Exhibit 10.9
=============================================
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
=============================================
FLEET RETAIL FINANCE INC.
AS ADMINISTRATIVE AGENT AND
COLLATERAL AGENT
=============================================
REVOLVING CREDIT LENDERS
NAMED HEREIN
=============================================
BACK BAY CAPITAL FUNDING LLC
THE TRANCHE B LENDER
▇▇▇▇▇ FARGO RETAIL FINANCE, LLC
AS SYNDICATION AGENT
NATIONAL CITY COMMERCIAL FINANCE, INC. AND
▇▇▇▇▇▇ FINANCIAL, INC.
AS CO-DOCUMENTATION AGENTS
=============================================
DESIGNS, INC.
THE BORROWERS' REPRESENTATIVE
FOR:
THE BORROWERS NAMED HEREIN
=============================================
MAY 14, 2002
ARTICLE 1 - DEFINITIONS:..........................................................................................2
ARTICLE 2 - THE REVOLVING CREDIT: ..............................................................................38
2.1 . Establishment of Revolving Credit.............................................................38
2.2. Advances in Excess of Borrowing Base (OverLoans)...............................................39
2.3. Initial Reserves. Changes to Reserves..........................................................40
2.4. Risks of Value of Collateral...................................................................40
2.5. Commitment to Make Revolving Credit Loans and Support Letters of Credit........................40
2.6. Revolving Credit Loan Requests.................................................................40
2.7 Making of Revolving Credit Loans...............................................................42
2.8. SwingLine Loans................................................................................43
2.9. The Loan Account...............................................................................43
2.10. The Revolving Credit Notes.....................................................................44
2.11. Payment of The Loan Account....................................................................45
2.12. Interest on Revolving Credit Loans. ...........................................................46
2.13. Revolving Credit Commitment Fee................................................................46
2.14. Administrative Agent's Fee.....................................................................47
2.15. Unused Line Fee................................................................................47
2.16. Revolving Credit Early Termination Fee.........................................................47
2.17. Intentionally omitted..........................................................................47
2.18. Agents' and Lenders' Discretion................................................................47
2.19. Procedures For Issuance of L/C's...............................................................48
2.20. Fees For L/C's.................................................................................49
2.21. Concerning L/C's...............................................................................50
2.22. Changed Circumstances..........................................................................52
2.23. Designation of Borrowers' Representative as Borrowers' Agent..................................53
2.24. Lenders' Commitments...........................................................................53
2.25. References to Original Agreement...............................................................55
ARTICLE 3 - THE TRANCHE B LOAN:..................................................................................55
3.1. The Tranche B Loan............................................................................55
3.2. The Tranche B Note.............................................................................55
3.3. Payment of Principal of the Tranche B Loan . .................................................56
3.4 Interest On The Tranche B Loan. ...............................................................56
3.5. Tranche B Commitment Fee and Tranche B Monitoring Fee..........................................57
3.6. Payments On Account of Tranche B Loan .........................................................58
ARTICLE 4 - CONDITIONS PRECEDENT: ...............................................................................58
4.1 Due Diligence................................................................................58
4.2. Opinion........................................................................................58
4.3. Additional Documents...........................................................................59
4.4. Officers' Certificates.........................................................................59
4.5. Casual Male Acquisition........................................................................59
4.6. Representations and Warranties.................................................................59
4.7. Minimum Day One Excess Availability............................................................59
4.8. All Fees and Expenses Paid.....................................................................59
4.9 INVESTMENT. ..................................................................................60
4.10 Collateral, Etc. ....................................................................60
4.11. No Default.....................................................................................60
4.12. Financial Statements; Legal Due Diligence; No Adverse Change...................................60
Page ii
4.14. Benefit of Conditions Precedent................................................................61
ARTICLE 5 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:...................................................61
5.1. Payment and Performance of Liabilities.........................................................62
5.2. Due Organization. Authorization. No Conflicts..................................................62
5.3. Trade Names....................................................................................63
5.4. Infrastructure.................................................................................63
5.5. Locations......................................................................................64
5.6. Stores.........................................................................................64
5.7. Title to Assets................................................................................65
5.8. Indebtedness...................................................................................65
5.9. Insurance......................................................................................66
5.10. Licenses.......................................................................................67
5.11. Leases.........................................................................................67
5.12. Requirements of Law............................................................................67
5.13. Labor Relations................................................................................67
5.14. Maintain Properties............................................................................68
5.15. Taxes..........................................................................................69
5.16. No Margin Stock................................................................................69
5.17. ERISA..........................................................................................69
5.18. Hazardous Materials............................................................................70
5.19. Litigation.....................................................................................70
5.20. Dividends. Investments. Entity Action..........................................................70
5.21. Permitted Acquisitions.........................................................................71
5.22. Loans..........................................................................................72
5.23. Restrictions on Sale of Collateral; License Agreements.........................................72
5.24. Protection of Assets...........................................................................73
5.25. Line of Business...............................................................................73
5.26. Affiliate Transactions.........................................................................74
5.27. Further Assurances.............................................................................74
5.28. Adequacy of Disclosure.........................................................................75
5.29. No Restrictions on Liabilities.................................................................75
5.30. Other Covenants................................................................................75
5.31. Inventory Purchasing...........................................................................76
ARTICLE 6 FINANCIAL REPORTING AND PERFORMANCE COVENANTS:.........................................................76
6.1. Maintain Records...............................................................................76
6.2. Access to Records..............................................................................76
6.3. Prompt Notice to Administrative Agent..........................................................77
6.4. Borrowing Base Certificate.....................................................................78
6.5. Weekly and Monthly Reports.....................................................................79
6.6. Quarterly Reports..............................................................................79
6.7. Annual Reports.................................................................................79
6.8. Officers' Certificates.........................................................................80
6.9. Inventories, Appraisals, and Audits............................................................81
6.10. Additional Financial Information...............................................................82
6.11. Financial Performance Covenants................................................................82
ARTICLE 7 - USE OF COLLATERAL:...................................................................................83
7.1. Use of Inventory Collateral....................................................................83
7.2. Inventory Quality..............................................................................83
Page iii
7.3. Adjustments and Allowances.....................................................................83
7.4. Validity of Accounts...........................................................................83
7.5. Notification to Account Debtors................................................................84
ARTICLE 8 - CASH MANAGEMENT. PAYMENT OF LIABILITIES: ............................................................84
8.1 Depository Accounts............................................................................84
8.2. Credit Card Receipts...........................................................................85
8.3. The Concentration, Blocked, and Operating Accounts.............................................85
8.4. Proceeds and Collections.......................................................................85
8.5. Payment of Liabilities.........................................................................86
8.6. The Operating Account..........................................................................87
ARTICLE 9 - GRANT OF SECURITY INTEREST:..........................................................................88
9.1. Grant of Security Interest.....................................................................88
9.2. Extent and Duration of Security Interest; Notice...............................................89
ARTICLE 10 - COLLATERAL AGENT AS ATTORNEY-IN-FACT:...............................................................89
10.1. Appointment as Attorney-In-Fact................................................................89
10.2. No Obligation to Act...........................................................................90
ARTICLE 11 - EVENTS OF DEFAULT:..................................................................................90
11.1. Failure to Pay the Revolving Credit or the Tranche B Loan......................................91
11.2. Failure To Make Other Payments.................................................................91
11.3. Failure to Perform Covenant or Liability (No Grace Period).....................................91
11.4. Financial Reporting Requirements...............................................................91
11.5. Failure to Perform Covenant or Liability (Grace Period)........................................92
11.6. Tranche B Loan Action Event Acceleration.......................................................92
11.7. Misrepresentation..............................................................................92
11.8. Acceleration of Other Debt; Breach of Lease. ..................................................92
11.9. Default Under Other Agreements.................................................................92
11.10. Uninsured Casualty Loss........................................................................93
11.11. Attachment. Judgment. Restraint of Business....................................................93
11.12. Canton Mortgage Default........................................................................93
11.13. Indictment - Forfeiture........................................................................93
11.14. Challenge to Loan Documents....................................................................93
11.15. Change in Control..............................................................................94
11.16. Business Failure...............................................................................94
11.17. Bankruptcy.....................................................................................94
ARTICLE 12 - RIGHTS AND REMEDIES UPON DEFAULT:...................................................................95
12.1 Acceleration...................................................................................95
12.2. Rights of Enforcement..........................................................................95
12.3. Sale of Collateral.............................................................................96
12.4. Occupation of Business Location................................................................97
12.5. Grant of Nonexclusive License..................................................................97
12.6. Assembly of Collateral.........................................................................98
12.7. Rights and Remedies............................................................................98
ARTICLE 13 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:........................................................98
13.1. Revolving Credit Funding Procedures............................................................98
Page iv
13.2. SwingLine Loans................................................................................98
13.3. Administrative Agent's Covering of Fundings:...................................................99
13.4. Ordinary Course Distributions: Revolving Credit...............................................101
13.5. Ordinary Course Distributions : The Tranche B Loan............................................103
ARTICLE 14 - ACCELERATION AND LIQUIDATION:......................................................................103
14.1. Acceleration Notices..........................................................................103
14.2. Mandatory Acceleration Right of The Tranche B Lender:.........................................104
14.3. Acceleration..................................................................................104
14.4. Initiation of Liquidation.....................................................................105
14.5. Actions At and Following Initiation of Liquidation...........................................105
14.6. Collateral Agent's Conduct of Liquidation.....................................................105
14.7. Distribution of Liquidation Proceeds:.........................................................106
14.8. Relative Priorities To Proceeds of Liquidation ...............................................106
ARTICLE 15 - THE AGENTS: ............................................................................108
15.1. Appointment of The Agents ..................................................................108
15.2. Responsibilities of Agents ...................................................................108
15.3. Concerning Distributions By the Agents .......................................................109
15.4. Dispute Resolution:...........................................................................110
15.5. Distributions of Notices and of Documents.....................................................110
15.6. Confidential Information......................................................................110
15.7. Reliance by Agents ...........................................................................111
15.8. Non-Reliance on Agents and Other Lenders......................................................111
15.9. Indemnification...............................................................................112
15.10. Resignation of Agent..........................................................................112
ARTICLE 16 - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:...............................................113
16.1. Administration of Credit Facilities...........................................................113
16.2. Actions Requiring or On Direction of Majority Lenders.........................................114
16.3. Actions Requiring or On Direction of SuperMajority Revolving Credit Lenders..................114
16.4. Action Requiring Certain Consent .............................................................114
16.5. Actions Requiring or Directed By Unanimous Consent............................................116
16.6. Actions Requiring SwingLine Lender Consent....................................................117
16.7. Actions Requiring Tranche B Lender Consent...................................................117
16.8. Actions Requiring Agents' Consent.............................................................118
16.9. Miscellaneous Actions.........................................................................118
16.10. Actions Requiring Borrowers' Representative's Consent.........................................119
16.11. NonConsenting Revolving Credit Lender.........................................................119
16.12. The BuyOut:...................................................................................120
ARTICLE 17 - ASSIGNMENTS BY LENDERS: ..........................................................................121
17.1. Assignments and Assumptions:..................................................................121
17.2. Assignment Procedures.........................................................................121
17.3. Effect of Assignment..........................................................................122
ARTICLE 18 - NOTICES:...........................................................................................122
18.1. Notice Addresses..............................................................................122
18.2. Notice Given..................................................................................124
18.3. Wire Instructions.............................................................................124
Page v
ARTICLE 19 - TERM:..............................................................................................124
19.1. Termination of Revolving Credit...............................................................124
19.2. Actions On Termination........................................................................125
ARTICLE 20 - GENERAL:...........................................................................................126
20.1. Protection of Collateral......................................................................126
20.2. Publicity.....................................................................................126
20.3. Successors and Assigns........................................................................126
20.4. Severability..................................................................................126
20.5. Amendments. Course of Dealing................................................................126
20.6. Power of Attorney.............................................................................127
20.7. Application of Proceeds.......................................................................127
20.8. Increased Costs...............................................................................127
20.9. Costs and Expenses Of Agents and Lenders .....................................................128
20.10. Copies and Facsimiles.........................................................................128
20.11. Massachusetts Law.............................................................................129
20.12. Indemnification. .............................................................................129
20.13. Rules of Construction.........................................................................129
20.14. Intent........................................................................................131
20.15. Participations................................................................................131
20.16. Right of Set-Off..............................................................................132
20.17. Pledges To Federal Reserve Banks: ............................................................132
20.18. Maximum Interest Rate.........................................................................132
20.19. Waivers. .....................................................................................132
Page vi
vi
EXHIBITS
1.0(a) : Borrowers
1.0(b) : Guarantors
1.0(c) : Casual Male Companies
1.0(d) :
Designs Inc. Companies
1.1 : Permitted Encumbrances
2.8 : SwingLine Note
2.10 : Revolving Credit Note
2.24 : Revolving Credit Lenders' Commitments
3.2 : Tranche B Note
5.2 : Loan Parties' Information
5.3 : Trade Names
5.4(b) : Exceptions to Property Rights
5.5 : Locations, Leases, and Landlords
5.7(b) : Consigned Inventory
5.7(c)(ii) : Equipment Usage Agreement
5.9 : Insurance Policies
5.11 : Capital Leases
5.13(a) : Labor Relations
5.19 : Litigation
5.28(b) : Contingent Obligations
6.4 : Borrowing Base Certificate
6.5 : Weekly and Monthly Financial Reporting Requirements
8.1 : DDA's
8.2 : Credit Card Arrangements
17.1 : Assignment / Assumption
Page vii
================================================================================
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT FLEET RETAIL FINANCE INC.
ADMINISTRATIVE AND COLLATERAL AGENT
================================================================================
May 14, 2002
THIS THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT (the
"AGREEMENT") is made amongst
Fleet Retail Finance Inc. (in such capacity, the
"ADMINISTRATIVE AGENT"), a Delaware corporation with offices at ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Administrative Agent for
the ratable benefit of (i) the Collateral Agent, (ii) the "REVOLVING
CREDIT LENDERS" who are, at present, those financial institutions
identified on the signature pages of this Agreement and any Person who
becomes a "Revolving Credit Lender" in accordance with the provisions
of Article 17.1 of this Agreement and (iii) the Tranche B Lender,
and
Fleet Retail Finance Inc. (in such capacity, the "COLLATERAL
AGENT"), a Delaware corporation with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Collateral Agent for the ratable
benefit of (i) the Administrative Agent, (ii) the Revolving Credit
Lenders and (iii) the Tranche B Lender,
and
The Revolving Credit Lenders;
and
Back Bay Capital Funding LLC (in such capacity, with any
successor or assign, the "TRANCHE B LENDER"), a limited liability
company with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and
Designs, Inc. ( in such capacity, the "BORROWERS'
REPRESENTATIVE"), a Delaware corporation with its principal executive
offices at ▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as agent for the
Persons named on EXHIBIT 1.0(A) annexed hereto (individually, a
"BORROWER" and collectively, the "BORROWERS").
WHEREAS, on December 7, 2000, Designs, Inc. and FRFI entered into a
Second Amended and Restated
Loan and Security Agreement (as amended and in
effect, the "ORIGINAL AGREEMENT"), pursuant to which, among other things, FRFI
agreed to make Revolving Loans to Designs, Inc.;
Page 1
WHEREAS, Designs, Inc. has requested that FRFI amend the Original
Agreement in certain respects in order to, among other thing, add additional
lenders and borrowers, increase the Revolving Credit amount, make a term loan
and extend the Maturity Date of the Original Agreement;
WHEREAS, FRFI is willing to amend the Original Agreement on the terms
set forth herein; and
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in its entirety.
NOW THEREFORE, Designs, Inc. and FRFI hereby agree that the Original
Agreement shall be amended and restated in its entirety as follows:
WITNESSETH:
ARTICLE 1 - DEFINITIONS:
As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"ACCELERATION": The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and
payable. Derivations of the word "Acceleration" (such as
"Accelerate") are used with like meaning in this Agreement.
"ACCELERATION NOTICE": Written notice as follows:
(a) From the Administrative Agent to the Collateral
Agent and the Revolving Credit Lenders, as provided in Section
14.1(a).
(b) From the SuperMajority Revolving Credit Lenders
to the Administrative Agent, as provided in Section 14.1(b).
(c) From the Tranche B Lender to the Administrative
Agent, as provided in Section 14.2(c).
"ACCOUNT DEBTOR": Has the meaning given that term in the UCC.
"ACCOUNTS" and "ACCOUNTS RECEIVABLE" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment
(whether or not earned by performance) for: property that has
been or is to be sold, leased, licensed, assigned, or
otherwise disposed of; services rendered or to be rendered; a
policy of insurance issued or to be issued; a secondary
obligation incurred or to be incurred; energy provided or to
be provided; for the use or hire of a vessel; arising out of
the use of a credit or charge card or information contained on
or used with that card;
Page 2
winnings in a lottery or other game of chance; and also all
Inventory which gave rise thereto, and all rights associated
with such Inventory, including the right of stoppage in
transit; all reclaimed, returned, rejected or repossessed
Inventory (if any) the sale of which gave rise to any Account.
"ACH": Automated clearing house.
"ACQUISITION": The purchase or other acquisition, by a Loan Party (no
matter how structured in one transaction or in a series of
transactions), of: (a) equity interests in any other Person
which would constitute or which results in a Change in Control
of such other Person, or (b) such of the assets of any Person
as would permit a Loan Party to operate one or more retail
locations of such Person or to conduct other business
operations with such assets (provided, however, none of the
following shall constitute an "Acquisition": purchases of
inventory in the ordinary course of a Loan Party's business;
purchases, leases or other acquisitions of Equipment in the
ordinary course of a Loan Party's business; and Capital
Expenditures permitted hereunder).
"ADMINISTRATIVE AGENT": Defined in the Preamble.
"ADMINISTRATIVE AGENT'S COVER": Defined in Section 13.3(c)(i).
"ADMINISTRATIVE AGENT'S FEE": Is defined in Section 2.14.
"AFFILIATE": The following:
(a) With respect to any two Persons, a relationship
in which (i) one holds, directly or indirectly, not less than
twenty five percent (25%) of the capital stock, beneficial
interests, partnership interests, or other equity interests of
the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a
majority of the directors (or other body or Person who has
those powers customarily vested in a board of directors of a
corporation); or (iii) not less than twenty five percent (25%)
of their respective ownership is directly or indirectly held
by the same third Person.
(b) Any Person which: is a parent, brother-sister or
Subsidiary of a Loan Party; could have such enterprise's tax
returns or financial statements consolidated with that Loan
Party's; could be a member of the same controlled group of
corporations (within the meaning of Section 1563(a)(1), (2)
and (3) of the Internal Revenue Code of 1986, as
Page 3
amended from time to time) of which any Loan Party is a
member; or controls or is controlled by any Loan Party.
"AGENT": When not preceded by "Administrative" or "Collateral", the
term "Agent" refers collectively and individually to the
Administrative Agent and the Collateral Agent.
"AGENTS' RIGHTS AND REMEDIES": Is defined in Section 12.7.
"APPLICABLE LAW": As to any Person: (i) All statutes, rules,
regulations, orders, or other requirements having the force of
law and (ii) all court orders and injunctions, arbitrator's
decisions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other
body which has or claims jurisdiction over such Person, or any
property of such Person, or of any other Person for whose
conduct such Person would be responsible.
"APPLICABLE MARGIN": The following percentages for Base Margin Loans
and Libor Loans based upon the following criteria:
LEVEL AVERAGE EXCESS AVAILABILITY LIBOR MARGIN BASE MARGIN
Less Than Equal to Or Greater Than
I $50,000,000 2.25% 0.00%
II $50,000,000 $25,000,000 2.50% .25%
III $25,000,000 $15,000,000 2.75% .50%
IV $15,000,000 3.00% .75%
The Applicable Margin shall initially be established at Level
III. Thereafter, the Applicable Margin shall be adjusted
quarterly on the first day of each calendar quarter,
commencing with the Fiscal quarter June, 2003, based upon the
average Excess Availability during the prior quarter, PROVIDED
that in no event shall the Applicable Margin be established at
Level I or Level II during the first twelve (12) months
subsequent to the Closing Date. Upon the occurrence of an
Event of Default, the Applicable Margin may, at the option of
the Administrative Agent, be immediately increased to the
percentages set forth in Level IV (even if the Excess
Availability requirements for another Level have been met) and
interest shall be determined in the manner set forth in
Section 2.12(f).
Page 4
"APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) (i) the
Retail of Eligible Inventory (net of Inventory Reserves) of
the Casual Male Companies plus (ii) the Cost of Eligible
Inventory (net of Inventory Reserves) of the Designs, Inc.
Companies MULTIPLIED by (b) that percentage, determined from
the then most recent appraisal of the Loan Parties' Inventory
undertaken at the request of the Administrative Agent, to
reflect the appraiser's estimate of the net recovery on the
Loan Parties' Inventory in the event of an in-store
liquidation of that Inventory.
"ASSIGNEE REVOLVING CREDIT LENDER": Defined in Section 17.1(a).
"ASSIGNING REVOLVING CREDIT LENDER": Defined in Section 17.1(a).
"ASSIGNMENT AND ACCEPTANCE": Defined in Section 17.2.
"AVAILABILITY": The least of (a), (b), or (c), where:
(a) is the result of
(i) The Revolving Credit Ceiling
MINUS
(ii) The aggregate unpaid balance of the
Loan Account
MINUS
(iii) The aggregate undrawn Stated Amount of
all then outstanding L/C's.
(b) is the result of
(i) The Borrowing Base MINUS
(ii) The aggregate unpaid balance of the
Loan Account
MINUS
(iii) The aggregate undrawn Stated Amount of
all then outstanding L/C's.
MINUS
(iv) The aggregate of the Availability
Reserves.
(c) is the result of
Page 5
(i) The Tranche B Borrowing Base MINUS
(ii) The aggregate unpaid balance of the
Loan Account
MINUS
(iii) The aggregate undrawn Stated Amount of
all then outstanding L/C's.
MINUS
(iv) The aggregate of the Availability
Reserves.
MINUS
(v) The then unpaid principal balance of
the Tranche B Loan and all accrued but
unpaid interest thereon.
"AVAILABILITY RESERVES": Such reserves as the Administrative Agent from
time to time determines in the Administrative Agent's
reasonable discretion as being appropriate to reflect the
impediments to the Collateral Agent's ability to realize upon
the Collateral. Without limiting the generality of the
foregoing, Availability Reserves may include (but are not
limited to) reserves based on the following:
(i) Rent (but only if a landlord's waiver,
acceptable to the Administrative Agent, has
not been received by the Administrative
Agent).
(ii) Customer Credit Liabilities.
(iii) Taxes and other governmental charges,
including, ad valorem, personal property,
and other taxes which might have priority
over the Collateral Interests of the
Collateral Agent in the Collateral.
(iv) L/C Landing Costs.
(v) Gift cards or gift certificates.
"BANKRUPTCY BREACH": The occurrence of any Event of Default described
in any of Sections 11.16, 11.17 and 11.18.
"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.
"BANKRUPTCY COURT": United States Bankruptcy Court for the Southern
District of New York.
Page 6
"BASE": The Base Rate announced from time to time by Fleet National
Bank (or any successor in interest to Fleet National Bank). In
the event that said bank (or any such successor) ceases to
announce such a rate, "Base" shall refer to that rate or index
announced or published from time to time as the Administrative
Agent, in good faith, designates as the functional equivalent
to said Base Rate. Any change in "Base" shall be effective,
for purposes of the calculation of interest due hereunder,
when such change is made effective generally by the bank on
whose rate or index "Base" is being set.
"BASE MARGIN": As determined from the definition of Applicable
Margin.
"BASE MARGIN LOAN": Each Revolving Credit Loan while bearing
interest at the Base Margin Rate.
"BASE MARGIN RATE": The aggregate of Base PLUS the then applicable
Base Margin.
"BBC": Back Bay Capital Funding LLC.
"BLOCKED ACCOUNT": Any account, including, without limitation, any DDA,
over which one or more of the Agents exercise control pursuant
to a Blocked Account Agreement.
"BLOCKED ACCOUNT AGREEMENT": An Agreement, in form satisfactory to the
Administrative Agent, which recognizes the Collateral Agent's
Collateral Interest in the contents of the account which is
the subject of such Agreement and provides that such contents
shall be transferred only to the Concentration Account or as
otherwise instructed by the Collateral Agent.
"BORROWER" and "BORROWERS": Defined in the Preamble.
"BORROWERS' REPRESENTATIVE": Defined in the Preamble.
"BORROWING BASE": The aggregate of the following:
(a) The lesser of
(i) The (x) product of the Retail
of Eligible Inventory (net of Inventory
Reserves) of the Casual Male Companies
multiplied by the
Page 7
Revolving Credit Casual Male Companies
Inventory Advance Rate and (y) product of
the Cost of Eligible Inventory (net of
Inventory Reserves) of the Designs, Inc.
Companies multiplied by the Revolving Credit
Designs, Inc. Companies Inventory Advance
Rate, or
(ii) 85% of the Appraised Inventory
Liquidation Value.
PLUS
(b) The face amount of Eligible Credit Card
Receivables multiplied by the Credit Card
Advance Rate.
PLUS
(c) The face amount of Eligible Receivables (net
of Receivables Reserves) multiplied by the
Receivables Advance Rate.
"BORROWING BASE CERTIFICATE": Is defined in Section 6.4.
"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts generally are not
open to the general public for the purpose of conducting
commercial banking business; or (c) a day on which the
principal office of the Administrative Agent is not open to
the general public to conduct business.
"BUSINESS PLAN": The Loan Parties' business plan dated February 8,
2002, as updated from time to time by the Borrowers'
Representative pursuant to this Agreement.
"BUYOUT": The consummation of a transaction described in Section 16.12.
"CANTON MORTGAGE": The mortgage made by JBAK Canton Realty, Inc., to
The Chase Manhattan Bank, dated as of December 30, 1996,
encumbering the Canton Warehouse.
"CANTON WAREHOUSE": That certain real property located at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"CAPITAL EXPENDITURES": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
"CAPITAL LEASE": Any lease which may be capitalized in accordance with
GAAP.
Page 8
"CASUAL MALE ACQUISITION": The acquisition by Designs, Inc. and
certain of its Affiliates of substantially all of the assets
of Casual Male Corp. and its subsidiaries in accordance with
the terms of the Casual Male Acquisition Agreement.
"CASUAL MALE ACQUISITION AGREEMENT": The Asset Purchase Agreement
dated as of April 26, 2002 among Buckmin Inc., Casual Male
Corp., Elm Equipment Corp., ISAB Inc., JBAK Canton Realty,
Inc., JBI Apparel Inc., JBI Holding Company Inc., JBI Inc., LP
Innovations Inc., ▇▇▇▇▇ Shoe Inc., ▇▇▇▇▇ Shoe International
Inc., ▇▇▇▇▇▇▇ Companies Inc., TCM Holding Company Inc., TCMB&T
Inc., The Casual Male Inc., White Cap Footwear, Inc., WGS
Corp., and Designs, Inc. and certain of its Affiliates, as
amended through the date of this Agreement.
"CASUAL MALE APPROVAL ORDER": The order entered by the Bankruptcy
Court pursuant to 11 USC Section 363 approving the Casual Male
Acquisition Agreement and authorizing the purchase and sale
pursuant to the Casual Male Acquisition Agreement.
"CASUAL MALE CORP.": Casual Male Corp.
"CASUAL MALE COMPANIES": The Persons listed on EXHIBIT 1.0(C) annexed
hereto.
"CHANGE IN CONTROL": The occurrence of any of the following:
(a) The acquisition, by any group of persons (within the
meaning of the Securities Exchange Act of 1934, as amended) or
by any Person, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission) of 25%
or more of the issued and outstanding capital stock of
Designs, Inc. having the right, under ordinary circumstances,
to vote for the election of directors of Designs, Inc.
(b) At any time, (a) occupation of a majority of the seats
(other than vacant seats) on the board of directors of
Designs, Inc. by Persons who were neither (i) nominated by the
board of directors of Designs, Inc. nor (ii) appointed by
directors so nominated.
(c) The persons who are directors of Designs, Inc. as of the
Closing Date cease, for any reason other than death,
disability, or resignation in the ordinary course (and not in
connection with a proxy contest or similar occurrence), to
constitute a majority of the board of directors of Designs,
Inc.
Page 9
(d) The failure by Designs, Inc. (i) to own directly 100% of
the issued and outstanding capital stock of Designs Apparel,
Inc. or (ii) to own, directly or indirectly, 100% of the
issued and outstanding capital stock of all other Loan
Parties.
"CHATTEL PAPER": Has the meaning given that term in the UCC.
"CLOSING DATE": May 14, 2002.
"COLLATERAL": Is defined in Section 9.1.
"COLLATERAL AGENT": Defined in the Preamble.
"COLLATERAL INTEREST": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"CONCENTRATION ACCOUNT": Is defined in Section 8.3.
"CONSENT": Actual consent given by the Lender from whom such consent is
sought; or the passage of seven (7) Business Days from receipt
of written notice to a Lender from an Agent of a proposed
course of action to be followed by an Agent without such
Lender's giving that Agent written notice of that Lender's
objection to such course of action, PROVIDED THAT all Agents
may rely on such passage of time as consent by a Lender only
if such written notice states that consent will be deemed
effective if no objection is received within such time period.
"CONSOLIDATED": When used to modify a financial term, test, statement,
or report, refers to the application or preparation of such
term, test, statement or report (as applicable) based upon the
consolidation, in accordance with GAAP, of the financial
condition or operating results of the Loan Parties.
"COST": The lower of
(a) the calculated cost of purchases, as determined
from invoices received by Design Apparel, Inc., its purchase
journal or stock ledger, based upon its accounting practices,
known to the Administrative Agent, which practices are in
effect on the date on
Page 10
which this Agreement was executed; or
(b) the lowest ticketed or promoted price at which
the subject inventory is offered to the public by any Loan
Party, after all ▇▇▇▇-▇▇▇▇▇ (whether or not such price is then
reflected on a Loan Party's accounting system).
"Cost" does not include inventory capitalization costs or
other non-purchase price charges used in a Loan Party's
calculation of cost of goods sold (other than freight, which
may be capitalized consistent with GAAP and such Loan Party's
prior practices).
"COSTS OF COLLECTION": Includes, without limitation, all reasonable
attorneys' fees and reasonable out-of-pocket expenses incurred
by any Agent's attorneys or the Tranche B Lender's attorneys,
and all reasonable out-of-pocket costs incurred by any Agent
or the Tranche B Lender in the administration of the
Liabilities and/or the Loan Documents, including, without
limitation, reasonable costs and expenses associated with
travel on behalf of any Agent or the Tranche B Lender, where
such costs and expenses are directly or indirectly related to
or in respect of any Agent's or the Tranche B Lender's:
administration and management of the Liabilities; negotiation,
documentation, and amendment of any Loan Document; or efforts
to preserve, protect, collect, or enforce the Collateral, the
Liabilities, and/or the Agents' Rights and Remedies and/or any
of the rights and remedies of any Agent or the Tranche B
Lender against or in respect of any guarantor or other person
liable in respect of the Liabilities (whether or not suit is
instituted in connection with such efforts). "Costs of
Collection" also includes the reasonable fees and expenses of
Lenders' Special Counsel and the Tranche B Lender's counsel.
The Costs of Collection are Liabilities, and at the
Administrative Agent's option may bear interest at the then
effective Base Margin Rate.
"CREDIT CARD ADVANCE RATE": 85%
"CUSTOMER CREDIT LIABILITY": Gift certificates, customer deposits,
merchandise credits, layaway obligations, frequent shopping
programs, and similar liabilities of any Loan Party to its
retail customers and prospective customers.
"DDA": Any checking, other demand daily depository account or other
bank or like account, other than an Exempt DDA, maintained by
any Loan Party including, on the date of this Agreement, the
accounts listed on EXHIBIT 8.1 hereto.
Page 11
"DEFAULT": Any occurrence, circumstance, or state of facts with respect
to a Loan Party which (a) is an Event of Default; or (b) would
become an Event of Default if any requisite notice were given
and/or any requisite period of time were to run and such
occurrence, circumstance, or state of facts were not cured
within any applicable grace period.
"DELINQUENT REVOLVING CREDIT LENDER": Defined in Section 13.3(c).
"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC.
"DESICAND": DesiCand Inc., a Delaware corporation wholly-owned by
Designs, Inc.
"DESICAND LICENSE AGREEMENT": The Retail Store License Agreement dated
January 9, 2002 between Candie's, Inc. and Designs, Inc., as
in effect on the Closing Date.
"DESIGNS, INC. COMPANIES": The Persons listed on EXHIBIT 1.0(D) annexed
hereto.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.
"EARLY TERMINATION ASSESSMENT": The Revolving Credit Early
Termination Fee and the Tranche B Early Termination Fee.
"ECKO": ECKO. Complex, LLC d/b/a Ecko Unltd.
"ECKO JOINT VENTURE": The joint venture between ECKO and Designs,
Inc. referred to in the Letter of Intent between ECKO and
Designs, Inc. dated February 18, 2002.
"EBITDA": Earnings before interest, taxes, depreciation and
amortization, each as determined in accordance with GAAP.
"ELIGIBLE ASSIGNEE": With respect to an assignee of a Revolving Credit
Lender: a bank, insurance company, or company engaged in the
business of making commercial loans having a combined capital
and surplus in excess of $300 Million or any Affiliate of any
Revolving Credit Lender, or any Person to whom a Revolving
Credit Lender assigns its
Page 12
rights and obligations under this Agreement as part of a
programmed assignment and transfer of such Revolving Credit
Lender's rights in and to a material portion of such Revolving
Credit Lender's portfolio of asset based credit facilities.
"ELIGIBLE CREDIT CARD RECEIVABLES": Under 5 Business Day accounts due
on a non-recourse basis from major credit card processors
(which, if due on account of a private label credit card
program, are deemed in the discretion of the Administrative
Agent to be eligible).
"ELIGIBLEIN-TRANSIT INVENTORY": "Eligible In-Transit Inventory " will
be calculated at 75% of (i) the Retail value of such of the
Inventory of the Casual Male Companies and (ii) the Cost of
such of the Inventory of the Designs, Inc. Companies (in each
case, without duplication as to Eligible Inventory and
Eligible In-Transit Inventory ), in each case in which title
has passed to a Loan Party and which is then being shipped
from a foreign location for receipt, within 45 days, at a
warehouse of one of the Loan Parties, PROVIDED THAT
(a) Such Inventory is of such types,
character, qualities and quantities (net of Inventory
Reserves) as the Administrative Agent in its
discretion from time to time determines to be
eligible for borrowing;
(b) The documents which relate to such
shipment names the Collateral Agent as consignee of
the subject Inventory and the Collateral Agent has
control over the documents which evidence ownership
of the subject Inventory (such as by the providing to
the Collateral Agent of a Customs Brokers Agreement
in form reasonably satisfactory to the Collateral
Agent); and
(c) The Collateral Agent has a first
priority perfected security interest in such
Inventory.
"ELIGIBLE INVENTORY": The following (without duplication):
(a) Such of the Loan Parties' Inventory, at such
locations, and of such types, character, qualities and
quantities, as the Administrative Agent, in its sole
discretion from time to time determines to be acceptable for
borrowing, as to which Inventory, the Collateral Agent has a
perfected security interest which is prior and superior to all
security interests, claims, and encumbrances.
(b) Eligible L/C Inventory.
(c) Eligible In-Transit Inventory.
Page 13
Without limiting the foregoing, "Eligible Inventory" shall not
include (i) direct shipment inventory; (ii) inventory which
can not be sold including, without limitation, any non-
merchandise inventory (such as labels, bags, and packaging
materials, etc.); (iii) "dummy warehouse inventory"; (iv)
damaged goods, return to vendor merchandise, packaways,
consigned inventory, samples and other similar categories; (v)
inventory which is the subject of a store closing,
liquidation, going-out-of-business or similar sale, as to
which in each case, any Loan Party has received an initial
payment of the guaranteed price from the Person conducting the
sale; and (vi) inventory in locations outside the United
States (except for Eligible L/C Inventory) and in locations in
the United States not under any Loan Party's control (unless
waivers acceptable to the Agents are obtained).
"ELIGIBLEL/C INVENTORY": "Eligible L/C Inventory" will be calculated
at 75% of (i) the Retail value of such of the Inventory of the
Casual Male Companies and (ii) the Cost of such of the
Inventory of the Designs, Inc. Companies (in each case,
without duplication as to Eligible Inventory and Eligible
In-Transit Inventory ), in each case the purchase of which is
supported by a documentary L/C then having an initial expiry
of forty-five (45) or less days, PROVIDED THAT
(a) Such Inventory is of such types,
character, qualities and quantities (net of Inventory
Reserves) as the Administrative Agent in its
discretion from time to time determines to be
eligible for borrowing; and
(b) The documentary L/C supporting such
purchase names the Collateral Agent as consignee of
the subject Inventory and the Collateral Agent has
control over the documents which evidence ownership
of the subject Inventory (such as by the providing to
the Collateral Agent of a Customs Brokers Agreement
in form reasonably satisfactory to the Collateral
Agent) .
"ELIGIBLE RECEIVABLES": Such of the Loan Parties' Accounts and accounts
receivable as arise in the ordinary course of the Loan
Parties' business (without duplication of Eligible Credit Card
Receivables) for goods sold and/or services rendered by the
Loan Parties' to corporate customers, which Accounts and
accounts receivable have been determined by the Administrative
Agent to be satisfactory and have been earned by performance
and are owed to the Loan Parties' by such of the Loan Parties'
corporate Account Debtors as the Administrative Agent
determines to be satisfactory, in the Administrative Agent's
discretion in each instance.
Page 14
"EMPLOYEE BENEFIT PLAN": As defined in ERISA.
"ENCUMBRANCE": A Collateral Interest or agreement to create or grant a
Collateral Interest; the interest of a lessor under a Capital
Lease, conditional sale or other title retention agreement;
sale of accounts receivable or chattel paper; or other
arrangement pursuant to which any Person is entitled to any
preference or priority with respect to the property or assets
of another Person or the income or profits of such other
Person; and each of the foregoing whether consensual or
non-consensual and whether arising by way of agreement,
operation of law, legal process or otherwise.
"END DATE": The date upon which all of the following conditions are
met: (a) all Liabilities have been paid in full; (b) all
obligations of any Lender to make loans and advances and to
provide other financial accommodations to the Borrowers
hereunder shall have been irrevocably terminated; and (c) the
arrangements regarding L/Cs described in Section 19.2(b) have
been made.
"ENVIRONMENTAL LAWS": All of the following:
(a) Applicable Law which regulates or relates to, or
imposes any standard of conduct or liability on account of or
in respect to environmental protection matters, including,
without limitation, Hazardous Materials, as are now or
hereafter in effect.
(b) The common law relating to damage to Persons or
property from Hazardous Materials.
"EQUIPMENT": Includes, without limitation, "equipment" as defined in
the UCC, and also all furniture, store fixtures, motor
vehicles, rolling stock, machinery, office equipment, plant
equipment, tools, dies, molds, and other goods, property, and
assets which are used and/or were purchased for use in the
operation or furtherance of a Person's business, and any and
all accessions or additions thereto, and substitutions
therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE": Any Person which is under common control with a
Loan Party within the meaning of Section 4001 of ERISA or is
part of a group which includes any Loan Party and which would
be treated as a single employer under Section 414 of the
Internal
Page 15
Revenue Code of 1986, as amended.
"EVENTS OF DEFAULT": Is defined in Article 11. An "Event of Default"
shall be deemed to have occurred and to be continuing unless
and until that Event of Default has been duly waived by the
requisite Lenders or by the Administrative Agent, as
applicable.
"EXCESS AVAILABILITY": The result of (a) Availability MINUS (b) all
then past due obligations of the Loan Parties including
accounts payable which are beyond customary trade terms and
rent obligations which are beyond applicable grace periods.
"EXEMPT DDA": A depository account maintained by any Loan Party, the
only contents of which may be transfers FROM the Operating
Account and actually used solely (i) for ▇▇▇▇▇ cash purposes;
or (ii) for payroll.
"FARM PRODUCTS": Has the meaning given that term in the UCC.
"FEE LETTER": Collectively, the letters, each dated May 14, 2002,
between (i) Designs, Inc. and the Administrative Agent and
(ii) Designs, Inc. and the Tranche B Lender, as each such
letter may from time to time be amended.
"FINANCIAL COVENANT BREACH": The breach of any of the financial
performance covenants provided for in Section 6.11.
"FISCAL":When followed by "month" or "quarter", it refers to the
relevant fiscal period based on the Loan Parties' fiscal year
and accounting conventions (e.g. reference to the Loan
Parties' "Fiscal June, 2002" is to the Loan Parties' fiscal
month of June in the calendar year 2001). When followed by
reference to a specific year, it refers to the fiscal year
which ends in a month of the year to which reference is being
made (e.g. if the Loan Parties' fiscal year ends in January
2002 reference to that year would be to the Loan Parties'
"Fiscal 2002").
"5% SUBORDINATED NOTE": Collectively, (i) the Designs, Inc. 5%
Subordinated Note due April 26, 2007 in the original principal
amount of $1,000,000 made by Designs, Inc. to the Kellwood
Company, and (ii) the Designs, Inc. 5% Subordinated Note due
April 26, 2007 in
Page 16
the original principal amount of $10,000,000 made by Designs,
Inc. to the Kellwood Company.
"FIXTURES": Has the meaning given that term in the UCC.
"FRFI": Fleet Retail Finance Inc.
"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is
being made, PROVIDED, HOWEVER, in the event of a Material
Accounting Change, then unless otherwise specifically agreed
to by the Administrative Agent, (a) the Loan Parties'
compliance with the financial performance covenants imposed
pursuant to Section 6.11 shall be determined as if such
Material Accounting Change had not taken place and (b) the
Borrowers' Representative shall include, with its monthly,
quarterly, and annual financial statements a schedule,
certified by the Borrowers' Representative's chief financial
officer, on which the effect of such Material Accounting
Change on that statement shall be described.
"GENERAL INTANGIBLES": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
Person; credit memoranda in favor of any Person; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of any Person to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
Page 17
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and other manuals and materials; trade
names, trademarks, service marks, and all goodwill relating
thereto; applications for registration of the foregoing; and
all other general intangible property of any Person in the
nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected
with, the design, development, manufacture, sale, marketing,
leasing, or use of any or all property produced, sold, or
leased, by any or credit extended or services performed, by
any Person, whether intended for an individual customer or the
general business of any Person, or used or useful in
connection with research by any Person.
"GOODS": Has the meaning given that term in the UCC, and also includes
all things movable when a security interest therein attaches
and also all computer programs embedded in goods and any
supporting information provided in connection with a
transaction relating to the program if (i) the program is
associated with the goods in such manner that it customarily
is considered part of the goods or (ii) by becoming the owner
of the goods, a Person acquires a right to use the program in
connection with the goods.
"GUARANTOR" and "GUARANTORS": Each Person named on EXHIBIT 1.1(b)
annexed hereto individually, and the Persons named on EXHIBIT
1.1(b) annexed hereto, collectively.
"GUARANTOR AGREEMENT": Each instrument and document executed by a
Guarantor of the Liabilities to evidence or secure the
Guarantor's guaranty thereof.
"GUARANTOR DEFAULT": Default or breach or the occurrence of any event
of default under any Guarantor Agreement.
"HAZARDOUS MATERIALS": Any (a) substance which is defined or regulated
as a hazardous material in or under any Environmental Law and
(b) oil in any physical state.
"INDEBTEDNESS": All indebtedness and obligations of or assumed by any
Person on account of or with respect to any of the following:
(a) In respect of money borrowed (including any
indebtedness which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on
Page 18
any asset of such Person) whether or not evidenced by a
promissory note, bond, debenture or other written obligation
to pay money.
(b) In connection with any letter of credit or
acceptance transaction (including, without limitation, the
face amount of all letters of credit and acceptances issued
for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(d) On account of deposits or advances (but not
including any liabilities with respect to gift cards and gift
certificates).
(e) As lessee under Capital Leases.
(f) In connection with any sale and leaseback
transaction. "Indebtedness" of any Person also includes:
(x) Indebtedness of others secured by an
Encumbrance on any asset of such Person, whether or
not such Indebtedness is assumed by such Person.
(y) Any guaranty, endorsement, suretyship or
other undertaking pursuant to which that Person may
be liable on account of any obligation of any third
party other than on account of the endorsement of
checks and other items in the ordinary course.
(z) The Indebtedness of a partnership or
joint venture for which such Person is liable as a
general partner or joint venturer.
"INDEMNIFIED PERSON": Is defined in Section 20.12.
"INSTRUMENTS": Has the meaning given that term in the UCC.
"INTEREST PAYMENT DATE": With reference to:
Each Libor Loan: The last day of the Interest Period
relating thereto (and on the last day of the third month for
any such loan which has a six (6) month Interest Period); the
Termination Date; and the End Date.
Each Base Margin Loan: The first day of each month;
the Termination Date; and the End Date.
"INTEREST PERIOD": The following:
Page 19
(a) With respect to each Libor Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of, or conversion to, the subject
Libor Loan and ending one, two, three or six months
thereafter, as the Borrowers' Representative may elect by
notice (pursuant to Section 2.6) to the Administrative Agent.
(b) With respect to each Base Margin Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Base
Margin Loan and ending on that date (i) as of which the
subject Base Margin Loan is converted to a Libor Loan, as the
Borrowers' Representative may elect by notice (pursuant to
Section 2.6) to the Administrative Agent, or (ii) on which the
subject Base Margin Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Margin
Loan which would otherwise end on a day which is not
a Business Day shall be extended to the next
succeeding Business Day.
(ii) Any Interest Period for a Libor Loan
which would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is
in the next calendar month, in which event such
Interest Period shall end on the last Business Day of
the month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any
Interest Period applicable to a Libor Loan, which
Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month
during which such Interest Period ends, shall end on
the last Business Day of the month during which that
Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall end on
the Termination Date.
(v) The number of Interest Periods in effect
at any one time is subject to Section 2.12(d) hereof.
"INVENTORY": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a Person
as lessor; are held by a Person for sale or lease or to be
furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a
business; (b) Goods of said description in transit; (c) Goods
of said description which are returned, repossessed and
rejected; (d) packaging, advertising, and shipping materials
Page 20
related to any of the foregoing; (e) all names, marks, and
General Intangibles affixed or to be affixed or associated
thereto; and (f) Documents and Documents of Title which
represent any of the foregoing.
"INVENTORY PURCHASE AGREEMENT": The Inventory Purchase Agreement dated
as of May 14, 2002 by and between Designs Apparel, Inc. and
the other Loan Parties.
INVENTORY RESERVES": Such Reserves as may be established from time to
time by the Administrative Agent in the Administrative Agent's
reasonable discretion with respect to the determination of the
saleability, at Retail, of the Eligible Inventory or which
reflect such other factors as affect the market value of the
Eligible Inventory. Without limiting the generality of the
foregoing, Inventory Reserves may include (but are not limited
to) reserves based on the following:
(i) Obsolescence (based upon Inventory on hand
beyond a given number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character.
(vi) Change in Inventory composition
(vii) Change in Inventory mix.
(viii) Markdowns (both permanent and point of sale)
(ix) Retail markons and markups inconsistent with
prior period practice and performance;
industry standards; current business plans;
or advertising calendar and planned
advertising events.
(x) Consigned Inventory.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"ISSUER": Fleet National Bank and any successor to Fleet National Bank.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower and any
acceptance made on account of such letter of credit.
"L/C LANDING COSTS": To the extent not included in the Stated
Amount of an L/C, customs, duty,
Page 21
freight, and other out-of-pocket costs and expenses which will
be expended to "land" the Inventory, the purchase of which is
supported by such L/C.
"LEASE": Any lease or other agreement, no matter how styled or
structured, pursuant to which a Loan Party is entitled to the
use or occupancy of any space.
"LEASEHOLD INTEREST": Any interest of a Loan Party as lessee under any
Lease.
"LEASEHOLD PROCEEDS": Any proceeds of the sale or other disposition of
a Leasehold Interest.
"LENDER": Collectively and each individually, each Revolving Credit
Lender and the Tranche B Lender.
"LENDERS'SPECIAL COUNSEL": Collectively, (i) a single counsel selected
by Revolving Credit Lenders holding more than 51% of the Loan
Commitments (other than any Loan Commitments held by
Delinquent Revolving Credit Lenders) following the occurrence
of an Event of Default to represent their interests in
connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any
other Loan Document, (ii) a single counsel selected by the
Tranche B Lender to represent the interests of the Tranche B
Lender in connection with the preparation, negotiation,
administration, enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any
other Loan Document.
"LETTER-OF-CREDIT RIGHT": Has the meaning given that term in the UCC
and also refers to any right to payment or performance under
an L/C, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance.
"LIABILITIES": (a) All and each of the following, whether now existing
or hereafter arising under this Agreement or under any of the
other Loan Documents, including, without limitation, the
following:
(i) Any and all direct and indirect liabilities,
debts, and obligations of each Borrower to any Agent or any
Lender, each of every kind, nature, and description owing on
account of this Agreement or any other Loan Document.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by any Borrower to any Agent or
Page 22
any Lender (including all future advances whether or not made
pursuant to a commitment by any Agent or any Lender), whether
or not any of such are liquidated, unliquidated, primary,
secondary, secured, unsecured, direct, indirect, absolute,
contingent, or of any other type, nature, or description, or
by reason of any cause of action which any Agent or any Lender
may hold against any Borrower.
(iii) All notes and other obligations of each
Borrower now or hereafter assigned to or held by any Agent or
any Lender, each of every kind, nature, and description,
including, without limitation, any interest rate swaps, caps,
or similar hedging instruments.
(iv) All interest, fees, and charges and other
amounts which may be charged by any Agent or any Lender to any
Borrower and/or which may be due from any Borrower to any
Agent or any Lender from time to time.
(v) All costs and expenses incurred or paid by any
Agent in respect of any agreement between any Borrower and any
Agent or instrument furnished by any Borrower to any Agent
(including, without limitation, Costs of Collection,
reasonable attorneys' fees, and all court and litigation costs
and expenses).
(vi) Any and all covenants of each Borrower to or
with any Agent or any Lender and any and all obligations of
each Borrower to act or to refrain from acting in accordance
with any agreement between that Borrower and any Agent or any
Lender or instrument furnished by that Borrower to any Agent
or any Lender.
(vii) Each of the foregoing as if each reference to
"any Agent or any Lender" were to each Affiliate of the
Administrative Agent.
(b) Any and all direct or indirect liabilities, debts, and
obligations of each Borrower to any Agent or any Affiliate of any
Agent, each of every kind, nature, and description owing on account of
any service or accommodation provided to, or for the account of any
Borrower pursuant to this or any other Loan Document, including cash
management services and the issuances of L/C's.
"LIBOR BUSINESS DAY": Any day which is both a Business Day and a day
on which the principal interbank market for Libor deposits in
London in which Fleet National Bank participates is open for
dealings in United States Dollar deposits.
"LIBOR LOAN": Any Revolving Credit Loan which bears interest at a
Libor Rate.
"LIBOR MARGIN": As determined from the definition of Applicable
Margin.
Page 23
"LIBOR OFFER RATE": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the
Administrative Agent in good faith to be the highest
prevailing rate per annum at which deposits on U.S. Dollars
are offered to Fleet National Bank, by first-class banks in
the London interbank market in which Fleet National Bank
participates at or about 10:00AM (Boston Time) two (2) Libor
Business Days before the first day of the Interest Period for
the subject Libor Loan, for a deposit approximately in the
amount of the subject loan for a period of time approximately
equal to such Interest Period.
"LIBOR RATE": That per annum rate which is the aggregate of the Libor
Offer Rate PLUS the Libor Margin EXCEPT THAT, in the event
that the Administrative Agent determines in good faith that
any Revolving Credit Lender may be subject to the Reserve
Percentage, the "Libor Rate" shall mean, with respect to any
Libor Loans then outstanding (from the date on which that
Reserve Percentage first became applicable to such loans), and
with respect to all Libor Loans thereafter made, an interest
rate per annum equal the sum of (a) plus (b), where:
(a) is the decimal equivalent of the
following fraction:
Libor Offer Rate
----------------
1 minus Reserve Percentage
(b) is the applicable Libor Margin.
"LIQUIDATION": The exercise, by the Collateral Agent, of those rights
accorded to the Collateral Agent under the Loan Documents as a
creditor of the Loan Parties following and on account of the
occurrence of an Event of Default looking towards the
realization on the Collateral. Derivations of the word
"Liquidation" (such as "Liquidate") are used with like meaning
in this Agreement.
"LOAN ACCOUNT": Is defined in Section 2.9.
"LOAN COMMITMENT": With respect to each Revolving Credit Lender,
that respective Revolving Credit Lender's Revolving Credit
Dollar Commitment. With respect to the Tranche B Lender, the
then unpaid principal balance of the Tranche B Loan.
"LOAN DOCUMENTS": This Agreement, each instrument and document
executed as contemplated by the Original Agreement and by
Article 5, below, and each other instrument or document from
time to time executed and/or delivered in connection with the
Page 24
arrangements contemplated hereby or in connection with any
transaction with the Administrative Agent or the Collateral
Agent or any Affiliate of the Administrative Agent or the
Collateral Agent, including, without limitation, any
transaction which arises out of any cash management,
depository, investment, letter of credit, interest rate
protection, or equipment leasing services provided by the
Administrative Agent or the Collateral Agent or any Affiliate
of the Administrative Agent or the Collateral Agent, as each
may be amended from time to time.
"LOAN PARTY AND LOAN PARTIES": Each Borrower and each Guarantor.
"MAJORITY LENDERS": Lenders (other than Delinquent Revolving Credit
Lenders) holding 51% or more of the Loan Commitments (other
than any Loan Commitments held by Delinquent Revolving Credit
Lenders).
"MAJORITY REVOLVING CREDIT LENDERS": Revolving Credit Lenders (other
than Delinquent Revolving Credit Lenders) holding 51% or more
the Loan Commitments which support the Revolving Credit (other
than such Loan Commitments held by a Delinquent Revolving
Credit Lender).
"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to
accounting periods subsequent to the Loan Parties' Fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the Loan
Parties' Consolidated financial condition or operating
results, as reflected on financial statements and reports
prepared by or for the Loan Parties, when compared with such
condition or results as if such change had not taken place or
where preparation of the Loan Parties' statements and reports
in compliance with such change results in the breach of a
financial performance covenant imposed pursuant to Section
6.11 where such a breach would not have occurred if such
change had not taken place or VISA VERSA.
"MATURITY DATE": May 14, 2005.
MINIMUM EXCESS AVAILABILITY BREACH: The failure of the Borrowers at
any time to comply with the provisions of Section 6.11(a).
"NOMINEE": A business entity (such as a corporation or limited
partnership) formed by the
Page 25
Collateral Agent to own or manage any Post Foreclosure Asset.
"NON CONSENTING LENDER": Is defined in Section 16.11.
"OPERATING ACCOUNT": Is defined in Section 8.3.
"ORIGINAL AGREEMENT:": Is defined in the Preamble.
"OVERLOAN": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, immediately after
its having been made, Availability is less than zero.
"PARTICIPANT": Is defined in Section 20.15, hereof.
"PAYMENT INTANGIBLE": Has the meaning given that term in the UCC and
also refers to any general intangible under which the Account
Debtor's primary obligation is a monetary obligation.
"PERMITTED ACQUISITION": An Acquisition complying with the following:
(A) Such Acquisition shall be of assets
ancillary, incidental or necessary to the retail sale
of apparel and related activities, or of 100% of the
stock of a corporation whose assets consist
substantially of such assets, or through the merger
of such a corporation with a Loan Party (with a Loan
Party as the surviving corporation), or with a
Subsidiary of a Loan Party where, after giving effect
to such merger, such corporation becomes a
wholly-owned Subsidiary of a Loan Party;
(B) If such Acquisition includes the
acquisition of assets by, or the merger of, a Loan
Party, there shall have been no change in the
identity of the president, chief financial officer or
any executive vice president of such Loan Party as a
consequence of such acquisition, or if there has been
such a change, the Administrative Agent shall have
consented in writing to such change in identity
within thirty (30) days thereafter (which consent
shall not be unreasonably withheld or delayed); and
(C) If a new Subsidiary is formed or
acquired as a result of such Acquisition, such
Subsidiary shall execute documentation, reasonably
satisfactory in form and substance to the
Administrative Agent, guarantying payment and
performance of
Page 26
the Liabilities and granting a first lien, subject only to
Permitted Encumbrances, in its assets in favor of the
Collateral Agent, for the ratable benefit of the Lenders.
"PERMITTED ASSET DISPOSITION": The following:
(a) A sale or other disposition of the assets of any Loan
Party (other than as specified in clauses (b) and (c) of this
definition), not in the ordinary course, so long as the
following conditions are satisfied:
(i) The sale, liquidation or other
disposition of Inventory at any locations from which
a Loan Party determines to cease the conduct of its
business, (x) shall be on terms satisfactory to the
Administrative Agent and (y) notwithstanding the
Administrative Agent's furnishing of any such
consent, the Administrative Agent may, in the
exercise of its reasonable discretion, impose
Inventory Reserves as a result of the occurrence of
any such sale, liquidation, or disposition;
(ii) The aggregate of all such sales or
other dispositions of assets during the term of this
Agreement shall not exceed five percent (5%) of the
value of all assets of Designs, Inc. as of the
Closing Date;
(iii) Each such sale or other disposition
shall be for fair consideration in an arm's length
transaction; and
(iv) On the date on which any sale or other
disposition of assets is consummated, no Default
shall have occurred and be continuing or will occur
as a result of such consummation.
(b) The rejection of up to fifteen (15) leases as contemplated
by Section 6.16 of the Casual Male Acquisition Agreement.
(c) The sale, spin-off or other disposition of Designs LPI
Corp., and its ownership interests in Securex, on terms
reasonably satisfactory to the Administrative Agent. The
Administrative Agent shall execute and deliver such releases
as shall be reasonably requested in order for such disposition
to be consummated.
"PERMITTED ENCUMBRANCES": The following:
(a) Encumbrances described on EXHIBIT 1.1 hereto.
(b) Encumbrances on properties to secure taxes, assessments
and other government charges or claims for labor, material or
supplies in respect of obligations not then overdue; deposits
or pledges made in connection with, or to secure payment of,
workmen's compensation, unemployment insurance, old age
pensions or other social security
Page 27
obligations; Encumbrances on property hereafter acquired
(either in connection with purchase money encumbrances, rental
purchase agreements, including Capital Leases, or conditional
sale or other title retention agreements), which are
restricted to the property so acquired and do not secure
Indebtedness exceeding the fair value (at the time of
acquisition) thereof; Encumbrances of carriers, warehousemen,
mechanics and materialmen, and other like Encumbrances on
properties in existence less than 90 days from the date of
creation thereof in respect of obligations not overdue; and
Encumbrances on properties consisting of easements, rights of
way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's Encumbrances under leases to which any
Loan Party is a party, and other minor Encumbrances or
encumbrances none of which interferes materially with the use
of the property affected in the ordinary conduct of the
business of the Loan Parties, which defects do not
individually or in the aggregate have a materially adverse
effect on the business of any Loan Party individually or of
the Loan Parties as a whole or which are being actively
contested in good faith by appropriate proceedings as to which
the Loan Parties have established reasonable reserves, IT
BEING UNDERSTOOD, HOWEVER, that the filing of a tax lien which
includes any Inventory or Accounts does not constitute a
"Permitted Encumbrance", even if being so contested.
"PERMITTED INDEBTEDNESS": The following Indebtedness:
(a) Indebtedness on account of the Revolving
Credit.
(b) Indebtedness on account of the Tranche B
Loan.
(c) The Subordinated Indebtedness.
(d) Capital Leases and purchase money
Indebtedness secured by Permitted
Encumbrances.
(e) Indebtedness assumed in connection with
Permitted Acquisitions pursuant to Sections
5.21 (it being understood that the principal
amount so assumed shall be deemed part of
the purchase price of any such Permitted
Acquisition) and any refinancing or
replacement thereof on terms and conditions
(including, without limitation, interest
rate and providing that, in any event, the
principal amount thereof shall not exceed
that outstanding on the date of refinance or
replacement) at least as favorable as those
being refinanced or replaced.
(f) Intercompany Indebtedness permitted under
Section 5.22.
Page 28
"PERMITTED INVESTMENTS": Any or all of the following:
(a) marketable direct full faith and credit obligations of, or
marketable obligations guaranteed by, the United States of America;
PROVIDED that such securities, as a group, may not, on the date of
determination, have a remaining weighted average maturity of more than
five years;
(b) marketable direct full faith and credit obligations of
States of the United States or of political subdivisions or agencies;
PROVIDED that such securities, as a group, may not, on the date of
determination, have a remaining weighted average maturity of more than
five years; and PROVIDED, FURTHER, that such obligations carry a rating
of "A" or better by a Rating Service;
(c) certificates of deposit and bankers acceptances maturing
within one year after the acquisition thereof issued by (i) Fleet
National Bank, or (ii) any commercial bank organized under the laws of
the United States of America or of any political subdivision thereof
the long term obligations of which are rated "A" or better by a Rating
Service;
(d) Eurodollar certificates of deposit maturing within one
year after the acquisition thereof issued by any commercial bank having
combined capital, surplus and undivided profits of at least $1 billion;
and
(e) tax-exempt bonds or notes which have a remaining maturity
at the time of purchase of no more than five years issued by any State
of the United States or the District of Columbia, or any political
subdivision thereof; PROVIDED, that such obligations carry a rating of
"A" or better by a Rating Service.
"PERMITTED OVERHEAD CONTRIBUTIONS": Rent under the Lease Agreement,
dated December 11, 1996, by and between JBAK Canton, or its
assigns, as landlord, and JBI, or its assigns, as tenant, with
respect to the Canton Warehouse.
"PERMITTED PROTECTIVE OVERADVANCE" Is defined in Section 16.3(a).
"PERSON": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"POST FORECLOSURE ASSET": All or any part of the Collateral,
ownership of which is acquired by the
Page 29
Collateral Agent or a Nominee on account of the "bidding in"
at a disposition as part of a Liquidation or by reason of a
"deed in lieu" type of transaction.
"PROCEEDS": Includes, without limitation, "Proceeds" as defined in the
UCC and each type of property described in Section 9.1 hereof.
"PRO-RATA": A proportional distribution based upon a Lender's
percentage claim to the overall aggregate amount being
distributed.
"PROTECTIVE OVERADVANCES": Revolving Credit Loans which are OverLoans,
but as to which each of the following conditions is satisfied:
(a) the Revolving Credit Ceiling is not exceeded; (b) when
aggregated with all other Protective OverAdvances, such
Revolving Credit Loans do not aggregate more than 5% of the
aggregate of the Borrowing Base; and (c) such Revolving Credit
Loans are made or undertaken in the Agents' discretion to
protect and preserve the interests of the Lenders.
"RECEIPTS": All cash, cash equivalents, money, checks, credit card
slips, receipts and other Proceeds from any sale of the
Collateral.
"RECEIVABLES ADVANCE RATE": 75%.
"RECEIVABLES COLLATERAL": That portion of the Collateral which consists
of Accounts, Accounts Receivable, General Intangibles, Chattel
Paper, Instruments, Documents of Title, Documents, Investment
Property, Payment Intangibles, Letter-of-Credit Rights,
bankers' acceptances, and all other rights to payment.
"RECEIVABLES RESERVES": Such Reserves as may be established from time
to time by the Administrative Agent in the Administrative
Agent's reasonable discretion with respect to the
determination of the collectibility in the ordinary course and
of the creditworthiness of the applicable Account Debtor.
Without limiting the generality of the foregoing, Receivables
Reserves shall include (but are not limited to) reserves based
on the following:
(i) The aggregate of all accounts receivables
which are more than 60 days past invoice.
(ii) The aggregate of all accounts receivable
owed by any Account Debtor 25% or more of
whose accounts are more than 60 days past
invoice.
Page 30
(iii) The aggregate of all accounts receivable
which arise out of the sale by a Loan Party
of goods consigned or delivered to such Loan
Party or to the Account Debtor on sale or
return terms (whether or not compliance has
been made with the applicable provisions of
Article 2 of the UCC).
(iv) The aggregate of all accounts receivable
which arise out of any sale made on a basis
other than upon terms usual to the business
of a Loan Party.
(v) The aggregate of all accounts receivable
which arise out of any sale made on a "▇▇▇▇
and hold," dating, or delayed shipping
basis.
(vi) The aggregate of all accounts receivable
which are owed by any Account Debtor whose
principal place of business is not within
the United States, the District of Columbia,
or Canada.
(vii) The aggregate of all accounts receivable
which are owed by any Affiliate.
(viii) The aggregate of all accounts receivable to
the extent that the Account Debtor holds or
is entitled to any claim, counterclaim, set
off, or chargeback as determined by the
Administrative Agent in its discretion.
(ix) The aggregate of all accounts receivable
which are evidenced by a promissory note or
other documentation evidencing modified
payment terms.
(x) The aggregate of all accounts receivable
which are owed by any person employed by, or
a salesperson of, a Loan Party.
(xi) That portion of Eligible Receivables owed by
any Account Debtor which exceed15% of all
Eligible Receivables owed by all Account
Debtors.
"REGISTER": Is defined in Section 17.2(c).
"REQUIREMENTS OF LAW": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
(c) That Person's by-laws and/or other instruments
which deal with corporate or similar governance, as
applicable.
"RESERVE PERCENTAGE": The decimal equivalent of that rate applicable to
the Lender under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for
determining the maximum reserve requirement of Lender with
respect to "Eurocurrency liabilities" as defined in such
regulations. The Reserve Percentage
Page 31
applicable to a particular Libor Loan shall be based upon that
in effect during the subject Interest Period, with changes in
the Reserve Percentage which take effect during such Interest
Period to take effect (and to consequently change any interest
rate determined with reference to the Reserve Percentage) if
and when such change is applicable to such loans.
"RESERVES": The following: Receivables Reserves; Availability Reserves;
and Inventory Reserves.
"RETAIL":As reflected in a Loan Party's stock ledger, being the
current ticket price aggregated by SKU, except that to the
extent that Eligible Inventory is not reflected in the stock
ledger, "Retail" shall be determined as tracked on such non
stock ledger inventory systems of a Loan Party which are
deemed adequate for such purpose by the Administrative Agent
in the exercise of the Administrative Agent's discretion.
"REVOLVING CREDIT": Is defined in Section 2.1.
"REVOLVING CREDIT CASUAL MALE COMPANIES INVENTORY ADVANCE RATE": 30.4%
"REVOLVING CREDIT DESIGNS, INC. COMPANIES INVENTORY ADVANCE RATE": 63%.
"REVOLVING CREDIT CEILING": $120,000,000.00.
"REVOLVING CREDIT COMMITMENT FEE": Is defined in Section 2.13.
"REVOLVING CREDIT DEBT": At any time, the lesser of (a) or (b), where
(a) is $120,000,000.00.
(b) is Indebtedness of the Borrowers on account of
loans and advances under the Revolving Credit which
Indebtedness, when incurred or when Acceleration takes place,
is within amounts available to be borrowed under the Revolving
Credit or constitutes Protective OverAdvances, as reflected on
the Borrowing Base Certificate (if any) in reliance on which
the subject loan or advance was made, IT BEING UNDERSTOOD
that, (i) in the absence of manifest computational error by
the Borrowers' Representative, the Administrative Agent may
rely on, and the Tranche B Lender shall be bound by, the
Page 32
determination of such availability as reflected on such
Borrowing Base Certificate, and (ii) the status of
indebtedness as "Revolving Credit Debt" is determined without
regard to any subsequent declination in the appraised value of
the Inventory or other assets on which such availability had
been so determined, and (iii) the occurrence of a Tranche B
Availability Breach, in and of itself, shall not affect the
status of indebtedness as "Revolving Credit Debt". (For
purposes of the determination of whether a loan or advance to
cover the honoring of a L/C constitutes "Revolving Credit
Debt", the date of issuance of the subject L/C shall
constitute the date on which the subject indebtedness was
incurred).
"REVOLVING CREDIT DOLLAR COMMITMENT": As set forth on EXHIBIT 2.24,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"REVOLVING CREDIT EARLY TERMINATION FEE": Is defined in Section 2.16.
"REVOLVING CREDIT FEES": The Unused Line Fee, Revolving Credit
Commitment Fee, Revolving Credit Early Termination Fee, fees
for L/C's which are specifically for the account of the
Revolving Credit Lenders and all other fees (such as a fee (if
any) on account of the execution of an amendment of a Loan
Document) payable by any Borrower in respect of the Revolving
Credit other than any amount payable to an Agent as
reimbursement for any cost or expense incurred by that Agent
on account of the discharge of that Agent's duties under the
Loan Documents.
"REVOLVING CREDIT LENDERS": Each Revolving Credit Lender to which
reference is made in the Preamble and any other Person who
becomes a "Revolving Credit Lender" in accordance with the
provisions of this Agreement.
"REVOLVING CREDIT LOANS": Loans made under the Revolving Credit, EXCEPT
THAT where the term "Revolving Credit Loan" is used with
reference to available interest rates applicable to the loans
under the Revolving Credit, it refers to so much of the unpaid
principal balance of the Loan Account as bears the same rate
of interest for the same Interest Period. (SEE Section
2.12(c)).
"REVOLVING CREDIT NOTE": Is defined in Section 2.10.
Page 33
"REVOLVING CREDIT OBLIGATIONS": The aggregate of the Borrowers'
liabilities, obligations, and indebtedness of any character on
account of or in respect to the Revolving Credit.
"REVOLVING CREDIT PERCENTAGE COMMITMENT": As set forth on EXHIBIT 2.24,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"REVOLVING CREDIT SENIOR COLLATERAL": All Collateral other than the
Tranche B Senior Collateral.
"SEC": The Securities and Exchange Commission.
"SECUREX": Securex LLC, a Delaware limited liability company.
"STANDSTILL PERIOD": A 15 consecutive day period initiated by written
notice by the Tranche B Lender to the Administrative Agent, in
accordance with Section 14.2(a), after the occurrence of a
Tranche B Loan Action Event (other than a Bankruptcy Breach).
"STATED AMOUNT": The maximum amount for which an L/C may be honored.
"STORE": Each location at which a Loan Party regularly offers Inventory
for sale to the public.
"SUBORDINATED INDEBTEDNESS": The Indebtedness evidenced by the 12%
Subordinated Note and the 5% Subordinated Note.
"SUBORDINATION AGREEMENTS": The several Subordinated Agreements between
the holders of the 12% Subordinated Note and the 5%
Subordinated Note, on the one hand, and FRFI, as agent for the
Lenders, and the Borrowers, on the other hand, each dated as
of May 14, 2002.
"SUBSCRIPTION AGREEMENT": Collectively, the Designs, Inc. Subscription
Agreement for Common Stock dated as of April 26, 2002 between
Designs, Inc. and the purchasers named therein and the
Designs, Inc. Subscription Agreement for Preferred Stock dated
as of April 26, 2002 between Designs, Inc. and the purchasers
named therein.
"SUBSIDIARY": With respect to any Person, any corporation, partnership
or other entity of which
Page 34
securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly
or indirectly owned by such Person.
"SUPERMAJORITY LENDERS": Lenders (other than Delinquent Revolving
Credit Lenders) holding 66-2/3% or more of the Loan
Commitments (other than Loan Commitments held by a Delinquent
Revolving Credit Lender).
"SUPERMAJORITY REVOLVING CREDIT LENDERS": Revolving Credit Lenders
(other than Delinquent Revolving Credit Lenders) holding
66-2/3% or more of the Loan Commitments which support the
Revolving Credit (other than such Loan Commitments held by a
Delinquent Revolving Credit Lender).
"SUPPORTING OBLIGATION": Has the meaning given that term in UCC and
also refers to a Letter-of-Credit Right or secondary
obligation which supports the payment or performance of an
Account, Chattel Paper, a Document, a General Intangible, an
Instrument, or Investment Property.
"SWINGLINE": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine
Loan Ceiling.
"SWINGLINE LENDER": FRFI.
"SWINGLINE LOAN CEILING": $15,000,000.
"SWINGLINE LOANS": Defined in Section 2.8.
"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the
Administrative Agent's notice to the Borrowers' Representative
setting the Termination Date on account of the occurrence of
any Event of Default; or (c) a date, irrevocable written
notice of which is provided by the Borrowers' Representative
to the Administrative Agent, which is at least ninety (90)
days after the date of such written notice.
"TRANCHE B AVAILABILITY BREACH": The aggregate of the following is
equal to or less than zero:
Page 35
(a) The Tranche B Borrowing Base
MINUS
(b) The aggregate unpaid balance of the Loan Account
MINUS
(c) The aggregate undrawn Stated Amount of all then
outstanding L/C's.
MINUS
(d) The then unpaid principal balance of the Tranche B
Loan and all accrued but unpaid interest thereon.
MINUS
(e) The aggregate of the Availability Reserves.
"TRANCHE B BORROWING BASE": The aggregate of the following:
(a) For the Casual Male Companies, the lesser of
(i) The product of the Retail of Eligible
Inventory (net of Inventory Reserves) of the
Casual Male Companies multiplied by the
Tranche B Casual Male Companies Inventory
Advance Rate, and
(ii) (A) 105% of the Appraised Inventory
Liquidation Value of the Inventory of the
Casual Male Companies from the Closing Date
through and including November 30, 2002, and
(B) 100% of the Appraised Inventory
Liquidation Value of the Inventory of the
Casual Male Companies from December 1, 2002,
through and including November 30, 2003, and
(C) 95% of the Appraised Inventory
Liquidation Value of the Inventory of the
Casual Male Companies from December 1, 2003
and thereafter.
PLUS
(b) (a) For the Designs, Inc. Companies, the lesser
of
(i) The Cost of Eligible Inventory (net of
Inventory Reserves) of the Designs,
Page 36
Inc. Companies multiplied by the Tranche B
Designs, Inc. Companies Inventory Advance
Rate ; or
(ii) 95% of the Appraised Inventory Liquidation
Value of the Inventory of the Designs, Inc.
Companies
PLUS
(c) The face amount of Eligible Credit Card Receivables
multiplied by the Credit Card Advance Rate.
PLUS
(d) The face amount of Eligible Receivables (net of
Receivables Reserves) multiplied by the Receivables
Advance Rate.
"TRANCHE B CASUAL MALE COMPANIES INVENTORY ADVANCE RATE": 37.5%
"TRANCHE B CURRENT PAY INTEREST": Is defined in Section 3.4(c)(i)
"TRANCHE B COMMITMENT FEE": Described in Section 3.5.
"TRANCHE B DESIGNS, INC. DIVISION INVENTORY ADVANCE RATE": 70%.
"TRANCHE B EARLY TERMINATION FEE": Defined in Section 3.3(b).
"TRANCHE B FEES": The Tranche B Commitment Fee, the Tranche B Early
Termination Fee, the Tranche B Monitoring Fee and all other
fees (such as a fee (if any) on account of the execution of an
amendment of any Loan Document) payable by any Borrower in
respect of the Tranche B Loan other than any amount payable to
an Agent as reimbursement for any cost or expense incurred by
that Agent on account of the discharge of that Agent's duties
under the Loan Documents.
"TRANCHE B INTEREST PAYMENT DATE": Defined in Section 3.4(c)(i).
"TRANCHE B INTEREST RATE": Defined in Section 3.4(a).
Page 37
"TRANCHE B LENDER": Defined in the Preamble.
"TRANCHE B LOAN ": Defined in Section 3.1.
"TRANCHE B LOAN ACTION EVENT": The occurrence of any of the following:
a Tranche B Availability Breach; a Financial Covenant Breach;
a Bankruptcy Breach; or a Tranche B Payment Breach.
TRANCHE B LOAN PREPAYMENT CONDITIONS": The following:
(a) The subject prepayment is made after May 14, 2003.
(b) Excess Availability, for each of the 45 days prior to the
making of such prepayment, is not less than $40,000,000.
(c) Immediately after, and giving effect to such prepayment,
Excess Availability is not less than $30,000,000.
(d) EBITDA for the 12 months immediately prior to such
prepayment is not less than 80% of EBITDA for such period projected in
the Business Plan.
(e) No more than fifteen days prior to such prepayment, the
Borrowers' Representative has provided the Administrative Agent with a
forecast, for the then next succeeding 12 month period which reflects
that Excess Availability will never be less than $30,000,000.
(f) On the date on which such prepayment is made and
immediately after giving effect to such prepayment, no Default shall
have occurred and be continuing.
"TRANCHE B MONITORING FEE": Described in Section 3.5.
"TRANCHE B NOTE": Defined in Section 3.2.
"TRANCHE B PAYMENT BREACH": The failure by the Borrowers to have made
any payment on account of the Borrowers' Liabilities to the
Tranche B Lender under the Loan Documents prior to expiry of
any grace period applicable to such payment.
"TRANCHE B PIK INTEREST": Defined in Section 3.4(c)(ii).
"TRANCHE B SENIOR COLLATERAL": All Collateral which consists of
Equipment.
Page 38
"TRANSFER": Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed to from time to time by
the Administrative Agent making such Transfer and the subject
Revolving Credit Lender. Wire instructions may be changed in
the same manner that Notice Addresses may be changed (Section
18.1), except that no change of the wire instructions for
Transfers to any Revolving Credit Lender shall be effective
without the consent of the Administrative Agent.
"12% SUBORDINATED NOTE": Collectively, (i) the Designs, Inc. 12%
Senior Subordinated Note No. 1 due 2007 in the original
principal amount of $10,000,000 made to ▇▇▇▇▇ Partners I,
L.P., (ii) the Designs, Inc. 12% Senior Subordinated Note No.
2 due 2007 in the original principal amount of $4,500,000 made
to Jewelcor Management Inc., (iii) the Designs, Inc. 12%
Senior Subordinated Note No. 3 due 2007 in the original
principal amount of $1,250,000 made to ▇▇▇▇▇ Partners I, L.P.,
(iv) the Designs, Inc. 12% Senior Subordinated Note No. 4 due
2007 in the original principal amount of $1,250,000 made to
Jewelcor Management, Inc., and (v) the Designs, Inc. 12%
Senior Subordinated Note No. 5 in the original principal
amount of $7,500,000 made to Baron Asset Fund on behalf of the
Baron Small Cap Fund Series.
"UCC": The Uniform Commercial Code as in effect from time to time in
Massachusetts.
"UNANIMOUS CONSENT": Consent of Lenders (other than Delinquent
Revolving Credit Lenders) holding 100% of the Loan Commitments
(other than Loan Commitments held by a Delinquent Revolving
Credit Lender).
"UNUSED LINE FEE": Is defined in Section 2.15.
"YIELD REVENUE": All amounts which are (or would be) payable on
account of the Tranche B Commitment Fee, the Tranche B
Monitoring Fee and the Tranche B Interest Rate (as if all
interest on the principal being prepaid were paid in cash on
the relevant Tranche B Interest Payment Date) with respect to
the Tranche B Loan.
ARTICLE 2 - THE REVOLVING CREDIT:
2.1 . ESTABLISHMENT OF REVOLVING CREDIT
Page 39
(a) The Revolving Credit Lenders hereby establish a revolving
line of credit (the "REVOLVING CREDIT") in the Borrowers' favor pursuant to
which each Revolving Credit Lender, subject to, and in accordance with, this
Agreement, acting through the Administrative Agent, shall make loans and
advances and otherwise provide financial accommodations to and for the account
of the Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be subject to Availability. The Borrowing Base and
Availability shall be determined by the Administrative Agent by reference to
Borrowing Base Certificates furnished as provided in Section 6.4, below, and
shall be subject to the following:
(i) Such determination shall take into account such
Reserves as the Administrative Agent may determine as being applicable
thereto.
(ii) The Retail of Eligible Inventory will be
calculated in a manner consistent with current tracking practices,
based on stock ledger inventory at Retail, and the Cost of Eligible
Inventory will be calculated in a manner consistent with current
tracking practices, based on stock ledger inventory at Cost.
(c) The commitment of each Revolving Credit Lender to provide
such loans, advances, and financial accommodations is subject to Section 2.24.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely as follows:
(i) For the Casual Male Acquisition.
(ii) For the Borrowers' working capital needs and
general corporate purposes.
(iii) For advances by the Borrowers to Guarantors
to finance the purchases by Guarantors of
Inventory pursuant to the Inventory Purchase
Agreement and to permit such Guarantors to
pay ordinary course operating expenses
(including, without limitation, rent,
utilities and taxes).
(iii) For Capital Expenditures to the extent
permitted by this Agreement.
2.2. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any
loan or advance, or otherwise to provide any credit to or for the benefit of the
Borrowers where the result of such loan, advance, or credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among
themselves, are subject to Section 13.3(a) (which relates to each Revolving
Credit Lender's making amounts available to the Administrative Agent) and to
Section 16.3(a) (which relates to Protective OverAdvances).
Page 40
(c) The Revolving Credit Lenders' providing of an OverLoan on
any one occasion does not affect the obligations of each Borrower hereunder
(including each Borrower's obligation to immediately repay any amount which
otherwise constitutes an OverLoan) nor obligate the Revolving Credit Lenders to
do so on any other occasion.
2.3. INITIAL RESERVES. CHANGES TO RESERVES.
(a) At the execution of this Agreement, the only Reserves are
as reflected on the Borrowing Base Certificate, a specimen of which is annexed
hereto as EXHIBIT 6.4.
(b) The Administrative Agent shall provide not less than seven
(7) days prior notice to the Borrowers' Representative of the establishment of
any Reserve (other than those established at the execution of this Agreement)
EXCEPT THAT the following may be undertaken without such prior notice:
(i) a change to the amount of a then existing Reserve
(as distinguished from a change by which such Reserve is measured or
determined), which change reflects changed circumstances (e.g. the
amount of the Reserve for Customer Credit Liability will change based
on the aggregate of Customer Credit Liability at any one time); and
(ii) the creation of, or a change to an existing,
Reserve on account of circumstances which the Administrative Agent
determines as having a material adverse change on the maintenance of
loan to collateral values.
2.4. RISKS OF VALUE OF COLLATERAL. The Administrative Agent's reference
to a given asset in connection with the making of loans, credits, and advances
and the providing of financial accommodations under the Revolving Credit and/or
the monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Administrative Agent or any Revolving Credit Lender
relative to the actual value of the asset in question. All risks concerning the
value of the Collateral are and remain upon the Borrowers. All Collateral
secures the prompt, punctual, and faithful performance of the Liabilities
whether or not relied upon by the Administrative Agent in connection with the
making of loans, credits, and advances and the providing of financial
accommodations under the Revolving Credit.
2.5. COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT. Subject to the provisions of this Agreement, the Revolving Credit
Lenders shall make a loan or advance under the Revolving Credit and the
Administrative Agent shall cause L/C's to be issued for the account of the
Borrowers' Representative, in each instance if duly and timely requested by the
Borrowers' Representative as provided herein PROVIDED THAT:
(a) No OverLoan is then outstanding and none will result
therefrom.
Page 41
(b) No Default has occurred and is continuing or will occur as
a result of the borrowing of such loan or advance or the issuance of such L/C.
2.6. REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for loans and advances under the Revolving Credit
or for the continuance or conversion of an interest rate applicable to a
Revolving Credit Loan may be requested by the Borrowers' Representative in such
manner as may from time to time be reasonably acceptable to the Administrative
Agent.
(b) Subject to the provisions of this Agreement, the
Borrowers' Representative may request a Revolving Credit Loan and elect an
interest rate and Interest Period to be applicable to that Revolving Credit Loan
by giving notice to the Administrative Agent by no later than the following:
(i) If such Revolving Credit Loan is to be or is to
be converted to a Base Margin Loan: By 1:00PM on the Business Day prior
to the Business Day on which the subject Revolving Credit Loan is to be
made or is to be so converted. Base Margin Loans requested by the
Borrowers' Representative, other than those resulting from the
conversion of a Libor Loan, shall not be less than $10,000.00.
(ii) If such Revolving Credit Loan is to be, or is to
be continued as, or converted to, a Libor Loan: By 1:00PM three (3)
Libor Business Days before the commencement of any new Interest Period
or the end of the then applicable Interest Period. Libor Loans and
conversions to Libor Loans shall each be not less than $1,000,000.00
and in increments of $100,000.00 in excess of such minimum.
(iii) Any Libor Loan which matures while a Default
has occurred and is continuing shall be converted, at the option of the
Administrative Agent, to a Base Margin Loan notwithstanding any notice
from the Borrowers' Representative that such Loan is to be continued as
a Libor Loan.
(c) Any request for a Revolving Credit Loan or for the
continuance or conversion of an interest rate applicable to a Revolving Credit
Loan which is made after the applicable deadline therefor, as set forth above,
shall be deemed to have been made at the opening of business on the then next
Business Day or Libor Business Day, as applicable. Each request for a Revolving
Credit Loan or for the conversion of a Revolving Credit Loan shall be made in
such manner as may from time to time be acceptable to the Administrative Agent.
(d) The Borrowers' Representative may request that the
Administrative Agent cause the issuance by the Issuer of L/C's for the account
of a Borrower as provided in Section 2.19.
(e) The Administrative Agent may rely on any request for a
loan or advance, or other financial accommodation under the Revolving Credit
which the Administrative Agent, in good faith, believes
Page 42
to have been made by a Person duly authorized to act on behalf of the Borrowers'
Representative and may decline to make any such requested loan or advance, or
issuance, or to provide any such financial accommodation pending the
Administrative Agent's being furnished with such documentation concerning that
Person's authority to act as reasonably may be satisfactory to the
Administrative Agent.
(f) A request by the Borrowers' Representative for a loan or
advance, or other financial accommodation under the Revolving Credit shall be
irrevocable and shall constitute certification by each Borrower that as of the
date of such request, each of the following is true and correct:
(i) There has been no material adverse change in the
Loan Parties' financial condition (taken as a whole) from the most
recent financial information furnished Administrative Agent or any
Lender pursuant to this Agreement.
(ii) Each representation, not relating to a specific
date, which is made herein or in any of the Loan Documents is then true
and correct in all material respects as of and as if made on the date
of such request (except (A) to the extent of changes resulting from
transactions contemplated or permitted by this Agreement or the other
Loan Documents and changes occurring in the ordinary course of business
which singly or in the aggregate are not materially adverse and (B) to
the extent that such representations and warranties expressly relate to
a then earlier date).
(iii) Unless accompanied by the Certificate of the
Borrowers' Representative's Chief Executive Officer, President, or
Chief Financial Officer describing (in reasonable detail) the facts and
circumstances thereof and the steps (if any) being taken to remedy such
condition, no Default has occurred and is continuing.
(g) If, at any time or from time to time, a Default shall
occur:
(i) The Administrative Agent may suspend the
Revolving Credit immediately, in which event, neither the
Administrative Agent nor any Revolving Credit Lender shall be obligated
during such suspension, to make any loans or advance, or to provide any
financial accommodation hereunder or to seek the issuance of any L/C.
(ii) The Administrative Agent may suspend the right
of the Borrowers' Representative to request any Libor Loan or to
convert any Base Margin Loan to a Libor Loan.
2.7 MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be made
by the transfer of the proceeds of such loan or advance to the Operating Account
or as otherwise instructed by the Borrowers' Representative.
(b) A loan or advance shall be deemed to have been made under
the Revolving Credit (and the Borrowers shall be indebted to the Administrative
Agent and the Revolving Credit Lenders for the amount thereof immediately) at
the following:
Page 43
(i) The Administrative Agent's initiation of the
transfer of the proceeds of such loan or advance in accordance with the
Borrowers' Representative's instructions (if such loan or advance is of
funds requested by the Borrowers' Representative).
(ii) The charging of the amount of such loan to the
Loan Account (in all other circumstances).
(c) There shall not be any recourse to or liability of any
Agent or any Lender on account of:
(i) Any delay, beyond the reasonable control of the
Agents and the Revolving Credit Lenders, in the making of any loan or
advance requested under the Revolving Credit.
(ii) Any delay, beyond the reasonable control of the
Agents and the Revolving Credit Lenders, by any bank or other
depository institution in treating the proceeds of any such loan or
advance as collected funds.
(iii) Any delay in the receipt, and/or any loss, of
funds which constitute a loan or advance under the Revolving Credit,
the wire transfer of which was properly initiated by the Administrative
Agent in accordance with wire instructions provided to the
Administrative Agent by the Borrowers' Representative.
2.8. SWINGLINE LOANS.
(a) For ease of administration, Base Margin Loans may be made
by the SwingLine Lender (in the aggregate, the "SWINGLINE LOANS") in accordance
with the procedures set forth in this Agreement for the making of loans and
advances under the Revolving Credit. The unpaid principal balance of the
SwingLine Loans shall not at any one time be in excess of the SwingLine Loan
Ceiling.
(b) The aggregate unpaid principal balance of SwingLine Loans
shall bear interest at the rate applicable to Base Margin Loans and shall be
repayable as a loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall
be evidenced by a Note in the form of EXHIBIT 2.8, annexed hereto, executed by
the Borrowers, and payable to the SwingLine Lender. Neither the original nor a
copy of that Note shall be required, HOWEVER, to establish or prove any
Liability. The Borrowers shall execute a replacement of any SwingLine Note which
has been lost, mutilated, or destroyed thereof and deliver such replacement to
the SwingLine Lender.
(d) For all purposes of this Loan Agreement, the SwingLine
Loans and the Borrowers' obligations to the SwingLine Lender constitute
Revolving Credit Loans and are secured as "Liabilities".
(e) SwingLine Loans may be subject to periodic settlement with
the Revolving Credit Lenders as provided in this Agreement.
Page 44
2.9. THE LOAN ACCOUNT.
(a) An account ("LOAN ACCOUNT") shall be opened on the books
of the Administrative Agent in which a record shall be kept of all loans and
advances made under the Revolving Credit.
(b) The Administrative Agent shall also keep a record (either
in the Loan Account or elsewhere, as the Administrative Agent may from time to
time elect) of all interest, fees, service charges, costs, expenses, and other
debits owed to the Administrative Agent and each Lender on account of the
Liabilities and of all credits against such amounts so owed.
(c) All credits against the Liabilities shall be conditional
upon final payment to the Administrative Agent for the account of each Lender of
the items giving rise to such credits. The amount of any item credited against
the Liabilities which is charged back against the Administrative Agent or any
Lender for any reason or is not so paid shall be a Liability and, if arising
under the Revolving Credit, shall be added to the Loan Account, whether or not
the item so charged back or not so paid is returned.
(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which any Borrower is obligated hereunder are
payable on demand. In the determination of Availability, the Administrative
Agent may deem fees, service charges, accrued interest, and other payments which
will be due and payable between the date of such determination and the first day
of the then next succeeding month as having been advanced under the Revolving
Credit whether or not such amounts are then due and payable.
(e) The Administrative Agent, without the request of the
Borrowers' Representative, may advance under the Revolving Credit any interest,
fee, service charge, or other payment to which any Agent or any Lender is
entitled from any Borrower pursuant hereto and may charge the same to the Loan
Account notwithstanding that an OverLoan may result thereby. Such action on the
part of the Administrative Agent shall not constitute a waiver of the
Administrative Agent's rights and each Borrower's obligations under Section
2.11(b). Any amount which is added to the principal balance of the Loan Account
as provided in this Section 2.9(e) shall bear interest at the interest rate then
and thereafter applicable to Base Margin Loans.
(f) In the absence of manifest error, a statement rendered by
the Administrative Agent or any Lender to the Borrowers' Representative
concerning the Liabilities shall be considered correct and accepted by each
Borrower and shall be conclusively binding upon each Borrower unless the
Borrowers' Representative provides the Administrative Agent with written
objection thereto within thirty (30) days from the mailing of such statement,
which written objection shall indicate, with particularity, the reason for such
objection. In the absence of manifest error, the Loan Account and the
Administrative Agent's books and records concerning the loan arrangement
contemplated herein and the Liabilities shall be prima facie evidence and proof
of the items described therein.
Page 45
2.10. THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by notes (each, a "REVOLVING CREDIT NOTE") in the form of
EXHIBIT 2.10, annexed hereto, executed by each Borrower, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, HOWEVER, to establish or prove any Liability. Upon the
Borrowers' Representative's being provided with an affidavit, from the
Administrative Agent to the effect that any Revolving Credit Note has been lost,
mutilated, or destroyed, the Borrowers shall execute a replacement thereof and
deliver such replacement to the Administrative Agent.
2.11. PAYMENT OF THE LOAN ACCOUNT.
(a) The Borrowers MAY repay all or any portion of the
principal balance of the Loan Account from time to time until the Termination
Date. Unless the Borrowers' Representative otherwise advises the Administrative
Agent, such payments shall be applied first to Base Margin Loans and only then
to Libor Loans.
(b) The Borrowers, without notice or demand from the
Administrative Agent or any Revolving Credit Lender, SHALL pay the
Administrative Agent that amount, from time to time, which is necessary so that
there is no OverLoan outstanding.
(c) The Borrowers SHALL repay the then entire unpaid balance
of the Loan Account and all other Liabilities on the Termination Date.
(d) The Administrative Agent shall endeavor to cause the
application of payments (if any), pursuant to Sections 2.11(a) and 2.11(b)
against Libor Loans then outstanding in such manner as results in the least cost
to the Borrowers, but shall not have any affirmative obligation to do so nor
liability on account of the Administrative Agent's failure to have done so. In
no event shall action or inaction taken by the Administrative Agent excuse any
Borrower from any indemnification obligation under Section 2.11(e).
(e) The Borrowers shall indemnify the Administrative Agent and
each Revolving Credit Lender and hold the Administrative Agent and each
Revolving Credit Lender harmless from and against any loss, cost or expense
(including loss of anticipated profits and amounts payable by the Administrative
Agent or such Revolving Credit Lender on account of "breakage fees" (so-called))
which the Administrative Agent or such Revolving Credit Lender may sustain or
incur (including, without limitation, by virtue of acceleration after the
occurrence of any Event of Default) as a consequence of the following:
(i) Default by any Borrower in payment of the
principal amount of or any interest on any Libor Loan as and when due
and payable, including any such loss or expense arising from interest
or fees payable by such Revolving Credit Lender in order to maintain
its Libor Loans.
Page 46
(ii) Default by any Borrower in making a borrowing or
conversion after the Borrowers' Representative has given (or is deemed
to have given) a request for a Revolving Credit Loan or a request to
convert a Revolving Credit Loan from one applicable interest rate to
another.
(iii) The making of any payment on a Libor Loan or
the making of any conversion of any such Loan to a Base Margin Loan on
a day that is not the last day of the applicable Interest Period with
respect thereto.
2.12. INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the Base
Margin Rate unless timely notice is given (as provided in Section 2.6) that the
subject Revolving Credit Loan (or a portion thereof) is, or is to be converted
to, a Libor Loan.
(b) Each Revolving Credit Loan which consists of a Libor Loan
shall bear interest at the applicable Libor Rate .
(c) Subject to, and in accordance with, the provisions of this
Agreement, the Borrowers' Representative may cause all or a part of the unpaid
principal balance of the Loan Account to bear interest at the Base Margin Rate
or the Libor Rate as specified from time to time by notice to the Administrative
Agent. For ease of reference and administration, each part of the Loan Account
which bears interest at the same interest and for the same Interest Period is
referred to herein as if it were a separate "Revolving Credit Loan".
(d) The Borrowers' Representative shall not select, renew, or
convert any interest rate for a Revolving Credit Loan such that, in addition to
interest at the Base Margin Rate, there are more than seven (7) Libor Rates
applicable to the Revolving Credit Loans at any one time.
(e) The Borrowers shall pay accrued and unpaid interest on
each Revolving Credit Loan in arrears as follows:
(i) On the applicable Interest Payment Date for that
Revolving Credit Loan.
(ii) On the Termination Date and on the End Date.
(iii) Following the occurrence of any Event of
Default, with such frequency as may be determined by the
Administrative Agent.
(f) Following the occurrence of any Event of Default (and
whether or not the Administrative Agent exercises the Administrative Agent's
rights on account thereof), all Revolving Credit Loans shall bear interest, at
the option of the Administrative Agent or at the instruction of the
SuperMajority Revolving Credit Lenders, at a rate which is the aggregate of the
rate applicable to Base Margin Loans PLUS three percent (3%) per annum.
Page 47
2.13. REVOLVING CREDIT COMMITMENT FEE. In consideration of the
commitment to make loans and advances to the Borrowers under the Revolving
Credit, and to maintain sufficient funds available for such purpose, there has
been earned by FRFI and the Borrowers shall pay the "REVOLVING CREDIT COMMITMENT
FEE" (so referred to herein) to the Administrative Agent in the amount and
payable as provided in the Fee Letter.
2.14. ADMINISTRATIVE AGENT'S FEE. In addition to any other fee or
expense to be paid by the Borrowers on account of the Revolving Credit, the
Borrowers shall pay the Administrative Agent the "ADMINISTRATIVE AGENT'S FEE" at
the times and in the amounts as set forth in the Fee Letter.
2.15. UNUSED LINE FEE. In addition to any other fee to be paid by the
Borrowers on account of the Revolving Credit, the Borrowers shall pay the
Administrative Agent the "UNUSED LINE FEE" (so referred to herein) of 0.375% per
annum of the average difference, during the quarter just ended (or relevant
period with respect to the payment being made on the Termination Date) between
the Revolving Credit Ceiling and the aggregate of the unpaid principal balance
of the Loan Account and the undrawn Stated Amount of L/C's outstanding during
the relevant period. The Unused Line Fee shall be paid in arrears, on the first
day of each quarter after the execution of this Agreement and on the Termination
Date.
2.16. REVOLVING CREDIT EARLY TERMINATION FEE.
(a) In the event that the Termination Date occurs, for any
reason (whether by virtue of Acceleration or otherwise), prior to the Maturity
Date, then except as provided in Section 2.16(b), the Borrowers shall pay the
Administrative Agent, for the Pro-Rata account of the Revolving Credit Lenders,
the "REVOLVING CREDIT EARLY TERMINATION FEE" (so referred to herein) consisting
of (i) one and one-half percent (1 1/2%) of the Revolving Credit Ceiling in
effect as of the date of this Agreement if the Termination Date shall occur at
any time prior to the first anniversary of the Closing Date and (i) one percent
(1%) of the Revolving Credit Ceiling in effect as of the date of this Agreement
if the Termination Date shall occur at any time after the first anniversary of
the Closing Date and more than 90 days prior to the Maturity Date.
(b) No Revolving Credit Early Termination Fee shall be due and
payable in the event of the early termination of the Revolving Credit in
connection with a refinancing of the Revolving Credit which is agented or
provided by FRFI or any Affiliate of FRFI, IT BEING UNDERSTOOD THAT neither FRFI
nor any affiliate of FRFI has agreed to provide any such refinancing.
2.17. INTENTIONALLY OMITTED.
Page 48
2.18. AGENTS' AND LENDERS' DISCRETION.
(a) Each reference in the Loan Documents to the exercise of
discretion, reasonable discretion, or the like by any Agent or any Lender shall
be to such Person's reasonable exercise of its judgment, in good faith (which
shall be rebuttably presumed), based upon such Person's consideration of any
such factors as that Agent or that Lender, taking into account information of
which that Person
then has actual knowledge, reasonably believes:
(i) Will or reasonably could be expected to affect,
in more than a DE MINIMIS manner, the value of the Collateral, the
enforceability of the Collateral Agent's Collateral Interests therein,
or the amount which the Collateral Agent would likely realize therefrom
(taking into account delays which may possibly be encountered in the
Collateral Agent's realizing upon the Collateral and likely Costs of
Collection).
(ii) Indicates that any report or financial
information delivered to any Agent or any Lender by or on behalf of any
Loan Party is incomplete, inaccurate, or misleading in any material
manner or was not prepared in accordance with the requirements of this
Agreement.
(iii) That a Default has occurred and is continuing.
(b) In the exercise of such judgement, each Agent or each
Lender reasonably also may take into account any of the following factors:
(i) Those included in, or tested by, the definitions
of "Eligible Accounts" and "Eligible Inventory".
(ii) The current financial and business climate of
the industry in which each Loan Party competes (having regard for that
Loan Party's position in that industry).
(iii) General macroeconomic conditions which have a
material effect on the Loan Parties' cost structure.
(iv) Material changes in or to the mix of the
Borrowers' Inventory.
(v) Seasonality with respect to the Borrowers'
Inventory and patterns of retail sales.
(vi) Such other factors as each Agent and each Lender
reasonably determine as having a material bearing on credit risks
associated with the providing of loans and financial accommodations to
the Borrowers.
(c) The burden of establishing the failure of any Agent or any
Lender to have acted in a reasonable manner in such Person's exercise of such
discretion shall be the Loan Parties' and may be made only by clear and
convincing evidence.
Page 49
2.19. PROCEDURES FOR ISSUANCE OF L/C'S.
(a) The Borrowers' Representative may request that the
Administrative Agent cause the issuance by the Issuer of L/C's for the account
of a Borrower. Each such request shall be in such manner as may from time to
time be reasonably acceptable to the Administrative Agent.
(b) The Administrative Agent will endeavor to cause the
issuance of any L/C so requested by the Borrowers' Representative, PROVIDED
THAT, at the time that the request is made, the Revolving Credit has not been
suspended as provided in Section 2.6(g) and if so issued:
(i) The aggregate Stated Amount of all L/C's then
outstanding, does not exceed $20,000,000.
(ii) The expiry of the L/C is not later than the
earlier of thirty (30) days prior to the Maturity Date or the
following:
(A) Standby's: One (1) year from initial
issuance.
(B) Documentary's: one hundred (100) days
from issuance.
(iii) If the expiry of an L/C is later than the
Maturity Date, it is 103% cash collateralized at its issuance.
(iv) An OverLoan will not result from the issuance of
the subject L/C.
(c) Each Borrower shall execute such documentation to apply
for and support the issuance of an L/C as may be required by the Issuer.
(d) There shall not be any recourse to, nor liability of, any
Agent or any Lender on account of
(i) Any delay or refusal by an Issuer to issue an
L/C;
(ii) Any action or inaction of an Issuer on account
of or in respect to, any L/C except where there is a specific finding
in a judicial proceeding (in which the Administrative Agent has had an
opportunity to be heard), from which finding no further appeal is
available, that the subject action or omission to act had been in
actual bad faith or grossly negligent or constituted willful
misconduct.
(e) The Borrowers shall reimburse the Issuer for the amount of
any honoring of a drawing under an L/C on the same day on which such honoring
takes place. The Administrative Agent, without the request of any Borrower, may
advance under the Revolving Credit (and charge to the Loan Account) the amount
of any honoring of any L/C and other amount for which any Borrower, the Issuer,
or the Revolving Credit Lenders become obligated on account of, or in respect
to, any L/C. Such advance shall be made whether or not any Default has occurred
and is continuing or such advance would result in an OverLoan. Such action shall
not constitute a waiver of the Administrative Agent's rights under Section
2.11(b) hereof.
Page 50
2.20. FEES FOR L/C'S.
(a) The Borrowers shall pay to the Administrative Agent the
following per annum fees on account of L/C's, the issuance of which had been
procured by the Administrative Agent monthly in arrears, and on the Termination
Date and on the End Date based on the weighted average Stated Amount of L/C's
outstanding during the period in respect of which such fee is being paid EXCEPT
THAT, following the occurrence and during the continuance of any Event of
Default (and whether or not the Administrative Agent exercises the
Administrative Agent's rights on account thereof), such fees, at the option of
the Administrative Agent or the direction of the SuperMajority Revolving Credit
Lenders, shall be the respective aggregate of those set forth below PLUS three
percent (3%) per annum.
(i) Documentaries: The Libor Margin then in effect MINUS 50
basis points.
(ii) Standbys: The Libor Margin then in effect.
(b) In addition to the fee to be paid as provided in
Subsection 2.20(a) above, the Borrowers shall pay to the Administrative Agent
(or to the Issuer, if so requested by Administrative Agent), on demand, all
customary issuance, processing, negotiation, amendment, and administrative fees
and other amounts charged by the Issuer on account of, or in respect to, any
L/C.
(c) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against letters of credit
heretofore or hereafter issued by any Issuer or with respect to which
any Revolving Credit Lender or any Issuer has an obligation to lend to
fund drawings under any L/C; or
(ii) impose on any Issuer any other condition or
requirements relating to any such letters of credit;
and the result of any event referred to in Section 2.20(c)(i) or 2.20(c)(ii),
above, shall be to increase the cost to any Revolving Credit Lender or to any
Issuer of issuing or maintaining any L/C (which increase in cost shall be the
result of such Issuer's reasonable allocation among that Revolving Credit
Lender's or Issuer's letter of credit customers of the aggregate of such cost
increases resulting from such events), then, upon demand by the Administrative
Agent and delivery by the Administrative Agent to the Borrowers' Representative
of a certificate of an officer of the subject Revolving Credit Lender or the
subject Issuer describing such change in law, executive order, regulation,
directive, or interpretation thereof, its effect on such Revolving Credit Lender
or such Issuer, and the basis for determining such increased costs and their
allocation, the Borrowers shall immediately pay to the Administrative Agent,
from time to time as specified by the Administrative Agent, such amounts as
shall be sufficient to compensate the subject Revolving Credit Lender or the
subject Issuer for such increased cost. In the absence of manifest error, any
Revolving Credit Lender's or any Issuer's determination of costs incurred under
Section 2.20(c)(i) or 2.20(c)(ii),
Page 51
above, and the allocation, if any, of such costs among the Borrowers and other
letter of credit customers of such Revolving Credit Lender or such Issuer, if
done in good faith and made on an equitable basis and in accordance with such
officer's certificate, shall be conclusive and binding on the Borrowers.
2.21. CONCERNING L/C'S.
(a) None of the Issuer, the Issuer's correspondents, any
Lender, any Agent, or any advising, negotiating, or paying bank with respect to
any L/C shall be responsible in any way for:
(i) The performance by any beneficiary under any L/C
of that beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of;
any documents called for under any L/C if (with respect to the
foregoing) such documents on their face appear to be in order.
(b) The Issuer may honor, as complying with the terms of any
L/C and of any drawing thereunder, any drafts or other documents otherwise in
order, but signed or issued by an administrator, executor, conservator, trustee
in bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver, or other legal representative of the party authorized
under such L/C to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance,
each Borrower hereby authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank, if any.
(d) All directions, correspondence, and funds transfers
relating to any L/C are at the risk of the Borrowers. The Issuer shall have
discharged the Issuer's obligations under any L/C which, or the drawing under
which, includes payment instructions, by the initiation of the method of payment
called for in, and in accordance with, such instructions (or by any other
commercially reasonable and comparable method). None of the Agent, the Lenders,
or the Issuer shall have any responsibility for any inaccuracy, interruption,
error, or delay in transmission or delivery by post, telegraph or cable, or for
any inaccuracy of translation.
(e) Each Agent's, each Lender's and the Issuer's rights,
powers, privileges and immunities specified in or arising under this Agreement
are in addition to any heretofore or at any time hereafter otherwise created or
arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the Issuer and the Borrowers'
Representative, documentary L/C's will be governed by the Uniform Customs and
Practice for Documentary Credits, International Chamber of Commerce, Publication
No. 500,
Page 52
and standby L/C's will be governed by International Standby Practices ISP98
(adopted by the International Chamber of Commerce on April 6, 1998) and any
respective subsequent revisions thereof.
(g) The obligations of the Borrowers under this Agreement with
respect to L/C's are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all circumstances,
whatsoever including, without limitation, the following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of this Agreement,
any L/C, or any other agreement or instrument relating thereto.
(ii) Any Borrower's consent to any amendment or
waiver of, or consent to the departure from, any L/C.
(iii) The existence of any claim, set-off, defense,
or other right which any
Borrower may have at any time against the beneficiary of any L/C.
(iv) Any good faith honoring of a drawing under any
L/C, which drawing possibly could have been dishonored based upon a
strict construction of the terms of the L/C.
(h) Each Issuer shall be deemed to have agreed as follows:
(i) That any action taken or omitted by that Issuer,
that Issuer's correspondents, or any advising, negotiating or paying bank with
respect to any L/C and the related drafts and documents, shall be done in good
faith and in compliance with foreign or domestic laws.
(ii) That the Borrowers shall not be required to
indemnify the Issuer, the Issuer's correspondents, or any advising, negotiating
or paying bank with respect to any L/C for any claims, damages, losses,
liabilities, costs or expenses to the extent, caused by (x) the willful
misconduct or gross negligence of the Issuer, the Issuer's correspondents, or
any advising, negotiating or paying bank with respect to any L/C in determining
whether a request presented under any Letter of Credit complied with the terms
of such Letter of Credit or (y) the Issuer's failure to pay under any Letter of
Credit after the presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit.
2.22. CHANGED CIRCUMSTANCES.
(a) The Administrative Agent may advise the Borrowers'
Representative (in reasonable detail as to the facts and circumstances thereof)
that the Administrative Agent has made the good faith determination (which
determination, in the absence of manifest error, shall be final and conclusive)
of any of the following:
(i) Adequate and fair means do not exist for ascertaining the
rate for Libor Loans .
(ii) The continuation of or conversion of any
Revolving Credit Loan to a Libor Loan has been made impracticable or
unlawful by the occurrence of a contingency that materially and
adversely affects the applicable market or the compliance by the
Administrative Agent or any
Page 53
Revolving Credit Lender in good faith with any Applicable Law.
(iii) The indices on which the interest rates for
Libor Loans are based shall no longer represent the effective cost to
the Administrative Agent or any Revolving Credit Lender for U.S. dollar
deposits in the interbank market for deposits in which it regularly
participates.
(b) In the event that the Administrative Agent advises the
Borrowers' Representative of an occurrence described in Section 2.22(a), then,
until the Administrative Agent notifies the Borrowers' Representative that the
circumstances giving rise to such notice no longer apply:
(i) The obligation of the Agent or each Revolving
Credit Lender to make loans of the type affected by such changed
circumstances or to permit the Borrowers' Representative to select the
affected interest rate as otherwise applicable to any Revolving Credit
Loans shall be suspended.
(ii) Any notice which the Borrowers' Representative
had given the Administrative Agent with respect to any Libor Loan, the
time for action with respect to which has not occurred prior to the
Administrative Agent's having given notice pursuant to Section 2.22(a),
shall be deemed at the option of the Administrative Agent to not having
been given.
2.23. DESIGNATION OF BORROWERS' REPRESENTATIVE AS BORROWERS' AGENT.
(a) Each Borrower hereby irrevocably designates and appoints
the Borrowers' Representative as that Borrower's agent to obtain loans and
advances under the Revolving Credit, and Tranche B, the proceeds of which shall
be available to each Borrower for those uses as those set forth in this
Agreement. As the disclosed principal for its agent, each Borrower shall be
obligated to the Agent and each Lender on account of loans and advances so made
as if made directly by the Lenders to that Borrower, notwithstanding the manner
by which such loans and advances are recorded on the books and records of the
Borrowers' Representative and of any Borrower. In addition, each Loan Party
other than the Borrowers hereby irrevocably designates and appoints the
Borrowers' Representative as that Loan Party's agent to represent such Loan
Party in all respects under this Agreement and the other Loan Documents.
(b) Each Borrower recognizes that credit available to it under
the Revolving Credit and the Tranche B Loan is in excess of and on better terms
than it otherwise could obtain on and for its own account and that one of the
reasons therefor is its joining in the credit facility contemplated herein with
all other Borrowers. Consequently, each Borrower hereby assumes and agrees to
discharge all Liabilities of each of the other Borrowers as if the Borrower
which is so assuming and agreeing were each of the other Borrowers.
(c) The Borrowers' Representative shall act as a conduit for
each Borrower (including itself, as a "Borrower") on whose behalf the Borrowers'
Representative has requested a Revolving Credit Loan or Tranche B Loan.
Page 54
(d) The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Borrowers' Representative shall be
deposited into the Operating Account or as otherwise indicated by the Borrowers'
Representative. The Borrowers' Representative shall cause the transfer of the
proceeds thereof to the (those) Borrower(s) on whose behalf such loan and
advance was obtained. Neither the Agent nor any Lender shall have any obligation
to see to the application of such proceeds.
2.24. LENDERS' COMMITMENTS
(a) Subject to Section 17.1 (which provides for assignments
and assumptions of commitments), each Revolving Credit Lender's "REVOLVING
CREDIT PERCENTAGE COMMITMENT", and "REVOLVING CREDIT DOLLAR COMMITMENT"
(respectively so referred to herein) is set forth on EXHIBIT 2.24, annexed
hereto.
(b) The obligations of each Revolving Credit Lender are
several and not joint. No Revolving Credit Lender shall have any obligation to
make any loan or advance under the Revolving Credit in excess of either of the
following:
(i) That Revolving Credit Lender's Revolving Credit
Percentage Commitment of the subject loan or advance or of
Availability.
(ii) that Revolving Credit Lender's Revolving Credit
Dollar Commitment.
(c) No Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
(d) The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit Lenders (but not
the Revolving Credit Ceiling) may be changed, from time to time by the
reallocation or assignment of Revolving Credit Dollar Commitments and Revolving
Credit Commitment Percentages amongst the Revolving Credit Lenders or with other
Persons who determine to become "Revolving Credit Lenders"; PROVIDED, HOWEVER
unless an Event of Default has occurred (in which event, no consent of any
Borrower is required) any assignment to a Person not then a Revolving Credit
Lender shall be subject to the prior consent of the Borrowers' Representative
(not to be unreasonably withheld), which consent will be deemed given unless the
Borrowers' Representative provides the Administrative Agent with written
objection not more than five (5) Business Days after the Administrative Agent
shall have given the Borrowers' Representative written notice of a proposed
assignment, such notice to state that consent will be deemed given by the
Borrowers' Representative if written objection is not received by the
Administrative Agent within such five (5) Business Days.
Page 55
(e) Upon written notice given the Borrowers' Representative
from time to time by the Administrative Agent of any assignment or allocation
referenced in Section 2.24(d):
(i) Each Borrower shall execute one or more
replacement Revolving Credit Notes to reflect such changed Revolving
Credit Dollar Commitments, Revolving Credit Commitment Percentages, and
identities and shall deliver such replacement Revolving Credit Notes to
the Administrative Agent (which promptly thereafter shall deliver to
the Borrowers' Representative the Revolving Credit Notes so replaced)
PROVIDED HOWEVER, in the event that a Revolving Credit Note is to be
exchanged following its acceleration or the entry of an order for
relief under the Bankruptcy Code with respect to any Borrower, the
Administrative Agent, in lieu of causing the Borrowers to execute one
or more new Revolving Credit Notes, may issue the Administrative
Agent's Certificate confirming the resulting Revolving Credit Dollar
Commitments and Revolving Credit Percentage Commitments.
(ii) Such change shall be effective from the
effective date specified in such written notice and any Person added as
a Revolving Credit Lender shall have all rights, privileges, and
obligations of a Revolving Credit Lender hereunder thereafter as if
such Person had been a signatory to this Agreement and any other Loan
Document to which a Revolving Credit Lender is a signatory and any
Person removed as a Revolving Credit Lender shall be relieved of any
obligations or responsibilities of a Revolving Credit Lender hereunder
thereafter.
2.25. REFERENCES TO ORIGINAL AGREEMENT. The terms "
Loan and Security
Agreement," "this Agreement," "Loan Agreement," and similar references as used
in the documents, instruments and agreements executed and/or delivered in
connection with the Original Agreement, shall mean the Original Agreement as
amended and restated hereby in its entirety, and each of such documents,
instruments and agreements is hereby so amended. Except as specifically agreed
herein, each of the Loan Documents executed and delivered in connection with the
Original Agreement are hereby ratified and confirmed and shall remain in full
force and effect in accordance with their terms. Without limitation of the
foregoing, the Loan Parties hereby confirm that the Collateral granted under the
Original Agreement, and all pledge and other security instruments and
agreements, continue to secure all Liabilities.
ARTICLE 3 - THE TRANCHE B LOAN:
3.1. THE TRANCHE B LOAN.
(a) Subject to satisfaction of the Conditions Precedent
(Article 4), the Borrower shall borrow from the Tranche B Lender and the Tranche
B Lender shall lend to the Borrower the sum of
Page 56
$15,000,000.00 (the "TRANCHE B LOAN "), repayable with interest as provided
herein.
(b) The proceeds of the Tranche B Loan shall be used solely
for the Casual Male Acquisition.
3.2. THE TRANCHE B NOTE. The obligation to repay the Tranche B Loan,
with interest as provided herein, shall be evidenced by a note (the "TRANCHE B
NOTE") in the form of EXHIBIT 3.2, annexed hereto, executed by the Borrowers.
Neither the original nor a copy of the Tranche B Note shall be required,
HOWEVER, to establish or prove any Liability. Upon the Borrowers'
Representative's being provided with an affidavit from the Administrative Agent
to the effect that said Tranche B Note has been lost, mutilated, or destroyed,
the Borrowers shall execute a replacement thereof and deliver such replacement
to the Tranche B Lender.
3.3. PAYMENT OF PRINCIPAL OF THE TRANCHE B LOAN .
(a) The Borrowers may not prepay all or any portion of the
principal balance of the Tranche B Loan prior to the Maturity Date or
Acceleration unless each of the Tranche B Loan Prepayment Conditions is
satisfied in connection with such prepayment; PROVIDED, HOWEVER, that
notwithstanding the foregoing, so long as no Default shall have occurred and be
continuing on the date on which such prepayment is made and immediately after
giving effect to such prepayment, the Tranche B Loan may be prepaid without
satisfaction of the Tranche B Loan Prepayment Conditions if the sole source of
funds for such prepayment shall be either (i) subordinated indebtedness with
terms and conditions (including, without limitation, interest rate and fees)
more favorable (as a whole) than those governing the Tranche B Loan or (ii)
proceeds from the sale of equity in Designs, Inc., in each case on terms and
conditions and subject to execution of documentation satisfactory to the
Administrative Agent.
(b) If any portion of the Tranche B Loan is paid prior to the
Maturity Date for any reason ( whether following satisfaction of the Tranche B
Loan Prepayment Conditions, Acceleration, or otherwise), all such prepayments in
any event to be in increments of not less than $2,000,000, the Borrowers shall
pay the Administrative Agent, contemporaneously with such prepayment, for the
account of the Tranche B Lender, the "TRANCHE B EARLY TERMINATION FEE" (so
referred to herein) equal to the greater of:
(i) (A) The aggregate Yield Revenue accruing (or
which would have accrued) on the Tranche B
Loan during the first fifteen (15) months
after the date such Tranche B Loan is made,
MINUS
(B) The aggregate Yield Revenue actually
received by the Tranche B
Page 57
Lender prior to the date of prepayment,
or
(ii) An amount equal to one and one half percent
(1 1/2%) of the principal balance of the
Tranche B Loan which is so paid prior to the
Maturity Date.
(c) The Borrowers shall repay the then entire unpaid balance
of the Tranche B Loan and all accrued and unpaid interest thereon on the
Termination Date.
3.4 INTEREST ON THE TRANCHE B LOAN.
(a) Subject to Section 3.4(d), the unpaid principal balance of
the Tranche B Loan shall bear interest, until repaid, fixed at 15% per annum
(the "TRANCHE B INTEREST RATE").
(b) In the event of the amendment of any interest rate which
is or which may be applicable to the unpaid principal balance of the Revolving
Credit, the Tranche B Interest Rate shall be increased by a like amount (e.g. if
the Base Margin Rate is increased by one-quarter of one percent per annum or the
Libor Rate is increased by 25 basis points, the Tranche B Interest Rate shall
likewise be increased by one-quarter of one percent per annum) and such increase
shall be treated as an increase to Current Pay Interest.
(c) Interest on the Tranche B Loan, at the Tranche B Interest
Rate, shall be payable as follows:
(i) Accrued interest on the unpaid principal balance
of the Tranche B Loan equal to 12% per annum ("TRANCHE B CURRENT PAY
INTEREST") shall be payable quarterly in arrears, on the first Business
Day of each quarter (the "TRANCHE B INTEREST PAYMENT DATE"), and on the
Maturity Date.
(ii) Subject to Section 3.4(c)(ii)(C), accrued
interest on the unpaid principal balance of the Tranche B Loan in
excess of Tranche B Current Pay Interest (which excess is referred to
herein as "TRANCHE B PIK INTEREST") shall be payable as follows:
(A) The Borrowers shall have the option,
exercisable by irrevocable written notice by the Borrowers'
Representative to the Administrative Agent made at least three
(3) Business Days prior to the relevant Tranche B Interest
Payment Date, to pay all or any part of such Tranche B PIK
Interest by adding the same to the principal balance of the
Tranche B Note on that Tranche B Interest Payment Date.
(B) Tranche B PIK Interest as to which the
option provided in Section 3.4(c)(ii)(A) is not exercised
shall be paid on the then next Tranche B Interest Payment
Date.
(C) At the direction of the Tranche B
Lender, following the
Page 58
occurrence of any Event of Default (and whether or not
Acceleration has taken place), the option provided in Section
3.4(c)(ii)(A) shall terminate and accrued interest to which
such option otherwise could have been exercised shall be paid
on each Tranche B Interest Payment Date.
(d) Following the occurrence of any Event of Default (and
whether or not Acceleration has taken place), at the direction of the Tranche B
Lender, interest shall accrue and shall be payable on the unpaid principal
balance of the Tranche B Loan at the aggregate of the Tranche B Interest Rate
then in effect plus four percent (4%) per annum.
3.5. TRANCHE B COMMITMENT FEE AND TRANCHE B MONITORING FEE. As
compensation for the Tranche B Lender's having committed to enter into this
Agreement, the Tranche B Lender has earned the Tranche B Commitment Fee and
Tranche B Monitoring Fee in the amount and payable as provided in the Fee
Letter.
3.6. PAYMENTS ON ACCOUNT OF TRANCHE B LOAN . The Borrowers authorize
the Administrative Agent to determine and to pay over directly to the Tranche B
Lender any and all amounts due and payable from time to time under or on account
of the Tranche B Loan as advances under the Revolving Credit IT BEING
UNDERSTOOD, HOWEVER, that the authorization of the Administrative Agent provided
in this Section 3.6 shall not excuse the Borrowers from fulfilling their
obligations to the Tranche B Lender on account of the Tranche B Loan nor place
any obligation on the Administrative Agent to do so. The Administrative Agent
shall provide prompt advice to the Borrowers' Representative of any amount which
is so paid over by the Administrative Agent to the Tranche B Lender pursuant to
this Section 3.6. The Tranche B Lender shall refund to the Administrative Agent
any overpayment which may have been made pursuant to this Section 3.6. The
Borrower shall not be entitled to any credit, rebate or repayment of any fee
previously earned by the Tranche B Lender pursuant to this Agreement
notwithstanding any termination of this Agreement or suspension or termination
of the Administrative Agent's and any Lender's respective obligation to make
loans and advances hereunder.
ARTICLE 4 - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, the
establishment of the Revolving Credit, the making of the first loan under the
Revolving Credit, and the making of the Tranche B Loan, each of the documents
respectively described in Sections 4.1 through and including 4.5, (each in form
and substance satisfactory to the Administrative Agent and the Tranche B Lender)
shall have been delivered to the Administrative Agent, and the conditions
respectively described in Sections 4.6 through and including 4.14,
Page 59
shall have been satisfied:
4.1. DUE DILIGENCE.
(a) Certificates of good standing for each Loan Party,
respectively issued by the Secretary of State for the state in which that Loan
Party is organized.
(b) Certificates of due qualification, in good standing,
issued by the Secretary(ies) of State of each State in which the nature of a
Loan Party's business conducted or assets owned could require such
qualification.
(c) Certificates of each Loan Party's clerk or secretary, as
applicable, of the due adoption, continued effectiveness, and setting forth the
texts of, each resolution adopted in connection with the establishment of the
loan arrangement contemplated by the Loan Documents and attesting to the true
signatures of each Person authorized as a signatory to any of the Loan
Documents.
4.2. OPINION. One or more reasonable and customary opinions of counsel
to the Loan Parties
4.3. ADDITIONAL DOCUMENTS. Such additional instruments and documents as
the Administrative Agent or its counsel or the Tranche B Lender reasonably may
require or request, including, without limitation, written instructions to the
Administrative Agent to apply the proceeds of the Tranche B Loan and the first
funding under the Revolving Credit to the Casual Male Acquisition.
4.4. OFFICERS' CERTIFICATES. Certificates executed by (a) either the
President or the Chief Executive Officer and (b) the Chief Financial Officer of
the Borrowers' Representative and stating that the representations and
warranties made by the Loan Parties to the Agents and the Lenders in the Loan
Documents are true and complete in all material respects as of the date of such
Certificate, and that no event has occurred which is or which, solely with the
giving of notice or passage of time (or both) would be an Event of Default.
4.5. CASUAL MALE ACQUISITION. The Administrative Agent shall have
received (i) a fully executed copy of the Casual Male Acquisition Agreement,
together with all exhibits and schedules thereto and all other agreements,
documents and instruments executed and delivered in accordance therewith, each
certified by an officer of the Borrowers' Representative as being true and
correct copies thereof and (ii) evidence that the Casual Male Acquisition
Agreement is in full force and effect, all filings, consents and approvals
required by applicable law for consummation of the Casual Male Acquisition,
including, without limitation, the Casual Male Approval Order, shall have been
obtained and shall be effective and that the
Page 60
Casual Male Acquisition shall be consummated contemporaneously with the making
of the first loan under the Revolving Credit and the making of the Tranche B
Loan.
4.6. REPRESENTATIONS AND WARRANTIES. Each of the representations made
by or on behalf of each Loan Party in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by or
on behalf of each Loan Party shall be true and complete in all material respects
as of the date as of which such representation or warranty was made.
4.7. MINIMUM DAY ONE EXCESS AVAILABILITY. After giving effect to the
first funding under the Revolving Credit and the Tranche B Loan, and the
issuance of any L/Cs, Excess Availability shall not be less than $20,000,000.
4.8. ALL FEES AND EXPENSES PAID. All fees due at or immediately after
the first funding under the Revolving Credit and the Tranche B Loan, and all
costs and expenses incurred by the Administrative Agent, the Collateral Agent
and the Tranche B Lender in connection with the establishment of the credit
facility contemplated hereby (including the reasonable fees and expenses of
counsel to the Administrative Agent, the Collateral Agent and the Tranche B
Lender), shall have been paid in full.
4.9 INVESTMENT. The Administrative Agent shall have received (i) a copy
of the fully executed 12% Subordinated Note and the 5% Subordinated Note, (ii)
executed originals of the Subordination Agreements, (iii) a copy of the
Subscription Agreement and (iv) evidence of the application to the Casual Male
Acquisition of not less than $35,000,000 in proceeds of the Subordinated
Indebtedness and $77,000,000 in proceeds of the sale of equity pursuant to the
Subscription Agreement.
4.10 COLLATERAL, ETC.
(a) Each document (including, without limitation, Uniform Commercial
Code financing statements) required by law or requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of the
Collateral Agent a first priority perfected security interest in the Collateral
shall have been properly filed, registered or recorded in each jurisdiction
where required and the Collateral Agent shall have a first priority perfected
security interest in the Collateral, subject only to Permitted Encumbrances.
(b) All accounts payable of the Loan Parties shall be within invoice
terms (subject only to good faith disputes).
(c) The Inventory Purchase Agreement shall have been executed and
delivered by all the Loan
Page 61
Parties, shall be in full force and effect and shall be satisfactory to the
Administrative Agent
4.11. NO DEFAULT.
(a) No Default shall have occurred and be continuing.
(b) No default shall have occurred and be continuing under any material
contract or other agreement to which any Loan Party is a party.
4.12. FINANCIAL STATEMENTS; LEGAL DUE DILIGENCE; NO ADVERSE CHANGE.
(a) The Administrative Agent shall be satisfied that all financial
statements and projections delivered to it fairly present the Consolidated
business and financial condition of Designs, Inc. and its subsidiaries and upon
the effectiveness of this Agreement and consummation of the Casual Male
Acquisition, Designs, Inc. shall have restructured its Indebtedness and balance
sheet in a manner reasonably acceptable to the Administrative Agent. The
Administrative Agent shall have received and be satisfied with certain asset
based reports previously requested of Designs, Inc.
(b) No event shall have occurred or failed to occur, which occurrence
or failure is or could have a materially adverse effect upon any Loan Party's
financial condition when compared with the financial condition of such Loan
Party as reflected in its most recent interim management prepared financial
statements, annual report(s), public filings and projections provided to the
Administrative Agent or any Lender.
(c) Counsel to the Administrative Agent shall have completed its legal
due diligence (including, without limitation, with respect to the Casual Male
Acquisition) with results reasonably satisfactory to the Administrative Agent
and such counsel.
(d) The Administrative Agent and the Tranche B Lender shall be
satisfied that no information or materials supplied by or on behalf of the Loan
Parties contain material misstatements or omissions which could be materially
misleading.
(e) The Administrative Agent and the Tranche B Lender shall be
satisfied that no materially adverse change in any governmental regulations or
policies affecting any Loan Party or Agent shall have occurred.
4.13. NO LITIGATION. The Administrative Agent and its counsel shall
have received evidence satisfactory to each that there are no actions, suits or
proceedings at law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or threatened against any
Loan Party the result of which is reasonably likely to have a material adverse
effect on the Casual Male
Page 62
Acquisition or on such Loan Party or its businesses or assets.
4.14. BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this
Article 4 are for the sole benefit of each Agent and each Lender and may be
waived by the Administrative Agent and the Tranche B Lender, in whole or in
part, without prejudice to any Agent or any Lender.
No document shall be deemed delivered to the Administrative Agent, the
Collateral Agent, the Tranche B Lender or any Revolving Credit Lender until
received and accepted by the Administrative Agent at its offices in Boston,
Massachusetts. Under no circumstances shall this Agreement take effect until
executed and accepted by the Administrative Agent at said offices.
ARTICLE 5 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Lender to establish the credit facilities contemplated
herein and to induce the Revolving Credit Lenders to provide loans and advances
under the Revolving Credit (each of which loans shall be deemed to have been
made in reliance thereupon) and to induce the Tranche B Lender to make the
Tranche B Loan, respectively, as contemplated hereby, the Loan Parties, in
addition to all other representations, warranties, and covenants made by any
Loan Party in any other Loan Document, make those representations, warranties,
and covenants included in this Agreement.
5.1. PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrowers shall pay
each payment Liability when due (or when demanded, if payable on demand) and
shall promptly, punctually, and faithfully perform each other Liability.
5.2. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Loan Party presently is and hereafter shall remain in
good standing under the laws of the State in which it is organized, as set forth
in the Preamble and is and shall hereafter remain duly qualified and in good
standing in every other State in which, by reason of the nature or location of
such Loan Party's assets or operation of such Loan Party's business, such
qualification may be necessary, except where the failure to so qualify would not
have a material adverse effect on the business or assets of that Loan Party.
(b) Each Loan Party's respective organizational identification
number assigned to it by the State of its organization and its respective
federal employer identification number is stated on EXHIBIT 5.2, annexed hereto.
(c) No Loan Party shall change its State of organization; any
organizational
Page 63
identification number assigned to that Loan Party by that State;
or that Loan Party's federal taxpayer identification number on less than sixty
(60) days prior written notice (in reasonable detail) to the Administrative
Agent.
(d) Each Affiliate of the Loan Parties is listed on EXHIBIT
5.2. The Borrowers' Representative shall provide the Administrative Agent with
prior written notice of any entity's becoming or ceasing to be an Affiliate.
(e) Each Loan Party has all requisite power and authority to
execute and deliver all Loan Documents to which that Loan Party is a party and
has and will hereafter retain all requisite power to perform all Liabilities.
(f) The execution and delivery by each Loan Party of each Loan
Document to which it is a party; each Loan Party's consummation of the
transactions contemplated by such Loan Documents (including, without limitation,
the creation of Collateral Interests by that Loan Party to secure the
Liabilities); each Loan Party's performance under those of the Loan Documents to
which it is a party; the borrowings hereunder; and the use of the proceeds
thereof:
(i) Have been duly authorized by all necessary
action.
(ii) Do not, and will not, contravene in any material
respect any provision of any Requirement of Law or obligation of that
Loan Party, where such contravention would have a material adverse
effect on that Loan Party.
(iii) Will not result in the creation or imposition
of, or the obligation to create or impose, any Encumbrance upon any
assets of that Loan Party pursuant to any Requirement of Law or
obligation, except pursuant to or as permitted by the Loan Documents.
(g) The Loan Documents have been duly executed and delivered
by each Loan Party and are the legal, valid and binding obligations of each Loan
Party, enforceable against each Loan Party in accordance with their respective
terms, except as such enforceability may be subject to limitations on the rights
and remedies of secured creditors generally imposed under bankruptcy or
insolvency law and that the availability of equitable relief is subject to the
discretion of the court from which such relief is sought.
5.3. TRADE NAMES.
(a) EXHIBIT 5.3, annexed hereto, is a listing of:
(i) All names under which any Loan Party conducted its
business during the five (5) years preceding the date of this
Agreement.
(ii) All Persons with whom any Loan Party consolidated or
merged, or from whom any Loan Party acquired in a single transaction or
in a series of related transactions substantially all of such Person's
assets, in each case during the five (5) years preceding the date of
this Agreement.
Page 64
(b) The Borrowers' Representative will provide the
Administrative Agent with not less than twenty-one (21) days prior written
notice (with reasonable particularity) of any change to any Loan Party's name
from that under which that Loan Party is conducting its business at the
execution of this Agreement and will not effect such change unless each Loan
Party is then in compliance with all provisions of this Agreement.
5.4. INFRASTRUCTURE.
(a) Each Loan Party has and will maintain a sufficient
infrastructure to conduct its business as presently conducted and as
contemplated to be conducted following its execution of this Agreement.
(b) To the Borrowers' knowledge, except as set forth in
EXHIBIT 5.4(B), each Loan Party owns and possesses, or has the right to use (and
will hereafter own, possess, or have such right to use) all patents, industrial
designs, trademarks, trade names, trade styles, brand names, service marks,
logos, copyrights, trade secrets, know-how, confidential information, and other
intellectual or proprietary property of any third Person necessary for that Loan
Party's conduct of that Loan Party's business except where the failure to own,
possess, or have such right or use will not have more than a DE MINIMIS adverse
effect on any Loan Party.
(c) To the Borrowers' knowledge, the conduct by each Loan
Party of that Loan Party's business does not presently infringe (nor will any
Loan Party conduct its business in the future so as to infringe) the patents,
industrial designs, trademarks, trade names, trade styles, brand names, service
marks, logos, copyrights, trade secrets, know-how, confidential information, or
other intellectual or proprietary property of any third Person except where such
infringement will not have no more than a DE MINIMIS adverse effect on that Loan
Party.
5.5. LOCATIONS.
(a) The Collateral, and the books, records, and papers of the
Loan Parties pertaining thereto, are kept and maintained solely at the following
locations:
(i) The Borrowers' Representative's chief executive
offices which are at ▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(ii) Those locations which are listed on EXHIBIT 5.5,
annexed hereto, which EXHIBIT includes, with respect to each such
location, the name and address of the landlord on the Lease which
covers such location (or an indication that a Loan Party owns the
subject location) and of all service bureaus with which any such
records are maintained and the names and addresses of each Loan Party's
landlord(s).
Page 65
(b) No Loan Party shall remove any of the Collateral from said
chief executive office or those locations listed on EXHIBIT 5.5 except for the
following purposes:
(i) To accomplish sales of Inventory in the ordinary
course of business or sales permitted by Section 5.14(d).
(ii) To move Inventory from one such location to
another such location.
(iii) To utilize such of the Collateral as is removed
from such locations in the ordinary course of business (such as motor
vehicles).
(c) Except where caused by a force majeure or as otherwise
agreed by the Administrative Agent, and except with respect to the
locations referred to in Section 5.14(d)(v) as to which 5 days notice
shall be deemed sufficient, no Loan Party shall cease the conduct of
business at any of its present or future Stores for more than fifteen
(15) consecutive days without first furnishing the Administrative Agent
with not less than thirty (30) days (or such lesser period as the
Administrative Agent may agree) prior written notice thereof.
5.6. STORES.
(a) No Loan Party is or may commit to or become legally
obligated to open additional Stores where such commitment, obligation, or
opening is prohibited by, or would result in a breach of, this Agreement.
(b) No tangible personal property of any Loan Party (beyond a
DE MINIMIS amount of such property) is in the care or custody of any third party
or stored or entrusted with a bailee or other third party OTHER THAN as
otherwise consented to in writing by the Administrative Agent.
5.7. TITLE TO ASSETS.
(a) The Loan Parties are, and shall hereafter remain, the
owners of the Collateral free and clear of all Encumbrances with the exceptions
of the following:
(i) Encumbrances in favor of the Collateral Agent.
(ii) Permitted Encumbrances.
(b) Except as disclosed on EXHIBIT 5.7(B), annexed hereto, the
Loan Parties do not have possession of any property on consignment to the Loan
Parties and will not have possession of property on consignment hereafter.
(c) No Loan Party shall acquire or obtain the right to use any
Equipment, the acquisition or right to use of which Equipment is otherwise
permitted by this Agreement, in which Equipment any third party has an interest,
except for:
(i) Equipment which is merely incidental to the
conduct of that Loan Party's
Page 66
business; or
(ii) Equipment, the acquisition or right to use of
which has been consented to by the Administrative Agent, which consent
may be conditioned solely upon the Administrative Agent's receipt of an
agreement, substantially in the form of EXHIBIT 5.7(C)(II), annexed
hereto with the third party which has an interest in such Equipment..
(d) No Affiliate (other than a Loan Party) which is owned,
directly or indirectly, by a Loan Party has, and none will acquire, any assets
other than assets of nominal value, unless (i) such acquisition of assets is not
prohibited by another provision of this Agreement and (ii) the ownership
interests of such Affiliate shall have been pledged to the Collateral Agent for
the benefit of the Lenders as their interests may appear and the Collateral
Agent has a first priority, perfected security interest in such ownership
interests.
5.8. INDEBTEDNESS.
The Loan Parties do not, and shall not hereafter, have any
Indebtedness with the exception of Permitted Indebtedness and shall not make,
directly or indirectly, any payment or other distribution (whether in cash,
securities or other property) of or in respect of principal of or interest on
any Indebtedness except Permitted Indebtedness; PROVIDED, HOWEVER, that the Loan
Parties will not make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Subordinated Indebtedness except for the following:
(i) with respect to the 5% Subordinated Note, (x)
regularly scheduled payments of interest and (y)
commencing with May 14, 2003, regularly scheduled
payments of principal (the aggregate of principal
payments during any twelve month period not in any
event to exceed $3,000,000), so long as in the case
of any payment under clause (x) or (y), as of the
date of such payment, and after giving effect
thereto, there exists no Default; and
(ii) with respect to the 12% Subordinated Note, (x)
regularly scheduled payments of interest may be made
so long as on the date of any such payment, and after
giving effect thereto, there exists no Default and
(y) principal payments made be made solely with the
prior written consent of the Administrative Agent,
SuperMajority Revolving Credit Lenders and the
Tranche B Lender.
The terms and conditions (including without
limitation, the payment terms thereunder (including,
without limitation, the timing thereof)) of the 5%
Subordinated
Page 67
Note, and the 12% Subordinated Note and Subordination
Agreements may not be amended, modified or
supplemented in any respect without the prior written
consent of the Administrative Agent, SuperMajority
Revolving Credit Lenders and the Tranche B Lender.
5.9. INSURANCE.
(a) EXHIBIT 5.9, annexed hereto, is a schedule of all
insurance policies owned by the Loan Parties or under which any Loan Party is
the named insured. Each of such policies is in full force and effect. Neither
the issuer of any such policy nor any Loan Party is in default or violation of
any such policy.
(b) The Loan Parties shall have and maintain at all times
insurance covering such risks, in such amounts, containing such terms, in such
form, for such periods, and written by such companies as may be satisfactory to
the Administrative Agent.
(c) All insurance carried by the Loan Parties shall provide
for a minimum of thirty (30) days' prior written notice of cancellation to the
Administrative Agent and all such insurance which covers the Collateral shall
include an endorsement in favor of the Agents, which endorsement shall provide
that the insurance, to the extent of the Agent's respective interest therein,
shall not be impaired or invalidated, in whole or in part, by reason of any act
or neglect of any Loan Party or by the failure of any Loan Party to comply with
any warranty or condition of the policy, and shall not include an endorsement in
favor of any other Person except for endorsements naming one or more of the
sellers under the Casual Male Acquisition Agreement as additional insureds to
the extent required or contemplated by such Casual Male Acquisition Agreement.
(d) The coverage reflected on EXHIBIT 5.9 presently satisfies
the foregoing requirements, IT BEING RECOGNIZED BY EACH LOAN PARTY, HOWEVER,
that such requirements may change hereafter to reflect changing circumstances.
(e) The Borrowers' Representative shall furnish the
Administrative Agent from time to time with certificates or other evidence
satisfactory to the Administrative Agent regarding compliance by the Loan
Parties with the foregoing requirements.
(f) In the event of the failure by the Loan Parties to
maintain insurance as required herein, the Administrative Agent, at its option,
may obtain such insurance, PROVIDED, HOWEVER, the Administrative Agent's
obtaining of such insurance shall not constitute a cure or waiver of any Event
of Default occasioned by the Loan Parties' failure to have maintained such
insurance.
5.10. LICENSES. Each license, distributorship, franchise, and similar
agreement issued to, or to which any Loan Party is a party, is in full force and
effect, except where the failure thereof to be in full
Page 68
force and effect does not have a material adverse effect on the Loan Parties. No
party to any such license or agreement is in default or violation thereof. No
Loan Party has received any notice or threat of cancellation of any such license
or agreement.
5.11. LEASES. EXHIBIT 5.11, annexed hereto, is a schedule of all
presently effective Capital Leases. EXHIBIT 5.5 includes a list of all other
presently effective Leases. Each of such Leases and Capital Leases is in full
force and effect. No party to any such Lease or Capital Lease is in default or
violation of any such Lease or Capital Lease and no Loan Party has received
notice or a threat of cancellation of any such Lease or Capital Lease. Each Loan
Party hereby authorizes the Administrative Agent at any time and from time to
time, with the consent of the Borrowers' Representative and at any time
following the occurrence of an Event of Default, to contact any of the Loan
Parties' respective landlords in order to confirm the Loan Parties' continued
compliance with the terms and conditions of the Lease(s) between the subject
Loan Party and that landlord and to discuss such issues, concerning the subject
Loan Party's occupancy under such Lease(s), as the Administrative Agent may
determine.
5.12. REQUIREMENTS OF LAW. Each Loan Party is in compliance with, and
shall hereafter comply with and use its assets in compliance with, all
Requirements of Law except where the failure of such compliance will not have
more than a DE MINIMIS adverse effect on the Loan Party's business. No Loan
Party has received any notice of any violation of any Requirement of Law (other
than of a violation which has no more than a DE MINIMIS adverse effect on the
Loan Party's business or assets), which violation has not been cured or
otherwise remedied.
5.13. LABOR RELATIONS.
(a) Except as disclosed on EXHIBIT 5.13(A), annexed hereto, no
Loan Party is presently a party to any collective bargaining or other labor
contract.
(b) There is not presently pending and, to any Loan Party's
knowledge, there is not threatened any of the following:
(i) Any strike, slowdown, picketing, work stoppage,
or material employee
grievance process.
(ii) Any proceeding against or affecting any Loan
Party relating to the alleged violation of any Applicable Law
pertaining to labor relations or before National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or
employment dispute against or affecting any Loan Party, which, if
determined adversely to that Loan Party could have more than a DE
MINIMIS adverse
Page 69
effect on that Loan Party.
(iii) Any lockout of any employees by any Loan Party
(and no such action is contemplated by any Loan Party).
(iv) Any application for the certification of a
collective bargaining agent.
(c) To the knowledge of the Borrowers' Representative and each
Loan Party, no material event has occurred or circumstance exists which could
provide the basis for any work stoppage or other labor dispute.
(d) Each Loan Party:
(i) Has complied in all material respects with all
Applicable Law relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing.
(ii) Is not liable for the payment of more than a DE
MINIMIS amount of compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for that Loan Party's failure to
comply with any Applicable Law referenced in Section 5.13(d)(i).
5.14. MAINTAIN PROPERTIES. The Loan Parties shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any policy
of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The sale of Inventory in compliance with this
Agreement.
(ii) The disposal of Equipment which is obsolete,
worn out, or damaged beyond repair, which Equipment is replaced to the
extent necessary to preserve or improve the operating efficiency of any
Loan Party.
(iii) The turning over to the Administrative Agent of
all Receipts as provided herein.
(iv) Permitted Asset Dispositions.
5.15. TAXES.
(a) The Loan Parties, in compliance with all Applicable Law,
have properly filed the Loan Party's tax returns due to be filed up to the date
of this Agreement. All federal and state taxes and
Page 70
other amounts in the nature of taxes for which the Loan Party is liable or
obligated are presently due and payable without penalty; or have been paid or
settled.
(b) The Loan Parties shall: pay, as they become due and
payable, all taxes and unemployment contributions and other charges of any kind
or nature levied, assessed or claimed against any Loan Party or the Collateral
by any person or entity whose claim could result in an Encumbrance upon any
asset of any Loan Party or by any governmental authority; properly exercise any
trust responsibilities imposed upon any Loan Party by reason of withholding from
employees' pay or by reason of any Loan Party's receipt of sales tax or other
funds for the account of any third party; timely make all contributions and
other payments as may be required pursuant to any Employee Benefit Plan now or
hereafter established by any Loan Party; and timely file all tax and other
returns and other reports with each governmental authority to whom any Loan
Party is obligated to so file except where failure to file would not have a
material adverse effect PROVIDED HOWEVER, nothing included in this Section
5.15(b) shall prevent the Loan Parties from contesting, in good faith and by
appropriate proceedings, any tax liability claimed against any Loan Party, but
only PROVIDED THAT and so long as no tax lien is filed with respect thereto. (c)
At its option, with prior notice to the Borrower's Representative, the
Administrative Agent may pay any tax, charge levied, assessed, or claimed upon
any Loan Party or the Collateral by any person or entity or governmental
authority, and make any payments on account of any Loan Party's Employee Benefit
Plan as the Administrative Agent , in the Administrative Agent's discretion, may
deem necessary or desirable, to protect the Agents' Rights and Remedies.
5.16. NO MARGIN STOCK. No Loan Party is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the United States). No part of the proceeds of any
borrowing hereunder will be used at any time to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
5.17. ERISA.
(a) Neither any Loan Party nor any ERISA Affiliate has ever:
(i) Violated or failed to be in full compliance with
any Loan Party's Employee Benefit Plan.
(ii) Failed timely to file all reports and filings
required by ERISA to be filed by any Loan Party.
(iii) Engaged in any nonexempt "prohibited
transactions" or "reportable events" (respectively as described in
ERISA).
Page 71
(iv) Engaged in, or committed, any act such that a
tax or penalty could be imposed upon any Loan Party on account thereof
pursuant to ERISA.
(v) Accumulated any material cumulative funding
deficiency within the meaning of ERISA.
(vi) Terminated any Employee Benefit Plan such that a
lien could be asserted against any assets of any Loan Party on account
thereof pursuant to ERISA.
(vii) Been a member of, contributed to, or had any
obligation under any Employee Benefit Plan which is a multiemployer
plan within the meaning of Section 4001(a) of ERISA.
(b) Neither any Loan Party nor any ERISA Affiliate shall ever
engage in any action of the type described in Section 5.17(a).
5.18. HAZARDOUS MATERIALS.
(a) No Loan Party has ever: (i) been legally responsible for
any release or threat of release of any Hazardous Material or (ii)
received notification of the incurrence of any expense in connection
with the assessment, containment, or removal of any Hazardous Material
for which that Loan Party would be responsible.
(b) Each Loan Party shall: (i) dispose of any Hazardous
Material only in compliance with all Environmental Laws and (ii) have
possession of any Hazardous Material only in the ordinary course of
that Loan Party's business and in compliance with all Environmental
Laws.
5.19. LITIGATION. Except as described in EXHIBIT 5.19, annexed hereto,
there is not presently pending or to its knowledge, threatened in writing, by or
against the Loan Parties, any suit, action, proceeding, or investigation which
if determined adversely to the Loan Parties, would have a material adverse
effect upon the Loan Parties' financial condition or ability to conduct their
business as such business is presently conducted or is contemplated to be
conducted in the foreseeable future.
5.20. DIVIDENDS. INVESTMENTS. ENTITY ACTION. No Loan Party shall:
(a) Pay any cash dividend or make any other distribution in
respect of any class of their respective capital stock or other
ownership interests, other than payments to another Loan Party.
(b) Redeem, retire, purchase, or acquire any of Design Inc.'s
capital stock.
(c) Invest in or purchase any stock or securities or other
ownership interests, or rights to purchase any such stock or securities
or other ownership interests, of any corporation or other Person,
except for
(i) Permitted Investments,
Page 72
(ii) capital stock or other ownership interests of
wholly owned direct or indirect Subsidiaries (in existence on the
Closing Date) of the Loan Parties, and
(iii) investments in the ECKO Joint Venture not to
exceed $5,000,000 in the aggregate during the term of this Agreement.
(d) Merge or consolidate or be merged or consolidated with or
into any other corporation or other entity; provided that nothing in
this Agreement shall prevent any Loan Party from merging into any other
Loan Party.
(e) Consolidate any of that Loan Party's operations with those
of any other corporation or other entity other than another Loan Party.
(f) Subordinate any debts or obligations owed to that Loan
Party by any third party to any other debts owed by such third party to
any other Person.
(g) Engage in any interest rate swaps, caps, or similar
activities, or any hedging activities, other than in the ordinary
course and conduct of that Loan Party's business and then only with a
Lender or any affiliate of a Lender.
5.21. PERMITTED ACQUISITIONS. The Loan Parties may make Permitted
Acquisitions without the consent of the Agent or the Lenders; provided that:
(a) Not less than fifteen (15) days prior written notice (with
reasonable particularity as to the facts and circumstances in respect
of which such notice is being given) of such Permitted Acquisition is
given to the Administrative Agent.
(b) The aggregate purchase price (exclusive of the portion of
the purchase price paid for with capital stock of the Loan Parties) of
all such Permitted Acquisitions undertaken from and after the Closing
Date is not greater than $5,000,000.
(c) No Event of Default then exists or would result from any
such Permitted Acquisition.
(d) With respect, to and in the event of any Permitted
Acquisition which consists of, or results in the creation of, a
Subsidiary, the Administrative Agent shall be provided with such
Subsidiary's Guarantor Agreement (in form and substance satisfactory to
the Administrative Agent), which Guarantor Agreement shall be secured
by first perfected security interests and liens on substantially all of
the assets of such Subsidiary, subject to the same limitations set
forth in Section 9.1 hereof and subject to Permitted Encumbrances.
(e) The Agent and the Lenders shall have no obligation to
include any Inventory acquired in such Permitted Acquisition (or
Inventory of a similar type and nature acquired after the Permitted
Acquisition) as Eligible Inventory.
Page 73
5.22. LOANS. The Loan Parties shall not make any loans to, nor acquire
the Indebtedness of, any Person, PROVIDED, HOWEVER, the foregoing does not
prohibit any of the following:
(a) Subject to such conditions respectively as apply thereto,
the making of Permitted Investments.
(b) Advance payments made to a Loan Party's suppliers in the
ordinary course.
(c) Advances to a Loan Party's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of a Loan Party,
which expenses are properly substantiated by the person seeking such
advance and properly reimbursable by a Loan Party.
(d) Loans to a Loan Party's officers and employees not
exceeding $400,000 in the aggregate at any one time outstanding,
provided that each such loan is for a term of not more than 90 days
from the date on which it is made and is paid within such 90-day
period; PROVIDED THAT, all amounts due on account of loans permitted
under this clause (d) shall constitute Collateral and shall be pledged
to the Collateral Agent for the benefit of the Lenders and their
interests may appear; and
(e) Advances to contractors for the construction or renovation
of stores, buildings or improvements for use in the business of a Loan
Party.
(f) Loans by Designs, Inc. to Securex not to exceed $5,000,000
in the aggregate during the term of this Agreement, so long as in each
case such intercompany loans shall be evidenced by, and subject to,
such documentation (including, without limitation, notes and pledge
agreements) as the Collateral Agent may require, and no Default shall
have occurred and be continuing on the date of any such loan.
(g) Loans by Designs, Inc. or Designs Apparel, Inc. to
Guarantors to finance the purchases by Guarantors of Inventory pursuant
to the Inventory Purchase Agreement and to permit such Guarantors to
pay ordinary course operating expenses (including, without limitation,
rent, utilities and taxes) so long as in each case such intercompany
loans shall be evidenced by, and subject to, such documentation
(including, without limitation, notes and pledge agreements) as the
Collateral Agent may require.
5.23. RESTRICTIONS ON SALE OF COLLATERAL; LICENSE AGREEMENTS. To the
Loan Parties' knowledge, the Loan Parties are not, and shall not become, party
to any agreement or understanding which limits, impairs, or otherwise restricts
the ability of the Collateral Agent to freely sell and dispose of any of the
Collateral (including, without limitation, any repurchase agreements, rights of
first refusal or other agreements which limit or condition the time, manner,
place or price for the sale or disposition of the Collateral), other than
certain Trademark License Agreements with Levi ▇▇▇▇▇▇▇ & Co. dated November 1,
Page 74
1991 and November 15, 1996. The Loan Parties shall not effect or permit
any material change or amendment to the terms of such License Agreements which
would impose further restrictions to the Collateral Agent's disposition of the
Collateral or would shorten the term of such License Agreements, other than as
contemplated in the Amendment and Distribution Agreement dated as of October 31,
1998 by and among Designs JV Corp., LDJV, Inc. and The Designs/OLS Partnership.
5.24. PROTECTION OF ASSETS. The Administrative Agent, in the
Administrative Agent's discretion, from time to time, may discharge any tax or
Encumbrance on any of the Collateral, or take any other action which the
Administrative Agent may deem necessary or desirable to repair, insure,
maintain, preserve, collect, or realize upon any of the Collateral. The
Administrative Agent shall not have any obligation to undertake any of the
foregoing and shall have no liability on account of any action so undertaken
except where there is a specific finding in a judicial proceeding (in which the
Administrative Agent has had an opportunity to be heard), from which finding no
further appeal is available, that the Administrative Agent had acted in actual
bad faith or in a grossly negligent manner. The Loan Parties shall pay to the
Administrative Agent, on demand, or the Administrative Agent, in its discretion,
may add to the Loan Account, all amounts paid or incurred by the Administrative
Agent pursuant to this Section 5.24.
5.25. LINE OF BUSINESS.
(a) Except as provided in Sections 5.20, 5.23 and 5.25(c), no
Loan Party shall engage in any business other than the business in
which it is currently engaged or plans to be engaged, as reflected in
the Business Plan, or a business reasonably related thereto (the
conduct of which reasonably related business is reflected in the
Business Plan), PROVIDED THAT the foregoing shall not prohibit the
expansion or contraction of a Loan Party's business so long as the Loan
Parties are still engaged solely in the retail sale of apparel,
footwear and related accessories and other activities, ancillary,
incidental or necessary thereto, and such expansion or contraction is
otherwise permitted under other Sections of this Agreement.
(b) The Loan Parties, with the prior written notice to the
Administrative Agent in each instance, may license the use of up to 5%
of the selling space of any Store (measured in terms of square feet)
for the operation of certain departments of their Stores by third
parties.
(c) The Loan Parties, with the prior written consent of the
Administrative Agent (as to which, SEE Section 5.25(c)(i)), may (x)
license the use of more than 5% of the selling space of any Store
(measured in terms of square feet) for the operation of certain
departments by third parties and (y) franchise to others the right to
operate comparable Stores, IT BEING UNDERSTOOD THAT:
(i) The Administrative Agent's determination to
consent to the Loan Parties'
Page 75
activities described in Section 5.25(c) may be conditioned on the
Administrative Agent's being satisfied that the secured position of the
Collateral Agent, and the Agents' Rights and Remedies, would not be
adversely affected by such restructuring and that such restructuring
does not place any material additional administrative burdens on the
Agents.
(ii) The Administrative Agent may provide such consent
pursuant to this Section 5.25(c) on its own authority and without
obtaining the Consent of the Majority Lenders.
(iii) The Administrative Agent may condition its providing of
such consent pursuant to this Section 5.25(c) on the Consent of the
Majority Lenders.
5.26. AFFILIATE TRANSACTIONS. No Loan Party shall make any payment, nor
give any value, to any Affiliate except for:
(a) Goods and services actually purchased by that Loan Party
from, or sold by that Loan Party to, such Affiliate for a price and on
terms which shall
(i) be competitive and fully deductible as an
"ordinary and necessary business expense" and/or fully depreciable
under the Internal Revenue Code of 1986 and the Treasury Regulations,
each as amended; and
(ii) be no less favorable to that Loan Party than
those which would have been charged and imposed in an arms length
transaction.
(b) Permitted Overhead Contributions. It is hereby agreed that
Permitted Overhead Contributions shall be deemed to include lease
payments under any amendment to or replacement of the Lease Agreement
referred to in the definition of Permitted Overhead Contributions
PROVIDING that such lease amendment or replacement is on terms and
conditions satisfactory to the Administrative Agent.
5.27. FURTHER ASSURANCES.
(a) No Loan Party is the owner of, nor has it any interest in,
any property or asset which, immediately upon the satisfaction of the
conditions precedent to the effectiveness of the credit facility
contemplated hereby (Article 4) will not be subject to a perfected
Collateral Interest in favor of the Collateral Agent (subject only to
Permitted Encumbrances) to secure the Liabilities.
(b) Except as otherwise permitted by this Agreement, no Loan
Party will hereafter acquire any asset or any interest in property
which is not, immediately upon such acquisition, subject to such a
perfected Collateral Interest in favor of the Collateral Agent to
secure the Liabilities (subject only to Permitted Encumbrances).
(c) Each Loan Party shall execute and deliver to the
Administrative Agent such instruments, documents, and papers, and shall
do all such things from time to time hereafter as the
Page 76
Administrative Agent reasonably may request, to carry into effect the provisions
and intent of this Agreement; to protect and perfect the Collateral Agent's
Collateral Interests in the Collateral; and to comply with all applicable
statutes and laws, and facilitate the collection of the Receivables Collateral.
Each Loan Party shall execute all such instruments as may be required by the
Administrative Agent with respect to the recordation and/or perfection of the
Collateral Interests created or contemplated herein.
(d) Each Loan Party hereby designates the Collateral Agent as
and for that Loan Party's true and lawful attorney, with full power of
substitution, to sign and file any financing statements in order to
perfect or protect the Collateral Agent's Collateral Interests in the
Collateral.
(e) This Agreement constitutes an authenticated record which
authorizes the Collateral Agent to file such financing statements as
the Collateral Agent determines as appropriate to perfect or protect
the Agent's Collateral Interests created hereby.
(f) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed
pursuant to this Section 5.27 shall be sufficient for filing to perfect
the security interests granted herein.
5.28. ADEQUACY OF DISCLOSURE.
(a) All financial statements furnished to each Agent and each
Lender by each Loan Party have been prepared in accordance with GAAP
consistently applied and present fairly the condition of the Loan
Parties at the date(s) thereof and the results of operations and cash
flows for the period(s) covered (PROVIDED HOWEVER, that unaudited
financial statements are subject to normal year end adjustments and to
the absence of footnotes). There has been no change in the Consolidated
financial condition, results of operations, or cash flows of the Loan
Parties since the date(s) of such financial statements, as supplemented
by the Business Plan, other than changes in the ordinary course of
business, which changes have not been materially adverse, either
singularly or in the aggregate.
(b) Except as set forth on EXHIBIT 5.28(B), annexed hereto, no
Loan Party has any contingent obligations or obligation under any Lease
or Capital Lease which is not noted in the Loan Parties' Consolidated
financial statements furnished to each Agent and each Lender prior to
the execution of this Agreement other than obligations which are
entered into in the ordinary course of business since the date of such
financial statement.
(c) No document, instrument, agreement, or paper now or
hereafter given to any Agent and any Lender by or on behalf of each
Loan Party or any guarantor of the Liabilities in connection with the
execution of this Agreement by each Agent and each Lender (except for
any projections provided by or on behalf of any Loan Party) contains or
will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the statements
therein not misleading.
Page 77
5.29. NO RESTRICTIONS ON LIABILITIES. No Loan Party shall enter into or
directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Loan Party's:
(a) Creation of, and granting of Collateral Interests in favor
of the Collateral Agent.
(b) Incurrence of Liabilities.
5.30. OTHER COVENANTS. No Loan Party shall indirectly do or cause to be
done any act which, if done directly by that Loan Party, would breach any
covenant contained in this Agreement.
5.31. INVENTORY PURCHASING. Any Person which at any time becomes a Loan
Party shall become party to, and shall at all times comply with the terms and
conditions set forth in, the Inventory Purchase Agreement including, without
limitation, the obligation of each Loan Party (other than Designs Apparel, Inc.)
to purchase of all of its Inventory exclusively from Designs Apparel, Inc. The
Inventory Purchase Agreement may not be amended, modified or supplemented,
except for the addition of Loan Parties, or terminated without the prior written
consent of the Administrative Agent.
ARTICLE 6 FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
6.1. MAINTAIN RECORDS. The Loan Parties shall:
(a) At all times, keep proper books of account, in which full,
true, and accurate entries shall be made of all of the Loan Parties'
financial transactions, all in accordance with GAAP applied
consistently with prior periods to fairly reflect the Consolidated
financial condition of the Loan Parties at the close of, and its
results of operations for, the periods in question.
(b) Timely provide the Administrative Agent with those
financial reports, statements, and schedules required by this Article 6
or otherwise, each of which reports, statements and schedules shall be
prepared, to the extent applicable, in accordance with GAAP applied
consistently with prior periods to fairly reflect the Consolidated
financial condition of the Loan Parties at the close of, and the
results of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current stock, cost,
and sales records of its Inventory, accurately and sufficiently
itemizing and describing the kinds, types, and quantities of Inventory
and the cost and selling prices thereof.
(d) At all times, retain Ernst & Young, LLP or such other
independent certified public accountants who are reasonably
satisfactory to the Administrative Agent and instruct such accountants
to fully cooperate with, and be available to, the Administrative Agent
to discuss the Loan Parties' financial
Page 78
performance, financial condition, operating results, controls, and such other
matters, within the scope of the retention of such accountants, as may be raised
by the Administrative Agent.
(e) Not change any Loan Party's
Fiscal year.
6.2. ACCESS TO RECORDS.
(a) Each Loan Party shall accord the
Administrative Agent with reasonable access on reasonable notice during
customary business hours from time to time as the Administrative Agent
reasonably may require to all properties owned by or over which any Loan Party
has control. The Administrative Agent shall have the right during customary
business hours on reasonable notice, and each Loan Party will permit the
Administrative Agent from time to time as Administrative Agent reasonably may
request, to examine, inspect, copy, and make extracts from any and all of the
Loan Parties' books, records, electronically stored data, papers, and files.
Each Loan Party shall make all of that Loan Party's copying facilities available
to the Administrative Agent.
(b) Each Loan Party hereby authorizes the Administrative Agent
during customary business hours on reasonable notice to:
(i) Inspect, copy, duplicate, review, cause to be
reduced to hard copy, run off, draw off, and otherwise use any and all
computer or electronically stored information or data which relates to
any Loan Party, or any service bureau, contractor, accountant, or other
person, and directs any such service bureau, contractor, accountant, or
other person fully to cooperate with the Administrative Agent with
respect thereto.
(ii) Verify at any time the Collateral or any portion
thereof, including verification with Account Debtors, and/or with each
Loan Party's computer billing companies, collection agencies, and
accountants and to sign the name of each Loan Party on any notice to
each Loan Party's Account Debtors or verification of the Collateral.
(c) The Borrowers' Representative, on reasonable request from
time to time from the Administrative Agent, will make representatives
of management available from time to time to discuss the Loan Parties'
operating results and other related matters with the Administrative
Agent.
(d) The Administrative Agent from time to time may designate
one or more representatives to exercise the Administrative Agent's
rights under this Section 6.2 as fully as if the Administrative Agent
were doing so.
(e) The Tranche B Lender and its participants, likewise shall
have those rights accorded to the Administrative Agent under this
Section 6.2.
6.3. PROMPT NOTICE TO ADMINISTRATIVE AGENT.
(a) The Borrowers' Representative shall provide the
Administrative Agent with written
Page 79
notice promptly upon its becoming aware of the occurrence of any of the
following events, which written notice shall be with reasonable particularity as
to the facts and circumstances in respect of which such notice is being given:
(i) Any material adverse change in the business
affairs of any Loan Party.
(ii) Any change in the executive officers of any Loan
Party.
(iii) Any ceasing of the Loan Parties' making of
payments, in the ordinary course, to any of its creditors, on account
of obligations aggregating in excess of $180,000.00 (including the
ceasing of the making of such payments on account of a dispute with the
subject creditor).
(iv) Any failure by a Loan Party to pay rent at any
of the Loan Parties' locations which rent in the aggregate exceeds
$180,000.00, which failure continues for more than Ten (10) days
following the day on which such rent first came due.
(v) A Default shall occur.
(vi) Any intention on the part of a Loan Party to
discharge that Loan Party's present independent accountants or any
withdrawal or resignation by such independent accountants from their
acting in such capacity (as to which, SEE Subsection 6.1(d)).
(vii) Any litigation which, if determined adversely
to a Loan Party, would have a material adverse effect on the financial
condition of that Loan Party.
(b) The Borrowers' Representative shall:
(i) Add the Administrative Agent as an addressee on
all mailing lists maintained by or for any Loan Party.
(ii) At the request of the Administrative Agent
provide the Administrative Agent with a copy of the results of any
physical or cycle count of a Loan Party's Inventory.
(iii) Provide the Administrative Agent, when received
by any Loan Party, with a copy of any management letter or similar
communications from any accountant of that Loan Party.
(iv) Provide the Administrative Agent with copies of
all filings by each Loan Party with the Securities and Exchange
Commission, when so filed, and when received, copies of all
correspondence from the SEC, other than routine non-substantive general
communications from the SEC.
(v) Provide the Administrative Agent with written
notice of any intended bulk sale, liquidation, or other disposition of
assets of any Loan Party at least ten (10) Business Days prior to the
consummation of such sale or disposition, or commencement of such
liquidation and a detailed summary of the net proceeds expected to be
received therefrom, PROVIDING that nothing in
Page 80
this Section is intended to be, or shall be deemed to be, a waiver of any
restriction on such disposition of assets set forth elsewhere in this Agreement
including without limitation Section 6.15 .
(vi) Provide the Administrative Agent, when so
distributed, with copies of any materials distributed to the
shareholders of Designs, Inc. and each of the other Loan Parties (QUA
such shareholders).
6.4. BORROWING BASE CERTIFICATE. The Borrowers' Representative shall
provide the Administrative Agent by 11:30 a.m., daily, with a Borrowing Base
Certificate (in the form of EXHIBIT 6.4 annexed hereto, as such form may be
revised from time to time by the Administrative Agent, the "BORROWING BASE
CERTIFICATE"). Such Certificate may be sent to the Administrative Agent by
facsimile transmission, PROVIDED THAT the original thereof is forwarded to the
Administrative Agent on the date of such transmission.
6.5. WEEKLY AND MONTHLY REPORTS. The Borrowers' Representative shall
provide the Administrative Agent with those financial statements and reports
described in EXHIBIT 6.5.
6.6. QUARTERLY REPORTS. Quarterly, within fifty (50) days following the
end of each Loan Party's Fiscal quarters, the Borrowers' Representative shall
provide the Administrative Agent with the following:
(a) An original counterpart of a management prepared
Consolidated and consolidating financial statement of the Loan Parties
for the period from the beginning of the Loan Parties' then current
Fiscal year through the end of the subject quarter, with comparative
information for the same period of the previous Fiscal year, which
statement shall include, at a minimum, a balance sheet, income
statement, cash flows and a schedule of consolidation, as well as a
comparison of same store sales and operating results for the
corresponding quarter of the then immediately previous year and to the
year-to- date period and to the Business Plan or updated forecast.
(b) The officer's compliance certificate described in Section
6.8.
6.7. ANNUAL REPORTS.
(a) Commencing with the Loan Parties' Fiscal 2002, and
annually thereafter, within ninety-five (95) days following the end of the Loan
Parties' Fiscal year, the Borrowers' Representative shall furnish the
Administrative Agent with the following:
(i) An original signed counterpart of the Loan
Parties' annual Consolidated
Page 81
financial statement (with consolidating schedules), which statement
shall have been prepared by, and bear the unqualified opinion of, the
Loan Parties' independent certified public accountants (i.e. said
statement shall be "certified" by such accountants). Such annual
statement shall include, at a minimum (with comparative information for
the then prior Fiscal year, a balance sheet, income statement,
statement of changes in shareholders' equity, and cash flows.
(ii) The following Consolidated and consolidating
financial statements for the Loan Parties for the prior Fiscal year
(each prepared by the Loan Parties' independent accountants): Balance
sheet, income statement, statement of changes in stockholders' equity
and cash flow.
(b) No later than the earlier of fifteen (15) days prior to
the end of each of the Loan Party's Fiscal years or the date on which
such accountants commence their work on the preparation of the Loan
Parties' annual financial statement, the Borrowers' Representative
shall give written notice to such accountants (with a copy of such
notice, when sent, to the Administrative Agent) that:
(i) Such annual financial statement will be delivered
by the Borrowers' Representative to the Administrative Agent (for
subsequent distribution to each Lender).
(ii) Among other things, it is the intention of each
Loan Party, in its engagement of such accountants, to satisfy the
financial reporting requirements set forth in this Article 7. (iii) The
Borrowers' Representative has been advised that the Administrative
Agent and each Lender) will rely thereon with respect to the
administration of, and transactions under, the credit facility
contemplated by this Agreement.
(c) Each annual statement shall be accompanied by such
accountant's Certificate indicating that, in conducting the audit for
such annual statement, nothing came to the attention of such
accountants to believe that such Loan Party is in Default (or that if
the Loan Party is in Default, the facts and circumstances thereof).
6.8. OFFICERS' CERTIFICATES. The Borrowers' Representative shall cause
the Borrowers' Representative's Chief Executive Officer, its President or its
Chief Financial Officer, in each instance, to provide such Person's Certificate
with those monthly, quarterly, and annual statements to be furnished pursuant to
this Agreement, which Certificate shall:
(a) Indicate that the subject statement was prepared in
accordance with GAAP consistently applied and presents fairly the
Consolidated financial condition of the Loan Parties at the close of,
and the results of the Loan Parties' operations and cash flows for, the
period(s) covered, SUBJECT,
Page 82
HOWEVER to the following:
(i) Usual year end adjustments (this exception shall
not be included in the Certificate which accompanies such annual
statement).
(ii) Material Accounting Changes (in which event,
such Certificate shall include a schedule (in reasonable detail) of the
effect of each such Material Accounting Change) not previously
specifically taken into account in the determination of the financial
performance covenant(s) imposed pursuant to Section 6.11.
(b) Indicate either that (i) no Default has occurred and is
continuing, or (ii) if a Default has occurred and is continuing, its
nature (in reasonable detail) and the steps (if any) being taken or
contemplated by the Loan Parties to be taken on account thereof.
(c) Include calculations concerning the Loan Parties'
compliance (or failure to comply) at the date of the subject statement
with each of the financial performance covenants included in Section
6.11 hereof.
6.9. INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Administrative Agent and the Tranche B Lender may
observe each inventory and any cycle count of the Collateral which is
undertaken on behalf of any Loan Party. The Loan Parties shall conduct
not less than one physical inventory, per Store and per warehouse, per
Fiscal year. The Administrative Agent does not contemplate undertaking
or requiring any additional physical inventories by or of the Loan
Parties, PROVIDED, HOWEVER, the Administrative Agent may do so if a
Default has occurred and is continuing.
(i) On the Administrative Agent's request, the
Borrowers' Representative shall provide the Administrative Agent with a
copy of the preliminary results of each such inventory (as well as of
any other physical inventory undertaken by any Loan Party) within ten
(10) days following the completion of such inventory.
(ii) The Borrowers' Representative, within thirty
(30) days following the completion of such inventory, shall provide the
Administrative Agent with a reconciliation of the results of each such
inventory (as well as of any other physical inventory undertaken by any
Loan Party) and shall post such results to the Loan Parties' stock
ledger and, as applicable to the Loan Parties' other financial books
and records .
(iii) The Administrative Agent, in its discretion, if
a Default has occurred and is continuing, may cause such additional
inventories to be taken as the Administrative Agent determines (each,
at the expense of the Loan Parties)
(b) The Administrative Agent may obtain appraisals of the
Collateral, from time to time
Page 83
(in all events, at the Loan Parties' expense) conducted by such
appraisers as are satisfactory to the Administrative Agent. As of the
Closing Date, the Administrative Agent contemplates obtaining four (4)
appraisals (in all events, at the Loan Parties' expense) of the Loan
Parties' Inventory during any twelve (12) month period during which
this Agreement is in effect, each conducted by such appraisers as are
satisfactory to the Administrative Agent, and, in any event, the
Administrative Agent shall obtain not less than the four (4) appraisals
contemplated as of the Closing Date if so requested by the Tranche B
Lender; in addition, following the occurrence of an Event of Default,
the Administrative Agent may cause additional such audits to be
undertaken (in each event, at the Loan Parties' expense).
(c) The Administrative Agent contemplates conducting four (4)
commercial finance audits (in each event, at the Loan Parties' expense)
of the Loan Parties' books and records during any twelve (12) month
period during which this Agreement is in effect, and, in any event, the
Administrative Agent shall obtain not less than the four (4) commercial
finance audits contemplated as of the Closing Date if so requested by
the Tranche B Lender; in addition, following the occurrence of an Event
of Default, the Administrative Agent may cause additional such audits
to be undertaken (in each event, at the Loan Parties' expense).
6.10. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be
provided pursuant to this Article 6, the Borrowers' Representative
promptly shall provide the Administrative Agent (and any guarantor of
the Liabilities), with such other and additional information concerning
the Loan Parties, the Collateral, the operation of the Loan Parties'
business, and the Loan Parties' financial condition, including original
counterparts of financial reports and statements, as the Administrative
Agent reasonably may from time to time request, in its own discretion
or upon the reasonable request of the Tranche B Lender, from the
Borrowers' Representative.
(b) The Borrowers' Representative MAY provide the
Administrative Agent, from time to time hereafter, with updated
forecasts of the Loan Parties' anticipated performance and operating
results.
(c) In all events, the Borrowers' Representative, by no later
than 30 days prior the end of the Loan Parties' Fiscal year, shall
furnish the Administrative Agent with an updated and extended forecast
(which shall include, on a monthly basis, balance sheets, income
statements, and cash flow, as well as of all components of each
borrowing base as of Fiscal month's end) which shall go out at least
through the end of the then next Fiscal year.
(d) Each Loan Party recognizes that all appraisals,
inventories, analysis, financial information, and other materials which
the Administrative Agent may obtain, develop, or receive with respect
to the Loan Parties are confidential to the Administrative Agent and
that, except as otherwise
Page 84
provided herein, no Loan Party is entitled to receipt of any of such
appraisals, inventories, analysis, financial information, and other
materials, nor copies or extracts thereof or therefrom.
6.11. FINANCIAL PERFORMANCE COVENANTS.
(a) The Loan Parties shall maintain at all times Excess
Availability of not less than $8,000,000.
(b) The Loan Parties shall not permit or suffer Capital
Expenditures for the
(i) Fiscal year ending January 25, 2003, to be
greater than $12,000,000;
(ii) Fiscal year ending January 30, 2004, to be
greater than $15,000,000;
(iii) Fiscal year ending January 29, 2005, to be
greater than $20,000,000; and
(iv) period from January 30, 2005, through the
Maturity Date, to be greater than $6,000,000.
Notwithstanding, the foregoing, any amount set forth in clauses (i)
through (iii) which is not committed or spent in such Fiscal year may be carried
over for Capital Expenditures during the next Fiscal year.
The Administrative Agent may determine the Loan Parties' compliance
with such covenants based upon financial reports and statements provided by the
Borrowers' Representative to the Administrative Agent (whether or not such
financial reports and statements are required to be furnished pursuant to this
Agreement) as well as by reference to interim financial information provided to,
or developed by, the Administrative Agent.
ARTICLE 7 - USE OF COLLATERAL:
7.1. USE OF INVENTORY COLLATERAL.
(a) No Loan Party shall engage in any of the following with
respect to its Inventory:
(i) Any sale other than for fair consideration in the
conduct of the Loan Parties' business in the ordinary course.
(ii) Sales or other dispositions to creditors.
(iii) Sales or other dispositions in bulk .
(iv) Sales of any Collateral in breach of any
provision of this Agreement.
(b) No sale of Inventory shall be on consignment, approval, or
under any other circumstances such that, with the exception of the Loan
Parties' customary return policy applicable to the return of inventory
purchased by the Loan Parties' retail customers in the ordinary course,
such Inventory may be returned to a Loan Party without the consent of
the Administrative Agent.
Page 85
7.2. INVENTORY QUALITY. All Inventory now owned or hereafter acquired
by a Loan Party is and will be of good and merchantable quality and free from
defects (other than defects within customary trade tolerances), other than
Inventory owned or acquired for outlet stores, which in the ordinary course sell
manufacturer's overruns, discontinued lines, and irregulars.
7.3. ADJUSTMENTS AND ALLOWANCES. Each Loan Party may grant such
allowances or other adjustments to that Loan Party's Account Debtors (exclusive
of extending the time for payment of any material Account or Account Receivable,
which shall not be done without first obtaining the Administrative Agent's prior
written consent in each instance) as that Loan Party may reasonably deem to
accord with sound business practice, PROVIDED, HOWEVER, at any time that a
Default has occurred and is continuing, the authority granted the Loan Parties
pursuant to this Section 7.3 may be limited or terminated by the Administrative
Agent at any time in the Administrative Agent's discretion.
7.4. VALIDITY OF ACCOUNTS.
(a) The amount of each Account shown on the books, records,
and invoices of the Loan Parties represented as owing by each Account
Debtor is and will be the correct amount actually owing by such Account
Debtor and shall have been fully earned by performance by the Loan
Parties.
(b) The Administrative Agent from time to time may verify the
Receivables Collateral directly with the Loan Parties' Account Debtors,
such verification to be undertaken in keeping with commercially
reasonable commercial lending standards.
(c) The Loan Parties have no knowledge of any impairment of
the validity or collectibility of any of the Accounts and shall notify
the Administrative Agent of any such fact immediately after the Loan
Parties become aware of any such impairment.
(d) No Loan Party shall post any bond to secure any Loan
Party's performance under any agreement to which any Loan Party is a
party nor cause any surety, guarantor, or other third party obligee to
become liable to perform any obligation of any Loan Party (other than
to the Administrative Agent) in the event of any Loan Party's failure
to so perform.
7.5. NOTIFICATION TO ACCOUNT DEBTORS. The Administrative Agent shall
have the right at any time that an Event of Default has occurred to notify any
of the Loan Parties' Account Debtors to make payment directly to the
Administrative Agent and to collect all amounts due on account of the
Collateral.
ARTICLE 8 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
Page 86
8.1 DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT 8.1 is a Schedule of all present
DDA's, which Schedule includes, with respect to each depository (i) the
name and address of that depository; (ii) the account number(s) of the
account(s) maintained with such depository; and (iii) a contact person
at such depository.
(b) The Borrowers' Representative shall deliver to the
Administrative Agent, as a condition to the effectiveness of this
Agreement:
(i) Notifications (in a form satisfactory to the
Administrative Agent) executed on behalf of the relevant Loan Party to
each depository institution with which any DDA (other than any Exempt
DDA and the Operating Account ) is maintained of the Collateral Agent's
Collateral Interest in such DDA.
(ii) A Blocked Account Agreement with any depository
institution at which either of the following conditions applies:
(A) Both a DDA (other than the Operating
Account) and the Operating Account are maintained.
(B) A Blocked Account is maintained.
(iii) An agreement (generally referred to as a
"Blocked Account Agreement"), in form satisfactory to the
Administrative Agent, with each depository institution at which a
Blocked Account is maintained.
(c) No Loan Party will establish any DDA hereafter unless,
contemporaneously with such establishment, the Borrowers' Representative
provides a notification of the Collateral Agent's Collateral Interest in such
DDA and will not establish any Blocked Account unless the Borrowers'
Representative provides the Administrative Agent with a Blocked Account
Agreement.
8.2. CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT 8.2, is a Schedule which
describes all arrangements to which each Loan Party is a party with respect to
the payment to such Loan Party of the proceeds of all credit card charges for
sales by such Loan Party.
(b) The Borrowers' Representative shall deliver to the
Administrative Agent, as a condition to the effectiveness of this Agreement,
notification, executed on behalf of the relevant Loan Party, to each of such
Loan Party's credit card clearinghouses and processors of notice (in form
satisfactory to the Administrative Agent ), which notice provides that payment
of all credit card charges submitted by any Loan Party to that clearinghouse or
other processor and any other amount payable to any Loan Party by such
clearinghouse or other processor shall be directed to the Concentration Account
or as otherwise designated from time to time by the Administrative Agent. No
Loan Party shall change such direction or
Page 87
designation except upon and with the prior written consent of the Administrative
Agent .
8.3. THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS .
(a) The following checking accounts have been or will be
established (and are so referred to herein):
(i) The "CONCENTRATION ACCOUNT" (so referred to
herein): Established by the Administrative Agent with Fleet National
Bank.
(ii) The "BLOCKED ACCOUNT" (so referred to herein):
Established by the Borrowers' Representative with Fleet National Bank.
(iii) The "OPERATING ACCOUNT" (so referred to
herein): Established by the Borrowers' Representative with Fleet
National Bank.
(b) The contents of each DDA and of the Blocked Account
constitutes Collateral and Proceeds of Collateral. The contents of the
Concentration Account constitutes the Administrative Agent's property.
(c) The Loan Parties shall pay all fees and charges of, and
maintain such impressed balances as may be required by the depository in which
any account is opened as required hereby (even if such account is opened by
and/or is the property of the Administrative Agent).
8.4. PROCEEDS AND COLLECTIONS .
(a) All Receipts and all other cash proceeds of any sale or
other disposition of any of each Loan Party's assets:
(i) Constitute Collateral and proceeds of Collateral.
(ii) Shall be held in trust by the Loan Parties for
the Administrative Agent.
(iii) Shall not be commingled with any of any Loan
Party's other funds.
(iv) Shall be deposited and/or transferred only to
the Blocked Account or the Concentration Account.
(b) The Borrowers' Representative shall cause the ACH or wire
transfer to the Blocked Account or the Concentration Account, no less frequently
than daily (and whether or not there is then an outstanding balance in the Loan
Account) the following:
(i) The entire contents (net of any minimum required
balance not in any event to exceed $2500) of each DDA (but excluding
any Exempt DDA).
(ii) The proceeds of all credit card charges not
otherwise provided for pursuant hereto.
Telephone advice (confirmed by written notice) shall be provided to the
Administrative Agent on each
Page 88
Business Day on which any such transfer is made.
(c) The Borrowers' Representative shall cause the ACH or wire
transfer to the Concentration Account, no less frequently than daily (and
whether or not any Liabilities are then outstanding), of the entire ledger
balance (net of any minimum required balance not in any event to exceed $2500)
of the Blocked Account.
(d) In the event that, notwithstanding the provisions of this
Section 8.4, any Loan Party receives or otherwise has dominion and control of
any Receipts, or any other proceeds or collections of any Collateral, such
Receipts, proceeds, and collections shall be held in trust by that Loan Party
for the Administrative Agent and shall not be commingled with any of that Loan
Party's other funds or deposited in any account of any Loan Party other than as
instructed by the Administrative Agent.
8.5. PAYMENT OF LIABILITIES.
(a) On each Business Day, the Administrative Agent shall apply
the then collected balance of the Concentration Account (net of fees charged,
and of such impressed balances as may be required by the bank at which the
Concentration Account is maintained) first, towards the SwingLine Loans and
second, towards the unpaid balance of the Loan Account and all other Liabilities
other than principal and interest on the Tranche B Loan, provided, however, for
purposes of the calculation of interest on the unpaid principal balance of the
Loan Account, such payment shall be deemed to have been made One (1) Business
Day after such transfer, and further provided that until the occurrence, and
during the continuance, of an Event of Default, unless the Borrower
Representative otherwise instructs the Administrative Agent, the balance of the
Concentration Account shall not be applied to any LIBOR Loans until the end of
the applicable Interest Period therefor.
(b) The following rules shall apply to deposits and payments
under and pursuant to this Section 8.5:
(i) Funds shall be deemed to have been deposited to
the Concentration Account on the Business Day on which
deposited, PROVIDED THAT notice of such deposit is delivered
to the Administrative Agent by 2:00PM on that Business Day.
(ii) Funds paid to the Administrative Agent, other
than by deposit to the Concentration Account, shall be deemed
to have been received on the Business Day when they are good
and collected funds, PROVIDED THAT notice of such payment is
delivered to the Administrative Agent by 2:00PM on that
Business Day.
(iii) If notice of a deposit to the Concentration
Account (Section 8.5(b)(i)) or payment (Section 8.5(b)(ii)) is
not delivered to the Administrative Agent until after 2:00PM
on a Business Day, such deposit or payment shall be deemed to
have been made at
Page 89
9:00AM on the then next Business Day.
(iv) All deposits to the Concentration Account and
other payments to the Administrative Agent are subject to
clearance and collection.
(c) The Administrative Agent shall transfer to the Operating
Account any surplus in the Concentration Account remaining after the application
towards the Liabilities referred to in Section 8.5(a), above (less those amount
which are to be netted out, as provided therein) PROVIDED, HOWEVER, in the event
that
(i) a Default has occurred and is continuing;
and
(ii) either
(A) one or more L/C's are then outstanding;
or
(B) there is any amount unpaid on account of
the Tranche B Loan, then the Administrative Agent may establish a funded reserve
of up to 110% of the aggregate of (x) the Stated Amounts of such L/C's PLUS (y)
amounts unpaid on account of the Tranche B Loan. Such funded reserve shall
either be (i) returned to the Borrowers' Representative PROVIDED THAT no Default
has occurred and is continuing or (ii) applied towards the Liabilities following
Acceleration.
8.6. THE OPERATING ACCOUNT. Except as otherwise specifically provided
in, or permitted by, this Agreement, all checks shall be drawn by the Borrowers'
Representative upon, and other disbursements shall be made by the Borrowers'
Representative solely from, the Operating Account.
ARTICLE 9 - GRANT OF SECURITY INTEREST:
9.1. GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual, and faithful performance of all and each of the Liabilities, each
Borrower hereby grants to the Collateral Agent, for the benefit of the Lenders
as their interests may appear herein, a continuing security interest in and to,
and assigns to the Collateral Agent, for the benefit of the Lenders as their
interests may appear herein, the following, and each item thereof, whether now
owned or now due, or in which that Borrower has an interest, or hereafter
acquired, arising, or to become due, or in which that Borrower obtains an
interest, and all products, Proceeds, substitutions, and accessions of or to any
of the following (all of which, together with any other property in which the
Collateral Agent may in the future be granted a security interest, is referred
to herein as the "COLLATERAL"; any of the following terms not defined in this
Agreement shall have the meanings attributed thereto in the UCC):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
Page 90
(d) All Equipment.
(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
(k) All Supporting Obligations.
(l) All books, records, and information relating to the
Collateral and/or to the operation of each Borrower's
business, and all rights of access to such books,
records, and information, and all property in which
such books, records, and information are stored,
recorded, and maintained.
(m) All Leasehold Interests.
(n) All Investment Property, Instruments, Documents,
Deposit Accounts, money, policies and certificates of
insurance, deposits, impressed accounts, compensating
balances, cash, or other property.
(o) Commercial Tort Claims
(p) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and
credit insurance, whether any of such proceeds,
refunds, and premium rebates arise out of any of the
foregoing (9.1(a) through 9.1(n)) or otherwise.
(q) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the
foregoing (9.1(a) through 9.1(p)), including the
right of stoppage in transit.
Notwithstanding anything in this Agreement to the contrary, with
respect to each item of Collateral constituting Equipment subject to a Capital
Lease, or constituting an agreement, license, permit or other instrument of a
Borrower, such item shall be subject to the security interest created hereby
only to the extent that the granting of such security interest, under the terms
of such Capital Lease, agreement, license, permit or other instrument, or as
provided by law, does not cause any default under or termination of such Capital
Lease, agreement, license, permit or other instrument or the loss of any
material right of a Borrower thereunder; provided, however, that in no event
shall the foregoing be construed to exclude from the security interest created
by this Agreement, proceeds or products of any such Capital Lease, agreement,
license, permit or other instrument of a Borrower or any accounts receivable or
the right to payments due or to become due a Borrower under any such agreement
or other instrument.
Page 91
9.2. EXTENT AND DURATION OF SECURITY INTEREST; NOTICE.
(a) The security interest created and granted herein is in
addition to, and supplemental of, any security interest previously granted by
any Borrower to the Collateral Agent and shall continue in full force and effect
applicable to all Liabilities until both (a) all Liabilities have been paid
and/or satisfied in full and (b) the security interest created herein is
specifically terminated in writing by a duly authorized officer of the
Collateral Agent.
(b) It is intended that the Collateral Interests created
herein extend to and cover all assets of each Borrower.
(c) If a Borrower shall at any time acquire a Commercial Tort
Claim, the Borrowers' Representative shall promptly notify the Administrative
Agent in writing of the details thereof and the Borrower shall take such actions
as the Collateral Agent shall request in order to grant to the Collateral Agent,
for the benefit of the Lenders as their interests may appear herein, a perfected
and first priority security interest therein and in the Proceeds thereof.
ARTICLE 10 - COLLATERAL AGENT AS ATTORNEY-IN-FACT:
10.1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Collateral Agent as that (acting through any of its
officers) Borrower's true and lawful attorney, with full power of substitution,
following the occurrence of an Event of Default, to convert the Collateral into
cash at the sole risk, cost, and expense of that Borrower, but for the sole
benefit of the Agents and the Lenders. The rights and powers granted the
Collateral Agent by this appointment include but are not limited to the right
and power to:
(a) Prosecute, defend, compromise, or release any action
relating to the Collateral.
(b) Sign change of address forms to change the address to
which each Borrower's mail is to be sent to such address as the Collateral Agent
shall designate; receive and open each Borrower's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Borrowers' Representative or to any trustee in
bankruptcy or receiver of the Borrowers' Representative, or other legal
representative of a Borrower whom the Collateral Agent determines to be the
appropriate person to whom to so turn over such mail.
(c) Endorse the name of the relevant Borrower in favor of the
Collateral Agent upon any and all checks, drafts, notes, acceptances, or other
items or instruments; sign and endorse the name of the relevant Borrower on, and
receive as secured party, any of the Collateral, any invoices, schedules of
Collateral, freight or express receipts, or bills of lading, storage receipts,
warehouse receipts, or other documents of title respectively relating to the
Collateral.
(d) Sign the name of the relevant Borrower on any notice to
that Borrower's Account
Page 92
Debtors or verification of the Receivables Collateral; sign the relevant
Borrower's name on any Proof of Claim in Bankruptcy against Account Debtors, and
on notices of lien, claims of mechanic's liens, or assignments or releases of
mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the
payment of any letter of credit and/or banker's acceptance of which any Borrower
is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of each Borrower.
(g) Use, license or transfer any or all General Intangibles of
each Borrower.
10.2. NO OBLIGATION TO ACT. The Collateral Agent shall not be obligated
to do any of the acts or to exercise any of the powers authorized by Section
10.1 herein, but if the Collateral Agent elects to do any such act or to
exercise any of such powers, it shall not be accountable for more than it
actually receives as a result of such exercise of power, and shall not be
responsible to any Borrower for any act or omission to act except for any act or
omission to act as to which there is a final determination made in a judicial
proceeding (in which proceeding the Collateral Agent has had an opportunity to
be heard) which determination includes a specific finding that the subject act
or omission to act had been grossly negligent or in actual bad faith or
constituted wilful misconduct.
ARTICLE 11 - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 11 respectively
shall constitute an "EVENT OF DEFAULT" herein. The occurrence of any Event of
Default shall also constitute, without notice or demand, a default under all
other agreements between any Agent and any Lender and any Loan Party and
instruments and papers heretofore, now, or hereafter given any Agent and any
Lender by any Loan Party.
11.1. FAILURE TO PAY THE REVOLVING CREDIT OR THE TRANCHE B LOAN The
failure by any Loan Party to pay when due any principal of, interest on, or fees
in respect of, the Revolving Credit or the Tranche B Loan.
11.2. FAILURE TO MAKE OTHER PAYMENTS. The failure by any Loan Party to
pay within five (5) Business Days when due (or upon demand, if payable on
demand) any payment Liability other than any payment liability on account of the
principal of, or interest on, or fees in respect of, the Revolving Credit or the
Tranche B Loan.
11.3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD) . The
failure by
Page 93
any Loan Party to promptly, punctually, faithfully and timely
perform, discharge, or comply with any covenant or Liability not otherwise
described in Section 11.1 or Section 11.2 hereof, and included in any of the
following provisions hereof:
SECTION RELATES TO :
--------------------------------------------------------
5.2(c) State of Organization, State Identification Number and Taxpayer
Identification Number
5.3(b) Notice of Name Change
5.5 Location of Collateral
5.7(a) Title to Assets
5.8 Indebtedness
5.9 Insurance Policies
5.20, 5.21 Dividends, Investments and Other Entity Actions
5.26 Affiliate Transactions
5.27 Further Assurances
6.11 Minimum Excess Availability and Capital Expenditures
7.1 Use of Inventory Collateral
Article 8 Cash Management (except if the failure to comply is as a result of force
majeure or through no fault of the Loan Parties)
11.4. FINANCIAL REPORTING REQUIREMENTS. The failure by the any Loan
Party to promptly, punctually, faithfully and timely perform, discharge, or
comply with the financial reporting requirements included in Article 6, subject,
however, to the following limited number of grace periods applicable to certain
of those requirements:
REPORT/STATEMENT REQUIRED BY GRACE PERIOD NUMBER OF GRACE
SECTION PERIODS
Borrowing Base Certificates 6.4 One Business Day Three per Fiscal Quarter
Weekly Report 6.5 Two Business Days Six in any 12 months
Monthly Report (15 Days) 6.5 Three Business Days Three in any 12 months
Monthly Reports (30 Days) 6.5 Three Business Days Three in any 12 months
11.5. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The
failure by any Loan Party, within fifteen (15) days following the earlier of any
Loan Party's knowledge of a breach of any covenant or Liability not described in
any of Sections 11.1, 11.2, 11.3 or 11.4, or of the Borrowers' Representative's
receipt of written notice from the Administrative Agent of the breach of any
such covenants or Liabilities.
11.6. TRANCHE B LOAN ACTION EVENT ACCELERATION.
(a) The occurrence of any Tranche B Loan Action Event.
(b) The Administrative Agent's receipt of an Acceleration
Notice pursuant to Section 14.2.
Page 94
11.7. MISREPRESENTATION. The determination by the Administrative Agent
that any representation or warranty at any time made by any Loan Party to any
Agent or any Lender was not true or complete in all material respects when
given; PROVIDED, HOWEVER, that for purposes of this Section 11.7, any
representation or warranty made by the Loan Parties in reliance on
representations and warranties made by Casual Male Corp. and certain of its
Subsidiaries in the Casual Male Acquisition Agreement shall be deemed to have
been made to the Loan Parties' knowledge; and, PROVIDED FURTHER, that if any
such representation or warranty is deemed repeated by the Loan Parties under the
terms of this Agreement on and after September 30, 2002, and such representation
and warranty was not true or complete in all material respects when given, and
the Loan Parties have failed to correct such representation or warranty by
providing revised schedules or exhibits, or otherwise, in each case to the
Administrative Agent's satisfaction, then the foregoing proviso shall be of no
effect.
11.8. ACCELERATION OF OTHER DEBT; BREACH OF LEASE. The occurrence of
any event such that any Indebtedness of any Loan Party in excess of
$1,000,000.00 to any creditor other than the Agent or any Lender could be
accelerated (provided, that an event of default under the 12% Subordinated Note
(or any Note Purchase Agreement under which such Subordinated Note is issued)
caused solely by a breach of a representation or warranty shall not be an Event
of Default hereunder) or, without the consent of a Loan Party, Leases with
aggregate monthly rents of at least $500,000.00 could be terminated prior to the
stated termination date thereof (whether or not the subject creditor or lessor
takes any action on account of such occurrence).
11.9. DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach or
default under any agreement between the Agent or any Lender and any Loan Party
or instrument or paper given the Agent or any Lender by any Loan Party not
constituting a Loan Document, whether such agreement, instrument, or paper now
exists or hereafter arises, with respect to Indebtedness in excess of
$1,000,000.00 (notwithstanding that the Agent or the subject Lender may not have
exercised its rights upon default under any such other agreement, instrument or
paper).
11.10. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss,
theft, damage, or destruction of or to any material portion of the Collateral.
11.11. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The service of process upon any Agent or any Lender or any
Participant of a
Page 95
court order or order of any other applicable governmental authority attaching,
by trustee, mesne, or other process, any funds of any Loan Party on deposit
with, or assets of any Loan Party in the possession of, that Agent or that
Lender or such Participant.
(b) The entry of judgments against any Loan Party, to the
extent not covered by insurance (subject to a reasonable deductible) aggregating
more than $750,000, which judgments are not satisfied (if a money judgment) or
appealed from (with execution or similar process stayed) within thirty (30) days
of entry.
(c) The entry of any order or the imposition of any other
process having the force of law, the effect of which is to restrain in any
material way the conduct by any Loan Party of its business in the ordinary
course.
11.12. CANTON MORTGAGE DEFAULT. The (i) acceleration of any
Indebtedness which is secured by the Canton Warehouse or (ii) the failure of the
Loan Parties to cause the proceeds of any refinancing or replacement of the
Canton Mortgage, and/or any second mortgage on the Canton Warehouse, in each
case in excess of the principal outstanding under the Canton Mortgage on the
Closing Date, to be applied immediately upon receipt thereof to repayment of the
Revolving Credit Obligations.
11.13. INDICTMENT - FORFEITURE. The indictment of, or institution of
any legal process or proceeding against, any Loan Party, under any federal,
state, municipal, and other civil or criminal statute, rule, regulation, order,
or other requirement having the force of law where the relief, penalties, or
remedies sought or available include the forfeiture of more than a DE MINIMIS
part of the property of that Loan Party and/or the imposition of any stay or
other order, the effect of which could be to restrain in any material way the
conduct by any Loan Party of its business in the ordinary course.
11.14. CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of the Borrowers'
Representative, any Loan Party to the validity of any Loan Document or the
applicability or enforceability of any Loan Document strictly in accordance with
the subject Loan Document's terms or which seeks to void, avoid, limit, or
otherwise adversely affect any security interest created by or in any Loan
Document or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.
Page 96
11.15. CHANGE IN CONTROL. Any Change in Control.
11.16. BUSINESS FAILURE. Any act by, against or relating to any Loan
Party, or its property or assets, which act constitutes the determination by any
Loan Party to initiate or acquiesce to: a program of partial or total
self-liquidation; an application for, consent to, or sufferance of the
appointment of a receiver, trustee, or other person, pursuant to court action or
otherwise, with respect to all or any part of any Loan Party's property; the
granting of any trust mortgage or execution of an assignment for the benefit of
the creditors of any Loan Party; any other voluntary or involuntary liquidation
or extension of debt agreement for any Loan Party; the offering by, or entering
into by, any Loan Party of any composition, extension, or any other arrangement
seeking relief from or extension of the debts of any Loan Party; or the
initiation of any judicial or non-judicial proceeding or agreement by, against,
or including any Loan Party which seeks or intends to accomplish a
reorganization or arrangement with creditors; and/or the initiation by or on
behalf of any Loan Party of the liquidation or winding up of all or any part of
any Loan Party's business or operations.
11.17. BANKRUPTCY. The failure by any Loan Party to generally pay the
debts of that Loan Party as they mature; adjudication of bankruptcy or
insolvency relative to any Loan Party; the entry of an order for relief or
similar order with respect to any Loan Party in any proceeding pursuant to the
Bankruptcy Code or any other federal bankruptcy law; the filing of any
complaint, application, or petition by any Loan Party initiating any matter in
which any Loan Party is or may be granted any relief from the debts of that Loan
Party pursuant to the Bankruptcy Code or any other insolvency statute or
procedure; the filing of any complaint, application, or petition against any
Loan Party initiating any matter in which that Loan Party is or may be granted
any relief from the debts of that Loan Party pursuant to the Bankruptcy Code or
any other insolvency statute or procedure, which complaint, application, or
petition is not timely contested in good faith by that Loan Party by appropriate
proceedings or, if so contested, is not dismissed within ninety (90) days of
when filed.
11.18 TERMINATION OF BUSINESS. Unless subject to the prior written
consent of the Agent, the determination of the Loan Parties, whether by vote of
the Loan Parties' board of directors or otherwise to: suspend the operation of
the Loan Parties' business in the ordinary course, liquidate all or a material
portion of the Loan Parties' assets or Stores, or employ an agent or other third
party to conduct any so- called store closing, store liquidation or
"Going-Out-Of-Business" sales (other than in connection with a Permitted Asset
Disposition).
11.19 PAYMENT OF OTHER INDEBTEDNESS. The Loan Parties shall prepay or
discharge any
Page 97
Indebtedness prior to its maturity date except as expressly permitted hereunder.
11.20 DEFAULT BY GUARANTOR; TERMINATION OF GUARANTY. The occurrence of
any Guarantor Default and/or the termination or attempted termination of any
Guaranty Agreement by any Person.
11.21 MATERIAL ADVERSE CHANGE. An event shall have occurred or failed
to occur, which occurrence or failure is or could have a materially adverse
effect upon the financial condition of (i) Designs, Inc. and its Subsidiaries
when compared with such financial condition as of March 6, 2002 and (ii) Casual
Male and its subsidiaries when compared with such financial condition as of
April 6, 2002.
11.22 LEVI ▇▇▇▇▇▇▇ CHANGES. There shall have occurred any material
adverse change in or to the Loan Parties' business relationship with Levi
▇▇▇▇▇▇▇ & Co. when compared to such relationship as of the Closing Date.
ARTICLE 12 - RIGHTS AND REMEDIES UPON DEFAULT:
12.1 ACCELERATION. Upon the occurrence of any Event of Default, the
Administrative Agent may (and on the issuance of Acceleration Notice(s)
requisite to the causing of Acceleration, the Administrative Agent shall)
declare all Indebtedness of the Loan Parties to the Lenders to be immediately
due and payable and may exercise all of the Administrative Agent's Rights and
Remedies (and the Collateral Agent may likewise exercise all of its rights and
remedies upon default) as the Administrative Agent from time to time thereafter
determines as appropriate.
12.2. RIGHTS OF ENFORCEMENT. The Collateral Agent shall have all of the
rights and remedies of a secured party upon default under the UCC, in addition
to which the Collateral Agent shall have all and each of the following rights
and remedies:
(a) To give notice to any bank at which any DDA or Blocked
Account is maintained and in which Proceeds of Collateral are deposited, to turn
over such Proceeds directly to the Collateral Agent.
(b) To give notice to any customs broker of any of the Loan
Parties to follow the instructions of the Collateral Agent as provided in any
written agreement or undertaking of such broker in favor of the Collateral
Agent.
(c) To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.
Page 98
(d) To take possession of all or any portion of the
Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Collateral Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(f) To conduct one or more going out of business sales which
include the sale or other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
12.3. SALE OF COLLATERAL.
(a) Any sale or other disposition of the Collateral may be at
public or private sale upon such terms and in such manner as the Collateral
Agent deems advisable, having due regard to compliance with any statute or
regulation which might affect, limit, or apply to the Collateral Agent's
disposition of the Collateral.
(b) The Collateral Agent, in the exercise of the Collateral
Agent's rights and remedies upon default, may conduct, or may require the Loan
Parties to conduct, one or more going out of business sales, in the Collateral
Agent's own right or by one or more agents and contractors. Such sale(s) may be
conducted upon any premises owned, leased, or occupied by any Loan Party. The
Collateral Agent and any such agent or contractor, in conjunction with any such
sale, may augment the Inventory with other goods (all of which other goods shall
remain the sole property of the Collateral Agent or such agent or contractor).
Any amounts realized from the sale of such goods which constitute augmentations
to the Inventory (net of an allocable share of the costs and reasonable expenses
incurred in their disposition) shall be the sole property of the Collateral
Agent or such agent or contractor and neither any Loan Party nor any Person
claiming under or in right of any Loan Party shall have any interest therein.
The proceeds of any such going out of business sale which is conducted by a Loan
Party at the request of the Collateral Agent shall be first applied to the
direct costs of such sale.
(c) Unless the Collateral is perishable or threatens to
decline speedily in value, or is of a type customarily sold on a recognized
market (in which event the Collateral Agent shall provide the Borrowers'
Representative such notice as may be practicable under the circumstances), the
Collateral Agent shall give the Borrowers' Representative at least ten (10) days
prior written notice of the date, time, and place of any proposed public sale,
and of the date after which any private sale or other disposition of the
Collateral may be made. Each Borrower agrees that such written notice shall
satisfy all requirements for notice to that Borrower which are imposed under the
UCC or other applicable law with respect to the
Page 99
exercise of the Collateral Agent's rights and remedies upon default.
(d) The Collateral Agent, the Administrative Agent, and any
Lender may purchase the Collateral, or any portion of it at any sale held under
this Article.
(e) If any of the Collateral is sold, leased, or otherwise
disposed of by the Collateral Agent on credit, the Liabilities shall not be
deemed to have been reduced as a result thereof unless and until payment is
finally received thereon by the Collateral Agent.
(f) The Collateral Agent shall turn over to the Administrative
Agent the proceeds of the exercise by the Collateral Agent of its rights and
remedies under this Article 12. The Administrative Agent shall apply the
proceeds of the Collateral Agent's exercise of its rights and remedies upon
default pursuant to this Article 12 in accordance with Sections 14.7 and 14.8.
12.4. OCCUPATION OF BUSINESS LOCATION. In connection with the
Collateral Agent's exercise of the Collateral Agent's rights under this Article
12, the Collateral Agent may enter upon, occupy, and use any premises owned or
occupied by each Loan Party, and may exclude each Loan Party from such premises
or portion thereof as may have been so entered upon, occupied, or used by the
Collateral Agent. The Collateral Agent shall not be required to remove any of
the Collateral from any such premises upon the Collateral Agent's taking
possession thereof, and may render any Collateral unusable to the Loan Parties.
In no event shall the Collateral Agent be liable to any Loan Party for use or
occupancy by the Collateral Agent of any premises pursuant to this Article 12,
nor for any charge (such as wages for any Loan Party's employees and utilities)
incurred in connection with the Collateral Agent's exercise of the Collateral
Agent's Rights and Remedies.
12.5. GRANT OF NONEXCLUSIVE LICENSE. Except to the extent prohibited by
a Borrower's contractual obligations, which prohibition has been disclosed to
the Administrative Agent, each Borrower hereby grants to the Collateral Agent a
royalty free, nonexclusive and irrevocable license to use, apply, and affix any
trademark, trade name, logo, or the like in which any Borrower now or hereafter
has rights, such license being with respect to the Collateral Agent's exercise
of the rights hereunder including, without limitation, in connection with any
completion of the manufacture of Inventory or sale or other disposition of
Inventory.
12.6. ASSEMBLY OF COLLATERAL. The Collateral Agent may require any
Borrower to assemble the Collateral and make it available to the Collateral
Agent at the Loan Parties' sole risk and expense at a place or places which are
reasonably convenient to both the Collateral Agent and the Borrowers'
Representative.
Page 100
12.7. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
and discretions of the Administrative Agent hereunder (herein, the "AGENTS'
RIGHTS AND REMEDIES") shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have. No delay or omission by an Agent in
exercising or enforcing any of the Agents' Rights and Remedies shall operate as,
or constitute, a waiver thereof. No waiver by an Agent of any Event of Default
or of any default under any other agreement shall operate as a waiver of any
other default hereunder or under any other agreement. No single or partial
exercise of any of the Agents' Rights or Remedies, and no express or implied
agreement or transaction of whatever nature entered into between any Agent and
any person, at any time, shall preclude the other or further exercise of the
Agents' Rights and Remedies. No waiver by any Agent of any of the Agents' Rights
and Remedies on any one occasion shall be deemed a waiver on any subsequent
occasion, nor shall it be deemed a continuing waiver. The Agents' Rights and
Remedies may be exercised at such time or times and in such order of preference
as the Agents may determine. The Agents' Rights and Remedies may be exercised
without resort or regard to any other source of satisfaction of the Liabilities.
ARTICLE 13 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
13.1. REVOLVING CREDIT FUNDING PROCEDURES.
(a) The Agent shall advise each Revolving Credit Lender, no
later than 2:00PM on a date on which any Revolving Credit Loan (other than a
SwingLine Loan) is to be made, that such Revolving Credit Loan is to be made.
Such advice, in each instance, may be by telephone or facsimile transmission,
PROVIDED THAT if such advice is by telephone, it shall be confirmed in writing.
Advice of a Revolving Credit Loan shall include the amount of and interest rate
applicable to the subject Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit
Dollar Commitment, each Revolving Credit Lender, by no later than the end of
business on the day on which the subject Revolving Credit Loan is to be made,
shall Transfer that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the subject Revolving Credit Loan to the Administrative Agent.
13.2. SWINGLINE LOANS.
(a) In the event that, when a Revolving Credit Loan is
requested, the aggregate unpaid balance of the SwingLine Loan is less than the
SwingLine Loan Ceiling, then the SwingLine Lender may advise the Administrative
Agent that the SwingLine Lender has determined to include up to the amount of
the requested Revolving Credit Loan as part of the SwingLine Loan. In such
event, the SwingLine Lender shall Transfer the amount of the requested Revolving
Credit Loan to the Administrative Agent.
(b) The SwingLine Loan shall be converted to a Revolving
Credit Loan in which all
Page 101
Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the SwingLine
Lender may advise the Administrative Agent that all, or any part, of
the SwingLine Loan is to be converted to a Revolving Credit Loan in
which all Revolving Credit Lenders participate, provided that if the
Administrative Agent is not so advised by the SwingLine Lender, then
all SwingLine Loans shall be converted no less frequently than weekly
to Revolving Credit Loans in which all Revolving Credit Lenders
participate.
(ii) At the initiation of a Liquidation, the then
entire unpaid principal balance of the SwingLine Loan shall be
converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate.
In either such event, the Administrative Agent shall advise each Revolving
Credit Lender of such conversion as if, and with the same effect as if, such
conversion were the making of a Revolving Credit Loan as provided in Section
14.1.
(c) The SwingLine Lender, in separate capacities, may also be
one or more Agents, a Revolving Credit Lender or the Tranche B Lender.
(d) The SwingLine Lender, in its capacity as SwingLine Lender,
is not a "Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided in the
relevant Section, any distribution pursuant to Section 14.8.
(ii) Determination of whether the requisite holders
of Loan Commitments have Consented to action requiring such Consent.
13.3. ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:
(a) Each Revolving Credit Lender shall make available to the
Administrative Agent, as provided herein, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of the following:
(i) Each Revolving Credit Loan, up to the maximum
amount of that Revolving Credit Lender's Revolving Credit Dollar
Commitment of the Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving
Credit Lender's Revolving Credit Dollar Commitment of each L/C Drawing
(to the extent that such L/C Drawing is not "covered" by a Revolving
Credit Loan as provided herein).
(b) In all circumstances, the Administrative Agent may:
(i) Assume that each Revolving Credit Lender, subject
to Section 13.3(a), timely shall make available to the Administrative
Agent that Revolving Credit Lender's Revolving Credit Percentage
Commitment of each Revolving Credit Loan, notice of which is provided
pursuant to Section 13.1 and shall make available, to the extent not
"covered" by a Revolving Credit
Page 102
Loan, that Revolving Credit Lender's Revolving Credit Percentage
Commitment of any honoring of an L/C.
(ii) In reliance upon such assumption, make available
the corresponding amount to the Loan Parties.
(iii) Assume that each Revolving Credit Lender timely
shall pay, and shall make available, to the Administrative Agent all
other amounts which that Revolving Credit Lender is obligated to so pay
and/or make available hereunder or under any of the other Loan
Documents.
(c) In the event that, in reliance upon any of such
assumptions, the Administrative Agent makes available a Revolving Credit
Lender's Revolving Credit Percentage Commitment of one or more Revolving Credit
Loans, or any other amount to be made available hereunder or under any of the
other Loan Documents, which amount a Revolving Credit Lender (a "DELINQUENT
REVOLVING CREDIT LENDER") fails to provide to the Administrative Agent within
One (1) Business Day of written notice of such failure, then:
(i) The amount which had been made available by the
Administrative Agent is an " ADMINISTRATIVE AGENT'S COVER" (and is so
referred to herein).
(ii) All interest paid by the Loan Parties on account
of the Revolving Credit Loan or coverage of the subject L/C Drawing
which consist of the Administrative Agent's Cover shall be retained by
the Administrative Agent until the Administrative Agent's Cover, with
interest, has been paid.
(iii) The Delinquent Revolving Credit Lender shall
pay to the Administrative Agent, on demand, interest at a rate equal to
the prevailing federal funds rate on any Administrative Agent's Cover
in respect of that Delinquent Revolving Credit Lender
(iv) The Administrative Agent shall have succeeded to
all rights to payment to which the Delinquent Revolving Credit Lender
otherwise would have been entitled hereunder in respect of those
amounts paid by or in respect of the Loan Parties on account of the
Administrative Agent's Cover together with interest until it is repaid.
Such payments shall be deemed made first towards the amounts in respect
of which the Administrative Agent's Cover was provided and only then
towards amounts in which the Delinquent Revolving Credit Lender is then
participating. For purposes of distributions to be made pursuant to
Section 13.4(a) (which relates to ordinary course distributions) or
Section 14.7 (which relates to distributions of proceeds of a
Liquidation) below, amounts shall be deemed distributable to a
Delinquent Revolving Credit Lender (and consequently, to the
Administrative Agent to the extent to which the Administrative Agent is
then entitled) at the highest level of distribution (if applicable) at
which the Delinquent Revolving Credit Lender would otherwise have been
entitled to a distribution.
(v) Subject to Subsection 13.3(c)(iv), the Delinquent
Revolving Credit Lender shall be
Page 103
entitled to receive any payments from the Loan Parties to which the
Delinquent Revolving Credit Lender is then entitled, PROVIDED HOWEVER
there shall be deducted from such amount and retained by the
Administrative Agent any interest to which the Administrative Agent is
then entitled on account of Section 13.3(c)(ii), above.
(d) A Delinquent Revolving Credit Lender shall not be relieved
of any obligation of such Delinquent Revolving Credit Lender hereunder (all and
each of which shall constitute continuing obligations on the part of any
Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status
as a Delinquent Revolving Credit Lender by paying the Administrative Agent the
aggregate of the following:
(i) The Administrative Agent's Cover (to the
extent not previously repaid by the Loan
Parties and retained by the Administrative
Agent in accordance with Subsection
13.3(c)(iv), above) with respect to that
Delinquent Revolving Credit Lender.
PLUS
(ii) The aggregate of the amount payable under
Subsection 13.3(c)(iii), above (which
relates to interest to be paid by that
Delinquent Revolving Credit Lender).
PLUS
(iii) All such costs and expenses as may be
incurred by the Administrative Agent in the
enforcement of the Administrative Agent's
rights against such Delinquent Revolving
Credit Lender.
13.4. ORDINARY COURSE DISTRIBUTIONS: REVOLVING CREDIT. (THIS SECTION
13.4 APPLIES UNLESS THE PROVISIONS OF SECTION 14.7 (WHICH RELATES TO
DISTRIBUTIONS IN THE EVENT OF A LIQUIDATION) BECOME OPERATIVE).
(a) Weekly, on such day as may be set from time to time by the
Administrative Agent (or more frequently at the Administrative Agent's option),
the Administrative Agent and each Revolving Credit Lender shall settle up on
amounts advanced under the Revolving Credit and collected funds received in the
Concentration Account.
(b) The Administrative Agent shall distribute to the SwingLine
Lender and to each Revolving Credit Lender such Person's respective Pro-Rata
share of interest payments on the Revolving Credit Loans when actually received
and collected by the Administrative Agent (excluding the one Business Day for
settlement provided for in Section 8.5(a), which shall be for the account of the
Administrative Agent only). For purposes of calculating interest due to a
Revolving Credit Lender, that Revolving Credit Lender
Page 104
shall be entitled to receive interest on the actual amount contributed by that
Revolving Credit Lender towards the principal balance of the Revolving Credit
Loans outstanding during the applicable period covered by the interest payment
made by the Loan Parties. Any net principal reductions to the Revolving Credit
Loans received by the Administrative Agent in accordance with the Loan Documents
during such period shall not reduce such actual amount so contributed, for
purposes of calculation of interest due to that Revolving Credit Lender, until
the Administrative Agent has distributed to that Revolving Credit Lender its
Pro-Rata share thereof.
(c) The Administrative Agent shall distribute fees paid on
account of the Revolving Credit, as follows:
(i) L/C Fee (Section 2.20(a)): Pro-Rata to the
Revolving Credit Lenders.
(ii) Unused Line Fee (Section 2.15): Pro-Rata to the
Revolving Credit Lenders.
(iii) Revolving Credit Early Termination Fee (Section
2.16) : Pro-Rata to the Revolving Credit Lenders.
(iv) Revolving Credit Commitment Fee (Section 2.13) :
As provided in separate letter agreements with the respective Revolving
Credit Lenders.
(d) No Lender shall have any interest in or right to receive
any part of the following:
(i) Any interest which reflects "float" as described
in the PROVISO included in Section 8.5(a), all of which float shall be
for the account of the Administrative Agent only.
(ii) The Administrative Agent's Monitoring Fee
(Section 2.14) to be paid by the Loan Parties to the Administrative
Agent.
(iii) Fees described in Section 2.20(b) (which
relates to fees associated with, among other things, the issuance of
L/C's): Retained by the Issuer.
(e) No Revolving Credit Lender shall have any interest in or
right to receive any part of the Tranche B Fees.
(f) Any amount received by the Administrative Agent or the
Collateral Agent as reimbursement for any cost or expense (including without
limitation, reasonable attorneys' fees) shall be distributed by the
Administrative Agent to that Person which is entitled to such reimbursement as
provided in this Agreement (and if such Person(s) is (are) the Lenders, Pro-Rata
determined as of the date on which the expense, in respect of which such
reimbursement is being made, was incurred).
(g) Each distribution pursuant to this Section 13.4 is subject
to Section 13.3(c), above (which relates to the effect of the failure of any
Revolving Credit Lender to have Transferred to the Administrative Agent any
amount which that Revolving Credit Lender is then obligated to so Transfer
pursuant to the within Agreement).
Page 105
13.5. ORDINARY COURSE DISTRIBUTIONS : THE TRANCHE B LOAN (THIS SECTION
13.5 APPLIES UNLESS THE PROVISIONS OF SECTION 14.7 (WHICH RELATES TO
DISTRIBUTIONS IN THE EVENT OF A LIQUIDATION) BECOME OPERATIVE).
(a) The Administrative Agent shall distribute to the Tranche B
Lender payments on account of principal of, and interest on, the Tranche B Loan
and the Tranche B Fees as received and collected by the Administrative Agent
from the Loan Parties in accordance with the provisions of this Agreement or as
made available by the Administrative Agent as the proceeds of advances under the
Revolving Credit. As provided in Section 13.4(f), any amount received by the
Administrative Agent or the Collateral Agent as reimbursement for any cost or
expense (including without limitation, reasonable attorneys' fees) shall be
distributed by the Administrative Agent to that Person which is entitled to such
reimbursement as provided in this Agreement (and if such Person(s) is (are) the
Lenders, Pro-Rata determined as of the date on which the expense, in respect of
which such reimbursement is being made, was incurred).
(b) Unless otherwise specifically agreement to in writing, the
Administrative Agent shall distribute the proceeds of a disposition of
Collateral, other than in the ordinary course, in accordance with the ordering
of distributions set forth in Section 14.8(c).
ARTICLE 14 - ACCELERATION AND LIQUIDATION:
14.1. ACCELERATION NOTICES
(a) The Administrative Agent may give the Collateral Agent and
Lenders an Acceleration Notice at any time following the occurrence of an Event
of Default.
(b) The SuperMajority Revolving Credit Lenders may give the
Administrative Agent an Acceleration Notice at any time following the occurrence
of an Event of Default. Such notice may be by multiple counterparts, PROVIDED
THAT counterparts executed by the requisite Lenders are received by the
Administrative Agent within a period of five (5) consecutive Business Days.
(c) The Tranche B Lender may give the Administrative Agent
an Acceleration Notice as follows:
(i) At any time following the occurrence of an Event
of Default which occurs after the Revolving Credit Debt has been paid
in full, all L/C's have been cash collateralized, and there is no
obligation on the Revolving Credit Lenders to make any further loans or
to provide any further financial accommodation under the Revolving
Credit.
(ii) At any time following the occurrence of an Event
of Default which occurs after a BuyOut by the Tranche B Lender.
(iii) At any time following the occurrence of a
Bankruptcy Breach.
Page 106
(iv) At any time as permitted pursuant to
Section 14.2.
14.2. MANDATORY ACCELERATION RIGHT OF THE TRANCHE B LENDER:
(a) The Tranche B Lender may initiate a Standstill Period by
written notice to the Administrative Agent at any time after the occurrence of
any Tranche B Loan Action Event and may so initiate a Standstill Period on
account of a separate Tranche B Loan Action Event during the pendency of another
Standstill Period which has been initiated by it.
(b) After the expiry of a Standstill Period initiated by a
Tranche B Loan Action Event, the Tranche B Lender may give the Administrative
Agent and the Collateral Agent an Acceleration Notice unless either 14.2(b)(i)
or 14.2(b)(ii) is applicable:
(i) Acceleration has been stayed by judicial or
statutory process.
(ii) As applicable:
(A) If the relevant Tranche B Loan Action
Event had been a Tranche B Availability Breach: On three (3)
consecutive days during the relevant Standstill Period, no
Tranche B Availability Breach exists or occurs.
(B) If the relevant Tranche B Event is a
Minimum Excess Availability Breach: On any three (3) days
during the relevant Standstill Period, no Minimum Excess
Availability Breach exists or occurs.
(C) If the relevant Tranche B Loan Action
Event is a Tranche B Payment Breach: All payments which are
due or overdue on account of the Tranche B Loan (other than
those which would be due only if the Tranche B Loan were
accelerated) are paid prior to the expiry of the relevant
Standstill Period.
(c) Notwithstanding the foregoing Section 14.2(b), after the
expiry of more than two Standstill Periods initiated by the same type of Tranche
B Loan Action Event within any 45 day period, the Tranche B Lender may give the
Administrative Agent and the Collateral Agent an Acceleration Notice.
14.3. ACCELERATION Unless stayed by judicial or statutory process, the
Administrative Agent shall Accelerate the Revolving Credit Obligations and the
Tranche B Loan within a commercially reasonable time following:
(a) The Administrative Agent's giving of an Acceleration
Notice to the Collateral Agent and the Revolving Credit Lenders as provided in
Section 14.1(a).
(b) The Administrative Agent's receipt of an Acceleration
Notice from the SuperMajority Revolving Credit Lenders, in compliance with
Section14.1(b).
(c) The Administrative Agent's receipt of an Acceleration
Notice from the Tranche B Lender, in compliance with Section 14.2(c).
Page 107
14.4. INITIATION OF LIQUIDATION Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Collateral Agent within a
commercially reasonable time following Acceleration of the Revolving Credit
Obligations and the Tranche B Loan.
14.5. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine
Loan (if any) shall be converted, pursuant to Section 14.2(b)(ii), to a
Revolving Credit Loan in which all Revolving Credit Lenders
participate.
(ii) The Administrative Agent and the Revolving
Credit Lenders shall "net out" each Revolving Credit Lender's
respective contributions towards the Revolving Credit Loans, so that
each Revolving Credit Lender holds that Revolving Credit Lender's
Revolving Credit Percentage Commitment of the Revolving Credit Loans
and advances.
(b) Following the initiation of a Liquidation, each Revolving
Credit Lender shall contribute, towards any L/C thereafter honored and not
immediately reimbursed by the Loan Parties, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of such honoring.
(c) Following the initiation of a Liquidation, each Revolving
Credit Lender shall contribute, towards any L/C thereafter honored and not
immediately reimbursed by the Loan Parties, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of such honoring.
14.6. COLLATERAL AGENT'S CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Collateral Agent
in the manner determined by it to be commercially reasonable. Any Liquidation of
the Tranche B Senior Collateral shall be conducted by the Collateral Agent with
the advice and assistance of the Tranche B Lender.
(b) The Collateral Agent may establish one or more Nominees to
"bid in" or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Collateral Agent shall manage the Nominee and manage
and dispose of any Post Foreclosure Assets with a view towards the realization
of the economic benefits of the ownership of the Post Foreclosure Assets and in
such regard, the Collateral Agent and/or the Nominee may operate, repair,
manage, maintain, develop, and dispose of any Post Foreclosure Asset in such
manner as the Collateral Agent determines as appropriate under the
circumstances.
(d) Each Agent may decline to undertake or to continue taking
a course of action or to execute an action plan (whether proposed by an Agent or
a Lender) unless indemnified Pro-Rata to that Agent's satisfaction by the
Lenders against any and all liability and expense which may be incurred by that
Page 108
Agent by reason of taking or continuing to take that course of action or action
plan.
(e) The Administrative Agent and each Lender shall execute all
such instruments and documents not inconsistent with the provisions of this
Agreement as the Administrative Agent and/or the Nominee reasonably may request
with respect to the creation and governance of any Nominee, the conduct of the
Liquidation, and the management and disposition of any Post Foreclosure Asset.
14.7. DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Collateral Agent may establish one or more reasonably
funded reserve accounts into which proceeds of the conduct of any Liquidation
may be deposited in anticipation of future expenses which may be incurred by any
Agent in the exercise of rights as a secured creditor of the Loan Parties and
prior claims which the Agents anticipate may need to be paid.
(b) The Collateral Agent shall distribute the proceeds of any
Liquidation to the Administrative Agent.
(c) The Administrative Agent shall distribute the net proceeds
of Liquidation, as distributed to the Administrative Agent by the Collateral
Agent pursuant to Section 14.7(b), in accordance with the relative priorities
set forth in Section 14.8.
(d) Each Revolving Credit Lender, on the written request of
the Administrative Agent and/or any Nominee, not more frequently than once each
month, shall reimburse the Agents and/or any Nominee, Pro-Rata, for any cost or
expense reasonably incurred by the Agents and/or the Nominee in the conduct of a
Liquidation, which amount is not covered out of current proceeds of the
Liquidation, which reimbursement shall be paid over to and distributed by the
Administrative Agent.
14.8. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION
(a) Proceeds of a Liquidation shall be distributed based on
levels of priority with respect to each classification of Collateral without
taking any Early Termination Assessments into account except as specified below.
(b) All distributions of proceeds of a Liquidation shall be net of payment over
to the Agents as reimbursement for all reasonable third party costs and expenses
incurred by the Agents and to Lenders' Special Counsel and to any funded reserve
established pursuant to Section 14.7(a). (c) The relative priorities to the
proceeds of a Liquidation shall be distributed based on the following relative
priorities:
(i) Revolving Credit Senior Collateral:
(A) First:, as provided in Section
14.8(d); and then
(B) Second, to the Tranche B Lender;
and then
Page 109
(C) Third, in the same order as in First
and Second above towards Early
Termination Assessments; and then
(D) Fourth, to all other Liabilities.
(ii) Tranche B Senior Collateral:
(A) First, to the Tranche B Lender; and
then
(B) Second, as provided in Section
14.8(d); and then
(C) Third, in the same order as in First
and Second above towards Early
Termination Assessments; and
then (D) Fourth, to all other Liabilities.
(d) Distributions which are made pursuant to reference
to Section14.8(d) shall be in the following order:
(i) To the SwingLine Lender, on account of any
SwingLine loans not converted to Revolving
Credit Loans pursuant to Section
14.5(a)(i); and then
(ii) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender) and
to FRFI or any of its Affiliates providing
cash management services or L/Cs to the
extent of any credit exposure in connection
therewith (but excluding any fees earned on
account thereof), Pro-Rata, to the unpaid
principal balance of Revolving Credit Debt
and any amounts owed on account of such
cash management services and any L/Cs
(including as cash collateral for any
undrawn L/Cs) and fees due to the Issuer on
account thereof; and then
(iii) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender),
Pro-Rata, to accrued interest which
constitutes Revolving Credit Debt; and then
(iv) To the Revolving Credit Lenders (other than
any Delinquent Revolving Credit Lender),
Pro-Rata, to Revolving Credit Fees, other
than the Revolving Credit Early Termination
Fee; and then
(v) To any Delinquent Revolving Credit Lenders,
Pro-Rata to amounts to which such Revolving
Credit Lenders otherwise would have been
entitled pursuant to Sections 14.8(d)(ii),
14.8(d)(iii), and 14.8(d)(iv).
Page 111
ARTICLE 15 - THE AGENTS:
15.1. APPOINTMENT OF THE AGENTS
(a) Each Lender appoints and designates Fleet Retail
Finance Inc. as the "Administrative Agent" hereunder and under the Loan
Documents.
(b) Each Lender appoints and designates Fleet Retail
Finance Inc. as the "Collateral Agent" hereunder and under the Loan Documents.
(c) Each Lender authorizes each Agent:
(i) To execute those of the Loan Documents and
all other instruments relating thereto to which that Agent is a party.
(ii) To take such action on behalf of the Lenders and
to exercise all such powers as are expressly delegated to that Agent hereunder
and in the Loan Documents and all related documents, together with such other
powers as are reasonably incident thereto.
(d) Each Lender recognizes that Fleet Retail Finance
Inc. and Back Bay Capital Funding LLC are interrelated and waives any potential
claim which may be based on an Agent's acting in conflict of interest on account
thereof. Nothing contained herein shall be deemed to release the Agents from
liability under Section 16.2(f) hereof for conduct undertaken in a grossly
negligent manner, in actual bad faith, or in willful misconduct.
(e) ▇▇▇▇▇ Fargo Retail Finance LLP has been granted
the title of "Syndication Agent", and National City Commercial Finance, Inc. and
▇▇▇▇▇▇ Financial Inc. have each been granted the title of "Co-Documentation
Agent" in which capacity none shall have any rights nor any responsibilities.
Any of the foregoing may resign such position at any time by written notice to
the Administrative Agent and, in any event, shall cease to be Syndication Agent
or Co-Documentation Agent, as the case may be, contemporaneously with its
ceasing to be a Revolving Credit Lender.
15.2. RESPONSIBILITIES OF AGENTS
(a) The Administrative Agent shall have principal
responsibilities for and primary authority for the administration of the credit
facilities contemplated by this Agreement and for all matters for which the
Collateral Agent is not responsible. In all instances where the allocation of
responsibility and authority, as between the Collateral Agent and the
Administrative Agent is in doubt, the Administrative Agent shall be vested with
such responsibility and authority.
(b) The Collateral Agent shall have principal responsibilities
for and primary authority for the conduct of the Liquidation and the
distribution of the proceeds of such Liquidation.
(c) Neither Agent shall have any duties or responsibilities
to, or any fiduciary
Page 111
relationship with, any Lender except for those expressly set forth in this
Agreement.
(d) Neither Agent nor any of its Affiliates shall be
responsible to any Lender for any of the following:
(i) Any recitals, statements, representations or
warranties made by any Loan Party or any other Person.
(ii) Any appraisals or other assessments of the
assets of any Loan Party or of any other Person responsible for or on
account of the Liabilities.
(iii) The value, validity, effectiveness,
genuineness, enforceability, or sufficiency of the Loan Agreement, the
Loan Documents or any other document referred to or provided for
therein.
(iv) Any failure by any Loan Party or any other
Person (other than the subject Agent) to perform its obligations under
the Loan Documents.
(e) Each Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such attorneys, accountants, and other
professionals or agents or attorneys-in-fact selected by the subject Agent with
reasonable care. No such attorney, accountant, other professional, agent, or
attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.
(f) Neither Agent, nor any of its directors, officers, or
employees shall be responsible for any action taken or omitted to be taken or
omitted to be taken by any other of them in connection herewith in reliance upon
advice of their respective counsel nor, in any other event except for any action
taken or omitted to be taken as to which a final judicial determination has been
or is made (in a proceeding in which such Person has had an opportunity to be
heard) that such Person had acted in a grossly negligent manner, in actual bad
faith, or in willful misconduct.
(g) Neither Agent shall have any responsibility in any event
for more funds than that Agent actually receives and collects.
(h) The Agents, in their separate capacities as Lenders, shall
have the same rights and powers hereunder as any other Lender.
15.3. CONCERNING DISTRIBUTIONS BY THE AGENTS
(a) Each Agent, in that Agent's reasonable discretion based
upon that Agent's determination of the likelihood that additional payments will
be received, expenses incurred, and/or claims made by third parties to all or a
portion of such proceeds, may delay the distribution of any payment received on
account of the Liabilities.
(b) Each Agent may disburse funds prior to determining that
the sums which that Agent expects to receive have been finally and
unconditionally paid to that Agent. If and to the extent that
Page 112
Agent does disburse funds and it later becomes apparent that the Agent did not
then receive a payment in an amount equal to the sum paid out, then any Lender
to whom the Agent made the funds available, on demand from the Agent, shall
refund to the Administrative Agent the sum paid to that person.
(c) If, in the opinion of an Agent, the distribution of any
amount received by that Agent might involve that Agent in liability, or might be
prohibited hereby, or might be questioned by any Person, then that Agent may
refrain from making distribution until that Agent's right to make distribution
has been adjudicated by a court of competent jurisdiction.
(d) The proceeds of any Lender's exercise of any right of, or
in the nature of, set-off shall be deemed, FIRST, to the extent that a Lender is
entitled to any distribution hereunder, to constitute such distribution and
SECOND, shall be shared with the other Lenders as if distributed pursuant to
(and shall be deemed as distributions under) Section 14.8.
(e) Each Lender recognizes that the crediting of the Loan
Parties with the "proceeds" of any transaction in which a Post Foreclosure Asset
is acquired is a non-cash transaction and that, in consequence, no distribution
of such "proceeds" will be made by the Administrative Agent to any Lender.
(f) In the event that (x) a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Administrative
Agent is to be repaid or disgorged or (y) the requisite Lenders (as provided in
Section 16.4(g)) determine to effect such repayment or disgorgement, then each
Lender to which any such distribution shall have been made shall repay, to the
Agent which had made such distribution, that Lender's Pro-Rata share of the
amount so adjudged or determined to be repaid or disgorged.
15.4. DISPUTE RESOLUTION: Any dispute among the Lenders and/or any
Agent concerning the interpretation, administration, or enforcement of the
financing arrangements contemplated by this or any other Loan Document or the
interpretation or administration of this or any other Loan Document which cannot
be resolved amicably shall be resolved in the United States District Court for
the District of Massachusetts, sitting in Boston or in the Superior Court of
Suffolk County, Massachusetts, to the jurisdiction of which courts each Lender
hereby submits.
15.5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS The Administrative
Agent will forward to each Lender, promptly after the Administrative Agent's
receipt thereof, a copy of each notice or other document furnished to the
Administrative Agent pursuant to this Agreement, including monthly, quarterly,
and annual financial statements received from the Borrowers' Representative
pursuant to Article 6 of this Agreement, other than any of the following:
(a) Routine communications associated with requests for Revolving
Credit Loans and/or the
Page 113
issuance of L/C's.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan Documents
to be furnished to the Lenders by the Borrowers' Representative.
(d) Any notice or document of which the Administrative Agent has
knowledge that such notice or document had been forwarded to the Lenders other
than by the Administrative Agent.
15.6. CONFIDENTIAL INFORMATION
(a) Each Lender will maintain, as confidential (other than to
their respective attorneys, agents, accountants, participants and prospective
participants) all of the following:
(i) Proprietary approaches, techniques, and methods
of analysis which are applied by the Administrative Agent in the
administration of the credit facility contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the
Administrative Agent in providing reports to the Lenders pursuant
hereto, which forms or formats are not of general currency.
(iii) Confidential information provided by any Loan
Party pursuant to the Loan Documents, other than any information which
becomes known to the general public through sources other than that
Lender.
(c) Nothing included herein shall prohibit the disclosure of
any such information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this Agreement.
15.7. RELIANCE BY AGENTS Each Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by that Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts selected
by that Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, that Agent
shall in all events be fully protected in acting, or in refraining from acting,
in accordance with the applicable Consent required by this Agreement.
Instructions given with the requisite Consent shall be binding on all Lenders.
15.8. NON-RELIANCE ON AGENTS AND OTHER LENDERS
(a) Each Lender represents to all other Lenders and to
the Agents that such Lender:
(i) Independently and without reliance on any
Page 114
representation or act by any Agent or by any other Lender, and based on
such documents and information as that Lender has deemed appropriate,
has made such Lender's own appraisal of the financial condition and
affairs of the Loan Parties and decision to enter into this Agreement.
(ii) Has relied upon that Lender's review of the
Loan Documents by that Lender and by counsel to that Lender as that
Lender deemed appropriate under the circumstances.
(b) Each Lender agrees that such Lender, independently and
without reliance upon any Agent or any other Lender, and based upon such
documents and information as such Lender shall deem appropriate at the time,
will continue to make such Lender's own appraisals of the financial condition
and affairs of the Loan Parties when determining whether to take or not to take
any discretionary action under this Agreement.
(c) Neither Agent in the discharge of that Agent's duties
hereunder, shall be required to make inquiry of, or to inspect the properties or
books of, any Person.
(d) Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder (as to which, SEE Section 15.5), the Agents shall
not have any affirmative duty or responsibility to provide any Lender with any
credit or other information concerning any Person, which information may come
into the possession of Agents or any Affiliate of an Agent.
(e) Each Lender, at such Lender's request, shall have
reasonable access to all nonprivileged documents in the possession of the
Agents, which documents relate to the Agents' performance of their duties
hereunder.
15.9. INDEMNIFICATION Without limiting the liabilities of the Loan
Parties under any this or any of the other Loan Documents, each Lender shall
indemnify each Agent, Pro-Rata, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including reasonable attorneys'
fees and expenses and other out-of-pocket expenditures) which may at any time be
imposed on, incurred by, or asserted against that Agent and in any way relating
to or arising out of this Agreement or any other Loan Document or any documents
contemplated by or referred to therein or the transactions contemplated thereby
or the enforcement of any of terms hereof or thereof or of any such other
documents, PROVIDED, HOWEVER, no Lender shall be liable for any of the foregoing
to the extent that any of the foregoing arises from any action taken or omitted
to be taken by the subject Agent as to which a final judicial determination has
been or is made (in a proceeding in which the subject Agent has had an
opportunity to be heard) that the subject Agent had acted in a grossly negligent
manner, in actual bad faith, or in willful misconduct.
Page 115
15.10. RESIGNATION OF AGENT
(a) An Agent may resign at any time by giving 60 days prior
written notice thereof to the Lenders and to the other Agent. Upon receipt of
any such notice of resignation, the SuperMajority Lenders and the Tranche B
Lender shall have the right to appoint a successor to such Agent (and if no
Event of Default has occurred, with the consent of the Borrowers'
Representative, not to be unreasonably withheld and, in any event, deemed given
by the Borrowers' Representative if no written objection is provided by the
Borrowers' Representative to the (resigning) Agent within seven (7) Business
Days notice of such proposed appointment). If a successor Agent shall not have
been so appointed and accepted such appointment within 30 days after the giving
of notice by the resigning Agent, then the resigning Agent may appoint a
successor Agent, which shall be a financial institution having a combined
capital and surplus in excess of $500,000,000.00 (unless, after a BuyOut such
Agent shall be the Tranche B Lender in which case the foregoing capital and
surplus requirement shall not apply). The consent of the Borrowers'
Representative otherwise required by this Section 15.10(a) shall not be required
if an Event of Default has occurred.
(b) Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent, such successor shall thereupon succeed to, and
become vested with, all the rights, powers, privileges, and duties of the
(resigning) Agent so replaced, and the (resigning) Agent shall be discharged
from the (resigning) Agent's duties and obligations hereunder, other than on
account of any responsibility for any action taken or omitted to be taken by the
(resigning) Agent as to which a final judicial determination has been or is made
(in a proceeding in which the (resigning) Person has had an opportunity to be
heard) that such Person had acted in a grossly negligent manner or in bad faith.
(c) After any retiring Agent's resignation, the provisions of
this Agreement and of all other Loan Documents shall continue in effect for the
retiring Person's benefit in respect of any actions taken or omitted to be taken
by it while it was acting as an Agent.
ARTICLE 16 - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
16.1. ADMINISTRATION OF CREDIT FACILITIES
(a) Except as otherwise specifically provided in this
Agreement, each Agent may take any action with respect to the credit facility
contemplated by the Loan Documents as that Agent determines to be appropriate
within their respective areas of responsibility and authority, as set forth in
Sections 15.2(b) and 15.2(a), PROVIDED, HOWEVER, neither Agent is under any
affirmative obligation to take any action which it is not required by this
Agreement or the Loan Documents specifically to so take.
(b) Except as specifically provided in the following Sections
of this Agreement, whenever a Loan Document or this Agreement provides that
action may be taken or omitted to be taken in
Page 116
an Agents' discretion, that Agent shall have the sole right to take, or refrain
from taking, such action without, and notwithstanding, any vote of the Lender:
ACTIONS DESCRIBED IN SECTION TYPE OF CONSENT REQUIRED
-----------------------------------------------------------
16.2 Majority Lenders
16.3 SuperMajority Revolving Credit Lenders
16.4 Certain Consent
16.5 Unanimous Consent
17.4 Consent of SwingLine Lender
16.7 Consent of Tranche B Lender
16.8 Consent of the Agents
(c) The rights granted to the Lenders in those sections
referenced in Section 16.1(b) shall not otherwise limit or impair any Agent's
exercise of its discretion under the Loan Documents.
16.2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS Except as
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver, or modification of any Loan
Document.
16.3. ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY REVOLVING
CREDIT LENDERS
The Consent or direction of the SuperMajority Revolving Credit Lenders
is required as follows:
(a) The Lenders agree that any loan or advance under the
Revolving Credit which results in a Protective OverAdvance may be made by the
Administrative Agent in its discretion without the Consent of the Lenders and
that each Lender shall be bound thereby, PROVIDED, HOWEVER, the Consent or
direction of the SuperMajority Revolving Credit Lenders is required to permit a
Protective OverAdvance to be outstanding for more than 45 consecutive Business
Days or more than twice in any twelve month period. (Any Protective OverAdvance
which is permitted by this Section 16.3(a) is referred to as a "PERMITTED
PROTECTIVE OVERADVANCE").
(b) If any Default has occurred and is continuing, the
SuperMajority Revolving Credit Lenders may direct the Administrative Agent to
suspend the Revolving Credit, whereupon, as long as a Default shall have
occurred and be continuing, the only Revolving Credit Loans which may be made
are the following:
(i) Revolving Credit Loans made to "cover" the
honoring of L/C's.
(ii) Permitted Protective OverAdvances.
(iii) Revolving Credit Loans made with Consent of
the SuperMajority Lenders.
Page 117
(c) If an Event of Default has occurred and not been duly
waived, the SuperMajority Revolving Credit Lenders may:
(i) Give the Administrative Agent an Acceleration
Notice in accordance with Section 15:15-1(b).
(ii) Direct the Administrative Agent to increase the
rate of interest to the default rate of interest as provided in, and to
the extent permitted by, this Agreement.
16.4. ACTION REQUIRING CERTAIN CONSENT The following Consent shall
be required for the following actions:
-------------------------------------------------------------------------------
ACTION REQUIRED CONSENT
-------------------------------------------------------------------------------
(a) Any change to the dates on which SuperMajority Revolving Credit
any payment of principal of the Tranche Lenders and the Tranche B Lender
B Loan shall be due and payable or the
amount of any such payment.
-------------------------------------------------------------------------------
(b) Waiver or amendment of SuperMajority Revolving Credit
financial performance covenants in Lenders and the Tranche B Lender.
Section 6.11
-------------------------------------------------------------------------------
(c) Increase in the SwingLine Ceiling: SwingLine Lender and the Majority
Lenders.
-------------------------------------------------------------------------------
(d) Any increase in any Revolving All Revolving Credit Lenders
Credit Lender's Revolving Credit Dollar affected thereby other than any
Commitment or Revolving Credit Percentage Delinquent Revolving Credit Lender.
Commitment (other than by reason of the
application of Section 16.11 (which deals
with NonConsenting Revolving Credit
Lenders) or Section 17.1 (which deals
with assignments and participations)),
it being understood that this
Section 16.4(d) addresses changes to
commitments inter se and not any increase
in the overall size of the Revolving
Credit.
-------------------------------------------------------------------------------
(e) Any forgiveness of all or any All Lenders whose payment Liability
portion of any payment Liability. is being so forgiven (other than any
Delinquent Revolving Credit Lender,
if otherwise applicable).
-------------------------------------------------------------------------------
Page 118
-------------------------------------------------------------------------------
ACTION REQUIRED CONSENT
-------------------------------------------------------------------------------
(f) Any decrease in any interest rate, All Lenders adversely affected
fee or assessment payable under any of thereby (other than any Delinquent
the Loan Documents (other than any Revolving Credit Lender, if
Administrative Agent's Monitoring Fee otherwise applicable).
(for which the consent of the
Administrative Agent shall also be
required)) and of any fee provided for
by any Fee Letter (which may be amended
by written agreement between the
Borrowers' Representative on the one hand,
and the Administrative Agent on the other).
-------------------------------------------------------------------------------
(g) Disgorgement as described in If disgorgement is
Section 15.3(f). By the Revolving Credit Lenders-
The SuperMajority Revolving Credit
Lenders.
By the Tranche B Lender - The
Tranche B Lender.
-------------------------------------------------------------------------------
16.5. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT None of
the following may take place except with Unanimous Consent:
(a) Any extension of the Maturity Date.
(b) Any release of all or substantially all of the Collateral
not otherwise required or provided for in the Loan Documents or to facilitate a
Liquidation.
(c) Any amendment of the definition of the terms "Borrowing
Base", "Tranche B Borrowing Base", or "Availability" or of any definition of any
component thereof, such that more credit would be available to the Loan Parties,
based on the same assets, as would have been available to the Loan Parties
immediately prior to such amendment , IT BEING UNDERSTOOD, HOWEVER, that:
(i) The foregoing shall not limit the adjustment by
the Administrative Agent of any Reserve in the Administrative Agent's
administration of the Revolving Credit as otherwise permitted by this
Agreement.
(ii) The foregoing shall not prevent the
Administrative Agent, in its administration of the Revolving Credit,
from restoring any component of Borrowing Base which had been lowered
by the Administrative Agent back to the value of such component, as
stated in this Agreement or to an intermediate value.
(d) Any release of any Person obligated on account of the
Liabilities (except in
Page 119
connection with a sale of such Person approved by the SuperMajority Lenders in
accordance with the terms of this Agreement).
(e) The making of any Revolving Credit Loan which, when made,
exceeds Availability and is not a Permitted Protective OverAdvance, PROVIDED,
HOWEVER, (i) no Consent shall be required in connection with the making of any
Revolving Credit Loan to "cover" any honoring of a drawing under any L/C; and
(ii) each Lender recognizes that subsequent to the
making of a Revolving Credit Loan which does not constitute a Permitted
Protective OverAdvance, the unpaid principal balance of the Loan
Account may exceed the Borrowing Base on account of changed
circumstances beyond the control of the Administrative Agent (such as a
drop in collateral value).
(f) The waiver of the obligation of the Loan Parties to reduce
the unpaid principal balance of loans under the Revolving Credit to an amount
which does not exceed a Permitted Protective OverAdvance or, subject to the time
limits included in Section 16.3(a) (which places time and frequency limits on
Permitted Protective OverAdvances).
(g) Any amendment of this Article 16.
(h) Amendment of any of the following Sections of this
Agreement:
(i) 13.4
(ii) 13.5
(iii) 14.7
(iv) 14.8
(i) Amendment of any of the following Definitions:
"Appraised Inventory Liquidation Value"
"Majority Lenders"
"Majority Revolving Credit Lenders"
"Minimum Excess Availability Breach"
"Tranche B Availability Breach"
"Tranche B Payment Breach"
"Permitted Protective OverAdvance"
"Standstill Period"
"SuperMajority Lenders"
"SuperMajority Revolving Credit Lenders"
"Tranche B Loan Action Events"
"Unanimous Consent"
Page 120
16.6. ACTIONS REQUIRING SWINGLINE LENDER CONSENT No action, amendment,
or waiver of compliance with, any provision of the Loan Documents or of this
Agreement which affects the SwingLine Lender may be undertaken without the
Consent of the SwingLine Lender.
16.7. ACTIONS REQUIRING TRANCHE B LENDER CONSENT None of the following
may be made without the Consent of the Tranche B Lender:
(a) Any increase in any interest rate or fee payable to the
Revolving Credit Lenders on account of the Revolving Credit Loans in excess of
150 basis points per annum in the aggregate.
(b) Any increase in any interest rate or fee payable to the
Revolving Credit Lenders on account of the Revolving Credit Loans not requiring
the Consent of the Tranche B Lender pursuant to Section 16.7(a), unless the Loan
Parties agree to increase the interest rate and fees payable to the Tranche B
Lender contemporaneously therewith by a like amount.
(c) Any amendment, modification, or waiver of any provision of
Article 3 (entitled "The Tranche B Loan"). (d) Any amendment of Sections 2.2,
11.6, 14.1(c), 14.2, 14.3(c) or 14.4. (e) Amendment of any of the following
Definitions: "Change in Control" "Equipment" "Overloan" "Protective OverAdvances
"Revolving Credit Ceiling" "Standstill Period." (f) Any release of Collateral
comprised of Equipment except as otherwise required or provided for in the Loan
Documents (including, without limitation, under Section 5.14) and except to
facilitate a Liquidation.
16.8. ACTIONS REQUIRING AGENTS' CONSENT
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects an Agent in
its capacity as an Agent may be undertaken without the written consent of the
Agents.
(b) No action referenced herein which affects the rights,
duties, obligations, or liabilities of an Agent shall be effective without the
written consent of the Agents.
16.9. MISCELLANEOUS ACTIONS
(a) Notwithstanding any other provision of this Agreement, no
single Lender
Page 121
independently may exercise any right of action or enforcement against or with
respect to any Loan Party.
(b) Each Agent shall be fully justified in failing or refusing
to take action under this Agreement or any Loan Document on behalf of any Lender
unless that Agent shall first
(i) receive such clear, unambiguous, written
instructions as that Agent deems appropriate; and
(ii) be indemnified to that Agent's satisfaction by
the Lenders against any and all liability and expense which may be
incurred by that Agent by reason of taking or continuing to take any
such action, unless such action had been grossly negligent, in willful
misconduct, or in bad faith.
(c) Each Agent may establish reasonable procedures for the
providing of direction and instructions from the Lenders to that Agent,
including its reliance on multiple counterparts, facsimile transmissions, and
time limits within which such direction and instructions must be received in
order to be included in a determination of whether the requisite Loan
Commitments has provided its direction, Consent, or instructions.
16.10. ACTIONS REQUIRING BORROWERS' REPRESENTATIVE'S CONSENT
(a) The Borrowers' Representative's consent is required for
any amendment of this Agreement, except that each of the following Articles of
this Agreement may be amended without the consent of the Borrowers'
Representative:
ARTICLE TITLE OF ARTICLE
---------------------------------
13 Revolving Credit Fundings and Distributions
15 The Agents
(b) The Borrowers' Representative's consent to the amendment
of those provisions referenced in Section 16.10(a)
(i) Shall be deemed given unless written objection
is made, within seven (7) Business Days following the Administrative
Agent's giving notice to the Borrowers' Representative of the proposed
amendment; and
(ii) shall not be required following the occurrence
of any Event of Default.
16.11. NONCONSENTING REVOLVING CREDIT LENDER
(a) In the event that a Revolving Credit Lender (in this
Section 16.11, a "NONCONSENTING LENDER") does not provide its Consent to a
proposal by the Administrative Agent to take action which requires consent under
this Article 16, then one or more Revolving Credit Lenders who
Page 122
provided Consent to such action may require the assignment, without recourse and
in accordance with the procedures outlined in Section 17.1, below, of the
NonConsenting Lender's commitment hereunder on five (5) days written notice to
the Administrative Agent and to the NonConsenting Lender.
(b) At the end of such five (5) days, AND PROVIDED THAT the
NonConsenting Lender delivers the Note held by the NonConsenting Lender to the
Administrative Agent, the Revolving Credit Lenders who have given such written
notice shall Transfer the following to the NonConsenting Lender:
(i) Such NonConsenting Lender's Pro-Rata share of the
principal and interest of the Loans to the date of such assignment.
(ii) All fees distributable hereunder to the
NonConsenting Lender to the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which
the NonConsenting Lender is entitled to reimbursement from the Loan
Parties.
(c) In the event that the NonConsenting Lender fails to
deliver to the Administrative Agent the Note held by the NonConsenting Lender as
provided in Section 16.11(b), then:
(i) The amount otherwise to be Transferred to the
NonConsenting Lender shall be Transferred to the Administrative Agent
and held by the Administrative Agent, without interest, to be turned
over to the NonConsenting Lender upon delivery of the Note held by that
NonConsenting Lender.
(ii) The Note held by the NonConsenting Lender shall
have no force or effect whatsoever.
(iii) The NonConsenting Lender shall cease to be a
"Lender".
(iv) The Revolving Credit Lender(s) which have
Transferred the amount to the Administrative Agent as described above
shall have succeeded to all rights and become subject to all of the
obligations of the NonConsenting Lender as a "Revolving Credit
Lender".
(d) In the event that more than One (1)Revolving Credit Lender
wishes to require such assignment, the NonConsenting Lender's commitment
hereunder shall be divided among such Revolving Credit Lenders, pro-rata based
upon their respective Loan Commitments, with the Administrative Agent
coordinating such transaction.
(e) The Administrative Agent shall coordinate the retirement
of the Note held by the NonConsenting Lender and the issuance of Notes to those
Lenders which "take-out" such NonConsenting Lender, PROVIDED, HOWEVER, no
processing fee otherwise to be paid as provided in Section 17.2(b) shall be due
under such circumstances.
16.12. THE BUYOUT:
Page 123
(a) The Tranche B Lender may (but shall not be obligated to)
cause the assignment to the Tranche B Lender, or its designee, by the Revolving
Credit Lenders, of all right, title and interest in, to, arising under, or in
respect of the Revolving Credit Obligations upon five (5) Business Days prior
written notice given at any time that the Tranche B Lender has the right, under
Section 14.1, to give an Acceleration Notice.
(b) Such assignments shall be effected on the Business Day
next following the expiry of such five (5) Business Days by the execution, by
the Revolving Credit Lenders, of an Assignment and Assumption (in the form of
EXHIBIT 17.1, annexed hereto) in exchange for the payment, in immediately
available funds, of the amount of Revolving Credit Obligations (including the
Revolving Credit Early Termination Fee as if the same were then due and
payable), providing that if the Revolving Credit Early Termination Fee is not
collected on such date by the Tranche B Lender, then the Tranche B Lender shall
use its best efforts to collect such Revolving Credit Early Termination Fee and
upon collection thereof shall cause it to be paid in the order of priority set
forth in Section 14.8(c).
The Tranche B Lender's buy out right under this Section 16.12 may only be
exercised completely with respect to the entire Revolving Credit.
ARTICLE 17 - ASSIGNMENTS BY LENDERS:
17.1. ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender
(in this Section 17.1(a), an "ASSIGNING REVOLVING CREDIT LENDER") may assign to
one or more Eligible Assignees (in this Section 17.1(a), each an "ASSIGNEE
REVOLVING CREDIT LENDER") all or a portion of that Lender's interests, rights
and obligations under this Agreement and the Loan Documents (including all or a
portion of its Commitment) and the same portion of the Loans at the time owing
to it, and of the Note held by the Assigning Revolving Credit Lender, PROVIDED
THAT:
(i) The Administrative Agent shall have given its
prior written consent to such assignment, which consent shall not be
unreasonably withheld, but need not be given if the proposed assignment
would result in any Assigning Revolving Credit Lender's having a Dollar
Commitment of less than the "minimum hold" amount specified in Section
17.1(a)(iii).
(ii) Each such assignment shall be of a constant, and
not a varying, percentage of all the Assigning Revolving Credit
Lender's rights and obligations under this Agreement.
(iii) Following the effectiveness of such assignment,
the Assigning Revolving Credit Lender's Dollar Commitment (if not an
assignment of all of the Assigning Revolving Credit
Page 124
Lender's Commitment) shall not be less than $10,000,000.00.
(iv) If no Event of Default has occurred, such
assignment shall be subject to the consent of the Borrowers'
Representative, not to be unreasonably withheld or delayed and which
consent shall be deemed given if no written objection is received
within seven (7) days of the Borrowers' Representative's receipt of
notice of such proposed assignment.
(b) The Tranche B Lender, with prior written notice to the
Administrative Agent, may assign all or a portion of that Lender's interests,
rights and obligations under this Agreement and the Loan Documents freely to any
Person.
17.2. ASSIGNMENT PROCEDURES. (THIS SECTION 17.2 DESCRIBES THE
PROCEDURES TO BE FOLLOWED IN CONNECTION WITH AN ASSIGNMENT EFFECTED PURSUANT
TO THIS ARTICLE 17 AND PERMITTED BY SECTION 17.1).
(a) The parties to such an assignment shall execute and
deliver to the Administrative Agent, for recording in the Register, an
Assignment and Acceptance substantially in the form of EXHIBIT 17.1, annexed
hereto (an "ASSIGNMENT AND ACCEPTANCE").
(b) The Assigning Revolving Credit Lender shall deliver to the
Administrative Agent, with such Assignment and Acceptance, the Note held by the
subject Assigning Revolving Credit Lender and the Administrative Agent's
processing fee of $3,000.00, PROVIDED, HOWEVER, no such processing fee shall be
due where the Assigning Revolving Credit Lender is one of the Lenders at the
initial execution of this Agreement.
(c) The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"REGISTER") for the recordation of the names and addresses of the Lenders and of
the Loan Commitments, the Revolving Credit Percentage Commitment and Revolving
Credit Percentage Commitment of each Lender. The Register shall be available for
inspection by the Lenders at any reasonable time and from time to time upon
reasonable prior notice. In the absence of manifest error, the entries in the
Register shall be conclusive and binding on all Lenders. The Administrative
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.
(d) The Assigning Revolving Credit Lender and Assignee
Revolving Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an Assignment
and Assumption.
17.3. EFFECT OF ASSIGNMENT.
(a) From and after the effective date
Page 125
specified in an Assignment and Acceptance which has been executed, delivered,
and recorded (which effective date the Administrative Agent may delay by up to
five (5) Business Days after the delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
(A) Shall be a party to this Agreement and
the other Loan Documents (and to any amendments thereof) as
fully as if the Assignee Revolving Credit Lender had executed
each.
(B) Shall have the rights of a Lender
hereunder to the extent of the Loan Commitment, the Revolving
Credit Percentage Commitment and Revolving Credit Percentage
Commitment assigned by such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be
released from the Assigning Revolving Credit Lender's obligations under
this Agreement and the Loan Documents to the extent of the Commitment
assigned by such Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to
obtain and distribute replacement Notes to the subject Assigning
Revolving Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance,
the parties thereto confirm to and agree with each other and with all parties to
this Agreement as to those matters which are set forth in the subject Assignment
and Acceptance.
ARTICLE 18 - NOTICES:
18.1. NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of any Loan Document (other than a request for a loan or advance
or other financial accommodation under the Revolving Credit) shall be made to
the following addresses, each of which may be changed upon seven (7) days
written notice to all others given by certified mail, return receipt requested:
If to either Agent:
Fleet Retail Finance Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇ ▇▇▇▇
Director
Fax : ▇▇▇ ▇▇▇ ▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇▇ ▇. ▇▇▇▇ Esquire
Fax : ▇▇▇ ▇▇▇ ▇▇▇▇
Page 126
If to the Tranche B Lender
Back Bay Capital Funding LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention :
Fax: : ▇▇▇ ▇▇▇ ▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Israels LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Esquire
Fax : ▇▇▇-▇▇▇-▇▇▇▇
If to the Borrowers' Representative
And All Loan Parties:
Designs, Inc.
▇▇ ▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax : ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇ ▇▇▇▇▇ Esquire
Fax : ▇▇▇-▇▇▇-▇▇▇▇
18.2. NOTICE GIVEN.
(a) Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times being
local to the place of delivery or receipt):
(i) By mail: the sooner of when actually received or
three (3) days following deposit in the United States mail, postage
prepaid.
(ii) By recognized overnight express delivery: the
Business Day following the day when sent.
(iii) By Hand: If delivered on a Business Day after
9:00 AM and no later than three (3) hours prior to the close of
customary business hours of the recipient, when delivered. Otherwise,
at the opening of the then next Business Day.
(iv) By Facsimile transmission (which must include a
header on which the party sending such transmission is indicated): If
sent on a Business Day after 9:00 AM and no later than three (3) hours
prior to the close of customary business hours of the recipient, one
(1) hour after being sent. Otherwise, at the opening of the then next
Business Day.
Page 127
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due notice
was given shall each be deemed receipt of the notice sent.
18.3. WIRE INSTRUCTIONS. Subject to change in the same manner that a
notice address may be changed (as to which, SEE Section 18.1), wire transfers to
the Administrative Agent shall be made in accordance with the following wire
instructions:
Fleet National Bank
ABA No. ▇▇▇▇▇▇▇▇▇
Acct Name: Fleet Retail Finance Inc.
Acct No. : 530-39952
Reference: Designs, Inc.
ARTICLE 19 - TERM:
19.1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2.6(g) hereof)
until the Termination Date.
19.2. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Loan Parties shall pay the
Administrative Agent (whether or not then due), in immediately available funds,
all then Liabilities including, without limitation: the following:
(i) The entire balance of the Loan Account (including
the unpaid principal balance of the Revolving Credit Loans, SwingLine
Loan and the Tranche B Loan).
(ii) Any then remaining unpaid installments of the
Revolving Credit Commitment Fee.
(iii) Any then remaining unpaid installments of the
Administrative Agent's Monitoring Fee.
(iv) Any payments due on account of the
indemnification obligations included in Section 2.11(e).
(v) Any accrued and unpaid Unused Line Fee.
(vi) Any applicable Revolving Credit Early
Termination Fee.
(vii) All accrued and unpaid interest (including all
accrued and unpaid Tranche B Current Pay Interest and all accrued and
unpaid Tranche B PIK Interest) on the Tranche B Loan.
(viii) Any then remaining unpaid installments of the
Tranche B Commitment
Page 128
Fee and Tranche B Monitoring Fee.
(ix) Any accrued and unpaid Tranche B Early
Termination Fee.
(x) All unreimbursed costs and expenses of each Agent
and of Lenders' Special Counsel for which each Loan Party is
responsible.
(b) On the Termination Date, the Loan Parties shall also shall
make such arrangements concerning any L/C's then outstanding as are reasonably
satisfactory to the Administrative Agent (such as their being cash
collateralized at 103 % of their then Stated Amount).
(c) Until such payment (Section 19.2(a)) and arrangements
concerning L/C's (Section 19.2(b)), all provisions of this Agreement, other than
those included in Article 2 which place any obligation on the Administrative
Agent or any Revolving Credit Lender to make any loans or advances or to provide
any financial accommodations to any Borrower and those included in Article 3
which place any obligation on the Tranche B Lender to make any loan or advance
or to provide any financial accommodation to any Borrower, shall remain in full
force and effect until all Liabilities shall have been paid in full.
(d) The release by the Collateral Agent of the Collateral
Interests granted the Collateral Agent by the Loan Parties hereunder may be upon
such conditions and indemnifications as the Administrative Agent reasonably may
require.
ARTICLE 20 - GENERAL:
20.1. PROTECTION OF COLLATERAL. No Agent has any duty as to the
collection or protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of that Agent.
20.2. PUBLICITY. The Agents (or either of them) and the Tranche B
Lender respectively may issue a "tombstone" notice of the establishment of the
credit facility contemplated by this Agreement and may make reference to each
Loan Party (and may utilize any logo or other distinctive symbol associated with
each Loan Party) in connection with any advertising, promotion, or marketing
undertaken by the Agents (or either of them) and/or by the Tranche B Lender.
20.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrowers' Representative, each Loan Party, and their respective
representatives, successors, and assigns and shall enure to the benefit of each
Agent and each Lender and their respective successors and assigns, PROVIDED,
HOWEVER, no trustee or other fiduciary appointed with respect to any Loan Party
shall have any rights hereunder. In the event that any Agent or any Lender
assigns or transfers its rights under this Agreement, the assignee shall
thereupon succeed to and become vested with all rights, powers, privileges,
Page 129
and duties of such assignor hereunder and such assignor shall thereupon be
discharged and relieved from its duties and obligations hereunder.
20.4. SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
20.5. AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between each Loan Party and each Agent and each
Lender, either express or implied, concerning the matters included herein and in
such other instruments, any custom, usage, or course of dealings to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course
of dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by any Agent or any Lender to give notice to the Borrowers'
Representative of any Loan Party's having failed to observe and comply with any
warranty or covenant included in any Loan Document shall constitute a waiver of
such warranty or covenant or the amendment of the subject Loan Document.
(b) Each Loan Party may undertake any action otherwise
prohibited hereby, and may omit to take any action otherwise required hereby,
upon and with the express prior written consent of the Administrative Agent.
Subject to Article 16, no consent, modification, amendment, or waiver of any
provision of any Loan Document shall be effective unless executed in writing by
or on behalf of the party to be charged with such modification, amendment, or
waiver (and if such party is the Administrative Agent then by a duly authorized
officer thereof). Any modification, amendment, or waiver provided by the
Administrative Agent shall be in reliance upon all representations and
warranties theretofore made to the Administrative Agent by or on behalf of the
Loan Parties (and any other guarantor, endorser, or surety of the Liabilities)
and consequently may be rescinded in the event that any of such representations
or warranties was not true and complete in all material respects when given.
20.6. POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, each Loan Party hereby grants unto the
Administrative Agent (acting through any of its officers) full power to do any
and all things necessary or appropriate in connection with the exercise of such
powers as fully and effectually as that Loan Party might or could do, hereby
ratifying all that said attorney shall do or cause to be done by virtue of this
Agreement. No power of attorney set forth in this Agreement shall be affected by
any disability or incapacity suffered by any Loan Party and each shall survive
the same. All powers conferred upon the Administrative Agent or the Collateral
Agent by this
Page 130
Agreement, being coupled with an interest, shall be irrevocable until this
Agreement is terminated by a written instrument executed by a duly authorized
officer of the Administrative Agent.
20.7. APPLICATION OF PROCEEDS. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the
Administrative Agent determines in its sole discretion, consistent, HOWEVER,
with Sections 14.7 and 14.8 and any other applicable provisions of this
Agreement. The Loan Parties shall remain liable for any deficiency remaining
following such application.
20.8. INCREASED COSTS. If, as a result of any Requirement of Law, or of
the interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof, whether or
not having the force of law, which on and after the Closing Date:
(a) subjects any Lender to any taxes or changes the basis of
taxation, or increases any existing taxes, on payments of principal,
interest or other amounts payable by any Loan Party to the
Administrative Agent or any Lender under this Agreement (except for
taxes on the Administrative Agent or any Lender based on net income or
capital imposed by the jurisdiction in which the principal or lending
offices of the Administrative Agent or that Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held
by, or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of any Lender;
(c). imposes on any Lender any other condition with respect to
any Loan Document; or
(d) imposes on any Lender a requirement to maintain or
allocate capital in relation to the Liabilities;
and the result of any of the foregoing, in such Lender's reasonable opinion, is
to increase the cost to that Lender of making or maintaining any loan, advance
or financial accommodation or to reduce the income receivable by that Lender in
respect of any loan, advance or financial accommodation by an amount which that
Lender deems to be material, then upon written notice from the Administrative
Agent, from time to time, to the Borrowers' Representative (such notice to set
out in reasonable detail the facts giving rise to and a summary calculation of
such increased cost or reduced income), the Loan Parties shall forthwith pay to
the Administrative Agent, for the benefit of the subject Revolving Credit
Lender, upon receipt of such notice, that amount which shall compensate the
subject Lender for such additional cost or reduction in income.
20.9. COSTS AND EXPENSES OF AGENTS AND LENDERS .
Page 131
(a) The Loan Parties shall pay from time to time on demand all
Costs of Collection and all reasonable costs, expenses, and disbursements
(including reasonable attorneys' fees and expenses) which are incurred by each
Agent and by the Tranche B Lender (and the respective Participants with the
Tranche B Lender) in connection with the preparation, negotiation, execution,
and delivery of this Agreement and of any other Loan Documents, and all other
reasonable costs, expenses, and disbursements which may be incurred in
connection with or in respect to the credit facility contemplated hereby or
which otherwise are incurred with respect to the Liabilities.
(b) The Loan Parties shall pay from time to time on demand all
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) incurred by the Lenders to Lenders' Special Counsel.
(c) Each Loan Party authorizes the Administrative Agent to pay
all such fees and expenses and in the Administrative Agent's discretion, to add
such fees and expenses to the Loan Account.
(d) The undertaking on the part of each Loan Party in this
Section 20.9 shall survive payment of the Liabilities and/or any termination,
release, or discharge executed by any Agent in favor of any Loan Party, other
than a termination, release, or discharge which makes specific reference to
this Section 20.9.
20.10. COPIES AND FACSIMILES. Each Loan Document and all documents and
papers which relates thereto which have been or may be hereinafter furnished any
Agent or any Lender may be reproduced by any Lender or by any Agent by any
photographic, microfilm, xerographic, digital imaging, or other process, and
such Person making such reproduction may destroy any document so reproduced. Any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business). Any facsimile which bears proof of transmission shall be binding on
the party which or on whose behalf such transmission was initiated and likewise
shall be so admissible in evidence as if the original of such facsimile had been
delivered to the party which or on whose behalf such transmission was received.
20.11. MASSACHUSETTS LAW. This Agreement and all rights and
obligations hereunder, including matters of construction, validity, and
performance, shall be governed by the law of The Commonwealth of Massachusetts
(without regard to the conflict of laws principles thereof).
20.12. INDEMNIFICATION. The Borrowers' Representative and each Loan
Party shall indemnify, defend, and hold each Agent and each Lender and any of
their respective employees, officers, or agents (each, an "INDEMNIFIED PERSON")
harmless of and from any claim brought or threatened against
Page 132
any Indemnified Person by any Loan Party, any other guarantor or endorser of the
Liabilities, or any other Person (as well as from reasonable attorneys' fees,
expenses, and disbursements in connection therewith) on account of the
relationship of the Borrowers' Representative, the Loan Parties or of any other
guarantor or endorser of the Liabilities, including all costs, expenses,
liabilities, and damages as may be suffered by any Indemnified Person in
connection with (x) the Collateral; (y) the occurrence of any Event of Default;
or (z) the exercise of any rights or remedies under any of the Loan Documents
(each of claims which may be defended, compromised, settled, or pursued by the
Indemnified Person with counsel of the Administrative Agent's selection, but at
the expense of the Borrowers' Representative and the Loan Parties) other than
any claim as to which a final determination is made in a judicial proceeding (in
which the Administrative Agent and any other Indemnified Person has had an
opportunity to be heard), which determination includes a specific finding that
the Indemnified Person seeking indemnification had acted in a grossly negligent
manner or in actual bad faith or wilful misconduct. This indemnification shall
survive payment of the Liabilities and/or any termination, release, or discharge
executed by the Administrative Agent in favor of the Borrowers' Representative
and/or the Loan Parties, other than a termination, release, or discharge duly
executed on behalf of the Administrative Agent which makes specific reference to
this Section 20.12.
20.13. RULES OF CONSTRUCTION. The following rules of construction
shall be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
(a) Unless otherwise specifically provided for herein,
interest and any fee or charge which is stated as a per annum percentage shall
be calculated based on a 360 day year and actual days elapsed.
(b) Words in the singular include the plural and words in the
plural include the singular.
(c) Any reference, herein, to a circumstance or event's having
"more than a DE MINIMIS adverse effect" and any similar reference is to a
circumstance or event which (x) in a well managed enterprise, would receive the
active attention of senior management with a view towards its being reversed or
remedied; or (y) if not reversed or remedied could reasonably be expected to
lead to its becoming a material adverse effect.
(d) Titles, headings (indicated by being UNDERLINED or shown
in SMALL CAPITALS) and any Table of Contents are solely for convenience of
reference; do not constitute a part of the instrument in which included; and do
not affect such instrument's meaning, construction, or effect.
(e) The words "includes" and "including" are not limiting.
(f) Text which follows the words "including, without
limitation" (or similar words) is illustrative and not limitational.
Page 133
(g) Text which is shown in ITALICS (except for parenthesized
italicized text), shown in BOLD, shown IN ALL CAPITAL LETTERS, or in any
combination of the foregoing, shall be deemed to be conspicuous.
(h) The words "may not" are prohibitive and not
permissive.
(i) Any reference to a Person's "knowledge" (or words of
similar import) are to such Person's knowledge assuming that such Person has
undertaken reasonable and diligent investigation with respect to the subject of
such "knowledge" (whether or not such investigation has actually been
undertaken).
(j) Terms which are defined in one section of any Loan
Document are used with such definition throughout the instrument in which so
defined.
(k) The symbol "$" refers to United States Dollars.
(l) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(m) References to "this Agreement" or to any other Loan
Document is to the subject instrument as amended to the date on which
application of such reference is being made.
(n) Except as otherwise specifically provided, all references
to time are to Boston time.
(o) In the determination of any notice, grace, or other
period of time prescribed or allowed hereunder:
(i) Unless otherwise provided (I) the day of the act,
event, or default from which the designated period of time begins to
run shall not be included and the last day of the period so computed
shall be included unless such last day is not a Business Day, in which
event the last day of the relevant period shall be the then next
Business Day and (II) the period so computed shall end at 5:00 PM on
the relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to,
but excluding".
(iv) The word "through" means "to and including".
(p) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section 20.14
hereof, PROVIDED, HOWEVER, in the event of any inconsistency between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall govern and control.
20.14. INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
Page 134
(b) The scope of all Collateral Interests created by any Loan
Party to secure the Liabilities be broadly construed in favor of the
Administrative Agent and that they cover all assets of each Loan Party.
(c) All Collateral Interests created in favor of the
Collateral Agent at any time and from time to time by any Loan Party secure all
Liabilities, whether now existing or contemplated or hereafter arising.
(d) All reasonable costs, expenses, and disbursements incurred
by any Agent, and, to the extent provide in Section 20.9 each Lender, in
connection with such Person's relationship(s) with any Loan Party shall be borne
by the Loan Parties.
(e) Unless otherwise explicitly provided herein, the
Administrative Agent's consent to any action of any Loan Party which is
prohibited unless such consent is given may be given or refused by the
Administrative Agent in its sole discretion and without reference to Section
2.18 hereof.
20.15. PARTICIPATIONS. Each Lender may sell participations to one
or more financial institutions (each, a "PARTICIPANT") in that Lender's
interests herein PROVIDED THAT no such participation shall include any provision
which accords that Participant with any rights, VIS A VIS any Agent, with
respect to any requirement herein for approval by a requisite number or
proportion of the Lenders, but PROVIDED FURTHER, such participation, if in the
Tranche B Loan, may be on such "voting" rights between that Lender and its
Participant as the two may determine. No such sale of a participation shall
relieve a Lender from that Lender's obligations hereunder nor obligate any Agent
to any Person other than a Lender.
20.16. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Loan Party from any Agent or any Lender or any
Participant or from any Affiliate of any of the foregoing, and any cash,
securities, instruments or other property of any Loan Party in the possession of
any of the foregoing, whether for safekeeping or otherwise (regardless of the
reason such Person had received the same) to the extent permitted by law, shall
at all times constitute security for all Liabilities and for any and all
obligations of each Loan Party to each Agent and such Lender or any Participant
or such Affiliate and following the occurrence of an Event of Default may be
applied or set off against the Liabilities and against such obligations at any
time, whether or not such are then due and whether or not other collateral is
then available to any Agent or that Lender.
20.17. PLEDGES TO FEDERAL RESERVE BANKS: Nothing included in this
Agreement shall prevent or limit any Lender, to the extent that such Lender is
subject to any of the twelve Federal Reserve Banks organized under ss.4 of the
Federal Reserve Act (12 U.S.C. ss.341) from pledging all or any portion of that
Page 135
Lender's interest and rights under this Agreement, PROVIDED, HOWEVER, neither
such pledge nor the enforcement thereof shall release the pledging Lender from
any of its obligations hereunder or under any of the Loan Documents.
20.18. MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither any Agent nor any Lender shall be entitled to contract for,
charge, receive, collect, or apply as interest on any Liability, any amount in
excess of the maximum rate imposed by Applicable Law. Any payment which is made
which, if treated as interest on a Liability would result in such interest's
exceeding such maximum rate shall be held, to the extent of such excess, as
additional collateral for the Liabilities as if such excess were "Collateral."
20.19. WAIVERS.
(a) The Borrowers' Representative and each Loan Party (and all
guarantors, endorsers, and sureties of the Liabilities) make each of the waivers
included in Section 20.19(b), below, knowingly, voluntarily, and intentionally,
and understands that each Agent and each Lender, in establishing the facilities
contemplated hereby and in providing loans and other financial accommodations to
or for the account of the Loan Parties as provided herein, whether not or in the
future, is relying on such waivers.
(b) THE BORROWERS' REPRESENTATIVE, EACH LOAN PARTY, AND EACH
SUCH GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby,
notice of non-payment, demand, presentment, protest and all forms of
demand and notice, both with respect to the Liabilities and the
Collateral.
(ii) Except as otherwise specifically required
hereby, the right to notice and/or hearing prior to an Agent's
exercising of that Agent's rights upon default.
(III) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH ANY AGENT OR ANY LENDER IS OR BECOMES A PARTY
(WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY AGENT
OR ANY LENDER OR IN WHICH ANY AGENT OR ANY LENDER IS JOINED AS A PARTY
LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF,
ANY RELATIONSHIP AMONGST OR BETWEEN THE BORROWERS' REPRESENTATIVE, ANY
LOAN PARTY OR ANY OTHER PERSON AND THE AGENT AND EACH LENDER LIKEWISE
WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR
CONTROVERSY).
(iv) Except for manifest error, any defense,
counterclaim, set-off, recoupment, or other basis on which the amount
of any Liability, as stated on the books and
Page 136
records of the Administrative Agent or any Lender, could be reduced or
claimed to be paid otherwise than in accordance with the tenor of and
written terms of such Liability.
(v) Any claim to consequential, special, or
punitive damages.
Page 137
THE BORROWERS' REPRESENTATIVE
DESIGNS, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
BORROWERS
DESIGNS, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
DESIGNS APPAREL, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
FLEET RETAIL FINANCE INC.
By_________________________________
Print Name:________________________________
Title:________________________________
TRANCHE B LENDER
BACK BAY CAPITAL FUNDING LLC
By_________________________________
Print Name:________________________________
Title:________________________________
Signature Page 1
THE REVOLVING CREDIT LENDERS:
FLEET RETAIL FINANCE INC.
By_________________________________
Name:________________________________
Title:________________________________
▇▇▇▇▇▇ FINANCIAL, INC.
(CO-DOCUMENTATION AGENT AND REVOLVING CREDIT LENDER)
By_________________________________
Name:________________________________
Title:________________________________
NATIONAL CITY COMMERCIAL FINANCE, INC.
(CO-DOCUMENTATION AGENT AND REVOLVING CREDIT LENDER)
By_________________________________
Name:________________________________
Title:________________________________
▇▇▇▇▇ FARGO RETAIL FINANCE LLC
(SYNDICATION AGENT AND REVOLVING CREDIT LENDER)
By_________________________________
Name:________________________________
Title:________________________________
Signature Page 2
Signature Page 3