9/26/97 - execution
LOAN AND SECURITY AGREEMENT
by and among
EDISON BROTHERS STORES, INC.
EDISON BROTHERS APPAREL STORES, INC.
EDISON PUERTO RICO STORES, INC.
as Borrowers
and
THE GUARANTORS NAMED HEREIN
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders
CONGRESS FINANCIAL CORPORATION
as Agent
THE CIT GROUP/BUSINESS CREDIT, INC.
as Co-Agent
Dated: As of September 26, 1997
TABLE OF CONTENTS
SECTION 1. DEFINITIONS 2
SECTION 2. CREDIT FACILITIES 18
2.1 Loans 18
2.2 Letter of Credit Accommodations 19
2.3 Commitments 22
2.4 Joint and Several Liability 22
SECTION 3. INTEREST AND FEES 23
3.1 Interest 23
3.2 Closing Fee 24
3.3 Servicing Fee 25
3.4 Co-Agent's Fee 25
3.5 Unused Line Fee 25
3.6 Syndication Fee 25
3.7 Changes in Laws and Increased Costs of Loans 25
SECTION 4. CONDITIONS PRECEDENT 26
4.1 Conditions Precedent to Initial Loans and Letter of
Credit Accommodations 26
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations 29
SECTION 5. SECURITY INTEREST 30
SECTION 6. COLLECTION AND ADMINISTRATION 30
6.1 Borrowers' Loan Account 30
6.2 Statements 31
6.3 Collection of Proceeds 31
6.4 Payments and Prepayments 33
6.5 Sharing of Payments, Etc. 34
6.6 Authorization to Make Loans 36
6.7 Settlement Procedures 36
6.8 Use of Proceeds 38
SECTION 7. COLLATERAL REPORTING AND COVENANTS 38
7.1 Collateral Reporting 38
7.2 Receivables Covenants 40
7.3 Inventory Covenants 41
7.4 Power of Attorney 42
7.5 Right to Cure 43
7.6 Access to Premises 43
SECTION 8. REPRESENTATIONS AND WARRANTIES 44
8.1 Corporate Existence, Power and Authority; Subsidiaries
44
8.2 Financial Statements; No Material Adverse Change. 44
8.3 Chief Executive Office; Collateral Locations. 45
8.4 Priority of Liens; Title to Properties 45
8.5 Tax Returns 45
8.6 Litigation 45
8.7 Intellectual Property 46
8.8 Compliance with Other Agreements and Applicable Laws
46
8.9 Environmental Compliance 47
8.10 Governmental Authority 47
8.11 Credit Card Agreements 48
8.12 Employee Benefits 48
8.13 Bank Accounts 49
8.14 Customs Brokers 49
8.15 Interrelated Businesses 49
8.16 Capitalization 49
8.17 Plan 50
8.18 Accuracy and Completeness of Information. 50
8.19 Survival of Warranties; Cumulative 51
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 51
9.1 Maintenance of Existence 51
9.2 New Collateral Locations 51
9.3 Compliance with Laws, Regulations, Etc 52
9.4 Payment of Taxes and Claims 52
9.5 Insurance 52
9.6 Financial Statements and Other Information 53
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc
56
9.8 Encumbrances 61
9.9 Indebtedness 62
9.10 Loans, Investments, Guarantees, Etc 70
9.11 Dividends; Redemptions; Issuance of Capital Stock 73
9.12 Transactions with Affiliates 74
9.13 Credit Card Agreements 74
9.14 Net Worth 75
9.15 Compliance with ERISA 75
9.16 Additional Bank Accounts 76
9.18 Costs and Expenses 76
9.19 Further Assurances 77
SECTION 10. EVENTS OF DEFAULT AND REMEDIES 77
10.1 Events of Default 77
10.2 Remedies 80
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW 81
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver 81
11.2 Waiver of Notices 82
11.3 Amendments and Waivers 83
11.4 Waiver of Counterclaims 84
11.5 Indemnification 84
SECTION 12. THE AGENT 85
12.1 Appointment, Powers and Immunities 85
12.2 Reliance by Agent 86
12.3 Events of Default 86
12.4 Rights as a Lender 86
12.5 Indemnification 87
12.6 Non-Reliance on Agent and Other Lenders 87
12.7 Failure to Act 88
12.8 Successor Agent. 88
12.9 Withholding Tax 88
12.10 Additional Loans 90
12.11 Concerning the Collateral and the Related Financing
Agreements 90
12.12 Field Audit and Examination Reports; Disclaimer by
Lenders 90
12.13 Collateral Matters 91
12.14 Agency for Perfection 92
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS 93
13.1 Term 93
13.2 Notices 95
13.3 Partial Invalidity 95
13.4 Successors 95
13.5 Assignments; Participations. 96
13.6 Confidentiality 98
13.7 Entire Agreement 99
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated as of September 26, 1997 is
entered into by and among Edison Brothers Stores, Inc., a Delaware
corporation ( Edison ), Edison Brothers Apparel Stores, Inc., a Missouri
corporation ( Edison Apparel ), Edison Puerto Rico Stores, Inc., a Puerto
Rico corporation ( Edison Puerto Rico , and together with Edison and Edison
Apparel, individually, a Borrower and collectively, Borrowers , as
hereinafter further defined), the other persons signatories hereto as
guarantors (individually, a Guarantor and collectively, Guarantors , as
hereinafter further defined), the financial institutions from time to time
parties hereto as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (individually, a Lender and collectively, the
Lenders , as hereinafter further defined), Congress Financial Corporation,
a California corporation, in its capacity as administrative agent and
collateral agent for the Lenders (in such capacity, the Agent ) and The
CIT Group/Business Credit, Inc., a New York corporation, in its capacity as
co-agent for the Lenders (in such capacity, the Co-Agent ).
W I T N E S S E T H:
WHEREAS, on or about November 3, 1995, Borrowers and Guarantors each
filed a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (as hereinafter defined) in the United States Bankruptcy Court for the
District of Delaware (the Chapter 11 Cases , as hereinafter further
defined); and
WHEREAS, pursuant to the order of the United States Bankruptcy Court
for the District of Delaware entered on November 29, 1995 in the Chapter 11
Cases, Borrowers, as debtors and debtors-in-possession under Chapter 11 of
the Bankruptcy Code, entered into post-petition financing arrangements with
a syndicate of financial institutions for which BankAmerica Business
Credit, Inc. acted as agent (the BABC DIP Facility ; as hereinafter
further defined); and
WHEREAS, pursuant to the order of the United States Bankruptcy Court
for the District of Delaware, the Plan (as defined herein) has been
confirmed, and concurrently with the making of the initial loans or
issuance of letters of credit hereunder, the Effective Date (as defined
therein) with respect to the Plan has occurred; and
WHEREAS, each of Lenders is willing to agree severally and not jointly
to make loans and provide other financial accommodations to Borrowers on a
pro rata basis according to its Commitment (as defined below), on the terms
and conditions set forth herein and Agent is willing to act as agent for
Lenders, on the terms and conditions set forth herein and the other
Financing Agreements (as defined below);
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein
shall also mean the singular and to the singular shall also mean the plural
unless the context otherwise requires. The words hereof , herein ,
hereunder , this Agreement and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced. The word including when used in this Agreement shall mean
including, without limitation . The words ratable or ratably or words
of similar import when used in this Agreement shall refer to a sharing or
allocation based on the respective Pro Rata Shares of Lenders. An Event of
Default shall exist or continue or be continuing until such Event of
Default is waived in accordance with Section 11.3 or if capable of being
cured as reasonably determined by Agent, is cured. Any accounting term
used herein unless otherwise defined in this Agreement shall have the
meaning customarily given to such term in accordance with GAAP. For
purposes of this Agreement, the following terms shall have the respective
meanings given to them below:
1.1 Accounts shall mean each Borrower's right to payment for a sale
or lease and delivery of goods or rendition of services, whether or not
evidenced by instruments or chattel paper, and whether or not earned by
performance and including, without limitation, Credit Card Receivables.
1.2 Adjusted Eurodollar Rate shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one percent
(1%)) determined by dividing (a) the Eurodollar Rate for such Interest
Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, Reserve Percentage shall mean the
reserve percentage, expressed as a decimal, prescribed by any United States
or foreign banking authority for determining the reserve requirement which
is or would be applicable to deposits of United States dollars in a non-
United States or an international banking office of Reference Bank used to
fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the
proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
1.3 Affiliate shall mean, as to any specified Person, any other
Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person. For purposes of this definition, control (including
with correlative meanings, the terms controlling , controlled by and
under common control with ), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to effectively direct
or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise.
1.4 Agent Advances shall have the meaning set forth in Section 12.13
hereof.
1.5 Assignment and Acceptance shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with
blanks appropriately completed) delivered to the Agent in connection with
an assignment of a Lender's interest hereunder in accordance with the
provisions of Section 13.5 below.
1.6 Availability shall mean, at any time, the lesser of (a) the
amount of the Loans which would be available to Borrowers as of such time
based on the applicable lending formulas set forth in Section 2.1(a)
hereof, as determined by Agent, and subject to Availability Reserves
established at such time hereunder (without regard to the then outstanding
Loans and Letter of Credit Accommodations) and (b) the Maximum Credit. The
term Availability is used herein to mean the amount of Loans available
without reduction for the amount of Loans and Letter of Credit
Accommodations then outstanding.
1.7 Availability Reserves shall mean, as established and revised by
Agent in good faith from time to time, (i) reserves, in Agent's reasonable
discretion, for accrued interest on Loans and accrued fees in respect of
the Letter of Credit Accommodations; (ii) reserves for rebates due
Borrowers and Guarantors on Inventory purchases made by Borrowers and
Guarantors and reserves for shrinkage of inventory to the extent (if any)
such shrinkage is not otherwise provided for in the calculation of
Availability in the Borrowing Base Certificate in a manner satisfactory to
Agent; (iii) other reserves which Agent in its reasonable discretion deems
necessary or desirable to maintain with respect to the loan account of
Borrowers as disclosed to Edison as of the date hereof and all other
reserves hereafter established or revised by Agent in good faith, after
prior notice to Edison (which reserves shall be in amounts having a
reasonable relationship to the event, condition or other matter which is
the basis for it as determined by Agent in good faith), (A) to reflect
events, conditions or circumstances that, as determined by Agent in good
faith, adversely affect or have a reasonable likelihood of adversely
affecting either: (1) the Collateral or any other property which is
security for the Obligations or its value, (2) the security interests and
other rights of Agent or any Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (3) the assets,
financial condition or business of Borrowers and Guarantors taken as a
whole (but not any economic events related to the general state of the
world economy or U.S. economy or the retail apparel industry); (iv) other
reserves hereafter established or revised by Agent, after prior notice to
Edison, which Agent in its reasonable discretion deems necessary or
desirable to maintain in respect of any state of facts which Agent
determines in good faith constitutes an Event of Default or would, with
notice or passage of time or both, constitute an Event of Default, or to
reflect the Agent's good faith belief that any collateral report or
financial information furnished by or on behalf of any Borrower or
Guarantor to Agent or any Lender is incomplete, inaccurate or misleading;
and (v) reserves to reflect outstanding Letter of Credit Accommodations as
provided in Section 2.2 hereof. To the extent Agent may revise the lending
formula set forth in Section 2.1 hereof so as to address any event,
condition or circumstance in a manner satisfactory to Agent, Agent shall
not establish an Availability Reserve for the same purpose.
1.8 BABC shall mean BankAmerica Business Credit, Inc., a Delaware
corporation, and its successors and assigns.
1.9 BABC DIP Facility shall mean the credit facility provided to
Edison and Edison Apparel, each as a debtor-in-possession during the
pendency of the Chapter 11 Cases, by certain financial institutions for
whom BABC acts as agent pursuant to the Loan and Security Agreement, dated
November 9, 1995, by and among the financial institutions parties thereto
as lenders, BABC as agent for such lenders, Borrowers and Guarantors.
1.10 Bankruptcy Code shall mean the United States Bankruptcy Code,
being Title 11 of the United States Code, as the same now exists or may
from time to time hereafter be amended, modified, recodified or
supplemented, together with all official rules thereunder or related
thereto.
1.11 Bankruptcy Court shall mean the United States District Court
for the District of Delaware having jurisdiction over the Chapter 11 Cases
and, to the extent of any reference under Section 157 of Title 28 of the
United States Code, the unit of such District Court under Section 151 of
Title 28 of the United States Code.
1.12 Borrowers shall mean individually and collectively, jointly and
severally, Edison Brothers Stores, Inc., a Delaware corporation, Edison
Brothers Apparel Stores, Inc., a Missouri corporation, Edison Puerto Rico
Stores, Inc., a Puerto Rico corporation, and their respective successors
and assigns, in each case as successors to Edison Brothers Stores, Inc., as
debtor and debtor-in-possession, Edison Brothers Apparel Stores, Inc., as
debtor and debtor-in-possession, and Edison Puerto Rico Stores, Inc., as
debtor and debtor-in-possession, respectively under the Chapter 11 Cases,
being sometimes individually referred to herein as a Borrower .
1.13 Borrowing Base Certificate shall mean a certificate
substantially in the form of Exhibit B hereto, as such form may from time
to time be modified by Edison, with the prior consent of Agent, or by
Agent, with the prior consent of Edison, which is duly completed (including
all schedules thereto) and executed by the chief financial officer or other
appropriate financial officer of Edison acceptable to Agent and delivered
to Agent.
1.14 Business Day shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close
under the laws of the State of New York or the Commonwealth of
Pennsylvania, and a day on which the Reference Bank and Agent are open for
the transaction of business, except that if a determination of a Business
Day shall relate to any Eurodollar Rate Loans, the term Business Day shall
also exclude any day on which banks are closed for dealings in dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market.
1.15 Capital Leases shall mean, as applied to any Person, any leases
of (or any agreement conveying the right to use) any property (whether
real, personal or mixed) by such Person as lessee which, in accordance with
GAAP, is required to be capitalized and accounted for as a capital lease.
1.16 Capital Stock shall mean any and all shares, interests,
participations, or other equivalents (however designated) of corporate
stock, partnership interests or limited liability company interests and any
options or warrants with respect to any of the foregoing.
1.17 Cash Distribution Pool shall have the meaning set forth in the
Plan as in effect on the date hereof.
1.18 Cash Equivalents shall mean investments of the type described
on Schedule 1.18 hereto.
1.19 Change of Control shall have the meaning set forth on Schedule
1.19 hereto.
1.20 Chapter 11 Cases shall mean the cases under Chapter 11 of the
Bankruptcy Code commenced by Borrowers and Guarantors, styled In re Edison
Brothers Stores, Inc., et al., Chapter 11 Case No. 95-1354 (PJW) Jointly
Administered, filed in the Bankruptcy Court on or about November 3, 1995.
1.21 CIT shall mean The CIT Group/Business Credit, Inc., a New York
corporation, in its individual capacity, and its successors and assigns.
1.22 Code shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations of the Internal Revenue Service thereunder or related
thereto.
1.23 Collateral shall have the meaning set forth in Section 5
hereof.
1.24 Commitment shall have the meaning set forth in Section 2.3
hereof.
1.25 Commitment Percentage shall mean, as to each Lender, the
percentage of the Maximum Credit provided for hereunder represented by such
Lender's Commitment. The Commitment Percentage of each Lender signing this
Agreement is set forth on the signature pages hereto below each Lender's
signature.
1.26 Concentration Accounts shall mean, collectively, the Store
Concentration Account and the Credit Card Concentration Account.
1.27 Confirmation Order shall mean the Order Confirming the Plan
entered by the Bankruptcy Court on September 9, 1997, in the Chapter 11
Cases.
1.28 Congress shall mean Congress Financial Corporation, a
California corporation, in its individual capacity, and its successors and
assigns.
1.29 Cost shall mean, as to the Inventory as of any date, the cost
of such Inventory as of such date, determined principally using the first-
in-first-out method and the retail inventory method or average cost
(consistent with current practice of Borrowers and Guarantors as of the
date hereof) in accordance with GAAP.
1.30 Credit Card Acknowledgments shall mean, individually and
collectively, the agreements by Credit Card Issuers or Credit Card
Processors who are parties to Credit Card Agreements in favor of Agent
acknowledging Agent's first priority security interest in the monies due
and to become due to any Borrower or Guarantor (including, without
limitation, credits and reserves) under the Credit Card Agreements, and
agreeing to transfer such amounts to the Credit Card Concentration Account
established for such purposes, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.31 Credit Card Agreements shall mean all agreements now or
hereafter entered into by any Borrower or Guarantor with any Credit Card
Issuer or any Credit Card Processor, as the same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or
replaced, including, but not limited to, the agreements set forth on
Schedule 8.11 hereto.
1.32 Credit Card Concentration Account shall mean account no.
10022188164 maintained by and in the name of Edison at Mercantile Bank of
St. Louis National Association or such other deposit account as Edison may
hereafter establish and maintain at the same or any other depository bank
in accordance with Section 9.16 hereof to which amounts payable to any
Borrower or Guarantor constituting Proceeds of Credit Card Receivables are
sent.
1.33 Credit Card Issuer shall mean any person (other than any
Borrower or Guarantor) who issues or whose members issue credit cards,
including, without limitation, MasterCard or VISA bank credit or debit
cards or other bank credit or debit cards issued through MasterCard
International, Inc., Visa, U.S.A., Inc. or Visa International and American
Express, Discover, Diners Club, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and other non-bank credit or
debit cards, including, without limitation, credit or debit cards issued by
or through American Express Travel Related Services Company, Inc. and Novus
Services, Inc.
1.34 Credit Card Processor shall mean any servicing or processing
agent or any factor or financial intermediary who facilitates, services,
processes or manages the credit authorization, billing transfer and/or
payment procedures with respect to sales transactions of any Borrower or
Guarantor involving credit card or debit card purchases by customers using
credit cards or debit cards issued by any Credit Card Issuer (including,
but not limited to National Processing Company and National City Bank of
Kentucky).
1.35 Credit Card Receivables shall mean collectively, (a) all
present and future rights of each Borrower to payment from any Credit Card
Issuer, Credit Card Processor or other third party arising from sales of
goods or rendition of services to customers who have purchased such goods
or services using a credit or debit card and (b) all present and future
rights of each Borrower to payment from any Credit Card Issuer, Credit Card
Processor or other third party in connection with the sale or transfer of
Accounts arising pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a credit card or
a debit card, including, but not limited to, all amounts at any time due or
to become due from any Credit Card Issuer or Credit Card Processor under
the Credit Card Agreements or otherwise.
1.36 Customs Broker shall mean any customs broker or similar persons
used by any Borrower or Guarantor for the purpose of assisting,
facilitating and arranging for Inventory to be shipped or delivered to
Borrowers and Guarantors who may at any time have custody, control or
possession of any bills of lading or other documents of title with respect
to goods purchased by Borrowers or Guarantors, provided, that, the term
Customs Broker shall not be construed to include common carriers used by
any Borrower or Guarantor in the United States for transporting goods
within the United States.
1.37 Edbro Missouri shall mean Edbro Missouri Realty Company, Inc.,
a Missouri corporation and its successors and assigns.
1.38 Edbro Missouri Facility shall mean the warehouse and
distribution facility owned by Edbro Missouri located at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.39 Effective Date shall have the meaning given to such term in the
Plan as in effect on the date hereof.
1.40 Eligible Inventory shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the businesses of Borrowers
that:
(a) is not, in Agent's reasonable judgment, obsolete or
unmerchantable;
(b) upon which Agent, for itself and the ratable benefit of
Lenders, has a first priority perfected security interest as to which Agent
has received such proof as Agent may require as to such perfection and
priority;
(c) is either (i) located at premises owned by or leased to a
Borrower or Guarantor or (ii) on premises otherwise reasonably acceptable
to Agent or (iii) is in transit in the United States to a location of
Borrowers in the United States if Agent has a first priority security
interest therein or (iv) is outside of the United States and in transit to
a location of Borrowers in the United States if Agent has a first priority
security interest in and control of the documents of title covering such
goods (whether through a Customs Broker or otherwise) and so long as no
Letter of Credit Accommodation is outstanding with respect thereto;
(d) Agent otherwise deems eligible as the basis for Loans and
Letter of Credit Accommodations based on such other credit and collateral
considerations as Agent may from time to time establish in its sole
discretion; and
(e) is not subject to a lien, security interest or other
encumbrance in favor of any issuer or provider of Letter of Credit
Accommodations (other than Agent).
Without intending to limit Agent's discretion to establish other criteria
of eligibility, Inventory located outside of the United States (other than
the in-transit Inventory to the extent provided above), piece-work,
packaway inventory, packaging and shipping material, supplies, ▇▇▇▇ and
hold Inventory, non-first quality returned Inventory, defective Inventory,
raw materials, work-in-process, excess or slow moving Inventory or
Inventory delivered to any Borrower on consignment shall not constitute
Eligible Inventory.
1.41 Environmental Laws shall mean all foreign, Federal, State,
Provincial and local laws (including common law), legislation, rules,
codes, licenses, permits (including any conditions imposed therein),
authorizations, judicial or administrative decisions, injunctions or
agreements between any Borrower or Guarantor and any Governmental
Authority, (a) relating to pollution and the protection, preservation or
restoration of the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use,
storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to
all laws with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials. The term
Environmental Laws includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act
of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking
Water Act of 1974, (ii) applicable state counterparts to such laws, and
(iii) any common law or equitable doctrine that may impose liability or
obligations for injuries or damages due to, or threatened as a result of,
the presence of or exposure to any Hazardous Materials.
1.42 ERISA shall mean the Employee Retirement Income Security Act of
1974, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations
and interpretations of the Internal Revenue Service thereunder or related
thereto.
1.43 ERISA Affiliate shall mean any person required to be aggregated
with Edison or any of its Subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.44 Eurodollar Rate shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one percent (1%)) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by a Borrower
and approved by Agent) on or about 9:00 a.m. (New York time) two (2)
Business Days prior to the commencement of such Interest Period in amounts
substantially equal to the principal amount of the Eurodollar Rate Loans
requested by and available to such Borrower in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by such Borrower.
1.45 Eurodollar Rate Loans shall mean any Loans or portion thereof
on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.46 Excess Availability shall mean the amount, as determined by
Agent, calculated at any time, equal to: (a) the Availability at such time,
minus (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations, plus (ii) the aggregate amount of all trade payables of
Borrowers which are more than thirty (30) days past due as of such time,
plus (iii) the amount of checks issued by Borrowers to pay trade payables,
but not yet sent and the book overdraft of Borrowers.
1.47 Existing Letters of Credit shall mean the letters of credit
outstanding on the date hereof issued by Bank of America, N.T. & S.A. for
the account of any Borrower pursuant to the BABC DIP Facility.
1.48 Event of Default shall have the meaning set forth in Section
10.1 hereof.
1.49 Financing Agreements shall mean, collectively, this Agreement
and all notes, guarantees, security agreements and other agreements,
documents and instruments now or at any time hereafter executed and/or
delivered by any Borrower or Guarantor in connection with this Agreement,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.50 Funding Escrow Agent shall mean Mercantile Trust Company, N.A.
and its successors and assigns, as escrow agent appointed pursuant to
Section 5.2 of the Plan.
1.51 Funding Escrow Properties shall mean the real property owned by
certain of Borrowers and Guarantors described on Schedule 1.51 hereto.
1.52 GAAP shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which are
applicable to the circumstances as of the date of determination
consistently applied, provided that if any change in generally accepted
accounting principles after the date hereof, in itself materially affects
the calculation of compliance with the financial covenant in
Section 9.14 hereof, Borrowers may by notice to Agent, or Agent may, or at
the request of Majority Lenders shall, by notice to Edison require that
such covenant thereafter be calculated in accordance with generally
accepted accounting principles as in effect, and applied by Borrowers,
immediately before such change in generally accepted accounting principles
occurred. If such notice is given, the compliance certificates delivered
pursuant to Section 9.6(a) hereof after such change occurs shall be
accompanied by reconciliations of the difference between the calculation
set forth therein and a calculation made in accordance with generally
accepted accounting principles as in effect from time to time after such
change occurs.
1.53 Governmental Authority shall mean the United States of America,
any State of the United States of America, any foreign government, or a
local municipality or other political subdivision or any body, department,
authority, agency, public corporation or instrumentality of any of the
foregoing.
1.54 Guarantors shall mean each of the Subsidiaries of Edison set
forth on Schedule 1.54 hereto and any other Person at any time hereafter
liable on or in respect of the Obligations, and their respective successors
and assigns, sometimes being individually referred to herein as a
Guarantor .
1.55 Hazardous Materials shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including, without limitation,
hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of
pollutants or contaminants (including, without limitation, materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under
any Environmental Law (including, without limitation, any that are or
become classified as hazardous or toxic under any Environmental Law).
1.56 Indebtedness shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof) or evidenced by bonds, notes,
debentures or similar instruments; (b) representing the balance deferred
and unpaid of the purchase price of any property or services (except any
such balance that constitutes an account payable to a trade creditor
(whether or not an Affiliate) created, incurred, assumed or guaranteed by
such Person in the ordinary course of business of such Person in connection
with obtaining goods, materials or services that is not overdue by more
than ninety (90) days, unless the trade payable is being diligently
contested in good faith); (c) all obligations as lessee under leases which
have been, or should be, in accordance with GAAP recorded as Capital
Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in
this definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, endorsed (other than for
collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by such Person, or in respect of which
such Person is otherwise directly or indirectly liable, including,
contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for
the payment or discharge thereof (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make
payment other than for value received; (e) all obligations with respect to
redeemable stock and redemption or repurchase obligations under any Capital
Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other similar liabilities of such Person with
respect to surety bonds (whether bid, performance or otherwise), letters of
credit, banker's acceptances or similar documents or instruments issued for
such Person's account (including, without limitation steamship or airway
guarantees, indemnities or releases); (g) all indebtedness of such Person
in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which
is secured by any consensual lien, security interest, collateral
assignment, conditional sale, mortgage, deed of trust, or other encumbrance
on any asset of such Person, whether or not such obligations, liabilities
or indebtedness are assumed by or are a personal liability of such Person,
all as of such time; and (h) all obligations, liabilities and indebtedness
of such Person (marked to market) consisting of hedging obligations (on a
net basis).
1.57 Interest Period shall mean, as to a Borrower, for any
Eurodollar Rate Loan, a period of approximately one (1), two (2), or three
(3) months duration as such Borrower may elect, the exact duration to be
determined in accordance with the customary practice in the applicable
Eurodollar Rate market; provided, that, no Borrower may elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
1.58 Interest Rate shall mean, as to Prime Rate Loans, the Prime
Rate per annum and, as to Eurodollar Rate Loans, a rate of two and one-
quarter percent (2 1/4%) per annum in excess of the Adjusted Eurodollar
Rate (based on the Eurodollar Rate applicable for the Interest Period
selected by a Borrower as in effect three (3) Business Days after the date
of receipt by Agent of the request of such Borrower for such Eurodollar
Rate Loans in accordance with the terms hereof, whether such rate is higher
or lower than any rate previously quoted to such Borrower); provided, that;
the Interest Rate shall be increased to the rate of two percent (2%) per
annum in excess of the Prime Rate as to Prime Rate Loans and the rate of
four and one-quarter percent (4 1/4%) per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Agent's option, without
notice, for the period on and after (a) the date of termination hereof and
until such time as all Obligations are indefeasibly paid in full
(notwithstanding entry of any judgment against such Borrower), or (b) the
date of the occurrence of any Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, and for so long as such Event of Default or other act, condition
or event is continuing.
1.59 Inventory shall mean all of each Borrower's now owned and
hereafter acquired inventory, goods, merchandise, and other personal
property, wherever located, to be furnished by such Borrower under any
contract of service or held for sale or lease, all raw materials, work-in-
process, finished goods, returned and repossessed goods, and materials and
supplies of any kind, nature or description which are or might be used or
consumed in such Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such
inventory, goods, merchandise and such other personal property, and all
documents of title or other documents representing them.
1.60 Issuing Banks shall mean CoreStates Bank, N.A. or any of its
branches or Affiliates and their respective successors and assigns.
1.61 Lenders shall mean the financial institutions who are
signatories hereto as lenders and other persons made a party to this
Agreement as Lenders in accordance with Section 13.5 hereof, and their
respective successors and assigns.
1.62 Letter of Credit Accommodations shall mean the letters of
credit, merchandise purchase guaranties or other guaranties which are from
time to time either (a) issued or opened by Agent or any Lender for the
account of a Borrower or any Guarantor or (b) with respect to which Agent
on behalf of Lenders has agreed to indemnify the issuer or guaranteed to
the issuer the performance by a Borrower or any Guarantor of its
obligations to such issuer (including, without limitation, the Existing
Letters of Credit).
1.63 Loans shall mean the loans now or hereafter made to or for the
benefit of Borrowers by Lenders or, at Agent's option, by Agent for the
ratable account of Lenders, on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.64 Majority Lenders shall mean as of any date of determination
thereof, Lenders holding more than fifty percent (50%) of the aggregate
outstanding principal amount of Loans and outstanding Letter of Credit
Accommodations, or, if there are no Loans or Letter of Credit
Accommodations outstanding, then such term shall mean Lenders having
aggregate Commitment Percentages of more than fifty percent (50%).
1.65 Material Adverse Effect shall mean (a) a material adverse
change in, or a material adverse effect upon (i) the Collateral or (ii) the
operations, business, properties, condition (financial or otherwise) or
prospects of Edison and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of Borrowers and Guarantors (taken as a whole) to
perform under any of the Financing Agreements and to avoid any Event of
Default; (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against Edison or any of its Subsidiaries of any
of the Financing Agreements; or (d) a material adverse effect upon the
perfection or priority of the security interests and liens of Agent upon
the Collateral or any other property which is security for the Obligations.
1.66 Maturity Date shall have the meaning set forth in Section 13.1
hereof.
1.67 Maximum Credit shall mean $200,000,000.
1.68 Net Recovery Cost Percentage shall mean the fraction, expressed
as a percentage, (a) the numerator of which is the amount equal to the
recovery on the aggregate amount of the Inventory at such time on a going
out of business sale basis as set forth in the most recent acceptable
appraisal of Inventory received by Agent in accordance with Section 7.3,
net of operating expenses, liquidation expenses and commissions with
respect to such sale, and (b) the denominator of which is the Cost of the
aggregate amount of the Inventory subject to such appraisal.
1.69 Net Recovery Retail Percentage shall mean the fraction,
expressed as a percentage, (a) the numerator of which is the amount equal
to the recovery on the aggregate amount of the Inventory at such time on a
going out of business sale basis as set forth in the most recent
acceptable appraisal of Inventory received by Agent in accordance with
Section 7.3, net of operating expenses, liquidation expenses and
commissions with respect to such sale, and (b) the denominator of which is
the Retail Value of the aggregate amount of the Inventory subject to such
appraisal.
1.70 Net Worth shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on
a consolidated basis for such Person and its subsidiaries (if any), the
amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its subsidiaries, calculating the book value
of inventory for this purpose principally on a first-in-first-out basis, at
(i) the lower of cost or market using the first-in-first-out method and the
retail inventory method or (ii) stating the inventory at the lower of cost,
mainly average cost, or market based principally on anticipated realizable
values, consistent with current practice as of the date hereof, after
deducting from such book values all appropriate reserves in accordance with
GAAP (including all reserves for doubtful receivables, obsolescence,
depreciation and amortization) and (b) the aggregate amount of the
indebtedness and other liabilities of such Person and its subsidiaries
(including tax and other proper accruals).
1.71 New Note Indenture shall mean the Indenture, dated as of
September 26, 1997, by and between Edison, as issuer, and The Bank of New
York, as trustee, with respect to the New Notes, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.72 New Notes shall mean, collectively, the 11% Notes due 2007
issued by Edison in the aggregate principal amount of $120,000,000 (since
Edison has elected on or before the Effective Date to reduce certain cash
to be paid into the Cash Distribution Pool pursuant to Section 1.15 of the
Plan (as in effect on the date hereof), so that the principal amount of the
New Notes has been increased from $100,000,000 to $120,000,000), pursuant
to the terms of the New Note Indenture, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.73 Non-Guarantor Subsidiary shall mean any Subsidiary of Edison
which is not a Guarantor.
1.74 Obligations shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by any or all of Borrowers to
Agent or any Lender, and including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under or in connection with this
Agreement or any of the other Financing Agreements, whether now existing or
hereafter arising, whether arising before, during or after the initial or
any renewal term of this Agreement, or before, during and after the
Effective Date or the confirmation of the Plan in the Chapter 11 Cases or
the reopening of the Chapter 11 Cases (including, without limitation, the
payment of interest and other amounts owed by any or all of Borrowers to
Agent and Lenders which would accrue and become due if such Chapter 11
Cases were reopened or after the commencement of any future case with
respect to any or all of Borrowers under the Bankruptcy Code or any similar
statute, whether or not such amounts are allowed or allowable in whole or
in part in such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, or secured or unsecured.
1.75 Participant shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans
and Letter of Credit Accommodations in conformity with the provisions of
Section 13.5 of this Agreement governing participations.
1.76 Payment Account shall have the meaning set forth in Section 6.3
hereof.
1.77 Permits shall have the meaning set forth in Section 8.8 hereof.
1.78 Person or person shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation,
any corporation which elects subchapter S status under the Code), limited
liability company, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or
political subdivision thereof.
1.79 Plan shall mean the Amended Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code, dated June 30, 1997, of Borrower and
Guarantors, in the form filed with the Bankruptcy Court on June 30, 1997,
and any amendments, supplements or modifications thereto.
1.80 Prime Rate shall mean the rate from time to time publicly
announced by CoreStates Bank, N.A., or its successors, at its office in
Philadelphia, Pennsylvania, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
1.81 Prime Rate Loans shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the
terms hereof.
1.82 Proceeds shall mean all products and proceeds of any
Collateral, and all proceeds of such proceeds and products, including,
without limitation, all cash and credit balances, all payments under any
indemnity, warranty, or guaranty payable with respect to any Collateral,
all awards for taking by eminent domain, all proceeds of fire or other
insurance, and all money and other property obtained as a result of any
claims against third parties or any legal action or proceeding with respect
to Collateral.
1.83 Proprietary Rights shall mean all of each Borrower's now owned
and hereafter arising or acquired United States: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject
matter of copyrights, trademarks, trade names, tradestyles, patent and
trademark applications and licenses and rights thereunder, and all other
rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to ▇▇▇ for past, present, and future infringement
of any of the foregoing; inventions, trade secrets, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals, and
operating standards; goodwill; customer and other lists in whatever form
maintained; and trade secret rights, copyright rights, rights in works of
authorship, and contract rights relating to computer software programs, in
whatever form created or maintained.
1.84 Pro Rata Share shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the
amount of such Lender's Commitment as adjusted from time to time in
accordance with the provisions of Section 13.5 hereof, and the denominator
of which shall be the aggregate amount of all of the Lenders' Commitments,
provided, that, if the Commitments have been terminated, the numerator
shall be the unpaid amount of such Lender's Loans and its interest in the
Letter of Credit Accommodations and the denominator shall be the aggregate
amount of all unpaid Loans and Letter of Credit Accommodations.
1.85 Receivables shall mean all of each Borrower's now owned and
hereafter arising or acquired: Accounts (whether or not earned by
performance), including Accounts owed to a Borrower by any of its
Subsidiaries or Affiliates, together with all interest, late charges,
penalties, collection fees, and other sums which shall be due and payable
in connection with any Account; proceeds of any letters of credit naming a
Borrower as beneficiary; contract rights, chattel paper, instruments,
documents, credit card or debit card sales slips or charge slips or
receipts, notes, general intangibles (including without limitation, choses
in action, causes of action, tax refunds, tax refund claims, and other
amounts payable to a Borrower from pension and employee benefit plans,
rights and claims against shippers and carriers, rights to indemnification
and business interruption insurance) and all forms of obligations owing to
a Borrower (including, without limitation, obligations owing to a Borrower
by its Subsidiaries and Affiliates); guarantees and other security for any
of the foregoing; and rights of stoppage in transit, replevin and
reclamation; and other rights or remedies of an unpaid vendor, lienor, or
secured party.
1.86 Reference Bank shall mean CoreStates Bank, N.A. or such other
bank as Agent may designate from time to time.
1.87 Refinancing Indebtedness shall have the meaning set forth in
Section 9.9 hereto.
1.88 Register shall have the meaning set forth in Section 13.5
hereof.
1.89 Retail Value shall mean, as to the Inventory as of any date,
the then current retail sales price of such Inventory as of such date,
after reduction by the amount of markdowns from the original retail sales
price or ticketed sales price with respect thereto (other than temporary
point-of-sale promotional markdowns consistent with current practices as of
the date hereof).
1.90 Series 1997 Note shall mean the Promissory Note, dated as of
September 26, 1997, issued by Edbro Missouri and made payable to the City
of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ County, Missouri, as the issuer of certain bonds,
in the original aggregate principal amount of $6,717,000, as the same now
exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.91 Series 1997 Loan Agreement shall mean the Loan Agreement, dated
as of August 1, 1997, by and between Edbro Missouri and the City of
Washington, Missouri, as the issuer of certain bonds, as the same now
exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.92 Store Concentration Account shall mean account no. 001010057985
maintained by and in the name of Edison at NationsBank Texas, N.A. (which
account number may be changed on or about October 6, 1997 to account no.
3750917165) or such other deposit account as Edison may hereafter establish
and maintain at the same or any other depository bank in accordance with
Section 9.16 hereof into which Proceeds of sales of Inventory are sent from
the local depository banks used by each of the retail store locations of
Borrower and Guarantors.
1.93 Subsidiary shall mean any corporation of which fifty percent
(50%) or more of the outstanding securities of any class or classes
thereof, as to which the holders thereof are ordinarily in the absence of
contingencies, entitled to elect a majority of the directors (or Persons
performing similar functions) of such corporation, is now or hereafter
directly or indirectly (through one or more intermediaries) owned by any
Borrower or Guarantor and/or any one or more of its Subsidiaries.
1.94 United States shall mean the United States of America, and its
possessions, including Puerto Rico and the Virgin Islands.
1.95 Value shall mean, with respect to Inventory, the lower of (a)
Cost or (b) market value.
1.96 Weighted Average Life to Maturity shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding principal amount of such Indebtedness into (b) the
total of the product obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (ii) the number of years (calculated to the nearest one-
twelfth) that will elapse between such date and the making of such payment.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to, and upon the terms and conditions contained
herein, each of the Lenders severally (and not jointly) agrees to fund its
Pro Rata Share of Loans to Borrowers from time to time in amounts requested
by a Borrower up to the amount equal to:
(i) the lesser of the Maximum Credit or: (A) during the period
commencing on December 16 in each calendar year through and including July
31 in the following calendar year, the lesser of: (1) sixty percent (60%)
multiplied by the Value of Eligible Inventory or (2) eighty-five percent
(85%) of the Net Recovery Cost Percentage multiplied by the Cost of
Eligible Inventory, or (B) during the period commencing on August 1 through
and including December 15 in each calendar year, the lesser of:
(1) seventy percent (70%) multiplied by the Value of Eligible Inventory or
(2) one hundred percent (100%) of the Net Recovery Cost Percentage
multiplied by the Cost of Eligible Inventory; plus
(ii) ninety-five percent (95%) multiplied by the aggregate amount
of cash and Cash Equivalents of Borrowers and Guarantors which are (A) held
by Agent as Collateral for the ratable benefit of itself and Lenders on
terms and conditions acceptable to Agent and pursuant to such agreements
and instruments satisfactory in form and substance to Agent and (B) free
and clear of any and all liens, security interests, claims and other
encumbrances except for the lien and security interest in favor of Agent
for the ratable benefit of itself and Lenders; minus
(iii) any Availability Reserves.
(b) In the event that any appraisal of the Inventory after the
date hereof by a third party appraiser shall reflect a Net Recovery Cost
Percentage or Net Recovery Retail Percentage less than such percentages
reflected in the appraisal of the Inventory by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ delivered to
Agent prior to the date hereof, Agent may, in its discretion, upon not less
than five (5) days prior notice to Edison, reduce the percentage lending
formula set forth in Section 2.1(a)(i)(A)(2) and 2.1(a)(i)(B)(2) above with
respect to Eligible Inventory to the extent of the decrease in the Net
Recovery Retail Percentage or the Net Recovery Cost Percentage after the
date hereof.
(c) Except in Agent's discretion, with the consent of the
Majority Lenders, (i) the aggregate amount of the Loans and the Letter of
Credit Accommodations outstanding at any time shall not exceed the Maximum
Credit, (ii) the aggregate amount of the Letter of Credit Accommodations
shall not exceed the sublimit for Letter of Credit Accommodations set forth
in Section 2.2(d) and (iii) the aggregate amount of the Loans outstanding
at any time shall not exceed the Availability.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained
herein, at the request of a Borrower, Agent agrees, for the ratable risk of
Lenders, according to their Pro Rata Shares, to provide or arrange for
Letter of Credit Accommodations issued by the Issuing Bank or Bank of
America, N.T. & S.A. for the account of such Borrower containing terms and
conditions acceptable to Agent and Issuing Bank or Bank of America, N.T. &
S.A. (as the case may be). Any payments made by Agent or Lenders to the
Issuing Bank or Bank of America, N.T. & S.A. and/or related parties in
connection with the Letter of Credit Accommodations shall constitute
additional Loans to Borrowers pursuant to this Section 2.
(b) Borrowers shall pay to Agent for the ratable benefit of
Lenders a letter of credit fee at a rate equal to one and one-quarter
percent (1-1/4%) per annum on the daily outstanding balance of the Letter
of Credit Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month,
except that Agent may, and upon the written direction of the Majority
Lenders shall, require Borrowers to pay to Agent, for the ratable benefit
of Lenders, such letter of credit fee, without notice, at a rate equal to
three and one-quarter percent (3-1/4%) per annum on such daily outstanding
balance for the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing. Such
letter of credit fee shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed and the obligation of
Borrowers to pay such fee shall survive the termination or non-renewal of
this Agreement. The foregoing letter of credit fee shall be in addition to
any charges, fees or expenses charged by any bank or issuer in connection
with the Letter of Credit Accommodations, provided, that, with respect to
Letter of Credit Accommodations which are not standby Letter of Credit
Accommodations and are used solely for the purpose of purchasing goods
expected to become Eligible Inventory or goods being shipped to Canada or
goods constituting fabric being shipped from one jurisdiction outside the
United States to another jurisdiction outside the United States, no bank
fees, opening charges or amendment or similar fees shall be charged by the
Issuing Bank for purposes of this Section 2.2(b), except as otherwise
provided in the fee agreement by and among the Issuing Bank and Borrowers.
Any Letter of Credit Accommodations issued payable to BABC in connection
with the Existing Letters of Credit constitutes a standby Letter of Credit
Accommodations for the purpose of satisfying the reimbursement obligations
of Borrowers and Guarantors to BABC arising upon a draw under the Existing
Letters of Credit, not for the purpose of purchasing goods.
(c) No Letter of Credit Accommodations shall be available unless
on the date of the proposed issuance of any Letter of Credit
Accommodations, the Loans available to Borrowers (subject to the Maximum
Credit and any Availability Reserves) are equal to or greater than (i) if
the proposed Letter of Credit Accommodation is for the purpose of
purchasing goods expected to become Eligible Inventory, the amount equal to
(A) the percentage equal to one hundred percent (100%) minus the then
applicable percentage set forth in Section 2.1(a)(i) above multiplied by
(B) the Cost of such Eligible Inventory, and (ii) if the proposed Letter of
Credit Accommodation is for any other purpose, an amount equal to one
hundred percent (100%) of the face amount thereof and all other commitments
and obligations made or incurred by Agent and Lenders with respect thereto.
Effective on the issuance of each Letter of Credit Accommodations, an
Availability Reserve shall be established in the applicable amount set
forth in Section 2.2(c)(i) or Section 2.2(c)(ii). To the extent that the
Existing Letters of Credit are for the purpose of purchasing goods expected
to become Eligible Inventory, the Availability Reserve for any Letter of
Credit Accommodations issued payable to BABC to reimburse BABC in the event
of a draw under such Existing Letters of Credit, subject to the other terms
and conditions contained herein, shall be in the amount set forth in
Section 2.2(c)(i).
(d) Except in Agent's discretion, with the consent of the
Majority Lenders, the amount of all outstanding Letter of Credit
Accommodations and all other commitments and obligations made or incurred
by Agent or any Lender in connection therewith, shall not at any time
exceed $150,000,000. At any time an Event of Default exists or has
occurred and is continuing, upon Agent's request, Borrowers will either
furnish cash collateral to secure the reimbursement obligations to the
issuer in connection with any Letter of Credit Accommodations or furnish
cash collateral to Agent, for itself and the ratable benefit of Lenders,
for the Letter of Credit Accommodations, and in either case, the Loans
otherwise available to Borrowers shall not be reduced as provided in
Section 2.2(c) to the extent of such cash collateral.
(e) Each Borrower shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in
connection with any Letter of Credit Accommodations and any documents,
drafts or acceptances relating thereto (and including, without limitation,
any steamship or airway guaranties or releases, indemnities or delivery
orders) including, but not limited to, any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except
for any losses, claims, damages, liabilities, costs and expenses as a
result of the gross negligence or wilful misconduct of Agent and Lenders as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be
deemed Borrowers' agent. Each Borrower assumes all risks for, and agrees
to pay, all foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit Accommodations or any
documents, drafts or acceptances thereunder. Borrowers hereby release and
hold Agent and Lenders harmless from and against any acts, waivers, errors,
delays or omissions, whether caused by Borrowers, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of
Credit Accommodation, except for any losses, claims, damages, liabilities,
costs and expenses as a result of the gross negligence or wilful misconduct
of Agent and Lenders as determined pursuant to final non-appealable order
of a court of competent jurisdiction. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination of this
Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant Borrowers any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any
kind with respect to any Letter of Credit Accommodation provided by an
issuer other than Agent unless Agent has duly executed and delivered to
such issuer the application or a guarantee or indemnification in writing
with respect to such Letter of Credit Accommodation or has otherwise
evidenced in writing or electronically its approval of the issuance of such
Letter of Credit Accommodation. Borrowers shall be bound by any
interpretation made in good faith by Agent, or any other issuer or
correspondent under or in connection with any Letter of Credit
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrowers. Agent shall have the sole and exclusive right
and authority to, and Borrowers shall not: (i) at any time an Event of
Default exists or has occurred and is continuing, (A) approve or resolve
any questions of non-compliance of documents, (B) give any instructions as
to acceptance or rejection of any documents or goods or (C) execute any and
all applications for steamship or airway guaranties, releases, indemnities
or delivery orders, and (ii) at all times, (A) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents, and (B) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letter of Credit Accommodations, or
documents, drafts or acceptances thereunder or any letters of credit
included in the Collateral. Agent may take such actions either in its own
name or the name of any Borrower or Guarantor.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrowers or Guarantors to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement
in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or undertaken by
Borrowers and Guarantors to Agent and Lenders. Any duties or obligations
undertaken by Agent to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement by Agent in
favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrowers and
Guarantors to Agent and to apply in all respects to Borrowers and
Guarantors. Borrowers and Guarantors shall take such actions as Agent or
Issuing Bank may reasonably request with respect to documents of title or
other documents required for drawing in connection with any of the Existing
Letters of Credit. All originals of documents of title covering goods
being purchased with Letter of Credit Accommodations shall either be sent
to (i) the appropriate Customs Broker in the United States who has entered
into an agreement (in form and substance satisfactory to Agent) in favor of
Agent, (ii) the Issuing Bank or (iii) Mercantile Bank of St. Louis National
Association, as the case may be.
2.3 Commitments. The Commitments of Lenders shall be the respective
maximum amounts set forth below each Lender's signature on the signature
pages hereto, as the same may from time to time be amended with the written
acknowledgment of the Agent and Edison (to the extent the consent of Edison
is required under Section 13.5 hereof) in connection with any executed
Assignment and Acceptance executed and delivered to evidence permitted
assignments by any Lender as provided in Section 13.5 hereof.
2.4 Joint and Several Liability. Borrowers shall be liable for all
amounts due to Agent and Lenders under this Agreement, regardless of which
Borrower actually receives the Loans or other extensions of credit
hereunder or the amount of such Loans received or the manner in which Agent
or any Lender accounts for such Loans, Letter of Credit Accommodations or
other extensions of credit on its books and records. The Obligations with
respect to Loans made to a Borrower, and the Obligations arising as a
result of the joint and several liability of a Borrower hereunder, with
respect to Loans made to the other Borrowers hereunder, shall be separate
and distinct obligations, but all such other Obligations shall be primary
obligations of all Borrowers. The Obligations arising as a result of the
joint and several liability of a Borrower hereunder with respect to Loans,
Letter of Credit Accommodations or other extensions of credit made to the
other Borrowers hereunder shall, to the fullest extent permitted by law, be
unconditional irrespective of (a) the validity or enforceability, avoidance
or subordination of the Obligations of the other Borrowers or of any
promissory note or other document evidencing all or any part of the
Obligations of the other Borrowers, (b) the absence of any attempt to
collect the Obligations from the other Borrowers, any Guarantors or any
other security therefor, or the absence of any other action to enforce the
same, (c) the waiver, consent, extension, forbearance or granting of any
indulgence by Agent or any Lender with respect to any provisions of any
instrument evidencing the Obligations of the other Borrowers, or any part
thereof, or any other agreement now or hereafter executed by the other
Borrowers and delivered to Agent or any Lender, (d) the failure by Agent or
any Lender to take any steps to perfect and maintain its security interest
in, or to preserve its rights and maintain its security or collateral for
the Obligations of the other Borrowers, (e) the election of Agent or any
Lender in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (f) any
borrowings or grant or a security interest by the other Borrowers, as
debtor-in-possession under Section 364 of the Bankruptcy Code, (g) the
disallowance of all or any portion of the claim(s) of Agent or any Lender
for the repayment of the Obligations of the other Borrowers under Section
502 of the Bankruptcy Code, or (h) any other circumstances which might
constitute a legal or equitable discharge or defense of a guarantor or of
the other Borrowers. With respect to the Obligations arising as a result
of the joint and several liability of a Borrower hereunder with respect to
Loans, Letter of Credit Accommodations or other extensions of credit made
to the other Borrowers hereunder, each Borrower waives, until the
Obligations shall have been paid in full and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy
which Agent or any Lender now has or may hereafter have against Borrowers,
any endorser or any guarantor of all or any part of the Obligations, and
any benefit of, and any right to participate in, any security or collateral
given to Agent for itself and the ratable benefit of Lender. Upon any
Event of Default, Agent may proceed directly and at once, without notice,
against any Borrower to collect and recover the full amount, or any portion
of the Obligations, without first proceeding against the other Borrowers or
any other Person, or against any security or collateral for the
Obligations. Each Borrower consents and agrees that Agent shall be under
no obligation to ▇▇▇▇▇▇▇▇ any assets in favor of Borrower(s) or against or
in payment of any or all of the Obligations.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the ratable benefit of
Lenders, interest on the outstanding principal amount of the Loans at the
Interest Rate. All interest accruing hereunder on and after the date of
any Event of Default or termination hereof shall be payable on demand.
(b) Borrowers may from time to time request that (i) Prime Rate
Loans be converted to Eurodollar Rate Loans, or (ii) any existing
Eurodollar Rate Loans continue for an additional Interest Period or (iii)
any existing Eurodollar Rate Loans be converted to Prime Rate Loans
(provided, that, in the event a Borrower elects to convert any Eurodollar
Rate Loans to Prime Rate Loans prior to the end of the applicable Interest
Period, Borrowers shall be liable for any amounts required to compensate
Agent, any Lender, the Reference Bank or any Participant as a result of
such conversion as provided below). Any such request from a Borrower shall
specify the amount of the Prime Rate Loans to be converted to Eurodollar
Rate Loans (subject to the limits set forth below) or Eurodollar Rate Loans
to be converted to Prime Rate Loans, as the case may be, and as to Prime
Rate Loans to be converted to Eurodollar Rate Loans, the Interest Period to
be applicable to such Eurodollar Rate Loans.
(c) Subject to the terms and conditions contained herein, three
(3) Business Days after receipt by Agent of such a request from a Borrower
to convert Prime Rate Loans to Eurodollar Rate Loans, or to continue any
existing Eurodollar Rate Loan, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the
case may be, provided, that, as of such date each of the following
conditions is satisfied as determined by Agent: (i) no Event of Default,
or act, condition or event which with notice or passage of time or both
would constitute an Event of Default, shall exist or have occurred and be
continuing, (ii) Borrowers shall have complied with such customary
procedures as are established by Agent and specified by Agent to a Borrower
from time to time for requests by Borrowers for Eurodollar Rate Loans,
(iii) no more than five (5) Interest Periods may be in effect at any one
time, (iv) the aggregate amount of the Eurodollar Rate Loans must be in an
amount not less than $2,500,000 or an integral multiple of $500,000 in
excess thereof, and (v) Agent shall have determined that the Interest
Period or Adjusted Eurodollar Rate is available to Agent and Lenders
through the Reference Bank and can be readily determined as of the date of
the request for such Eurodollar Rate Loan by a Borrower. Any request by a
Borrower to convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans or to convert Eurodollar Rate
Loans to Prime Rate Loans shall be irrevocable. Notwithstanding anything
to the contrary contained herein, Agent, Lenders and Reference Bank shall
not be required to purchase United States Dollar deposits in the London
interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply
as if Agent, Lenders and Reference Bank had purchased such deposits to fund
the Eurodollar Rate Loans.
(d) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period,
unless Agent has received a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with
the terms hereof and the conditions set forth herein shall have been
satisfied. Any Eurodollar Rate Loans shall, at Agent's option, upon notice
by Agent to a Borrower, convert to Prime Rate Loans in the event that (i)
an Event of Default, or act, condition or event which with the notice or
passage of time or both would constitute an Event of Default, shall exist
or have occurred, (ii) the aggregate principal amount of the Prime Rate
Loans which have previously been converted to Eurodollar Rate Loans or
existing Eurodollar Rate Loans continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest
Period exceed either (A) the aggregate principal amount of the Loans then
outstanding or (B) the Availability. Borrower shall pay to Agent, for the
ratable benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrower) any amounts required to
compensate Agent, any Lender or the Reference Bank for any loss (including
loss of anticipated profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime Rate Loans
pursuant to this clause (d) or as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to clause (b)(iii) above.
(e) Interest shall be payable by Borrowers to Agent, for the
ratable benefit of Lenders, monthly in arrears not later than the first day
of each calendar month and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall
increase or decrease by an amount equal to each increase or decrease in the
Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day
of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrowers to Agent or Lenders exceed the
maximum amount or the rate permitted under any applicable law or
regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall
be deemed amended to conform thereto.
3.2 Closing Fee. Borrowers shall pay to Agent, for the ratable
benefit of Lenders, based on their Pro Rata Shares, as a closing fee the
amount of $1,250,000 which shall be fully earned as of and payable on the
date of the initial Loans or Letter of Credit Accommodations hereunder.
3.3 Servicing Fee. Borrowers shall pay to Agent, for its own
account, a monthly servicing fee in an amount equal to $12,500 for each
month (or part thereof) while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.
3.4 Co-Agent's Fee. Borrowers shall pay to Agent, for the account of
Co-Agent, a monthly fee in an amount equal to $10,416.66 for each of the
first twelve months (or part thereof) that this Agreement is in effect, and
$8,3333.33 for each month (or part thereof) thereafter while this Agreement
is in effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be fully earned as of and payable in advance
on the date hereof and on the first day of each month hereafter.
3.5 Unused Line Fee. Borrowers shall pay to Agent, for the ratable
benefit of Lenders, based on their Pro Rata Shares, monthly an unused line
fee at a rate equal to three-eighths of one percent (3/8 of 1%) per annum
calculated upon the amount by which the Maximum Credit exceeds the average
daily principal balance of the outstanding Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof)
while this Agreement is in effect, which fee shall be payable on the first
day of each month in arrears.
3.6 Syndication Fee. Borrowers shall pay to Agent, for the ratable
benefit of Congress and CIT, a syndication fee the amount of $250,000,
which shall be fully earned as of the date hereof, and which shall be
payable on the third anniversary of the date hereof, provided, that, such
amount shall not be payable if (a) on or before the date ninety (90) days
prior to such third anniversary date, Agent shall have received written
notice from Borrowers of their election to terminate this Agreement (which
notice shall be irrevocable), and (b) Agent and Lenders shall have received
full and final repayment of all of the Obligations and cash collateral as
required under Section 13.1(d) hereof on or before the third anniversary of
the date hereof.
3.7 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Agent to Borrowers, convert
to Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof by the
Governmental Authority having jurisdiction over such matters) shall either
(A) make it unlawful for Agent, any Lender or Reference Bank to make or
maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the
increase in the costs to Agent, any Lender or Reference Bank of making or
maintaining any Eurodollar Rate Loans by an amount deemed by Agent to be
material, or (C) reduce the amounts received or receivable by Agent or any
Lender in respect thereof, by an amount deemed by Agent to be material or
(ii) the cost to Agent, any Lender or Reference Bank of making or
maintaining any Eurodollar Rate Loans shall otherwise increase by an amount
deemed by Agent to be material. Borrowers shall pay to Agent, for the
ratable benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrowers) any amounts required to
compensate Agent, any Lender or the Reference Bank for any loss (including
loss of anticipated profits), cost or expense incurred by such person as a
result of the foregoing, including, without limitation, any such loss, cost
or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain the
Eurodollar Rate Loans or any portion thereof. A certificate of Agent or
any Lender setting forth the basis for the determination of such amount
necessary to compensate Agent or such Lender as aforesaid shall be
delivered to Borrowers and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar
Rate Loans are received by Agent other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity
or otherwise), including any payments pursuant to the application of
collections under Section 6.3 or any other payments made with the proceeds
of Collateral, Borrowers shall pay to Agent, for the ratable benefit of
Lenders, upon demand by Agent (or Agent may, at its option, charge any loan
account of Borrowers) any amounts required to compensate Agent, any Lender
or the Reference Bank for any additional loss (including loss of
anticipated profits), cost or expense incurred by such person as a result
of such prepayment or payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance reasonably
satisfactory to Agent, all releases, terminations and such other documents
as Agent may reasonably request to evidence and effectuate the termination
by BABC and the other financial institutions who are lenders under the BABC
DIP Facility of such financing arrangements with Borrowers and Guarantors
(and any financing arrangements in effect prior to the commencement of the
Chapter 11 Cases) and the termination and release by them and BABC of any
interest in and to any assets and properties of Borrowers and Guarantors,
duly authorized, executed and delivered by it or them or on its or their
behalf, including, but not limited to, UCC termination statements for all
UCC financing statements previously filed by BABC, as secured party and any
Borrower or Guarantor, as debtors;
(b) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that Agent, for itself and the ratable
benefit of Lenders, has valid perfected and first priority security
interests in and liens upon the Collateral and any other property which is
intended to be security for the Obligations or the liability of any
Guarantor in respect thereof, subject only to the security interests and
liens permitted herein or in the other Financing Agreements;
(c) Agent shall have received, in form and substance reasonably
satisfactory to Agent, unlimited guarantees of payment of the Obligations
by each Guarantor in favor of Agent and Lenders, and with respect to each
Guarantor, (i) a security agreement by each such Guarantor in favor of
Agent and the ratable benefit of Lenders, granting Agent, for itself and
the ratable benefit of Lenders, a first priority security interest in each
such Guarantor's assets, and (ii) UCC-1 financing statements with respect
thereto, in each case duly authorized, executed and delivered by the
parties thereto;
(d) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Agent, and Agent shall have received
all information and copies of all documents, including, without limitation,
records of requisite corporate action and proceedings which Agent may have
requested in connection therewith, such documents where requested by Agent
or its counsel to be certified by appropriate corporate officers or
governmental authorities;
(e) no act, condition or event shall exist or have occurred
which would have a Material Adverse Effect since the date of Agent's latest
field examination of the businesses of Borrowers and Guarantors;
(f) Agent shall have completed a field review of the books and
records of Borrowers and Guarantors and such other information with respect
to the Collateral as Agent may require to determine the amount of Loans
available to Borrowers including, without limitation, current perpetual
inventory records and/or roll-forwards of Inventory through the date of
closing, together with such supporting documentation as may be necessary or
appropriate, and other documents and information that will enable Agent to
accurately identify and verify the Collateral, the results of which shall
be satisfactory to Agent, not more than seven (7) days prior to the date
hereof (or such greater number of days as is satisfactory to Agent);
(g) Agent shall have received, in form and substance
satisfactory to Agent, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable
in order to permit, protect and perfect its security interests in and liens
upon the Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements, including, without
limitation, agreements with Customs Brokers acknowledging Agent's security
interests in the Collateral, waiving any security interests, liens or other
claims by such persons to the Collateral and permitting Agent access to,
and the right to remain on, the premises to exercise its rights and
remedies and otherwise deal with the Collateral;
(h) Borrowers shall have established the Concentration Accounts
and Agent shall have received, in form and substance satisfactory to Agent,
all agreements with the depository banks and Borrowers with respect to such
Concentration Accounts as Agent may require pursuant to Section 6.3 hereof,
duly authorized, executed and delivered by such depository banks and
Borrowers;
(i) Agent shall have received Credit Card Acknowledgements in
each case, duly authorized, executed and delivered by the Credit Card
Issuers and Credit Card Processors;
(j) the Excess Availability as determined by Agent, as of the
date hereof, shall not be less than $20,000,000 after giving effect to the
initial Loans made or to be made and Letter of Credit Accommodations issued
or to be issued in connection with the initial transactions hereunder, and
after giving effect to the payment of all fees and costs of the
transactions provided for herein;
(k) Agent shall have received a Borrowing Base Certificate
setting forth the Loans available to Borrowers as of the date hereof as
completed in a manner satisfactory to Agent and duly authorized, executed
and delivered on behalf of Borrowers;
(l) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder (which will not include Agent as loss
payee with respect to insurance on the Funding Escrow Properties) and under
the other Financing Agreements, in form and substance satisfactory to
Agent, and certificates of insurance policies and/or endorsements naming
Agent as loss payee;
(m) no court of competent jurisdiction shall have issued any
injunction, restraining order or other order which prohibits the
consummation of the transactions described in the Financing Agreements, and
no governmental or other action or proceeding shall have been threatened or
commenced, seeking any injunction, restraining order or other order which
seeks to void or otherwise modify the transactions described in the
Financing Agreements or which would otherwise have a Material Adverse
Effect;
(n) Agent shall have received a certified copy of the
Confirmation Order, which shall be in form and substance reasonably
satisfactory to Agent;
(o) the Confirmation Order shall have been entered, following
due notice to such creditors and other parties-in-interest as required by
the Bankruptcy Court and the Confirmation Order shall not be subject to any
pending motion for reconsideration or any stay pending appeal and all steps
to be taken on the Effective Date under the Plan shall have been taken and,
concurrently with the satisfaction of the other conditions precedent set
forth in this Section 4.1, the Effective Date shall have occurred;
(p) any amendments, modifications or supplements to the
provisions of the Plan relating to Agent and Lenders, the rights of Agent
and Lenders or the financing arrangements provided for herein (if any)
shall be in form and substance satisfactory to Agent and Lenders;
(q) no motion, action or proceeding shall be pending against
Borrowers or Guarantors (or their predecessors) by any creditor or other
party-in-interest in the Bankruptcy Court or in any other court of
competent jurisdiction which would if successful have a Material Adverse
Effect;
(r) Agent shall have received evidence, in form and substance
satisfactory to Agent, that, concurrently with the satisfaction of the
other conditions precedent set forth in this Section 4.1, the Effective
Date shall have occurred;
(s) Agent shall have received, in form and substance reasonably
satisfactory to Agent, the opinion letter of counsel(s) to Borrower and
Guarantors with respect to the Financing Agreements and the security
interests and liens of Agent with respect to the Collateral, the
confirmation of the Plan, the occurrence of the Effective Date, the entry
of the Confirmation Order and such other matters as Agent may request; and
(t) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and
delivered to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent
to Agent and Lenders making Loans and/or providing Letter of Credit
Accommodations to Borrowers, including the initial Loans and Letter of
Credit Accommodations and any future Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties
had been made on and as of the date of the making of each such Loan or
providing each such Letter of Credit Accommodation and after giving effect
thereto; and
(b) no Event of Default and no act, condition or event which,
with notice or passage of time or both, would constitute an Event of
Default, shall exist or have occurred and be continuing on and as of the
date of the making of such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto.
SECTION 5. SECURITY INTEREST
To secure payment and performance of all Obligations, each Borrower
hereby grants to Agent, for itself and the ratable benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns to Agent, for itself and the ratable benefit of
Lenders, as security, the following property and interests in property of
such Borrower, whether now owned or hereafter acquired or existing, and
wherever located (collectively, the Collateral ):
5.1 all Receivables, Inventory, Proprietary Rights, and Proceeds,
wherever located and whether now existing or hereafter arising or acquired;
5.2 all moneys, securities and other property and the Proceeds
thereof, now or hereafter held or received by, or in transit to Agent or
any Lender from or for such Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, including, without
limitation, all of such Borrower's deposit accounts, credits, and balances
with Agent or any Lender and all claims of such Borrower against Agent or
any Lender at any time existing;
5.3 all of such Borrower's deposit accounts with any financial
institutions with which such Borrower maintains deposits, excluding
deposits of cash or Cash Equivalents held by the Funding Escrow Agent
pursuant to or as contemplated by the Plan to the extent such deposits do
not constitute other property described in this Section 5; and
5.4 all books, records and other property relating to or referring to
any of the foregoing, including, without limitation, all books, records,
ledger cards, data processing records, computer software and other property
and general intangibles at any time evidencing or relating to the
Receivables, Inventory, Proprietary Rights, Proceeds, and other property
referred to above.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments in respect thereof and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s)
shall be made in accordance with Agent's customary practices as in effect
from time to time.
6.2 Statements. Agent shall render to Borrowers each month, within
ten (10) days after the first day of such month, a statement setting forth
the balance in the Borrowers' loan account(s) maintained by Agent for
Borrowers pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall
be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers
and conclusively binding upon Borrowers as an account stated except to the
extent that Agent receives a written notice from Borrowers of any specific
exceptions of Borrowers thereto within thirty (30) days after the date such
statement has been mailed by Agent. Until such time as Agent shall have
rendered to Borrowers a written statement as provided above, the balance in
Borrowers' loan account(s) shall be presumptive evidence of the amounts due
and owing to Agent and Lenders by Borrowers.
6.3 Collection of Proceeds.
(a) Schedule 6.3 sets forth all of the banks or other financial
institutions with whom Borrowers and Guarantors have investment accounts,
securities accounts, deposit account arrangements and merchant payment
arrangements as of the date hereof and identifies each of the deposit
accounts at such banks to a retail store location of Borrowers and
Guarantors or otherwise describes the nature of the use of such investment
account, securities account or deposit account by Borrowers and Guarantors.
(i) Borrowers and Guarantors shall deposit all Proceeds
from sales of Inventory in every form, including, without limitation, cash,
checks, credit card sales drafts, credit card sales or charge slips or
receipts and other forms of daily store receipts, from each retail store
location of Borrowers and Guarantors on each Business Day into the deposit
accounts of Borrowers and Guarantors used solely for such purpose and
identified to such retail store location as set forth on Schedule 6.3 or
such other deposit accounts as are established by Borrowers to be used for
a retail store location after the date hereof as provided in Section 9.16
hereof. All such funds deposited into the separate deposit accounts shall
be sent by wire transfer each Business Day to the Store Concentration
Account as provided in Section 6.3(a)(ii) below. Borrowers and Guarantors
shall irrevocably authorize and direct each of the banks into which
Proceeds from sales of Inventory from each retail store location of
Borrowers and Guarantors are at any time deposited as provided above to
send all funds deposited in such account by wire transfer each Business Day
to the Store Concentration Account. Such authorization and direction shall
not be rescinded, revoked or modified without the prior written consent of
Agent. Notwithstanding the foregoing, Borrowers and Guarantors shall be
permitted to retain cash at each retail store location of Borrowers and
Guarantors (or at the respective deposit accounts used for such retail
store locations as set forth on Schedule 6.3 or established after the date
hereof as provided in Section 9.16 hereof) in such amounts as are necessary
for the day-to-day operation of such retail stores consistent with prior
practices in respect of each such store.
(ii) Borrowers shall establish and maintain, at their
expense, the Concentration Accounts. Borrowers shall cause (A) all amounts
payable to Borrowers and Guarantors from Credit Card Issuers and Credit
Card Processors to be deposited in the Credit Card Concentration Account on
each Business Day and (B) all amounts on deposit in its deposit accounts
used by each retail store location to be sent as provided in Section
6.3(a)(i) above on each Business Day to the Store Concentration Account.
The banks at which each of the Concentration Accounts are at any time
established shall enter into an agreement, in form and substance
satisfactory to Agent, providing that all items received or deposited in
such of the Concentration Accounts are subject to the security interest and
lien of Agent for itself and the ratable benefit of Lenders, that the
depository bank has no lien upon, or right of setoff against, such of the
Concentration Accounts, the items received for deposit therein, or the
funds from time to time on deposit therein and that upon the request of
Agent, the depository bank will wire, or otherwise transfer, in immediately
available funds, on each Business Day all funds received or deposited into
such of the Concentration Accounts to such bank account of Agent as Agent
may from time to time designate for such purpose ( Payment Account ).
Agent shall instruct the depository banks at which the Concentration
Accounts are maintained to transfer the funds on deposit in the
Concentration Accounts to such operating bank accounts of Borrowers as
Borrowers may specify in writing to Agent until such time as Agent shall
notify the depository banks otherwise. Agent may instruct the depository
banks at which the Concentration Accounts are maintained to transfer all
funds received or deposited into the Concentration Accounts to the Payment
Account at any time that either: (A) an Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, or (B) Excess Availability shall be less than $10,000,000.
Borrowers agree that all amounts deposited in such Concentration Accounts
or other funds received and collected by Agent and Lenders, whether as
Proceeds or otherwise shall be subject to the security interest and lien of
Agent for itself and the ratable benefit of Lenders.
(b) For purposes of calculating the amount of the Loans
available to Borrowers and except as otherwise provided below, for purposes
of calculating interest on the Obligations, all payments in respect of the
Obligations will be applied (conditional upon final collection) to the
Obligations on the Business Day of receipt by Agent of immediately
available funds in the Payment Account provided such payments and notice
thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to
credit Borrowers' loan account(s) on such day, and if not, then on the next
Business Day. In the event that Agent shall have the right to instruct the
depository banks at which the Concentration Accounts are maintained to
transfer funds to the Payment Account pursuant to Section 6.3(a) above or
otherwise thereafter, for purposes of calculating interest on the
Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations one (1) Business Day
following the date of receipt of immediately available funds by Agent in
the Payment Account provided such payments or other funds and notice
thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to
credit Borrowers' loan accounts on such day, and if not, then on the next
Business Day (the Collection Period ). The economic benefit of the
Collection Period shall be for Agent's sole account. If the closing daily
balance in the loan account(s) of Borrowers as of any day is a credit
balance, Agent shall, on the first day of the next month, credit the loan
account(s) of Borrowers with an amount calculated upon such credit balance
at the rate of three and one-half percent (3 1/2%) per annum less than the
Prime Rate so long as no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing. Such amount to be
credited shall be calculated on the basis of a three hundred sixty (360)
day year and actual days elapsed. The Prime Rate used to calculate such
credit to the loan account(s) of Borrowers shall increase or decrease by an
amount equal to such increase or decrease in such Prime Rate effective on
the first day of the month after any change in such rate. In the event
that no Loans are outstanding, and so long as no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, upon Borrowers' request made to Agent on a Business Day, Agent
shall remit to Borrowers not later than the next succeeding Business Day,
an amount equal to such credit balance in the loan account of Borrowers.
(c) Borrowers and Guarantors shall, acting as trustee for Agent,
receive, as the property of Agent, any cash, checks, credit card sales
drafts, credit card sales or charge slips or receipts, notes, drafts, all
forms of store receipts or any other payment relating to and/or Proceeds of
Receivables or other Collateral which come into their possession or under
their control and immediately upon receipt thereof, shall deposit or cause
the same to be deposited in the Concentration Accounts, or remit the same
or cause the same to be remitted, in kind, to Agent. Each Borrower agrees
to reimburse Agent and Lenders on demand for any amounts owed or paid to
any bank at which a Concentration Account is established or any other bank
or person involved in the transfer of funds to or from the Concentration
Accounts arising out of Agent's or any Lender's payments to or
indemnification of such bank or person. The obligation of Borrowers to
reimburse Agent and Lenders for such amounts pursuant to this Section 6.3
shall survive the termination of this Agreement.
6.4 Payments and Prepayments.
(a) Each Borrower may, in accordance with the terms of this
Agreement, from time to time borrow, prepay and reborrow Loans.
(b) On each date when any reduction to the lending formula set
forth in Section 2.1(a)(i) becomes effective, regardless of the amounts of
Eligible Inventory, Borrowers shall absolutely and unconditionally,
automatically and without demand, pay to Agent for the ratable benefit of
Lenders in respect of the Loans an amount equal to the excess, if any, of
the aggregate unpaid principal amount of the Loans with respect to Eligible
Inventory over the amount of the Availability calculated using the
applicable percentage with respect to Eligible Inventory as so reduced.
(c) In the event that the outstanding amount of the Loans exceed
the Availability, or the aggregate amount of the outstanding Letter of
Credit Accommodations exceed the sublimit for Letter of Credit
Accommodations set forth in Section 2.3(d), or the aggregate amount of the
Loans and the Letter of Credit Accommodations outstanding at any time shall
exceed the Maximum Credit, such event shall not limit, waive or otherwise
affect any rights of Agent and Lenders in that circumstance or on any
future occasions and Borrowers shall, upon demand by Agent, which may be
made at any time or from time to time, immediately repay to Agent, for the
ratable benefit of Lenders, the entire amount of any such excess(es) for
which payment is demanded.
(d) All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place in the United States as Agent
may designate from time to time. Agent may apply payments received or
collected from Borrowers or for the account of Borrowers (including,
without limitation, the monetary proceeds of collections or of realization
upon any Collateral) to such of the Obligations, whether or not then due,
in such order and manner as Agent determines provided, that, (i) all such
payments shall be applied to Obligations which are then due and payable
before being applied to prepay any Obligations which are not then due and
payable and (ii) all such payments shall be applied to Prime Rate Loans
before being applied to Eurodollar Rate Loans. At Agent's option, all
principal, interest, fees, costs, expenses and other charges provided for
in this Agreement or the other Financing Agreements may be charged directly
to the loan account(s) of Borrowers. Borrowers shall make all payments to
Agent and Lenders on the Obligations free and clear of, and without
deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment
of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Agent or any Lender is required to surrender or return such
payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated
and continue and this Agreement shall continue in full force and effect as
if such payment or proceeds had not been received by Agent or such Lender.
Borrowers shall be liable to pay to Agent and Lenders, and does hereby
indemnify and hold Agent and Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4 shall
remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds. This
Section 6.4 shall survive the payment of the Obligations and the
termination of this Agreement.
6.5 Sharing of Payments, Etc.
(a) Borrowers agree that, in addition to (and without limitation
of) any right of setoff, banker's lien or counterclaim Agent or a Lender
may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrowers and
Guarantors at any of its offices, in dollars or in any other currency,
against any principal of or interest on any Loans owed to such Lender or
any other amount payable to such Lender hereunder, that is not paid when
due (regardless of whether such balances are then due to Borrowers and
Guarantors), in which case it shall promptly notify a Borrower and Agent
thereof; provided, that, such Lender's failure to give such notice shall
not affect the validity thereof.
(b) If any Lender shall obtain from any Borrower or Guarantor
payment of any principal of or interest on any Loan owing to it or payment
of any other amount under this Agreement or any other Financing Agreement
through the exercise of any right of setoff, banker's lien or counterclaim
or similar right or otherwise (other than from Agent as provided herein),
and, as a result of such payment, such Lender shall have received more than
its Pro Rata Share of the principal of or interest on the Loans or such
other amounts then due hereunder or thereunder by Borrowers to such Lender
than the percentage thereof received by any other Lender, it shall promptly
pay to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the
Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end
that all Lenders shall share the benefit of such excess payment (net of any
expenses that may be incurred by such Lender in obtaining or preserving
such excess payment) in accordance with their respective Pro Rata Shares.
Amounts received by Agent under this Section 6.5 hereof shall be treated as
a payment received from Borrowers under Section 6.5 hereof. To such end
all Lenders shall make appropriate adjustments among themselves (by the
resale of participation sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) Borrowers agree that any Lender so purchasing such a
participation (or direct interest) may exercise, in a manner consistent
with this Section 6.5, all rights of setoff, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such
Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of Borrowers. If, under
any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 6.5
applies, such Lender shall, to the extent practicable, assign such rights
to Agent for the benefit of Lenders and, in any event, exercise its rights
in respect of such secured claim in a manner consistent with the rights of
Lenders entitled under this Section 6.5 to share in the benefits of any
recovery on such secured claim.
6.6 Authorization to Make Loans. Agent is authorized to make the
Loans and provide the Letter of Credit Accommodations based upon telephonic
or other instructions received from anyone purporting to be an authorized
officer of a Borrower or other authorized person set forth on the list of
such authorized officers and other authorized persons furnished by
Borrowers to Agent as supplemented by Borrowers from time to time, or, at
the discretion of Agent, if such Loans are necessary to satisfy any
Obligations. All requests for Loans or Letter of Credit Accommodations
hereunder shall specify the date on which the requested advance is to be
made or Letter of Credit Accommodations established (which day shall be a
Business Day) and the amount of the requested Loan. Requests received
after 12:00 noon New York City time on any day shall be deemed to have been
made as of the opening of business on the immediately following Business
Day. All Loans and Letter of Credit Accommodations under this Agreement
shall be conclusively presumed to have been made to, and at the request of
and for the benefit of, Borrowers when deposited to the credit of Borrowers
or otherwise disbursed or established in accordance with the instructions
of a Borrower or in accordance with the terms and conditions of this
Agreement.
6.7 Settlement Procedures.
(a) Notwithstanding any other provision of this Agreement, and
in order to administer the Loans and the Letter of Credit Accommodations in
an efficient manner and to reduce the number of fund transfers between
Lenders and Agent, Borrowers, Lenders and Agent agree that Agent may (but
shall not be obligated to), and Borrowers and Lenders hereby irrevocably
authorize the Agent to, fund, on behalf of the Lenders, Loans pursuant to
Section 2.1, subject to the procedures for settlement set forth in this
Section 6.7; provided, that, (i) other than to fund Loans to make payments
to the issuer of any of the Letter of Credit Accommodations or for costs
and expenses as provided for herein, Agent shall in no event fund such
Loans if the Agent shall have received written notice from the Majority
Lenders on the Business Day prior to the day of the proposed Loan that one
or more of the conditions precedent contained in Section 4 will not be
satisfied on the day of the proposed Loan, and (ii) Agent shall not
otherwise be required to determine that, or take notice whether, the
conditions precedent in Section 4 have been satisfied.
(b) With respect to all periods for which the Agent has funded
Loans pursuant to Section 6.7(a) above, the amount of each Lender's Pro
Rata Share in the outstanding Loans and Letter of Credit Accommodations
shall be computed weekly, and shall be adjusted upward or downward on the
basis of the amount of the outstanding Loans as of the close of business on
the Business Day immediately preceding the date of each settlement
computation; provided, that, Agent retains the absolute right at any time
or from time to time to make the above described adjustments at intervals
more frequent than weekly. Agent shall deliver to each of Lenders after
the end of each week, or such lesser period or periods as Agent shall
determine, a summary statement of the amount of outstanding Loans for such
period (such week or lesser period or periods being hereinafter referred to
as a Settlement Period ). If the summary statement is sent by Agent and
received by a Lender prior to 12:00 noon (New York City time) then such
Lender shall make the settlement transfer described in this Section by no
later than 2:00 p.m. (New York City time) on the day such summary statement
was sent, and if such summary statement is sent by Agent and received by a
Lender after 12:00 noon (New York City time), such Lender shall make such
settlement transfer by no later than 2:00 p.m. (New York City time) on the
next Business Day following the date of the receipt of such summary
statement. If, as of the end of any Settlement Period, the amount of a
Lender's Pro Rata Share of the outstanding Loans is more than such Lender's
Pro Rata Share of the outstanding Loans as of the end of the previous
Settlement Period, then such Lender shall forthwith (but in no event later
than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase.
If the amount of a Lender's Pro Rata Share of the outstanding Loans in any
Settlement Period is less than the amount of such Lender's Pro Rata Share
of the outstanding Loans for the previous Settlement Period, Agent shall
forthwith transfer to such Lender by wire transfer in immediately available
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent. Each of Agent
and Lenders agrees to ▇▇▇▇ its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata
Share of the outstanding Loans and Letter of Credit Accommodations. Each
Lender shall only be entitled to receive interest on its Pro Rata Share of
the Loans which have been funded by such Lender.
(c) To the extent that Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrowers, Agent may apply such amounts repaid
directly to any amounts made available by Agent pursuant to this Section
6.7. In lieu of weekly or more frequent settlements, Agent may at any time
require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent's disbursement
of such Loan to Borrowers. In such event, all Loans under this Agreement
shall be made by the Lenders simultaneously and proportionately to their
Pro Rata Shares. No Lender shall be responsible for any default by any
other Lender in the other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased
as a result of the default by any other Lender in the other Lender's
obligation to make a Loan requested hereunder.
(d) If Agent is not funding a particular Loan pursuant to
Section 6.7(a) above on any day, Agent may assume that each Lender will
make available to Agent such Lender's Pro Rata Share of the Loan requested
or otherwise made on such day and Agent may, in its discretion, but shall
not be obligated to, cause a corresponding amount to be made available to
Borrowers on such day. If Agent makes such corresponding amount available
to a Borrower and such corresponding amount is not in fact made available
to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
thereon for each day from the date such payment was due until the date such
amount is paid to Agent at the Interest Rate. During the period in which
such Lender has not paid such corresponding amount to Agent,
notwithstanding anything to the contrary contained in this Agreement or any
of the other Financing Agreements, the amount so advanced by Agent to a
Borrower shall, for all purposes hereof, be a Loan made by Agent for its
own account. Upon any such failure by a Lender to pay Agent, Agent shall
promptly thereafter notify Borrowers of such failure and the Borrowers
shall immediately pay such corresponding amount to Agent for its own
account.
(e) Nothing in this Section 6.7 or otherwise in this Agreement
or the other Financing Agreements shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights
that Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
6.8 Use of Proceeds. Borrowers shall use the initial proceeds of the
Loans and Letter of Credit Accommodations provided by Lenders to Borrowers
hereunder only for: (a) the Letter of Credit Accommodation to be issued
payable to BABC in respect of the Existing Letters of Credit; (b) payments
to each of the persons listed in the disbursement direction letter
furnished by Borrowers to Agent on or about the date hereof and (c) costs,
expenses and fees in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Financing
Agreements. All other Loans made or Letter of Credit Accommodations
provided by Agent and Lenders to Borrowers pursuant to the provisions
hereof shall be used by Borrowers only for general operating, working
capital and other proper corporate purposes of Borrowers not otherwise
prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Loans to be
considered a purpose credit within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following documents
in a form satisfactory to Agent:
(i) on a weekly basis, or more frequently as reasonably
practicable upon request of Agent at any time on or after an Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, a Borrowing Base Certificate
setting forth Borrowers' calculation of the Loans and Letter of Credit
Accommodations available to Borrowers pursuant to the terms and conditions
contained herein as of the Saturday of the immediately preceding week, duly
completed and executed by the chief financial officer or other appropriate
financial officer acceptable to Agent, together with all schedules required
pursuant to the terms of the Borrowing Base Certificate duly completed (and
including, without limitation, (A) a summary of the perpetual inventory
reports, (B) reports of amounts of consigned Inventory held by Borrowers by
category and consignor and (C) reports of the Cost and Retail Value of the
Inventory (net of markdowns));
(ii) on a monthly basis or more frequently as Agent may
reasonably request, (A) inventory reports by category to reflect the mix of
Inventory by chain of Borrowers' stores, (B) agings of accounts payable,
(C) reports of sales for each category of Inventory and gross profit margin
for each category of Inventory by chain and (D) reports on sales and use
tax collections, deposits and payments, including monthly sales and use tax
accruals;
(iii) upon Agent's reasonable request, (A) copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, (C) copies of purchase orders, invoices and delivery documents
for Inventory, (D) reports by retail store location of sales and operating
profits for each such retail store location, and (E) perpetual inventory
reports, (F) agings of accounts receivable, and (G) the monthly statements
received by any Borrower or Guarantor from any Credit Card Issuers or
Credit Card Processors, together with such additional information with
respect thereto as shall be sufficient to enable Agent to monitor the
transactions pursuant to the Credit Card Agreements;
(iv) such other reports as to the Collateral as Agent shall
reasonably request from time to time.
(b) Nothing contained in any Borrowing Base Certificate shall be
deemed to limit, impair or otherwise affect the rights of Agent contained
herein and in the event of any conflict or inconsistency between the
calculation of the Loans and Letter of Credit Accommodations available to
Borrowers as set forth in any Borrowing Base Certificate and as determined
by Agent, the determination of Agent shall govern and be conclusive and
binding upon Borrowers absent manifest error. Agent shall, upon Borrowers'
request, provide to Borrowers the basis for the calculation by Agent of the
Loans and Letter of Credit Accommodations available to Borrowers. Without
limiting the foregoing, Borrowers shall furnish to Agent any information
which Agent may reasonably request regarding the determination and
calculation of any of the amounts set forth in the Borrowing Base
Certificate. If any records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent,
Borrowers hereby irrevocably authorize such service, contractor, shipper or
agent to deliver such records, reports and related documents to Agent and
to follow Agent's instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 Receivables Covenants.
(a) Borrowers shall notify Agent promptly of (i) the assertion
of any claims, offsets, defenses or counterclaims by any account debtor,
Credit Card Issuer or Credit Card Processor or any disputes with any of
such persons or any settlement, adjustment or compromise thereof in excess
of $500,000 and (ii) all material adverse information relating to the
financial condition of any account debtor, Credit Card Issuer or Credit
Card Processor. No credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor, Credit
Card Issuer or Credit Card Processor except in the ordinary course of the
business of Borrowers in accordance with the current practices of Borrowers
as in effect on the date hereof. So long as no Event of Default exists or
has occurred and is continuing, Borrowers may settle, adjust or compromise
any claim, offset, counterclaim or dispute with any account debtor, Credit
Card Issuer or Credit Card Processor. At any time that an Event of Default
exists or has occurred and is continuing, Agent shall, at its option, have
the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors, Credit Card Issuers or Credit
Card Processors or grant any credits, discounts or allowances.
(b) Borrowers shall notify Agent promptly of: (i) any notice of
a material default by Borrowers under any of the Credit Card Agreements or
of any default which might result in the Credit Card Issuer or Credit Card
Processor ceasing to make payments or suspending payments to Borrowers,
(ii) any notice from any Credit Card Issuer or Credit Card Processor that
such person is ceasing or suspending, or will cease or suspend, any present
or future payments due or to become due to Borrowers from such person, or
that such person is terminating or will terminate any of the Credit Card
Agreements, and (iii) the failure of Borrowers to comply with any material
terms of the Credit Card Agreements or any terms thereof which might result
in the Credit Card Issuer or Credit Card Processor ceasing or suspending
payments to Borrowers.
(c) Agent may, at any time or times that an Event of Default
exists or has occurred, (i) notify any or all account debtors, Credit Card
Issuers and Credit Card Processors that the Receivables have been assigned
to Agent and that Agent has a security interest therein for itself and the
ratable benefit of Lenders and Agent may direct any or all account debtors,
Credit Card Issuers and Credit Card Processors to make payments of
Receivables directly to Agent, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Receivables or
other obligations included in the Collateral and thereby discharge or
release the account debtor or any other party or parties in any way liable
for payment thereof without affecting any of the Obligations, (iii) demand,
collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Agent shall not be liable for its
failure to collect or enforce the payment thereof nor for the negligence of
its agents or attorneys with respect thereto so long as Agent has selected
such agents or attorneys, with reasonable care, and (iv) take whatever
other action Agent may deem necessary or desirable for the protection of
its interests. At any time that an Event of Default exists or has occurred
and is continuing, at Agent's request, all invoices and statements sent to
any account debtor, Credit Card Issuer or Credit Card Processor shall state
that the Receivables due from such account debtor, Credit Card Issuer or
Credit Card Processor and such other obligations have been assigned to
Agent and are payable directly and only to Agent, for itself and the
ratable benefit of Lenders, and Borrowers shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Receivables as Agent may
require.
(d) Agent shall have the right at any time or times, in Agent's
name or in the name of a nominee of Agent, to verify the validity, amount
or any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Borrowers shall deliver or cause to be delivered to Agent,
with appropriate endorsement and assignment, with full recourse to
Borrowers, all chattel paper and instruments which a Borrower now owns or
may at any time acquire immediately upon such Borrower's receipt thereof,
except as Agent may otherwise agree.
7.3 Inventory Covenants. With respect to the Inventory: (a) Borrowers
shall at all times maintain inventory records consistent with the current
practices of Borrowers as of the date hereof or as modified in any material
respect after the date hereof in a manner reasonably acceptable to Agent,
keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, Borrowers' cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a
physical count of the Inventory at least once each fiscal year, but at any
time or times as Agent may request on or after an Event of Default exists
or has occurred and so long as the same is continuing, and promptly
following such physical inventory shall supply Agent with a report in the
form and with such specificity as may be reasonably satisfactory to Agent
concerning such physical count; (c) Borrowers shall not remove any
Inventory from the locations set forth or permitted herein, without the
prior written consent of Agent, except for sales of Inventory in the
ordinary course of such Borrower's business and except to move Inventory
directly from one location set forth or permitted herein to another such
location or Inventory in transit to such location; (d) upon Agent's
request, such Borrower shall, at its expense, no more than once in any six
(6) month period, but at any time or times as Agent may request at Agent's
expense, or at any time or times as Agent may request at such Borrower's
expense on or after an Event of Default exists or has occurred and so long
as the same is continuing, deliver or cause to be delivered to Agent
written reports or appraisals as to the Inventory in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent or upon which Agent is expressly permitted to rely; (e)
upon Agent's request, each Borrower shall, at its expense, conduct through
RGIS Inventory Specialists, Inc. or another inventory counting service
acceptable to Agent, a physical count of the Inventory in form, scope and
methodology acceptable to Agent no more than once in any twelve (12) month
period, but at any time or times as Agent may request on or after an Event
of Default exists or has occurred and so long as the same is continuing,
the results of which shall be reported directly by such inventory counting
service to Agent and such Borrower shall promptly deliver confirmation in a
form satisfactory to Agent that appropriate adjustments have been made to
the inventory records of such Borrower to reconcile the inventory count to
such Borrower's inventory records; (f) each Borrower shall produce, use,
store and maintain the Inventory, with all reasonable care and caution and
in accordance with applicable standards of any insurance and in conformity
with applicable laws (including, but not limited to, the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (g) as between Agent, Lenders and
Borrowers, each Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory; (h) each Borrower shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate such Borrower to repurchase such Inventory except for the right of
return given to retail customers of such Borrower in the ordinary course of
the business of such Borrower in accordance with the then current return
policy of such Borrower; (i) each Borrower shall keep the Inventory in good
and marketable condition in all material respects; (j) no Borrower shall
acquire or accept any Inventory on consignment or approval, except to the
extent such Inventory is reported to Agent in accordance with the terms
hereof; and (k) each Borrower shall give Agent not less than ten (10) days'
prior written notice of any change in the inventory counting service used
by such Borrower.
7.4 Power of Attorney. Each Borrower hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as such Borrower's
true and lawful attorney-in-fact, and authorizes Agent, in such Borrower's
or Agent's name, to: (a) at any time an Event of Default or act, condition
or event which with notice or passage of time or both would constitute an
Event of Default exists or has occurred and is continuing (i) demand
payment on Receivables or other proceeds of Inventory or other Collateral,
(ii) enforce payment of Receivables by legal proceedings or otherwise,
(iii) exercise all of such Borrower's rights and remedies to collect any
Receivables or other Collateral, (iv) sell or assign any Receivables upon
such terms, for such amount and at such time or times as the Agent deems
advisable, (v) settle, adjust, compromise, extend or renew a Receivable,
(vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor, and (viii) do all acts and things which
are necessary, in Agent's determination, to fulfill such Borrower's
obligations under this Agreement and the other Financing Agreements, (b) at
any time that Agent may receive any item of payment or proceeds thereof,
endorse such Borrower's name upon such item of payment or proceeds thereof
and deposit the same in the Agent's account for application to the
Obligations, (c) at any time Agent may receive any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any
Receivable or any goods pertaining thereto or any other Collateral, endorse
such Borrower's name thereon, (d) at any time sign such Borrower's name on
any verification of Receivables and notices thereof to account debtors and
(e) execute in such Borrower's name and file any UCC financing statements
or amendments thereto. Each Borrower hereby releases Agent, Lenders and
its and their officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result
of Agent's or such Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
7.5 Right to Cure. Agent may, at its option, (a) upon notice to
Borrowers, cure any default by Borrowers, Guarantors or their Subsidiaries,
under any material agreement with a third party which affects the
Collateral, its value or the ability of Agent to collect, sell or otherwise
dispose of the Collateral or the rights and remedies of Agent or any Lender
therein or the ability of Borrowers or Guarantors to perform their
obligations hereunder or under the other Financing Agreements, provided,
that, so long as no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default,
shall exist or have occurred and be continuing, then (i) if such material
agreement provides for or relates to liabilities and obligations which do
not exceed $5,000,000, either singly or in the aggregate, then such notice
from Agent to Borrowers shall be not less than thirty (30) days, and (ii)
if such material agreement provides for or relates to liabilities and
obligations which equal or exceed $5,000,000, either singly or in the
aggregate, then such notice from Agent to Borrowers shall be not less than
ten (10) days, (b) upon notice to Borrowers, pay or bond on appeal any
judgment entered against any Borrower, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with
respect to the Collateral (other than those permitted hereunder) and (d)
pay any amount, incur any expense or perform any act which, in Agent's
judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Agent and Lenders with respect
thereto. Agent may add any amounts so expended to the Obligations and
charge any loan account of Borrowers therefor, such amounts to be repayable
by Borrowers on demand. Agent and Lenders shall be under no obligation to
effect such cure, payment or bonding and shall not, by doing so, be deemed
to have assumed any obligation or liability of Borrowers or Guarantors.
Any payment made or other action taken by Agent or any Lender under this
Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Agent, at
the cost and expense of Borrowers, (a) Agent and any Lender or its designee
shall have complete access to all of each Borrower's premises during normal
business hours and after notice to a Borrower, or at any time and without
notice to Borrowers if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of Borrowers' books and records, and (b) Borrowers shall
allow and assist Agent to make such copies of such books and records or
extracts therefrom as Agent may reasonably request, and (c) Agent may use
during normal business hours such of Borrowers' personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and
if an Event of Default exists or has occurred and is continuing for the
collection of Accounts and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrowers and Guarantors hereby jointly and severally represent and
warrant to Agent and Lenders the following (which shall survive the
execution and delivery of this Agreement), the truth and accuracy of which
are a continuing condition of the making of Loans and providing Letter of
Credit Accommodations by Agent and Lenders to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each
Borrower and Guarantor is a corporation or limited liability company duly
organized and in good standing under the laws of its jurisdiction of
organization and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a Material Adverse Effect. The
execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are
all within the corporate powers or powers as a limited liability company of
each Borrower and Guarantor, have been duly authorized and are not in
contravention of law or the terms of each Borrower's and Guarantor's
certificate of incorporation, by-laws, or other organizational
documentation, or any indenture, agreement or undertaking to which such
Borrower or Guarantor is a party or by which such Borrower or Guarantor or
its property are bound. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrowers and Guarantors
enforceable in accordance with their respective terms. Borrowers and
Guarantors do not have any Subsidiaries except as set forth in Schedule 8.1
hereto, and such other Subsidiaries as may be formed after the date hereof
in accordance with Section 9.7 below. The only Non-Guarantor Subsidiaries
of Borrowers and Guarantors in existence on the date hereof are identified
on Schedule 8.1.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers and Guarantors at any time delivered by
Borrowers or Guarantors to Agent or any Lender have been prepared in
accordance with GAAP and fairly present the financial condition and the
results of operations of Edison and its Subsidiaries on a consolidated
basis as at the dates and for the periods set forth therein. Except as
disclosed in any interim financial statements furnished by or on behalf of
Borrowers or Guarantors to Agent or any Lender prior to the date of this
Agreement, there has been no material adverse change in the assets, liabi
lities, properties and condition, financial or otherwise, of Edison and its
Subsidiaries on a consolidated basis, since the date of the audited
financial statements included with the disclosure statement for the Plan
filed with the Bankruptcy Court as of June 30, 1997.
8.3 Chief Executive Office; Collateral Locations. The chief
executive office of each Borrower and Borrower's books and records
concerning Receivables and Inventory are located only at the address set
forth below and its other places of business and the other locations of
Collateral, if any, are the addresses set forth in Schedule 8.3 hereto and
the other locations established by Borrowers after the date hereof in
accordance with Section 9.2 hereof. Schedule 8.3 correctly identifies any
of such locations which are not owned by Borrowers or Guarantors and sets
forth the owners and/or operators thereof as of the date hereof.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Agent for itself and the ratable benefit of Lenders
under this Agreement and the other Financing Agreements constitute valid
and perfected first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on Schedule 8.4 hereto and
the other liens permitted under Section 9.8 hereof. Each Borrower owns and
has good title to the Collateral owned by such Borrower and such title to
all of its other properties and assets as is necessary to operate its
business, subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Agent for
itself and the ratable benefit of Lenders and such others as are
specifically listed on Schedule 8.4 hereto or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed or caused to
be filed all tax returns and other reports which it was required by law to
file on or prior to the date hereof and has paid all taxes, assessments,
fees, and other governmental charges, and penalties and interest, if any,
against it or its properties, assets, income, or franchise, that are due
and payable (except to the extent that (a) any such taxes, assessments,
fees, and other governmental charges, and penalties and interest are
diligently contested in good faith by appropriate proceedings and proper
reserves are established on the books of the applicable Borrower or
Guarantor as provided by GAAP and (b) a stay of enforcement of any liens
arising from the nonpayment thereof when due is in effect). Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, Provincial, county, local, foreign and other taxes whether or not
yet due and payable and whether or not disputed. Each Borrower and
Guarantor has remitted to the appropriate tax authority all sales and/or
use taxes applicable to its business required to be collected and remitted
under the laws of the United States and each possession or territory
thereof, and each State or political subdivision thereof, including any
State in which such Borrower or Guarantor owns any Inventory or owns or
leases any other property.
8.6 Litigation. Except as set forth in Schedule 8.6, there is no
present investigation by any Governmental Authority to the best of the
knowledge of Borrowers and Guarantors pending or threatened, against or
affecting any Borrower or Guarantor, its assets or business and there is no
action, suit, proceeding or claim by any Person pending or to the best of
the knowledge of Borrowers and Guarantors, threatened, against any Borrower
or Guarantor or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against any Borrower or Guarantor would have a Material Adverse Effect.
8.7 Intellectual Property. Each Borrower and Guarantor owns or
licenses all material patents, trademarks, service-marks, logos, trade
names, trade secrets, know-how, copyrights, or licenses and other rights
with respect to any of the foregoing, which are necessary for the operation
of its business as presently conducted or proposed to be conducted. To the
best of the knowledge of Borrowers and Guarantors, no product, process,
method, substance, part or other material presently contemplated to be sold
by or employed by any Borrower or Guarantor infringes any patent,
trademark, service-▇▇▇▇, trade name, copyright, license or other right
owned by any other Person and no claim or litigation is pending or to the
best of the knowledge of Borrowers and Guarantors, threatened against or
affecting any Borrower or Guarantor contesting its right to sell or use any
such product, process, method, substance, part or other material which
would have a Material Adverse Effect.
8.8 Compliance with Other Agreements and Applicable Laws.
(a) No Borrower or Guarantor is in default in any respect under,
or in violation in any respect of any of the terms of, any agreement,
contract, instrument, lease or other commitment to which it is a party or
by which it or any of its assets are bound where any such default or
violation would have a Material Adverse Effect. Each Borrower and
Guarantor is in compliance in all respects with the requirements of all
applicable laws, rules, regulations and orders of any Governmental
Authority relating to its business, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health
Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended,
ERISA, the Code, as amended, and the rules and regulations thereunder, all
Federal, State, Provincial and local statutes, regulations, rules and
orders relating to consumer credit (including, without limitation, as each
has been amended, the Truth-in-Lending Act, the Fair Credit Billing Act,
the Equal Credit Opportunity Act and the Fair Credit Reporting Act, and
regulations, rules and orders promulgated thereunder), all Federal, State,
Provincial and local states, regulations, rules and orders pertaining to
sales of consumer goods (including, without limitation, the Consumer
Products Safety Act of 1972, as amended, and the Federal Trade Commission
Act of 1914, as amended, and all regulations, rules and orders promulgated
thereunder) where the failure to comply would have a Material Adverse
Effect.
(b) Each Borrower and Guarantor has obtained all material
permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority required for the lawful
conduct of its business (collectively, the Permits ). All of the Permits
are valid and subsisting and in full force and effect except where the
failure to have such Permits would not have a Material Adverse Effect.
There are no actions, claims or proceedings pending or threatened that seek
the revocation, cancellation, suspension or modification of any of the
Permits except where the failure to have such Permits would not have a
Material Adverse Effect.
8.9 Environmental Compliance.
(a) Except as set forth on Schedule 8.9 hereto, (i) each
Borrower, Guarantor and its Subsidiaries has not generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in
any manner which at any time violates any applicable Environmental Law or
any license, permit, certificate, approval or similar authorization
thereunder in any manner which would have a Material Adverse Effect and
(ii) the operations of such Borrower, Guarantor and its Subsidiaries comply
in all respects with all Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder, where the
failure to so comply would have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.9 hereto, there has been
no investigation, proceeding, complaint, order, directive, claim, citation
or notice of violation by any Governmental Authority or any other person
nor is any pending or to the best knowledge of Borrowers and Guarantors
threatened, with respect to any non-compliance with or violation of the
requirements of any Environmental Law by any Borrower, Guarantor or its
Subsidiaries or the release, spill or discharge, threatened or actual, of
any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter,
which affects any Borrower, Guarantor or its Subsidiaries or its or their
businesses, operations or assets or any properties at which any Borrower,
Guarantor or its Subsidiaries has transported, stored or disposed of any
Hazardous Materials, which would have a Material Adverse Effect.
(c) Except as set forth on Schedule 8.9 hereto, each Borrower,
Guarantor and its Subsidiaries has no liability (contingent or otherwise)
in connection with a release, spill or discharge, threatened or actual, of
any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials, which would have a Material Adverse Effect.
(d) Except as set forth on Schedule 8.9 hereto, each Borrower,
Guarantor and its Subsidiaries has all licenses, certificates, approvals,
authorizations or other permits required to be obtained or filed in
connection with the operations of such Borrower, Guarantor and Subsidiary
under any Environmental Law, except where the failure to obtain, file or
maintain as valid and effective any such licenses, certificates, approvals,
authorizations or other Permits would not have a Material Adverse Effect.
All of such licenses, certificates, approvals, authorizations or other
permits are valid and in full force and effect.
8.10 Governmental Authority. No consent, approval or other action of,
or filing with, or notice to any Governmental Authority is required in
connection with the execution, delivery and performance of this Agreement,
the other Financing Agreements or any of the instruments or documents to be
delivered pursuant hereto or thereto, except for those consents or
approvals already obtained by Borrowers and Guarantors and the filing of
UCC financing statements.
8.11 Credit Card Agreements. Set forth in Schedule 8.11 hereto is a
correct and complete list as of the date hereof of all of the Credit Card
Agreements and all other agreements, documents and instruments existing as
of the date hereof between or among Borrowers, Guarantors, the Credit Card
Issuers, the Credit Card Processors and any of their Affiliates. The
Credit Card Agreements constitute all of such agreements necessary for each
Borrower and Guarantor to operate its business as presently conducted with
respect to credit cards and debit cards and no Accounts of Borrowers or
Guarantors arise from purchases by customers of Inventory with credit cards
or debit cards, other than those which are issued by Credit Card Issuers
with whom such Borrower or Guarantor has entered into one of the Credit
Card Agreements set forth on Schedule 8.11 hereto or with whom such
Borrower or Guarantor has entered into a Credit Card Agreement in
accordance with Section 9.13 hereof. Each of the Credit Card Agreements
constitutes the legal, valid and binding obligations of Borrowers and
Guarantors and to the best of the knowledge of Borrowers and Guarantors,
the other parties thereto, enforceable in accordance with their respective
terms and are in full force and effect. No default or event of default, or
act, condition or event which after notice or passage of time or both,
would constitute a default or an event of default under any of the Credit
Card Agreements exists or has occurred. Borrowers and the other parties
thereto have complied with all of the terms and conditions of the Credit
Card Agreements to the extent necessary for Borrowers to be entitled to
receive all payments thereunder. Borrowers have delivered, or caused to be
delivered to Agent, true, correct and complete copies of all of the Credit
Card Agreements.
8.12 Employee Benefits.
(a) No Borrower or Guarantor has engaged in any transaction in
connection with which such Borrower or Guarantor or any of its ERISA
Affiliates could be subject to either a civil penalty assessed pursuant to
ERISA or a tax imposed by the Code, including any accumulated funding
deficiency described in Section 8.12(c) hereof and any deficiency with
respect to vested accrued benefits described in Section 8.12(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected to be incurred by any Borrower or Guarantor with
respect to any employee benefit plan of any Borrower or Guarantor or any of
its ERISA Affiliates. There has been no reportable event (within the
meaning of ERISA) or any other event or condition with respect to any
employee benefit plan of any Borrower or Guarantor or any of its ERISA
Affiliates which presents a risk of termination of any such plan by the
Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which any
Borrower, Guarantor or any of its ERISA Affiliates is required under ERISA
and the Code to have paid under the terms of each employee benefit plan as
contributions to such plan as of the last day of the most recent fiscal
year of such plan ended prior to the date hereof, and no accumulated
funding deficiency (as defined in ERISA and the Code), whether or not
waived, exists with respect to any employee pension benefit plan, including
any penalty or tax described in Section 8.12(a) hereof and any deficiency
with respect to vested accrued benefits described in Section 8.12(d)
hereof.
(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by each Borrower and Guarantor
that are subject to Title IV of ERISA does not exceed the current value of
the assets of such plans allocable to such vested accrued benefits,
including any penalty or tax described in Section 8.12(a) hereof and any
accumulated funding deficiency described in Section 8.12(d) hereof. The
terms current value and accrued benefit have the meanings specified in
ERISA.
(e) No Borrower, Guarantor or any of their ERISA Affiliates is
or has ever been obligated to contribute to any multiemployer plan (as
such term is defined in ERISA) that is subject to Title IV of ERISA.
8.13 Bank Accounts. All of the deposit accounts, securities accounts,
investment accounts or other accounts in the name of or used by each
Borrower and Guarantor maintained at any bank or other financial
institution as of the date hereof are set forth on Schedule 6.3 hereto.
8.14 Customs Brokers. All of the Customs Brokers used by Borrowers
and Guarantors as of the date hereof are set forth on Schedule 8.14 hereto.
8.15 Interrelated Businesses. Borrowers and Guarantors make up an
interrelated organization of various entities constituting a single
economic and business enterprise in which each Borrower and Guarantor
shares an identity of interests such that any benefit received by any
Borrower or Guarantor benefits the other such Persons. Each Borrower and
Guarantor purchases or sells and supplies goods and renders or receives
services to or from, or for the benefit of, the other such Persons and
provides or receives other financial accommodations to or for the benefit
of the other such Persons and administrative, marketing, payroll and
management services to or from or for the benefit of, the other such
Persons. Each Borrower and Guarantor has consolidated accounting,
administrative, financial, computer, credit, legal and other services.
8.16 Capitalization.
(a) All of the issued and outstanding shares of Capital Stock of
Guarantors are directly and beneficially owned and held as of the date
hereof by the persons identified on Schedule 8.16 and all of such shares
have been duly authorized and are fully paid and non-assessable, free and
clear of all claims, liens, pledges and encumbrances of any kind, except in
favor of Agent and as permitted hereunder. All of the issued and
outstanding shares of Capital Stock of Edison Apparel are directly and
beneficially owned and held by Edison and all of such shares have been duly
authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except in favor of
Agent and as permitted hereunder.
(b) Each Borrower is solvent and will continue to be solvent
after the creation of the Obligations, the security interests of Agent and
the other transactions contemplated hereunder, is able to pay its debts as
they mature and has (and has reason to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its
business and all businesses in which it is about to engage. The assets and
properties of each Borrower at a fair valuation and at their present fair
salable value are, and will be, greater than the Indebtedness and other
liabilities of such Borrower, and including subordinated and contingent
liabilities computed at the amount which, to the best of the knowledge of
Borrowers, represents an amount which can reasonably be expected to become
an actual or matured liability.
8.17 Plan. The Plan has been confirmed pursuant to the Confirmation
Order, and concurrently with the making of the initial Loans or issuance of
the initial Letter of Credit Accommodations, the Effective Date has
occurred. The Plan is valid and binding upon all parties in interest and
is in full force and effect. The Confirmation Order (a) has been duly
entered; (b) is valid, subsisting and continuing; (c) has not been revoked,
remanded, vacated, modified, reversed on appeal or revoked, remanded,
vacated, reversed or modified by any Bankruptcy or District Court Judge;
(d) has not been appealed as of the date hereof, except as set forth on
Schedule 8.17 hereto and (e) is not subject to any pending motion for
reconsideration or any stay pending appeal. All steps to be taken on or
before the Effective Date under the terms of the Plan have been taken and
upon the making of the initial Loans or issuing of the initial Letter of
Credit Accommodations hereunder, all conditions precedent to the
effectiveness of the Plan have been fulfilled, in each case as of the date
hereof. Borrowers have delivered, or caused to be delivered, to Agent and
Lenders a true copy of the Plan (including all amendments, modifications
and supplements thereto) and the Confirmation Order in the form duly
entered by the Bankruptcy Court on or before the date hereof.
8.18 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrowers or Guarantors in writing to Agent or
any Lender in connection with this Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including,
without limitation, all information on the schedules is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make
such information not misleading. No event or circumstance with respect to
the business of Edison and its Subsidiaries has occurred which has had or
could reasonably be expected to have a Material Adverse Effect, which has
not been fully and accurately disclosed to Agent in writing.
8.19 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Agent and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall
be conclusively presumed to have been relied on by Agent and Lenders
regardless of any investigation made or information possessed by Agent and
Lenders. The representations and warranties set forth herein shall be
cumulative and in addition to any other representations or warranties which
Borrowers shall now or hereafter give, or cause to be given, to Agent and
Lenders.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Borrower and Guarantor shall, and
shall cause its Subsidiaries to, at all times preserve, renew and keep in
full, force and effect its corporate existence and rights and franchises
with respect thereto and maintain in full force and effect all licenses,
trademarks, tradenames, approvals, authorizations, leases, contracts and
Permits necessary to carry on its business as presently or proposed to be
conducted, except to the extent otherwise permitted under Section 9.7
hereof. Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, give Agent thirty (30) days prior written notice of any
proposed change in its corporate name, which notice shall set forth the new
name and, if requested by Agent, such Borrower or Guarantor shall deliver
to Agent a copy of the amendment to the Certificate of Incorporation of
such Borrower, Guarantor or Subsidiary providing for the name change
certified by the Secretary of State of the jurisdiction of incorporation of
such Borrower, Guarantor or Subsidiary as soon as it is available.
9.2 New Collateral Locations. Each Borrower and Guarantor may open
any new location within the United States so long as such Borrower or
Guarantor (a) gives Agent thirty (30) days prior written notice of the
intended opening of any such new location; except, that, Borrowers and
Guarantors shall not be required to give such prior written notice of a new
retail store location of Borrowers or Guarantors, provided, that, (i) no
Event of Default, or act, condition or event which with notice or passage
of time or both would constitute an Event of Default, shall exist or have
occurred and be continuing, (ii) the total amount of Inventory located at
all such new retail store locations shall not exceed $2,500,000 (provided,
that, if Borrowers have provided evidence to Agent that such new retail
store location is in a jurisdiction in which the security interest or lien
of Agent for itself and the ratable benefit of Lenders is perfected, the
amount of Inventory at such location shall not be considered for purposes
of such limit), and (iii) Borrowers and Guarantors shall include such new
retail store locations in the monthly reports provided by Borrowers and
Guarantors to Agent in accordance with Section 9.6 hereof, and (b) executes
and delivers, or causes to be executed and delivered, to Agent such
agreements, documents, and instruments as Agent may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc. Each Borrower and
Guarantor shall, and shall cause its Subsidiaries to, at all times comply
with all applicable provisions of laws, rules, regulations, licenses,
approvals, orders and Permits and duly observe all requirements, of any
foreign, Federal, State, Provincial or local Governmental Authority,
including, without limitation, the Occupational Safety and Health Act of
1970, as amended, the Code, the Fair Labor Standards Act of 1938, as
amended, and the rules and regulations thereunder, all Federal, State,
Provincial and local statutes, regulations, rules and orders relating to
consumer credit (including, without limitation, as each has been amended,
the Truth-in-Lending Act, the Fair Credit Billing Act, the Equal Credit
Opportunity Act and the Fair Credit Reporting Act, and regulations, rules
and orders promulgated thereunder), all Federal, State, Provincial and
local statutes, regulations, rules and orders pertaining to sales of
consumer goods (including, without limitation, the Consumer Products Safety
Act of 1972, as amended, and the Federal Trade Commission Act of 1914, as
amended, and all regulations, rules and orders promulgated thereunder) and
all statutes, rules, regulations, orders, permits and stipulations relating
to environmental pollution and employee health and safety, including,
without limitation, all Environmental Laws, where the failure to so comply
would have a Material Adverse Effect.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall,
and shall cause its Subsidiaries to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or
its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers and Guarantors and with respect to which adequate
reserves have been set aside on its books and as to which no lien has been
filed.
9.5 Insurance.
(a) Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, at all times insure all tangible property of such
Borrower, Guarantor or Subsidiary (other than tangible property located in
retail stores) against loss or damage by fire with extended coverage,
theft, burglary, pilferage, loss in transit, and such other hazards as
Agent shall specify and shall also maintain, and cause each of its
Subsidiaries to maintain, such other insurance as Agent may reasonably
require, including, without limitation, liability insurance, in each case
in amounts, under policies and by insurers acceptable to Agent.
(b) Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, cause Agent (for the ratable benefit of the Lenders) to be
named in each such policy as loss payee or additional insured, as
appropriate, in a manner acceptable to Agent. Each policy of insurance
shall contain a clause or endorsement requiring the insurer to give not
less than thirty (30) days (or in the case of nonpayment of premiums, ten
(10) days) prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever and with respect to property
insurance, a clause or endorsement stating that the interest of Agent shall
not be impaired or invalidated by any act or neglect of any Borrower,
Guarantor or Subsidiary or the owner of any premises where assets and/or
properties are located nor by the use of such premises for purposes more
hazardous than are permitted by such policy.
(c) All premiums for such insurance shall be paid by the
applicable Borrower, Guarantor or Subsidiary when due, and certificates of
insurance and, if requested, photocopies of the policies shall be delivered
to Agent (with copies for each of Lenders). If any Borrower or Guarantor
fails to procure such insurance or to pay the premiums therefor when due,
Agent may (but shall not be required to) do so and charge the costs thereof
to the loan account of Borrower maintained by Agent.
(d) Each Borrower and Guarantor shall promptly notify Agent of
any loss, damage, or destruction to any of the tangible property of such
Borrower or Guarantor or any of its Subsidiaries or arising from its use,
whether or not covered by insurance, to the extent that the amount of the
loss with respect to such property exceeds $1,000,000.
(e) Subject to Section 9.5(f) hereof, Agent is hereby authorized
to collect directly all insurance proceeds with respect to liability
insurance for which Agent is named as beneficiary or additional insured and
property insurance for which Agent is named as loss payee or additional
insured.
(f) In addition to the insurance required pursuant to the
foregoing, each Borrower or Guarantor shall, and shall cause its
Subsidiaries to, maintain such other insurance (which may be self-
insurance) with respect to its property and business against casualties and
contingencies of such types (including, without limitation, business
interruption, environmental liability, public liability, product liability,
and larceny, embezzlement or other criminal misappropriation) and in such
amounts as is customary for persons of established reputation engaged in
the same or a similar business and similarly situated. All of the
insurance of Borrowers and Guarantors and their Subsidiaries shall require
at least thirty (30) days (or, in the case of nonpayment of premiums, ten
(10) days) prior written notice to Agent of any cancellation, non-renewal
or material change. At its option, Agent may apply any insurance proceeds
with respect to Collateral received by Agent at any time to payment of the
Obligations, whether or not then due, in any order and in such manner as
Agent may determine or hold such proceeds as cash collateral for the
Obligations, except as Agent may otherwise agree, provided, however, that
if at the time Agent receives any such insurance proceeds no Event of
Default, and no act, condition or event which with notice or passage of
time or both would constitute an Event of Default, shall exist or have
occurred and be continuing, and the aggregate amount of such proceeds from
any one occurrence, loss or destruction does not exceed $1,000,000, then
Agent shall remit such proceeds to Borrowers.
9.6 Financial Statements and Other Information.
(a) Borrowers shall promptly furnish to Agent and Lenders all
such financial information as Agent shall reasonably request. Borrowers
hereby authorize Agent to meet with and/or contact Borrowers' auditors and
accountants regarding the financial condition of Edison and its
Subsidiaries. Edison will authorize its accountants and auditors to
cooperate with Agent. Without limiting the foregoing, Borrowers will
furnish to Agent and Lenders, in such detail as Agent shall request, the
following:
(i) As soon as available, but in any event not later than
ninety (90) days after the close of each fiscal year of Edison and its
Subsidiaries, (A) consolidated audited balance sheets of Edison and its
Subsidiaries as of the end of such fiscal year and (B) consolidated audited
statements of income and expense, retained earnings and cash flow for
Edison and its Subsidiaries for such fiscal year, all in reasonable detail,
fairly presenting the financial position and the results of operations of
Edison and its Subsidiaries as at the date thereof and for the fiscal year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards by and
accompanied by a report thereon unqualified as to scope of Ernst & Young
L.L.P. or such other independent certified public accountants selected by
Edison and reasonably satisfactory to Agent.
(ii) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter of Edison and
its Subsidiaries (other than any fiscal quarter which is also the end of
any fiscal year of Edison and its Subsidiaries) and not later than ninety
(90) days after the end of any fiscal quarter of Edison and its
Subsidiaries which is also the end of any fiscal year of Edison and its
Subsidiaries, (A) consolidated unaudited balance sheets of Edison and its
Subsidiaries as at the end of such quarter and (B) consolidated unaudited
statements of income and expense and cash flow for Edison and its
Subsidiaries for such quarter and for the period from the beginning of the
fiscal year to the end of such quarter, in each instance setting forth next
to such quarterly figures and year to end of quarter figures, the budgeted
figures for such periods, respectively, together with the accompanying
notes thereto, all in reasonable detail, fairly presenting the financial
position and results of operation of Edison and its Subsidiaries as at the
date thereof and for such periods, and prepared in accordance with GAAP
consistent with the audited financial statements required pursuant to
Section 9.6(a)(i) above. Edison shall certify, by a certificate signed by
its chief financial officer, that all such statements have been prepared in
accordance with GAAP and present fairly, subject to normal year-end
adjustments, Edison's consolidated financial position as at the dates
thereof and its results of operations for the periods then ended.
(iii) As soon as available, but in any event not later than
thirty (30) days after the close of each fiscal month of Edison and its
Subsidiaries (other than any fiscal month which is also the end of any
fiscal quarter of Edison and its Subsidiaries) and not later than forty-
five (45) days after the close of each fiscal month of Edison and its
Subsidiaries which is also the end of any fiscal quarter of Edison and its
Subsidiaries (other than any fiscal quarter which is also the end of any
fiscal year of Edison and its Subsidiaries) and not later than ninety (90)
days after the close of each fiscal month of Edison and its Subsidiaries
which is also the end of any fiscal year of Edison and its Subsidiaries,
(A) consolidated unaudited balance sheets of Edison and its Subsidiaries as
at the end of such fiscal month and (B) consolidated unaudited statements
of income and expense and cash flow for Edison and its Subsidiaries for
such fiscal month and for the period from the beginning of the fiscal year
to the end of such fiscal month, together with comparable store information
by division for the corresponding portion of Edison's previous fiscal year,
all in reasonable detail. Edison shall certify, by a certificate signed by
its chief financial officer, that all such statements have been prepared in
accordance with GAAP and present fairly, subject to normal year-end
adjustments, Edison's consolidated financial position as at the dates
thereof and its results of operations for the periods then ended.
(iv) With each of the audited financial statements
delivered pursuant to Section 9.6(a)(i), a certificate of the independent
certified public accountants that examined such statements to the effect
that they have reviewed and are familiar with the Financing Agreements and
that, in the course of examining such financial statements, they did not
become aware of any fact or condition which then constituted an Event of
Default, except for those, if any, described in reasonable detail in such
certificate.
(b) Borrowers shall promptly notify Agent and Lenders in writing
of the details of (i) any loss, damage, investigation, action, suit,
proceeding or claim relating to the Collateral or any other property which
is security for the Obligations which has or would have a Material Adverse
Effect and (ii) the occurrence of any Event of Default, or act, condition
or event which, with the passage of time or giving of notice or both, would
constitute an Event of Default.
(c) Borrowers shall promptly after the sending or filing thereof
furnish or cause to be furnished to Agent and Lenders copies of all reports
which Edison sends to its stockholders generally and copies of all reports
and registration statements which any Borrower or Guarantor files with the
Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.
(d) Without limiting the rights of Agent under any other
provision of this Agreement, as soon as available, but in any event not
later than thirty (30) days after the end of each calendar month, Borrowers
and Guarantors shall deliver to Agent, in form and reasonably substance
satisfactory to Agent, in each case certified by the chief financial
officer of Edison as true and correct: (i) a statement confirming the
payment of rent and other amounts due to owners and lessors of real
property used by Borrowers and Guarantors in the immediately preceding
month, subject to year-end or periodic adjustments, (ii) the addresses of
all new retail store locations of Borrowers and Guarantors opened and
existing retail store locations closed or sold, in each case since the date
of the most recent certificate delivered to Agent containing the
information required under this subsection (ii), or if no such certificate
has been delivered, then since the date hereof, and (iii) a report of any
new deposit account, investment accounts, securities accounts or other
accounts established or used by Borrowers and Guarantors with any bank or
other financial institution, including the Borrower or Guarantor in whose
name the account is maintained, the account number, the name and address of
the financial institution at which such account is maintained, the purpose
of such account and, if any, the amount held in such account on or about
the date of such report.
(e) Without limiting the rights of Agent under any other
provisions of this Agreement, Borrowers and Guarantors shall deliver to
Agent, upon the reasonable request of Agent from time to time, in each case
certified by the chief financial officer or other senior financial officer
of Edison as true and correct, a list and description of guarantees by a
Borrower after the date hereof of the obligations of any Guarantor under
real property leases with respect to retail store locations leased by such
Guarantor, which list shall set forth in reasonable detail satisfactory to
Agent, the person or persons to whom such guaranteed obligations will be
owed, the premises to be leased and the amount of the monthly rent or other
amounts payable to the lessor.
(f) Borrowers shall furnish or cause to be furnished to Agent
and Lenders such budgets, forecasts, projections and other information
respecting the Collateral and the businesses of Borrowers and Guarantors,
as Agent may, from time to time, reasonably request. Agent and Lenders are
hereby authorized to deliver a copy of any financial statement or any other
information relating to the businesses of Borrowers and Guarantors to any
court or other Governmental Authority or to any Participant or assignee or
prospective Participant or assignee (subject to Section 13.6 hereof with
respect to the confidentiality of such information). Any documents,
schedules, invoices or other papers delivered to Agent or any Lender may be
destroyed or otherwise disposed of by Agent or such Lender one (1) year
after the same are delivered to Agent or such Lender, except as otherwise
designated by Borrowers to Agent or such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each
Borrower and Guarantor shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with any other
Person, except, that, (i) a Borrower or Guarantor may merge with and into
or consolidate with any other Borrower or Guarantor, and any Non-Guarantor
Subsidiary may merge with and into or consolidate with any Borrower,
Guarantor or any other Non-Guarantor Subsidiary; provided, that, each of
the following conditions is satisfied as determined by Agent: (A) Agent
shall have received not less than ten (10) Business Days prior written
notice of the intention of such Borrower, Guarantor or Non-Guarantor
Subsidiary to so merge or consolidate and such information with respect
thereto as Agent may request, (B) as of the effective date of the merger or
consolidation and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, (C) promptly upon Agent's request, Borrowers and Guarantors
shall furnish, or cause to be furnished to Agent, true, correct and
complete copies of all agreements, documents and instruments relating to
such merger or consolidation, including, but not limited to, the
certificate or certificates of merger or consolidation as filed with each
appropriate Secretary of State, (D) in the case of a merger or
consolidation involving any Borrower or Guarantor, promptly upon Agent's
request, the surviving entity shall immediately upon the effectiveness of
the merger or consolidation expressly confirm in writing pursuant to an
agreement, in form and substance satisfactory to Agent, its continuing
liability in respect of the Obligations and Financing Agreements and
execute and deliver such other agreements, documents and instruments as
Agent may request in connection therewith, (E) in the case of a merger or
consolidation involving any Borrower or Guarantor, promptly upon Agent's
request, each Borrower and Guarantor shall ratify and confirm that their
respective guarantees of the Obligations shall apply to the Obligations as
assumed by such surviving entity, (F) in the case of a merger or
consolidation involving any Borrower or Guarantor, the surviving entity
shall, immediately before and immediately after giving effect to such
transaction or series of transactions have a net worth (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of
transactions) equal to or greater than the net worth it had immediately
prior to such transaction or series of transactions, and (G) no Borrower or
Guarantor shall become obligated with respect to any Indebtedness, nor any
of its property become subject to any security interest, lien, claim or
other encumbrance, pursuant to such merger or consolidation unless such
Borrower or Guarantor could incur such Indebtedness or create such security
interest, lien, claim or other encumbrance hereunder or under the other
Financing Agreements and (ii) a Guarantor may merge with and into any other
Guarantor or Non-Guarantor Subsidiary as set forth on Schedule 9.7 hereto,
provided, that, such mergers shall occur by no later than December 31,
1997, except as Agent may otherwise agree; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose
of any of its assets to any other Person, except for:
(i) sales of Inventory in the ordinary course of business,
(ii) sales or other dispositions by Borrowers and Guarantors
of assets in connection with the closing or sale of a retail store location
of a Borrower or Guarantor in the ordinary course of business which consist
of leasehold interests in the premises of such store, the equipment and
fixtures located at such premises and the books and records relating
exclusively and directly to the operations of such store; provided, that,
as to each and all such sales, (A) on the date of, and after giving effect
to, any such sale, in any fiscal year, the number of retail store locations
closed or sold by Borrowers and Guarantors minus the number of retail
stores opened by Borrowers and Guarantors in such fiscal year, whether as
relocations of closed stores or new retail store locations, shall not
exceed the amount equal to ten percent (10%) of the number of retail store
locations of Borrowers and Guarantors as of the end of the immediately
preceding fiscal year, but in no event shall the retail store locations
closed or sold by Borrowers and Guarantors in any fiscal year have
accounted for more than $150,000,000 of all sales of Borrowers and
Guarantors in the immediately preceding fiscal year, (B) at any time after
Agent's request, thereafter Agent must have received not less than ten (10)
Business Days prior written notice of such sale, which notice shall set
forth in reasonable detail satisfactory to Agent, the parties to such sale
or other disposition, the assets to be sold or otherwise disposed of, the
purchase price and the manner of payment thereof and such other information
with respect thereto as Agent may request, (C) as of the date of such sale
or other disposition and after giving effect thereto, no Event of Default,
or act, condition or event which with notice or passage of time would
constitute an Event of Default, shall exist or have occurred and be
continuing, (D) such sale or other disposition shall be on commercially
reasonable prices and terms in a bona fide arm's length transaction, and
(E) in the event Agent shall have the right to instruct the depository
banks at which the Concentration Accounts are maintained to transfer the
funds received or deposited into any of the Concentration Accounts to the
Payment Account, any and all net proceeds in respect of such sale or other
disposition of Collateral or reasonably attributable to Collateral shall be
paid or delivered, or caused to be paid or delivered, to Agent in
accordance with the terms of this Agreement either, at Agent's option, for
application to the Obligations in accordance with the terms hereof (except
to the extent such proceeds reflect payment in respect of Indebtedness
secured by a properly perfected first priority security interest in the
assets sold, in which case, such proceeds shall be applied to such
indebtedness secured thereby) or to be held by Agent for itself and the
ratable benefit of Lenders as cash collateral for the Obligations on terms
and conditions acceptable to Agent,
(iii) sales or other dispositions by Borrowers and
Guarantors of assets (other than the Collateral) in addition to sales or
other dispositions permitted under Section 9.7(b)(ii) above or Sections
9.7(b)(iv), (v), (vi) and (vii) below; provided, that, as to each and all
such sales or other dispositions, each of the following conditions is
satisfied, as determined by Agent: (A) the consideration received in
connection with any such sale or other disposition shall be at least equal
to the fair market value of such assets, (B) the fair market value of all
such assets so sold by Borrowers, Guarantors and their Subsidiaries in a
single transaction or series of related transactions shall not exceed
$5,000,000 in the aggregate in any fiscal year, or $20,000,000 in the
aggregate during the term of this Agreement, for all such assets so sold by
Borrowers and Guarantors, (C) any and all net cash proceeds payable or
delivered to any Borrower or Guarantor from such sales or other
dispositions shall be used to repay any Indebtedness which is secured by a
purchase money security interest on the asset so sold or otherwise disposed
of, and any remaining proceeds shall be either (1) retained by Borrowers
and Guarantors if at the time of receipt of such proceeds no Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred and
be continuing, or (2) if an Event of Default, or such other act, condition
or event, shall then exist or have occurred and be continuing, paid or
delivered, or caused to be paid or delivered, to Agent either, at Agent's
option, for application to the Obligations or to be held by Agent for
itself and the ratable benefit of Lenders as cash collateral for the
Obligations on terms and conditions acceptable to Agent, (D) Agent shall
have received not less than ten (10) Business Days prior written notice of
any such sale or other disposition of assets having a fair market value in
excess of $500,000, which notice shall set forth in reasonable detail
satisfactory to Agent, the parties to such sale or other disposition, the
assets to be sold or otherwise disposed of, the purchase price and the
manner of payment thereof and such other information with respect thereto
as Agent may request, (E) to the extent that the assets sold or otherwise
disposed of consist of any portion of real property or equipment related
thereto, the sale thereof shall not, in the good faith determination of
Agent, have an adverse affect on the value, or the ability to use the
remaining portion of the real property in a manner consistent with current
uses thereof or the ability of Agent to realize on any of the Collateral,
and (F) as of the date of such sale and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or passage
of time would constitute an Event of Default, shall exist or have occurred
and be continuing,
(iv) the grant by Borrowers, Guarantors and their
Subsidiaries of a non-exclusive license to any person for the use of any
trademarks or other Proprietary Rights, provided, that, as to each and all
of such licenses, each of the following conditions is satisfied, (A) at the
time of the grant of the license and after giving effect thereto, no Event
of Default, or act, condition or event which with notice or passage of time
or both would constitute an Event of Default, shall exist or have occurred
and be continuing, (B) the rights of such licensee in the trademarks or
other Proprietary Rights subject to such license shall be subject and
subordinate in all respects to the rights of Agent therein, and (C) Agent
shall have received true, correct and complete copies of the executed
license agreement, promptly after the execution thereof, which shall be
acceptable to Agent and shall expressly provide for the subordination
required under clause (B) above,
(v) the disposition through the abandonment, cancellation or
other failure to maintain any trademark or other Proprietary Rights which
are no longer used or useful in the business of Borrowers, Guarantors or
their Subsidiaries and are not otherwise material to the businesses of
Borrowers, Guarantors or their Subsidiaries;
(vi) the sale, assignment or transfer by Borrowers or
Guarantors of any of the Capital Stock of Borrowers, Guarantors or their
Subsidiaries to one of the other Borrowers, Guarantors or Subsidiaries,
provided, that, as to each and all of such transfers, each of the following
conditions is satisfied, as determined by Agent: (A) Agent shall have
received not less than ten (10) Business Days prior written notice of such
transfer, which notice shall set forth in reasonable detail satisfactory to
Agent, the parties to such transfer, the Capital Stock which is being
transferred and such other information with respect thereto as Agent may
reasonably request, (B) as of the date of such transfer and after giving
effect thereto, no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default,
shall exist or have occurred and be continuing;
(vii) the distribution of assets of Edison and its
Subsidiaries to the extent required by the Plan (as in effect on the date
hereof) and the sale of assets from the Funding Escrow Account as
contemplated by the Plan (as in effect on the date hereof);
(c) form or acquire any Subsidiaries, except, that, (i)
Borrowers and Guarantors may acquire Subsidiaries to the extent permitted
under Section 9.7(b)(vi) above, (ii) Borrowers and Guarantors may form or
acquire Subsidiaries (including any limited liability company) after the
date hereof; provided, that, each of the following conditions is satisfied,
as determined by Agent: (A) promptly upon such formation or acquisition,
such Borrower or Guarantor shall cause any such Subsidiary to execute and
deliver to Agent, in form and substance satisfactory to Agent: (1) an
absolute and unconditional guarantee of payment of all of the Obligations,
(2) a general security agreement granting to Agent, for itself and ratable
benefit of Lenders, a first and only security interest in and lien upon all
of the assets and properties of such Subsidiary, (3) related Uniform
Commercial Code financing statements, and (4) such other agreements,
documents and instruments as Agent may reasonably require, (B) the amount
of the investment by such Borrower or Guarantor in the Capital Stock of
such Subsidiary and any other amounts paid by such Borrower or Guarantor to
or for the formation or acquisition of such Subsidiary shall not exceed the
amount permitted under Section 9.10 hereof and (C) no Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, and (iii) Borrowers, Guarantors and Non-Guarantor Subsidiaries
may form or acquire other Non-Guarantor Subsidiaries after the date hereof;
provided, that, each of the following conditions is satisfied, as
determined by Agent: (A) Borrowers shall have given Agent notice of such
formation or acquisition not later than the effective date thereof and (B)
no payment of any amount, transfer of any property (other than de minimis
amounts required under applicable state corporate law for the commencement
of corporate existence not to exceed $75,000 in the aggregate for all such
Non-Guarantor Subsidiaries) or incurrence of any Indebtedness shall have
been required from or by any of Borrowers or Guarantors in connection with
such formation or acquisition or otherwise at any time be made to or on
behalf of such Non-Guarantor Subsidiaries (except for loans by Borrowers or
Guarantors to Non-Guarantor Subsidiaries to the extent permitted under
Section 9.10(h) hereof); or
(d) wind up, liquidate or dissolve, except, (i) in connection
with any merger or consolidation permitted under Section 9.7(a) hereof and
(ii) any Guarantor or Non-Guarantor Subsidiary may wind up, liquidate or
dissolve; provided, that, each of the following conditions is satisfied:
(A) Agent shall have received not less than ten (10) Business Days prior
written notice of the intention to wind up, liquidate or dissolve such
Guarantor or Non-Guarantor Subsidiary, (B) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all
applicable laws and regulations, (C) effective upon such winding up,
liquidation or dissolution all of the assets and properties of such
Guarantor or Non-Guarantor Subsidiary shall be duly and validly transferred
and assigned to any Borrower or other Guarantor (or in the case of a Non-
Guarantor Subsidiary, also to another Non-Guarantor Subsidiary), free and
clear of any liens, restrictions or encumbrances, (D) after giving effect
to such winding up, liquidation or dissolution, none of Borrowers or
Guarantors shall have any liabilities or obligations as a result thereof,
and (E) as of the date of such winding up, liquidation or dissolution, and
after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred and be continuing, or
(e) agree to do any of the foregoing.
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, the Collateral, except:
(a) liens and security interests of Agent for itself and the
ratable benefit of Lenders;
(b) liens for taxes or other governmental charges not yet
payable or liens for taxes or other governmental charges being contested in
good faith and by proper proceedings diligently pursued, provided, that, a
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor on the applicable financial statements
of the applicable Borrower or Guarantor and that a stay of enforcement of
any such lien is in effect;
(c) liens upon equipment granted in connection with the
acquisition of such equipment after the date hereof (including, without
limitation, pursuant to Capital Leases), provided, that: (i) the aggregate
amount of the Indebtedness secured by such liens does not exceed
$30,000,000, (ii) each such lien attaches only to the equipment acquired
with the Indebtedness secured thereby, and (iii) the principal amount of
the Indebtedness secured by any item of equipment shall not exceed one
hundred percent (100%) of the cost thereof;
(d) reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other similar title
exceptions or encumbrances affecting any real property of Edison or any of
its Subsidiaries, provided, that, they do not in the aggregate materially
detract from the value of said properties or materially interfere with
their use in the ordinary conduct of the businesses of any Borrower or
Guarantor;
(e) deposits under workmen's compensation, unemployment
insurance, social security and other similar laws;
(f) liens relating to statutory obligations with respect to
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(g) carriers', warehousemen's, mechanics, materialmen's or other
similar liens arising in the ordinary course of business securing sums
which are not overdue or are being diligently contested in good faith by
Borrowers or Guarantors and if such lien is being contested, so long as the
holder of such lien has not obtained any judgment or taken any action
adversely affecting the assets of Borrowers or Guarantors;
(h) judgment liens on assets of any Borrower or Guarantor being
contested in good faith and by proper proceedings diligently pursued,
provided, that, (i) a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor on the applicable
financial statements of such Borrower or Guarantor, (ii) a stay of
enforcement of any such lien is in effect and (iii) if any such judgment
lien is on any of the Collateral, such lien or liens, either singly or in
the aggregate, are not in excess of $1,000,000;
(i) the liens and security interests upon the Edbro Missouri
Facility in favor of the City of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ County, Missouri to
secure the Indebtedness of Edbro Missouri permitted under Section 9.9(d)
hereof;
(j) the mortgages, liens and security interests of the Funding
Escrow Agent on the Funding Escrow Properties to secure the payment of
interest by Edison on the New Notes from the date of the issuance thereof
through and including July 1, 2000, to the extent required by the Plan (as
in effect on the date hereof); or
(k) the liens and security interests set forth on Schedule 8.4
hereto.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall
not permit any of its Subsidiaries to, incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any Indebtedness,
except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) to
the extent not incurred or secured by liens (including Capital Leases) in
violation of any other provision of this Agreement;
(c) Indebtedness of Edison evidenced by the New Notes, provided,
that:
(i) the principal amount of such Indebtedness shall not in
the aggregate exceed $120,000,000 (since Edison has elected on or before
the Effective Date to reduce certain cash to be paid into the Cash
Distribution Pool pursuant to Section 1.15 of the Plan as in effect on the
date hereof so that the principal amount of the New Notes has been
increased from $100,000,000 to $120,000,000), less the aggregate amount of
all repayments or repurchases, optional or mandatory, of principal in
respect thereof, plus interest thereon at the rate provided for in the New
Notes as in effect on the date hereof,
(ii) Edison shall only make regularly scheduled payments of
principal and interest on an unaccelerated basis, in respect of such
Indebtedness in accordance with the terms of the New Notes as in effect on
the date hereof (except as otherwise permitted below);
(iii) such Indebtedness consisting of interest at the rate
provided for in the New Notes (as in effect on the date hereof) for the
period from the issuance thereof through and including July 1, 2000 only
shall be secured by security interests in and liens upon the Funding Escrow
Properties to the extent permitted under Section 9.8(j) hereof; and
(iv) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related thereto,
except, that, Edison may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof other than to (1) increase the
amount of such Indebtedness, or the interest rate, or any fees or other
charges or amounts payable in respect thereof or in connection therewith,
(2) require that any of such Indebtedness be paid sooner than is required
under the New Notes as in effect on the date hereof, (3) grant any security
interests, liens or other encumbrances to secure directly or indirectly any
or all of such Indebtedness, (4) add any provision which in any way,
directly or indirectly, limits, impairs or otherwise affects the ability or
right of Borrowers to request or receive Loans or Letter of Credit
Accommodations or amend, modify, supplement, extend, renew, restate or
replace any of the Financing Agreements or in any way relates to or affects
the arrangements of Borrowers and Guarantors with Agent and Lenders, or (5)
make any covenants contained therein more restrictive or burdensome as to
Borrowers and Guarantors or otherwise less favorable to Borrowers or
Guarantors, or (B) redeem, retire, defease, purchase or otherwise acquire
such Indebtedness, or set aside or otherwise deposit or invest any sums for
such purpose, except, that, (1) Edison may prepay or redeem any of such
Indebtedness with the proceeds of Refinancing Indebtedness to the extent
permitted under Section 9.9(n) below and (2) Edison may prepay or redeem
any or all of such Indebtedness, provided, that, each of the following
conditions is satisfied as determined by Agent: (aa) Agent shall have
received not less than ten (10) Business Days and not more than twenty (20)
Business Days prior written notice of the intention of Edison to prepay or
redeem such Indebtedness, (bb) as of the date of such payment and after
giving effect thereto, no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, and (cc) as of the
date of any such payment, the daily average of the Excess Availability for
the immediately preceding thirty (30) consecutive day period shall be not
less than $20,000,000, and as of the date of any such payment and after
giving effect thereto, the Excess Availability shall be not less than
$20,000,000, and
(v) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after receipt thereof, or sent by any Borrower or Guarantor or on its or
their behalf, concurrently with the sending thereof, as the case may be;
(d) Indebtedness of Edbro Missouri evidenced by the Series 1997
Note and Series 1997 Loan Agreement, provided, that,
(i) the principal amount of such Indebtedness shall not in
the aggregate exceed $6,717,000, less the aggregate amount of all
repayments or repurchases, optional or mandatory, of principal in respect
thereof, plus interest thereon at the rate(s) provided for in the Series
1997 Note and Series 1997 Loan Agreement, as in effect on the date hereof;
(ii) Edbro Missouri shall only make regularly scheduled
payments of principal, interest, purchase price and other mandatory
payments on an unaccelerated basis, in respect of such Indebtedness in
accordance with the terms of the Series 1997 Note, as in effect on the date
hereof (except as otherwise permitted below);
(iii) such Indebtedness shall only be secured by security
interests in and liens upon the Edbro Missouri Facility to the extent
permitted under Section 9.8(i) hereof;
(iv) such Indebtedness shall be guaranteed by Edison but
only to the extent as permitted under Section 9.10(e) hereof;
(v) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related thereto,
except, that, Edbro Missouri may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof other than to (1) increase
the amount of such Indebtedness, the interest rate, or any fees or other
charges or amounts payable in respect thereof or in connection therewith,
(2) require that any of such Indebtedness be paid sooner than is required
under the Series 1997 Note and Series 1997 Loan Agreement, as in effect on
the date hereof, (3) grant any further security interests, liens or other
encumbrances to secure directly or indirectly any or all of such
Indebtedness, (4) add any provision which in any way, directly or
indirectly, limits, impairs or otherwise affects the ability or right of
Borrowers to request or receive Loans or Letter of Credit Accommodations or
amend, modify, supplement, extend, renew, restate or replace any of the
Financing Agreements or in any way relates to or affects the arrangements
of Borrowers and Guarantors with Agent and Lenders, or (5) make any
covenants contained therein more restrictive or burdensome as to Borrowers
and Guarantors or otherwise less favorable to Borrowers and Guarantors, or
(B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose except, that, (1) Edbro Missouri may prepay any of such
Indebtedness with the proceeds of Refinancing Indebtedness to the extent
permitted under Section 9.9(n) below, (2) Edbro Missouri may purchase the
Series 1997 Note to the extent such purchase or prepayment is mandatory
under the terms of the Series 1997 Note as in effect on the date hereof,
and (3) Edbro Missouri may prepay any or all of such Indebtedness,
provided, that, each of the following conditions is satisfied as determined
by Agent: (aa) Agent shall have received not less than ten (10) Business
Days and not more than twenty (20) Business Days prior written notice of
the intention of Edbro Missouri to prepay or redeem such Indebtedness, (bb)
as of the date of such prepayment and after giving effect thereto, no Event
of Default, or act, condition or event which with notice or passage of time
or both would constitute an Event of Default, shall exist or have occurred
and be continuing, and (cc) as of the date of any such payment, the daily
average of the Excess Availability for the immediately preceding thirty
(30) consecutive day period shall be not less than $20,000,000, and as of
the date of any such payment and after giving effect thereto, the Excess
Availability shall be not less than $20,000,000, and
(vi) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after receipt thereof, or sent by any Borrower or Guarantor or on its or
their behalf, concurrently with the sending thereof, as the case may be;
(e) Indebtedness of Borrowers and Guarantors to Bank of America,
N.T. & S.A., as assignee of BABC, in respect of the Existing Letters of
Credit issued by Bank of America, N.T.& S.A. under the BABC DIP Facility
and fees and expenses relating thereto arising pursuant to the
reimbursement agreement by Borrowers in favor of Bank of America, N.T. &
S.A., as assignee of BABC (as in effect on the date hereof), provided,
that, (i) Borrowers and Guarantors shall not, directly or indirectly,
amend, modify, alter or change (A) the terms of such Indebtedness or the
reimbursement agreement related thereto, or (B) any of such Existing
Letters of Credit or any agreement, document or instrument related thereto
so as to increase the amount thereof (except that Borrowers may increase
the amount of any such existing Letters of Credit so long as (1) in the
aggregate the total amount of the liability of Borrowers and Guarantors to
Bank of America, N.T. & S.A., as assignee of BABC, in respect of such
Existing Letters of Credit shall not exceed the amount thereof as of the
date hereof by more than ten (10%) percent, (2) Borrowers shall give Agent
prompt written notice of a request for any such increase, and (3) after
giving effect to any Availability Reserve required as a result of such
increase, there shall be Excess Availability) or (C) any of such Existing
Letters of Credit or any agreement, document or instrument related thereto
which are standby letters of credit so as to extend the expiration date
thereof or (D) any of such Existing Letters of Credit or any agreement,
document or instrument related thereto which are for the purposes of
purchasing Inventory so as to extend the expiration date thereof by more
than ninety (90) days (provided that Borrowers shall give Agent prompt
written notice of any request for such extension), (ii) Borrowers and
Guarantors shall furnish to Agent all notices or demands in connection with
such Indebtedness, either received by any Borrower or Guarantor or on its
or their behalf, promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its or their behalf, concurrently with the
sending thereof, as the case may be and (iii) Borrowers and Guarantors
shall cause the documents of title related to goods purchased pursuant to
such Existing Letters of Credit to be promptly delivered to a Customs
Broker;
(f) Indebtedness of Borrowers and Guarantors to Bank of America,
N.T. & S.A. arising after the date hereof in respect of Letter of Credit
Accommodations issued by Bank of America, N.T. & S.A. for the account of
Borrowers and fees and expenses relating thereto arising pursuant to the
reimbursement agreement by Borrowers in favor of Bank of America, N.T. &
S.A. (as in effect on the date hereof), provided, that, (i) Borrowers shall
not request any such Letter of Credit Accommodations without the prior
written consent of Agent, (ii) Borrowers shall not request such Letter of
Credit Accomodations after the earlier of November 15, 1997 or the date of
written notice from Agent to Borrowers that Agent has received notice from
Issuing Bank that the Issuing Bank will be issuing or arranging for the
issuance of Letter of Credit Accomodations, (iii) Borrower and Guarantors
shall not, directly or indirectly, amend, modify, alter or change (A) the
terms of such Indebtedness or the reimbursement agreement related thereto,
or (B) any of such Letter of Credit Accomodations or any agreement,
document or instrument related thereto so as to increase the amount thereof
or extend the terms thereof, (iv) Borrowers and Guarantors shall furnish to
Agent all notices or demands in connection with such Indebtedness, either
received by any Borrower or Guarantor or on its or their behalf, promptly
after the receipt thereof, or sent by any Borrower or Guarantor or on its
or their behalf, concurrently with the sending thereof, as the case may be
and (v) Borrowers and Guarantors shall cause the documents of title related
to goods purchased pursuant to such Letter of Credit Accomodations to be
promptly delivered to a Customs Broker;
(g) Indebtedness of Edison to the Internal Revenue Service as
permitted under the Plan, provided, that:
(i) the principal amount of such Indebtedness shall not in
the aggregate exceed $16,000,000, less the aggregate amount of all
repayments or repurchases, optional or mandatory, of principal in respect
thereof, plus interest thereon at the rate provided for in the Plan (as in
effect on the date hereof),
(ii) Edison shall only make regularly scheduled payments of
principal and interest on an unaccelerated basis, in respect of such
Indebtedness in accordance with the terms of such Indebtedness as in effect
on the date hereof (except as otherwise permitted below),
(iii) such Indebtedness shall be unsecured,
(iv) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related thereto,
except, that, Edison may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof other than to (1) increase the
amount of such Indebtedness, or the interest rate, or any fees or other
charges or amounts payable in respect thereof or in connection therewith,
(2) require that any of such Indebtedness be paid sooner than is required
under the terms thereof as in effect on the date hereof, (3) grant any
security interests, liens or other encumbrances to secure directly or
indirectly any or all of such Indebtedness, (4) add any provision which in
any way, directly or indirectly, limits, impairs or otherwise affects the
ability or right of Borrowers to request or receive Loans or Letter of
Credit Accommodations or amend, modify, supplement, extend, renew, restate
or replace any of the Financing Agreements or in any way relates to or
affects the arrangements of Borrowers and Guarantors with Agent and
Lenders, or (5) make any covenants contained therein more restrictive or
burdensome as to Borrowers and Guarantors or otherwise less favorable to
Borrowers or Guarantors, or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except, that, (1) Edison may prepay or
redeem any of such Indebtedness with the proceeds of Refinancing
Indebtedness to the extent permitted under Section 9.9(n) below and (2)
Edison may prepay or redeem any or all of such Indebtedness, provided,
that, each of the following conditions is satisfied as determined by Agent:
(aa) Agent shall have received not less than ten (10) Business Days and not
more than twenty (20) Business Days prior written notice of the intention
of Edison to prepay or redeem such Indebtedness, (bb) as of the date of
such payment and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, and (cc) as of the date of any such payment, the daily average
of the Excess Availability for the immediately preceding thirty (30)
consecutive day period shall be not less than $20,000,000, and as of the
date of any such payment and after giving effect thereto, the Excess
Availability shall be not less than $20,000,000, and
(v) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after receipt thereof, or sent by any Borrower or Guarantor or on its or
their behalf to the holders of such Indebtedness or their representatives
or agents, concurrently with the sending thereof, as the case may be;
(h) Indebtedness arising in the ordinary course of the business
of any Borrower or Guarantor in connection with worker's compensation,
unemployment insurance or other types of social security benefits in each
case consistent with the current practices of such Borrower or Guarantor as
of the date hereof; provided, that, such Indebtedness is secured only by
liens on assets and property of such Borrower or Guarantor permitted under
Section 9.8(e) hereof;
(i) unsecured Indebtedness of any Borrower or Guarantor to any
of the other Borrowers or Guarantors or to any Non-Guarantor Subsidiary
arising pursuant to intercompany loans permitted under Section 9.10 hereof;
(j) unsecured Indebtedness of any Non-Guarantor Subsidiary to
any Borrower, Guarantor or other Non-Guarantor Subsidiary arising pursuant
to intercompany loans permitted under Section 9.10 hereof;
(k) unsecured Indebtedness of any Borrower or Guarantor to any
Non-Guarantor Subsidiary arising pursuant to intercompany loans permitted
under Section 9.10 hereof;
(l) other Indebtedness constituting guarantees permitted under
Section 9.10 hereof;
(m) Indebtedness of Borrowers, Guarantors and their Subsidiaries
existing as of the date hereof set forth on Schedule 9.9 hereto, provided,
that, (i) such Borrower, Guarantor or Subsidiary may only make regularly
scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date
hereof (except as otherwise permitted below), (ii) such Borrower, Guarantor
or Subsidiary shall not, directly or indirectly, (A) amend, modify, alter
or change the terms of such Indebtedness or any agreement, document or
instrument related thereto as in effect on the date hereof, except, that,
such Borrower and Guarantor or Subsidiary may, after prior written notice
to Agent, amend, modify, alter or change the terms thereof other than to
(1) increase the amount of such Indebtedness, the interest rate, or any
fees or other charges or amounts payable in respect thereof or in
connection therewith, (2) require that any of such Indebtedness be paid
sooner than is required under the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date
hereof, (3) grant any security interests, liens or other encumbrances to
secure directly or indirectly any or all of such Indebtedness, (4) add any
provision which in any way, directly or indirectly, limits, impairs or
otherwise affects the ability of Borrowers to request or receive Loans or
Letter of Credit Accommodations or amend, modify, supplement, extend,
renew, restate or replace any of the Financing Agreements or in any way
relates to or affects the arrangements of Borrowers and Guarantors with
Agent and Lenders, or (5) make covenants contained therein more restrictive
or burdensome as to the Borrowers and Guarantors or otherwise less
favorable to Borrowers and Guarantors taken as a whole, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose, except,
that, (1) such Borrower, Guarantor or Subsidiary may prepay or redeem any
of such Indebtedness with the proceeds of Refinancing Indebtedness to the
extent permitted under Section 9.9(n) below and (2) such Borrower,
Guarantor or Subsidiary may prepay or redeem any or all of such
Indebtedness, provided, that, each of the following conditions is satisfied
as determined by Agent: (aa) Agent shall have received not less than ten
(10) Business Days and not more than twenty (20) Business Days prior
written notice of the intention of such Borrower, Guarantor or Subsidiary
to prepay or redeem such Indebtedness, (bb) as of the date of such payment
and after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred and be continuing, and (cc)
as of the date of any such payment, the daily average of the Excess
Availability for the immediately preceding thirty (30) consecutive day
period shall be not less than $20,000,000, and as of the date of any such
payment and after giving effect thereto, the Excess Availability shall be
not less than $20,000,000, and (iii) Borrowers and Guarantors shall, and
shall cause their Subsidiaries to, furnish to Agent all notices, demands or
other materials concerning such Indebtedness either received by any
Borrower, Guarantor or Subsidiary or on its or their behalf, promptly after
the receipt thereof, or sent by any Borrower, Guarantor or Subsidiary or on
its or their behalf, concurrently with the sending thereof, as the case may
be;
(n) Indebtedness issued in exchange for, or the proceeds of
which are used to extend, refinance, replace, substitute or refund
Indebtedness referred to in Section 9.9(b), 9.9(c), 9.9(d), 9.9(g) and
9.9(m) hereof (the Refinancing Indebtedness ); provided, that, (i) the
principal amount of such Refinancing Indebtedness shall not exceed the
principal amount of the Indebtedness so extended, refinanced, replaced,
substituted or refunded (plus the amount of reasonable refinancing fees and
expenses incurred in connection therewith), (ii) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity and a final
maturity equal to or greater than the Weighted Average Life to Maturity and
the final maturity, respectively, of the Indebtedness being extended,
refinanced, replaced, substituted or refunded, (iii) the Refinancing
Indebtedness shall rank in right of payment no more senior than, and be at
least as subordinated (if subordinated) to, the Obligations as the
Indebtedness being extended, refinanced, replaced, substituted or refunded,
(iv) the Refinancing Indebtedness shall not include terms and conditions
with respect to any Borrower or Guarantor which are more burdensome or
restrictive than those included in the Indebtedness so extended,
refinanced, replaced, substituted or refunded, (v) Agent shall have
received not less than ten (10) Business Days prior written notice of the
intention to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent, the amount of such Indebtedness,
the person to whom such Indebtedness will be owed, the interest rate, the
schedule of repayments and maturity date with respect thereto and such
other information with respect thereto as Agent may request, (vi) promptly
upon Agent's request, Agent shall have received true, correct and complete
copies of all agreements, documents and instruments evidencing or otherwise
related to such Indebtedness, as duly authorized executed and delivered by
the parties thereto, (vii) such Indebtedness incurred by any Borrower or
Guarantor shall be at rates and with fees or other charges no higher or
greater than the Indebtedness so extended, refinanced, replaced,
substituted or refunded, (viii) such Indebtedness shall not be owed to any
officer, director, agent, employee or other Affiliate (other than a
shareholder) of any Borrower or Guarantor, (ix) as of the date of incurring
such Indebtedness and after giving effect thereto, no Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, (x) Borrowers and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness (except
as otherwise permitted below), (xi) Borrowers and Guarantors shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of the
agreements with respect to such Indebtedness except, that, Borrowers and
Guarantors may, after prior written notice to Agent, amend, modify, alter
or change the terms thereof other than to (1) increase the amount of such
Indebtedness, the interest rate, or any fees or other charges or amounts
payable in respect thereof or in connection therewith, (2) require that any
of such Indebtedness be paid sooner than is required under the terms of the
agreement or instrument evidencing or giving rise to such Indebtedness as
in effect upon the execution thereof, (3) grant any security interests,
liens or other encumbrances to secure directly or indirectly any or all of
such Indebtedness, (4) add any provision which in any way, directly or
indirectly, limits, impairs or otherwise affects the ability or right of
Borrowers to request or receive Loans or Letter of Credit Accommodations or
amend, modify, supplement, extend, renew, restate or replace any of the
Financing Agreements or in any way relates to or affects the arrangements
of Borrowers and Guarantors with Agent and Lenders, or (5) make any
covenants contained therein more restrictive or burdensome as to the
Borrowers and Guarantors or otherwise less favorable to Borrowers and
Guarantors taken as a whole, and (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except, that, (1) Borrowers and
Guarantors may prepay or redeem any of such Indebtedness with the proceeds
of Refinancing Indebtedness to the extent permitted under this Section
9.9(n) and (2) Borrowers and Guarantors may prepay or redeem any or all of
such Indebtedness, provided, that, each of the following conditions is
satisfied as determined by Agent: (aa) Agent shall have received not less
than ten (10) Business Days and not more than twenty (20) Business Days
prior written notice of the intention of Borrowers and Guarantors to prepay
or redeem such Indebtedness, (bb) as of the date of such payment and after
giving effect thereto, no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, and (cc) as of the
date of any such payment, the daily average of the Excess Availability for
the immediately preceding thirty (30) consecutive day period shall be not
less than $20,000,000, and as of the date of any such payment and after
giving effect thereto, the Excess Availability shall be not less than
$20,000,000, and (xii) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after the receipt thereof, or sent by any Borrower or Guarantor on its or
their behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Each Borrower and
Guarantor shall not, and shall not permit its Subsidiaries to, directly or
indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise) or purchase or
repurchase the Capital Stock or Indebtedness or all or a substantial part
of the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the Indebtedness,
performance, obligations or dividends of any Person or agree to do any of
the foregoing, except:
(a) the endorsement of instruments for collection or deposit in
the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, to
the extent such investments are Collateral, as to any of the foregoing,
promptly upon the request of Agent, Borrowers and Guarantors shall take
such actions as are deemed necessary by Agent to perfect the security
interest of Agent in such investments;
(c) the existing investments of Edison, either directly or
indirectly, in the Capital Stock of the other Borrowers, Guarantors and the
Non-Guarantor Subsidiaries as of the date hereof;
(d) the guarantees by Borrowers and Guarantors in favor of Agent
and Lenders,
(e) the guarantee by Edison of the Indebtedness of Edbro
Missouri to the City of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ County, Missouri evidenced by
the Series 1997 Note (as in effect on the date hereof) to the extent such
Indebtedness is permitted under Section 9.9(d) hereof; provided, that,
(i) Borrowers and Guarantors shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such guarantee or any agreement,
document or instrument related thereto, except, that, Edison may, after
prior written notice to Agent, amend, modify, alter or change the terms
thereof other than to (1) increase the amount of such Indebtedness, the
interest rate, or any fees or other charges or amounts payable in respect
thereof or in connection therewith, (2) require that any of such
Indebtedness be paid sooner than is required under the Series 1997 Note or
such guarantee (as each is in effect on the date hereof), (3) grant any
security interests, liens or other encumbrances to secure directly or
indirectly any or all of such Indebtedness, (4) add any provision which in
any way, directly or indirectly, limits, impairs or otherwise affects the
ability or right of Borrowers to request or receive Loans or Letter of
Credit Accommodations or amend, modify, supplement, extend, renew, restate
or replace any of the Financing Agreements or in any way relates to or
affects the arrangements of Borrowers and Guarantors with Agent and
Lenders, or (5) make any covenants contained therein more restrictive or
burdensome as to the Borrowers and Guarantors or otherwise less favorable
to Borrowers and Guarantors, or (B) redeem, retire, defease, purchase or
otherwise acquire such guarantee or set aside or otherwise deposit or
invest any sums for such purpose (except to the extent the Indebtedness of
Edbro Missouri subject to such guarantee may be prepaid or redeemed under
Section 9.9(d) hereof) and (ii) Borrowers and Guarantors shall furnish to
Agent all notices, demands or other materials in connection with such
loans, advances or guarantees either received by any of them or on its or
their behalf, promptly after the receipt thereof, or sent by any of them or
on its or their behalf, concurrently with the sending thereof, as the case
may be;
(f) loans by any Borrower or Guarantor to any other Borrower or
Guarantor in the ordinary course of the business of Borrowers and
Guarantors consistent with the current practices as of the date hereof;
provided, that, (i) such Indebtedness is not, and shall not be, evidenced
by any promissory note or other instrument, unless the original of such
note is promptly delivered to Agent upon the issuance thereof, duly
indorsed and assigned by such Borrower or Guarantor to Agent and (ii) such
Indebtedness is subordinated in right of payment to the Obligations on
terms and conditions and in a manner acceptable to Agent;
(g) loans by any Non-Guarantor Subsidiary to any other Non-
Guarantor Subsidiary in the ordinary course of business of such Non-
Guarantor Subsidiaries consistent with current practices as of the date
hereof;
(h) loans by any Borrower or Guarantor to any Non-Guarantor
Subsidiary in the ordinary course of the business of Borrowers and
Guarantors consistent with current practices as of the date hereof,
provided, that, the net aggregate outstanding principal amount of such
loans shall not exceed $2,000,000 at any time, except, that, the principal
amount of such loans may exceed $2,000,000 so long as each of the following
conditions is satisfied, as determined by Agent, (i) Agent shall have
received not less than ten (10) Business Days prior written notice of the
intention of Borrowers or Guarantors to make such loans in excess of the
principal amount of $2,000,000, (ii) as of the date of such loan, and after
giving effect thereto, no Event of Default, or act, condition or event
which with notice of passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, (iii) as of the
date of any such loan and after giving effect thereto, the daily average of
the Excess Availability for the immediately preceding thirty (30)
consecutive day period shall be not less than $20,000,000, and as of the
date of such loan and after giving effect thereto, Excess Availability
shall be not less than $20,000,000, (iv) there shall be no restriction,
limitation or subordination with respect to the obligation of such Non-
Guarantor Subsidiary to repay or prepay the Indebtedness owing to such
Borrower or Guarantor arising pursuant to such loan, and (v) such
Indebtedness is not, and shall not be, evidenced by any promissory note or
other instrument, unless the original of such note is promptly delivered to
Agent upon the issuance thereof, duly indorsed and assigned by such
Borrower or Guarantor to Agent;
(i) loans by any Non-Guarantor Subsidiary to any Borrower or
Guarantor in the ordinary course of the business of Borrowers and
Guarantors consistent with current practices as of the date hereof;
provided, that, the Indebtedness of any Borrower or Guarantor to such Non-
Guarantor Subsidiary arising pursuant to such loan shall be subordinated in
right of payment to the Obligations on terms and conditions and in a manner
acceptable to Agent;
(j) capital contributions of Borrowers and Guarantors to any
Subsidiaries formed or acquired after the date hereof to the extent
permitted under and in accordance with Section 9.7 hereof, provided, that,
(i) as of the date of such investment and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or passage
of time or both would constitute an Event of Default, shall exist or have
occurred and be continuing and (ii) in no event shall the total amount of
any capital contributions or other amounts paid by any Borrower or
Guarantor to or for the formation or acquisition of any such Subsidiaries
exceed $500,000 in the aggregate;
(k) loans and advances by any Borrower, Guarantor or their
Subsidiaries to employees of such Borrower, Guarantor or Subsidiary after
the date hereof not to exceed the principal amount of $1,000,000 in the
aggregate at any time outstanding for reasonable and necessary work-related
travel or other ordinary business expenses to be incurred by employees in
connection with their work for Borrowers, Guarantors or their Subsidiaries
or for the relocation of such employees in connection with their work for
Borrowers, Guarantors or their Subsidiaries;
(l) guarantees by a Borrower of the obligations of any Guarantor
or any other Borrower under real property leases with respect to retail
store locations leased by such Guarantor or Borrower in the ordinary course
of business consistent with current practices;
(m) the other existing loans, advances and guarantees by any
Borrower, Guarantor or Subsidiary outstanding as of the date hereof as set
forth on Schedule 9.10 hereto not otherwise permitted above; provided,
that, as to such loans, advances and guarantees, (i) such Borrower,
Guarantor or Subsidiary shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such loans, advances or guarantees or
any agreement, document or instrument related thereto, or (B) as to such
guarantees, redeem, retire, defease, purchase or otherwise acquire such
guarantee or set aside or otherwise deposit or invest any sums for such
purpose and (ii) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials in connection with such loans, advances
or guarantees either received by any Borrower, Guarantor or Subsidiary or
on its or their behalf, promptly after the receipt thereof, or sent by any
Borrower, Guarantor or Subsidiary or on its or their behalf, concurrently
with the sending thereof, as the case may be.
9.11 Dividends; Redemptions; Issuance of Capital Stock.
(a) Each Borrower and Guarantor shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, declare or pay any
dividends on account of any shares of class of its Capital Stock now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums
for such purpose, or redeem, retire, defease, purchase or otherwise acquire
any shares of any class of Capital Stock (or set aside or otherwise deposit
or invest any sums for such purpose) for any consideration other than
common stock or apply or set apart any sum, or make any other distribution
(by reduction of capital or otherwise) in respect of any such shares or
agree to do any of the foregoing, except, that, (i) any Borrower, Guarantor
or its Subsidiary may declare and pay dividends to any other Borrower or
Guarantor out of legally available funds therefor and (ii) any Non-
Guarantor Subsidiary may declare and pay dividends to any Borrower,
Guarantor or other Non-Guarantor Subsidiary.
(b) Each Borrower and Guarantor shall not, and shall not permit
any of its Subsidiaries to, authorize, issue, sell or otherwise dispose of
any of its Capital Stock, except (i) Edison may authorize and issue shares
of its own Capital Stock pursuant to stock option plans of Edison in effect
on the date hereof or hereafter, (ii) any Borrower or Guarantor may
authorize, issue and sell its Capital Stock after the date hereof,
provided, that, (A) Agent shall have received not less than ten (10)
Business Days prior written notice of such issuance and sale, which notice
shall specify the parties to whom such shares are to be sold, the terms of
such sale, the total amount which it is anticipated will be realized from
the issuance and sale of such Capital Stock and the net cash proceeds which
it is anticipated will be received by such Borrower or Guarantor from such
sale, (B) no Borrower or Guarantor shall be required to pay any dividends
or repurchase or redeem such Capital Stock or make any other payments in
respect thereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any
provision which in any way, directly or indirectly, limits, impairs or
otherwise affects the ability or right of Borrower to request or receive
Loans or Letter of Credit Accommodations or to amend, modify, supplement,
extend, renew, restate or replace any of the Financing Agreements or
otherwise in any way relates to or affects the arrangements of Borrowers
and Guarantors with Agent and Lenders or are more restrictive or burdensome
to Borrowers and Guarantors than the terms of any Capital Stock in effect
on the date hereof, and (D) as of the date of such issuance and sale and
after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred and be continuing and (iii)
Edison may issue shares of its own Capital Stock pursuant to warrants
outstanding on the date hereof as set forth in Schedule 9.11 hereto.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, (a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, employee, shareholder Bank
National Association , director, agent or any other Affiliate, except in
the ordinary course of and pursuant to the reasonable requirements of such
Borrower's, Guarantor's or Subsidiary's business and upon fair and
reasonable terms no less favorable to the such Borrower, Guarantor or
Subsidiary than such Borrower, Guarantor or Subsidiary would obtain in a
comparable arm's length transaction with an unaffiliated person or (b) make
any payments of management, consulting or other fees for management or
similar services, or of any Indebtedness owing to any officer, employee,
director or other Affiliate except (i) reasonable compensation, severance,
advances and reimbursement for business-related expenses to officers,
employees and directors for services rendered to Borrowers, Guarantors and
their Subsidiaries in the ordinary course of business or (ii) as otherwise
permitted hereunder.
9.13 Credit Card Agreements. Each Borrower shall (a) observe and
perform all material terms, covenants, conditions and provisions of the
Credit Card Agreements to be observed and performed by it at the times set
forth therein; (b) not do, permit, suffer or refrain from doing anything,
as a result of which there could be a default under or breach of any of the
terms of any of the Credit Card Agreements and (c) at all times maintain in
full force and effect the Credit Card Agreements and not terminate, cancel,
surrender, modify, amend, waive or release any of the Credit Card
Agreements, or consent to or permit to occur any of the foregoing; except,
that, (i) a Borrower may terminate or cancel any of the Credit Card
Agreements in the ordinary course of the business of such Borrower; (d) not
enter into any new Credit Card Agreements with any new Credit Card Issuer
unless (i) Agent shall have received not less than thirty (30) days prior
written notice of the intention of such Borrower to enter into such
agreement (together with such other information with respect thereto as
Agent may request) and (ii) such Borrower delivers, or causes to be
delivered to Agent, a Credit Card Acknowledgment in favor of Agent; (e)
give Agent immediate written notice of any Credit Card Agreement entered
into by such Borrower after the date hereof, together with a true, correct
and complete copy thereof and such other information with respect thereto
as Agent may request; and (f) furnish to Agent, promptly upon the request
of Agent, such information and evidence as Agent may require from time to
time concerning the observance, performance and compliance by such Borrower
or the other party or parties thereto with the terms, covenants or
provisions of the Credit Card Agreements.
9.14 Net Worth. The consolidated Net Worth of Edison and its
Subsidiaries shall, on the last day of each fiscal quarter of Borrowers and
Guarantors, equal or exceed $100,000,000.
9.15 Compliance with ERISA.
(a) Each Borrower and Guarantor shall not with respect to any
employee benefit plans maintained by such Borrower or Guarantor or any of
its ERISA Affiliates: (i) terminate any of such employee pension plans so
as to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, (ii) allow or suffer to exist any prohibited
transaction involving any of such employee benefit plans or any trust
created thereunder which would subject Borrower or such ERISA Affiliate to
a tax or penalty or other liability on prohibited transactions imposed
under the Code or ERISA, (iii) fail to pay to any such employee benefit
plan any contribution which it is obligated to pay under ERISA, the Code or
the terms of such plan, (iv) allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such
employee benefit plan, (v) allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such
employee benefit plan that is a single employer plan, which termination
could result in any liability to the Pension Benefit Guaranty Corporation
or (vi) incur any withdrawal liability with respect to any multiemployer
pension plan.
(b) Nothing contained in this Section 9.15 shall be construed to
prohibit the termination of the Existing Pension Plan (as such term is
defined in the Plan as in effect on the date hereof) and its replacement
with a new plan in each case in accordance with the Plan (as in effect on
the date hereof).
(c) As used in this Section 9.15, the term employee pension
benefit plans, employee benefit plans , accumulated funding deficiency
and reportable event shall have the respective meanings assigned to them
in ERISA, and the term prohibited transaction shall have the meaning
assigned to it in the Code and ERISA.
9.16 Additional Bank Accounts. Each Borrower and Guarantor shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly,
open, establish or maintain any deposit account, investment account,
securities account or any other account with any bank or other financial
institution, other than the Concentration Accounts and the accounts set
forth in Schedule 6.3 hereto, except: (a) as to any new or additional
Concentration Accounts, with the prior written consent of Agent and subject
to such conditions thereto as Agent may establish and (b) as to any
accounts used by Borrowers or Guarantors to make payments of payroll, taxes
or other obligations to third parties, so long as prior to an Event of
Default, such accounts are reported to Agent in accordance with Section 9.6
hereof and after an Event of Default, only after prior written notice to
Agent.
9.17 Customs Brokers. Borrowers and Guarantors shall not, and shall
not permit any of its Subsidiaries to, use any Customs Brokers other than
those listed on Schedule 8.14 hereof, except if (a) Agent shall have
received not less than ten (10) days' prior written notice of the intention
of such Borrower or Guarantor to use any other Customs Broker; (b) Agent
shall have received an agreement in writing from such other Customs Broker,
in form and substance satisfactory to Agent, acknowledging the security
interests of Agent in the Collateral, waiving any security interest, lien
or other claim of such Customs Broker in any Collateral at any time in the
custody, control or possession of such person and agreeing to follow the
instructions of Agent with respect thereto upon Agent's request, duly
authorized, executed and delivered by such other Customs Broker; (c) such
Customs Broker shall be reasonably acceptable to Agent; and (d) no Event of
Default shall exist or have occurred and be continuing.
9.18 Costs and Expenses. Borrowers and Guarantors shall pay to Agent
on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense
of the Obligations, the rights of Agent and Lenders in the Collateral, this
Agreement, the other Financing Agreements and all other documents related
hereto or thereto, including any amendments, supplements or consents which
may hereafter be contemplated (whether or not executed) or entered into in
respect hereof and thereof, including: (a) all costs and expenses of filing
or recording (including Uniform Commercial Code financing statement filing
taxes and fees, documentary taxes, intangibles taxes and mortgage recording
taxes and fees, if applicable); (b) all insurance premiums, appraisal fees
and search fees; (c) costs and expenses of remitting loan proceeds,
collecting checks and other items of payment, and establishing and
maintaining the Concentration Accounts, together with Agent's customary
charges and fees with respect thereto; (d) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations (except that with respect to Letter of Credit Accommodation
which are not standby Letter of Credit Accommodations and are used solely
for the purpose of purchasing goods expected to become Eligible Inventory,
no bank fees, opening charges or amendment or similar fees shall be charged
by the Issuing Bank as provided in Section 2.2(b), except as otherwise
provided in the fee agreement between Borrowers and the Issuing Bank); (e)
costs and expenses of preserving and protecting the Collateral; (f) costs
and expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Agent and
Lenders, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Agent and
Lenders arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters);
(g) all reasonable out-of-pocket expenses and costs heretofore and from
time to time hereafter incurred by Agent and Lenders during the course of
periodic field examinations of the Collateral and Borrower's operations,
plus a per diem charge at the rate of $600 per person per day for Agent's
examiners in the field and office; and (h) the reasonable fees and
disbursements of counsel (including legal assistants) to Agent and Lenders
in connection with any of the foregoing.
9.19 Further Assurances. At the request of Agent at any time and from
time to time, each Borrower and Guarantor shall, at its expense, duly
execute and deliver, or cause to be duly executed and delivered, such
further agreements, documents and instruments, and do or cause to be done
such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Agent may at any time
and from time to time request a certificate from an officer of a Borrower
representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied.
In the event of such request by Agent, Agent and Lenders may, at Agent's
option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Agent has received such certificate and, in
addition, Agent has determined that such conditions are satisfied. Where
permitted by law, each Borrower and Guarantor hereby authorizes Agent to
execute and file one or more UCC financing statements signed only by Agent.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an
Event of Default , and collectively as Events of Default :
(a) (i) any Borrower fails to pay any of the Obligations within
three (3) days after the same becomes due and payable, (ii) any Borrower or
Guarantor fails to perform any of the covenants contained in Sections 6.3,
6.4, 7.6, 8.6, 9.6(b), 9.7, 9.8, 9.9, 9.10, 9.11 and 9.12 of this
Agreement, (iii) any Borrower or Guarantor fails to perform any of the
covenants contained in Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.6 (other than
Section 9.6(b)), 9.16, 9.17, 9.19 or 9.20 of this Agreement and such
failure shall continue for ten (10) days or (iv) any Borrower or Guarantor
fails to perform any of the other covenants contained in the Agreement or
the other Financing Agreements and such failure shall continue for twenty
(20) days; provided, that, (A) the ten (10) day period and the twenty (20)
day period provided for in clauses (iii) and (iv) above shall not apply in
the case of: (1) any failure to observe any such covenant which is not
capable of being cured at all or within such ten (10) day period or twenty
(20) day period, as applicable, or which has been the subject of a prior
failure within a six (6) month period or (2) an intentional breach by any
Borrower or Guarantor of any such covenant or (3) any failure to observe
any such covenant if as a result of such failure, any of the Financing
Agreements shall terminate (other than in accordance with its terms or the
terms hereof or with the written consent of Agent) or become void or
unenforceable; and (B) the twenty (20) day period provided for in clause
(iv) above shall commence on the earlier of (1) written notice of default
being given to Edison by Agent or any Lender and (2) a responsible officer
of either Edison or Edison Apparel obtaining knowledge of such default;
(b) any representation, warranty or statement of fact in writing
made by any Borrower or Guarantor to Agent or any Lender in this Agreement,
the other Financing Agreements or any other agreement, schedule,
confirmatory assignment or certificate shall when made or deemed made be
false or misleading in any material respect;
(c) any Guarantor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Agent or any
Lender;
(d) one or more final judgments for the payment of money
aggregating in excess of $1,000,000 (whether or not covered by insurance)
shall be rendered against any Borrower or Guarantor and such Borrower or
Guarantor shall fail to discharge the same within twenty (20) days from the
date of notice of entry thereof or to appeal therefrom and a stay of
execution shall not then be in effect pending determination of such appeal;
(e) any Borrower or Guarantor shall file a certificate of
dissolution under applicable state or foreign law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it any
action or proceeding for dissolution, winding-up or liquidation, or shall
take any corporate action in furtherance thereof or shall suspend or
discontinue doing business except as permitted hereunder;
(f) Borrowers and Guarantors become insolvent (however defined
or evidenced) on a consolidated basis, or any Borrower or Guarantor makes
an assignment for the benefit of creditors, or makes or sends notice of a
bulk transfer (except in connection with a disposition of assets to the
extent permitted hereunder);
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect (other than to the extent of
the retention of jurisdiction by the Bankruptcy Court with respect to the
Chapter 11 Cases) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower or Guarantor or all or any part of its
properties and such petition or application is not dismissed within thirty
(30) days after the date of its filing or such Borrower or Guarantor shall
file any answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any such action
or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect (other than to the extent of
the retention of jurisdiction by the Bankruptcy Court with respect to the
Chapter 11 Cases) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or Guarantor or for all or any part of its property;
(i) any default by any Borrower or Guarantor under any
agreement, document or instrument relating to any Indebtedness owing to any
person other than Agent and Lenders in any case in an amount in excess of
$2,500,000, which default continues for more than the applicable cure
period, if any, with respect thereto, or any default by Borrower or any
Guarantor under the Plan, the Confirmation Order, or any material contract,
lease, license or other obligation to any person other than Agent and
Lenders, which default continues for more than the applicable cure period,
if any, with respect thereto and which would have a Material Adverse
Effect;
(j) a Change of Control;
(k) the indictment or threatened indictment of any Borrower or
Guarantor under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings brought by any Governmental
Authority against any Borrower or Guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include
forfeiture of any material portion of the Collateral;
(l) there occurs any material adverse change in the property,
business, operations, prospects or condition (financial or otherwise) of
Edison and its Subsidiaries, taken as a whole; or
(m) the distribution under Section 4.7(b)(i) of the Plan in
respect of Class 7 Allowed General Unsecured Claims shall not have been
fully and completely made within seventy (70) days after the Effective
Date; or
(n) there shall be an Event of Default as such term is defined
in any of the other Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Agent and Lenders shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and remedies
may be exercised without notice to or consent by Borrowers or Guarantors,
except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to
Agent and Lenders hereunder, under any of the other Financing Agreements,
the Uniform Commercial Code or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall
include, without limitation, the right to apply to a court of equity for an
injunction to restrain a breach or threatened breach by any Borrower or
Guarantor of this Agreement or any of the other Financing Agreements.
Agent may, at any time or times, proceed directly against any Borrower or
Guarantor to collect the Obligations without prior recourse to the
Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, in its
discretion and without limitation, and upon specific direction by the
Majority Lenders shall, (i) accelerate the payment of all Obligations and
demand immediate payment thereof to Agent for itself and the ratable
benefit of Lenders (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and
repair of all or any portion of the Collateral, (iii) require Borrowers, at
Borrowers' expense, to assemble and make available to Agent any part or all
of the Collateral at any place and time designated by Agent, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on or
in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose, (vi)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including, without limitation, entering into contracts with
respect thereto, public or private sales at any exchange, broker's board,
at any office of Agent or elsewhere) at such prices or terms as Agent may
deem reasonable, for cash, upon credit or for future delivery, with the
Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of Borrowers, which right or equity of redemption is
hereby expressly waived and released by Borrowers and/or (vii) terminate
this Agreement. If any of the Collateral is sold or leased by Agent upon
credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Agent.
If notice of disposition of Collateral is required by law, five (5) days
prior notice by Agent to Borrowers designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable
notice thereof and Borrowers waive any other notice. In the event Agent or
any Lender institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, Borrowers waive the posting
of any bond which might otherwise be required.
(c) Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of
the Collateral to payment of the Obligations, in whole or in part and in
such order as Agent may elect, whether or not then due. Borrowers shall
remain liable to Agent and Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses
of collection or enforcement, including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an
Event of Default or an act, condition or event which with notice or passage
of time or both would constitute an Event of Default, Agent may, at its
option, and upon direction by the Majority Lenders shall, without notice,
(i) cease making Loans or arranging for Letter of Credit Accommodations or
reduce the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrowers and/or (ii) terminate any provision
of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Agent or any Lender to Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of
New York (without giving effect to principles of conflicts of law).
(b) Borrowers, Guarantors, Agent and Lenders irrevocably consent
and submit to the non-exclusive jurisdiction of the Supreme Court of the
State of New York in New York County and the United States District Court
for the Southern District of New York and waive any objection based on
venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in
any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that
Agent shall have the right to bring any action or proceeding against any
Borrower or Guarantor or its property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize
on the Collateral or to otherwise enforce its rights against any Borrower
or Guarantor or its property).
(c) Each Borrower and Guarantor hereby waives personal service
of any and all process upon it and consents that all such service of
process may be made by certified mail (return receipt requested) directed
to its address set forth on the signature pages hereof and service so made
shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Agent's option, by service upon
any Borrower or Guarantor in any other manner provided under the rules of
any such courts. Within thirty (30) days after receipt by such Borrower or
Guarantor of such service, such Borrower or Guarantor shall appear in
answer to such process, failing which such Borrower or Guarantor shall be
deemed in default and judgment may be entered by Agent against such
Borrower or Guarantor for the amount of the claim and other relief
requested.
(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER
FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT AND LENDERS EACH
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWERS,
GUARANTORS, AGENT OR LENDERS MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Agent nor any Lender shall have any liability to
Borrowers or Guarantors (whether in tort, contract, equity or otherwise)
for losses suffered by Borrowers or Guarantors in connection with, arising
out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on such party, that the losses were the
result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Agent and Lenders shall be entitled to
the benefit of the rebuttable presumption that it and they acted in good
faith and with the exercise of ordinary care in the performance by it and
them of the terms of this Agreement.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly
waives demand, presentment, protest and notice of protest and notice of
dishonor with respect to any and all instruments and commercial paper,
included in or evidencing any of the Obligations or the Collateral, and any
and all other demands and notices of any kind or nature whatsoever with
respect to the Obligations, the Collateral and this Agreement, except such
as are expressly provided for herein. No notice to or demand on any
Borrower or Guarantor which Agent or any Lender may elect to give shall
entitle Borrowers or Guarantors to any other or further notice or demand in
the same, similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but
only by a written agreement signed as provided in Section 11.3(b) below.
Agent and Lenders shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its or their rights,
powers and/or remedies unless such waiver shall be in writing and signed as
provided in Section 11.3(b) below. Any such waiver shall be enforceable
only to the extent specifically set forth therein. A waiver by Agent or
any Lender of any right, power and/or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right, power and/or remedy
which Agent or any Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
(b) Neither this Agreement nor any other Financing Agreement nor
any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in
writing signed by Agent and the Majority Lenders and as to amendments to
any Financing Agreement, by Borrowers; except, that, any change, waiver,
discharge or termination with respect to the following shall require the
consent of Agent and all Lenders: (i) the extension of the scheduled final
maturity of any Loan, or any portion thereof, or reduction in the rate or
extension of the time of payment of interest thereon or fees (other than as
a result of waiving or not requiring the applicability of any post-default
increase in fees for outstanding Letter of Credit Accommodations or
increased interest rates on Loans in excess of the amounts then available
to Borrowers), or reduction in the principal amount thereof, or increase in
the Commitment of any Lender over the amount thereof then in effect or
provided hereunder (it being understood that a waiver of any Event of
Default shall not constitute a change in the terms of any Commitment of any
Lender), (ii) the release of a material amount of the Collateral (except as
expressly required by the Financing Agreements and except as permitted
under Section 12.13 hereof), (iii) the amendment, modification or waiver of
any provision of this Section 11.3, (iv) the reduction of any percentage
specified in the definition of Majority Lenders, (v) the consent to the
assignment or transfer by any Borrower of any of its rights and obligations
under this Agreement or (vi) the increase in the stated advance percentage
under the lending formulas contained in Section 2.1 hereof. No provision
of this Section 11.3 may be amended without the prior written consent of
Agent.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(b) above, in the event that Borrowers request that this
Agreement or any other Financing Agreements be amended or otherwise
modified in a manner which would require the unanimous consent of all of
the Lenders and such amendment or other modification is agreed to by the
Majority Lenders, then, with the consent of Borrowers and the Majority
Lenders, Borrowers and the Majority Lenders may amend this Agreement
without the consent of the Lender or Lenders which did not agree to such
amendment or other modification (collectively, the Minority Lenders ) to
provide for (i) the termination of the Commitment of each of the Minority
Lenders, (ii) the addition to this Agreement of one or more other Lenders,
or an increase in the Commitment of one or more of the Majority Lenders, so
that the Commitments, after giving effect to such amendment, shall be in
the same aggregate amount as the Commitments immediately before giving
effect to such amendment, (iii) if any Loans are outstanding at the time of
such amendment, the making of such additional Loans by such new Lenders or
Majority Lenders, as the case may be, as may be necessary to repay in full
the outstanding Loans of the Minority Lenders immediately before giving
effect to such amendment and (iv) the payment of all interest, fees and
other Obligations payable or accrued in favor of the Minority Lenders and
such other modifications to this Agreement as Borrowers and the Majority
Lenders may determine to be appropriate.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding
with respect to this Agreement, the Obligations, the Collateral or any
matter arising therefrom or relating hereto or thereto to the extent
permitted by applicable law.
11.5 Indemnification.
(a) Borrowers and Guarantors shall indemnify and hold Agent,
Lenders, and their respective directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses imposed on, incurred by or asserted against any of them
in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any
of the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including, without limitation,
amounts paid in settlement, court costs, and the reasonable fees and
expenses of counsel, except to the extent such losses, claims, damages,
liabilities, costs or expenses are the result of the gross negligence or
willful misconduct of Agent or Lenders as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in this
Section may be unenforceable because it violates any law or public policy,
Borrowers and Guarantors shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction
of indemnified matters under this Section. The foregoing indemnity shall
survive the payment of the Obligations and the termination of this
Agreement.
(b) Borrowers and Guarantors shall be liable for any tax or
penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and each Borrower and Guarantor agrees to
indemnify and hold Agent and Lenders harmless with respect to the
foregoing, and to repay to Agent and Lenders on demand the amount thereof,
and until paid by Borrowers or Guarantors such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrowers or Guarantors to pay any income or franchise
taxes attributable to the income of Agent or any Lender from any amounts
charged or paid hereunder to Agent or such Lender. The foregoing indemnity
shall survive the payment of the Obligations and the termination of this
Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent hereunder and
under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other
Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities
except those expressly set forth in this Agreement and in the other
Financing Agreements, and shall not by reason of this Agreement or any
other Financing Agreement be a trustee or fiduciary for any Lender; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any other
Financing Agreement, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any
other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for
herein or therein or for any failure by any Borrower or Guarantor or any
other Person to perform any of its obligations hereunder or thereunder; and
(c) shall not be responsible to Lenders for any action taken or omitted to
be taken by it hereunder or under any other Financing Agreement or under
any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith. Agent may deem and treat the payee of any note as the holder
thereof for all purposes hereof unless and until the assignment thereof
pursuant to an agreement (if and to the extent permitted herein) in form
and substance satisfactory to Agent shall have been delivered to and
acknowledged by Agent. The identification of CIT as a co-agent hereunder
shall not create any rights in favor of it in such capacity or subject it
to any duties or obligations, except as expressly set forth herein.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) reasonably believed by it 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 legal
counsel, independent accountants and other experts selected by Agent. As
to any matters not expressly provided for by this Agreement or any other
Financing Agreement, Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder or thereunder in accordance with
instructions given by Majority Lenders or all of Lenders as is required in
such circumstance, and such instructions of such Lenders and any action
taken or failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent
to the Loans and Letter of Credit Accommodations hereunder, unless and
until Agent has received written notice from a Lender or a Borrower
specifying such Event of Default or any unfulfilled condition precedent,
and stating that such notice is a Notice of Default or Failure of
Condition . In the event that Agent receives such a Notice of Default or
Failure of Condition, Agent shall give prompt notice thereof to Lenders.
Agent shall (subject to Section 12.7) take such action with respect to any
such Event of Default or failure of condition precedent as shall be
directed by the Majority Lenders; provided, that, unless and until Agent
shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to
or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting
the foregoing, and notwithstanding the existence or occurrence and
continuance of an Event of Default or any other failure to satisfy any of
the conditions precedent set forth in Section 4 of this Agreement to the
contrary, Agent may, but shall have no obligation to, continue to make
Loans and issue or cause to be issued Letter of Credit Accommodations for
the ratable account and risk of Lenders from time to time if Agent believes
making such Loans or issuing or causing to be issued such Letter of Credit
Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the
Loans, Letter of Credit Accommodations or other Obligations, as against any
Borrower or Guarantor or any of the Collateral or other property of any
Borrower or Guarantor.
12.4 Rights as a Lender. With respect to its Commitment and the Loans
made and Letter of Credit Accommodations issued or caused to be issued by
it (and any successor acting as Agent), so long as Congress shall be a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as
Agent, and the term Lender or Lenders shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) lend
money to, make investments in and generally engage in any kind of business
with Borrowers and Guarantors (and any of their subsidiaries or Affiliates)
as if it were not acting as Agent, and Congress and its Affiliates may
accept fees and other consideration from Borrowers and Guarantors for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrowers hereunder and without limiting the Obligations
of Borrowers hereunder) ratably, in accordance with their Pro Rata Shares,
for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating
to or arising out of this Agreement or any other Financing Agreement or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and
expenses that Agent is obligated to pay hereunder) or the enforcement of
any of the terms hereof or thereof or of any such other documents,
provided, that, no Lender shall be liable for any of the foregoing to the
extent it arises from the gross negligence or willful misconduct of the
party to be indemnified as determined by a final non-appealable judgment of
a court of competent jurisdiction.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or any other Lender,
and based on such documents and information as it has deemed appropriate,
made its own credit analysis of Borrowers and Guarantors and has made its
own decision to enter into this Agreement and that it will, independently
and without reliance upon Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Financing Agreements.
Agent shall not be required to keep itself informed as to the performance
or observance by Borrowers or Guarantors of any term or provision of this
Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties
or books of Borrowers or Guarantors. Agent will use reasonable efforts to
provide Lenders with any information received by Agent from Borrowers which
is required to be provided to Lenders hereunder and with a copy of any
Notice of Default or Failure of Condition received by Agent from a Borrower
or any Lender; provided, that, Agent shall not be liable to any Lender for
any failure to do so, except to the extent that such failure is
attributable to Agent's own gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction. Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall not
have any duty or responsibility to provide any Lender with any other credit
or other information concerning the affairs, financial condition or
business of Borrowers that may come into the possession of Agent or any of
its affiliates.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all
cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction
from Lenders of their indemnification obligations under Section 12.5 hereof
against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action.
12.8 Successor Agent.
(a) Agent may resign from the performance of all its functions
and duties hereunder and under the other Financing Agreements at any time
by giving at least thirty (30) days' prior written notice to Borrowers and
each Lender. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to Sections 12.8(b) and 12.8(c)
below or as otherwise provided below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent. If the successor Agent is not selected
from one of the Lenders, the successor Agent must be reasonably
satisfactory to Borrowers. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other
Financing Agreements. After any Agent's resignation hereunder as the
Agent, the provisions of this Section 12 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement and the other Financing Agreements.
(c) If a successor Agent shall not have been so appointed within
such thirty (30) Business Day period, the retiring Agent, with the consent
of Borrowers, shall then appoint a successor Agent who shall serve as Agent
until such time, if any, as the Majority Lenders, with the consent of
Borrowers, appoint a successor Agent as provided above.
12.9 Withholding Tax.
(a) If any Lender is a foreign corporation, partnership or
trust within the meaning of the Code and such Lender claims exemption
from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442
of the Code, such Lender agrees with and in favor of Agent, to deliver to
Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224 before
the payment of any interest is due in the first taxable year of such Lender
and in each succeeding taxable year of such Lender during which interest
may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees to promptly notify Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
properly completed and such Lender sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of Borrowers to
such Lender, such Lender agrees to notify Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of Borrowers to
such Lender. To the extent of such percentage amount, Agent will treat
such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed
by Section 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to Agent, then Agent
may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the Internal Revenue Service or any other Governmental
Authority of the United States of America or other jurisdiction asserts a
claim that Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not delivered,
was not properly executed, or because such Lender failed to notify Agent of
a change in circumstances which rendered the exemption from, or reduction
of, withholding tax ineffective, or for any other reason) such Lender shall
indemnify Agent fully for all amounts paid, directly or indirectly, by
Agent as tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to Agent under
this Section, together with all costs and expenses (including attorneys'
fees and expenses). The obligations of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or
replacement of Agent.
12.10 Additional Loans. Agent shall not make any Loans or provide any
Letter of Credit Accommodations on behalf of Lenders intentionally and with
actual knowledge that such Loans or Letter of Credit Accommodations would
cause the aggregate amount of the total outstanding Loans and Letter of
Credit Accommodations to exceed the Availability, without the prior consent
of all Lenders, except, that, Agent may make such additional Loans or
provide such additional Letter of Credit Accommodations on behalf of
Lenders intentionally and with actual knowledge that such Loans or Letter
of Credit Accommodations will cause the total outstanding Loans and Letter
of Credit Accommodations to exceed the Availability as Agent may deem
necessary or advisable in its discretion, provided, that: (a) the total
principal amount of the additional Loans or additional Letter of Credit
Accommodations which Agent may make or provide after obtaining such actual
knowledge that the aggregate principal amount of the Loans equal or exceed
the Availability shall not exceed the amount equal to ten percent (10%) of
the Availability at the time and shall not cause the total principal amount
of the Loans and Letter of Credit Accommodations to exceed the Maximum
Credit and (b) without the consent of all Lenders, Agent shall not make any
such additional Loans or Letter of Credit Accommodations more than ninety
(90) days from the date of the first such additional Loans or Letter of
Credit Accommodations each time Agent shall make or provide the same. Each
Lender shall be obligated to pay Agent the amount of its Pro Rata Share of
any such additional Loans or Letter of Credit Accommodations provided that
Agent is acting in accordance with the terms of this Section 12.10.
12.11 Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and
the other Financing Agreements relating to the Collateral, for the ratable
benefit of Lenders and Agent. Each Lender agrees that any action taken by
Agent or Majority Lenders in accordance with the terms of this Agreement or
the other Financing Agreements relating to the Collateral, and the exercise
by the Agent or Majority Lenders of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
12.12 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish Lender,
promptly after it becomes available, a copy of each field audit or
examination report (each a Report and collectively, Reports ) prepared
by Agent;
(b) expressly agrees and acknowledges that Agent (i) does not
make any representation or warranty as to the accuracy of any Report, or
(ii) shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers' books
and records, as well as on representations of Borrowers' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.6 hereof, and not
to distribute or use any Report in any other manner.
12.13 Collateral Matters.
(a) Agent may from time to time, at any time on or after an
Event of Default and for so long as the same is continuing, make such
disbursements and advances ( Agent Advances ) which Agent, in its sole
discretion, deems necessary or desirable either (i) to preserve or protect
the Collateral or any portion thereof, (ii) to enhance the likelihood or
maximize the amount of repayment by Borrowers of the Loans and other
Obligations or (iii) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including, without limitation,
costs, fees and expenses as described in Section 9.19 and payments to any
issuer of Letter of Credit Accommodations. Agent Advances shall be
repayable on demand and be secured by the Collateral. Agent Advances shall
not constitute Loans but shall otherwise constitute Obligations hereunder.
Agent shall notify each Lender and Borrower in writing of each such Agent
Advance, which notice shall include a description of the purpose of such
Agent Advance. Without limitation of its obligations pursuant to Section
6.7, each Lender agrees that it shall make available to Agent, upon Agent's
demand, in immediately available funds, the amount equal to such Lender's
Pro Rata Share of each such Agent Advance. If such funds are not made
available to Agent by such Lender, Agent shall be entitled to recover such
funds, on demand from such Lender together with interest thereon, for each
day from the date such payment was due until the date such amount is paid
to Agent, at the Interest Rate.
(b) Lenders hereby irrevocably authorize Agent, at its option
and in its discretion to release any security interest in, mortgage or lien
upon, any of the Collateral (i) upon termination of the Commitments and
payment and satisfaction of all of the Obligations and delivery of cash
collateral to the extent required under Section 13.1 below, or
(ii) constituting property being sold or disposed of if a Borrower
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry), or (iii) constituting property in
which no Borrower owned an interest at the time the security interest,
mortgage or lien was granted or at any time thereafter, or (iv) having a
value of less than $5,000,000 or (v) if approved, authorized or ratified in
writing by the Majority Lenders. Except as provided above, Agent will not
release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of the Majority Lenders.
Upon request by Agent at any time, Lenders will promptly confirm in writing
Agent's authority to release particular types or items of Collateral
pursuant to this Section 12.13.
(c) Without any manner limiting Agent's authority to act without
any specific or further authorization or consent by the Majority Lenders,
each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section
12.13. Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the
security interest, mortgage or liens granted to Agent for the benefit of
the Lenders upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and
(ii) such release shall not in any manner discharge, affect or impair the
Obligations or any security interest, mortgage or lien upon (or obligations
of any Borrower in respect of) the Collateral retained by such Borrower.
(d) Agent shall have no obligation whatsoever to any Lender or
any other Person to investigate, confirm or assure that the Collateral
exists or is owned by any Borrower or Guarantor or is cared for, protected
or insured or has been encumbered, or that any particular items of
Collateral meet the eligibility criteria applicable in respect of the Loans
or Letter of Credit Accommodations hereunder, or whether any particular
Availability Reserves are appropriate, or that the liens and security
interests granted to Agent herein or pursuant hereto or otherwise have been
properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all
or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and
powers granted or available to Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect
of the Collateral, or any act, omission or event related thereto, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no
duty or liability whatsoever to any other Lender.
12.14 Agency for Perfection. Agent and each Lender hereby appoints
each other Lender as agent for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent for itself and the
ratable benefit of Lenders in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof,
and, promptly upon Agent's request therefor shall deliver such Collateral
to Agent or in accordance with Agent's instructions.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date of the initial Loans or Letter of Credit
Accommodations hereunder (including such Loans or Letter of Credit
Accommodations arising pursuant to Section 2.5 hereof) and shall continue
in full force and effect for a term ending on the date five (5) years from
the date hereof (the Maturity Date ), unless sooner terminated pursuant to
the terms hereof.
(b) Borrowers may terminate this Agreement and the other
Financing Agreements at any time by giving to Agent and Lenders not less
than ten (10) Business Days prior written notice; provided, that, (i) this
Agreement and all other Financing Agreements must be terminated
simultaneously, (ii) Borrowers shall pay and perform all of the Obligations
as provided in Section 13.1(d) below, and including, without limitation,
the early termination fee provided for in Section 13.1 hereof (to the
extent such termination is effective prior to September 26, 1999), and
(iii) any such notice by Borrowers is irrevocable.
(c) Agent may, at its option, or shall upon the direction or the
Majority Lenders terminate this Agreement and the other Financing
Agreements at any time an Event of Default shall exist or have occurred and
be continuing.
(d) Upon the effective date of termination of the Financing
Agreements, Borrowers shall pay to Agent, for itself and the ratable
benefit of Lenders, in full in cash or other immediately available funds,
all outstanding and unpaid Obligations and shall furnish cash collateral to
Agent, for itself and the ratable benefit of Lenders, in such amounts as
Agent determines are reasonably necessary to secure Agent, for itself and
the ratable benefit of Lenders, from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received
final and indefeasible payment. Such payments in respect of the
Obligations and cash collateral shall be remitted by wire transfer in
Federal funds to such bank account of Agent, as Lender may, in its
discretion, designate in writing to Borrowers for such purpose. Interest
shall be due until and including the next business day, if the amounts so
paid by Borrowers to the bank account designated by Agent are received in
such bank account later than 12:00 noon, New York City time.
(e) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and covenants under this Agreement or the
other Financing Agreements until (i) all Obligations other than the
contingent obligations referred to in subsection (ii) of this Section
13.1(e) have been fully and finally discharged and paid, and Agent's
continuing security interest in the Collateral and the rights and remedies
of Agent and Lenders hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid, and (ii) with respect to any
contingent Obligations (including issued and outstanding Letter of Credit
Accommodations and checks or other documents provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received
final and indefeasible payment), cash collateral shall have been furnished
to Agent, for itself and ratable benefit of Lenders, in the amounts and in
the manner required under Section 13.1(d) hereof.
(f) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view of
the impracticality and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of
lost profits of Agent and Lenders as a result thereof, Borrowers agree to
pay to Agent, for itself and the ratable benefit of Lenders, upon the
effective date of such termination, an early termination fee in the amount
set forth below if such termination is effective in the period indicated:
Amount Period
(i) 2% of Maximum Credit From
the date hereof to and including
September 26, 1998.
(ii) 1/2% of Maximum Credit From
September 27, 1998 to and includ
ing September 25, 1999.
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers agree that it is reasonable under the circumstances currently
existing. In addition, Agent, for itself and the ratable benefit of
Lenders, shall be entitled to such early termination fee upon the
occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h) hereof, even if Agent and Lenders do not exercise its or their
right to terminate this Agreement, but elects, at its or their option, to
provide financing to Borrowers or permit the use of cash collateral under
the Bankruptcy Code. The early termination fee provided for in this
Section 13.1 shall be deemed included in the Obligations.
(g) In the event that after the Test Period (as defined below)
the Issuing Bank, Lender or Mercantile Bank, National Association (
Mercantile ) do not in any material respect fulfill their respective
obligations in connection with the issuance of Letter of Credit
Accommodations within the applicable time periods for such obligations set
forth in Schedule 13.1 hereto on a consistent basis for a period of more
than ten (10) consecutive days (other than as a result of acts or omissions
of Borrowers or Guarantors), Borrowers may notify Agent and Issuing Bank.
If for a period of thirty (30) consecutive days after the receipt of such
notice by Agent and Issuing Bank, Issuing Bank continues to fail in any
material respect on a consistent basis to fulfill such obligations within
the applicable time periods set forth in Schedule 13.1 hereto Borrowers may
within five (5) Business Days after the end of such period upon thirty (30)
days written notice to Agent terminate this Agreement and the other
Financing Agreements. If Borrowers elect to terminate this Agreement and
the other Financing Agreements pursuant to their rights under this Section
13.1(g), Borrowers shall not be required to pay to Agent the early
termination fee otherwise payable under Section 13.1(f) if each of the
following conditions is satisfied: (i) no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, and (ii) Lender shall have received the full and final
repayment of all of the Obligations and the cash collateral all as provided
in Section 13.1(d) above, within ten (10) days of the written notice from
Borrowers of their election to so terminate this Agreement. As used
herein, the term Test Period shall mean the period of one hundred eighty
(180) days after the Commencement Date as such term is defined in the
Letter of Credit Processing Agreement by and among Agent, the Issuing Bank,
Mercantile and Borrowers.
13.2 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Agent and Lenders at their respective addresses
set forth below and to Borrowers at their chief executive office set forth
below, or to such other address as either party may designate by written
notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if delivered in person, immediately upon delivery;
if by telex, telegram or facsimile transmission, immediately upon sending
and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing.
13.3 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall
not invalidate this Agreement as a whole, but this Agreement shall be
construed as though it did not contain the particular provision held to be
invalid or unenforceable and the rights and obligations of the parties
shall be construed and enforced only to such extent as shall be permitted
by applicable law.
13.4 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and
inure to the benefit of and be enforceable by Borrowers, Guarantors, Agent,
Lenders and their respective permitted successors and assigns, except that
Borrowers may not assign their rights under this Agreement, the other
Financing Agreements and any other document referred to herein or therein
without the prior written consent of Agent and all Lenders. Any such
purported assignment without such express prior written consent shall be
void. No Lender may assign its rights and obligations under this Agreement
without the prior written consent of all Lenders, Agent and Edison (to the
extent provided in Section 13.5 below), except as provided in Section 13.5
below. The terms and provisions of this Agreement and the other Financing
Agreements are for the purpose of defining the relative rights and
obligations of Borrowers, Guarantors, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any
of the other Financing Agreements.
13.5 Assignments; Participations.
(a) Each Lender may with the written consent of Agent and Edison
(which consent of Edison shall not be unreasonably withheld, conditioned or
delayed), assign to one or more commercial banks or other financial
institutions a portion of its rights and obligations under this Agreement
(including, without limitation, a portion of its Commitment, the Loans
owing to it and its rights and obligations as a Lender with respect to
Letters of Credit Accommodations) and the other Financing Agreements;
provided, that, (i) each such assignment shall be in a principal amount of
not less than $10,000,000 and in multiples of $1,000,000 in excess thereof
(or the remainder of such Lender's Commitment) and (ii) the parties to each
such assignment shall execute and deliver to Agent, for its acceptance and
recording in the Register an Assignment and Acceptance.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and
Acceptance, (i) the assignee thereunder shall be a party hereto and to the
other Financing Agreements and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations (including, without limitation,
the obligation to participate in Letter of Credit Accommodations) of a
Lender hereunder and thereunder and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assignor and assignee thereunder confirm to and agree with each other
and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or any of the other Financing Agreements or the execution,
legality, enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Financing Agreements furnished pursuant
hereto, (ii) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
Borrowers or Guarantors or the performance or observance by Borrowers or
Guarantors of any of the Obligations, (iii) such assignee confirms that it
has received a copy of this Agreement and the other Financing Agreements,
together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, the Agent or any other Lender
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other
Financing Agreements as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto,
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender.
Agent and Lenders may furnish any information concerning Borrowers or
Guarantors in the possession of Agent or any Lender from time to time to
assignees and Participants (subject to Section 13.16 hereof).
(d) Agent shall maintain at its address referred to on the
signature page hereto, a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of Lenders and the Commitment of each Lender from time to time
(the Register ). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrowers, Agent and
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower and any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee Lender, Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of
Exhibit A hereto, (i) accept such Assignment and Acceptance, (ii) give
prompt notice thereof to Edison and (iii) record the information contained
therein in the Register.
(f) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations
under this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it
and its participation in the Letter of Credit Accommodations); provided,
that, (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment hereunder) and the other Financing
Agreements shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Financing
Agreements, (iii) such sale shall be to a Lender, or an Affiliate of a
Lender or a commercial bank or other financial institution which has,
together with its Affiliates, combined capital surplus and undivided
profits of not less than $100,000,000, (iv) each of Congress and CIT shall
at all times hold an interest for its own respective account of not less
than $25,000,000 in the rights and obligations under this Agreement and the
other Financing Agreements, and (v) at any one time there shall not be more
than ten (10) Participants hereunder. Each Participant shall have the
rights of a Lender (including any right to receive payment) under Section
3.7 hereof to the extent of such Participant's interest; provided, that all
requests for any such payments shall be made by Participant through the
Lender granting such participation. The right of each Participant to
receive payment under Section 3.7 hereof shall be limited to the lesser of
(i) the amounts actually incurred by such Participant for which payment is
provided under such Section and (ii) the amounts that would have been
payable under such Section by Borrowers to the Lender granting the
participation to such Participant had such participation not been granted
(to the extent of such Participant's interest). Each Lender shall inform
Agent of the Persons who have purchased such participations and upon
Borrowers' request, Agent shall inform Borrowers of the names of the
Persons who as of the date of such request have purchased participations in
the Loans.
13.6 Confidentiality. Each Lender agrees to take normal and
reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as confidential by
Borrowers to such Lender and provided to it by any Borrower or Guarantor,
or by Agent on such Borrower's or Guarantor's behalf, in connection with
this Agreement or any of the other Financing Agreements, and neither it nor
any of its Affiliates shall use any such information for any purpose or in
any manner other than for purposes of this Agreement; except to the extent
that any Borrower or Guarantor consents in writing to such disclosure or
that such information (a) was or becomes generally available to the public
other than as a result of a disclosure by Agent or any Lender, or (b) was
or becomes available on a non-confidential basis from a source other than
any Borrower or Guarantor, provided that such source is not bound by a
written confidentiality agreement with such Borrower or Guarantor actually
known to Agent or such Lender, or (c) was available to Agent or such Lender
on a non-confidential basis prior to its disclosure to Agent or such Lender
by any Borrower or Guarantor; provided, that, Agent and any Lender may
disclose such information (i) at the request or pursuant to any requirement
of any Governmental Authority to which Agent or such Lender is subject,
(ii) pursuant to subpoena or other similar legal process (provided, that,
Lenders shall make reasonable efforts (if permitted under applicable law)
to give Edison prompt written notice of such subpoena or requirement and
shall make such disclosure only to the extent it is advised by counsel that
such disclosure is necessary under applicable law or to avoid any
liability), (iii) when required to do so in accordance with the provisions
of any applicable requirement of law (provided, that, Lenders shall make
reasonable efforts (if permitted under applicable law) to give Edison
prompt written notice of such requirement and shall make such disclosure
only to the extent it is advised by counsel that such disclosure is
necessary under applicable law or to avoid any liability); (iv) to the
extent reasonably required in connection with any litigation or proceeding
to which Agent, any Lender or their respective Affiliates may be party
(provided, that, Lenders shall make reasonable efforts (if permitted under
applicable law) to give Edison prompt written notice of any subpoena or
requirement and shall make such disclosure only to the extent it is advised
by counsel that such disclosure is necessary under applicable law or to
avoid any liability); (v) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any of the other
Financing Agreements; and (vi) to such Person's outside auditors, counsel,
consultants, appraisers and other professional advisors, subject to the
provisions of this Section 13.6, (vii) to any assignee or Participant (or
prospective assignee or Participant) so long as such assignee or
Participant (or prospective assignee or Participant) shall have first
agreed to treat such information as confidential in accordance with this
Section 13.6, (viii) to counsel for Agent or such Lender, or (ix) to
counsel for any Participant or assignee (or prospective Participant or
assignee), so long as such counsel shall have first agreed to treat such
information as confidential in accordance with this Section 13.6. In no
event shall this Section 13.6 or any other provision of this Agreement or
applicable law be deemed to require Agent or any Lender to return any
materials furnished by any Borrower or Guarantor to Agent or such Lender or
to prevent Agent or such Lender from responding to routine informational
requests in accordance with its customary practices as then in effect. The
obligations of Agent and Lenders under this Section 13.6 shall supersede
and replace the obligations of Agent and Lenders under any confidentiality
letter signed prior to the date hereof.
13.7 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject
matter hereof and thereof between the parties hereto, and supersede all
other prior agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Agent, Co-Agent, Lenders, Borrowers and Guarantors
have caused these presents to be duly executed as of the day and year first
above written.
AGENT
CONGRESS FINANCIAL CORPORATION,
as Agent
By: /S/
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
CO-AGENT
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
BORROWERS
EDISON BROTHERS STORES, INC.
By: /S/
Title:
Chief Executive Office:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
EDISON BROTHERS APPAREL
STORES, INC.
By: /S/
Title:
Chief Executive Office:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
EDISON PUERTO RICO STORES, INC.
By: /S/
Title:
Chief Executive Office:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LENDERS
CONGRESS FINANCIAL CORPORATION
By: /S/
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Commitment:
$100,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Commitment:
$100,000,000
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
GUARANTORS
EDISON PAYMASTER, INC.
EDBRO MISSOURI REALTY, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-KANSAS, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ WAREHOUSE, INC.
EDBRO CALIFORNIA USG - 2, INC.
EDBRO CALIFORNIA USG - 1, INC.
▇▇▇▇▇▇▇ CLOTHES, INC.
Z & Z FASHIONS, LTD.
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
SACHA SHOES LTD.
▇▇▇▇▇▇'▇ OF CALIFORNIA
By:
Title:
EDISON INDIANA, LLC
By: EDISON BROTHERS APPAREL STORES, INC., its Manager
By:
Title: