in any
material respect with the business of any member of the Consolidated
Group;
(j) any interest or title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations, or
agreements in foreign jurisdictions) relating to, leases not prohibited by
this Agreement;
(k) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(l) Liens deemed to exist in connection with Investments in
repurchase agreements which constitute Permitted Investments;
(m) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(n) Liens of a collection bank arising under Section 4-210 of the
UCC on items in the course of collection;
(o) Liens existing as of the Closing Date and set forth on Schedule
1.1C; provided that no such Lien shall at any time be extended to or cover
any Property other than the Property subject thereto on the Closing Date,
and provided further, notwithstanding the foregoing, any such Lien which
purports to cover proceeds of consigned goods described in clause (p)
following shall not be a Permitted Lien after the expiration of forty-five
(45) days after the Closing Date;
(p) Liens on goods consigned to a Borrower in connection with
consignment arrangements, provided, that such consignment arrangement is
evidenced by a written agreement in form and substance satisfactory to the
Agent and such Lien does not attach to proceeds of such goods.
(q) extension, renewal, or replacement (or successive extensions,
renewals, or replacements), in whole or in part, of Liens referred to in
the foregoing clauses; provided that the Lien given in connection any such
extension, renewal, or replacement shall be limited to the property
securing the Lien prior to extension, renewal, or replacement and where
such Lien secures Funded Debt, the Lien given in connection with such
extension, renewal, or replacement shall not secure indebtedness in an
amount exceeding the principal amount secured immediately prior to the
extension, renewal, or replacement; and
(r) Liens comprised of any exclusion or exception under any title
insurance policy provided to the Agent in accordance with the Credit
Documents (which policy shall be in form and content reasonably
satisfactory to the Agent).
Page 24
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which any member of the
Consolidated Group or any ERISA Affiliate is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an "employer"
within the meaning of Section 3(5) of ERISA.
"Pro Forma Basis" means that, for purposes of determining compliance with
any provision of this Agreement, including the financial covenants set forth in
Section 6.11, on a "Pro Forma Basis", that any transaction shall be deemed to
have occurred as of the first day of the applicable measurement period ending as
of the most recent Fiscal Period end immediately preceding the date of such
transaction with respect to which the Agent has received the Required Financial
Information. As used herein, "transaction" means (a) any payment of investment
banking fees pursuant to Section 6.1(h), (b) any Asset Disposition allowed by
Section 7.5, and (c) any Restricted Payment allowed by Section 7.7. In
connection with any calculation of the financial covenants set forth in Section
6.11, upon giving effect to a transaction on a Pro Forma Basis (y) income
statement items (whether positive or negative) attributable to the Property
disposed of in such Asset Disposition shall be excluded and (z) any Indebtedness
which is retired in connection with such Asset Disposition shall be excluded and
deemed to have been retired as of the first day of the applicable period.
"Pro Forma Compliance Certificate" means a certificate of an Executive
Officer of Crescent delivered to the Agent in connection with (a) any merger or
consolidation allowed by Section 7.4 and (b) any Asset Disposition allowed by
Section 7.5, as applicable, and containing reasonably detailed calculations,
upon giving effect to the applicable transaction on a Pro Forma Basis, of the
EBITDA as of the most recent Fiscal Period end preceding the date of the
applicable transaction with respect to which the Agent shall have received the
Required Financial Information.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Real Property" means, with respect to any member of the Consolidated
Group, any real property (wherever located) which (a) is owned or leased by such
member of the Consolidated Group and (b) is not Excluded Property.
"Receivables Advance Rate" means fifty percent (50.0%); provided that the
Receivables Advance Rate shall be reduced by one percent (1.0%) for each whole
percentage that the Collateral Adjustment Percent for the Fiscal Period ending
immediately preceding the date of determination exceeds the percentage specified
in the table below corresponding to the applicable Fiscal Period ending
immediately prior to the date of determination:
Page 25
Fiscal Period End Percentage
Fiscal Period ending July 27,
2002 54.0%
Fiscal Period ending August 24,
2002 58.0%
Fiscal Period ending September
28, 2002 60.0%
Fiscal Periods ending October 26,
2002 and November 23, 2002 61.0%
Fiscal Period ending December 28,
2002 58.0%
Fiscal Period ending January 25,
2003 and each Fiscal Period 47.0%
ending thereafter
"Register" has the meaning specified in Section 10.3(g).
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Regulation Z" means Regulation Z of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the advance or thirty (30) day notice
requirement has been waived by regulation.
"Required Financial Information" means the annual and periodic compliance
certificates and related financial statements and information required by the
provisions of Section 6.1(a), Section 6.1(b), and Section 6.1(c).
"Required Lenders" means, at any time, Lenders having more than sixty-five
percent (65.0%) of the aggregate Commitments, or if the Commitments have been
terminated, Lenders having more than sixty-five percent (65.0%) of the aggregate
principal amount of the Obligations outstanding (taking into account in each
case Participation Interests or obligations to participate therein); provided
that the Commitments of, and outstanding principal amount of Obligations (taking
into account Participation Interests therein) owing to, a Defaulting Lender
shall be excluded for purposes hereof in making a determination of Required
Lenders.
Page 26
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, or ordinance (including, without
limitation, Consumer Protection Laws and Environmental Laws) or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or to which any of its material
Property is subject.
"Reserves" means reserves that limit the availability of credit hereunder,
consisting of reserves against borrowing availability established by the Agent
from time to time in the Agent's reasonable discretion as a result of negative
forecasts and/or trends in the Borrowers' business, industry, prospects,
profits, operations, or financial condition or other issues, circumstances or
facts that could reasonably be expected to negatively and materially impact the
Collateral or the Borrowers' business, prospects, profits, operations, industry,
financial condition, or assets. Without limiting the generality of the
foregoing, the following reserves shall be deemed to be a reasonable exercise of
the Agent's discretion: (a) Bank Product Reserves; (b) reserves for accrued,
unpaid interest on the Loans; (c) reserves for rent at leased locations; (d)
reserves for customs charges; (e) reserves for dilution of accounts; (f)
reserves for warehousemen's or bailees' charges; (g) reserves for taxes, fees,
assessments, and other governmental charges which are due and unpaid; (h)
reserves for accounts payable in excess of sixty (60) days past due, not in
excess of $5,000,000; and (i) reserves for accounts payable to any Person who
has any interest in the proceeds of the sale of any consigned goods sold by a
Borrower, notwithstanding that such interest may be a Permitted Lien hereunder.
"Restricted Payment" means (a) any dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any member of the Consolidated Group, now or hereafter
outstanding (including, without limitation, any payment in connection with any
dissolution, merger, consolidation, or disposition involving any member of the
Consolidated Group), or to the holders, in their capacity as such, of any shares
of any class of Capital Stock of any member of the Consolidated Group, now or
hereafter outstanding (other than dividends or distributions payable in the same
class of Capital Stock of the applicable Person or dividends or distributions
payable to any Borrower (directly or indirectly through Subsidiaries)), (b) any
redemption, retirement, sinking fund or similar payment, purchase, or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of any member of the Consolidated Group, including, without limitation,
any payment with respect to any Capital Stock issued pursuant to the ▇▇▇▇▇▇▇▇'▇
Stock Sale, now or hereafter outstanding, and (c) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options, or other rights
to acquire shares of any class of Capital Stock of any member of the
Consolidated Group, now or hereafter outstanding.
"Revolving Commitment" means the commitment of each Lender to make its
ratable share of Revolving Loans hereunder.
"Revolving Commitment Percentage" means, for each Lender, a fraction
(expressed as a percentage) the numerator of which is the Revolving Committed
Amount of such Lender at such
Page 27
time and the denominator of which is the Aggregate Revolving Commitment Amount
at such time. The Revolving Commitment Percentages are specified in Schedule
1.1D, which may be amended by the Agent from time to time to reflect assignments
by one Lender to another Lender.
"Revolving Committed Amount" means, individually, the maximum Revolving
Commitment of each Lender, and collectively, the aggregate maximum amount of all
the Revolving Commitments of the Lenders hereunder. The Revolving Committed
Amounts are specified in Schedule 1.1D, which may be amended by the Agent from
time to time to reflect assignments by one Lender to another Lender.
"Revolving Loans" has the meaning specified in Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of the
Borrowers, in substantially the form attached as Exhibit A, in favor of each of
the Lenders evidencing the Revolving Loans, individually or collectively, as
appropriate, as each such promissory note may be amended, restated, or otherwise
modified from time to time.
"Sale and Leaseback Transaction" means any arrangement pursuant to which
any member of the Consolidated Group, directly or indirectly, becomes liable as
lessee, guarantor, or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any Property (a) which such member of the
Consolidated Group has sold or transferred (or is to sell or transfer) to a
Person which is not a member of the Consolidated Group or (b) which such member
of the Consolidated Group intends to use for substantially the same purpose as
any other Property which has been sold or transferred (or is to be sold or
transferred) by such member of the Consolidated Group to another Person which is
not a member of the Consolidated Group in connection with such lease.
"Securities Exchange Act" means the Securities Exchange Act of 1934 and
the regulations promulgated thereunder.
"Securitization Transaction" means, with respect to any Person (the
"subject Person"), any financing transaction or series of financing transactions
that have been or may be entered into by the subject Person pursuant to which
the subject Person may sell, convey, grant a security interest in, or otherwise
transfer to a Subsidiary, Affiliate, or any other Person, any accounts
receivable, notes receivable, rights to future lease payments or residuals, or
other similar rights to payment (herein, the "Securitization Receivables")
(whether such Securitization Receivables are then existing or arising in the
future) of the subject Person, and any assets related thereto, including,
without limitation, all security interests in merchandise or services financed
thereby, the proceeds of such Securitization Receivables, and other assets which
are customarily sold or in respect of which security interests are customarily
granted in connection with securitization transactions involving such assets.
"Security Agreement" means each Security Agreement, executed and delivered
by any Credit Party to secure the Total Obligations, as such agreement may be
amended, restated, or
Page 28
otherwise modified from time to time, and "Security Agreements" means two or
more of such agreements, collectively.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including contingent liabilities);
(b) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute
and matured;
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subject Properties" has the meaning specified in Section 5.16(a).
"Subordinated Debt" means any Indebtedness (including, without limitation,
the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt) of a member of the Consolidated Group which by
its terms is expressly subordinated in right of payment to the prior payment of
the Total Obligations on the terms and conditions and evidenced by documentation
satisfactory to the Agent and the Required Lenders.
"Subsidiary" means, with respect to any Person (the "subject Person") any
corporation, partnership, association, limited liability company, joint venture,
or other business entity of which more than fifty percent (50.0%) of the voting
Capital Stock or other Capital Stock, is owned or controlled directly or
indirectly by the subject Person, or one or more of the Subsidiaries of the
subject Person, or a combination thereof. Unless the context otherwise clearly
requires, "Subsidiary" or "Subsidiaries" shall refer to Subsidiaries of the
Parent.
"Support Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including, without limitation, any
obligation, whether or not contingent, (a) to purchase any such
Page 29
Indebtedness or any Property constituting security therefor, (b) to advance or
provide funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency, or other balance sheet
condition of such other Person (including, without limitation, keep well
agreements, maintenance agreements, comfort letters, or similar agreements or
arrangements) for the benefit of any holder of Indebtedness of such other
Person, (c) to lease or purchase Property, securities, or services primarily for
the purpose of assuring the holder of such Indebtedness, or (d) to otherwise
assure or hold harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Support Obligation hereunder shall be deemed to be an
amount equal to the outstanding principal amount (or maximum principal amount,
if larger) of the Indebtedness in respect of which such Support Obligation is
made.
"Supporting Letter of Credit" has the meaning specified in Section 2.6(i).
"Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan, or similar off-balance sheet financing product
where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an Operating Lease under GAAP.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Agent and each Lender, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by the Agent's or
such Lender's income in the jurisdiction (whether federal, state, or local and
including any political subdivision thereof) under the laws of which the Agent
or such Lender, as the case may be, is organized or maintains a lending office.
"Termination Date" means August 28, 2005, or such later date as to which
the Agent, the Lenders, and the Borrowers may in their sole discretion by
written consent agree.
"Total Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrowers
and the other Credit Parties, to the Agent and/or any Lender, arising under or
pursuant to this Agreement or any of the other Credit Documents, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification, or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees, and any other sums chargeable to any Credit Party
hereunder or under any of the other Credit Documents. "Total Obligations"
includes, without limitation, (a) all Obligations now or hereafter arising and
(b) all debts, liabilities, and obligations now or hereafter arising from or in
connection with Bank Products.
"UCC" means the Uniform Commercial Code (or any successor statute), as in
effect from time to time, of the State of New York or of any other state the
laws of which are required as a result thereof to be applied in connection with
the issue of perfection of security interests; provided that to the extent that
the UCC is used to define any term herein or in any other Credit
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Document and such term is defined differently in different Articles or Divisions
of the UCC, the definition of such term contained in Article or Division 9 shall
govern.
"United States" means the United States of America.
"Unused Line Fee" has the meaning specified in Section 3.5(a).
"Voting Stock" means, with respect to any Person, Capital Stock issued by
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of whose
Voting Stock is at the time owned by such Person directly or indirectly through
other Wholly Owned Subsidiaries.
Section 1.2 Accounting Terms. Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lenders hereunder shall be prepared, in accordance with GAAP
applied on a consistent basis. All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or periodic financial statements of the Consolidated
Group delivered pursuant to Section 6.1 (or, prior to the delivery of the first
financial statements of the Consolidated Group pursuant to Section 6.1,
consistent with the annual audited financial statements referenced in Section
5.1(a)); provided, however, if (a) the Borrowers shall object to determining
such compliance on such basis at the time of delivery of such financial
statements due to any change in GAAP or the rules promulgated with respect
thereto or (b) the Agent or the Required Lenders shall so object in writing
within sixty (60) days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrowers to the Lenders as to which no such
objection shall have been made.
Section 1.3 Interpretive Provisions. Wherever used in this Agreement:
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms. Terms used herein that are
defined in the UCC and are not otherwise defined herein shall have the
meanings specified therefor in the UCC.
(b) The words "hereof," "herein," "hereunder," and similar words
refer to this Agreement as a whole and not to any particular provision of
this Agreement. Section, Subsection, Schedule, and Exhibit references are
to this Agreement unless otherwise specified. The term "documents"
includes any and all instruments, documents, agreements, certificates,
indentures, notices, and other writings, however evidenced. The term
"including" is not limiting and means "including, without limitation." In
the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including," the words "to"
and "until" each mean "to but
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excluding" and the word "through" means "to and including." The word "or"
is not exclusive.
(c) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments, restatements, and
other modifications thereto, but only to the extent such amendments,
restatements, and other modifications are not prohibited by the terms of
any Credit Document, and (ii) references to any statute or regulation are
to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing, or interpreting the
statute or regulation.
(d) This Agreement and the other Credit Documents may use several
different limitations, tests, or measurements to regulate the same or
similar matters. All such limitations, tests, and measurements are
cumulative and shall each be performed in accordance with their terms.
(e) For purposes of Section 8.1, a breach of a financial covenant
contained in Section 6.11 shall be deemed to have occurred as of any date
of determination thereof by the Agent or as of the last day of any
specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent and the Lenders.
(f) This Agreement and the other Credit Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, each
Lender, and the Credit Parties and are the products of all parties.
Accordingly, this Agreement and the other Credit Documents shall not be
construed against the Agent, the Lender, or the Credit Parties merely
because of their respective involvement in their preparation.
ARTICLE 2
CREDIT FACILITIES
Section 2.1 Commitments.
(a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make revolving
loans (the "Revolving Loans"; such Revolving Loans to include Non-Ratable Loans
made by Bank of America pursuant to Section 2.7(e)) to the Borrowers in the
amount of such Lender's Revolving Commitment Percentage of such Revolving Loans
for the purposes hereinafter set forth; provided that (i) with regard to the
Lenders collectively, the aggregate principal amount of Obligations (excluding
Discretionary Over-Advances) at any time shall not exceed the lesser of (A) the
Aggregate Revolving Commitment Amount or (B) the Borrowing Base, and (ii) with
regard to each Lender individually, such Lender's Revolving Commitment
Percentage of Obligations (excluding Discretionary Over-Advances) at any time
shall not exceed the lesser of (A) such Lender's Revolving Committed Amount or
(B) such Lender's Revolving Commitment Percentage of the Borrowing Base.
Notwithstanding the foregoing, the Agent may make Revolving Loans
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in its discretion ("Discretionary Over-Advances") for and on behalf of the
Lenders in an aggregate principal amount outstanding at any time not to exceed
$5,000,000, even though (1) a Default or Event of Default then exists and has
not been waived or cured, (2) the other conditions to Extensions of Credit under
Section 4.2 have not or cannot be satisfied, or (3) after giving effect thereto,
the Obligations then outstanding will be in excess of the Borrowing Base (but
not in excess of the Aggregate Revolving Commitment Amount), if in the
reasonable business judgment of the Agent, such advances are necessary or
advisable for the protection or preservation of the Collateral or in order to
improve the likelihood of repayment of the Total Obligations (including
financing working capital needs). The Agent will give prompt notice to the
Lenders of any Discretionary Over-Advances and the circumstances giving rise
thereto, and each Lender will promptly reimburse the Agent for its ratable share
of such advance. The right and ability of the Agent to make Discretionary
Over-Advances hereunder are subject to revocation by written notice to the Agent
from the Required Lenders. Revolving Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrowers may request, and
may be repaid and reborrowed in accordance with the provisions hereof.
(b) Letter of Credit Commitment. During the Commitment Period, subject to
the terms and conditions hereof and of the LOC Documents, if any, and such other
terms and conditions which the Issuing Lender may reasonably require, the Agent
shall cause the Issuing Lender to issue, and the Lenders shall participate
severally in (to the extent of their respective Revolving Commitment
Percentages), such standby and documentary Letters of Credit as any of the
Borrowers may request, in form acceptable to the Issuing Lender, for the
purposes hereinafter set forth; provided that (i) the aggregate amount of LOC
Obligations shall not exceed $5,000,000 at any time (the "LOC Committed
Amount"), (ii) with regard to the Lenders collectively, the aggregate principal
amount of Obligations (excluding Discretionary Over-Advances) at any time shall
not exceed the lesser of (A) the Aggregate Revolving Commitment Amount or (B)
the Borrowing Base, and (iii) with regard to each Lender individually, such
Lender's Revolving Commitment Percentage of Obligations (excluding Discretionary
Over-Advances) at any time shall not exceed the lesser of (A) such Lender's
Revolving Committed Amount or (B) such Lender's Revolving Commitment Percentage
of the Borrowing Base.
Section 2.2 Method of Borrowing.
(a) Notice of Request for Extensions of Credit. Any Borrower may request
an Extension of Credit hereunder by written notice (or telephonic notice
promptly confirmed in writing) as follows:
(i) Revolving Loans. In the case of Revolving Loans, to the Agent not
later than 10:00 a.m. (Pasadena, California time) on the Business Day of the
requested borrowing in the case of Base Rate Loans, and on the third Business
Day prior to the date of the requested borrowing in the case of Eurodollar
Loans. Each such request for borrowing shall be irrevocable and shall specify
(A) that a Revolving Loan is requested, (B) the date of the requested borrowing
(which shall
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be a Business Day), (C) the aggregate principal amount to be
borrowed, and (D) whether the borrowing shall be comprised of Base
Rate Loans, Eurodollar Loans, or a combination thereof, and if
Eurodollar Loans are requested, the duration of the Interest
Period(s) therefor.
(ii) Letters of Credit. The Borrowers must notify the Agent of
any request for issuance of a Letter of Credit by 10:00 a.m.
(Pasadena, California time) at least three (3) Business Days prior
to the proposed issuance date. Such notice shall be irrevocable and
must specify the original face amount of the Letter of Credit
requested, the Business Day of issuance of such requested Letter of
Credit, whether such Letter of Credit may be drawn in a single or in
partial draws, the Business Day on which the requested Letter of
Credit is to expire, the purpose for which such Letter of Credit is
to be issued, and the beneficiary of the requested Letter of Credit.
The Borrowers shall attach to such notice the proposed form of the
Letter of Credit.
(b) Minimum Amounts. Each request for a Revolving Loan which is a
Eurodollar Loan (including Continuations and Conversions) shall be in a
minimum principal amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof.
(c) Information Not Provided. If in connection with any such request
for a Loan, the requesting Borrower shall fail to specify (i) an
applicable Interest Period in the case of a Eurodollar Loan, such Borrower
shall be deemed to have requested an Interest Period of one month, or (ii)
the type of Loan requested, such Borrower shall be deemed to have
requested a Base Rate Loan.
(d) Maximum Number of Eurodollar Loans. No more than five (5)
borrowings of Eurodollar Loans shall be outstanding at any time. For
purposes hereof, Eurodollar Loans with separate or different Interest
Periods will be considered as separate Eurodollar Loans even if their
Interest Periods expire on the same date.
Section 2.3 Interest. Subject to Section 2.8 and Section 3.1, the Loans
and other Total Obligations shall bear interest at a per annum rate, payable in
arrears on each applicable Interest Payment Date (or at such other times as may
be specified herein), as follows:
(a) Base Rate Loans. During such periods as the Loans shall be
comprised of Base Rate Loans, the Adjusted Base Rate;
(b) Eurodollar Loans. During such periods as the Loans shall be
comprised of Eurodollar Loans, the Adjusted Eurodollar Rate; and
(c) Other Total Obligations. At all times for any other Total
Obligations which remain unpaid, the Adjusted Base Rate.
Section 2.4 Repayment. The Borrowers shall repay the outstanding principal
balance of the Loans, together with all other Total Obligations, including all
accrued and unpaid interest thereon, on the Termination Date. In addition, and
without limiting the generality of the
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foregoing, upon demand the Borrowers shall pay to the Agent, for the account of
the Lenders, the amount, if any and without duplication, by which the
Obligations exceed the lesser of the Borrowing Base or the aggregate Revolving
Commitments.
Section 2.5 Notes. The Borrowers shall execute and deliver to each Lender
a Revolving Note. Each Revolving Note shall be in the principal amount of the
applicable Lender's Revolving Committed Amount, dated as of the Closing Date or
the date of any assignment of a portion of any Lender's Revolving Commitment.
Each Revolving Note shall represent the obligation of the Borrowers to pay the
amount of the applicable Lender's Revolving Committed Amount, or, if less, such
Lender's Revolving Commitment Percentage of the aggregate unpaid principal
amount of all Revolving Loans made to the Borrowers together with interest
thereon as prescribed in this Agreement.
Section 2.6 Additional Provisions Relating to Letters of Credit.
(a) Amounts Outside Expiration Date. The Agent shall not have any
obligation to cause the Issuing Lender to issue any Letter of Credit at
any time if: (i) the maximum face amount of the requested Letter of Credit
is greater than the unused portion of the aggregate LOC Committed Amount
at such time; (ii) the maximum undrawn amount of the requested Letter of
Credit and all commissions, fees, and charges due from the Borrowers in
connection with the opening thereof exceeds the lesser of (A) the
Borrowing Base or the Aggregate Revolving Commitment Amount, minus (B) the
Obligations at such time; or (iii) such Letter of Credit has an expiration
date later than (A) the Termination Date or (B) more than twelve (12)
calendar months from the date of issuance (except as any Letter of Credit
may be extended pursuant to an "evergreen" or automatic renewal provision,
provided that any such extension shall not be for an expiration date
beyond the Termination Date).
(b) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article
4, the obligation of the Agent to cause the Issuing Lender to issue any
Letter of Credit is subject to the following conditions precedent having
been satisfied in a manner reasonably satisfactory to the Agent:
(i) the Borrowers shall have delivered to the Issuing Lender,
at such times and in such manner as the Issuing Lender may
prescribe, an application in form and substance satisfactory to the
Issuing Lender and reasonably satisfactory to the Agent for the
issuance of the Letter of Credit and such other documents as may be
required pursuant to the terms thereof, and the form, terms, and
purpose of the proposed Letter of Credit shall be satisfactory to
the Agent and the Issuing Lender (provided that in the event any
term of such application or any other document is inconsistent with
the terms of this Agreement the terms of this Agreement shall be
controlling); and
(ii) as of the date of issuance, no order of any court,
arbitrator, or Governmental Authority shall purport by its terms to
enjoin or restrain money
Page 35
center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law,
rule, or regulation applicable to money center banks generally and
no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center
banks generally shall prohibit, or request that the Issuing Lender
refrain from, the issuance of letters of credit generally or the
issuance of such proposed Letters of Credit.
(c) Issuance of Letters of Credit.
(i) Responsibilities of the Agent; Issuance. The Agent shall
determine, as of the Business Day immediately preceding the
requested issuance date of the Letter of Credit set forth in the
notice from the Borrower pursuant to Section 2.2(a)(ii), whether the
conditions set forth in Section 2.6(a) have been met as of such
date. If the Agent determines that such conditions are met, the
Agent shall cause the Issuing Lender to issue the requested Letter
of Credit on the requested issuance date so long as the other
conditions hereof are met.
(ii) Extensions and Amendments. The Agent shall not be
obligated to cause the Issuing Lender to extend or amend any Letter
of Credit issued pursuant hereto unless the requirements of this
Section 2.6 are met as though a new Letter of Credit were being
requested and issued. With respect to any Letter of Credit which
contains any "evergreen" or automatic renewal provision, each Lender
shall be deemed to have consented to any such extension or renewal
unless such Lender shall have provided to the Agent, written notice
that it declines to consent to any such extension or renewal at
least thirty (30) days prior to the date on which the Issuing Lender
is entitled to decline to extend or renew the Letter of Credit;
provided that, notwithstanding the foregoing, if all of the
requirements of this Section 2.6 are met and no Default or Event of
Default has occurred and is continuing, no Lender may decline to
consent to any such extension or renewal.
(d) Payments Pursuant to Letters of Credit. The Borrowers agree to
reimburse the Issuing Lender promptly upon demand for any draw under any
Letter of Credit and to pay the Issuing Lender promptly upon demand the
amount of all other charges and fees payable to the Issuing Lender under
or in connection with any Letter of Credit when due, irrespective of any
claim, setoff, defense, or other right which the Borrowers may have at any
time against the Issuing Lender or any other Person. Each drawing under
any Letter of Credit shall constitute a request by the Borrower for an
borrowing of a Base Rate Loan in the amount of such drawing. The Funding
Date with respect to such borrowing shall be the date of such drawing.
(e) Indemnification; Exoneration; Power of Attorney.
(i) Indemnification. The Borrowers agree to protect,
indemnify, pay, and save the Lenders, the Agent, and the Issuing
Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges,
Page 36
and expenses (including attorneys' fees and expenses) which any
Lender, the Agent, or the Issuing Lender may incur or be subject to
as a consequence, direct or indirect, of the issuance of any Letter
of Credit except to the extent that it shall be determined in a
final, nonappealable judgment by a court of competent jurisdiction
that any such claims, demands, liabilities, damages, losses, costs,
charges, and expenses resulted from the gross negligence or willful
misconduct of the Lenders, the Agent, or the Issuing Lender,
respectively. The Borrowers' obligations under this Section 2.6(e)
shall survive payment of all of the other Total Obligations.
(ii) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders, the Agent, and the Issuing Lender, the
Borrowers assume all risks of the acts and omissions of, or misuse
of any of the Letters of Credit by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the
foregoing, the Lenders, the Agent, and the Issuing Lender shall not
be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any document submitted by any Person
in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit,
even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged; (B) the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (C) the
failure of the beneficiary of any Letter of Credit to comply duly
with conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex, or otherwise, whether or not they be in cipher unless such
errors, omissions, interruptions, or delays are the result of the
gross negligence or willful misconduct of the Issuing Lender; (E)
errors in interpretation of technical terms; (F) any loss or delay
in the transmission or otherwise of any document required in order
to make a drawing under any Letter of Credit or of the proceeds
thereof unless such loss or delay is the result of the gross
negligence or willful misconduct of the Lender; (G) the
misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; (H) any
consequences arising from causes beyond the control of the Lenders
or the Agent, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental
Authority; or (I) the Issuing Lender's honor of a draw for which the
draw or any certificate fails to comply with the terms of the Letter
of Credit unless such failure to comply is the result of the gross
negligence or willful misconduct of the Issuing Lender. None of the
foregoing shall affect, impair, or prevent the vesting of any rights
or powers of the Agent, any Lender, or the Issuing Lender under this
Section 2.6(e).
(iii) Exoneration. Without limiting the foregoing, no action
or omission whatsoever by the Agent or any Lender (excluding the
Issuing Lender acting in such capacity) under or in connection with
any of the Letters of Credit or
Page 37
any related matters shall result in any liability of the Agent or
any Lender to the Borrowers, or relieve the Borrowers of any of
their obligations hereunder to any such Person.
(iv) Rights Against Issuing Lender. Nothing contained in this
Agreement is intended to limit the Borrowers' rights, if any, with
respect to the Issuing Lender which arise as a result of the letter
of credit application and related documents executed by and between
the Borrowers and the Issuing Lender.
(v) Account Party. The Borrowers hereby authorize and direct
the Issuing Lender to name any Borrower as the "Account Party" in
any Letter of Credit and to deliver to the Agent all instruments,
documents, and other writings and property received by the Issuing
Lender pursuant to each such Letter of Credit, and to accept and
rely upon the Agent's instructions and agreements with respect to
all matters arising in connection with each such Letter of Credit or
the application therefor.
(vi) Power of Attorney. In connection with all inventory
financed by any Letter of Credit, the Borrowers hereby appoint the
Agent, or the Agent's designee, as its attorney, with full power and
authority: (A) to sign and/or endorse any Borrower's name upon any
warehouse or other receipts; (B) to sign any Borrower's name on
bills of lading and other negotiable and non-negotiable documents;
(C) to clear inventory through customs in the Agent's or any
Borrower's name, and to sign and deliver to customs officials powers
of attorney in any Borrower's name for such purpose; (D) to complete
in any Borrower's or the Agent's name, any order, sale, or
transaction, obtain the necessary documents in connection therewith,
and collect the proceeds thereof; and (E) to do such other acts and
things as are necessary in order to enable the Agent to obtain
possession or control of such inventory and to obtain payment of the
Total Obligations. Neither the Agent nor its designee, as any
Borrower's attorney, will be liable for any acts or omissions, nor
for any error of judgment or mistakes of fact or law other than for
gross negligence or willful misconduct. This power, being coupled
with an interest, is irrevocable until all Total Obligations have
been paid and satisfied.
(vii) Control of Inventory. In connection with all inventory
financed by Letters of Credit, the Borrowers will, at the Agent's
request, instruct all suppliers, carriers, forwarders, customs
brokers, warehouses, or others receiving or holding cash, checks,
inventory, documents, or instruments in which the Agent holds a
security interest to deliver them to the Agent and/or subject to the
Agent's order, and if they shall come into any Borrower's
possession, to deliver them, upon request, to the Agent in their
original form. The Borrowers shall also, at the Agent's written
request, designate the Agent as the consignee on all bills of lading
and other negotiable and non-negotiable documents.
Page 38
(f) Participation. Each Lender, with respect to the Existing Letters
of Credit, hereby purchases a participation interest in such Existing
Letters of Credit, and with respect to Letters of Credit issued on or
after the Closing Date, upon issuance of a Letter of Credit, shall be
deemed to have purchased without recourse a risk participation from the
Issuing Lender in such Letter of Credit and the obligations arising
thereunder, in each case in an amount equal to such Lender's pro rata
share of the obligations under such Letter of Credit (based on the
Revolving Commitment Percentages of such Lender) and shall absolutely,
unconditionally, and irrevocably assume, as primary obligor and not as
surety, and be obligated to pay to the Issuing Lender therefor and
discharge when due, such Lender's pro rata share of the obligations
arising under such Letter of Credit. Without limiting the scope and nature
of each Lender's participation in any Letter of Credit, to the extent that
the Issuing Lender has not been reimbursed as required hereunder or under
any such Letter of Credit, each Lender shall pay to the Issuing Lender its
pro rata share of such unreimbursed drawing in same day funds pursuant to
the provisions of clause (c) following. The obligation of each Lender to
reimburse the Issuing Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of Default or any
other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrowers to reimburse the Issuing
Lender under any Letter of Credit, together with interest as hereinafter
provided.
(g) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits (the "UCP") or the International Standby Practices
1998 (the "ISP98"), in either case as published as of the date of issue by
the International Chamber of Commerce, in which case the UCP or the ISP98,
as applicable, may be incorporated therein and deemed in all respects to
be a part thereof.
(h) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set forth
in Section 4.2 have been satisfied unless it shall have been notified by
the Borrowers or a Lender (other than the Issuing Lender in its capacity
as the Agent or a Lender) that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section 2.6
shall be deemed to prejudice the right of any Lender to recover from the
Issuing Lender any amounts made available by such Lender to the Issuing
Lender pursuant to this Section 2.6 in the event that it is determined by
a court of competent jurisdiction that the payment with respect to a
Letter of Credit constituted gross negligence or willful misconduct on the
part of the Issuing Lender.
(i) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.1(b), any Letter of Credit is
outstanding upon the termination of this Agreement, then upon such
termination the Borrowers shall deposit with the Agent with respect to
each such Letter of Credit then outstanding, as the Agent in its
discretion shall specify, either (i) a standby letter of credit (a
"Supporting Letter of Credit") in form
Page 39
and substance satisfactory to the Agent, issued by an issuer satisfactory
to the Agent in an amount equal to the greatest amount for which such
Letter of Credit may be drawn plus any fees and expenses associated with
such Letter of Credit, under which Supporting Letter of Credit the Agent
is entitled to draw amounts necessary to reimburse the Agent and the
Lenders for payments to be made by the Agent and the Lenders under such
Letter of Credit and any fees and expenses associated with such Letter of
Credit or (ii) cash in an amount necessary to reimburse the Agent and the
Lenders for payments to be made by the Agent and the Lenders under such
Letter of Credit and any fees and expenses associated with such Letter of
Credit. Such Supporting Letter of Credit or deposit of cash shall be held
by the Agent, for the benefit of the Agent and the Lenders, as security
for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit remaining outstanding.
Section 2.7 Additional Provisions Relating to Revolving Loans.
(a) Disbursement. The Agent is authorized and directed by the
Borrowers to transfer the proceeds of the Loans requested hereunder to an
account maintained with Bank of America as specified by the Borrowers (the
"Designated Account"). The Borrowers may designate a replacement
Designated Account from time to time by written notice to the Agent. Any
designation by the Borrowers of the Designated Account must be reasonably
acceptable to the Agent.
(b) Reliance Upon Authority; No Liability. The Agent is entitled to
rely conclusively on any individual's request for Extensions of Credit on
behalf of any Borrower, so long as the proceeds thereof are to be
transferred to the Designated Account. The Agent shall have no duty to
verify the identity of any individual representing himself or herself as a
person authorized by the Borrowers to make such requests on their behalf.
The Agent shall not incur any liability to the Borrowers as a result of
acting upon any notice referred to in Section 2.2, which the Agent
reasonably believes to have been given by an officer or other person duly
authorized by the Borrowers to request Extensions of Credit on behalf of
the Borrowers or for otherwise acting under this Section 2.7. The
crediting of Loans to the Designated Account shall conclusively establish
the obligation of the Borrowers to repay such Loans as provided herein.
(c) The Agent's Election. Subject to the requirements of Section
2.7(e), promptly after receipt of a request for an Extension of Credit
(other than a request for a Eurodollar Loan) in compliance with Section
2.2(a), the Agent shall elect in its discretion to have the terms of
Section 2.7(d) or Section 2.7(e) apply to such requested borrowing. If
Bank of America declines in its sole discretion to make a Non-Ratable Loan
pursuant to Section 2.7(e), the terms of Section 2.7(d) shall apply to the
requested borrowing.
(d) Making of Revolving Loans. If the Agent elects to have the terms
of this Section 2.7(d) apply to a requested borrowing or if the requested
borrowing is for a Eurodollar Loan, then promptly after receipt of a
Notice of Borrowing or telephonic notice in lieu thereof, the Agent shall
notify the Lenders by telecopy, telephone, or e-mail of the requested
borrowing. Subject to satisfaction of the applicable conditions precedent
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set forth in Article 4, each Lender shall transfer its Revolving
Commitment Percentage of the requested borrowing to the Agent in
immediately available funds, to the account from time to time designated
by the Agent, not later than 12:00 noon (Pasadena, California time) on the
applicable Funding Date. After the Agent's receipt of the proceeds of such
requested borrowing, the Agent shall make the proceeds of such requested
borrowing available to the applicable Borrower on the applicable Funding
Date by transferring same day funds to the Designated Account.
(e) Making of Non-Ratable Loans. Subject to Section 2.7(c), if the
Agent elects, with the consent of Bank of America, to have the terms of
this Section 2.7(e) apply to a requested borrowing, Bank of America shall
make a Loan in the amount of such requested borrowing available to the
applicable Borrower on the applicable Funding Date by transferring same
day funds to the Designated Account. Each Revolving Loan made solely by
Bank of America pursuant to this Section 2.7(e) is referred to hereinafter
as a "Non-Ratable Loan," and such Loans are collectively referred to as
the "Non-Ratable Loans." Each Non-Ratable Loan shall be subject to all the
terms and conditions applicable to other Loans except that all payments
thereon shall be payable to Bank of America solely for its own account.
The aggregate amount of Non-Ratable Loans outstanding at any time shall
not exceed $5,000,000. The Agent shall not request Bank of America to make
any Non-Ratable Loan if the Agent has received written notice from any
Lender that one or more of the applicable conditions precedent set forth
in Article 4 will not be satisfied on the requested Funding Date for the
applicable borrowing. The Non-Ratable Loans shall be secured by the
Agent's Liens in and to the Collateral and shall constitute Base Rate
Loans and Obligations hereunder.
Section 2.8 Maximum Interest Rate. If any of the interest rates set forth
in Section 2.3 and Section 3.1 (collectively herein, the "Interest Rate"),
absent the limitation set forth in this Section 2.8, would have exceeded the
Maximum Rate, then the Interest Rate shall be the Maximum Rate, and, if in the
future, the Interest Rate would otherwise be less than the Maximum Rate, then
the Interest Rate shall remain at the Maximum Rate until such time as the amount
of interest paid hereunder equals the amount of interest which would have been
paid if the same had not been limited by the Maximum Rate. In the event that,
upon payment in full of the Total Obligations, the total amount of interest paid
or accrued under the terms of this Agreement and the other Credit Documents is
less than the total amount of interest which would, but for this Section 2.8,
have been paid or accrued if the Interest Rate otherwise set forth in this
Agreement had at all times been in effect, then the Borrowers shall, to the
extent permitted by Requirements of Law, pay the Agent, for the account of the
Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been paid or accrued if the Maximum Rate had, at all
times, been in effect or (ii) the amount of interest which would have been paid
or accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement. Each of the Agent, each Lender, the Issuing Lender, and
each of the Borrowers acknowledges, agrees, and declares that it is its
intention to expressly comply with all Requirements of Law in respect of
limitations on the amount or rate of interest that can legally be contracted
for, charged, or received under or in connection with the Credit Documents.
Notwithstanding anything to the contrary contained in any Credit Document (even
if any such provision expressly declares that it
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controls all other provisions of the Credit Documents), in no contingency or
event whatsoever shall the amount of interest (including the aggregate of all
charges, fees, benefits, or other compensation which constitutes interest under
any applicable law) under the Credit Documents paid by the Borrowers, received
by the Agent, any Lender, or the Issuing Lender or agreed to be paid by the
Borrowers, or requested or demanded to be paid by the Agent, any Lender, or the
Issuing Lender exceed the Maximum Rate, and all provisions of the Credit
Documents in respect of the contracting for, charging, or receiving compensation
for the use, forbearance, or detention of money shall be limited as provided by
this Section 2.8. In the event any such interest is paid to the Agent, any
Lender, or the Issuing Lender by the Borrowers in an amount or at a rate which
would exceed the Maximum Rate, the Agent, such Lender, or the Issuing Lender, as
the case may be, shall automatically apply such excess to any unpaid amount of
the Total Obligations, other than interest, in the inverse order of maturity, or
if the amount of such excess exceeds said unpaid amount, such excess shall be
paid to the Borrowers, as applicable. All interest paid, or agreed to be paid,
by the Borrowers, or taken, reserved, or received by the Agent, any Lender, or
the Issuing Lender, shall be amortized, prorated, spread, and allocated in
respect of the Total Obligations throughout the full term of this Agreement.
Notwithstanding any provision contained in any of the Credit Documents, or in
any other related documents executed pursuant hereto, neither the Agent, any
Lender, or the Issuing Lender shall ever be entitled to charge, receive, take,
reserve, collect, or apply as interest any amount which, together with all other
interest under the Credit Documents would result in a rate of interest under the
Credit Documents in excess of the Maximum Rate and, in the event the Agent, any
Lender, or the Issuing Lender ever charges, receives, takes, reserves, collects,
or applies any amount in respect of the Borrowers that otherwise would, together
with all other interest under the Credit Documents, be in excess of the Maximum
Rate, such amount shall automatically be deemed to be applied in reduction of
the unpaid principal balance of the Total Obligations (other than interest), if
such principal balance is paid in full, any remaining excess shall forthwith be
paid to the Borrowers, as applicable. The Borrowers, the Agent, the Lenders, and
the Issuing Lender shall, to the maximum extent permitted under any Requirement
of Law, (A) characterize any non-principal payment as a standby fee, commitment
fee, prepayment charge, delinquency charge, expense, or reimbursement for a
third-party expense rather than as interest and (B) exclude prepayments,
acceleration, and the effects thereof. Nothing in any Credit Document shall be
construed or so operate as to require or obligate the Borrowers to pay any
interest, fees, costs, or charges greater than is permitted by any Requirement
of Law. Subject to the foregoing, the Borrowers hereby agree that the actual
effective rate of interest from time to time existing under the Credit
Documents, including all amounts agreed to by the Borrowers or charged or
received by the Agent, the Lenders, or the Issuing Lender pursuant to and in
accordance with the Credit Documents, which may be deemed to be interest under
any Requirement of Law, shall be deemed to be a rate which is agreed to and
stipulated by the Borrowers and the Lenders in accordance with Requirements of
Law.
ARTICLE 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
Section 3.1 Default Rate. Subject to Section 2.8, during the existence of
an Event of Default, upon the election of the Agent or the Required Lenders (a)
the principal of and, to the
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extent permitted by law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents shall bear interest, payable on
demand, at a per annum rate two percent (2.00%) greater than the rate which
would otherwise be applicable (or if no rate is applicable, whether in respect
of interest, fees, or other amounts, then the Adjusted Base Rate plus two
percent (2.00%)) and (b) the Letter of Credit Fee shall accrue at a per annum
rate two percent (2.00%) greater than the rate which would otherwise be
applicable.
Section 3.2 Continuation and Conversion. The Borrowers shall have the
option, on any Business Day, to continue existing Loans into a subsequent
permissible Interest Period (a "Continuation") or to convert Loans into Loans of
another interest rate type (a "Conversion"); provided, however, that (a)
Eurodollar Loans may be Continued as Eurodollar Loans for new Interest Periods
only on the last day of the Interest Period applicable thereto, (b) Eurodollar
Loans may be paid prior to the last day of the relevant Interest Period or
Converted into Base Rate Loans only upon payment of the amounts determined in
accordance with Section 3.6(d), (c) without the consent of the Required Lenders,
Eurodollar Loans may be Continued, and Base Rate Loans may be Converted into
Eurodollar Loans, only if the conditions precedent set forth in Section 4.2 are
satisfied on the date of Continuation or Conversion, (d) Loans Continued as, or
Converted into, Eurodollar Loans shall be subject to the terms of the definition
of "Interest Period" and shall be in such minimum amounts as provided in Section
2.2(b), and (e) any request for Continuation of a Eurodollar Loan or Conversion
of a Base Rate Loan into a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such Continuation or Conversion shall be effected by a Borrower by
giving a Notice of Continuation/Conversion (or telephonic notice promptly
confirmed in writing) to the office of the Agent specified in Section 10.1, or
at such other office as the Agent may designate in writing, prior to 10:00 a.m.
(Pasadena, California time) on the Business Day of, in the case of the
Conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the Continuation of a Eurodollar Loan as, or
Conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
Continuation or Conversion, specifying the date of the proposed Continuation or
Conversion, the Loans to be so Continued or Converted, the types of Loans into
which such Loans are to be Converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for Continuation or
Conversion shall be irrevocable and shall constitute a representation and
warranty by the Borrowers of the matters specified in Section 4.2(a), Section
4.2(b), and Section 4.2(c). In the event the Borrowers fail to request
Continuation or Conversion of any Eurodollar Loan in accordance with this
Section or any such Conversion or Continuation is not permitted or required by
this Section then such Eurodollar Loan shall, at the end of the Interest Period
applicable thereto, be automatically Converted to a Base Rate Loan. The Agent
shall give each Lender notice as promptly as practicable of any such proposed
Continuation or Conversion affecting any Loan.
Section 3.3 Prepayments.
(a) Voluntary Prepayments. The Loans may be repaid in whole or in
part without premium or penalty; provided that (i) Eurodollar Loans may be
prepaid only upon three (3) Business Days prior written notice to the
Agent and must be accompanied by payment of any amounts owing under
Section 3.6, (ii) such notice shall be provided by 10:00 a.m. (Pasadena,
California time) on the date of such prepayment, in the case of
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Base Rate Loans, or on the date three Business Days prior to such
prepayment, in the case of Eurodollar Loans, and (iii) partial prepayments
of the Eurodollar Loans shall be minimum principal amounts of $5,000,000
and integral multiples of $1,000,000 in excess thereof.
(b) Mandatory Prepayments.
(i) Revolving Commitments. If at any time (A) the aggregate
principal amount of Obligations shall exceed the lesser of (1) the
Aggregate Revolving Commitment Amount or (2) the Borrowing Base or
(B) the aggregate amount of LOC Obligations shall exceed the LOC
Committed Amount, the Borrowers shall make payment promptly on
demand on the Revolving Loans and/or to a cash collateral account in
respect of the LOC Obligations in an amount sufficient to eliminate
the difference.
(ii) Asset Dispositions. The Borrowers shall prepay the
Obligations hereunder in an amount equal to the net proceeds of any
Asset Disposition upon receipt thereof. Prepayments under this
clause (ii) shall not result in a commitment reduction and amounts
paid on account thereof may be reborrowed subject to the
availability and the other conditions to Extensions of Credit
hereunder.
(c) Application. Unless otherwise specified, prepayments on the
Obligations shall be applied first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period maturities.
Section 3.4 Termination of Credit Facility.
(a) The Borrowers may terminate this Agreement upon at least twenty
(20) days prior written notice thereof to the Agent and the Lenders, upon
(i) the payment in full of all outstanding Loans, together with accrued
and unpaid interest thereon, and the cancellation and return of all
outstanding Letters of Credit (or alternatively, with respect to each such
Letter of Credit, the furnishing to the Agent, in the Agent's discretion,
of a Supporting Letter of Credit or cash deposit, in each case in amounts
and in the manner required by Section 2.6(i)), (ii) the payment in full of
the early termination fee set forth in the following sentence, (iii) the
payment in full of all reimbursable expenses and other Total Obligations
together with accrued and unpaid interest thereon, and (iv) the payment in
full of any amount due under Section 3.6. The aggregate amount of the
Revolving Commitment Amount shall not be reduced except in connection with
termination of the credit facility provided pursuant to this Agreement.
Subject to Section 2.8, if this Agreement is terminated at any time prior
to the second Anniversary Date, whether pursuant to this Section or
pursuant to Section 8.2, the Borrowers shall pay to the Agent, for the
account of the Lenders, an early termination fee determined in accordance
with the following table:
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Period during which early
termination occurs Early Termination Fee
On or prior to the first 2.00% of the aggregate Revolving
Anniversary Date Committed Amount
After the first Anniversary 1.00% of the aggregate Revolving
Date but on or prior to the Committed Amount
second Anniversary Date
Notwithstanding the foregoing, no such early termination fee shall be
payable in the event this Agreement is terminated (A) after the first
Anniversary Date in connection with refinancing of the Total Obligations
in a transaction in which another lending group of Bank of America or
another lending group of CIT or any of their respective Affiliates
provides or arranges replacement financing or (B) more than eighteen
months after the Closing Date, in connection with a public offering of
debt or equity securities of any Credit Party either arranged or
underwritten by Bank of America, an Affiliate of Bank of America, or
another investment banking firm (provided that Bank of America was offered
the opportunity to lead such offering and has declined to lead such
offering).
(b) The term of this Agreement shall end on the Termination Date
unless sooner terminated in accordance with the terms hereof. The Agent
upon direction from the Required Lenders may terminate this Agreement,
without notice to the Credit Parties, during the existence of an Event of
Default. Upon the effective date of termination of this Agreement for any
reason whatsoever, the Total Obligations (including all unpaid principal,
accrued and unpaid interest, and any early termination or prepayment fees
but excluding indemnification obligations to the extent no claim with
respect thereto has been asserted and remains unsatisfied) shall become
immediately due and payable and the Borrowers shall immediately arrange
for the cancellation and return of all Letters of Credit then outstanding
or, if permitted by the Agent in its discretion, presentation to the Agent
of a Supporting Letter of Credit or cash collateral as specified in
Section 2.6(k). Notwithstanding the termination of this Agreement, until
the Total Obligations are indefeasibly paid and performed in full in cash,
the Credit Parties shall remain bound by the terms of this Agreement and
the other Credit Documents, as applicable, and shall not be relieved of
any of their obligations hereunder or under any other Credit Document, and
the Agent and the Lenders shall retain all their rights and remedies
hereunder and under the other Credit Documents (including, without
limitation, the Agent's Liens in and all rights and remedies with respect
to all then existing and after-arising Collateral).
Section 3.5 Fees.
(a) Unused Line Fee. Subject to Section 2.8, until the Loans have
been paid in full and this Agreement terminated, the Borrowers agree to
pay to the Agent for the ratable benefit of the Lenders, in accordance
with their respective Revolving Commitment Percentages, on the first day
of each calendar month and on the Termination Date, a fee (the "Unused
Line Fee") at a per annum rate equal to the Applicable Percentage for the
Unused Line Fee multiplied by the amount by which the Revolving
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Committed Amount exceeded the sum of the average daily amount of the
Revolving Loans and the average daily undrawn face amount of all
outstanding Letters of Credit during the immediately preceding month or
shorter period if calculated for the first month after the Closing Date or
on the Termination Date. For purposes of computing the Unused Line Fee,
(i) any payment received by the Agent (if received prior to 11:00 a.m.
(Pasadena, California time)) shall be deemed to be credited to the
Borrowers' loan account on the Business Day following the date such
payment is received by the Agent and (ii) Non-Ratable Loans shall not be
counted toward or considered usage under the Revolving Committed Amount.
(b) Letter of Credit Fees. Subject to Section 2.8 and Section 3.1,
the Borrowers agree to pay to the Agent, for the account of the Lenders,
in accordance with their respective Revolving Commitment Percentages, on
the first day of each calendar month and on the Termination Date, a fee
(the "Letter of Credit Fee") at a per annum rate equal to the Applicable
Percentage for Letters of Credit, multiplied by the average daily undrawn
face amount of all Letters of Credit outstanding during the immediately
preceding month or shorter period if calculated for the first month after
the Closing Date or on the Termination Date. The Borrowers also agree to
pay all reasonable out-of-pocket costs, fees, and expenses incurred by the
Issuing Lender in connection with the application for, processing of,
issuance of, or amendment to any Letter of Credit, which costs, fees, and
expenses shall include a "fronting fee" in an amount equal to one-quarter
percent (0.25%) of the face amount of such Letter of Credit, payable to
the Issuing Lender on the date of issuance of each Letter of Credit.
(c) Administrative Fees. The Borrowers agree to pay to the Agent,
for its own account, the fees referred to in the Administrative Agent's
Fee Letter.
Section 3.6 Taxes, Yield Protection, and Illegality.
(a) Taxes.
(i) Any and all payments by the Borrowers, or any of them, to
the Agent or any Lender under this Agreement and any other Credit
Document shall be made free and clear of, and without deduction or
withholding for, any Taxes. In addition, subject to Section 9.10(e),
the Borrowers shall pay all Other Taxes
(ii) The Borrowers agree to indemnify and hold harmless the
Agent and each Lender for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 3.6(a)) paid by the Agent or any
Lender and any liability (including penalties, interest, additions
to tax, and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within
thirty (30) days after the date the Agent or any Lender makes
written demand therefor.
Page 46
(iii) If the Borrowers shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to the Agent or any Lender, then:
(A) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings
(including, without limitation, deductions and withholdings
applicable to additional sums payable under this Section
3.6(a)) the Agent or such Lender, as the case may be, receives
an amount equal to the sum it would have received had no such
deductions or withholdings been made;
(B) the Borrowers shall make such deductions and
withholdings;
(C) the Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority
in accordance with any applicable law; and
(D) the Borrowers shall also pay to the Agent, for the
account of each Lender, or each Lender at the time interest is
paid, all additional amounts which the respective Lender
specifies as necessary to preserve the after-tax yield such
Lender would have received if such Taxes or Other Taxes had
not been imposed.
(iv) Within thirty (30) days after the date of any payment by
the Borrowers of Taxes or Other Taxes, the Borrowers shall furnish
the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to the
Agent.
(v) If the Borrowers are required to pay additional amounts to
the Agent or any Lender pursuant to Section 3.6(a)(iii), then the
applicable Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of its
Applicable Lending Office so as to eliminate any such additional
payment by the Borrowers which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to
such Lender.
(vi) For any period with respect to which a Lender has failed
to provide the Borrowers and the Agent with the appropriate forms
pursuant to Section 9.10(a) (unless such failure is due to a change
in treaty, law, or regulation occurring subsequent to the date on
which a form originally was required to be provided), such Lender
shall not be entitled to indemnification under this Section with
respect to Taxes imposed by the United States.
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(b) Illegality.
(i) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in
the interpretation or administration of any Requirement of Law, has
made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for such Lender or its
Applicable Lending Office to make Eurodollar Loans, then, on notice
thereof by such Lender to the Borrowers through the Agent, any
obligation of such Lender to make Eurodollar Loans shall be
suspended until the circumstances giving rise to such determination
no longer exist.
(ii) If a Lender determines that it is unlawful to maintain
any Eurodollar Loans, the Borrowers shall, upon receipt of notice of
such fact and demand from such Lender (with a copy to the Agent),
prepay in full such Eurodollar Loans of such Lender then
outstanding, together with accrued and unpaid interest thereon and
amounts required under Section 3.6(d), either on the last day of the
Interest Period thereof, if such Lender may lawfully continue to
maintain such Eurodollar Loans to such day, or immediately, if such
Lender may not lawfully continue to maintain such Eurodollar Loans.
If the Borrowers are required to so prepay any Eurodollar Loans,
then concurrently with such prepayment, the Borrowers shall borrow
from the affected Lender, in the amount of such repayment, a Base
Rate Loan.
(c) Increased Costs and Reduction of Return.
(i) If any Lender determines that due to either (A) the
introduction of or any change in the interpretation of any
Requirement of Law or (B) the compliance by such Lender with any
guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be
any increase in the cost to such Lender of agreeing to make or
making, funding, or maintaining any Eurodollar Loans, then the
Borrowers shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to the Agent), pay to
the Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs.
(ii) If any Lender shall have determined that (A) the
introduction of any Capital Adequacy Regulation, (B) any change in
any Capital Adequacy Regulation, (C) any change in the
interpretation or administration of any Capital Adequacy Regulation
by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (D) compliance by such
Lender or any corporation or other entity controlling such Lender
with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by such
Lender or any corporation or other entity controlling such Lender
and (taking into consideration such Lender's or such corporation's
or other entity's policies with respect to capital adequacy and such
Lender's desired return on capital) determines that the amount of
such
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capital is increased as a consequence of its Revolving Commitment,
Loans, credits, or obligations under this Agreement, then, upon
demand of such Lender to the Borrowers through the Agent, the
Borrowers shall pay to such Lender, from time to time as specified
by such Lender, additional amounts sufficient to compensate such
Lender for such increase.
(d) Funding Losses. The Borrowers shall reimburse each Lender and
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of:
(i) the failure of the Borrowers to make on a timely basis any
payment of principal of any Eurodollar Loan;
(ii) the failure of the Borrowers to (i) borrow any requested
Eurodollar Loan, (ii) Continue any Eurodollar Loan, or (iii) Convert
a Base Rate Loan to a Eurodollar Loan after any Borrower has given
(or is deemed to have given) a Notice of Borrowing or a Notice of
Continuation/Conversion with respect thereto (except as permitted by
Section 3.6(e)); or
(iii) the prepayment or other payment (including after
acceleration thereof) of any Eurodollar Loans on a day that is not
the last day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense
arising from the liquidation or reemployment of funds obtained by such
Lender to maintain its Eurodollar Loans or from fees payable to terminate
the deposits from which such funds were obtained. The Borrowers shall also
pay any customary administrative fees charged by any Lender in connection
with the foregoing.
(e) Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Loan, or that the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Loan does not
adequately and fairly reflect the cost to the Lenders of funding such
Loan, the Agent will promptly so notify the Borrowers and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of a notice pursuant to the first sentence of this
Section, the Borrowers may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by any of them. If the Borrowers do
not revoke any such Notice of Borrowing or Notice of
Continuation/Conversion, the Lenders shall make, Convert, or Continue the
Loans, as proposed by the Borrowers, in the amount specified in the
applicable notice submitted by the Borrowers, but such Loans shall be
made, Converted, or Continued as Base Rate Loans instead of Eurodollar
Loans.
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(f) Certificates of the Agent. If any Lender claims reimbursement or
compensation under this Section 3.6, the Agent shall determine the amount
thereof and shall deliver to the Borrowers (with a copy to the affected
Lender) a certificate setting forth in reasonable detail the amount
payable to the affected Lender, and such certificate shall be conclusive
and binding on the Borrowers in the absence of manifest error.
(g) Survival. The agreements and obligations of the Borrowers in
this Section 3.6 shall survive the payment of the Total Obligations.
Section 3.7 Pro Rata Treatment. Except to the extent otherwise provided
herein:
(a) Loans. Each Revolving Loan advance, each payment or prepayment
of principal of any Revolving Loan (other than Non-Ratable Loans and
Discretionary Over-Advances) or reimbursement obligations arising from
drawings under Letters of Credit, each payment of interest on the
Revolving Loans or reimbursement obligations arising from drawings under
Letters of Credit, each payment of Unused Line Fees, each payment of the
Letter of Credit Fee, each payment of early termination fee, each
reduction of the Revolving Committed Amount (if any), and each
Continuation or Conversion of any Revolving Loan shall be allocated pro
rata among the Lenders in accordance with their respective Revolving
Commitment Percentages.
(b) Advances. No Lender shall be responsible for the failure or
delay by any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of
its obligations hereunder.
Section 3.8 Sharing of Payments. The Lenders agree among themselves that,
in the event that any Lender shall obtain payment in respect of any Loan, LOC
Obligations, or any other obligation owing to such Lender under this Agreement
through the exercise of a right of setoff, banker's lien, or counterclaim, or
pursuant to a secured claim under Section 506 of Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency, or
other similar law or otherwise, or by any other means, in excess of its pro rata
share of such payment as provided for in this Agreement, such Lender shall
promptly purchase from the other Lenders a Participation Interest in such Loans,
LOC Obligations, and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Agreement. The Lenders further agree among themselves that
if payment to a Lender obtained by such Lender through the exercise of a right
of setoff, banker's lien, counterclaim, or other event as aforesaid shall be
rescinded or must otherwise be restored, each Lender which shall have shared the
benefit of such payment shall, by repurchase of a Participation Interest
theretofore sold, return its share of that benefit (together with its share of
any accrued interest payable with respect thereto) to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrowers agree that any
Lender so purchasing such a Participation Interest may, to the fullest extent
permitted by law, exercise all rights of payment, including setoff, banker's
lien, or counterclaim, with respect to such Participation Interest as fully as
if such Lender were a holder
Page 50
of such Loan, LOC Obligations, or other obligation in the amount of such
Participation Interest. Except as otherwise expressly provided in this
Agreement, if any Lender or the Agent shall fail to remit to the Agent or any
other Lender an amount payable by such Lender or the Agent to the Agent or such
other Lender pursuant to this Agreement on the date when such amount is due,
such payments shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to the Agent or
such other Lender at a rate per annum equal to the Federal Funds Rate. If under
any applicable bankruptcy, insolvency, or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this Section 3.8 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.8 to share in the benefits of any recovery on such secured claim.
Section 3.9 Certain Limitations. The provisions of Section 3.6(a), Section
3.6(b), Section 3.6(c), and Section 3.6(d) shall be subject to the following:
(a) Each Lender that desires compensation or indemnification under
Section 3.6(a), Section 3.6(b), Section 3.6(c), or Section 3.6(d) shall
notify the Borrowers through the Agent of any event occurring after the
Closing Date entitling such Lender to compensation or indemnification
under any of such Sections as promptly as practicable, but in any event
within ninety (90) days after the occurrence of the event giving rise
thereto; provided that (i) if any such Lender fails to give such notice
within ninety (90) days after the occurrence of such an event, such Lender
shall only be entitled to compensation or indemnification in respect of
such event accruing under Section 3.6(a), Section 3.6(b), Section 3.6(c),
or Section 3.6(d) with respect to the period from and after the date
ninety (90) days prior to the date that such Lender does give notice.
(b) Any notice given by a Lender pursuant to clause (a) preceding
shall certify (i) that one of the events described in Section 3.6(a),
Section 3.6(b), Section 3.6(c), or Section 3.6(d) has occurred, describing
in reasonable detail the nature of such event, (ii) as to the increased
cost, reduced amount receivable, or loss or expense resulting from such
event, and (iii) as to the additional amount demanded by such Lender,
attaching a reasonably detailed explanation of the calculation thereof.
Such a certificate as to any compensation or indemnification payable
pursuant to Section 3.6(a), Section 3.6(b), Section 3.6(c), or Section
3.6(d), submitted by such Lender through the Agent to the Borrowers, shall
be conclusive and binding on the parties hereto in the absence of manifest
error.
(c) If any Lender requests compensation or indemnification from the
Borrowers under Section 3.6(a), Section 3.6(b), Section 3.6(c), or Section
3.6(d), the Borrowers may, at their option, within fifteen (15) days after
receipt by the Borrowers of written demand from the affected Lender for
payment of such compensation or indemnification, notify the Agent and such
affected Lender of their intention to replace the affected Lender. So long
as no Event of Default shall have occurred and be continuing, the
Borrowers may obtain, at the Borrowers' expense, a replacement Lender
(which must be an Eligible Assignee reasonably acceptable to the Agent)
for the affected Lender. If the Borrowers obtain a replacement Lender
within ninety (90) days following
Page 51
notice of their intention to do so, the affected Lender must sell and
assign its loans and obligations and any Commitments to such replacement
Lender pursuant to Section 10.3, for an amount equal to the principal
balance of all Revolving Loans held by the affected Lender and all accrued
interest and Fees with respect thereto through the date of such sale,
provided that the Borrowers shall have paid to such affected Lender the
compensation or indemnification that it is entitled to receive under
Section 3.6(a), Section 3.6(b), Section 3.6(c), or Section 3.6(d), through
the date of such sale and assignment. Notwithstanding the foregoing, the
Borrowers shall not have the right to obtain a replacement Lender if the
affected Lender rescinds its demand for such compensation or
indemnification within fifteen (15) days following its receipt of the
Borrowers' notice of intention to replace such affected Lender.
Additionally, if the Borrowers give a notice to the Agent and an affected
Lender of the Borrowers' intention to replace such affected Lender and the
Borrowers do not so replace such affected Lender within ninety (90) days
thereafter, the Borrowers' rights under this Section 3.9(c) shall
terminate and the Borrowers shall promptly pay all compensation or
indemnification demanded by such affected Lender pursuant to Section
3.6(a), Section 3.6(b), Section 3.6(c), and Section 3.6(d).
Section 3.10 Payments, Computations, Etc.
(a) Generally. Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in Dollars in immediately
available funds, without setoff, deduction, counterclaim, or withholding
of any kind, at the Agent's office specified in Section 10.1 not later
than 10:00 a.m. (Pasadena, California time) on the date when due; provided
that no Default or Event of Default shall be deemed to have occurred in
connection with payments made on the due date but received after such
cut-off time, even though credited for receipt on the following Business
Day. Payments received after such time shall be deemed to have been
received on the next succeeding Business Day. The Agent may (but shall not
be obligated to) debit the amount of any such payment which is not made by
such time to any ordinary deposit account of the Borrowers or any
Guarantor maintained with the Agent (with notice to the Borrowers or such
Guarantor). Each Borrower shall, at the time it makes any payment under
this Agreement, specify to the Agent the Loans, LOC Obligations, Fees,
interest, or other amounts payable by such Borrower hereunder to which
such payment is to be applied (and in the event that such Borrower fails
so to specify, or if such application would be inconsistent with the terms
hereof, the Agent shall distribute such payment to the Lenders in such
manner as the Agent may determine to be appropriate in respect of
obligations owing by the Borrowers hereunder, subject to the terms of
Section 3.7). The Agent will distribute such payments to such Lenders, if
any such payment is received prior to 10:00 a.m. (Pasadena, California
time) on a Business Day in like funds as received prior to the end of such
Business Day and otherwise the Agent will distribute any such payment to
such Lenders on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and Fees for the period of such
extension), except that in the case of Eurodollar Loans, if the extension
would cause the payment to be made in the next following calendar month,
then such payment shall
Page 52
instead be made on the next preceding Business Day. Subject to Section
2.8, unless expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days
elapsed over a year of 360 days. Interest shall accrue from and include
the date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Agreement to the contrary, during the
existence of an Event of Default, all amounts collected or received on or
in respect of the Total Obligations shall be paid over or delivered as
follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable attorneys'
fees) of the Agent actually incurred in connection with enforcing
the rights and remedies of the Agent and the Lenders under the
Credit Documents (including, without limitation, exercising rights
and remedies in respect of the Collateral) and any protective
advances (including any Discretionary Over-Advances) made with
respect thereto, excluding any of the foregoing solely relating to
Bank Products;
SECOND, to payment of any fees and expenses (including,
without limitation, fees and expenses owing pursuant to Section
10.5(a)) owed to the Agent under the Credit Documents and not paid
pursuant to clause "FIRST" preceding, excluding any of the foregoing
solely relating to Bank Products;
THIRD, to the payment of all accrued interest and fees on or
in respect of the Obligations;
FOURTH, to the payment of the outstanding principal amount of
the Obligations hereunder (including the payment or cash
collateralization of the outstanding LOC Obligations);
FIFTH, to the payment of all amounts due with respect to Bank
Products;
SIXTH, to all other obligations hereunder and other
obligations which shall have become due and payable under the Credit
Documents otherwise and not repaid pursuant to clauses "FIRST"
through "FIFTH" preceding; and
SEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to the
next succeeding category, (ii) except as otherwise provided, the Lenders
shall receive amounts ratably in accordance with their respective pro rata
share (based on the proportion that the then outstanding Obligations held
by such Lenders bears to the aggregate amount of Obligations then
outstanding) of amounts available to be applied pursuant to clauses
"THIRD", "FOURTH", and "SIXTH" preceding, and (iii) to the extent that any
amounts available for distribution
Page 53
pursuant to clause "FOURTH" preceding are attributable to the issued but
undrawn amount of outstanding Letters of Credit, such amounts shall be
held by the Agent in a cash collateral account and applied (A) first, to
reimburse the Issuing Lender for any drawings under such Letters of Credit
and (B) then, following the expiration of all Letters of Credit, to all
other obligations of the types described in clauses "THIRD" and "FOURTH"
preceding in the manner provided in this Section 3.10(b).
Section 3.11 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing
each Loan made by such Lender to the Borrowers from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement. Each Lender will make
reasonable efforts to maintain the accuracy of its account or accounts and
to promptly update its account or accounts from time to time, as
necessary.
(b) The Agent shall maintain the Register pursuant to Section
10.3(g), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type, and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to each
Lender hereunder, and (iii) the amount of any sum received by the Agent
hereunder from or for the account of the Borrowers or any Guarantor and
each Lender's share thereof. The Agent will make reasonable efforts to
maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register, and subaccounts
maintained pursuant to clause (b) preceding (and, if consistent with the
entries of the Agent, clause (a)) shall be prima facie evidence of the
existence and amounts of the obligations of the Borrowers and the
Guarantors therein recorded absent manifest error; provided, however, that
the failure of any Lender or the Agent to maintain any such account, such
Register, or such subaccount, as applicable, or any error therein, shall
not in any manner affect the obligation of the Borrowers or the Guarantors
to repay the Loans and obligations owing hereunder and under the other
Credit Documents to such Lender.
Section 3.12 Bank Products. The Borrowers may request and the Agent may,
in its sole and absolute discretion, arrange for the Credit Parties to obtain
Bank Products from Bank of America or any Affiliate of Bank of America although
no Credit Party is required to do so. To the extent Bank Products are provided
by an Affiliate of Bank of America, the Borrowers agree to indemnify and hold
the Agent, Bank of America, and the Lenders harmless from any and all costs and
obligations now or hereafter incurred by the Agent, Bank of America, or any of
the Lenders which arise from any indemnity given by the Agent to its Affiliates
related to such Bank Products; provided, however, nothing contained herein is
intended to limit any Credit Party's rights, with respect to Bank of America or
its Affiliates, if any, which arise as a result of the execution of documents by
and between such Credit Party and Bank of America or its Affiliates which relate
to Bank Products. The agreement contained in this Section shall survive
Page 54
termination of this Agreement. The Borrowers acknowledge and agree that the
obtaining of Bank Products by the Credit Parties from Bank of America or Bank of
America's Affiliates (a) is in the sole and absolute discretion of Bank of
America or Bank of America's Affiliates, and (b) is subject to all rules and
regulations of Bank of America or Bank of America's Affiliates.
ARTICLE 4
CONDITIONS
Section 4.1 Closing Conditions. The obligation of the Lenders to enter
into this Agreement and to make the initial Extensions of Credit shall be
subject to satisfaction of the following conditions (in form and substance
acceptable to the Lenders).
(a) Executed Credit Documents. The Agent shall have received: (i)
multiple counterparts of this Agreement, (ii) a Revolving Note for each
Lender, (iii) multiple counterparts of the Collateral Documents and
Guaranty Agreements (if any), and (iv) multiple counterparts of the
▇▇▇▇▇▇▇▇'▇ Intercreditor Agreement, in each case executed by a duly
authorized officer of each party thereto and in each case conforming to
the requirements of this Agreement.
(b) Legal Opinions. The Agent shall have received multiple
counterparts of opinions of counsel for the Credit Parties relating to the
Credit Documents and the transactions contemplated therein, in form and
substance satisfactory to the Agent and the Lenders, and including, among
other things, opinions regarding enforceability of the Credit Documents
and the perfection of the security interests created thereby.
(c) Financial Information. The Lenders shall have received of such
financial information regarding the members of the Consolidated Group as
may be requested by, and in each case in form and substance satisfactory
to, the Agent and the Lenders.
(d) Personal Property Collateral. The Agent shall have received each
of the following:
(i) UCC financing statements for each jurisdiction as is
necessary or appropriate, in the Agent's discretion, to perfect the
Agent's Liens in the Collateral;
(ii) original certificates evidencing the Capital Stock which
is pledged as Collateral pursuant to any Credit Document (including
100% of the Capital Stock of Crescent), together with undated stock
transfer powers executed in blank;
(iii) such patent, trademark, and copyright notices and
filings as necessary or appropriate, in the Agent's discretion, to
perfect the security interests of the Agent in the Credit Parties'
Intellectual Property;
(iv) a landlord's or mortgagee's waiver and consent agreement,
in form and substance satisfactory to the Agent, duly executed on
behalf of each landlord
Page 55
or mortgagee, as the case may be, of Real Property, excluding retail
store locations, on which any Collateral is located (provided that
the Agent may, in its discretion, waive or defer such requirement or
establish a Reserve with respect to any Collateral located on any
Real Property for which the Agent has not received an acceptable
waiver and consent agreement); and
(v) bailee agreements with each Person as the Agent determines
are necessary, in form and substance satisfactory to the Agent, with
respect to any Installment Contracts held by any such bailee
(provided that the Agent may, in its discretion, establish a Reserve
with respect to any such Installment Contracts held by any bailee
for which the Agent has not received an acceptable bailee
agreement).
(e) Evidence of Insurance. The Agent shall have received evidence,
in form, scope, and substance, reasonably satisfactory to the Agent, of
all insurance coverage as required by this Agreement together with loss
payable endorsements in form acceptable to the Agent.
(f) Absence of Legal Proceedings. There shall not exist any action,
suit, investigation, or proceeding pending in any court or before any
arbitrator or Governmental Authority which could reasonably be expected to
have a Material Adverse Effect.
(g) Corporate Documents. The Agent shall have received the following
(or their equivalent) for each of the Credit Parties:
(i) copies of the organization documents of such Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other
jurisdiction of its organization and certified by a secretary,
assistant secretary, general partner, or similar Person of such
Credit Party to be true and correct as of the Closing Date;
(ii) a copy of the bylaws, partnership agreement, operating
agreement, or other equivalent agreement or document of such Credit
Party certified by a secretary, assistant secretary, general
partner, or similar Person of such Credit Party to be true and
correct and in force and effect as of the Closing Date;
(iii) copies of resolutions of the board of directors of such
Credit Party or of the general partner, members, or similar Persons
approving and adopting the Credit Documents to which such Credit
Party is a party and the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a
secretary, assistant secretary, general partner, or such Person of
such Credit Party to be true and correct and in force and effect as
of the Closing Date;
(iv) certificates of good standing and existence (or its
equivalent) with respect to each Credit Party certified as of a
recent date by the appropriate
Page 56
Governmental Authorities of the state of organization and each other
state in which the failure to so qualify and be in good standing
would be reasonably likely to have a Material Adverse Effect on the
business or operations of such Credit Party in such state; and
(v) an officer's certificate of the Credit Parties, dated as
of the Closing Date, certifying to such factual matters as may be
reasonably requested by the Agent.
(h) Priority of Liens. The Agent shall have received satisfactory
evidence that (i) the Agent holds a perfected, first priority Lien on all
Collateral (subject only to Permitted Liens which are specifically
permitted to have priority over the Liens of the Agent) and (ii) none of
the Collateral is subject to any Liens other than Permitted Liens.
(i) Officer's Certificates. The Agent shall have received a
certificate executed by an Executive Officer of Crescent as of the Closing
Date, in form and substance satisfactory to the Agent, stating that (i)
each Borrower and each Guarantor is in compliance with all existing
financial obligations, (ii) all governmental, shareholder, and third party
consents and approvals, if any, necessary with respect to the Credit
Documents and the transactions contemplated thereby have been obtained,
(iii) there is no pending or, to such Executive Officer's knowledge,
threatened action, suit, investigation, or proceeding in any court or
before any arbitrator or governmental instrumentality that purports to
affect any Borrower or any Guarantor or any transaction contemplated by
the Credit Documents, which could reasonably be expected to have a
Material Adverse Effect, (iv) immediately after giving effect to the
initial Extensions of Credit on the Closing Date, (A) no Default or Event
of Default exists, (B) all representations and warranties contained herein
and in the other Credit Documents are true and correct in all material
respects, and (C) the Credit Parties are in compliance on a Pro Forma
Basis as of the Closing Date with each of the financial covenants set
forth in Section 6.11 (assuming for purposes hereof that such financial
covenants were measured as of, and for the twelve (12) Fiscal Periods
ending on, the most recent Fiscal Period end and attaching detailed
calculations demonstrating such compliance), (v) all conditions to funding
of the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt have been met, Crescent has received
the proceeds of the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt, and attaching true,
correct, and complete copies of the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt
Documents, and (vi) all conditions to completion of the ▇▇▇▇▇▇▇▇'▇ Stock
Sale have been met, Crescent has received the proceeds of the ▇▇▇▇▇▇▇▇'▇
Stock Sale, and attaching true, correct, and complete copies of the
agreements, documents, and instruments executed and delivered in
connection therewith.
(j) Merchant Account Agreements. The Agent shall have received true,
correct, and complete copies of all Merchant Account Agreements for which
any Credit Party is party thereto.
(k) Borrowing Base Certificate. The Agent shall have received a
Borrowing Base Certificate dated as of the most recent week-end preceding
the Closing Date, in
Page 57
form and substance satisfactory to the Agent and certified by the chief
financial officer of Crescent to be true and correct as of the date
thereof.
(l) Field Audit. Representatives of the Agent shall have completed a
field audit of the accounts receivable, inventory, accounts payable, and
accounting controls and systems of the members of the Consolidated Group
with results and findings acceptable to the Agent and the Lenders.
(m) Fees and Expenses. The Borrowers and the Guarantors shall have
paid to the Lenders and the Agent of all fees and expenses owed by them in
connection with this Agreement and the other Credit Documents, including,
without limitation, payment to the Agent and CIT of the fees set forth in
the Agents' Fee Letter.
(n) Availability. After giving effect to the making of all
Extensions of Credit (including any Loans made to finance the fees and
expenses set forth in the Agents' Fee Letter or otherwise as reimbursement
for fees, costs, and expenses then payable in connection with this
Agreement and the other Credit Documents), and with all of the Borrowers'
obligations current, on the Closing Date, the Borrowing Base shall exceed
the outstanding Obligations by an amount not less than (a) $5,000,000,
plus (b) the amount by which accounts payable of the Borrowers which are
over sixty (60) days past due exceed $10,000,000.
(o) ▇▇▇▇▇▇▇▇'▇ Subordinated Debt and ▇▇▇▇▇▇▇▇'▇ Stock Sale Funding.
Crescent shall have received the proceeds of the ▇▇▇▇▇▇▇▇'▇ Subordinated
Debt and the ▇▇▇▇▇▇▇▇'▇ Stock Sale in an aggregate amount not less than
$85,000,000.
Section 4.2 Conditions to all Extensions of Credit. The obligation of each
Lender to make any Loan or of the Issuing Lender to issue any Letter of Credit
hereunder (including the initial Extension of Credit to be made hereunder) is
subject to the satisfaction of the following conditions precedent on the date of
making such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Borrowers and the Guarantors herein and in the
other Credit Documents or which are contained in any certificate furnished
at any time under or in connection herewith or therewith shall be true and
correct in all material respects on and as of the date of such Extension
of Credit as if made on and as of such date (except for those which
expressly relate to an earlier date and except for changes expressly
permitted therein or as expressly contemplated herein).
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect
to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Agreement.
Page 58
(c) Material Adverse Effect. No event has occurred and is
continuing, or would result from such Extension of Credit, which has had
or would have a Material Adverse Effect.
(d) Additional Conditions to Revolving Loans and Letters of Credit.
If making of a Revolving Loan, or issuance of a Letter of Credit, is
requested pursuant to Section 2.1 and Section 2.2, all conditions set
forth in Article 2 shall have been satisfied.
Each request for an Extension of Credit (including Continuations and
Conversions) and each acceptance by any Borrower of an Extension of Credit
(including Continuations and Conversions) shall be deemed to constitute a
representation and warranty by the Borrowers as of the date of such Extension of
Credit that the applicable conditions in clauses (a), (b), and (c) preceding (as
applicable) have been satisfied.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit hereunder, each of the Borrowers and the Guarantors hereby
represents and warrants to the Agent and to each Lender that:
Section 5.1 Financial Condition. Each of the financial statements
described below (copies of which have heretofore been provided to the Agent for
distribution to the Lenders) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, are complete and
correct in all material respects and present fairly in all material respects the
financial condition (including disclosure of all material liabilities,
contingent or otherwise) and results from operations of the entities and for the
periods specified, subject in the case of interim company-prepared statements to
normal year-end adjustments and the absence of footnotes:
(a) audited consolidated balance sheets for the Parent and its
Subsidiaries dated as of July 31, 1999, July 31, 2000, and July 28, 2001,
together with related audited consolidated statements of income and cash
flows for the Fiscal Years then ending, certified by Ernst & Young LLP,
certified public accountants;
(b) company prepared consolidated balance sheets for the Parent and
its Subsidiaries as of June 28, 2002, together with related consolidated
statements of income and cash flows for the Fiscal Period then ending; and
(c) after the Closing Date, the annual and periodic financial
statements provided in accordance with Section 6.1(a) and Section 6.1(b).
Section 5.2 No Changes or Restricted Payments. Except as set forth on
Schedule 5.2, since the date of the most recent annual audited financial
statements referenced in Section 5.1(a),
Page 59
(a) for the period from the date of such financial statements to the
Closing Date, except as previously disclosed in writing to the Agent and
the Lenders, (i) there have been no material sales, transfers, or other
dispositions of any material part of the business or property of the
members of the Consolidated Group, nor have there been any material
purchases or other acquisitions of any business or property (including the
Capital Stock of any other Person) by the members of the Consolidated
Group, which are not reflected in the annual audited or company prepared
periodic financial statements referenced in Section 5.1(a) and Section
5.1(b), and (ii) no Restricted Payments have been declared or paid by
members of the Consolidated Group to any Person which is not a Credit
Party; and
(b) there has been no circumstance, development, or event relating
to or affecting the members of the Consolidated Group which has had or
could reasonably be expected to have a Material Adverse Effect.
Section 5.3 Organization; Existence; Compliance with Law. Each of the
members of the Consolidated Group (a) is duly incorporated, organized, or formed
and validly existing in good standing under the laws of the jurisdiction of its
incorporation, organization, or formation (b) has the corporate or other
necessary power and authority, and the legal right to own and operate its
Property, to lease the Property it operates as lessee, and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where its
ownership, lease, or operation of Property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not, in the aggregate, have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law
(including, without limitation, Consumer Protection Laws), except to the extent
that the failure to comply therewith would not, in the aggregate, be reasonably
expected to have a Material Adverse Effect.
Section 5.4 Power; Authorization; Enforceable Obligations. Each of the
Credit Parties has the corporate or other necessary power and authority, and the
legal right, to make, deliver, and perform the Credit Documents to which it is a
party and has taken all necessary corporate or other action to authorize the
execution, delivery, and performance by it of the Credit Documents to which it
is a party. No consent or authorization of, filing with, notice to, or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with acceptance of Extensions of Credit or the making of the
guaranties hereunder or with the execution, delivery, or performance of any
Credit Documents by the Credit Parties (other than those which have been
obtained, such filings as are required by the Securities and Exchange Commission
and to fulfill other reporting requirements with Governmental Authorities) or
with the validity or enforceability of any Credit Document against the Credit
Parties (except such filings as are necessary in connection with the perfection
of the Liens created by such Credit Documents). Each Credit Document to which it
is a party constitutes a legal, valid, and binding obligation of such Credit
Party enforceable against such Credit Party in accordance with its respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
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Section 5.5 No Legal Bar. The execution, delivery, and performance of the
Credit Documents, the borrowings hereunder, and the use of the Extensions of
Credit will not violate any Requirement of Law or any Contractual Obligation of
any member of the Consolidated Group (except those as to which waivers or
consents have been obtained), and will not result in, or require, the creation
or imposition of any Lien on any Property or revenue of any member of the
Consolidated Group pursuant to any Requirement of Law or Contractual Obligation
other than the Liens arising under or contemplated in connection with the Credit
Documents. No member of the Consolidated Group is in default under or with
respect to any of its Contractual Obligations in any respect which would
reasonably be expected to have a Material Adverse Effect. The Credit Parties'
entering into the Credit Documents and incurrence of the Total Obligations is
not prohibited under the terms of any Subordinated Debt.
Section 5.6 No Material Litigation and Disputes.
(a) Except as set forth on Schedule 5.6, no claim, litigation,
investigation, or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the best knowledge of the Borrowers and the
Guarantors, threatened by or against, any members of the Consolidated
Group or against any of their respective Properties or revenues which (i)
relate to the Credit Documents or any of the transactions contemplated
hereby or thereby or (ii) would reasonably be expected to have a Material
Adverse Effect.
(b) No default exists and, to the best knowledge of the Borrowers
and the Guarantors, no default has been asserted, under any Contractual
Obligations to which any members of the Consolidated Group are party which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
Section 5.7 No Defaults. No Default or Event of Default has occurred and
is continuing.
Section 5.8 Ownership and Operation of Property. Each of the members of
the Consolidated Group (a) has good record and marketable title to, or a valid
leasehold interest in, all its material Real Property, and good title to, or a
valid leasehold interest in, all its other material Property, and none of such
Property is subject to any Lien, except for Permitted Liens, and (b) holds all
licenses, permits, franchises, or other certifications, consents, approvals, and
authorizations, governmental or private, necessary to the ownership of its
Property and to the conduct of its business, except for any such licenses,
permits, franchises, or other certifications, consents, approvals, and
authorizations which the failure to hold could not reasonably be expected to
have a Material Adverse Effect.
Section 5.9 Intellectual Property. Each of the members of the Consolidated
Group owns, or has the legal right to use, all United States trademarks,
tradenames, copyrights, patents, technology, know-how, and processes, if any,
necessary for each of them to conduct its business as currently conducted (the
"Intellectual Property") except for those the failure to own or have such legal
right to use would not be reasonably expected to have a Material Adverse Effect.
Schedule 5.9 sets forth a list of the Intellectual Property owned and used by
members of the Consolidated Group, as of the Closing Date. No claim has been
asserted in writing to any
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Borrower or any Guarantor and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, and the use of such
Intellectual Property by the members of the Consolidated Group does not infringe
on the rights of any Person, except for such claims and infringements that, in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect.
Section 5.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the members of the Consolidated Group would be
reasonably expected to have a Material Adverse Effect.
Section 5.11 Taxes. Each member of the Consolidated Group has filed or
caused to be filed all income tax returns (federal, state, local, and foreign)
and all other tax returns which are required to be filed and has paid, except
where any failure to file or pay could not reasonably be expected to have a
Material Adverse Effect, (a) all amounts shown therein to be due (including
interest and penalties) and (b) all other taxes, fees, assessments, and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes, and intangibles taxes) owing, except for such taxes which are not yet
delinquent or as are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have been
established unless the failure to make any such payment could give rise to an
immediate right to foreclose on a Lien securing such amounts. No tax claim or
assessment has been asserted against any member of the Consolidated Group which
if adversely determined could reasonably be expected to have a Material Adverse
Effect.
Section 5.12 ERISA. Except as would not reasonably be expected to have a
Material Adverse Effect:
(a) During the five (5) year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred,
and, to the best knowledge of the Borrowers and the Guarantors, no event
or condition has occurred or exists as a result of which any ERISA Event
could reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302
of ERISA and Section 412 of the Internal Revenue Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and in
material compliance with the provisions of ERISA, the Internal Revenue
Code, and any other applicable federal or state laws; and (iv) no lien in
favor of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under
each Single Employer Plan, as of the last annual valuation date prior to
the date on which this representation is made or deemed made (determined,
in each case, in accordance with Financial Accounting Standards Board
Statement 87, utilizing the actuarial assumptions used in such Plan's most
recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
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(c) No member of the Consolidated Group has incurred, or, to the
best knowledge of the Borrowers and the Guarantors, could be reasonably
expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. No member of the
Consolidated Group would become subject to withdrawal liability under
ERISA if any member of the Consolidated Group were to withdraw completely
from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made. No member of the Consolidated Group
has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA), or has been terminated
(within the meaning of Title IV of ERISA), and no Multiemployer Plan is,
to the best knowledge of the Borrowers and the Guarantors, reasonably
expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Internal Revenue Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected or
may subject any member of the Consolidated Group to liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Internal Revenue Code, or under any agreement or other instrument pursuant
to which any member of the Consolidated Group has agreed or is required to
indemnify any Person against any such liability.
(e) No member of the Consolidated Group has liability with respect
to "expected post-retirement benefit obligations" within the meaning of
the Financial Accounting Standards Board Statement 106. Each Plan which is
a welfare plan (as defined in Section 3(1) of ERISA) to which Sections
601-609 of ERISA and Section 4980B of the Internal Revenue Code apply has
been administered in compliance in all material respects of such sections.
(f) Neither the execution and delivery of this Credit Agreement nor
the consummation of the financing transactions contemplated thereunder
will involve any transaction which is subject to the prohibitions of
Sections 404, 406, or 407 of ERISA by reason of the identity of any member
of the Consolidated Group or in connection with which a tax could be
imposed on any member of the Consolidated Group pursuant to Section 4975
of the Internal Revenue Code.
(g) No ERISA Affiliate that is not a member of the Consolidated
Group has incurred, or to the best knowledge of the Borrowers and the
Guarantors, could reasonably be expected to incur, any liability under
ERISA, the Internal Revenue Code or otherwise in relation to any ERISA
Affiliate Plan that would have a Material Adverse Effect.
Section 5.13 Use of Proceeds; Governmental Regulations, Etc.
(a) The proceeds of the Loans are to be used solely for the purposes
specified in Section 5.15. No Credit Party is in the business of buying or
selling Margin Stock or extending credit for the purpose of buying or
carrying Margin Stock.
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(b) None of the members of the Consolidated Group is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or the Investment Company Act of 1940, each as amended.
In addition, none of the members of the Consolidated Group is (i) an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled by such
a company, or (ii) a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 5.14 Subsidiaries. Schedule 5.14 sets forth all of the
Subsidiaries of the Parent as of the Closing Date, including the jurisdiction of
organization, classes of Capital Stock (including options, warrants, rights of
subscription, conversion and exchangeability and other similar rights),
ownership, and ownership percentages thereof. The outstanding shares of Capital
Stock shown have been duly authorized and validly issued and, in the case of any
corporation, are fully paid and non-assessable and are owned free of Liens other
than Liens of the type described in clauses (a), (b), (c), (f), and (q) of the
definition of Permitted Liens. Except as identified on Schedule 5.14, the
outstanding shares of Capital Stock shown are not the subject of any buy-sell,
voting trust, or other shareholder agreement and are not subject to the
preemptive rights of any Person.
Section 5.15 Purpose of Extensions of Credit. The Loans will be used by
the Borrowers solely to (a) refinance the indebtedness, liabilities, and
obligations of Crescent under the Original Credit Agreement and (b) provide
working capital and for other general corporate purposes of the Credit Parties.
No portion of the Loan proceeds will be used directly or indirectly (w) to buy
or carry any Margin Stock, (x) to repay or otherwise refinance indebtedness of
any Person incurred to buy or carry any Margin Stock, (y) to extend credit for
the purpose of buying or carrying any Margin Stock, or (z) to acquire any
security in any transaction that is subject to Section 13 or 14 of the
Securities Exchange Act of 1934 and the regulations promulgated thereunder, and
notwithstanding any other provision to the contrary, no portion of the Loans
will be used for any purpose which violates any provision of Regulation T,
Regulation U, or Regulation X.
Section 5.16 Environmental Matters. Except as would not reasonably be
expected to have a Material Adverse Effect:
(a) Each of the facilities and properties owned, leased, or operated
by the members of the Consolidated Group (the "Subject Properties") and
all operations at the Subject Properties are in compliance with all
applicable Environmental Laws, and there is no violation of any
Environmental Law with respect to the Subject Properties or the businesses
operated by the members of the Consolidated Group (the "Businesses"), and
there are no conditions relating to the Businesses or Subject Properties
that could give rise to liability under any applicable Environmental Laws.
(b) None of the Subject Properties contains, or to the knowledge of
the Borrowers or the Guarantors has previously contained, any Materials of
Environmental Concern at, on or under the Subject Properties in amounts or
concentrations that
Page 64
constitute or constituted a violation of, or could give rise to liability
under, Environmental Laws.
(c) None of the members of the Consolidated Group has received any
written notice of, or written inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability, or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Subject Properties or the
Businesses, nor does any member of the Consolidated Group have knowledge
or reason to believe that any such notice will be received or is being
threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Subject Properties, or generated, treated, stored, or
disposed of at, on or under any of the Subject Properties or any other
location, in each case by or on behalf of any members of the Consolidated
Group in violation of, or in a manner that would be reasonably likely to
give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of the Borrowers or the Guarantors,
threatened, under any Environmental Law to which any member of the
Consolidated Group is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative orders,
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to any member of the
Consolidated Group, the Subject Properties, or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Subject Properties, or arising from
or related to the operations (including, without limitation, disposal) of
any member of the Consolidated Group in connection with the Subject
Properties or otherwise in connection with the Businesses, in violation of
or in amounts or in a manner that could give rise to liability under
Environmental Laws.
Section 5.17 No Material Misstatements. None of the information, reports,
financial statements, exhibits, or schedules, taken as a whole, furnished by or
on behalf of any member of the Consolidated Group to the Agent or any Lender in
connection with the negotiation of the Credit Documents or included therein or
delivered pursuant thereto contained, contains, or will contain any misstatement
of a material fact or omitted, omits, or will omit to state any material fact
necessary to make the statements therein not materially misleading, provided
that to the extent any such information, report, financial statement, exhibit,
or schedule was based upon or constitutes a forecast or projection, each of the
Borrowers and the Guarantors represents only that it acted in good faith and
utilized reasonable assumptions and due care in the preparation of such
information, report, financial statement, exhibit, or schedule.
Section 5.18 Labor Matters. Except as set forth in Schedule 5.18, as of
the Closing Date,
Page 65
(a) there are no strikes or lockouts against any members of the
Consolidated Group pending or, to the best knowledge of the Borrowers and
the Guarantors, threatened;
(b) the hours worked by and payments made to employees of the
Consolidated Group 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 in any case where a Material Adverse Effect would
reasonably be expected to occur as a result of the violation thereof;
(c) all payments due from members of the Consolidated Group, or for
which any claim may be made against a member of the Consolidated Group, 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 the
respective members of the Consolidated Group; and
(d) none of the members of the Consolidated Group is party to a
collective bargaining agreement.
Section 5.19 Security Documents.
(a) Security Agreements. Each Security Agreement is effective to
create in favor of the Agent, for the benefit of the Agent and the
Lenders, a legal valid and enforceable security interest in the
"Collateral" identified therein and, when financing statements in
appropriate form are filed in the appropriate offices for the locations
specified as the jurisdiction of incorporation or organization (as
applicable) of each Credit Party in Schedule 2.4(d) to each such Security
Agreement, such Security Agreement shall create a fully perfected Lien on,
pledge of, and security interest in, all right, title, and interest of the
grantors thereunder in such "Collateral" that may be perfected by filing,
recording, or registering a financing statement under the UCC, in each
case prior and superior in right to any other Lien on any Collateral other
than Permitted Liens which are specifically permitted to have priority
over the Liens of the Agent.
(b) Intellectual Property. Each Security Agreement together with the
applicable Notice of Grant of Security Interest in Trademarks and the
applicable Notice of Grant of Security Interest in Patents filed with the
United States Patent and Trademark Office, and the applicable Notice of
Grant of Security Interest in Copyrights filed with the United States
Copyright Office will create a fully perfected Lien on, and security
interest in, all right, title, and interest of the grantors thereunder in
all Patents and Patent Licenses, Trademarks and Trademark Licenses, and
Copyrights and Copyright Licenses (each as defined in such Security
Agreement) and in which a security interest may be perfected by filing,
recording, or registration of a Notice in the United States Patent and
Trademark Office and the United States Copyright Office, in each case
prior and superior in right to any other Lien other than Permitted Liens
which are specifically permitted hereunder to have priority over the Liens
of the Agent.
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(c) Mortgages. The Mortgages (if any) are effective to create in
favor of the Agent, for the benefit of the Agent and the Lenders, a legal,
valid and enforceable Lien on all of the respective grantors' right,
title, and interest in and to the Mortgaged Property thereunder and the
proceeds thereof, and constitute fully perfected Liens on, and security
interests in, all right, title, and interest of the grantors in such
Mortgaged Property and the proceeds thereof, in each case prior and
superior in right to any other Lien other than Permitted Liens which are
specifically permitted hereunder to have priority over the Liens of the
Agent.
Section 5.20 Location of Real Property and Leased Premises. As of the
Closing Date:
(a) Schedule 5.20 sets forth a complete and correct list of all Real
Property located in the United States and owned or leased by any member of
the Consolidated Group with street address and state where located;
(b) Schedule 5.20 sets forth a list of all locations where any
tangible personal property of any member of the Consolidated Group is
located, including street address and state where located; and
(c) Schedule 5.20 sets forth the chief executive office and
principal place of business of each member of the Consolidated Group.
Section 5.21 Solvency. Each of the Borrowers is, and the Credit Parties
(taken as a whole) are, Solvent prior to and after giving effect to each
Extension of Credit to be made on the Closing Date (including the inclusion of
each Existing Letter of Credit as a Letter of Credit hereunder).
Section 5.22 ▇▇▇▇▇▇▇▇'▇ Subordinated Debt Documents. The Credit Parties
have delivered to the Agent true and correct copies of the ▇▇▇▇▇▇▇▇'▇
Subordinated Debt Documents. Crescent has the corporate power and authority to
enter into the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt Documents and incur the Subordinated
Debt evidenced thereby. The issuance of any subordinated notes in connection
with the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt is exempt from registration under
applicable federal and state securities laws.
Section 5.23 Bank Accounts; Merchant Accounts. As of the Closing Date,
Schedule 5.23 contains a complete and accurate list of all bank accounts
maintained by each Credit Party with any bank or other financial institution and
Merchant Accounts.
ARTICLE 6
AFFIRMATIVE COVENANTS
The Borrowers and the Guarantors hereby covenant and agree that so long as
this Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding or any Letter of Credit is outstanding,
and until all of the Commitments hereunder shall have terminated:
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Section 6.1 Information Covenants.
(a) Annual Financial Statements. The Borrowers and the Guarantors
will furnish, or cause to be furnished, to the Agent and each of the
Lenders, as soon as available, and in any event within ninety (90) days
after the close of each Fiscal Year of the Parent, a consolidated balance
sheet and income statement of the members of the Consolidated Group as of
the end of such Fiscal Year, together with related consolidated statements
of operations and retained earnings and of cash flows for such Fiscal
Year, in each case setting forth in comparative form consolidated figures
for the preceding Fiscal Year, all such financial information described
above to be in reasonable form and detail and audited by independent
certified public accountants of recognized national standing reasonably
acceptable to the Agent and whose opinion shall be to the effect that such
financial statements have been prepared in accordance with GAAP (except
for changes with which such accountants concur) and shall not be limited
as to the scope of the audit or qualified as to the status of the members
of the Consolidated Group as a going concern or any other material
qualifications or exceptions.
(b) Periodic Financial Statements. The Borrowers and the Guarantors
will furnish, or cause to be furnished, to the Agent and each of the
Lenders, as soon as available, and in any event within thirty (30) days
after the end of each Fiscal Period or forty-five (45) days for any Fiscal
Period which ends on the last day of a Fiscal Year, a consolidated balance
sheet, income statement, and statements of cash flows of the members of
the Consolidated Group for such Fiscal Period, in each case setting forth
in comparative form consolidated figures for the corresponding Fiscal
Period of the preceding Fiscal Year, all such financial information
described above to be in reasonable form and detail and reasonably
acceptable to the Agent, and accompanied by a certificate of an Executive
Officer of Crescent to the effect that such financial statements fairly
present in all material respects the financial condition of the members of
the Consolidated Group and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end audit
adjustments and the absence of footnotes.
(c) Officer's Certificate. The Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent and each of the Lenders,
at the time of delivery of the financial statements provided for in
Section 6.1(a) and Section 6.1(b) preceding, a certificate of an Executive
Officer of Crescent, substantially in the form of Exhibit D, (i)
demonstrating compliance with the financial covenants contained in Section
6.11 by calculation thereof as of the end of each such Fiscal Period (as
applicable) and (ii) stating that no Default or Event of Default exists,
or if any Default or Event of Default does exist, specifying the nature
and extent thereof and what action the Credit Parties propose to take with
respect thereto.
(d) Borrowing Base Certificate. The Borrowers and the Guarantors
will furnish, or cause to be furnished, to the Agent and each of the
Lenders, no later than the first Business Day following the end of the
preceding calendar week, or on a more frequent basis as requested by the
Agent, a statement of the Borrowing Base and its components as of the end
of the immediately preceding week (or such other more
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frequent period), in form and content satisfactory to the Agent and
certified by an Executive Officer of Crescent or the treasurer or
corporate controller of Crescent to be true and correct as of the date
thereof (a "Borrowing Base Certificate") together with a schedule of the
Borrowers' receivables created since the immediately preceding such
schedule and Borrowing Base Certificate.
(e) Annual Business Plan and Budgets. The Borrowers and the
Guarantors will furnish, or cause to be furnished, to the Agent and each
of the Lenders, within thirty (30) days after the end of each Fiscal Year
of the Parent, beginning with the Fiscal Year ending August 2, 2003, an
annual business plan and budget of the members of the Consolidated Group
containing, among other things, pro forma financial statements for the
following Fiscal Year.
(f) Collateral Reports. The Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent and each of the Lenders,
within fifteen (15) days after the end of each Fiscal Period, in form and
detail reasonably satisfactory to the Agent, (i) an aging of the accounts
receivable of the Borrowers, together with a computation of Eligible
Installment Contracts in detail satisfactory to the Agent and a
reconciliation to the previous Fiscal Period's aging of the accounts
receivable of the Borrowers and to their respective general ledgers and
financial statements, (ii) an aging of the accounts payable of the
Borrowers, (iii) reports by category of inventory of the Borrowers, with
additional detail showing additions to and deletions from the Borrowers'
inventory, together with a computation of Eligible Inventory in detail
satisfactory to the Agent and a reconciliation to the general ledger and
financial statements, (iv) a list of all new locations where the Credit
Parties have any Collateral and, any other locations where Collateral is
no longer kept by the Credit Parties (including a listing of retail store
locations opened or closed during such Fiscal Period), including the
address and, if requested by the Agent, contact information for any
landlord, (v) a computation of the Receivables Advance Rate and the
Collateral Adjustment Percent, in form satisfactory to the Agent, and (vi)
with the delivery of each of the foregoing, a certificate executed by the
chief financial officer or treasurer of Crescent certifying as to the
accuracy and completeness of the foregoing. If any of the records of the
Borrowers or reports of the Collateral are prepared by an accounting
service or other agent, each of the Borrowers hereby authorizes such
service or agent to deliver such records, reports, and related documents
to the Agent, for distribution to the Lenders.
(g) Consumer Credit Policies. The Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent and each of the Lenders,
concurrently with delivery of the financial statements for the last day of
each Fiscal Quarter delivered pursuant to clause (a) or clause (b)
preceding, written notice to the Agent of material changes or
modifications in their respective consumer credit policies and practices,
together with a written explanation, in substance and detail reasonably
satisfactory to the Agent, of such changes or modifications to such
consumer credit policies or practices.
(h) Investment Banking Fees. The Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent and each of the Lenders,
advance notice of all
Page 69
investment banking fees in excess of $250,000 in the aggregate payable by
members of the Consolidated Group in connection with any single
transaction, together with a certification from the Borrowers that after
giving effect thereto no Default or Event of Default shall exist on a Pro
Forma Basis.
(i) Auditor's Reports. The Borrowers and the Guarantors will
furnish, or cause to be furnished, to the Agent and each of the Lenders,
promptly upon receipt thereof, a copy of any other report or "management
letter" submitted by independent accountants to any member of the
Consolidated Group in connection with any annual, interim, or special
audit of the books of such Person.
(j) Reports. The Borrowers and the Guarantors will furnish, or cause
to be furnished, to the Agent and each of the Lenders, promptly upon
transmission or receipt thereof, (i) copies of any filings and
registrations with, and reports to or from, the Securities and Exchange
Commission, or any successor agency (excluding any exhibits thereto and
any registration statements filed on Form S-8), and copies of all
financial statements, proxy statements, notices, and reports as any member
of the Consolidated Group shall send to its stockholders or to a holder of
any Indebtedness owed by any member of the Consolidated Group in its
capacity as such a holder and (ii) upon the request of the Agent, all
reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency responsible
for environmental matters, the United States Occupational Health and
Safety Administration, or any state or local agency responsible for health
and safety matters, or any successor agencies or authorities concerning
environmental, health, or safety matters.
(k) Notices. Upon any Executive Officer of the Borrower or any
Guarantor obtaining actual knowledge thereof, the Borrowers and the
Guarantors will immediately furnish, or cause to be furnished, to the
Agent and each of the Lenders, written notice of (i) the occurrence of an
event or condition consisting of a Default or Event of Default, specifying
the nature and existence thereof and what action the Credit Parties
propose to take with respect thereto, (ii) the occurrence of any of the
following with respect to any member of the Consolidated Group (A) the
pendency or commencement of any litigation, arbitration, or governmental
proceeding against such Person which could reasonably be expected to have
a Material Adverse Effect or (B) the institution of any proceedings
against such Person with respect to, or the receipt of notice by such
Person of potential liability or responsibility for violation, or alleged
violation of any federal, state, or local law, rule, or regulation,
including but not limited to, Environmental Laws, the violation of which
could reasonably be expected to have a Material Adverse Effect, and (iii)
the occurrence of any default or other breach or failure to perform under
any agreement with respect to any Subordinated Debt.
(l) ERISA. Upon any Executive Officer of the Borrower or any
Guarantor obtaining knowledge thereof, the Borrowers and the Guarantors
will give written notice to the Agent and the Lenders promptly (and in any
event within five (5) Business Days) of: (i) any event or condition,
including, but not limited to, any Reportable Event, that constitutes, or
might reasonably lead to, an ERISA Event; (ii) with respect to any
Page 70
Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against the Credit Parties
or any ERISA Affiliates, or of a determination that any Multiemployer Plan
is in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due date
(including extensions) thereof of all amounts which any member of the
Consolidated Group or any ERISA Affiliate is required to contribute to
each Plan pursuant to its terms and as required to meet the minimum
funding standard set forth in ERISA and the Internal Revenue Code with
respect thereto; or (iv) any change in the funding status of any Plan that
could have a Material Adverse Effect, together with a description of any
such event or condition or a copy of any such notice and a statement by an
Executive Officer of Crescent briefly setting forth the details regarding
such event, condition, or notice, and the action, if any, which has been
or is being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the Borrowers and the Guarantors
shall furnish to the Agent and the Lenders such additional information
concerning any Plan as may be reasonably requested, including, but not
limited to, copies of each annual report/return (Form 5500 series), as
well as all schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Internal Revenue Code, respectively, for each "plan year"
(within the meaning of Section 3(39) of ERISA).
(m) Additional Patents and Trademarks. At the time of delivery of
the financial statements and reports pursuant to Section 6.1(a), the
Borrowers and the Guarantors will furnish, or cause to be furnished, to
the Agent and each of the Lenders, a report signed by an Executive Officer
of Crescent setting forth (i) a list of registration numbers for all
patents, trademarks, service marks, tradenames, and copyrights awarded to
any member of the Consolidated Group since the last day of the immediately
preceding Fiscal Year and (ii) a list of all patent applications,
trademark applications, service ▇▇▇▇ applications, trade name
applications, and copyright applications submitted by any member of the
Consolidated Group since the last day of the immediately preceding Fiscal
Year and the status of each such application, all in such form as shall be
reasonably satisfactory to the Agent.
(n) Notices to Subordinated Creditors. The Borrowers and the
Guarantors will furnish, or cause to be furnished to the Agent and each of
the Lenders copies of all statements, reports, notices, documents, and
certificates, furnished pursuant to the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt
Documents and not otherwise furnished to the Agent and the Lenders
pursuant to this Agreement.
(o) Certificate of December Sales. The Borrowers and the Guarantors
will furnish, or cause to be furnished, to the Agent and the Lenders, as
soon as available, and in any event within five (5) Business Days after
the end of each Fiscal Period ending closest to December 31 of each year,
a certificate of an Executive Officer of ▇▇▇▇▇▇▇▇'▇ demonstrating
compliance with the financial covenant contained in Section 6.11(d) by
calculation thereof as of the end of each such Fiscal Period.
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(p) Bank Accounts. With each of the certificates delivered pursuant
to clause (c) preceding, the Borrowers and the Guarantors will furnish, or
cause to be furnished, to the Agent a listing of each bank account opened
or closed by any Credit Party, during the preceding Fiscal Period and any
Merchant Account Agreement entered into by any Credit Party during the
preceding Fiscal Period.
(q) Other Information. With reasonable promptness upon any such
request, the Borrowers and the Guarantors will furnish, or cause to be
furnished, to the Agent and each of the Lenders, such other information
regarding the business, properties, or financial condition of any member
of the Consolidated Group as the Agent or any Lender through the Agent may
reasonably request.
Section 6.2 Preservation of Existence and Franchises. Except as a result
of or in connection with a dissolution, merger, or disposition of a Subsidiary
permitted under Section 7.4 or Section 7.5, the Borrowers and the Guarantors
will, and will cause each of their respective Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its existence and all
material rights, franchises, and authority.
Section 6.3 Books and Records. The Borrowers and the Guarantors will, and
will cause each of their respective Subsidiaries to, keep complete and accurate
books and records of its transactions in accordance with good accounting
practices on the basis of GAAP (including the establishment and maintenance of
appropriate reserves) and keep such books and records in a location with fire,
casualty and theft protection satisfactory to the Agent.
Section 6.4 Compliance with Law. The Borrowers and the Guarantors will,
and will cause each of their respective Subsidiaries to, comply with all laws,
rules, regulations, and orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if noncompliance
with any such law, rule, regulation, order, or restriction could reasonably be
expected to have a Material Adverse Effect.
Section 6.5 Payment of Taxes and Other Indebtedness. The Borrowers and the
Guarantors will, and will cause each of their respective Subsidiaries to, pay
and discharge (a) all taxes, assessments, and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its Properties,
before they shall become delinquent and (b) all lawful claims (including claims
for labor, materials, and supplies) which, if unpaid, might give rise to a Lien
upon any of its Properties, provided, however, that no member of the
Consolidated Group shall be required to pay any such tax, assessment, charge,
levy, claim, or Indebtedness which is being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established, unless the failure to make any such payment (i)
could give rise to an immediate right to foreclose on a Lien securing such
amounts or (ii) could have a Material Adverse Effect.
Section 6.6 Insurance.
(a) The Borrowers and the Guarantors will, and will cause each of
their respective Subsidiaries to, at all times maintain in full force and
effect insurance
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(including worker's compensation insurance, liability insurance, casualty
insurance, flood insurance, and business interruption insurance) in such
amounts, covering such risks and liabilities, and with such deductibles or
self-insurance retentions as are in accordance with normal industry
practice (or as otherwise required by the Collateral Documents). The Agent
shall be named as loss payee or mortgagee, as its interest may appear,
and/or additional insured with respect to any such insurance providing
coverage in respect of any Collateral, and each provider of any such
insurance shall agree, by endorsement upon the policy or policies issued
by it or by independent instruments furnished to the Agent, that it will
give the Agent thirty (30) days prior written notice before any such
policy or policies shall be altered or canceled, and that no act or
default of any member of the Consolidated Group or any other Person shall
affect the rights of the Agent or the Lenders under such policy or
policies. The present insurance coverage of the members of the
Consolidated Group is outlined as to carrier, policy number, expiration
date, type, and amount on Schedule 6.6.
(b) The proceeds from insurance received from the theft, loss,
physical destruction or damage, taking, or similar event shall be used
either to repair, replace, or reinvest in the same or similar assets or to
prepay the Obligations.
Section 6.7 Maintenance of Property. The Borrowers and the Guarantors
will, and will cause each of their respective Subsidiaries to, maintain and
preserve its properties and equipment material to the conduct of its business in
good repair, working order, and condition, normal wear and tear and casualty and
condemnation excepted, and will make, or cause to be made, in such properties
and equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments, and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses,
except, as to any of the foregoing activities, where the activities are not
otherwise prohibited hereunder.
Section 6.8 Performance of Obligations. The Borrowers and the Guarantors
will, and will cause each of their respective Subsidiaries to, perform in all
material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements, and other debt
instruments to which it is a party or by which it is bound except to the extent
that the failure to do so will not result in a Material Adverse Effect.
Section 6.9 Use of Proceeds. The Borrowers will use the proceeds of
Extensions of Credit solely for the purposes set forth in Section 5.15 and not
for prepayment of interest or payment or prepayment of principal of any
Subordinated Debt or for any other payment of Subordinated Debt which would
violate the terms of any subordination agreement applicable thereto, including,
without limitation, the ▇▇▇▇▇▇▇▇'▇ Intercreditor Agreement.
Section 6.10 Audits/Inspections. Upon reasonable notice and during normal
business hours, the Borrowers and the Guarantors will, and will cause each of
their respective Subsidiaries to, permit representatives appointed by the Agent,
including, without limitation, independent accountants, agents, attorneys, and
appraisers to visit and inspect its property, including its books and records,
its accounts receivable and inventory, its facilities and its other business
assets, and to make photocopies or photographs thereof and to write down and
record any information such
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representative obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to the Lenders and
to discuss all such matters with the officers, employees, and representatives of
such Person. The cost of such inspections and audits shall be at the expense of
the Borrowers as provided in the Security Agreement. The Lenders, and their
representatives may accompany the Agent and its representatives on any such
inspection or audit at their own expense.
Section 6.11 Financial Covenants.
(a) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio,
determined for the Consolidated Group on a consolidated basis as of the
last day of each Fiscal Period after the Closing Date for the preceding
twelve (12) Fiscal Periods ending as of such date shall not be less than
the ratio specified in the table below for the applicable dates as
follows:
Fiscal Period End Fixed Charge Coverage Ratio
Fiscal Period ending August 24, 2002 0.65 to 1.00
Fiscal Period ending September 28, 2002 0.70 to 1.00
Fiscal Period ending October
26, 2002 and November 23, 2002 0.75 to 1.00
Fiscal Period ending December 28,
2002 and January 25, 2003 1.00 to 1.00
Fiscal Period ending February 22, 2003 1.05 to 1.00
Fiscal Period ending March 29, 2003 1.10 to 1.00
Fiscal Period ending April 26, 2003
and each Fiscal Period ending thereafter 1.15 to 1.00
(b) Adjusted Tangible Net Worth. The Adjusted Tangible Net Worth of
the Consolidated Group, determined on a consolidated basis as of the last
day of each Fiscal Period ending after the Closing Date, shall not be less
than the Adjusted Tangible Net Worth Requirement.
(c) Leverage Ratio. The Leverage Ratio, determined for the
Consolidated Group on a consolidated basis as of the last day of each
Fiscal Period ending after the Closing Date shall not be greater than 4.00
to 1.00.
(d) December Sales. The Borrowers and the Guarantors shall cause the
actual retail sales of the Borrowers in the Fiscal Period ending closest
to December 31 of each year to not be less than (i) $26,740,000 for such
Fiscal Period ending December 28, 2002
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and (ii) for each Fiscal Period ending closest to December 31 of each year
thereafter, seventy percent (70.0%) of the projected retail sales for such
Fiscal Period as set forth in the projections delivered to the Agent and
the Lenders in the annual business plan and budget of the Borrowers
delivered to the Agent and the Lenders as required pursuant to Section
6.1(e).
Section 6.12 New Subsidiaries; Addition of Subsidiaries as Borrowers and
Guarantors. Promptly upon creation or acquisition of any Subsidiary by a Credit
Party, other than any Subsidiary which is organized under Requirements of Law of
a jurisdiction other than the United States or a state of the United States, the
Credit Parties shall propose to the Agent that such new Subsidiary become, and
with the Agent's and the Required Lenders' consent pursuant to Section 10.20
cause such Subsidiary to become either a Borrower and a Guarantor or a Guarantor
(but not a Borrower) under the Credit Documents. Any Subsidiary which must be
added as either a Borrower or a Guarantor (but not a Borrower) as provided in
this Section 6.12, shall promptly execute and deliver a joinder agreement, all
items of the type required by Section 4.1 (as applicable) as if such Subsidiary
was a Credit Party on the Closing Date, and such other Credit Documents as the
Agent may reasonably require.
Section 6.13 Guaranties of the Obligations. Each Credit Party, including
any Person which becomes a Borrower or a Guarantor after the Closing Date
pursuant to the terms of this Agreement, shall guarantee payment and performance
of the Total Obligations (other than such Total Obligations owing by itself)
pursuant to a Guaranty Agreement in form and substance satisfactory to the
Agent, duly executed or joined in (as applicable) by each such Credit Party.
Each Borrower acknowledges and expressly agrees with the Agent and each Lender
that the guaranty by such Borrower is required solely as a condition to, and is
given solely as inducement for and in consideration of, credit or accommodations
extended or to be extended under the Credit Documents to any or all of the other
Borrowers and is not required or given as a condition of extensions of credit to
such Borrower.
Section 6.14 Additional Collateral; Further Assurances.
(a) Subject to Requirements of Law, each Credit Party shall cause
any Subsidiary of the Parent which is required to become a Credit Party
pursuant to the terms of this Agreement to, upon the request of the Agent,
(i) grant Liens to the Agent, for the benefit of the Agent and the
Lenders, pursuant to such documents as the Agent may reasonably deem
necessary and deliver such property, documents, and instruments as the
Agent may request to perfect the Liens of the Agent in the Collateral of
such Subsidiary (ii) execute a Guaranty Agreement with respect to the
Total Obligations (excluding the Total Obligations of such Credit Party)
pursuant to Section 6.13, in form and substance satisfactory to the Agent,
and (iii) in connection with the foregoing requirements, or either of
them, deliver to the Agent all items of the type required by Section
4.1(a) (as applicable). Upon execution and delivery of such Credit
Documents and other instruments, certificates, and agreements, such
Subsidiary shall automatically become a Borrower and a Guarantor, or a
Guarantor (but not a Borrower), as applicable, hereunder and thereupon
shall have all of the rights, benefits, duties, and obligations in such
capacity under the Credit Documents.
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(b) Without limiting the foregoing, each Credit Party shall, and
shall cause each of the Parent's Subsidiaries which is required to become
a Credit Party pursuant to the terms of this Agreement to, execute and
deliver, or cause to be executed and delivered, to the Agent such
documents and agreements, and shall take or cause to be taken such actions
as the Agent may, from time to time, reasonably request to carry out the
terms and conditions of this Agreement and the other Credit Documents.
(c) Upon the Agent's request, each Credit Party will deliver to the
Agent the following with respect to each parcel of Real Property owned by
any Credit Party:
(i) a Mortgage in proper form for recording in the
jurisdiction in which such Real Property covered thereby is located;
(ii) ALTA or other mortgagee's policies, in form and substance
satisfactory to the Agent, with respect to the Real Property subject
to the Mortgages;
(iii) an environmental site assessment, in compliance with
applicable Requirements of Law prepared by a credentialed
environmental consultant acceptable to the Agent;
(iv) a boundary survey prepared and certified to the Agent by
a credentialed surveyor acceptable to the Agent; and
(v) such other information, documentation, and certifications,
in form and substance satisfactory to the Agent, as may be
reasonably requested by the Agent.
Section 6.15 Landlord and Mortgagee Agreements. The Credit Parties will
provide to the Agent upon the Agent's request, a landlord's or mortgagee's
waiver and consent agreement or subordination and consent agreement, in form and
substance reasonably acceptable to the Agent, duly executed on behalf of each
landlord or mortgagee, as the case may be, of Real Property on which any
Collateral is located; provided that the Agent may, in its discretion, defer
delivery of any such waiver and consent agreement or subordination and consent
agreement and establish a Reserve with respect to any Collateral located on any
Real Property for which the Agent has not received such acceptable waiver and
consent agreement or subordination and consent agreement; provided further that
in the event the Credit Parties, after use of commercially reasonable efforts,
are unable to obtain any such landlord waivers requested for a retail location,
the Agent's and the Lenders' sole remedy in connection therewith shall be to
establish a Reserve with respect to such location.
Section 6.16 Bank as Depository. Each of the Credit Parties shall maintain
Bank of America as its principal depository bank, including for the maintenance
of operating, administrative, cash management, collection activity, and other
deposit accounts for the conduct of its business.
Page 76
Section 6.17 Interest Rate Protection. Within sixty (60) days of the
Closing Date, and continuing thereafter during the term of this Agreement, the
Borrowers shall maintain in full force and effect one or more Hedging Agreements
(including interest rate cap agreements), in form and substance reasonably
satisfactory to the Agent, with a financial institution reasonably acceptable to
the Agent, that will have placed a limit upon the rate of interest payable by
the Borrowers under this Agreement or the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt Documents
with respect to a principal amount of not less than $35,000,000.
ARTICLE 7
NEGATIVE COVENANTS
The Borrowers and the Guarantors hereby covenant and agree that so
long as this Agreement is in effect or any amounts payable hereunder or under
any other Credit Document shall remain outstanding or any Letter of Credit is
outstanding, and until all of the Commitments hereunder shall have terminated:
Section 7.1 Indebtedness. The Borrowers and the Guarantors will not permit
any member of the Consolidated Group to contract, create, incur, assume, or
permit to exist any Indebtedness, except:
(a) Indebtedness existing or arising under this Agreement or the
other Credit Documents;
(b) Indebtedness of the Borrowers and their Subsidiaries set forth
on Schedule 7.1, and renewals, refinancings, and extensions thereof on
terms and conditions which, taken as a whole, are no less favorable to
such Person than such existing Indebtedness;
(c) purchase money Indebtedness (including for purposes hereof
obligations in respect of Capital Leases or Synthetic Leases) hereafter
incurred by the Borrowers or any of their Subsidiaries to finance the
purchase of fixed assets and any refinancing thereof; provided that (i)
the total of all such Indebtedness for the Borrowers and their
Subsidiaries taken together shall not exceed an aggregate principal amount
of $2,500,000 at any one time outstanding; (ii) such Indebtedness when
incurred shall not exceed the purchase price of the asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of such
refinancing;
(d) obligations of the Borrowers or their Subsidiaries owing under
interest rate, commodities, and foreign currency exchange protection
agreements entered into in the ordinary course of business to manage
existing or anticipated risks and not for speculative purposes;
(e) unsecured intercompany Indebtedness owing by a member of the
Consolidated Group to another member of the Consolidated Group (subject,
however, to
Page 77
the limitations of Section 7.6 in the case of the member of the
Consolidated Group extending the loan, advance, or credit);
(f) Support Obligations given by members of the Consolidated Group
with respect to any Indebtedness permitted under this Section 7.1; and
(g) other unsecured Indebtedness of the Borrowers and their
Subsidiaries in an aggregate outstanding principal amount of up to
$2,500,000 at any time.
Section 7.2 Liens. The Borrowers and the Guarantors will not permit any
member of the Consolidated Group to contract, create, incur, assume, or permit
to exist any Lien with respect to any of its Property, whether now owned or
hereafter acquired, except for Permitted Liens.
Section 7.3 Nature of Business. The Borrowers and the Guarantors will not
permit any member of the Consolidated Group to substantively alter the character
or conduct of the business conducted by such Person as of the Closing Date and
any business ancillary or complimentary thereto.
Section 7.4 Merger and Consolidation, Dissolution, and Acquisitions.
(a) No member of the Consolidated Group will enter into any
transaction of merger or consolidation, except that:
(i) any member of the Consolidated Group (other than the
Parent) may be a party to a transaction of merger or consolidation
with another member of the Consolidated Group (other than the
Parent); provided that (A) if Crescent is a party to such
transaction, it shall be the surviving entity, and (B) in any event,
and without limiting clause (A) preceding, the surviving entity
shall be a Domestic Subsidiary and, if the survivor is not already a
Credit Party, it shall execute and deliver such Credit Documents as
may be necessary for compliance with the provisions of Section 6.12
and Section 6.13; provided, that notwithstanding the foregoing, any
Foreign Subsidiary may merge with and into another Foreign
Subsidiary; and
(ii) any member of the Consolidated Group which is not a
Borrower may enter into a transaction of merger or consolidation in
connection with an Asset Disposition permitted under Section 7.5.
(b) No member of the Consolidated Group may dissolve, liquidate, or
wind up its affairs, other than any such member that is not a Borrower and
whose assets are transferred to a Credit Party in an Asset Disposition
allowed by Section 7.5.
(c) No member of the Consolidated Group shall make any Acquisition
(except for Permitted Investments or as otherwise expressly permitted by
the provisions of clause (a) preceding), without the prior written consent
of the Required Lenders.
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Section 7.5 Asset Dispositions. The Borrowers and the Guarantors will not
permit any member of the Consolidated Group to make any Asset Disposition
(including, without limitation, any Sale and Leaseback Transaction), unless:
(a) the sale, lease, or other disposition is to a Borrower;
(b) the sale, lease or other disposition is by a Credit Party other
than a Borrower, to a Credit Party.
(c) such Asset Disposition is in connection with the closing of
retail store locations of a Borrower in the ordinary course of business;
provided that the Borrowers will not close more than ten (10) retail store
locations in any twelve (12) consecutive Fiscal Periods;
(d) such Asset Disposition is the result of theft, loss, physical
destruction, or damage, taking or similar event with respect to the assets
subject to such Asset Disposition and the proceeds from insurance
resulting from such Asset Disposition are used to repair, replace, or
reinvest in the same or similar assets;
(e) in all other cases, (i) no accounts or Installment Contracts
will be the subject of any such sale, (ii) any Eligible Inventory sold in
connection with any such sale shall be sold for cash at least equal to an
amount equal to such Eligible Inventory multiplied by the applicable
advance rate for Eligible Inventory as specified in clause (b) of the
definition of Borrowing Base, (iii) at least seventy-five percent (75.0%)
of the consideration paid therefor shall consist of cash and Cash
Equivalents, (iv) if the subject transaction involves Capital Stock of a
Subsidiary of a Borrower, the subject transaction is of a controlling
interest in such Subsidiary, (v) the aggregate net book value of all
assets sold, leased, or otherwise disposed of shall not exceed $2,500,000
in any Fiscal Year of the Parent, (vi) no Default or Event of Default
shall exist immediately after giving effect thereto, and (vii) the
Borrowers shall have demonstrated compliance with the financial covenants
in Section 6.11 on a Pro Forma Basis after giving effect to the
disposition and shall have delivered to the Agent a Pro Forma Compliance
Certificate (including reaffirmation of the representations and warranties
hereunder as of such date before and after giving effect to such
transaction) in connection therewith; or
(f) the assets sold consist of Installment Contracts which have been
written-off in accordance with the applicable Borrower's credit policies
and which are sold in a transaction consistent with such Borrower's
customary business practices.
With respect to any assets subject to a disposition permitted by this Section
7.5, at the Borrowers' expense, the Agent will promptly deliver to the Borrowers
upon request such release documentation (including delivery of applicable stock
certificates) as may be reasonably requested to give effect to the release of
such assets from the security interests securing the Borrowers' obligations
hereunder.
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Section 7.6 Investments. The Borrowers and the Guarantors will not permit
any member of the Consolidated Group to make or permit to exist any Investment
in or to any Person, except for Permitted Investments; provided that no member
of the Consolidated Group will make any Investment (including any Investment
which is of a type included in the definition of Permitted Investments) in the
Parent or any Person which owns or controls the Parent.
Section 7.7 Restricted Payments. Neither any Borrower, any Guarantor, nor
the Parent will make any Restricted Payment except for Permitted Distributions.
Notwithstanding any other provision of this Agreement, the other Credit
Documents, or the ▇▇▇▇▇▇▇▇'▇ Intercreditor Agreement, neither any Borrower, any
Guarantor, nor the Parent will make any payment with respect to the ▇▇▇▇▇▇▇▇'▇
Subordinated Debt or any Restricted Payment with respect to any Capital Stock
issued pursuant to the ▇▇▇▇▇▇▇▇'▇ Stock Sale if any Default or Event of Default
exists or will exist after giving effect to such payment.
Section 7.8 Modifications and Payments in Respect of Other Funded Debt.
None of the members of the Consolidated Group will
(a) after the issuance thereof, amend or modify (or permit the
amendment or modification of) the terms of any Subordinated Debt in a
manner adverse to the interests of the Lenders (including specifically any
amendment of the terms of subordination, shortening any maturity or
average life to maturity or requiring any payment sooner than previously
scheduled or increasing the interest rate or fees applicable thereto) or
in a manner prohibited by the subordination provisions thereof; or
(b) make any prepayment, redemption, defeasance, or acquisition for
value of (including, without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the
purpose of paying when due), or refund, refinance, or exchange of any
Funded Debt (other than the Indebtedness under this Agreement and the
other Credit Documents and intercompany Indebtedness permitted hereunder)
other than regularly scheduled payments of principal and interest on such
Funded Debt, except in connection with a refinancing or refunding
permitted hereunder.
Section 7.9 Transactions with Affiliates. The Borrowers and the Guarantors
will not permit any member of the Consolidated Group to enter into or permit to
exist any transaction or series of transactions with any officer, director,
shareholder, Subsidiary, or Affiliate of such Person other than (a) advances of
working capital to any Borrower, (b) transfers of other assets to any Borrower
or from any Credit Party which is not a Borrower to any other Credit Party, (c)
transactions permitted by Section 7.1, Section 7.4, Section 7.5, Section 7.6,
Section 7.7 or Section 7.13, (d) normal compensation and reimbursement of
expenses of officers and directors, (e) the transactions entered into prior to
the Closing Date and set forth on Schedule 7.9, and (f) except as otherwise
specifically limited in this Agreement, other transactions which are entered
into on terms and conditions substantially as favorable to such Person as would
be obtainable by it in a comparable arms-length transaction with a Person other
than an officer, director, shareholder, Subsidiary, or Affiliate.
Page 80
Section 7.10 Fiscal Year; Organizational Documents. Without the prior
written consent of the Required Lenders (which consent shall not be unreasonably
withheld), the Borrowers and the Guarantors will not permit any member of the
Consolidated Group to amend, modify, or change (a) the last day of its Fiscal
Year or (b) its articles of incorporation (or corporate charter or other similar
organizational document) or bylaws (or other similar document) other than in a
manner which does not adversely affect the rights of the Agent or the Lenders.
Section 7.11 Ownership of Subsidiaries; Limitations on Parent.
Notwithstanding any other provision of this Agreement to the contrary:
(a) The Borrowers and the Guarantors will not permit any member of
the Consolidated Group to (i) permit any Person other than a Borrower or
any Wholly Owned Subsidiary of a Borrower to own any Capital Stock of any
Subsidiary of a Borrower, except (A) to qualify directors where required
by applicable law or to satisfy other requirements of applicable law with
respect to the ownership of Capital Stock of Foreign Subsidiaries or (B)
as a result of or in connection with a dissolution, merger, consolidation,
or disposition of a Subsidiary permitted under Section 7.4 or Section 7.5,
(ii) permit any Subsidiary of a Borrower to issue any shares of preferred
Capital Stock, or (iii) permit, create, incur, assume, or suffer to exist
any Lien on any Capital Stock of any Subsidiary of a Borrower, except for
Permitted Liens.
(b) The Parent shall not (i) hold any assets other than the Capital
Stock of Crescent, (ii) have any liabilities other than (A) its
liabilities under the Credit Documents, (B) tax liabilities in the
ordinary course of business, (C) loans and advances permitted under
Section 7.1 and Section 7.6, and (D) corporate, administrative, and
operating expenses in the ordinary course of business, or (iii) engage in
any business other than (A) owning the Capital Stock of Crescent and
activities incidental or related thereto and (B) acting as a Guarantor
hereunder and pledging its assets to the Agent, for the benefit of the
Agent and the Lenders, pursuant to the Collateral Documents to which it is
a party.
Section 7.12 No Further Negative Pledges. The Borrowers and the Guarantors
will not permit any member of the Consolidated Group to enter into, assume, or
become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for any
obligation if security is given for any other obligation, except (a) pursuant to
or as otherwise expressly permitted by this Agreement and the other Credit
Documents and (b) pursuant to the terms of any purchase money Indebtedness
permitted by Section 7.1(c) to the extent such limitations relate only to the
property which is the subject of such financing.
Section 7.13 Limitation on Management Fees. The Borrowers and the
Guarantors will not permit members of the Consolidated Group to pay management
or consulting fees (exclusive of investment banking fees payable in connection
with capital raising, debt placement, or other financial transactions permitted
under Section 6.1(h)) to any Affiliates (including, without limitation, ▇▇▇▇▇▇
▇▇▇▇▇▇ and its Affiliates) in an aggregate amount in excess of $500,000 during
any Fiscal Year of the Parent.
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Section 7.14 Limitation on Foreign Subsidiaries. After the Closing Date,
the Borrowers and the Guarantors will not permit any member of the Consolidated
Group to create, acquire, or permit to exist any Subsidiary which is not a
Domestic Subsidiary (other than Sparkle Insurance Company, a Turks and Caicos
company) without the prior written consent of the Required Lenders.
Section 7.15 Inventory Classification. During any calendar month, the
Borrowers and the Guarantors shall not transfer, convert, or otherwise
reclassify Eligible Inventory into inventory which is leased or consigned unless
(a) no Default or Event of Default exists, (b) the aggregate fair market value
thereof does not exceed $500,000, and (c) the Borrowers and the Guarantors
provide at least ten (10) Business Days prior written notice thereof to the
Agent, which notification contains satisfactory calculations that, after giving
effect to such transaction, the aggregate principal amount of the Obligations
will not exceed the Borrowing Base.
ARTICLE 8
EVENTS OF DEFAULT
Section 8.1 Events of Default. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "Event of
Default"):
(a) the Borrowers or any Guarantor shall default in the payment when
due of (i) any principal of any of the Loans, (ii) any reimbursement
obligations arising from drawings under Letters of Credit, (iii) any
interest on the Loans or on any reimbursement obligations arising from
drawings under Letters of Credit, (iv) any Fees owing hereunder, or (v)
any other amount owing under any of the other Credit Documents or in
connection herewith or therewith;
(b) any representation, warranty, or statement made or deemed to be
made by any Borrower or any Guarantor herein, in any of the other Credit
Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material
respect on the date as of which it was deemed to have been made;
(c) any Borrower or any Guarantor shall
(i) default in the due performance or observance of any term,
covenant, or agreement contained in Sections 6.2, 6.9, 6.10, 6.11,
6.14, or 7.1 through 7.15,
(ii) default in the due performance of the requirements of
Section 6.1(d) in the Agent's discretion or if such default shall
continue for more than two Business Days,
(iii) default in the due performance or observance of any
term, covenant, or agreement contained in Section 6.1 (other than
Section 6.1(d)) or Section 6.16 and such default shall continue
unremedied for a period of at least
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five (5) Business Days after the earlier of an Executive Officer of
a Credit Party becoming aware of such default or notice thereof by
the Agent,
(iv) default in the due performance or observance by it of any
term, covenant, or agreement (other than those referred to in
clauses (a), (b), (c)(i), (c)(ii), (c)(iii), and (d) through (j) of
this Section 8.1) contained in this Credit Agreement or in any other
Credit Document and such default shall continue unremedied for a
period of at least thirty (30) days after the earlier of an
Executive Officer of a Credit Party becoming aware of such default
or notice thereof by the Agent; or
(d) except as otherwise expressly permitted herein, any Credit
Document shall fail to be in full force and effect in all material
respects or to give the Agent and/or the Lenders the Liens, rights,
powers, and privileges purported to be created thereby in all material
respects, or any Credit Party shall so state in writing;
(e) except as the result of or in connection with a dissolution,
merger, or disposition of a Subsidiary permitted under Section 7.4 or
Section 7.5, the guaranty given by any Guarantor (including any Person
which becomes a Guarantor after the Closing Date in accordance with
Section 6.12) or any provision thereof shall cease to be in full force and
effect in all material respects, or any Guarantor (including any Person
which becomes a Guarantor after the Closing Date in accordance with
Section 6.12) or any Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty;
(f) any Bankruptcy Event shall occur with respect to any Credit
Party;
(g) any breach, noncompliance, default, or event of default (however
defined), or other violation occurs under the ▇▇▇▇▇▇▇▇'▇ Subordinated Debt
Documents or, with respect to any other Indebtedness (other than
Indebtedness outstanding under this Agreement) in excess of $1,000,000 in
the aggregate for the members of the Consolidated Group taken as a whole,
(i) any member of the Consolidated Group shall (A) default in any payment
(beyond the applicable grace period with respect thereto, if any) with
respect to any such Indebtedness, or (B) the occurrence and continuance of
a default in the observance or performance relating to such Indebtedness
or contained in any instrument or agreement evidencing, securing, or
relating thereto, or any other event or condition shall occur or condition
exist, the effect of which default or other event or condition is to
cause, or to permit, the holder or holders of such Indebtedness (or
trustee or agent on behalf of such holders) to cause (determined without
regard to whether any notice or lapse of time is required), any such
Indebtedness to become due prior to its stated maturity or (ii) any such
Indebtedness shall be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof;
(h) one or more judgments or decrees shall be entered against one or
more of the members of the Consolidated Group involving a liability of
$1,000,000 or more in the
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aggregate (to the extent not paid or fully covered by insurance provided
by a carrier who has acknowledged coverage and has the ability to perform)
or otherwise having a Material Adverse Effect and any such judgments or
decrees shall not have been vacated, discharged, or stayed or bonded
pending appeal within thirty (30) days from the entry thereof;
(i) any of the following events or conditions, if such event or
condition is reasonably likely to involve the imposition of taxes,
penalties, and other liabilities against members of the Consolidated Group
in an aggregate amount in excess of $500,000: (i) any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section
412 of the Internal Revenue Code, whether or not waived, shall exist with
respect to any Plan, or any Lien shall arise on the assets of any member
of the Consolidated Group in favor of the PBGC or a Plan; (ii) an ERISA
Event shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (iii) an ERISA Event shall
occur with respect to a Multiemployer Plan or Multiple Employer Plan,
which is, in the reasonable opinion of the Agent, likely to result in (A)
the termination of such Plan for purposes of Title IV of ERISA, or (B) any
member of the Consolidated Group incurring any liability in connection
with a withdrawal from, reorganization of (within the meaning of Section
4241 of ERISA), or insolvency (within the meaning of Section 4245 of
ERISA) of such Plan; (iv) any prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Internal Revenue Code) or
breach of fiduciary responsibility shall occur which may subject any
member of the Consolidated Group or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Internal Revenue Code, or under any agreement or other instrument pursuant
to which any member of the Consolidated Group or any ERISA Affiliate has
agreed or is required to indemnify any Person against any such liability;
or (v) the occurrence of any event described in clause (i) through clause
(iv) preceding in relation to an ERISA Affiliate Plan, if such event
actually results in any member of the Consolidated Group incurring
liability for taxes, penalties, or other liabilities in an aggregate
amount in excess of $500,000; or
(j) there shall occur a Change of Control.
Section 8.2 Acceleration; Remedies. Upon the occurrence of an Event of
Default, and at any time thereafter unless and until such Event of Default has
been waived by the requisite Lenders (pursuant to the voting requirements
specified in Section 10.6) or cured to the satisfaction of the requisite Lenders
(pursuant to the voting procedures specified in Section 10.6), the Agent shall,
upon the request and direction of the Required Lenders, by written notice to the
Borrower take any of the following actions:
(a) declare the Commitments terminated whereupon the Commitments
shall be immediately terminated;
(b) declare the unpaid principal of and any accrued interest in
respect of all Loans, any reimbursement obligations arising from drawings
under Letters of Credit, and
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any and all other indebtedness or obligations of any and every kind owing
by the Credit Parties to the Agent and/or any of the Lenders hereunder to
be due whereupon the same shall be immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which
are hereby waived by the Credit Parties;
(c) direct the Borrowers and the Guarantors to pay (and the
Borrowers and the Guarantors agree that upon receipt of such notice, or
upon the occurrence of an Event of Default under Section 8.1(f), they will
immediately pay) to the Agent additional cash, to be held by the Agent,
for the benefit of the Agent and the Lenders, in a cash collateral account
as additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount equal
to the maximum aggregate amount which may be drawn under all Letters of
Credits then outstanding; and
(d) enforce any and all rights and interests created and existing
under the Credit Documents including, without limitation, all rights and
remedies existing under the Collateral Documents, all rights and remedies
against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
8.1(f) shall occur with respect to any Borrower, then the Commitments shall
automatically terminate and all Loans, all reimbursement obligations arising
from drawings under Letters of Credit, all accrued interest in respect thereof,
all accrued and unpaid Fees, and all other indebtedness or obligations owing to
the Agent and/or any of the Lenders hereunder automatically shall immediately
become due and payable without the giving of any notice or other action by the
Agent or the Lenders.
ARTICLE 9
AGENCY PROVISIONS
Section 9.1 Appointment and Authorization. Each Lender hereby designates
and appoints Bank of America (acting in its capacity as the Agent) as its agent
under this Agreement and the other Credit Documents and each Lender hereby
irrevocably authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Credit Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Credit Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this Article 9. The provisions of this Article 9 are
solely for the benefit of the Agent and the Lenders and the Credit Parties shall
have no rights as a third party beneficiary of any of the provisions contained
herein other than as expressly provided in Section 9.10 and Section 9.11.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Credit Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or any other Credit Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any
Page 85
Requirement of Law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative relationship
between independent contracting parties. Except as expressly otherwise provided
in this Agreement, the Agent shall have and may use its sole discretion with
respect to exercising or refraining from exercising any discretionary rights or
taking or refraining from taking any actions which the Agent is expressly
entitled to take or assert under this Agreement and the other Credit Documents,
including (a) the determination of the applicability of ineligibility criteria
with respect to the calculation of the Borrowing Base, (b) the making of
Discretionary Over-Advances, and (c) the exercise of remedies pursuant to
Section 8.2, and any action so taken or not taken shall be deemed consented to
by the Lenders.
Section 9.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Credit Document by or through agents,
employees, or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects as long as such selection was made without gross negligence or
willful misconduct.
Section 9.3 Liability of the Agent. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Credit Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation, or warranty made by any Credit Party, the
Parent, or any Affiliate of any Credit Party, or any officer thereof, contained
in this Agreement or in any other Credit Document, or in any certificate,
report, statement, or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Credit
Document, or the validity, effectiveness, genuineness, enforceability, or
sufficiency of this Agreement or any other Credit Document, or for any failure
of any Credit Party, the Parent, or any other party to any Credit Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Credit Document, or to inspect the properties,
books or records of any Credit Party, the Parent, or any Credit Party's
Affiliates.
Section 9.4 Reliance by the Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex, or
telephone message, statement, or other document or conversation believed by it
to be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including,
without limitation, counsel to any Credit Party and the Parent), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Credit Document in accordance with a request or consent of the Required
Lenders (or such other percentage of Lenders if so required by Section 10.6) and
such
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request and any action taken or failure to act pursuant thereto shall be binding
upon all of the Lenders.
Section 9.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, unless
the Agent shall have received written notice from a Credit Party or a Lender
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Article 8; provided, however, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
Section 9.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Credit Parties and their Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of the Credit Parties and their Affiliates, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Borrowers. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals, and decisions in taking or not taking action under
this Agreement and the other Credit Documents, and to make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition, and creditworthiness of the
Credit Parties and their Affiliates. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition, or creditworthiness of the Credit
Parties and their Affiliates which may come into the possession of any of the
Agent-Related Persons.
Section 9.7 Indemnification. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
HEREBY ARE CONSUMMATED, THE LENDERS SHALL UPON DEMAND INDEMNIFY THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE
CREDIT PARTIES AND WITHOUT LIMITING THE OBLIGATION OF THE CREDIT PARTIES TO DO
SO), IN ACCORDANCE WITH THEIR PRO RATA SHARES, FROM AND AGAINST ANY AND ALL
INDEMNIFIED LIABILITIES OTHER THAN LIABILITIES RELATING TO BANK PRODUCTS;
PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT TO THE
AGENT-RELATED PERSONS OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES (AS DEFINED
HEREIN) RESULTING SOLELY FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Without limitation of the
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foregoing, each Lender shall reimburse the Agent upon demand for its pro rata
share of any costs or out-of-pocket expenses (including fees and expenses for
legal counsel) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment, or enforcement
(whether through negotiations, legal proceedings, or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Credit Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Credit Parties. The undertaking in this Section shall survive the payment of the
Total Obligations and the resignation or replacement of the Agent.
Section 9.8 The Agent in Individual Capacity. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with any
Credit Party and its Affiliates as though Bank of America were not the Agent
hereunder and without notice to or consent of the Lenders. Bank of America or
its Affiliates may receive information regarding any Credit Party or its
Affiliates and account debtors (including information that may be subject to
confidentiality obligations in favor of any such Credit Party or Affiliate), and
the Lenders acknowledge that the Agent and Bank of America shall be under no
obligation to provide such information to the Lenders. With respect to its
Loans, Bank of America as a Lender shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" include Bank of America in
its individual capacity.
Section 9.9 Successor Agent. The Agent may resign as Agent upon at least
thirty (30) days prior notice to the Lenders and the Credit Parties, such
resignation to be effective upon the acceptance of a successor agent to its
appointment as the Agent. In the event Bank of America sells all of its
Commitments and Loans as part of a sale, transfer, or other disposition by Bank
of America of substantially all of its loan portfolio, Bank of America shall
resign as the Agent and such purchaser or transferee shall become the successor
Agent hereunder. Subject to the foregoing, if the Agent resigns (the "resigning
Agent") under this Agreement, the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders (the "successor Agent"). If no
successor Agent is appointed prior to the effective date of the resignation of
the resigning Agent, the resigning Agent may appoint, after consulting with the
Lenders and the Borrowers, a successor Agent from among the Lenders. The
appointment of any successor Agent shall, so long as no Default or Event of
Default shall exist, be subject to the prior consent of the Borrowers (such
consent not to be unreasonably withheld). Upon the acceptance of its appointment
as the successor Agent, the successor Agent shall succeed to all the rights,
powers, and duties of the resigning Agent and the term "Agent" shall mean the
successor Agent and the resigning Agent's appointment, powers, and duties as the
Agent shall be terminated. After any resigning Agent's resignation hereunder as
the Agent, the provisions of this Article 9 shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Agent under this Agreement.
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Section 9.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership, or trust"
within the meaning of the Internal Revenue Code and such Lender claims
exemption from, or a reduction of, United States withholding tax under
Sections 1441 or 1442 of the Internal Revenue Code, such Lender agrees
with and in favor of the Agent, to deliver to the Agent and the Borrowers:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a U.S. tax treaty, two (2) properly
completed and executed IRS Forms W-8BEN and W-8ECI before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two (2) properly completed and executed copies of IRS Form
W-8ECI before the payment of any interest is due in the first
taxable year of such Lender and in each succeeding taxable year of
such Lender during which interest may be paid under this Agreement,
and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Internal Revenue Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees to promptly notify the Agent and the Borrowers of
any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
W-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Total Obligations owing to such
Lender under this Agreement, such Lender agrees to notify the Agent and
the Borrowers of the percentage amount in which it is no longer the
beneficial owner of such Total Obligations owing to such Lender. To the
extent of such percentage amount, the Agent and the Borrowers will treat
such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Total
Obligations owing to such Lender under this Agreement, such Lender agrees
to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Internal Revenue
Code.
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(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent or the Borrowers may withhold from any interest
payment to such Lender an amount equivalent to the applicable withholding
tax after taking into account such reduction. If the forms or other
documentation required by clause (a) preceding are not delivered to the
Agent and the Borrowers, then the Agent or the Borrowers may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent or the
Borrowers did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify the Agent
or the Borrowers of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify the Agent and the Borrowers fully for
all amounts paid, directly or indirectly, by the Agent or the Borrowers as
tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Agent
under this Section 9.10, together with all costs and expenses (including
fees and expenses for legal counsel). The obligation of the Lenders under
this clause (e) shall survive the payment of the Total Obligations and the
resignation or replacement of the Agent.
Section 9.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Liens upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full of all Loans and reimbursement obligations in respect
of Letters of Credit, and the termination of all outstanding Letters of
Credit (whether or not any of such obligations are due) and all other
Total Obligations; (ii) constituting property being sold or disposed of if
the Credit Party disposing of such property certifies to the Agent that
the sale or disposition is made in compliance with the terms of this
Agreement (and the Agent may rely conclusively on any such certificate,
without further inquiry); (iii) constituting property in which no Credit
Party owned any interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to a Credit Party under a
lease which has expired or been terminated in a transaction permitted
under this Agreement. Except as provided above, the Agent will not release
any of the Agent's Liens without the prior written authorization of the
Lenders; provided that the Agent may, in its discretion, release the
Agent's Liens on Collateral valued in the aggregate not in excess of
$1,000,000 during each calendar year without the prior written
authorization of the Lenders and the Agent may release the Agent's Liens
on Collateral valued in the aggregate not in excess of $2,500,000 during
each calendar year with the prior written authorization of the Required
Lenders. Upon request by the Agent or the Credit Parties at any time, the
Lenders will confirm in writing the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral pursuant to
this Section 9.11.
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(b) Upon receipt by the Agent of any authorization required pursuant
to Section 9.11(a) from the Lenders or the Required Lenders, as
applicable, of the Agent's authority to release any Liens upon particular
types or items of Collateral, and upon at least five (5) Business Days
prior written request by the Credit Parties, the Agent shall (and is
hereby irrevocably authorized by the Lenders to) execute such documents as
may be necessary to evidence the release of the Agent's Liens upon such
Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would
expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect,
or impair the Total Obligations or any Liens (other than those expressly
being released) upon (or obligations of the Credit Parties in respect of)
all interests retained by the Credit Parties, including the proceeds of
any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Credit
Parties or is cared for, protected, or insured or has been encumbered, or
that the Agent's Liens have been properly or sufficiently or lawfully
created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or
under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the rights, authorities, and powers granted or
available to the Agent pursuant to any of the Credit Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission, or event related thereto, the Agent may act in any manner it may
deem appropriate, in its sole discretion given the Agent's own interest in
the Collateral in its capacity as one of the Lenders and that the Agent
shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.
Section 9.12 Restrictions on Actions by the Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of all Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, setoff
against the Total Obligations, any amounts owing by such Lender to any
Credit Party or any accounts of any Credit Party now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it
shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement or
any other Credit Document or against any Credit Party, including the
commencement of any legal or equitable proceedings, to foreclose any Lien
on, or otherwise enforce any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Total Obligations owing to such Lender
arising under, or relating to, this Agreement or the other Credit
Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or (ii)
payments from the Agent in excess of such Lender's ratable portion of all
such
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distributions by the Agent, such Lender shall promptly (1) turn the same
over to the Agent, in kind, and with such endorsements as may be required
to negotiate the same to the Agent, or in same day funds, as applicable,
for the account of all of the Lenders and for application to the Total
Obligations in accordance with the applicable provisions of this
Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Total Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as
among the Lenders in accordance with their Revolving Commitment
Percentage; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to
the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
Section 9.13 Agency for Perfection; Appointment of Collateral Agent.
(a) Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting Liens, for the benefit of the Agent and the Lenders,
in assets which, in accordance with Article 9 of the UCC or any other
Requirements of Law can be perfected only by possession. Should any Lender
(other than the Agent) obtain possession of any such Collateral, such
Lender shall notify the Agent thereof, and, promptly upon the Agent's
request therefor shall deliver such Collateral to the Agent or otherwise
deal with such Collateral in accordance with the Agent's instructions.
(b) The Lenders hereby appoint, authorize, and direct Bank of
America, N.A., its successors and assigns in such capacity, to act as
collateral agent under the Collateral Documents (in such capacity, the
"Collateral Agent") with such powers and discretion as are specifically
delegated to the Collateral Agent by the terms thereof, together with such
other powers as are reasonably incidental thereto. The Lenders further
agree that the Collateral Agent shall be entitled to the same rights,
privileges, powers, immunities, and indemnification provided to the Agent
under this Article 9 to the same extent as provided to the Agent.
Section 9.14 Payments by the Agent to the Lenders. All payments to be made
by the Agent to the Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an assignee, delivered with or in the applicable
Assignment and Acceptance), or pursuant to such other wire transfer instructions
as each party may designate for itself by written notice to the Agent.
Concurrently with each such payment, the Agent shall identify whether such
payment (or any portion thereof) represents principal, premium, or interest on
the Loans or otherwise. Unless the Agent receives notice from the Borrowers
prior to the date on which any payment is due to the Lenders that the Borrowers
will not make such payment in full as and when required, the Agent may assume
that the Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender.
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EXHIBIT 10.2
If and to the extent the Borrowers have not made such payment in full to the
Agent, each Lender shall repay to the Agent on demand such amount distributed to
such Lender, together with interest thereon at the Federal Funds Rate for each
day from the date such amount is distributed to such Lender until the date
repaid.
Section 9.15 Field Audit and Examination Reports; Disclaimer by the
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, the "Reports")
prepared by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither Bank of America
nor the Agent (i) makes any representation or warranty as to the accuracy
of any Report, or (ii) shall be liable for any information contained in
any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, Bank of America, or
any other party performing any audit or examination will inspect only
specific information regarding the Credit Parties and will rely
significantly upon the Credit Parties' books and records, as well as on
representations of the Credit Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its Participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may
reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to the
Credit Parties, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of the Credit Parties;
and (ii) to pay and protect, and indemnify, defend, and hold the Agent and
any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses, and other amounts
(including fees and expenses of legal counsel) incurred by the Agent and
any such other Lender preparing a Report as the direct or indirect result
of any third parties who might obtain all or part of any Report through
the indemnifying Lender.
Section 9.16 Relation Among the Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
Section 9.17 Settlement.
(a) Each Lender's funded portion of the Loans is intended by the
Lenders to be equal at all times to such Lender's Revolving Commitment
Percentage of the
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outstanding Loans. Notwithstanding such agreement, the Agent, Bank of
America, and the Lenders agree (which agreement shall not be for the
benefit of or enforceable by the Credit Parties) that in order to
facilitate the administration of this Agreement and the other Credit
Documents, settlement among them as to the Revolving Loans, including the
Non-Ratable Loans, shall take place on a periodic basis in accordance with
the following provisions:
(i) The Agent shall request settlement (a "Settlement") with
the Lenders on at least a weekly basis, or on a more frequent basis
at the Agent's election, (A) on behalf of Bank of America, with
respect to each outstanding Non-Ratable Loan, (B) for itself, with
respect to each Discretionary Over-Advance, and (C) with respect to
collections received, in each case, by notifying the Lenders of such
requested Settlement by telecopy, telephone, e-mail, or other
similar form of transmission, of such requested Settlement, no later
than 12:00 noon (Pasadena, California time) on the date of such
requested Settlement (the "Settlement Date"). Each Lender (other
than Bank of America, in the case of Non-Ratable Loans, and the
Agent in the case of Discretionary Over-Advances) shall transfer the
amount of such Lender's Revolving Commitment Percentage of the
outstanding principal amount of the Non-Ratable Loans and
Discretionary Over-Advances with respect to which Settlement is
requested to the Agent, to such account of the Agent as the Agent
may designate, not later than 2:00 p.m. (Pasadena, California time),
on the Settlement Date applicable thereto. Settlements may occur
during the continuation of a Default or an Event of Default and
whether or not the applicable conditions precedent set forth in
Article 4 have then been satisfied. Such amounts transferred to the
Agent shall be applied against the amounts of the applicable
Non-Ratable Loan or Discretionary Over-Advance and, together with
the portion of such Non-Ratable Loan or Discretionary Over-Advance
representing Bank of America's Revolving Commitment Percentage
thereof, shall constitute Revolving Loans of such Lenders,
respectively. If any such amount is not transferred to the Agent by
any Lender on the Settlement Date applicable thereto, the Agent
shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the
first three (3) days from and after the Settlement Date and
thereafter at the Adjusted Base Rate (Y) on behalf of Bank of
America, with respect to each outstanding Non-Ratable Loan, and (Z)
for itself, with respect to each Discretionary Over-Advance.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or
after the occurrence of a Default or an Event of Default and
regardless of whether the Agent has requested a Settlement with
respect to a Non-Ratable Loan or Discretionary Over-Advance), each
other Lender (A) shall irrevocably and unconditionally purchase and
receive from Bank of America or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation in
such Non-Ratable Loan or Discretionary Over-Advance equal to such
Lender's Revolving Commitment Percentage of such Non-Ratable Loan or
Discretionary Over-Advance and (B) if Settlement has not previously
occurred with respect to such Non-Ratable Loans or
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Discretionary Over-Advance, upon demand by Bank of America or the
Agent, as applicable, shall pay to Bank of America or the Agent, as
applicable, as the purchase price of such participation an amount
equal to one-hundred percent (100%) of such Lender's Revolving
Commitment Percentage of such Non-Ratable Loans or Discretionary
Over-Advance. If such amount is not in fact transferred to the Agent
by any Lender, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the
Federal Funds Rate for the first two (2) days from and after such
demand and thereafter at the Adjusted Base Rate.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Non-Ratable
Loan or Discretionary Over-Advance pursuant to clause (ii)
preceding, the Agent shall promptly distribute to such Lender, such
Lender's Revolving Commitment Percentage of all payments of
principal and interest and all proceeds of Collateral received by
the Agent in respect of such Non-Ratable Loan or Discretionary
Over-Advance.
(iv) Between Settlement Dates, to the extent no Discretionary
Over-Advances are outstanding, the Agent may pay over to Bank of
America any payments received by the Agent, which in accordance with
the terms of this Agreement would be applied to the reduction of the
Loans, for application to the Non-Ratable Loans. If, as of any
Settlement Date, collections received since the then immediately
preceding Settlement Date have been applied to Bank of America's
Revolving Loans (other than to Non-Ratable Loans or Discretionary
Over-Advance in which a Lender has not yet funded its purchase of a
participation pursuant to clause (ii) preceding), as provided for in
the previous sentence, Bank of America shall pay to the Agent for
the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement
Date, its Revolving Commitment Percentage of the Revolving Loans.
During the period between Settlement Dates, Bank of America (with
respect to Non-Ratable Loans), the Agent (with respect to
Discretionary Over-Advances), and each Lender (with respect to the
Revolving Loans other than Non-Ratable Loans and Discretionary
Over-Advances), shall be entitled to interest at the applicable rate
or rates payable under this Agreement on the actual average daily
amount of funds employed by Bank of America, the Agent, and the
other Lenders.
(b) The Lenders' Failure to Perform. All Loans (other than
Non-Ratable Loans and Discretionary Over-Advances) shall be made by the
Lenders simultaneously and in accordance with their Revolving Commitment
Percentages. It is understood that (i) no Lender shall be responsible for
any failure by any other Lender to perform its obligation to make any
Loans hereunder, nor shall the Revolving Committed Amount of any Lender be
increased or decreased as a result of any failure by any other Lender to
perform its obligation to make any Loans hereunder, (ii) no failure by any
Lender to perform its obligation to make any Loans hereunder shall excuse
any other Lender from
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its obligation to make any Loans hereunder, and (iii) the obligations of
each Lender hereunder shall be several, not joint and several.
(c) Defaulting Lenders. Unless the Agent receives notice from a
Lender on or prior to the Closing Date or, with respect to any borrowing
after the Closing Date, at least one (1) Business Day prior to the date of
such borrowing, that such Lender will not make available as and when
required hereunder to the Agent such Lender's Revolving Commitment
Percentage of such borrowing, the Agent may assume that each Lender has
made such amount available to the Agent in immediately available funds on
the Funding Date. Furthermore, the Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding
amount. If any Lender has not transferred its full Revolving Commitment
Percentage of any borrowing to the Agent in immediately available funds
and if the Agent has transferred a corresponding amount to the Borrowers
on the Business Day following such Funding Date the applicable Lender
shall make such amount available to the Agent, together with interest at
the Federal Funds Rate for that day. A notice by the Agent submitted to
any Lender with respect to amounts owing shall be conclusive, absent
manifest error. If each Lender's full Revolving Commitment Percentage of
any requested borrowing is transferred to the Agent as required, the
amount transferred to the Agent shall constitute such Lender's Loan for
all purposes of this Agreement. If any such amount is not transferred to
the Agent on the Business Day following the Funding Date, the Agent will
notify the Borrowers of such failure to fund and, upon demand by the
Agent, the Borrowers shall pay such amount to the Agent for the Agent's
account, together with interest thereon for each day elapsed since the
date of such borrowing, at a rate per annum equal to the Adjusted
Eurodollar Rate or the Adjusted Base Rate, as applicable at the time to
the Loans comprising that particular borrowing. The failure of any Lender
to make any Loan on any Funding Date (any such Lender, prior to the cure
of such failure, being hereinafter referred to as a "Defaulting Lender")
shall not relieve any other Lender of its obligation hereunder to make a
Loan on such Funding Date. No Lender shall be responsible for any other
Lender's failure to advance such other Lenders' Revolving Commitment
Percentage of any borrowing.
(d) Retention of Defaulting Lender's Payments. The Agent shall not
be obligated to transfer to a Defaulting Lender any payments made by the
Borrowers to the Agent for the Defaulting Lender's benefit, nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder.
Amounts payable to a Defaulting Lender shall instead be paid to or
retained by the Agent. In its discretion, the Agent may loan the Borrowers
the amount of all such payments received or retained by it for the account
of such Defaulting Lender. Any amounts so loaned to the Borrowers shall
bear interest at the rate applicable to Base Rate Loans and for all other
purposes of this Agreement shall be treated as if they were Loans,
provided, however, that for purposes of voting or consenting to matters
with respect to the Credit Documents and determining the Revolving
Commitment Percentages, such Defaulting Lender shall be deemed not to be a
"Lender." Until a Defaulting Lender cures its failure to fund its
Revolving Commitment Percentage of any borrowing (i) such Defaulting
Lender shall not be entitled to any portion of the Unused Line Fee and
(ii) the Unused Line Fee shall accrue in favor of the Lenders which have
funded their respective Revolving Commitment Percentage of such
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requested borrowing and shall be allocated among such performing Lenders
ratably based upon their relative Revolving Committed Amount. This Section
shall remain effective with respect to such Lender until such time as the
Defaulting Lender shall no longer be in default of any of its obligations
under this Agreement. The terms of this Section shall not be construed to
increase or otherwise affect the Revolving Commitment of any Lender, or
relieve or excuse the performance by the Borrowers of their duties and
obligations hereunder.
Section 9.18 Documentation Agent. CIT, in its capacity as the
documentation agent, shall have no rights, powers, duties, liabilities,
fiduciary relationships, or obligations under this Agreement or any of the other
Credit Documents.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number specified below, (c) the Business Day following
the day on which the same has been delivered prepaid to a reputable national
overnight air courier service, or (d) the third Business Day following the day
on which the same is sent by certified or registered mail, postage prepaid, in
each case to the respective parties at the address, in the case of the
Borrowers, the Guarantors, and the Agent, set forth below, and, in the case of
the Lenders, set forth on Schedule 10.1, or at such other address as such party
may specify by written notice to the other parties hereto:
if to the Borrowers or the Guarantors:
Crescent Jewelers
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Agent:
Bank of America, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ , ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Portfolio Manager
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.2 Right of Setoff. In addition to any rights and remedies of
the Lenders provided by law, if an Event of Default exists or the Loans have
been accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Credit Parties, any such notice being waived by the
Credit Parties to the fullest extent permitted by law, to setoff and
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apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by, such
Lender or any Affiliate of such Lender to or for the credit or the account of
the Credit Parties against the Total Obligations to such Lender, now or
hereafter existing, irrespective of whether or not the Agent or such Lender
shall have made demand under this Agreement or any other Credit Document and
although such Total Obligations owing by the Credit Parties may be contingent or
unmatured. Each Lender agrees promptly to notify the Credit Parties and the
Agent after any such setoff and application made by such Lender; provided,
however, the failure to give such notice shall not affect the validity of such
setoff and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE
ANY RIGHT OF SETOFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR
PROPERTY OF ANY CREDIT PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR
WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
Section 10.3 Benefit of Agreement; Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided that neither any Borrower nor any Guarantor may assign or
transfer any of its interests and obligations without prior written
consent of each of the Lenders; provided further that the rights of each
Lender to transfer, assign, or grant participations in its rights and/or
obligations hereunder shall be limited as provided by this Section 10.3.
(b) Any Lender may, with the written consent of the Agent (which
consent shall not be unreasonably withheld) and if no Default or Event of
Default exists with the written consent of Crescent (which consent shall
not be unreasonably withheld), assign and delegate to one or more Eligible
Assignees (provided that no consent of the Agent or Crescent shall be
required in connection with any assignment and delegation by a Lender to
an Affiliate of such Lender or to another Lender) (each an "Assignee")
all, or any ratable part of all, of the Loans, the Commitments, and the
other rights and obligations of such Lender hereunder, in a minimum amount
of $10,000,000 and integral amounts of $1,000,000 in excess thereof or all
of such assigning Lender's Loans and Commitments (provided that, unless an
assignor Lender has assigned and delegated all of its Loans and
Commitments, no such assignment and/or delegation shall be permitted
unless, after giving effect thereto, such assignor Lender retains a
Commitment in a minimum amount of $10,000,000); provided, however, that
the Credit Parties and the Agent may continue to deal solely and directly
with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to
the Assignee, shall have been given to the Borrowers and the Agent by such
Lender and the Assignee; (ii) such Lender and its Assignee shall have
delivered to the Borrowers and the Agent an Assignment and Acceptance in
the form of Exhibit E (an "Assignment and Acceptance") together with any
Notes subject to such assignment, and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of $5,000
(provided that the Agent may, in its discretion, waive such fee in
connection with the initial syndication of the Commitments). The Borrowers
agree to promptly execute and deliver new or
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replacement Notes as reasonably requested by the Agent to evidence
assignments of the Loans and Commitments in accordance herewith.
(c) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations, including, but not limited to, the obligation to participate
in Letters of Credit have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under
the Credit Documents, and (ii) the assignor Lender shall, to the extent
that rights and obligations hereunder and under the other Credit Documents
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this
Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties, or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or
any other Credit Document furnished pursuant hereto or the attachment,
perfection, or priority of any Lien granted by the Credit Parties to the
Agent or any Lender in the Collateral; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Credit Parties or the performance or
observance by the Credit Parties of any of their respective obligations
under this Agreement or any other Credit Document furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender,
or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other
Credit Documents as are delegated to the Agent by the terms hereof,
together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(e) Immediately upon satisfaction of the requirements of Section
10.3(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and
the resulting adjustment of the Commitments
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arising therefrom. The Commitment allocated to each Assignee shall reduce
such Commitments of the assigning Lender pro tanto.
(f) Any Lender may at any time sell to one or more participants
participating interests in any Loans, the Commitments of that Lender, and
the other interests of that Lender (the "originating Lender") hereunder
and under the other Credit Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the originating Lender shall remain solely responsible for
the performance of such obligations, (iii) the Credit Parties and the
Agent shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender's rights and obligations
under this Agreement and the other Credit Documents, and (iv) no Lender
shall transfer or grant any participating interest under which the
participant has rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Credit Document except
the matters set forth in Section 10.6(a)(i), Section 10.6(a)(ii), and
Section 10.6(a)(iii), and (v) all amounts payable by the Borrowers
hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement
are due and unpaid, or shall have been declared or shall have become due
and payable upon the occurrence of an Event of Default, each participant
shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same
extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(g) The Agent shall maintain at its address referred to in Section
10.1 a copy of each Assignment and Acceptance delivered to and accepted by
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 owing to,
each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Credit Parties, the Agent, and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by the Credit Parties or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Any assignment of any
loan, commitment, interest, or obligation hereunder or under the other
Credit Documents shall be effective only upon an entry with respect
thereto being made in the Register.
(h) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the
Register, and (iii) give prompt notice thereof to the parties thereto.
(i) Any Lender may furnish any information concerning the members of
the Consolidated Group in the possession of such Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 10.15.
Page 100
(j) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor of
any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Board or U.S. Treasury Regulation 31 CFR Section 203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under Requirements of Law.
Section 10.4 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Agent or any Lender in exercising any right, power, or privilege
hereunder or under any other Credit Document and no course of dealing between
the Agent or any Lender and any of the Credit Parties shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power, or privilege
hereunder or thereunder. The rights and remedies provided herein are cumulative
and not exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. No notice to or demand on any Credit Party in any case shall
entitle the Credit Parties to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Agent or the
Lenders to any other or further action in any circumstances without notice or
demand.
Section 10.5 Expenses; Indemnification.
(a) The Borrowers agree to pay to the Agent, for its benefit, on
demand, all costs and expenses that the Agent pays or incurs in connection
with the negotiation, preparation, syndication, consummation,
administration (including reasonable costs of travel, lodging, and meals
incurred in connection with administration of this Agreement),
enforcement, and termination of this Agreement or any of the other Credit
Documents, including: (i) all reasonable fees, expenses, and disbursements
of any law firm or other counsel engaged by the Agent; (ii) costs and
expenses (including all fees, expenses, and disbursements of any law firm
or other counsel engaged by the Agent) in connection with administration
of this Agreement and for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Credit Documents and the
transactions contemplated thereby; (iii) reasonable costs and expenses of
lien and title searches, title insurance, and environmental audits; (iv)
taxes, fees, and other charges for recording the Mortgages, filing
financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including reasonable costs and
expenses paid or incurred by the Agent in connection with the consummation
of this Agreement); (v) sums paid or incurred to pay any amount or take
any action required of any Credit Party under the Credit Documents that
such Credit Party fails to pay or take; (vi) costs of appraisals,
inspections, and verifications of the Collateral, including travel,
lodging, and meals for field examinations and inspections of the
Collateral and the Credit Parties' operations by the Agent, plus the
Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $800 per day (or
portion thereof) for each Person retained or employed by the Agent with
respect to each field examination or audit); and (vii) costs and expenses
of forwarding loan proceeds, collecting checks and other items of payment,
and establishing and maintaining payment
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accounts and lockboxes, and costs and expenses of preserving and
protecting the Collateral. In addition, upon demand, the Borrowers agree
to pay costs and expenses incurred by the Agent and the Lenders (including
all reasonable fees, expenses, and disbursements of any law firm or other
counsel engaged by the Agent and all reasonable fees, expenses, and
disbursements incurred by the Lenders for one law firm retained by the
Lenders), in each case, paid or incurred to obtain payment of the Total
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Credit Documents,
or to defend any claims made or threatened against the Agent or any Lender
arising out of the transactions contemplated hereby (including
preparations for and consultations concerning any such matters).
Additionally, the Borrowers agree to pay or reimburse Bank of America for
all costs, fees, and expenses for which any Credit Party is obligated
under the Original Credit Agreement, and Bank of America is authorized to
charge such amounts to the loan account of the Borrowers as a Revolving
Loan. The foregoing shall not be construed to limit any other provisions
of the Credit Documents regarding costs and expenses to be paid by the
Borrowers. All of the foregoing costs and expenses shall be charged to the
loan account of the Borrowers as Revolving Loans.
(b) EACH CREDIT PARTY AGREES TO DEFEND, INDEMNIFY, AND HOLD THE
AGENT-RELATED PERSONS, AND EACH LENDER AND EACH OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, AND
ATTORNEYS-IN-FACT (EACH, AN "INDEMNIFIED PERSON") HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES, AND DISBURSEMENTS
(INCLUDING ATTORNEY FEES AND EXPENSES) OF ANY KIND OR NATURE WHATSOEVER
WHICH MAY AT ANY TIME (INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE
LOANS AND THE TERMINATION, RESIGNATION, OR REPLACEMENT OF THE AGENT OR
REPLACEMENT OF ANY LENDER) BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST
ANY SUCH PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT,
ANY OTHER CREDIT DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT, OR INSTRUMENT
CONTEMPLATED BY OR REFERRED TO HEREIN OR THEREIN, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH
PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH
RESPECT TO ANY INVESTIGATION, LITIGATION, OR PROCEEDING (INCLUDING ANY
INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT
OF THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR THE LOANS OR THE USE OF
THE PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY
THERETO (ALL THE FOREGOING, COLLECTIVELY, THE "INDEMNIFIED LIABILITIES");
PROVIDED THAT THE CREDIT PARTIES SHALL HAVE NO OBLIGATION HEREUNDER TO ANY
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES TO THE EXTENT
DETERMINED IN A
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FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON. THE AGREEMENTS IN THIS SECTION 10.5(b) SHALL SURVIVE
PAYMENT OF ALL OTHER TOTAL OBLIGATIONS.
(c) EACH CREDIT PARTY AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS
THE AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY OR
INDIRECTLY ARISING OUT OF THE USE, GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF
A HAZARDOUS SUBSTANCE RELATING TO ANY CREDIT PARTY'S OPERATIONS, BUSINESS,
OR PROPERTY. THIS INDEMNITY WILL APPLY WHETHER THE HAZARDOUS SUBSTANCE IS
ON, UNDER, OR ABOUT ANY CREDIT PARTY'S PROPERTY OR OPERATIONS OR PROPERTY
LEASED TO ANY CREDIT PARTY. THE INDEMNITY INCLUDES BUT IT NOT LIMITED TO
REASONABLE ATTORNEY FEES AND EXPENSES. THE INDEMNITY EXTENDS TO THE AGENT
AND THE LENDERS, THEIR AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS, AND
ASSIGNS. AS USED IN THIS CLAUSE (c), "HAZARDOUS SUBSTANCES" MEANS ANY
SUBSTANCE, MATERIAL, OR WASTE THAT IS OR BECOMES DESIGNATED OR REGULATED
AS "TOXIC," "HAZARDOUS," "POLLUTANT," OR "CONTAMINANT" OR A SIMILAR
DESIGNATION OR REGULATION UNDER ANY FEDERAL, STATE, OR LOCAL LAW (WHETHER
UNDER COMMON LAW, STATUTE, REGULATION, OR OTHERWISE) OR JUDICIAL OR
ADMINISTRATIVE INTERPRETATION OF SUCH, INCLUDING PETROLEUM OR NATURAL GAS.
THIS INDEMNITY WILL SURVIVE REPAYMENT OF ALL OTHER OBLIGATIONS.
Section 10.6 Amendments, Waivers, and Consents. Neither this Agreement nor
any other Credit Document nor any of the terms hereof or thereof may be amended,
changed, waived, discharged, or terminated unless such amendment, change,
waiver, discharge, or termination is in writing entered into by, or approved in
writing by, the Required Lenders and the Borrowers, provided, however, that:
(a) except as specifically provided in clause (iv) following,
without the consent of each Lender, neither this Agreement nor any other
Credit Document may be amended to
(i) extend the final maturity of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or Fees hereunder,
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(iii) reduce or waive the principal amount of any Loan or of
any reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the aggregate amount of the Commitments
(including the Revolving Loan Commitments and the LOC Committed
Amount) or, with the consent of only the Lender affected thereby,
increase the Commitment of a Lender over the amount thereof in
effect (it being understood and agreed that a waiver of any Default
or Event of Default or mandatory reduction in the Commitments shall
not constitute a change in the terms of any Commitment of any
Lender),
(v) except as the result of or in connection with an Asset
Disposition permitted by Section 7.5 or as otherwise expressly
permitted under Section 9.11 or the Collateral Documents, release or
subordinate any Collateral,
(vi) except as the result of or in connection with a
dissolution, merger, or disposition of a member of the Consolidated
Group permitted under Section 7.4, release any Credit Party from its
obligations under the Credit Documents,
(vii) amend, modify, or waive any provision of this Section
10.6 or Section 3.6 through Section 3.9, Section 3.10(b), Section
8.1(a), Section 10.2, Section 10.3, Section 10.5, or Section 10.9,
(viii) reduce any percentage specified in, or otherwise change
any percentages of the Commitments which is required for the Lenders
to take any action under this Agreement, or otherwise modify, the
definition of Required Lenders,
(ix) amend the definition of (A) Eligible Installment
Contracts, Eligible Inventory, or Reserves if the effect of any or
all of such amendments would collectively increase the determination
of the Borrowing Base by more than five percent (5.0%) or (B)
Borrowing Base or Receivables Advance Rate, or
(x) consent to the assignment or transfer by any Borrower or
any other Credit Party of any of its rights and obligations under
(or in respect of) the Credit Documents except as permitted thereby;
(b) without the consent of the Agent, no provision of Article 9 may
be amended; and
(c) without the consent of the Issuing Lender, no provision of
Section 2.2(a)(ii) or Section 2.6 may be amended.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as provided in clause (a) preceding, (y) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization plan
that affects the Loans, and each Lender acknowledges that
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the provisions of Section 1126(c) of the Bankruptcy Code supersedes the
unanimous consent provisions set forth herein and (z) the Required Lenders may
consent to allow a Credit Party to use cash collateral in the context of a
bankruptcy or insolvency proceeding.
Section 10.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart for each of the parties hereto. Delivery by facsimile by
any of the parties hereto of an executed counterpart of this Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
Section 10.8 Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 10.9 Survival. All indemnities set forth herein, including,
without limitation, in Section 2.6(e), Section 3.6, Section 9.7, and Section
10.5, shall survive the execution and delivery of this Agreement, the making of
the Loans, the issuance of the Letters of Credit, the repayment of the Loans,
LOC Obligations and other obligations under the Credit Documents, and the
termination of the Commitments hereunder, and all representations and warranties
made by the Borrowers and the Guarantors herein shall survive delivery of the
Notes and the making of the Loans hereunder.
Section 10.10 Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS, PROVIDED
THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE
EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE
9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE
LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATES OF
CALIFORNIA OR OF THE UNITED STATES LOCATED IN LOS ANGELES COUNTY,
CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
CREDIT PARTIES, THE AGENT, AND THE LENDERS CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE CREDIT PARTIES, THE AGENT, AND THE LENDERS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE
Page 105
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY OTHER AGREEMENT,
DOCUMENT, OR INSTRUMENT RELATED HERETO OR THERETO. NOTWITHSTANDING THE
FOREGOING (i) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY CREDIT PARTY OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY
OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR
THE TOTAL OBLIGATIONS AND (ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES
THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH CREDIT
PARTY AT ITS ADDRESS SET FORTH IN SECTION 10.1 AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE UNITED STATES MAILS POSTAGE PREPAID. NOTHING CONTAINED
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE LEGAL
PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES, ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL AT THE
REQUEST OF ANY PARTY HERETO BE DETERMINED BY BINDING ARBITRATION. The
arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the
American Arbitration Association ("AAA"). The arbitrator(s) shall give
effect to statutes of limitation in determining any claim. Any controversy
concerning whether an issue is arbitrable shall be determined by the
arbitrator(s). Judgment upon the arbitration award may be entered in any
court having jurisdiction. The institution and maintenance of an action
for judicial relief or pursuant to a provisional or ancillary remedy shall
not constitute a waiver of the right of either party, including the
plaintiff, to submit the controversy or claim to arbitration if any other
party contests such action for judicial relief.
(e) Notwithstanding the provisions of clause (d) preceding, no
controversy or claim shall be submitted to arbitration without the consent
of all parties if, at the time of the proposed submission, such
controversy or claim arises from or related to an obligation to the
Lenders which is secured by real estate property collateral (exclusive of
real estate space lease assignments). If all the parties do not consent to
submission of such a
Page 106
controversy or claim to arbitration, the controversy or claim shall be
determined as provided in Section 10.10(f).
(f) At the request of any party a controversy or claim which is not
submitted to arbitration as provided and limited in Section 10.10(d) and
Section 10.10(e) shall be determined by judicial reference. If such an
election is made, the parties shall designate to the court a referee or
referees selected under the auspices of the AAA in the same manner as
arbitrators are selected in AAA sponsored proceedings. The presiding
referee of the panel, or the referee if there is a single referee, shall
be an active attorney or retired judge. Judgment upon the award rendered
by such referee or referees shall be entered in the court in which such
proceeding was commenced.
(g) No provision of clause (d) through clause (g) preceding shall
limit the right of the Agent or the Lenders to exercise self-help remedies
such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during
the pendency of any arbitration or other proceeding. The exercise of a
remedy does not waive the right of either party to resort to arbitration
or reference. At the Agent's option, foreclosure under a deed of trust or
mortgage may be accomplished either by exercise of power of sale under the
deed of trust or mortgage or by judicial foreclosure.
Section 10.11 Waiver of Jury Trial. EACH OF THE CREDIT PARTIES, THE
LENDERS, AND THE AGENT IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH OF THE CREDIT PARTIES, THE LENDERS, AND THE AGENT
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES FURTHER
AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS, OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
Section 10.12 Severability. If any provision of any of the Credit
Documents is determined to be illegal, invalid, or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid,
or unenforceable provisions.
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Section 10.13 Entirety. This Agreement together with the other Credit
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
Section 10.14 Binding Effect; Termination.
(a) This Agreement shall become effective at such time on or after
the Closing Date when it shall have been executed by the Borrowers, the
Guarantors, and the Agent, and the Agent shall have received copies hereof
which, when taken together, bear the signatures of each Lender, and
thereafter this Agreement shall be binding upon and inure to the benefit
of the Borrowers, the Guarantors, the Agent, each Lender, and their
respective successors and assigns.
(b) The term of this Agreement shall be until no Loans, LOC
Obligations, or any other amounts payable hereunder or under any of the
other Credit Documents shall remain outstanding, no Letters of Credit
shall be outstanding, all of the Loans and obligations owing hereunder and
under the other Credit Documents have been irrevocably satisfied in full
and all of the Commitments hereunder shall have expired or been
terminated.
Section 10.15 Confidentiality. The Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by the Credit Parties pursuant to this Agreement that is marked
confidential; provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or Affiliate of any Lending Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any law, rule, or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Lending Party other than as a result of a
disclosure by any Lending Party prohibited by this Agreement, (g) in connection
with any litigation to which such Lending Party or any of its Affiliates may be
a party, (h) to the extent necessary in connection with the exercise of any
remedy under this Agreement or any other Credit Document, (i) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender, (j) to any direct or indirect contractual counterparty in swap
agreements or such contractual counterparty's professional advisor (so long as
such contractual counterparty or professional advisor to such contractual
counterparty (i) has been approved in writing by the Borrowers and (ii) agrees
in a writing enforceable by the Borrowers to be bound by the provisions of this
Section 10.15) and (k) subject to provisions substantially similar to those
contained in this Section 10.15, to any actual or proposed participant or
assignee.
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Section 10.16 Other Security and Guaranties. The Agent may, without notice
or demand and without affecting the Credit Parties' obligations hereunder, from
time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Total Obligations and
exchange, enforce, or release such collateral or any part thereof; and (b)
accept and hold any endorsement or guaranty of payment of all or any part of the
Total Obligations and release or substitute any such endorser or guarantor, or
any Person who has given any Lien in any other collateral as security for the
payment of all or any part of the Total Obligations, or any other Person in any
way obligated to pay all or any part of the Total Obligations.
Section 10.17 Agency of Crescent for Each Other Credit Party. Each of the
other Credit Parties irrevocably appoints Crescent as its agent for all purposes
relevant to this Agreement, including the giving and receipt of notices and
execution and delivery of all documents, instruments, and certificates
contemplated herein and all modifications hereto. Any acknowledgment, consent,
direction, certification, or other action which might otherwise be valid or
effective only if given or taken by all or any of the Credit Parties or acting
singly, shall be valid and effective if given or taken only by Crescent, whether
or not any of the other Credit Parties joins therein, and the Agent and the
Lenders shall have no duty or obligation to make further inquiry with respect to
the authority of Crescent under this Section 10.16, provided that nothing in
this Section 10.16 shall limit the effectiveness of, or the right of the Agent
and the Lenders to rely upon, any notice (including without limitation a Notice
of Borrowing or a Notice of Continuation/Conversion), document, instrument,
certificate, acknowledgment, consent, direction, certification, or other action
delivered by any Credit Party pursuant to this Agreement.
Section 10.18 Joint and Several Liability. All Loans, upon funding, shall
be deemed to be jointly funded to and received by the Borrowers. Each Borrower
jointly and severally agrees to pay, and shall be jointly and severally liable
under this Agreement for, all of the Total Obligations, regardless of the manner
or amount in which proceeds of Loans are used, allocated, shared, or disbursed
by or among the Borrowers themselves, or the manner in which the Agent and/or
any Lender accounts for such Loans or other extensions of credit on its books
and records. Each Borrower shall be liable for all amounts due to the Agent
and/or any Lender under this Agreement, regardless of which Borrower actually
receives Loans or other extensions of credit hereunder or the amount of such
Loans and extensions of credit received or the manner in which the Agent and/or
such Lender accounts for such Loans or other extensions of credit on its books
and records. Each Borrower's indebtedness, liabilities, and obligations with
respect to Loans and other extensions of credit made to it, and such Borrower's
indebtedness, liabilities, and obligations arising as a result of the joint and
several liability of such Borrower hereunder, with respect to Loans made to the
other Borrowers hereunder, shall be separate and distinct obligations, but all
such indebtedness, liabilities, and obligations shall be primary obligations of
such Borrower. The Borrowers acknowledge and expressly agree with the Agent and
each Lender that the joint and several liability of each Borrower is required
solely as a condition to, and is given solely as inducement for and in
consideration of, credit or accommodations extended or to be extended under the
Credit Documents to any or all of the other Borrowers and is not required or
given as a condition of extensions of credit to such Borrower. Each Borrower's
indebtedness, liabilities, and obligations under this Agreement and as an
obligor under a Guaranty Agreement shall be separate and distinct obligations.
Each Borrower's indebtedness,
Page 109
liabilities, and obligations under this Agreement shall, to the fullest extent
permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance, or subordination of the indebtedness, liabilities,
and obligations of any other Borrower or of any promissory note or other
document evidencing all or any part of the indebtedness, liabilities, and
obligations of any other Borrower, (ii) the absence of any attempt to collect
the indebtedness, liabilities, and obligations from any other Borrower, any
Guarantor, or any other security therefor, or the absence of any other action to
enforce the same, (iii) the waiver, consent, extension, forbearance, or granting
of any indulgence by the Agent and/or any Lender with respect to any provision
of any instrument evidencing the indebtedness, liabilities, and obligations of
any other Borrower or Guarantor, or any part thereof, or any other agreement now
or hereafter executed by any other Borrower or Guarantor and delivered to the
Agent and/or any Lender, (iv) the failure by the Agent and/or any Lender to take
any steps to perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for the indebtedness, liabilities, and
obligations of any other Borrower or Guarantor, (v) the Agent's and/or any
Lender's election, in any proceeding instituted under the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing
or grant of a security interest by any other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any
portion of the Agent's and/or any Lender's claim(s) for the repayment of the
indebtedness, liabilities, and obligations of any other Borrower under Section
502 of the Bankruptcy Code, or (viii) any other circumstances which might
constitute a legal or equitable discharge or defense of a guarantor or of any
other Borrower. With respect to any Borrower's indebtedness, liabilities, and
obligations arising as a result of the joint and several liability of the
Borrowers hereunder with respect to Loans or other extensions of credit made to
any of the other Borrowers hereunder, such Borrower waives, until the Total
Obligations shall have been paid in full and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy which
the Agent and/or any Lender now has or may hereafter have against any other
Borrower, any endorser or any Guarantor of all or any part of the Total
Obligations, and any benefit of, and any right to participate in, any security
or collateral given to the Agent and/or any Lender to secure payment of the
Total Obligations or any other liability of any Borrower to the Agent and/or any
Lender. Upon any Event of Default, the Agent may proceed directly and at once,
without notice, against any Borrower to collect and recover the full amount, or
any portion of the Total Obligations, without first proceeding against any other
Borrower or any other Person, or against any security or collateral for the
Total Obligations. Each Borrower consents and agrees that the Agent shall be
under no obligation to marshal any assets in favor of any Borrower or against or
in payment of any or all of the Total Obligations.
Section 10.19 Contribution and Indemnification Among the Borrowers. Each
Borrower is obligated to repay the Total Obligations as joint and several
obligors under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Total Obligations
constituting Loans made to another Borrower hereunder or other Total Obligations
incurred directly and primarily by any other Borrower (an "Accommodation
Payment"), then the Borrower making such Accommodation Payment shall be entitled
to contribution and indemnification from, and be reimbursed by, each of the
other Borrowers in an amount, for each of such other Borrowers, equal to a
fraction of such Accommodation Payment, the numerator of which fraction is such
other Borrower's Allocable Amount and the denominator
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of which is the sum of the Allocable Amounts of all of the Borrowers. As of any
date of determination, the "Allocable Amount" of each Borrower shall be equal to
the maximum amount of liability for Accommodation Payments which could be
asserted against such Borrower hereunder without (a) rendering such Borrower
"insolvent" within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (b) leaving such Borrower with
unreasonably small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving
such Borrower unable to pay its debts as they become due within the meaning of
Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the
UFCA. All rights and claims of contribution, indemnification, and reimbursement
under this Section shall be subordinate in right of payment to the prior payment
in full of the Total Obligations. The provisions of this Section shall, to the
extent expressly inconsistent with any provision in any Credit Document,
supersede such inconsistent provision.
Section 10.20 Additional Borrowers and Guarantors. Addition of any Person
as a Borrower or a Guarantor is subject to approval of the Agent and the
Required Lenders, and may be conditioned upon such requirements as they may
reasonably determine in their discretion, including, without limitation, (a) the
furnishing of such financial and other information as the Agent or any such
Lender may request; (b) approval by all appropriate approval authorities of the
Agent and each such Lender; (c) execution and delivery by the Credit Parties,
such Person, the Agent, and the Required Lenders of such agreements and other
documentation (including, without limitation, an amendment to this Agreement or
any other Credit Document), and the furnishing by such Person or any of the
Credit Parties of such certificates, opinions, and other documentation, as the
Agent and any such Lender may reasonably request. Neither the Agent nor any
Lender shall have any obligation to approve any such Person for addition as a
party to this Agreement.
Section 10.21 Express Waivers By the Credit Parties in Respect of Cross
Guaranties and Cross Collateralization. Each Credit Party agrees as follows:
(a) Each Credit Party hereby waives: (i) notice of acceptance of
this Agreement; (ii) notice of the making of any Loans, the issuance of
any Letter of Credit, or any other financial accommodations made or
extended under the Credit Documents or the creation or existence of any
indebtedness, liabilities, or obligations under the Credit Documents;
(iii) notice of the amount of the indebtedness, liabilities, and
obligations under the Credit Documents, subject, however, to such Credit
Party's right to make inquiry of the Agent to ascertain the amount of the
indebtedness, liabilities, and obligations under the Credit Documents at
any reasonable time; (iv) notice of any adverse change in the financial
condition of any other Credit Party or of any other fact that might
increase such Credit Party's risk with respect to such other Credit Party
under the Credit Documents; (v) notice of presentment for payment, demand,
protest, and notice thereof as to any promissory notes or other
instruments among the Credit Documents; and (vii) all other notices
(except if such notice is specifically required to be given to such Credit
Party hereunder or under any of the other Credit Documents to which such
Credit Party is a party) and demands to which such Credit Party might
otherwise be entitled.
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(b) Each Credit Party hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against any
other Credit Party or to exhaust any rights and remedies which the Agent
or any Lender has or may have against any other Credit Party. Each Credit
Party further waives any defense arising by reason of any disability or
other defense of any other Credit Party (other than the defense that the
Total Obligations shall have been fully and finally performed and
indefeasibly paid) or by reason of the cessation from any cause whatsoever
of the liability of any such Credit Party in respect thereof.
(c) Each Credit Party hereby waives and agrees not to assert against
the Agent, any Lender, or the Issuing Lender: (i) any defense (legal or
equitable), setoff, counterclaim, or claim which such Credit Party may now
or at any time hereafter have against any other Credit Party or any other
party liable under the Credit Documents; (ii) any defense, setoff,
counterclaim, or claim of any kind or nature available to any other Credit
Party against the Agent, any Lender, or the Issuing Lender, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Total Obligations or any
security therefor; (iii) any right or defense arising by reason of any
claim or defense based upon an election of remedies by the Agent, any
Lender, or the Issuing Lender under any applicable law; (iv) the benefit
of any statute of limitations affecting any other Credit Party's liability
hereunder.
(d) Each Credit Party consents and agrees that, without notice to or
by such Credit Party and without affecting or impairing the obligations of
such Credit Party hereunder, the Agent may (subject to any requirement for
consent of any of the Lenders to the extent required by this Agreement),
by action or inaction: (i) compromise, settle, extend the duration or the
time for the payment of, or discharge the performance of, or may refuse to
or otherwise not enforce the Credit Documents; (ii) release all or any one
or more parties to any one or more of the Credit Documents or grant other
indulgences to any other Credit Party in respect thereof; (iii) amend or
modify in any manner and at any time (or from time to time) any of the
Credit Documents; or (iv) release or substitute any Person liable for
payment of the Total Obligations, or enforce, exchange, release, or waive
any security for the Total Obligations or any guaranty therefor.
(e) Each Guarantor hereby waives:
(i) any and all rights, benefits, and defenses under
California Civil Code Sections 2845 and 2850, which would
otherwise require the Agent and the Lenders to proceed against any
Borrower or any other Person, or to proceed against or exhaust any
security held by the Agent or any Lender at any time, or to first
apply any security of any Borrower to the discharge of the Total
Obligations, or to pursue any other remedy in the Agent's or any
Lender's power before proceeding against any Guarantor hereunder;
(ii) any and all rights, benefits, and defenses under
California Civil Code Sections 2847 and 2848, and each
Guarantor agrees that such Guarantor shall have no right of
subrogation, reimbursement, exoneration, contribution, indemnity, or
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similar right as against any Borrower which would result in such
Guarantor being deemed a creditor of any Borrower under the
Bankruptcy Code or any other law or for any other purpose, and each
Guarantor further WAIVES any and all rights, benefits, and defenses
under California Civil Code Section 2849, which provides that a
surety is entitled to the benefit of every security for the
performance of the principal obligation held by the creditor;
(iii) any and all rights, benefits, and defenses under
California Code of Civil Procedure Section 580d, which would
otherwise limit the Agent's and the Lenders' right to recover a
deficiency after a non-judicial foreclosure sale, and any and all
rights and defenses arising out of an election of remedies by the
Agent and the Lenders, even though that election of remedies, such
as a non-judicial foreclosure with respect to security for a
guaranteed obligation, has destroyed such Guarantor's rights of
subrogation and reimbursement against any Borrower by the operation
of California Code of Civil Procedure Section 580d, or otherwise;
(iv) any and all rights, benefits, and defenses under
California Code of Civil Procedure Section 580(a) which would
otherwise limit any Guarantor's liability after a non-judicial
foreclosure sale to the difference between the obligations
guaranteed herein and the fair market value of the property or
interests sold at such non-judicial foreclosure sale;
(v) any and all rights, benefits, and defenses under
California Code of Civil Procedure Section 580(b) which would
otherwise limit the Agent's or any Lender's right to record a
deficiency judgment with respect to purchase money obligations;
(vi) any and all rights, benefits, and defenses under
California Code of Civil Procedure Section 726 which, among other
things, would otherwise require the Agent or any Lender to exhaust
all of its security before a personal judgment may be obtained for a
deficiency;
(vii) any and all rights, benefits, and defenses under any
other present or future so-called "antideficiency" laws or statutes
of the state of California limiting or discharging the principal's
indebtedness.
Notwithstanding the waivers set forth in clauses (i) through (vii)
preceding, to the extent that the Total Obligations are secured by Real
Property owned by any Guarantor, it is agreed the foregoing waivers are
intended to apply to any security provided by any Borrower or any other
Person and not to Real Property of such Guarantor securing the Total
Obligations. With respect to Real Property of any Guarantor which secures
the Total Obligations, such Guarantor shall be entitled to all of the
benefits of California Code of Civil Procedure Sections 580a, 580b,
580d, 726 and all other antideficiency laws, to the extent that they are
applicable.
(f) Each Guarantor WAIVES all rights described in California Civil
Code Section 2856 (a)(1)-(3), inclusive, which includes, without
limitation, any rights and
Page 113
defenses which are or may become available to such Guarantor by reason of
California Civil Code Sections 2787 to 2855, inclusive. Accordingly,
without limiting the scope or effect of any of the other waivers of any
Guarantor contained in any Credit Document:
(i) such Guarantor WAIVES all rights and defenses that such
Guarantor may have because any debtor's debt is secured by Real
Property. This means, among other things:
(A) the Agent and the Lenders may collect from such
Guarantor without first foreclosing on any real or personal
property pledged by any Borrower; and
(B) if the Agent or any Lender forecloses on any Real
Property pledged by such Guarantor, the amount of the debt may
be reduced only by the price for which that collateral is sold
at the foreclosure sale, even if the collateral is worth more
than the sale price and the Agent and the Lenders may collect
from such Guarantor even if the Agent and the Lenders, by
foreclosing on such Real Property, have destroyed any right
such Guarantor may have to collect from any Borrower;
(ii) the waiver contained in this clause (f) is an
unconditional and irrevocable waiver of any rights and defenses such
Guarantor may have because any Borrower's debt is secured by Real
Property; these rights and defenses include, but are not limited to,
any rights or defenses based upon Sections 580a, 580b, 580d, or 726
of the California Code of Civil Procedure;
(iii) such Guarantor WAIVES all rights and defenses arising
out of an election of remedies by the Agent or the Lenders, even
though that election of remedies, such as a nonjudicial foreclosure
with respect to security for a guaranteed obligation, has destroyed
such Guarantor's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the California Code of
Civil Procedure or otherwise.
Each Credit Party represents and warrants to the Agent and the Lenders that such
Credit Party is currently informed of the financial condition of all other
Credit Parties and all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Total Obligations. Each Credit
Party further represents and warrants that such Credit Party has read and
understands the terms and conditions of the Credit Documents. Each Credit Party
agrees that neither the Agent, any Lender, nor the Issuing Lender has any
responsibility to inform any Credit Party of the financial condition of any
other Credit Party or of any other circumstances which bear upon the risk of
nonpayment or nonperformance of the Total Obligations.
Section 10.22 Conflict. To the extent that there is a conflict or
inconsistency between any provision hereof, on the one hand, and any provision
of any Credit Document, on the other hand, this Agreement shall control.
Page 114
Section 10.23 Amendment and Restatement.
(a) This Agreement and the other Credit Documents amends and
restates in its entirety the Original Credit Agreement. All rights,
benefits, indebtedness, interest, liabilities, and obligations of the
parties to the agreements, documents, and instruments executed and
delivered in connection with the Original Credit Agreement (the "Original
Credit Documents") are hereby renewed, amended, restated, and superseded
in their entirety according to the terms and provisions set forth herein
and in the other Credit Documents. All indebtedness, liabilities, and
obligations of the Credit Parties under the Original Credit Agreement are
renewed and continued and hereafter shall be payable in accordance with
this Agreement.
(b) All obligations of any Credit Party under any guaranty agreement
executed pursuant to the Original Credit Documents are renewed and
continued and hereafter shall be payable in accordance with the Guaranty
Agreements executed by such Credit Parties, and each such Credit Party
acknowledges and agrees that the "Guaranteed Obligations" as defined by
the Guaranty Agreements include, without limitation, the "Obligations"
under the Original Credit Agreement existing on the Closing Date as
renewed by this Agreement.
(c) All security interests, liens, and assignments previously
granted by any Credit Party pursuant to the Original Credit Documents are
hereby renewed and continued, and all such security interests, liens, and
assignments shall remain in full force and effect as security for the
Total Obligations.
(d) This Agreement shall not result in or constitute a waiver of or
a release, discharge, or forgiveness of any amount payable pursuant to the
Original Credit Documents, which such amounts are payable pursuant to the
terms of this Agreement. Each Credit Party represents and warrants that as
of the date hereof there are no claims or offsets against, or defenses or
counterclaims to, its obligations under this Agreement or any of the
Original Credit Documents. To induce the Agent and the Lenders to enter
into this Agreement, each Credit Party waives any and all such claims,
offsets, defenses, or counterclaims, whether known or unknown, arising
prior to the date hereof and relating to the Original Credit Documents or
this Agreement and the other Credit Documents.
[Remainder of page intentionally left blank]
Page 115
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
CREDIT PARTIES:
CRESCENT JEWELERS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President, Chief
Financial Officer
CRESCENT JEWELERS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President, Chief
Financial Officer
AGENT:
BANK OF AMERICA, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President
LENDERS:
BANK OF AMERICA, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President
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THE CIT GROUP/BUSINESS
CREDIT, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Title: Vice President
-------------------------
Page 117
Schedule 1.1(A)
EXISTING LETTERS OF CREDIT
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Schedule 1.1(B)
INVESTMENTS
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Schedule 1.1(C)
LIENS
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Schedule 1.1(D)
LENDER AND COMMITMENTS
Revolving Revolving LOC
Commitment Committed Committed
Lender Percentage Amount Amount
------------------------------------- ---------- ----------- -----------
Bank of America, N.A. 50.00% $25,000,000 $ 2,500,000
The CIT Group/Business Credit, Inc. 50.00% $25,000,000 $ 2,500,000
Total 100.00% $50,000,000 $ 5,000,000
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Schedule 5.2
CHANGES AND RESTRICTED PAYMENTS
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Schedule 5.6
LITIGATION
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Schedule 5.9
INTELLECTUAL PROPERTY
A. Trademarks
B. Tradenames
C. Copyrights
D. Patents
E. Other Intellectual Property (technology, know-how and processes
necessary for the conduct of business
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Schedule 5.14
SUBSIDIARIES
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Schedule 5.18
LABOR MATTERS
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Schedule 5.20
REAL PROPERTY LOCATIONS; LOCATIONS OF
COLLATERAL; CHIEF EXECUTIVE OFFICE/
PRINCIPAL PLACES OF BUSINESS
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Schedule 5.23
BANK ACCOUNTS; MERCHANT ACCOUNTS
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Schedule 6.6
INSURANCE
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Schedule 7.1
INDEBTEDNESS
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Schedule 10.1
LENDERS' ADDRESSES
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Credit Contact Operations Contact
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Bank of America, N.A. Bank of America, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Portfolio Manager Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
---------------------------------------------------------------------------------
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THE CIT GROUP/BUSINESS CREDIT, INC. THE CIT GROUP/BUSINESS CREDIT, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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