Exhibit 4.1
LOAN AND SECURITY AGREEMENT
FLEET RETAIL FINANCE INC.
AGENT FOR
THE REVOLVING CREDIT LENDERS REFERENCED HEREIN
ODD JOB STORES, INC.
THE LEAD BORROWER
FOR:
HIA TRADING ASSOCIATES AND
ODD-JOB ACQUISITION CORP.
THE BORROWERS
OJSAC, INC. AND
ODD JOB TRADING CORP.
THE GUARANTORS
JULY 17, 2003
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS:
ARTICLE 2 - THE REVOLVING CREDIT:
2.1 Establishment of Revolving Credit...................................................-27-
2.2 Advances in Excess of Borrowing Base (OverLoans).....................................-28-
2.3 Risks of Value of Collateral.........................................................-28-
2.4 Commitment to Make Revolving Credit Loans and Support Letters of Credit..............-28-
2.5 Revolving Credit Loan Requests.......................................................-28-
2.6 Suspension of Revolving Credit.......................................................-30-
2.7 Making of Revolving Credit Loans.....................................................-30-
2.8 SwingLine Loans......................................................................-31-
2.9 The Loan Account.....................................................................-31-
2.10 The Revolving Credit Notes...........................................................-32-
2.11 Payment of The Loan Account..........................................................-32-
2.12 Interest on Revolving Credit Loans. .................................................-33-
2.13 Revolving Credit Commitment Fee......................................................-34-
2.14 Facility Fee.........................................................................-34-
2.15 Unused Line Fee......................................................................-34-
2.16 Early Termination Fee................................................................-34-
2.17 Concerning Fees......................................................................-34-
2.18 Agent's and Revolving Credit Lenders' Discretion.....................................-35-
2.19 Procedures For Issuance of L/C's.....................................................-36-
2.20 Fees For L/C's.......................................................................-37-
2.21 Concerning L/C's.....................................................................-38-
2.22 Changed Circumstances................................................................-39-
2.23 Designation of Lead Borrower as Loan Parties' Agent..................................-40-
2.24 Lenders' Commitments.................................................................-40-
2.25 -42-
2.26 -43-
ARTICLE 3 - CONDITIONS PRECEDENT:
3.1 Corporate Due Diligence..............................................................-45-
3.2 Opinions.............................................................................-46-
3.3 Additional Documents.................................................................-46-
3.4 Officers' Certificates...............................................................-46-
3.5 Representations and Warranties.......................................................-47-
3.6 Minimum Day One Availability.........................................................-47-
3.7 All Fees and Expenses Paid...........................................................-47-
3.8 No Default...........................................................................-47-
3.11 No Material Adverse Change...........................................................-47-
3.12 Tender Offer.........................................................................-47-
3.13 Benefit of Conditions Precedent......................................................-48-
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ARTICLE 4 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
4.1 Payment and Performance of Liabilities...............................................-48-
4.2 Due Organization. Authorization. No Conflicts........................................-48-
4.3 Trade Names..........................................................................-50-
4.4 Infrastructure.......................................................................-50-
4.5 Locations; Title to Assets; Acquisitions.............................................-50-
4.6 Encumbrances.........................................................................-52-
4.7 Indebtedness.........................................................................-52-
4.8 Insurance............................................................................-52-
4.9 Licenses.............................................................................-53-
4.10 Leases...............................................................................-53-
4.11 Requirements of Law..................................................................-54-
4.12 Labor Relations......................................................................-54-
4.13 Maintain Properties..................................................................-54-
4.14 Taxes................................................................................-55-
4.15 No Margin Stock......................................................................-56-
4.16 ERISA................................................................................-56-
4.17 Hazardous Materials..................................................................-56-
4.18 Litigation...........................................................................-57-
4.19 Dividends. Investments. Corporate Action.............................................-57-
4.20 Loans................................................................................-58-
4.21 Protection of Assets.................................................................-58-
4.22 Line of Business.....................................................................-58-
4.23 Affiliate Transactions...............................................................-58-
4.24 Further Assurances...................................................................-58-
4.25 Adequacy of Disclosure...............................................................-59-
4.26 No Restrictions on Liabilities.......................................................-60-
4.27 Other Covenants......................................................................-60-
ARTICLE 5 - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5.1 Maintain Records.....................................................................-60-
5.2 Access to Records....................................................................-61-
5.3 Immediate Notice to Agent............................................................-61-
5.4 Borrowing Base Certificate...........................................................-62-
5.5 Weekly Reports.......................................................................-62-
5.6 Monthly Reports......................................................................-63-
5.7 Quarterly Reports....................................................................-63-
5.8 Annual Reports.......................................................................-64-
5.9 Officers' Certificates...............................................................-64-
5.10 Inventories, Appraisals, and Audits..................................................-65-
5.11 Additional Financial Information.....................................................-66-
5.12 Financial Performance Covenants......................................................-67-
ARTICLE 6 - USE OF COLLATERAL:
6.1 Use of Inventory Collateral.........................................................-67-
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6.2 Inventory Quality....................................................................-68-
6.3 Adjustments and Allowances...........................................................-68-
6.4 Validity of Accounts.................................................................-68-
6.5 Notification to Account Debtors......................................................-68-
ARTICLE 7 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7.1 Depository Accounts..................................................................-68-
7.2 Credit Card Receipts.................................................................-69-
7.3 The Concentration, Collection and Operating Accounts.................................-69-
7.4 Proceeds and Collections.............................................................-70-
7.5 Payment of Liabilities...............................................................-70-
7.6 The Operating Account................................................................-71-
ARTICLE 8 - GRANT OF SECURITY INTEREST:
8.1 Grant of Security Interest...........................................................-71-
8.2 Extent and Duration of Security Interest.............................................-72-
ARTICLE 9 - AGENT AS ATTORNEY-IN-FACT:
9.1 Appointment as Attorney-In-Fact......................................................-75-
9.2 No Obligation to Act.................................................................-76-
ARTICLE 10 - EVENTS OF DEFAULT:
10.1 Failure to Pay the Revolving Credit..................................................-77-
10.2 Failure To Make Other Payments.......................................................-77-
10.3 Failure to Perform Covenant or Liability (No Grace Period)...........................-77-
10.4 Failure to Perform Covenant or Liability (Grace Period)..............................-77-
10.5 Misrepresentation....................................................................-77-
10.6 Acceleration of Other Debt. Breach of Lease..........................................-78-
10.7 Default Under Other Agreements.......................................................-78-
10.8 Collateral...........................................................................-78-
10.9 Attachment. Judgment. Restraint of Business..........................................-78-
10.10 Business Failure.....................................................................-79-
10.11 Bankruptcy...........................................................................-79-
10.12 Indictment - Forfeiture..............................................................-79-
10.13 Reserved.............................................................................-79-
10.14 Termination of Guaranty..............................................................-79-
10.15 Challenge to Loan Documents..........................................................-79-
10.16 Key Executives.......................................................................-80-
10.17 Change in Control....................................................................-80-
ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT:
11.1 Acceleration.........................................................................-80-
11.2 Rights of Enforcement................................................................-80-
11.3 Sale of Collateral...................................................................-81-
11.4 Occupation of Business Location......................................................-81-
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11.5 Grant of Nonexclusive License........................................................-82-
11.6 Assembly of Collateral...............................................................-82-
11.7 Rights and Remedies..................................................................-82-
ARTICLE 12 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
12.1 Revolving Credit Funding Procedures..................................................-82-
12.2 SwingLine Loans......................................................................-83-
12.3 Agent's Covering of Fundings:........................................................-83-
12.4 Ordinary Course Distributions........................................................-85-
ARTICLE 13 - ACCELERATION AND LIQUIDATION:
13.1 Acceleration Notices.................................................................-86-
13.2 Acceleration.........................................................................-86-
13.3 Initiation of Liquidation............................................................-86-
13.4 Actions At and Following Initiation of Liquidation..................................-86-
13.5 Agent's Conduct of Liquidation.......................................................-87-
13.6 Distribution of Liquidation Proceeds:................................................-87-
13.7 Relative Priorities To Proceeds of Liquidation ......................................-88-
ARTICLE 14 - THE AGENT:
14.1 Appointment of The Agent ..........................................................-88-
14.2 Responsibilities of Agent ...........................................................-89-
14.3 Concerning Distributions By the Agent ...............................................-89-
14.4 Dispute Resolution:..................................................................-90-
14.5 Distributions of Notices and Other Documents.........................................-90-
14.6 Confidential Information.............................................................-91-
14.7 Reliance by Agent ...................................................................-91-
14.8 Non-Reliance on Agent and Other Revolving Credit Lenders.............................-91-
14.9 Indemnification......................................................................-92-
14.10 Resignation of Agent.................................................................-92-
ARTICLE 15 - ACTION BY AGENT; CONSENTS; AMENDMENTS; WAIVERS:
15.1 Administration of Credit Facilities..................................................-93-
15.2 Actions Requiring or On Direction of Majority Lenders................................-94-
15.3 Actions Requiring or On Direction of SuperMajority Lenders...........................-94-
15.4 Action Requiring Certain Consent: -95-
15.5 Actions Requiring or Directed By Unanimous Consent...................................-95-
15.6 Actions Requiring SwingLine Lender Consent...........................................-96-
15.7 Actions Requiring Agent's Consent....................................................-96-
15.8 Miscellaneous Actions................................................................-97-
15.10 NonConsenting Revolving Credit Lender................................................-97-
ARTICLE 16 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16.1 Assignments and Assumptions:.........................................................-99-
16.2 Assignment Procedures................................................................-99-
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16.3 Effect of Assignment................................................................-100-
ARTICLE 17 - NOTICES:
17.1 Notice Addresses....................................................................-100-
17.2 Notice Given........................................................................-101-
17.3 Wire Instructions. Notice Given.....................................................-102-
ARTICLE 18 - TERM:
18.1 Termination of Revolving Credit.....................................................-102-
18.2 Actions On Termination..............................................................-102-
ARTICLE 19 - GENERAL:
19.1 Protection of Collateral............................................................-103-
19.2 Publicity...........................................................................-103-
19.3 Successors and Assigns..............................................................-103-
19.4 Severability........................................................................-103-
19.5 Amendments. Course of Dealing......................................................-103-
19.6 Power of Attorney...................................................................-104-
19.7 Application of Proceeds.............................................................-104-
19.8 Increased Costs.....................................................................-104-
19.9 Costs and Expenses of the Agent.....................................................-105-
19.10 Copies and Facsimiles...............................................................-105-
19.11 Massachusetts Law...................................................................-106-
19.12 Consent to Jurisdiction.............................................................-106-
19.13 Indemnification.....................................................................-106-
19.14 Rules of Construction...............................................................-107-
19.15 Intent..............................................................................-108-
19.16 Participations:.....................................................................-109-
19.17 Right of Set-Off....................................................................-109-
19.18 Pledges To Federal Reserve Banks: ..................................................-109-
19.19 Maximum Interest Rate...............................................................-109-
19.20 Waivers. ...........................................................................-110-
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EXHIBITS
1.1 : Customs Broker Agreement
2.8(c) : SwingLine Note
2.10 : Revolving Credit Note
2.24 : Revolving Credit Lenders' Commitments
2.25 : Form of Opinion for Proposed Combination
4.2 : Affiliates; Corporate Information
4.3 : Trade Names
4.5 : Locations
4.5(e) : Customs Brokers and Carriers
4.6 : Encumbrances
4.7 : Indebtedness
4.8 : Insurance Policies
4.10 : Capital Leases
4.12 : Labor Agreements
4.14 : Taxes
4.18 : Litigation
4.19 : Permitted Investments
5.4 : Borrowing Base Certificate
5.6 : Monthly Financial Reporting Requirements
5.12(a) : Financial Performance Covenants
5.12(b) : Business Plan
6.3 : Blocked Account Agreement
7.1(a) : DDAs
7.1(b) : Form of DDA Notice
7.2(a) : Credit Card Arrangements
7.2(b) : Form of Credit Card Notice
8.3(b) : Chattel Paper
8.3(d) : Investment Accounts
8.3(e) : L/Cs, Bankers Acceptances
8.3(f) : Commercial Tort Claims
16.2 : Assignment /Assumption
vi
LOAN AND SECURITY AGREEMENT FLEET RETAIL FINANCE INC.
Agent
July 17, 2003
THIS AGREEMENT is made between
FLEET RETAIL FINANCE INC. (in such capacity, herein the
"AGENT"), a Delaware corporation with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent for the ratable benefit of the
"REVOLVING CREDIT LENDERS", who are, on the Closing Date, those
financial institutions identified on the signature pages of this
Agreement and who in the future are those Persons (if any) who become
"Revolving Credit Lenders" in accordance with the provisions of
Section 2.24, 2.25 and Article 16 below;
and
The Revolving Credit Lenders;
and
ODD JOB STORES, INC, AN OHIO CORPORATION with its principal
executive offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, as agent (in such capacity, the "LEAD BORROWER") for HIA
TRADING ASSOCIATES A NEW YORK GENERAL PARTNERSHIP ("HIA"), and
ODD-JOB ACQUISITION CORP., A DELAWARE CORPORATION ("ODD-JOB
ACQUISITION")(each, individually, a "BORROWER" and collectively, the
"BORROWERS"), and OJSAC, INC., a Delaware corporation ("OJSAC"), and
ODD JOB TRADING CORP., a New York corporation ("TRADING CORP.")(each,
individually, a "GUARANTOR" and collectively, the "GUARANTORS"),
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
ARTICLE 1 - DEFINITIONS:
As used herein, the following terms have the following meanings or
are defined in the section of this Agreement so indicated:
"ACCELERATION": With respect to any Indebtedness, its becoming due
and payable prior to its stated maturity. Derivations of
the word "Acceleration" (such as "Accelerate") are used
with like meaning in this Agreement.
"ACCELERATION NOTICE": Written notice as follows:
(a) From the Agent to the Revolving Credit
Lenders, as provided in 13.1(a).
(b) From the SuperMajority Lenders to the
Agent, as provided in Section 13.1(b).
"ACCOUNT DEBTOR": Has the meaning given that term in the UCC.
"ACCOUNTS"and "ACCOUNTS RECEIVABLE": Include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment
(whether or not earned by performance) for: property that
has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of; services rendered or to be rendered;
a policy of insurance issued or to be issued; a secondary
obligation incurred or to be incurred; energy provided or
to be provided; for the use or hire of a vessel; arising
out of the use of a credit or charge card or information
contained on or used with that card; winnings in a lottery
or other game of chance; and also all Inventory which gave
rise thereto, and all rights associated with such
Inventory, including the right of stoppage in transit; all
reclaimed, returned, rejected or repossessed Inventory (if
any) the sale of which gave rise to any Account.
"ACH": Automated clearing house.
"AFFILIATE": The following:
(a) With respect to any two Persons, a
relationship in which (i) one holds, directly or
indirectly, not less than five percent (5%) of the capital
stock, beneficial interests, partnership interests, or
other equity interests of the other; or (ii) one has,
directly or indirectly, the right, under ordinary
circumstances, to elect a majority of the directors (or
other body or Person who has those powers customarily
vested in a board of directors of a corporation); or (iii)
not less than five percent (5%) of their respective
ownership is directly or indirectly held by the same third
Person.
(b) Any Person which: is a parent,
brother-sister, subsidiary, or affiliate, of a Loan Party;
could have such enterprise's tax returns or financial
statements consolidated with that Loan Party's; could be a
member of the same controlled group of corporations (within
the meaning of Section 1563(a)(1), (2) and (3) of the
2
Internal Revenue Code of 1986, as amended from time to
time) of which any Loan Party is a member; or controls or
is controlled by any Loan Party.
"AGENT": Is referred to in the Preamble.
"AGENT'S COVER": Is defined in Section 12.3(c)(i).
"AGENT'S RIGHTS AND REMEDIES": Is defined in Section 11.7.
"AMAZING SAVINGS": Amazing Savings Holding LLC, a Delaware limited
liability company.
"AMAZING SAVINGS COMPANIES": Amazing Savings, OJSAC, Ascend Retail
Partners LLC and Amazing Savings/J.B.S. Liquidators, Inc.
"APPLICABLE LAW": As to any Person: (i) All statutes, rules,
regulations, orders, or other requirements having the force
of law and (ii) all court orders and injunctions,
arbitrator's decisions, and/or similar rulings, in each
instance ((i) and (ii)) of or by any federal, state,
municipal, and other Governmental Authority, or court,
tribunal, panel, or other body which has or claims
jurisdiction over such Person, or any property of such
Person, or of any other Person for whose conduct such
Person would be responsible.
"APPLICABLE MARGIN": The following percentages for Base Margin Loans
and Eurodollar Loans based upon the following criteria:
--------------- ------------------------------------------------ --------------------- --------------
LEVEL AVERAGE EXCESS AVAILABILITY EURODOLLAR MARGIN BASE MARGIN
--------------- ------------------------------------------------ --------------------- --------------
Less Than Equal to Or Greater Than
--------------- ------------------- ---------------------------- --------------------- --------------
I $10,000,000 2.00% 0.00%
--------------- ------------------- ---------------------------- --------------------- --------------
II $10,000,000 $5,000,000 2.25% 0.25%
--------------- ------------------- ---------------------------- --------------------- --------------
III $5,000,000 $2,500,000 2.50% 0.50%
--------------- ------------------- ---------------------------- --------------------- --------------
IV $2,500,000 2.75% 0.75%
--------------- ------------------- ---------------------------- --------------------- --------------
The Applicable Margin shall initially be established at
Level III and shall remain at such level through the
quarter ending December 31, 2003, unless at any time from
the Closing Date to such quarter end average Excess
Availability shall be equal to or less than that specified
for Level IV, in which event the Applicable Margin shall be
immediately increased to the percentages set forth in Level
IV. In any event, the Applicable Margin shall be adjusted
quarterly on the first day of each calendar quarter,
3
commencing with January 1, 2004, based upon the average
Excess Availability during the prior quarter. Upon the
occurrence of an Event of Default, the Applicable Margin
may, at the option of the Agent, be immediately increased
to the percentages set forth in Level IV (even if the
Excess Availability requirements for another Level have
been met) and interest shall be determined in the manner
set forth in Section 2.12(g).
"APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) the Cost
of Eligible Inventory (net of Inventory Reserves)
multiplied by (b) that percentage, determined from the then
most recent appraisal of the Loan Parties' Inventory
undertaken at the request of the Agent, to reflect the
appraiser's estimate of the net recovery on the Loan
Parties' Inventory in the event of an in-store liquidation
of that Inventory.
"APPRAISED INVENTORY PERCENTAGE": 85%.
"ASSIGNING REVOLVING CREDIT LENDER": Defined in Section 16.1(a).
"ASSIGNMENT AND ACCEPTANCE": Defined in Section 16.2.
"AVAILABILITY": The result of the following:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of the Loan Account.
Minus
(iii) The aggregate undrawn Stated Amount of all then
outstanding L/C's.
Minus
(iv) The aggregate of the Availability Reserves.
"AVAILABILITY RESERVES": Such reserves as the Agent from time to time
determines in the Agent's discretion as being appropriate
to reflect the impediments to the Agent's ability to
4
realize upon the Collateral. Without limiting the
generality of the foregoing, Availability Reserves may
include (but are not limited to) reserves based on the
following:
(i) Rent for any (x) Retail Store in a
Landlord State and (y)Warehouse, in
each case in respect to which a
Landlord Waiver, acceptable to the
Agent, has not been received by the
Agent)(which initially shall be two
(2) months rent for any such
location).
(ii) Customer Credit Liabilities.
(iii) Taxes and other governmental charges,
including, ad valorem, personal
property, and other taxes which might
have priority over the Collateral
Interests of the Agent in the
Collateral, including, without
limitation, with respect to the Fiscal
2002 Federal tax assessment against
Lead Borrower in the amount of
$440,000.00.
(iv) L/C Landing Costs. (v) Deposits on
special orders.
(vi) Payables (based upon payables which
are both past due and past the Loan
Parties' normal payment terms
consistent with past practices).
"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.
"BASE MARGIN": As determined from the definition of Applicable
Margin.
"BASE MARGIN LOAN": Each Revolving Credit Loan bearing interest
at the Base Margin Rate.
"BASE MARGIN RATE": The aggregate of the Prime Rate plus the then
applicable Base Margin.
"BLOCKED ACCOUNT": Any DDA into which the contents of any other DDA
is transferred.
"BLOCKED ACCOUNT AGREEMENT": An agreement with the a bank
maintaining one or more deposit accounts of the Loan
Parties where funds from one or more DDAs are concentrated,
which agreements shall be substantially in the form
attached hereto as EXHIBIT6.3 or otherwise in form and
substance reasonably satisfactory to the Agent.
"BONY": The Bank of New York.
"BONY AGREEMENTS": Collectively, the (i) Master Promissory Note
(Alternate Base Rate), dated April 28, 2003, in the face
amount of $7,500,000.00 made by Amazing Savings to BONY,
(ii) Promissory Note Time/Installment, dated December 18,
2002, in the face amount of $600,000.00 made by Amazing
5
Savings to BONY, (iii) Security Agreement, dated December
18, 2002, made by Amazing Savings to BONY and (iv) that
certain Letter, dated May 6, 2003, from BONY to Amazing
Savings.
"BORROWER" and "BORROWERS": Is defined in the Preamble.
"BORROWING BASE": The result of the following:
(i) The lesser of
(A) the Cost of Eligible Inventory (net
of Inventory Reserves) multiplied by
the Inventory Advance Rate
or
(B) the Appraised Inventory Percentage
of the Appraised Inventory
Liquidation Value
Plus
(ii) The face amount of Eligible Credit Card Receivables
multiplied by the Credit Card Advance Rate.
"BORROWING BASE CERTIFICATE": Is defined in Section 5.4.
"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts generally are
not open to the general public for the purpose of
conducting commercial banking business; or (c) a day on
which the principal office of the Agent is not open to the
general public to conduct business.
"BUSINESS PLAN": The Loan Parties' business plan annexed hereto as
EXHIBIT 5.12(B) and any revision, amendment, or update of
such business plan with respect to which the Agent has
provided its written approval.
"CAPITAL EXPENDITURES": The expenditure of funds or the incurrence
of liabilities which may be capitalized in accordance with
GAAP.
"CAPITAL LEASE": Any lease which may be capitalized in accordance
with GAAP.
"CERTIFICATE OF EXEMPTION": Defined in Section 2.26.
"CHANGE IN CONTROL": The occurrence of any of the following:
6
(a) (i) The acquisition by any group of Persons
(within the meaning of the Securities Exchange Act of 1934,
as amended) or any Person, of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange
Commission), directly or indirectly, of more of the issued
and outstanding capital stock of the Lead Borrower having
the right, under ordinary circumstances, to vote for the
election of directors of the Lead Borrower, than that owned
by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or, in the event of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'
death, the ▇▇▇▇▇▇ Family, or (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or, in the
event of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇' death, the ▇▇▇▇▇▇ Family, shall
have beneficial ownership of less than twenty percent (20%)
of the issued and outstanding capital stock of the Lead
Borrower having the right, under ordinary circumstances, to
vote for the election of directors of the Lead Borrower
(b) At any time during the lifetime of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ a majority of the seats (other than vacant seats) on
the board of directors of the Lead Borrower are occupied by
Persons who were not (i) nominated by the board of
directors of the Lead Borrower, (ii) nominated by ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or by Persons under the Control of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or
(iii) appointed by directors nominated in accordance with
clause (i) or (ii) above.
(c) At any time after the death of ▇▇▇▇▇▇▇
▇▇▇▇▇▇, (i) the persons who are directors of the Lead
Borrower as of the date of the death of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
together with the director appointed to replace ▇▇▇▇▇▇▇
▇▇▇▇▇▇ on the board, cease for any reason to constitute a
majority of the board of directors of Lead Borrower, (ii)
within sixty (60) days of the date on which the Agent shall
have received notice from Lead Borrower pursuant to Section
5.3(b)(vi) that such majority shall cease to exist, the
Agent shall have notified the Lead Borrower that the
composition of the Board is no longer satisfactory to the
Agent and (iii) the Liabilities shall not have been repaid
in full and all commitments hereunder terminated within
ninety (90) days after the delivery by Agent to Lead
Borrower of the notice referred to in clause (c)(ii).
(d) Except in connection with the Proposed
Combination, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (or, in the event of ▇▇▇▇▇▇▇
▇▇▇▇▇▇' death, the ▇▇▇▇▇▇ Family, shall cease to have
Control of (i) an amount of the issued and outstanding
equity interests in each Person which directly or
indirectly Controls the Lead Borrower, which exceeds the
amount of such equity interests that is Controlled by any
other Person or Group of Persons or (ii) at least twenty
percent (20%) of the issued and outstanding equity
interests in each Person which, directly or indirectly,
Controls the Lead Borrower.
(e) Except in connection with the Proposed
Combination, any failure of the Lead Borrower to own,
beneficially and of record, directly or indirectly, 100% of
the equity interests of all other Loan Parties (other than
OJSAC).
"CHATTEL PAPER": Has the meaning given that term in the UCC.
7
"CLOSING DATE": The date on which the conditions specified in
Article 3 are satisfied (or waived by the Agent).
"COLLATERAL": Is defined in Section 8.1.
"COLLATERAL INTEREST": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"CONCENTRATION ACCOUNT": Is defined in Section 7.3.
"CONSENT":Actual consent given by the Revolving Credit Lender from
whom such consent is sought; or the passage of seven (7)
Business Days from receipt of written notice to a Revolving
Credit Lender from the Agent of a proposed course of action
to be followed by the Agent without such Revolving Credit
Lender's giving the Agent written notice of that Revolving
Credit Lender's objection to such course of action,
provided that the Agent may rely on such passage of time as
consent by a Revolving Credit Lender only if such written
notice states that consent will be deemed effective if no
objection is received within such time period.
"CONSOLIDATED": When used to modify a financial term, test,
statement, or report, refers to the application or
preparation of such term, test, statement or report (as
applicable) based upon the consolidation, in accordance
with GAAP, of the financial condition or operating results
of the Loan Parties.
"CONTROL":The possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies
of a Person, whether through the ability to exercise voting
power, by contract or otherwise. The terms "Controlling"
and "Controlled" have meanings correlative thereto.
"COST": The lower of:
(a) The calculated cost of purchases, based upon
the Loan Parties' accounting practices, known to the Agent,
which practices are in effect on the date on which this
Agreement was executed as such calculated cost is
determined from: invoices received by the Loan Parties; the
Loan Parties' purchase journal; or the Loan Parties' stock
ledger; and
(b) The cost equivalent of the lowest ticketed or
promoted price at which the subject Inventory is offered to
the public, after all ▇▇▇▇-▇▇▇▇▇ (whether or not such price
is then reflected on the Loan Parties' accounting system),
which cost equivalent is determined in accordance with the
retail method of accounting, reflecting the Loan Parties'
historic business practices.
8
("Cost" does not include inventory capitalization
costs or other non-purchase price charges (such as freight)
used in the Loan Parties' calculation of cost of goods
sold).
"COSTS OF COLLECTION": Includes, without limitation, all
attorneys' reasonable fees and reasonable out-of-pocket
expenses incurred by the Agent's attorneys, and all
reasonable out-of-pocket costs incurred by the Agent in the
administration of the Liabilities and/or the Loan
Documents, including, without limitation, reasonable costs
and expenses associated with travel on behalf of the Agent,
where such costs and expenses are directly or indirectly
related to or in respect of the Agent's: administration and
management of the Liabilities; negotiation, documentation,
and amendment of any Loan Document; or efforts to preserve,
protect, collect, or enforce the Collateral, the
Liabilities, and/or the Agent's Rights and Remedies and/or
any of the rights and remedies of the Agent against or in
respect of any guarantor or other person liable in respect
of the Liabilities (whether or not suit is instituted in
connection with such efforts). "Costs of Collection" also
includes the reasonable fees and expenses of Lenders'
Special Counsel. The Costs of Collection are Liabilities,
and at the Agent's option may bear interest at the then
effective Base Margin Rate.
"CREDIT CARD ADVANCE RATE": 80%.
"CREDIT EXTENSIONS": At any time, the sum of (a) the principal
balance of all Revolving Credit Loans then outstanding and
(b) the aggregate undrawn Stated Amount of all then
outstanding L/C's.
"CREDIT PARTY": Defined in Section 2.26.
"CUSTOMER CREDIT LIABILITY": Gift certificates, customer deposits,
merchandise credits, layaway obligations, frequent shopping
programs, and similar liabilities of any Borrower to its
retail customers and prospective customers.
"CUSTOMS BROKER AGREEMENT": A tri-party agreement in substantially
the form attached as EXHIBIT 1.1, annexed hereto, among the
Lead Borrower or any Borrower, and a customs broker or
other carrier, in which the customs broker or other carrier
acknowledges that it has control over and holds the
documents evidencing ownership of the subject Inventory for
the benefit of the Agent and agrees, upon notice from the
Agent, to hold and dispose of the subject Inventory solely
as directed by the Agent.
"DDA": Any checking or other demand daily depository account
maintained by any Loan Party other than any Exempt DDA.
"DEFAULT": Any occurrence, circumstance or state of facts which would
become an Event of Default if any requisite notice were
given and/or any requisite period of time were to elapse
9
and such occurrence, circumstance or state of facts were
not cured within any applicable grace period.
"DELINQUENT REVOLVING CREDIT LENDER": Is defined in Section 12.3(c).
"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC and
also includes all demand, time, savings, passbook, or
similar accounts maintained with a bank.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.
"EARLY TERMINATION FEE": Is defined in Section 2.16.
"EBITDA": The Loan Parties' Consolidated earnings (excluding
extraordinary gains and gains from the sale of assets other
than in the ordinary course of business) before interest,
taxes, depreciation, amortization and other non-cash
charges properly deducted in determining earnings in
accordance with GAAP, each as determined in accordance with
GAAP.
"ELIGIBLE ASSIGNEE": A bank, insurance company, or company engaged in
the business of making commercial loans having a combined
capital and surplus in excess of $300,000,000 or any
Affiliate of any Revolving Credit Lender, or any Person to
whom a Revolving Credit Lender assigns its rights and
obligations under this Agreement as part of a programmed
assignment and transfer of such Revolving Credit Lender's
rights in and to a material portion of such Revolving
Credit Lender's portfolio of asset based credit facilities.
"ELIGIBLE CREDIT CARD RECEIVABLES": Under four (4) Business Day
accounts due on a non-recourse basis from major credit card
processors (which, if due on account of a private label
credit card program, are deemed in the discretion of the
Agent to be eligible).
"ELIGIBLE INVENTORY": All of the following (without duplication): (a)
such of the Loan Parties' Inventory, at such locations, and
of such types, character, qualities and quantities, as the
Agent in its discretion from time to time determines to be
acceptable for borrowing, as to which Inventory, the Agent
has a perfected security interest which is prior and
superior to all security interests, claims and Encumbrances
(other than Permitted Encumbrances); (b) Eligible L/C
Inventory; and (c) Eligible Prepaid Inventory. That portion
of "Eligible Inventory" which consists of Eligible Prepaid
Inventory and Eligible L/C Inventory shall not, in the
aggregate, exceed the In-Transit Inventory Cap.
10
"ELIGIBLE L/C INVENTORY": Inventory (without duplication as to
Eligible Inventory), the purchase of which is supported by
a documentary L/C then having an initial expiry of
forty-five (45) or less days, provided that
(a) Such Inventory is of such types,
character, qualities and quantities (net of
Inventory Reserves) as the Agent in its
discretion from time to time determines to be
eligible for borrowing; and
(b) The documentary L/C supporting
such purchase names the Agent as consignee of the
subject Inventory and the Agent has control over
the documents which evidence ownership of the
subject Inventory (such as by the providing to
the Agent of a Customs Brokers Agreement in form
reasonably satisfactory to the Agent).
"ELIGIBLE PREPAID INVENTORY": That portion of the Borrower's
Inventory (without duplication of other Eligible Inventory)
for which the Borrower has paid, title to which has passed
to the Borrower, which has been received by the Borrower or
its bailee, and which has been shipped from a foreign
location to one of the Loan Parties' Warehouses; provided
that
(a) Such Inventory is of such types, character, qualities
and quantities as the Agent in its reasonable discretion
from time to time determines to be Eligible Inventory;
(b) The documents which relate to such shipment name the
Agent as consignee of the subject Inventory and, if
required by the Agent, the Agent has control over the
documents which evidence ownership of the subject Inventory
such as by providing a Customs Brokers Agreement to the
Agent); and
(c) Such Inventory has not yet been delivered to the Loan
Parties' Warehouse and has been in transit from the
applicable foreign location for no more than forty-five
(45) calendar days.
"EMPLOYEE BENEFIT PLAN": An "Employee Benefit Plan" as defined in
Section 3(3) of ERISA which is subject o Title IV of ERISA.
"ENCUMBRANCE": Each of the following:
(a) A Collateral Interest or agreement to create
or grant a Collateral Interest; the interest of a lessor
under a Capital Lease; conditional sale or other title
retention agreement; sale of accounts receivable or chattel
paper; or other arrangement pursuant to which any Person is
entitled to any preference or priority with respect to the
property or assets of another Person or the income or
profits of such other Person; each of the foregoing whether
consensual or non-consensual and whether arising by way of
11
agreement, operation of law, legal process or otherwise.
(b) The filing of any financing statement under
the UCC or comparable law of any jurisdiction.
"END DATE": The date upon which all of the following conditions
are met: (a) all payment Liabilities described in Section
18.2(a) have been indefeasibly paid in full; (b) all
obligations of any Revolving Credit Lender to make loans
and advances and to provide other financial accommodations
to the Loan Parties hereunder shall have been irrevocably
terminated and (c) those arrangements concerning L/C's
which are described in Section 18.2(a) have been made.
"ENVIRONMENTAL LAWS": All of the following:
(a) Applicable Law which regulates or relates to,
or imposes any standard of conduct or liability on account
of or in respect to environmental protection matters,
including, without limitation, Hazardous Materials, as are
now or hereafter in effect.
(b) The common law relating to damage to
Persons or property from Hazardous Materials.
"EQUIPMENT": Includes, without limitation, "equipment" as defined in
the UCC, and also all furniture, store fixtures, motor
vehicles, rolling stock, machinery, office equipment, plant
equipment, tools, dies, molds, and other goods, property,
and assets which are used and/or were purchased for use in
the operation or furtherance of a Loan Parties' business,
and any and all accessions or additions thereto, and
substitutions therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE": Any Person which is under common control with a
Loan Party within the meaning of Section 4001 of ERISA or
is part of a group which includes any Loan Party and which
would be treated as a single employer under Section 414 of
the Internal Revenue Code of 1986, as amended.
"EURODOLLAR BUSINESS DAY": Any day which is both a Business Day and a
day on which the principal market in Eurodollars in which
Fleet National Bank participates is open for dealings in
United States Dollar deposits.
"EURODOLLAR LOAN": Any Revolving Credit Loan which bears interest at
a Eurodollar Rate.
"EURODOLLAR MARGIN": As determined from the definition of Applicable
Margin.
12
"EURODOLLAR OFFER RATE": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the Agent
to be the highest prevailing rate per annum at which
deposits on U.S. Dollars are offered to Fleet National
Bank, by first-class banks in the Eurodollar market in
which Fleet National Bank participates at or about 10:00AM
two (2) Eurodollar Business Days before the first day of
the Interest Period for the subject Eurodollar Loan, for a
deposit approximately in the amount of the subject loan for
a period of time approximately equal to such Interest
Period.
"EURODOLLAR RATE": That per annum rate which is the aggregate of the
Eurodollar Offer Rate plus the Eurodollar Margin except
that, in the event that the Agent determines that any
Revolving Credit Lender may be subject to the Reserve
Percentage, the "Eurodollar Rate" shall mean, with respect
to any Eurodollar Loans then outstanding (from the date on
which that Reserve Percentage first became applicable to
such loans), and with respect to all Eurodollar Loans
thereafter made, an interest rate per annum equal the sum
of (a) plus (b), where:
(a) is the decimal equivalent of the following
fraction:
Eurodollar Offer Rate
---------------------
1 minus Reserve Percentage
(b) is the applicable Eurodollar Margin.
"EVENTS OF DEFAULT": Is defined in Article 10. An "Event of
Default" shall be deemed to have occurred and to be
continuing unless and until that Event of Default has been
duly waived by the Agent. In the event of such due waiver,
the so-waived Event of Default shall be deemed never to
have occurred, other than with respect to any post-default
interest which accrued prior to such waiver and with
respect to any reimbursement obligation in respect of any
Costs of Collection.
"EXCESS AVAILABILITY": As of any date of determination, the excess,
if any, of (a) the lesser of the Borrowing Base or the
Revolving Credit Ceiling, over (b) the sum of (i) the
aggregate the outstanding Credit Extensions; (ii) all then
held checks (other than held checks drawn to pay accounts
which are not more than thirty (30) days beyond stated
credit terms); (iii) accounts payable which are more than
thirty (30) days beyond credit terms then accorded the Loan
Parties; and (iv) overdrafts.
"EXEMPT DDA": A depository account maintained by any Loan Party,
the only contents of which are transfers from the Operating
Account and which are used solely for ▇▇▇▇▇ cash purposes
and/or payroll.
"FACILITY FEE": Is defined in the Fee Letter.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100
of 1%) of the rates on overnight Federal funds transactions
13
with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary,
to the next 1/100 of 1%) of the quotations for such day for
such transactions received by Fleet from three Federal
funds brokers of recognized standing selected by it.
"FEE LETTER": That letter dated on or about the date of this
Agreement and styled "Fee Letter" between the Lead Borrower
and the Agent, as such letter may from time to time be
amended.
"FISCAL": When followed by "month" or "quarter", the relevant fiscal
period based on the Loan Parties' fiscal year and
accounting conventions (e.g. reference to "Fiscal 2003" is
to the fiscal month of the Loan Parties"s fiscal year
ending in 2003). When followed by reference to a specific
year, the fiscal year which ends in a month of the year to
which reference is being made (e.g. if the Loan Parties'
fiscal year ends in January 2003 reference to that year
would be to the Loan Parties' "Fiscal 2003").
"FIXTURES": Has the meaning given that term in the UCC.
"FLEET" means Fleet National Bank, a national banking association.
"FOREIGN LENDER": Defined in Section 2.26.
"FOREIGN SUBSIDIARY": A Subsidiary created or organized outside the
United States or the laws of a jurisdiction other than the
United States or any political subdivision thereof.
"FRFI": Fleet Retail Finance Inc.
"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to
that accounting period in respect of which reference to
GAAP is being made, provided, however, in the event of a
Material Accounting Change, then unless otherwise
specifically agreed to by the Agent, (a) the Loan Parties'
compliance with the financial performance covenants imposed
pursuant to Section 5.12 shall be determined as if such
Material Accounting Change had not taken place and (b) the
Lead Borrower shall include, with its monthly, quarterly,
and annual financial statements a schedule, certified by
the Lead Borrower's chief financial officer, on which the
effect of such Material Accounting Change on that statement
shall be described.
"GENERAL INTANGIBLES": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
14
Loan Party; credit memoranda in favor of any Loan Party;
warranty claims; tax refunds and abatements; insurance
refunds and premium rebates; all means and vehicles of
investment or hedging, including, without limitation,
options, warrants, and futures contracts; records; customer
lists; telephone numbers; goodwill; causes of action;
judgments; payments under any settlement or other
agreement; literary rights; rights to performance;
royalties; license and/or franchise fees; rights of
admission; licenses; franchises; license agreements,
including all rights of any Loan Party to enforce same;
permits, certificates of convenience and necessity, and
similar rights granted by any Governmental Authority;
patents, patent applications, patents pending, and other
intellectual property; internet addresses and domain names;
developmental ideas and concepts; proprietary processes;
blueprints, drawings, designs, diagrams, plans, reports,
and charts; catalogs; manuals; technical data; computer
software programs (including the source and object codes
therefor), computer records, computer software, rights of
access to computer record service bureaus, service bureau
computer contracts, and computer data; tapes, disks,
semi-conductors chips and printouts; trade secrets rights,
copyrights, mask work rights and interests, and derivative
works and interests; user, technical reference, and other
manuals and materials; trade names, trademarks, service
marks, and all goodwill relating thereto; applications for
registration of the foregoing; and all other general
intangible property of any Loan Party in the nature of
intellectual property; proposals; cost estimates, and
reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected
with, the design, development, manufacture, sale,
marketing, leasing, or use of any or all property produced,
sold, or leased, by any Loan Party or credit extended or
services performed, by any Loan Party, whether intended for
an individual customer or the general business of any Loan
Party, or used or useful in connection with research by any
Loan Party.
"GOODS": Has the meaning given that term in the UCC, and also
includes all things movable when a security interest
therein attaches and also all computer programs embedded in
goods and any supporting information provided in connection
with a transaction relating to the program if (i) the
program is associated with the goods in such manner that it
customarily is considered part of the goods or (ii) by
becoming the owner of the goods, a Person acquires a right
to use the program in connection with the goods.
"GOVERNMENTAL AUTHORITY": Means any nation or government, any
federal, state, city, town, municipality, county, local or
other political subdivision thereof or thereto and any
department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
15
"GROSS MARGIN": With respect to the subject accounting period for
which being calculated, the decimal equivalent of the
following (determined in accordance with the retail method
of accounting):
Sales (Minus) Cost of Goods Sold
--------------------------------
Sales
"GUARANTOR": Is defined in the Preamble.
"GUARANTY": The Guaranty dated as of the Closing Date by Odd Job
Trading Corp. and OJSAC in favor of the Agent and the
Revolving Credit Lender, as amended, modified or
supplemented from time to time.
"HAZARDOUS MATERIALS": Any (a) substance which is defined or
regulated as a hazardous material in or under any
Environmental Law and (b) oil in any physical state.
"HIA": Is defined in the Preamble.
"INDEBTEDNESS": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:
(a) Money borrowed (including any indebtedness
which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on
any asset of such Person) whether or not
evidenced by a promissory note, bond, debenture
or other written obligation to pay money.
(b) Any letter of credit or acceptance
transaction (including, without limitation, the
face amount of all letters of credit and
acceptances issued for the account of such Person
or reimbursement on account of which such Person
would be obligated).
(c) The sale or discount of accounts receivable
or chattel paper of such Person.
(d) Deposits or advances.
(e) Capital Leases.
(f) Any sale and leaseback transaction.
(g) Obligations with respect to redeemable stock
and redemption or repurchase obligations under
any equity securities issued by such Person.
"Indebtedness" also includes:
16
(x) Indebtedness of others secured by
an Encumbrance on any asset of such Person,
whether or not such Indebtedness is assumed by
such Person.
(y) Any guaranty, endorsement,
suretyship or other undertaking pursuant to which
that Person may be liable on account of any
obligation of any third party.
(z) The Indebtedness of a partnership
or joint venture for which such Person is liable
as a general partner or joint venturer.
"INDEMNIFIED PERSON": Is defined in Section 19.13.
"INDEPENDENT DIRECTORS": Persons who are not officers, employees or
affiliates of any of the Loan Parties or Amazing Savings
Companies or their respective executive officers or
principal shareholders or of any of their respective
subsidiaries.
"INITIAL FINANCIAL COVENANT DATE": Is defined in Section 5.12.
"INSTRUMENTS": Has the meaning given that term in the UCC.
"INTEREST PAYMENT DATE": With reference to:
Each Eurodollar Loan: The last day of the
Interest Period relating thereto (and on the last day of
month three for any such loan which has a six month
Interest Period); the Termination Date; and the End Date.
Each Base Margin Loan: The first day of each
month; the Termination Date; and the End Date.
"INTEREST PERIOD": The following:
(a) With respect to each Eurodollar Loan: Subject
to Subsection (c), below, the period commencing on the date
of the making or continuation of, or conversion to, the
subject Eurodollar Loan and ending one, two, three, or six
months thereafter, as the Lead Borrower may elect by notice
(pursuant to Section 2.5) to the Agent
(b) With respect to each Base Margin Loan:
Subject to Subsection (c), below, the period commencing on
the date of the making or continuation of or conversion to
such Base Margin Loan and ending on that date (i) as of
which the subject Base Margin Loan is converted to a
Eurodollar Loan, as the Lead Borrower may elect by notice
(pursuant to Section 2.5) to the Agent, or (ii) on which
the subject Base Margin Loan is paid by the Loan Parties.
(c) The setting of Interest Periods is in all
instances subject to the following:
17
(i) Any Interest Period for a Base
Margin Loan which would otherwise end on a day
which is not a Business Day shall be extended to
the next succeeding Business Day.
(ii) Any Interest Period for a
Eurodollar Loan which would otherwise end on a
day that is not a Business Day shall be extended
to the next succeeding Business Day, unless that
succeeding Business Day is in the next calendar
month, in which event such Interest Period shall
end on the last Business Day of the month during
which the Interest Period ends.
(iii) Subject to Subsection (iv),
below, any Interest Period applicable to a
Eurodollar Loan, which Interest Period begins on
a day for which there is no numerically
corresponding day in the calendar month during
which such Interest Period ends, shall end on the
last Business Day of the month during which that
Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall
end on the Termination Date.
(v) The number of Interest Periods
in effect at any one time is subject to Section
2.12(e) hereof.
"IN-TRANSIT INVENTORY CAP": An aggregate amount of Eligible Prepaid
Inventory and Eligible L/C Inventory, valued at Cost, not
to exceed $10,000,000.00 at any time from the Closing Date
through December 31, 2003 and $5,000,000.00 at any time
hereafter.
"INVENTORY": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a
Person as lessor; are held by a Person for sale or lease or
to be furnished under a contract of service; are furnished
by a Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed
in a business; (b) Goods of said description in transit;
(c) Goods of said description which are returned,
repossessed and rejected; (d) packaging, advertising, and
shipping materials related to any of the foregoing; (e) all
names, marks, and General Intangibles affixed or to be
affixed or associated thereto; and (f) Documents and
Documents of Title which represent any of the foregoing.
"INVENTORY ADVANCE RATE": Means the following percentages for the
periods indicated:
------------------------------------------- ---------------------------
PERIOD INVENTORY ADVANCE RATE
------------------------------------------- ---------------------------
December 15 to February 28 of each year 60%
------------------------------------------- ---------------------------
March 1 to September 14 of each year 63%
------------------------------------------- ---------------------------
September 15 to December 16 of each year 70%
------------------------------------------- ---------------------------
18
"INVENTORY RESERVES": Such Reserves as may be established from time
to time by the Agent in the Agent's discretion with respect
to the determination of the saleability, at retail, of the
Eligible Inventory or which reflect such other factors as
affect the market value of the Eligible Inventory. Without
limiting the generality of the foregoing, Inventory
Reserves may include (but are not limited to) reserves
based on the following:
(i) Obsolescence (based upon Inventory on hand
beyond a given number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character.
(vi) Change in Inventory composition
(vii) Change in Inventory mix.
(viii) Markdowns (both permanent and point of sale)
(ix) Retail markons and markups inconsistent with
prior period practice and performance; industry
standards; current business plans; or
advertising calendar and planned advertising
events.
(x) Damaged goods.
(xi) Consigned goods.
(xii) Any non-merchandise Inventory (such as labels,
bags, and packaging materials).
(xiii) Return to vendor merchandise.
(xiv) Packaways.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"IRC": The Internal Revenue Code of 1986 and all regulations
promulgated thereunder.
"IRS": The Internal Revenue Service.
"ISSUER": Means Fleet National Bank.
"KEY EXECUTIVE": ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
"L/C": Any letter of credit, the issuance of which is procured by
the Agent for the account of any Borrower and any
acceptance made on account of such letter of credit.
19
"L/C LANDING COSTS": To the extent not included in the Stated
Amount of an L/C, customs, duty, freight, and other
out-of-pocket costs and expenses which will be expended to
"land" the Inventory, the purchase of which is supported by
such L/C.
"LANDLORD STATE": Initially Washington, Virginia, and Pennsylvania
and such other states in which a landlord's claim for rent
has priority over the Encumbrances of the Agent in the
Collateral.
"LEAD BORROWER": Is defined in the Preamble.
"LEASE": Any lease or other agreement, no matter how styled or
structured, pursuant to which a Loan Party is entitled to
the use or occupancy of any space.
"LEASEHOLD INTEREST": Any interest of a Loan Party as lessee under
any Lease.
"LENDERS' SPECIAL COUNSEL": A single counsel, selected by the
Majority Lenders following the occurrence of an Event of
Default, to represent the interests of the Revolving Credit
Lenders in connection with the enforcement, attempted
enforcement, or preservation of any rights and remedies
under this, or any other Loan Document, as well as in
connection with any "workout", forbearance, or
restructuring of the credit facility contemplated hereby.
"LETTER-OF-CREDIT RIGHT":Has the meaning given that term in UCC and
also refers to any right to payment or performance under an
L/C, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance.
"LIABILITIES": Includes, without limitation, the following:
(a) All and each of the following, whether now existing or
hereafter arising under this Agreement or under any of the other Loan
Documents:
(i) Any and all direct and indirect liabilities,
debts, and obligations of each Loan Party to the Agent or
any Revolving Credit Lender, each of every kind, nature,
and description.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by any Loan Party to the Agent or any
Revolving Credit Lender (including all future advances
whether or not made pursuant to a commitment by the Agent
or any Revolving Credit Lender), whether or not any of such
are liquidated, unliquidated, primary, secondary, secured,
unsecured, direct, indirect, absolute, contingent, or of
any other type, nature, or description, or by reason of any
cause of action which the Agent or any Revolving Credit
Lender may hold against any Loan Party.
20
(iii) All notes and other obligations of each
Loan Party now or hereafter assigned to or held by the
Agent or any Revolving Credit Lender, each of every kind,
nature, and description.
(iv) All interest, fees, and charges and other
amounts which may be charged by the Agent or any Revolving
Credit Lender to any Loan Party and/or which may be due
from any Loan Party to the Agent or any Revolving Credit
Lender from time to time.
(v) All costs and expenses incurred or paid by
the Agent or any Revolving Credit Lender in respect of any
agreement between any Loan Party and the Agent or any
Revolving Credit Lender or instrument furnished by any Loan
Party to the Agent or any Revolving Credit Lender
(including, without limitation, Costs of Collection,
attorneys' reasonable fees, and all court and litigation
costs and expenses).
(vi) Any and all covenants of each Loan Party to
or with the Agent or any Revolving Credit Lender and any
and all obligations of each Loan Party to act or to refrain
from acting in accordance with any agreement between that
Loan Party and the Agent or any Revolving Credit Lender or
instrument furnished by that Loan Party to the Agent or any
Revolving Credit Lender.
(vii) Each of the foregoing as if each reference
to the " the Agent or any Revolving Credit Lender" were to
each Affiliate of the Agent.
(b) Any and all direct or indirect liabilities, debts, and
obligations of each Loan Party to the Agent or any Affiliate of the
Agent, each of every kind, nature, and description owing on account
of any service or accommodation provided to, or for the account of
any Loan Party pursuant to this or any other Loan Document, including
cash management services and the issuances of L/C's.
"LIQUIDATION": The exercise, by the Agent, of those rights and
remedies accorded to the Agent under the Loan Documents and
Applicable Law as a creditor of the Loan Parties following
and on account of the occurrence of an Event of Default
looking towards the realization on the Collateral.
Derivations of the word "Liquidation" (such as "Liquidate")
are used with like meaning in this Agreement.
"LOAN ACCOUNT": Is defined in Section 2.9.
"LOAN DOCUMENTS": This Agreement and each other instrument or
document from time to time executed and/or delivered in
connection with the arrangements contemplated hereby or in
connection with any transaction with the Agent or any
Affiliate of the Agent, including, without limitation, any
transaction which arises out of any cash management,
depository, investment, letter of credit, interest rate
protection, or equipment leasing services provided by the
Agent or any Affiliate of the Agent, as each may be amended
from time to time.
"LOAN PARTY: Each Borrower and each Guarantor.
21
MAJORITY LENDERS": If there are two or fewer Revolving Credit
Lenders who are not Delinquent Revolving Credit Lenders:
All Revolving Credit Lenders who are not Delinquent
Revolving Credit Lenders.
If there are three or more Revolving Credit
Lenders who are not Delinquent Revolving Credit Lenders:
Revolving Credit Lenders (other than Delinquent Revolving
Credit Lenders) holding more than 50% of the Revolving
Credit Percentage Commitments (calculated without regard to
any Revolving Credit Percentage Commitment of any
Delinquent Revolving Credit Lender).
"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to
accounting periods subsequent to the Loan Parties' fiscal
year most recently completed prior to the execution of this
Agreement, which change has a material effect on the Loan
Parties' Consolidated financial condition or operating
results, as reflected on financial statements and reports
prepared by or for the Loan Parties, when compared with
such condition or results as if such change had not taken
place or where preparation of the Loan Parties' statements
and reports in compliance with such change results in the
breach of a financial performance covenant imposed pursuant
to Section 5.12 where such a breach would not have occurred
if such change had not taken place or visa versa.
"MATERIAL ADVERSE CHANGE": Any event, fact, circumstance, change in,
or effect on, the business of any Loan Party, which
individually or in the aggregate or on a cumulative basis
with any other events, facts, circumstances, changes in, or
effects on, the Loan Parties or the Collateral, taken as a
whole which:
(a) Would reasonably be expected to materially adversely
affect (i) the ability of any Loan Party to (A) operate or
conduct its business in all material respects in the manner
in which such business is currently operated or conducted,
or (B) to perform its obligations or to pay any Liabilities
under this Agreement or under any other the Loan Documents,
(ii) the assets, properties, business, prospects,
profitability, operations, or condition (financial or
otherwise) of the Loan Parties taken as a whole, or (iii)
the validity or enforceability of this Agreement or any of
the other Loan Documents or any of the material rights or
remedies of the Agent or the Revolving Credit Lenders
hereunder or thereunder.
(b) Would reasonably be expected to have a Material Adverse
Effect on the value, enforceability, or collectibility of
the Collateral taken as a whole.
22
"MATERIAL ADVERSE EFFECT": A result, consequence, or outcome which
constitutes a Material Adverse Change.
"MATURITY DATE": July 17, 2006.
"NOMINEE": A business entity (such as a corporation or limited
partnership) formed by the Agent to own or manage any Post
Foreclosure Asset.
"OJSAC": Is defined in the Preamble.
"OPERATING ACCOUNT": Is defined in Section 7.3.
"OTHER TAXES": Any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or
similar levies arising from any payment made hereunder or
from the execution, delivery, enforcement or registration
of, or otherwise with respect to, this Agreement or any
other Loan Document.
"OVERLOAN": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, immediately
after its having been made, Availability is less than zero.
"PARTICIPANT": Is defined in Section 19.16, hereof.
"PAYMENT INTANGIBLE": As defined in the UCC and also any general
intangible under which the Account Debtor's primary
obligation is a monetary obligation.
23
"PERMITTED DISPOSITION": Any sale of assets or property of a Loan
Party (other than the sale of Inventory in the ordinary
course of business and other than the ownership interests
of any Loan Party in another Loan Party) not to exceed
$2,500,000.00 in the aggregate during the term of this
Agreement.
"PERMITTED ENCUMBRANCES": The following:
(i) Any and all Encumbrances in
favor of the Agent.
(ii) Any and all those Encumbrances
(if any) listed on EXHIBIT 4.6, annexed hereto.
(iii) Purchase money security
interests or capitalized equipment leases on
Equipment acquired or held by a Loan Party in the
ordinary course of business and securing
Indebtedness incurred or assumed for the purpose
of financing all or any part of the cost of
acquiring such Equipment; provided however that
(x) any such Encumbrance attaches to such
property concurrently with or within twenty (20)
days after the acquisition thereof, (y) such
Encumbrance attaches solely to the property so
acquired in such transaction and (z) the
principal amount of the Indebtedness secured
thereby does not exceed 100% of the cost of such
property.
(iv) Liens securing the payment of
taxes, assessments or government charges either
not yet overdue or the validity of which is being
contested in good faith by a Loan Party and for
which such Loan Party has established adequate
cash reserve; non-consensual statutory liens
(other than liens securing the payment of taxes)
arising in the ordinary course of a Loan Party's
business to the extent such liens secure (x)
indebtedness that is not overdue, (y)
indebtedness relating to claims or liabilities
which are fully insured and being defended at the
sole cost and expense and at the sole risk of the
insurer or are being contested by a Loan Party in
good faith by appropriate proceedings diligently
pursued, in each instance prior to the
commencement of foreclosure or other similar
proceedings and provided that adequate reserves
therefor have been set aside on such Loan Party's
books (provided, however, that the inclusion of
any of the foregoing as "Permitted Encumbrances"
shall not affect their respective relative
priorities vis a vis the security interests
created herein), or (z) zoning restrictions,
easements, licenses, covenants and other
restrictions affecting the use of real property.
(v) Deposits under workmen's
compensation, unemployment insurance and social
security laws, or to secure the performance of
bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to
secure statutory obligations or surety or appeal
bonds, or to secure indemnity, performance or
other similar bonds arising in the ordinary
course of business.
24
(vi) Landlord's liens arising by
operation of law where waivers have not been
obtained.
(vii) Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen
and other liens imposed by law created in the
ordinary course of business for amounts not yet
due or that are being contested in good faith by
appropriate proceedings and with respect to which
the Loan Parties have established adequate
reserves.
(viii) Encumbrances arising by reason
of zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility
easements, building restrictions and other
similar encumbrances on the use of real property
not materially detracting from the value of such
real property or not materially interfering with
the ordinary conduct of the business conducted
and proposed to be conducted at such real
property.
(ix) Encumbrances arising under leases
or subleases of real property that do not, in the
aggregate, materially detract from the value of
such real property or interfere with the ordinary
conduct of the business conducted and proposed to
be conducted at such real property.
(x) Any Lien securing the renewal,
extension, refinancing or refunding of any
Permitted Indebtedness referred to in clause
(iii) of the definition of Permitted
Indebtedness, secured by any Lien permitted
hereunder without any change in the assets
subject to such Lien.
(xi) Liens in favor of lessors
securing operating leases or, to the extent such
transactions create a Lien thereunder, sale and
leaseback transactions, in each case to the
extent such operating leases or sale and
leaseback transactions are otherwise permitted
hereunder.
(xii) Liens securing Subordinated
Indebtedness which are junior and subject to the
liens and security interest granted to the Agent
hereunder.
"PERMITTED INDEBTEDNESS": The following:
(i) Any Indebtedness on account of
the Revolving Credit.
(ii) The Indebtedness (if any)
listed on EXHIBIT 4.7, annexed hereto.
(iii) Indebtedness on account of
Equipment acquired in compliance with the
requirements of Section 4.6(c), the incurrence
of which would not otherwise be prohibited by
this Agreement, not exceeding an aggregate of
$5,000,000.00 outstanding at any time.
(iv) Guaranty obligations incurred by
any Loan Party in respect of Indebtedness of any
other Loan Party that is otherwise permitted
hereunder.
(v) Renewals, extensions, refinancings
and refundings of Indebtedness permitted under
other paragraphs of this definition; provided,
however, that any such renewal, extension,
refinancing or refunding is in an aggregate
principal amount not greater than the principal
25
amount of, and is on terms no less favorable to
the Loan Party obligated thereunder, including as
to weighted average maturity and final maturity,
than the Indebtedness being renewed, extended,
refinanced or refunded.
(vi) unsecured Indebtedness not
otherwise permitted hereunder; provided, however,
that the aggregate outstanding principal amount
of all such unsecured Indebtedness shall not
exceed $5,000,000.00 at any time outstanding and
shall be on terms and conditions, including
without limitation, terms of subordination with
respect to payment of such Indebtedness,
reasonably satisfactory to the Agent.
(vii) Subordinated Indebtedness.
"PERMITTED INVESTMENTS": The following, in each instance only if
subject to a prior perfected security interest in favor of
the Agent to secure the Liabilities:
(i) Indebtedness entitled to the full
faith and credit of the United States with
maturities not to exceed one hundred and
eighty-one (181) days.
(ii) Banker's acceptances accepted,
savings accounts made available, repurchase
agreements entered into, and certificates of
deposit issued by the Agent or any bank whose
most senior debt has been assigned an investment
grade credit rating by a nationally recognized
credit rating service.
(iii) Commercial paper rated A-1/P-1.
(iv) Money market accounts or funds
within the meaning of Rule 2a-7 of the Investment
Company Act of 1940, in effect as of the date of
this Agreement.
(v) Investments listed on EXHIBIT
4.19, annexed hereto
"PERSON": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"PLEDGE AGREEMENTS": Means, collectively, (i) the Pledge and
Security Agreement dated as of the Closing Date made by
OJSAC in favor of the Agent for the benefit of the Lenders
with respect to the capital stock of Lead Borrower, (ii)
the Pledge and Security Agreement dated as of the Closing
Date made by Odd Job Stores, Inc. in favor of the Agent for
the benefit of the Lenders, with respect to the capital
stock of Odd-Job Acquisition Corp., (iii) the Pledge and
Security Agreement dated as of the Closing Date made by
Odd-Job Acquisition Corp. in favor of the Agent for the
benefit of the Lenders, with respect to the capital stock
of Odd Job Trading Corp., (iv) the Pledge and Security
Agreement dated as of the Closing Date made by Odd-Job
Acquisition Corp. in favor of the Agent for the benefit of
the Lenders, with respect to the general partnership
interests owned by Odd-Job Acquisition Corp. of HIA , and
(v) the Pledge and Security Agreement dated as of the
Closing Date made by Odd Job Trading Corp. in favor of the
Agent for the benefit of the Lenders, with respect to the
26
general partnership interests owned by Odd Job Trading
Corp. of HIA, in each case as amended, modified or
supplemented from time to time in accordance with its
terms.
"POST FORECLOSURE ASSET": All or any part of the Collateral,
ownership of which is acquired by the Agent or a Nominee on
account of the "bidding in" at a disposition as part of a
Liquidation or by reason of a "deed in lieu" type of
transaction.
"PRIME RATE" shall mean, for any day, the higher of (a) the annual
rate of interest then most recently announced by Fleet at
its head office in Boston, Massachusetts as its "Prime
Rate" and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1% (0.50%) per annum. The Prime Rate
is a reference rate and does not necessarily represent the
lowest or best rate being charged to any customer. If for
any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of
the Agent to obtain sufficient quotations thereof in
accordance with the terms hereof, the Prime Rate shall be
determined without regard to clause (b) of the first
sentence of this definition, until the circumstances giving
rise to such inability no longer exist. Any change in the
Prime Rate due to a change in Fleet's Prime Rate or the
Federal Funds Effective Rate shall be effective on the
effective date of such change in Fleet's Prime Rate or the
Federal Funds Effective Rate, respectively.
"PROCEEDS": Includes, without limitation, "Proceeds" as defined in
the UCC and each type of property described in Section 8.1
hereof.
"PROPOSED COMBINATION" As defined in Section 2.25.
"PROTECTIVE OVERADVANCES": Revolving Credit Loans which are
OverLoans, but as to which each of the following conditions
is satisfied: (a) the Revolving Credit Ceiling is not
exceeded; and (b) when aggregated with all other Protective
OverAdvances, such Revolving Credit Loans do not aggregate
more than five percent (5%) of the aggregate of the
Borrowing Base; and (c) such Revolving Credit Loans are
made or undertaken in the Agent's discretion to protect and
preserve the interests of the Revolving Credit Lenders.
"PURCHASE DATE": Is defined in the Tender Agreement.
"RECEIPTS": All cash, cash equivalents, money, checks, credit card
slips, receipts and other Proceeds from any sale of the
Collateral.
"RECEIVABLES COLLATERAL": That portion of the Collateral which
consists of Accounts, Accounts Receivable, General
Intangibles, Chattel Paper, Instruments, Documents of
27
Title, Documents, Investment Property, Payment Intangibles,
Letter-of-Credit Rights, bankers' acceptances, and all
other rights to payment.
"REGISTER": Is defined in Section 16.2(c).
"REQUIREMENTS OF LAW": As to any Person:
(i) Applicable Law.
(ii) That Person's organizational documents.
(iii) That Person's by-laws and/or other
instruments which deal with corporate or similar
governance, as applicable.
"RESERVE PERCENTAGE": The decimal equivalent of that rate applicable
to a Revolving Credit Lender under regulations issued from
time to time by the Board of Governors of the Federal
Reserve System for determining the maximum reserve
requirement of that Revolving Credit Lender with respect to
"Eurocurrency liabilities" as defined in such regulations.
The Reserve Percentage applicable to a particular
Eurodollar Loan shall be based upon that in effect during
the subject Interest Period, with changes in the Reserve
Percentage which take effect during such Interest Period to
take effect (and to consequently change any interest rate
determined with reference to the Reserve Percentage) if and
when such change is applicable to such loans.
"RESERVES": Availability Reserves and Inventory Reserves.
"RETAIL": The lower of
(a) The Cost of Inventory divided by the Cost
Factor (except that, for purposes of the determination of
"Availability", the Cost of Inventory shall be the Cost of
Eligible Inventory); or
(b) the lowest ticketed or promoted price at
which the subject inventory is offered to the public, after
all ▇▇▇▇-▇▇▇▇▇ (whether or not such price is then reflected
on the Loan Parties' accounting system).
"RETAIL STORE": Means each retail store of the Borrowers listed on
EXHIBIT 4.5, annexed hereto, together with each retail
store opened by the Borrowers after the Closing Date in
accordance with the terms of this Agreement.
"REVOLVING CREDIT": Is defined in Section 2.1.
"REVOLVING CREDIT CEILING": $40,000,000.00 (subject to increase as
provided in Section 2.25).
"REVOLVING CREDIT COMMITMENT FEE": Is defined in the Fee Letter.
28
"REVOLVING CREDIT DOLLAR COMMITMENT": As set forth on EXHIBIT 2.24,
annexed hereto (as such amounts may change in accordance
with the provisions of this Agreement including, without
limitation, Section 2.25).
"REVOLVING CREDIT LENDERS": Each Revolving Credit Lender to which
reference is made in the Preamble of this Agreement and any
other Person who becomes a "Revolving Credit Lender" in
accordance with the provisions of this Agreement.
"REVOLVING CREDIT LOANS": Loans made under the Revolving Credit,
except that where the term "Revolving Credit Loan" is used
with reference to available interest rates applicable to
the loans under the Revolving Credit, it refers to so much
of the unpaid principal balance of the Loan Account as
bears the same rate of interest for the same Interest
Period. (See Section 2.12(d)).
"REVOLVING CREDIT NOTE": Is defined in Section 2.10.
"REVOLVING CREDIT PERCENTAGE COMMITMENT": As set forth on EXHIBIT
2.24, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"STATED AMOUNT": The maximum amount for which an L/C may be honored.
"▇▇▇▇▇▇ FAMILY": The spouse, children or lineal descendants of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or any trust or other entity established for
the benefit thereof.
"SUBSIDIARY": With respect to any Person, any corporation,
partnership, limited liability company or other business
entity of which an aggregate of 50% or more of the
outstanding voting stock is, at the time, directly or
indirectly, owned or controlled by such Person or one or
more subsidiaries of such Person.
"SUBORDINATED INDEBTEDNESS": Indebtedness of the Lead Borrower not to
exceed the principal amount of $10,000,000.00 at any time
outstanding which is subordinated to the Liabilities
pursuant to a subordination agreement on terms and
conditions satisfactory to the Agent.
"SUPERMAJORITY LENDERS": Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 662/3% or more
of the Revolving Credit Percentage Commitments (calculated
without regard to any Revolving Credit Percentage
Commitment of any Delinquent Revolving Credit Lender).
"SUPPORTING OBLIGATION": Has the meaning given that term in the UCC
and also refers to a Letter-of-Credit Right or secondary
obligation which supports the payment or performance of an
29
Account, Chattel Paper, a Document, a General Intangible,
an Instrument, or Investment Property.
"SWINGLINE": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the
SwingLine Loan Ceiling.
"SWINGLINE LENDER": FRFI.
"SWINGLINE LOAN CEILING": $5,000,000.00 (subject to increase as
provided in Section 15.4(e)).
"SWINGLINE LOANS": Is defined in Section 2.8.
"TAXES": Taxes, levies, imposts, deductions, charges or withholdings
imposed by any Governmental Authority, and all liabilities
with respect thereto, EXCLUDING
(a) franchise taxes and taxes imposed on or measured by the
net income or overall gross receipts of any Credit Party or
similar taxes imposed on any Credit Party by the
jurisdiction under the laws of which such Credit Party is
organized, conducts business or has a present or former
connection or any political subdivision thereof, and any
liabilities, penalties and interest with respect to the
foregoing,
(b) any United States withholding taxes payable with
respect to payments hereunder or under the other Loan
Documents under laws (including any statute, treaty or
regulation) in effect on the Closing Date (or, in the case
of (i) an assignee, the date of the Assignment and
Acceptance, (ii) a successor Agent, the date of the
appointment of such Agent, and (iii) a successor Issuer,
the date such Issuer becomes the Issuer) applicable to such
Credit Party, and any liabilities, penalties and interest
with respect to the foregoing, but not excluding any United
States withholding tax payable with respect to interest
arising under a Loan Document as a result of any change in
such laws occurring after the Closing Date (or the date of
such Assignment and Acceptance or the date of such
appointment of such Agent or the date such Issuer becomes
the Issuer), other than withholding with respect to taxes
imposed or based on its net income or with respect to
franchise or capital taxes, and
(c) any non-United States withholding taxes payable with
respect to payments hereunder or under the other Loan
Documents imposed by the jurisdictions under the laws of
which such Credit Party is organized, conducts business or
has a present or former connection, or any political
subdivision thereof, in effect on the Closing Date (or, in
the case of (i) an assignee, the date of the Assignment and
Acceptance, (ii) a successor Agent, the date of the
appointment of such Agent, and (iii) a successor Issuer,
the date such Issuer becomes the Issuer) applicable to such
Credit Party, and any liabilities, penalties and interest
with respect to the foregoing, but not excluding any
withholding tax payable with respect to interest arising
30
under a Loan Document as a result of any change in such
laws occurring after the Closing Date (or the date of such
Assignment and Acceptance or the date of such appointment
of such Agent or the date such Issuer becomes the Issuer),
other than withholding with respect to taxes imposed or
based on its net income or with respect to franchise or
capital taxes.
"TENDER AGREEMENT": The Tender Agreement dated as of June 3, 2002
between Amazing Savings and the Lead Borrower, as in effect
on the Closing Date.
"TENDER OFFER": The offer to purchase shares of Lead Borrower made
by Amazing Savings through OJSAC pursuant to the Tender
Agreement.
"TERMINATION DATE": The earliest of (a) the Maturity Date; (b) the
occurrence of any event described in Section 10.11, below;
or (c) the Agent's notice to the Lead Borrower setting the
Termination Date on account of the occurrence of any Event
of Default other than as described in Section 10.11, below.
"TRADING CORP.": Is defined in the Preamble.
"TRANSFER": Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed to from time to time
by the Agent making such Transfer and the subject Revolving
Credit Lender. Wire instructions may be changed in the same
manner that Notice Addresses may be changed (Section 17.1),
except that no change of the wire instructions for
Transfers to any Revolving Credit Lender shall be effective
without the consent of the Agent.
"UCC": The Uniform Commercial Code as in effect from time to time
in Massachusetts.
"UNANIMOUS CONSENT": Consent of Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 100% of the
Revolving Credit Dollar Commitments (other than a Revolving
Credit Dollar Commitment held by a Delinquent Revolving
Credit Lender).
"UNUSED LINE FEE": Is defined in Section 2.15.
"U.S. LENDER": Is defined in Section 2.26.
"WAREHOUSES": The Borrowers' distribution centers and warehouses
listed in EXHIBIT 4.5 hereto, and any future locations at
which the Borrowers store Inventory.
31
ARTICLE 2 - THE REVOLVING CREDIT:
2.1 ESTABLISHMENT OF REVOLVING CREDIT
(a) The Revolving Credit Lenders hereby establish a
revolving line of credit (the "REVOLVING CREDIT") in the Borrowers' favor
pursuant to which each Revolving Credit Lender, subject to, and in accordance
with, this Agreement, acting through the Agent, shall make loans and advances
and otherwise provide financial accommodations to and for the account of the
Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be made with reference to the Borrowing Base and shall be
subject to Availability. The Borrowing Base and Availability shall be determined
by the Agent by reference to Borrowing Base Certificates furnished as provided
in Section 5.4, below, and shall be subject to the following:
(i) Such determination shall take into account
such Reserves as the Agent may reasonably determine as
being applicable thereto.
(ii) The Cost of Eligible Inventory will be
determined in a manner consistent with current tracking
practices, based on the Borrowers' stock ledger inventory.
Initial Reserves shall be as set forth on the initial Borrowing Base
Certificate.
(c) The commitment of each Revolving Credit Lender to
provide such loans, advances, and financial accommodations is subject to Section
2.24.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely in accordance with the Business Plan for the Borrowers'
working capital and Capital Expenditures, and for the payment of Subordinated
Indebtedness, all solely to the extent permitted by this Agreement. No proceeds
of a borrowing under the Revolving Credit may be used, nor shall any be
requested, with a view towards the accumulation of any general fund or funded
reserve of the Loan Parties other than in the ordinary course of the Loan
Parties' business and consistent with the provisions of this Agreement.
2.2 ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to the
Borrowers to make any loan or advance, or otherwise to provide any credit to or
for the benefit of the Borrowers where the result of such loan, advance, or
credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among
themselves, are subject to (among other provisions of this Agreement) Section
12.3(a) (which relates to each Revolving Credit Lender's making amounts
available to the Agent) and 15.3(a) (which relates to Protective OverAdvances).
32
(c) The Revolving Credit Lenders' providing of an OverLoan
on any one occasion does not affect the
obligations of each Borrower hereunder (including each Borrower's obligation to
immediately repay any amount which otherwise constitutes an OverLoan) nor
obligate the Revolving Credit Lenders to do so on any other occasion.
2.3 RISKS OF VALUE OF COLLATERAL. The Agent's reference to a given
asset in connection with the making of loans, credits, and advances and the
providing of financial accommodations under the Revolving Credit and/or the
monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Agent or any Revolving Credit Lender relative to the actual
value of the asset in question. All Collateral secures the prompt, punctual, and
faithful performance of the Liabilities whether or not relied upon by the Agent
in connection with the making of loans, credits, and advances and the providing
of financial accommodations under the Revolving Credit.
2.4 COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT. Subject to the provisions of this Agreement, the Revolving Credit
Lenders shall make a loan or advance under the Revolving Credit and the Agent
shall endeavor to have an L/C issued for the account of the Lead Borrower, in
each instance if duly and timely requested by the Lead Borrower as provided
herein provided that:
(a) No OverLoan is then outstanding and none will result
therefrom.
(b) No Default or Event of Default has occurred and is
continuing or would occur after giving effect thereto.
2.5 REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for loans and advances under the Revolving
Credit or for the continuance or conversion of an interest rate applicable to a
Revolving Credit Loan may be requested by the Lead Borrower in such manner as
may from time to time be acceptable to the Agent.
(b) Subject to the provisions of this Agreement, the Lead
Borrower may request a Revolving Credit Loan and elect an interest rate and
Interest Period to be applicable to that Revolving Credit Loan by giving notice
to the Agent by no later than the following:
(i) If such Revolving Credit Loan is to be or
is to be converted to a Base Margin Loan: by 12:00 p.m. on
the Business Day on which the subject Revolving Credit
Loan is to be made or is to be so converted. Base Margin
Loans requested by the Lead Borrower, other than those
resulting from the conversion of a Eurodollar Loan, shall
not be less than $10,000.00.
(ii) If such Revolving Credit Loan is to be, or
is to be continued as, or converted to, a Eurodollar Loan:
by 12:00 p.m. three (3) Eurodollar Business Days before
the commencement of any new Interest Period or the end of
the then applicable Interest Period. Eurodollar Loans
33
and conversions to Eurodollar Loans shall each be not less
than $1,000,000.00 and in increments of $500,000.00 in
excess of such minimum.
(iii) Any Eurodollar Loan which matures while
any Default or Event of Default has occurred and is
continuing shall be converted, at the option of the Agent,
to a Base Margin Loan notwithstanding any notice from the
Lead Borrower that such Loan is to be continued as a
Eurodollar Loan.
(c) Any request for a Revolving Credit Loan or for the
continuance or conversion of an interest rate applicable to a Revolving Credit
Loan which is made after the applicable deadline therefor, as set forth above,
shall be deemed to have been made at the opening of business on the then next
Business Day or Eurodollar Business Day, as applicable.
(d) Reserved.
(e) The Lead Borrower may request that the Agent cause the
issuance by the Issuer of L/C's for the account of the Borrowers as provided in
Section 2.19.
(f) The Agent may rely on any request for a loan or
advance, or other financial accommodation under the Revolving Credit which the
Agent, in good faith, believes to have been made by a Person duly authorized to
act on behalf of the Lead Borrower and may decline to make any such requested
loan or advance, or issuance, or to provide any such financial accommodation
pending the Agent's being furnished with such documentation concerning that
Person's authority to act as may be satisfactory to the Agent.
(g) A request by the Lead Borrower for loan or advance, or
other financial accommodation under the Revolving Credit shall be irrevocable
and shall constitute certification by each Borrower that as of the date of such
request, each of the following is true and correct:
(i) There has been no Material Adverse Change.
(ii) To the extent necessary, all or a portion
of any loan or advance so requested will be set aside by
the Borrowers to cover the Borrowers' obligations for
sales tax on account of sales since the then most recent
borrowing pursuant to the Revolving Credit.
(iii) Each representation which is made herein
or in any of the Loan Documents is then true and complete
in all material respects as of and as if made on the date
of such request (unless such representation relates to an
earlier date, in which event, such representation shall be
true as of such earlier date).
(iv) Unless accompanied by a written
Certificate of the Lead Borrower's President or its Chief
Financial Officer describing (in reasonable detail) the
facts and circumstances thereof and the steps (if any)
being taken to remedy such condition, that no Default or
Event of Default has occurred and is continuing.
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2.6 SUSPENSION OF REVOLVING CREDIT. If, at any time or from
time to time, any Default or Event of Default has occurred and is continuing:
(a) The Agent may suspend the Revolving Credit immediately,
in which event, neither the Agent nor any Revolving Credit Lender shall be
obligated, during such suspension, to make any loans or advance, or to provide
any financial accommodation hereunder or to seek the issuance of any L/C.
(b) The Agent may suspend the right of the Lead Borrower to
request any Eurodollar Loan or to convert any Base Margin Loan to a Eurodollar
Loan.
2.7 MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be
made by the transfer of the proceeds of such loan or advance to the Operating
Account or as otherwise instructed by the Lead Borrower.
(b) A loan or advance shall be deemed to have been made
under the Revolving Credit (and the Borrowers
shall be indebted to the Agent and the Revolving Credit Lenders for the amount
thereof immediately) at the following:
(i) The Agent's initiation of the transfer of
the proceeds of such loan or advance in accordance with
the Lead Borrower's instructions (if such loan or advance
is of funds requested by the Lead Borrower).
(ii) The charging of the amount of such loan to
the Loan Account (in all other circumstances).
(c) Except where there has been a final judicial
determination (in a proceeding in which the Agent or applicable Revolving Credit
Lender has had an opportunity to be heard) that any of the following delays were
the result of the Agent's or such Revolving Credit Lenders' gross negligence or
willful misconduct, there shall not be any recourse to or liability of the Agent
or any Revolving Credit Lender, on account of any delay:
(i) in the making of any loan or advance
requested under the Revolving Credit.
(ii) by any bank or other depository
institution in treating the proceeds of any such loan or
advance as collected funds.
(iii) in the receipt, and/or any loss, of funds
which constitute a loan or advance under the Revolving
Credit, the wire transfer of which was properly initiated
by the Agent in accordance with wire instructions provided
to the Agent by the Lead Borrower.
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2.8 SWINGLINE LOANS.
(a) For ease of administration, Base Margin Loans may be
made by the SwingLine Lender (in the aggregate, the "SWINGLINE LOANS") in
accordance with the procedures set forth in this Agreement for the making of
loans and advances under the Revolving Credit. The unpaid principal balance of
the SwingLine Loans shall not at any one time be in excess of the SwingLine Loan
Ceiling.
(b) The aggregate unpaid principal balance of SwingLine
Loans shall bear interest at the rate applicable to Base Margin Loans and shall
be repayable as a loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans
shall be evidenced by a Note in the form of EXHIBIT 2.8(C), annexed hereto,
executed by the Borrowers, and payable to the SwingLine Lender. Neither the
original nor a copy of that Note shall be required, however, to establish or
prove any Liability. At the SwingLine Lender's request, the Borrowers shall
execute a replacement of any SwingLine Note which has been lost, mutilated, or
destroyed thereof and deliver such replacement to the SwingLine Lender.
(d) For all purposes of this Loan Agreement, the SwingLine
Loans and the Borrowers' obligations to the SwingLine Lender constitute
Revolving Credit Loans and are secured as "Liabilities".
(e) SwingLine Loans may be subject to periodic settlement
with the Revolving Credit Lenders as provided in this Agreement.
2.9 THE LOAN ACCOUNT.
(a) An account ("LOAN ACCOUNT") shall be opened on the
books of the Agent in which a record shall be kept of all loans and advances
made under the Revolving Credit.
(b) The Agent shall also keep a record (either in the Loan
Account or elsewhere, as the Agent may from time to time elect) of all interest,
fees, service charges, costs, expenses, and other debits owed to the Agent and
each Revolving Credit Lender on account of the Liabilities and of all credits
against such amounts so owed.
(c) All credits against the Liabilities shall be
conditional upon final payment to the Agent for the account of each Revolving
Credit Lender of the items giving rise to such credits. The amount of any item
credited against the Liabilities which is charged back against the Agent or any
Revolving Credit Lender or is disgorged for any reason or is not so paid shall
be a Liability and shall be added to the Loan Account, whether or not the item
so charged back or not so paid is returned.
(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which any Borrower is obligated hereunder are
payable on demand. In the determination of Availability, the Agent may deem
36
fees, service charges, accrued interest, and other payments which will be due
and payable between the date of such determination and the first day of the then
next succeeding month as having been advanced under the Revolving Credit whether
or not such amounts are then due and payable.
(e) The Agent, without the request of the Lead Borrower,
may advance under the Revolving Credit any interest, fee, service charge, or
other payment to which the Agent or any Revolving Credit Lender is entitled from
any Borrower pursuant hereto and may charge the same to the Loan Account
notwithstanding that an OverLoan may result thereby. Such action on the part of
the Agent shall not constitute a waiver of the Agent's rights and each
Borrower's obligations under Section 2.11(b). Any amount which is added to the
principal balance of the Loan Account as provided in this Section 2.9(e) shall
bear interest at the interest rate then and thereafter applicable to Base Margin
Loans.
(f) Any statement rendered by the Agent or any Revolving
Credit Lender to the Lead Borrower concerning the Liabilities shall be
considered correct and accepted by each Loan Party and shall be conclusively
binding upon each Loan Party unless the Lead Borrower provides the Agent with
written objection thereto within twenty (20) days from the mailing of such
statement, which written objection shall indicate, with particularity, the
reason for such objection. The Loan Account and the Agent's books and records
concerning the loan arrangement contemplated herein and the Liabilities shall be
prima facie evidence and proof of the items described therein.
2.10 THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by Notes (each, a "REVOLVING CREDIT NOTE") in the form of
EXHIBIT 2.10, annexed hereto, executed by each Borrower, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, however, to establish or prove any Liability. In the
event that any Revolving Credit Note is ever lost, mutilated, or destroyed, each
Borrower shall execute a replacement thereof and deliver such replacement to the
Agent.
2.11 PAYMENT OF THE LOAN ACCOUNT.
(a) The Borrowers may repay all or any portion of the
principal balance of the Loan Account from time to time until the Termination
Date.
(b) The Borrowers, without notice or demand from the Agent
or any Revolving Credit Lender, shall pay the Agent that amount, from time to
time, which is necessary so that there is no OverLoan outstanding.
(c) The Borrowers shall repay the then entire unpaid
balance of the Loan Account and all other Liabilities on the Termination Date.
37
(d) The Agent shall endeavor to cause the application of
payments (if any), pursuant to Sections 2.11(a) and 2.11(b) against Eurodollar
Loans then outstanding in such manner as results in the least cost to the
Borrowers, but shall not have any affirmative obligation to do so nor liability
on account of the Agent's failure to have done so. In no event shall action or
inaction taken by the Agent excuse any Borrower from any indemnification
obligation under Section 2.11(e).
(e) The Loan Parties shall indemnify the Agent and each
Revolving Credit Lender and hold the Agent and each Revolving Credit Lender
harmless from and against any loss, cost or expense (including loss of
anticipated profits and amounts payable by the Agent or such Revolving Credit
Lender on account of "breakage fees" (so-called)) which the Agent or such
Revolving Credit Lender may sustain or incur (including, without limitation, by
virtue of acceleration after the occurrence of any Event of Default) as a
consequence of the following:
(i) Default by any Borrower in payment of the
principal amount of or any interest on any Eurodollar Loan
as and when due and payable, including any such loss or
expense arising from interest or fees payable by such
Revolving Credit Lender in order to maintain its
Eurodollar Loans.
(ii) Default by any Borrower in making a
borrowing or conversion after the Lead Borrower has given
(or is deemed to have given) a request for a Revolving
Credit Loan or a request to convert a Revolving Credit
Loan from one applicable interest rate to another.
(iii) The making of any payment on a Eurodollar
Loan or the making of any conversion of any such Loan to a
Base Margin Loan on a day that is not the last day of the
applicable Interest Period with respect thereto.
2.12 INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the
Base Margin Rate unless timely notice is given (as provided in Section 2.5) that
the subject Revolving Credit Loan (or a portion thereof) is, or is to be
converted to, a Eurodollar Loan.
(b) Each Revolving Credit Loan which consists of a
Eurodollar Loan shall bear interest at the applicable Eurodollar Rate.
(c) Subject to, and in accordance with, the provisions of
this Agreement, the Lead Borrower may cause all or a part of the unpaid
principal balance of the Loan Account to bear interest at the Base Margin Rate
or the Eurodollar Rate as specified from time to time by the Lead Borrower by
notice to the Agent.
(d) For ease of reference and administration, each part of
the Loan Account which bears interest at the same rate interest and for the same
Interest Period is referred to herein as if it were a separate "Revolving Credit
Loan".
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(e) The Lead Borrower shall not select, renew, or convert
any interest rate for a Revolving Credit Loan such that, in addition to interest
at the Base Margin Rate, there are more than five (5) Eurodollar Rates
applicable to the Revolving Credit Loans at any one time.
(f) The Borrowers shall pay accrued and unpaid interest on
each Revolving Credit Loan in arrears as follows:
(i) On the applicable Interest Payment Date for
that Revolving Credit Loan.
(ii) On the Termination Date and on the End
Date.
(iii) Following the occurrence of any Event of
Default, with such frequency as may be determined by the
Agent.
(g) Following the occurrence of any Event of Default (and
whether or not the Agent exercises the Agent's rights on account thereof), all
Revolving Credit Loans shall bear interest, at the option of the Agent or at the
instruction of the SuperMajority Lenders at rate which is the aggregate of the
rate applicable to Base Margin Loans plus three percent (3%) per annum.
2.13 REVOLVING CREDIT COMMITMENT FEE. In consideration of the
commitment to make loans and advances to the Borrowers under the Revolving
Credit, and to maintain sufficient funds available for such purpose, there has
been earned and the Borrowers shall pay the "REVOLVING CREDIT COMMITMENT FEE"
(so referred to herein) in the amount and payable as provided in the Fee Letter.
2.14 FACILITY FEE. In addition to any other fee or expense to be paid
by the Borrowers on account of the Revolving Credit, the Borrowers shall pay the
Agent the "FACILITY FEE" at the times and in the amounts as set forth the Fee
Letter.
2.15 UNUSED LINE FEE. In addition to any other fee to be paid by the
Borrowers on account of the Revolving Credit, the Borrowers shall pay the Agent
the "UNUSED LINE FEE" (so referred to herein) of 0.375% per annum of the average
difference, during the month just ended (or relevant period with respect to the
payment being made on the Termination Date) between the Revolving Credit Ceiling
and the aggregate of the unpaid principal balance of the Loan Account and the
undrawn Stated Amount of L/C's outstanding during the relevant period. The
Unused Line Fee shall be paid in arrears, on the first day of each month after
the execution of this Agreement and on the Termination Date.
2.16 EARLY TERMINATION FEE. Except as set forth in the next sentence,
in the event that the Termination Date occurs, for any reason (whether by virtue
of Acceleration or otherwise), prior to the Maturity Date, then the Borrowers
shall pay the Agent, for the ratable benefit of the Lenders, the "EARLY
TERMINATION FEE" (so referred to herein)equal to (i) one percent (1%) of the
Revolving Credit Ceiling then in effect if the Termination Date shall occur at
any time on or before July 17, 2004; (ii) two thirds of one percent (2/3%) of
the Revolving Credit Ceiling then in effect if the Termination Date shall occur
39
at any time on or after July 18, 2004 but prior to July 17, 2005; and (iii) one
third of one percent (1/3%)of the Revolving Credit Ceiling then in effect if the
Termination Date shall occur at any time (other than the Maturity Date) on or
after July 18, 2005. Notwithstanding the foregoing, if prior to December 31,
2003 the Lead Borrower has requested the Agent consent to the Proposed
Combination and if in accordance with Section 2.25, the Agent shall refuse to
grant permission to the Proposed Combination and the Borrowers refinance the
Liabilities, in whole but not in part, within sixty (60) days of the Agent's
refusal, the Early Termination Fee shall not be payable.
2.17 CONCERNING FEES.
(a) In addition to any other right to which the Agent is
then entitled on account thereof, the Agent may assess an additional fee payable
by the Borrowers on account of the accommodation, from time to time, by the
Agent of the Lead Borrower's request that the Agent depart or dispense with
(whether by waiver, consent, amendment, modification or similar action) one or
more of the administrative provisions of this Agreement and/or any Borrower's
failure to comply with any of such provisions.
(i) By way of non-exclusive example, the Agent
may assess a fee on account of an accommodation with
respect to any of the following:
(A) The Borrowers' failure to pay
that amount which is necessary so that no
OverLoan is outstanding (as required under
Section 2.11(b) hereof).
(B) The providing of a loan or
advance under the Revolving Credit or charging
of the Loan Account such that an OverLoan is
made.
(C) The foreshortening of any of the
time frames with respect to the making of
Revolving Credit Loans as set forth in Section
2.5.
(D) The Lead Borrower's failure to
provide a financial statement or report within
the applicable time frame provided for such
report under Article 5 hereof.
(ii) The inclusion of the foregoing right on
the part of the Agent to assess a fee does not constitute
an obligation, on the part of the Agent, to waive any
provision of this Agreement under any circumstances. The
assessment of any such fee in any particular circumstance
shall not constitute the Agent's waiver of any breach of
this Agreement on account of which such fee was assessed
nor a course of action on which any Loan Party may rely.
(b) The Loan Parties shall not be entitled to any credit,
rebate or repayment of any fee earned by the Agent or any Revolving Credit
Lender pursuant to this Agreement or any Loan Document notwithstanding any
termination of this Agreement or suspension or termination of the Agent's and
any Revolving Credit Lender's respective obligation to make loans and advances
hereunder.
40
2.18 AGENT'S AND REVOLVING CREDIT LENDERS' DISCRETION.
(a) Each reference in the Loan Documents to the exercise of
discretion or the like by the Agent or any Revolving Credit Lender shall be to
such Person's reasonable exercise of its judgment, in good faith (which shall be
presumed), based upon such information of which that Person then has actual
knowledge.
(b) In the exercise of such reasonable discretion, the
following may be taken into account.
(i) The reasonable anticipation: of a material
adverse change to the value of the Collateral; the
enforceability of the Agent's Collateral Interests
therein; or the amount which the Agent would likely
realize therefrom (taking into account delays which may
possibly be encountered in the Agent's realizing upon the
Collateral and likely Costs of Collection).
(ii) The content, completeness, and accuracy of
any report or financial information delivered to the Agent
or any Revolving Credit Lender by or on behalf of any Loan
Party and the manner by such report or financial
information was prepared.
(iii) The existence of circumstances which
suggest an increase in the likelihood that any Loan Party
may become the subject of a bankruptcy or insolvency
proceeding.
(iv) The existence of circumstances suggest
that a Default or Event of Default has occurred and is
continuing
(c) In the exercise of such discretion, the Agent and each
Revolving Credit Lender also may take into account any of the following factors:
(i) Those included in, or tested by, the
definitions of "Eligible Inventory" and "Cost".
(ii) The current financial and business climate
of the industry in which each Loan Party competes (having
regard for that Borrower's position in that industry).
(iii) General macroeconomic conditions which
have a material effect on the Loan Parties' cost
structure.
(iv) Material changes in or to the mix of the
Loan Parties' Inventory.
(v) Seasonality with respect to the Loan
Parties' Inventory and patterns of retail sales.
(vi) Such other factors as the Agent and each
Revolving Credit Lender reasonably determine as having a
material bearing on credit risks associated with the
providing of loans and financial accommodations to the
Loan Parties.
(d) The burden of establishing the failure of the Agent or
any Revolving Credit Lender to have acted in a reasonable manner in such
Person's exercise of such discretion shall be the Loan Parties' and may be made
only by clear and convincing evidence.
41
2.19 PROCEDURES FOR ISSUANCE OF L/C'S.
(a) The Lead Borrower may request that the Agent cause the
issuance by the Issuer of L/C's for the account of any Borrower. Each such
request shall be in such manner as may from time to time be acceptable to the
Agent.
(b) The Agent will endeavor to cause the issuance of any
L/C so requested by the Lead Borrower, provided that, at the time that the
request is made, the Revolving Credit has not been suspended as provided in
Section 2.6 and if so issued:
(i) The aggregate Stated Amount of all L/C's
then outstanding (after giving effect to the L/C whose
issuance is requested), does not exceed $10,000,000.00.
(ii) The expiry of the requested L/C is not
later than the earlier of thirty (30) days prior to the
Maturity Date or the following:
(A) Standby's: One (1) year from
initial issuance.
(B) Documentary's: Sixty (60) days
from issuance.
(iii) If the expiry of an L/C is later than the
Maturity Date, it is 105% cash collateralized at its
issuance.
(iv) An OverLoan will not result from the
issuance of the subject L/C.
(v) The Borrowing Base would not be exceeded
upon issuance of the Requested L/C.
(c) Each Borrower shall execute such documentation to apply
for and support the issuance of an L/C as may be required by the Issuer.
(d) There shall not be any recourse to, nor liability of,
the Agent or any Revolving Credit Lender on account of
(i) Any delay or refusal by an Issuer to issue
an L/C;
(ii) Any action or inaction of an Issuer on
account of or in respect to, any L/C.
(e) The Borrowers shall reimburse the Issuer for the amount
of any honoring of a drawing under an L/C on the same day on which such honoring
takes place. The Agent, without the request of any Borrower, may advance under
the Revolving Credit (and charge to the Loan Account) the amount of any honoring
of any L/C and other amount for which any Borrower, the Issuer, or the Revolving
Credit Lenders become obligated on account of, or in respect to, any L/C. Such
advance shall be made whether or not any Default or Event of Default has
occurred and is continuing or such advance would result in an OverLoan. Such
42
action shall not constitute a waiver of the Agent's rights under Section 2.11(b)
hereof.
2.20 FEES FOR L/C'S.
(a) The Borrowers shall pay to the Agent the following per
annum fees on account of L/C's, the issuance of which had been procured by the
Agent, quarterly in arrears, and on the Termination Date and on the End Date,
based on the weighted average Stated Amount of L/C's outstanding during the
period in respect of which such fee is being paid, except that following the
occurrence and during the continuance of any Event of Default (and whether or
not the Agent exercises the Agent's rights on account thereof), such fees shall
be the respective aggregate of those set forth below plus three percent (3%) per
annum.
(i) Documentary L/Cs: The Eurodollar Margin
then in effect minus 50 basis points.
(ii) Standby L/Cs: The Eurodollar Margin then
in effect.
(b) In addition to the fee to be paid as provided in
Subsection 2.20(a), above, the Borrowers shall pay to the Agent (or to the
Issuer, if so requested by Agent), on demand, all customary issuance,
processing, negotiation, amendment, and administrative fees and other amounts
charged by the Issuer on account of, or in respect to, any L/C.
(c) RESERVED
(d) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any
reserve, special deposit or similar requirements against
letters of credit heretofore or hereafter issued by any
Issuer or with respect to which any Revolving Credit
Lender or any Issuer has an obligation to lend to fund
drawings under any L/C; or
(ii) impose on any Issuer any other condition
or requirements relating to any such letters of credit;
and the result of any event referred to in Section 2.20(d)(i) or 2.20(d)(ii),
above, shall be to increase the cost to any Revolving Credit Lender or to any
Issuer of issuing or maintaining any L/C (which increase in cost shall be the
result of such Issuer's reasonable allocation among that Revolving Credit
Lender's or Issuer's letter of credit customers of the aggregate of such cost
increases resulting from such events), then, upon demand by the Agent and
delivery by the Agent to the Lead Borrower of a certificate of an officer of the
subject Revolving Credit Lender or the subject Issuer describing such change in
law, executive order, regulation, directive, or interpretation thereof, its
effect on such Revolving Credit Lender or such Issuer, and the basis for
determining such increased costs and their allocation, the Borrowers shall
immediately pay to the Agent, from time to time as specified by the Agent, such
amounts as shall be sufficient to compensate the subject Revolving Credit Lender
43
or the subject Issuer for such increased cost. In the absence of manifest error,
any Revolving Credit Lender's or any Issuer's determination of costs incurred
under Section 2.20(d)(i) or 2.20(d)(ii), above, and the allocation, if any, of
such costs among the Borrowers and other letter of credit customers of such
Revolving Credit Lender or such Issuer, if done in good faith and made on an
equitable basis and in accordance with such officer's certificate, shall be
conclusive and binding on the Loan Parties.
2.21 CONCERNING L/C'S.
(a) None of the Issuer, the Issuer's correspondents, any
Revolving Credit Lender, the Agent, or any advising, negotiating, or paying bank
with respect to any L/C shall be responsible in any way for:
(i) The performance by any beneficiary under
any L/C of that beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness,
genuineness, authority of any person signing;
falsification; or the legal effect of; any documents
called for under any L/C if (with respect to the
foregoing) such documents on their face appear to be in
order.
(b) The Issuer may honor, as complying with the terms of
any L/C and of any drawing thereunder, any drafts or other documents otherwise
in order, but signed or issued by an administrator, executor, conservator,
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, liquidator, receiver, or other legal representative of the party
authorized under such L/C to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance,
each Borrower hereby authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(d) All directions, correspondence, and funds transfers
relating to any L/C are at the risk of the Borrowers. The Issuer shall have
discharged the Issuer's obligations under any L/C which, or the drawing under
which, includes payment instructions, by the initiation of the method of payment
called for in, and in accordance with, such instructions (or by any other
commercially reasonable and comparable method). None of the Agent, any Revolving
Credit Lender, or the Issuer shall have any responsibility for any inaccuracy,
interruption, error, or delay in transmission or delivery by post, telegraph or
cable, or for any inaccuracy of translation.
(e) The Agent's, each Revolving Credit Lender's, and the
Issuer's rights, powers, privileges and immunities specified in or arising under
this Agreement are in addition to any heretofore or at any time hereafter
44
otherwise created or arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the Issuer and the Lead Borrower,
documentary L/C's will be governed by the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce, Publication No. 500, and
standby L/C's will be governed by International Standby Practices ISP98 (adopted
by the International Chamber of Commerce on April 6, 1998) and any respective
subsequent revisions thereof.
(g) The obligations of the Borrowers under this Agreement
with respect to L/C's are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all circumstances,
whatsoever including, without limitation, the following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of this
Agreement, any L/C, or any other agreement or instrument
relating thereto.
(ii) Any Borrower's consent to any amendment or
waiver of, or consent to the departure from, any L/C.
(iii) The existence of any claim, set-off,
defense, or other right which any Borrower may have at any
time against the beneficiary of any L/C.
(iv) Any good faith honoring of a drawing under
any L/C, which drawing possibly could have been dishonored
based upon a strict construction of the terms of the L/C.
(h) With respect to any documentary L/C, all bills of
lading shall be assigned to or in the name of the Issuer, and all originals
shall be delivered to the Issuer, all in form and substance as is reasonably
requested by the Issuer.
2.22 CHANGED CIRCUMSTANCES.
(a) The Agent may advise the Lead Borrower that the Agent
has made the good faith determination (which determination shall be final and
conclusive) of any of the following:
(i) Adequate and fair means do not exist for
ascertaining the rate for Eurodollar Loans.
(ii) The continuation of or conversion of any
Revolving Credit Loan to a Eurodollar Loan has been made
impracticable or unlawful by the occurrence of a
contingency that materially and adversely affects the
applicable market or the compliance by the Agent or any
Revolving Credit Lender in good faith with any Applicable
Law.
(iii) The indices on which the interest rates
for Eurodollar Loans are based shall no longer represent
the effective cost to the Agent or any Revolving Credit
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Lender for U.S. dollar deposits in the interbank market
for deposits in which it regularly participates.
(b) In the event that the Agent advises the Lead Borrower
of an occurrence described in Section 2.22(a), then, until the Agent notifies
the Lead Borrower that the circumstances giving rise to such notice no longer
apply:
(i) The obligation of the Agent or each
Revolving Credit Lender to make loans of the type affected
by such changed circumstances or to permit the Lead
Borrower to select the affected interest rate as otherwise
applicable to any Revolving Credit Loans shall be
suspended.
(ii) Any notice which the Lead Borrower had
given the Agent with respect to any Eurodollar Loan, the
time for action with respect to which has not occurred
prior to the Agent's having given notice pursuant to
Section 2.22(a), shall be deemed at the option of the
Agent to not having been given.
2.23 DESIGNATION OF LEAD BORROWER AS LOAN PARTIES' AGENT.
(a) Each Borrower hereby irrevocably designates and
appoints the Lead Borrower as that Borrower's agent to obtain loans and advances
under the Revolving Credit, the proceeds of which shall be available to each
Borrower for those uses as those set forth in Section 2.1(d). As the disclosed
principal for its agent, each Borrower shall be obligated to the Agent and each
Revolving Credit Lender on account of loans and advances so made under the
Revolving Credit as if made directly by the Revolving Credit Lenders to that
Borrower, notwithstanding the manner by which such loans and advances are
recorded on the books and records of the Lead Borrower and of any Loan Party.
(b) Each Loan Party recognizes that credit available to the
Borrowers under the Revolving Credit is in excess of and on better terms than it
otherwise could obtain on and for its own account and that one of the reasons
therefor is its joining in the credit facility contemplated herein with all
other Loan Parties. Consequently, each Loan Party hereby assumes and agrees to
fully, faithfully, and punctually discharge all Liabilities of all of the Loan
Parties.
(c) The Lead Borrower shall act as a conduit for each
Borrower (including itself, as a "Borrower") on whose behalf the Lead Borrower
has requested a Revolving Credit Loan.
(d) The proceeds of each loan and advance provided under
the Revolving Credit which is requested by the Lead Borrower shall be deposited
into the Operating Account or as otherwise indicated by the Lead Borrower. The
Lead Borrower shall cause the transfer of the proceeds thereof to the (those)
Borrower(s) on whose behalf such loan and advance was obtained. Neither the
Agent nor any Revolving Credit Lender shall have any obligation to see to the
application of such proceeds.
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2.24 LENDERS' COMMITMENTS
(a) Subject to Section 16.1 (which provides for assignments
and assumptions of commitments), each Revolving Credit Lender's "REVOLVING
CREDIT PERCENTAGE COMMITMENT", and "REVOLVING CREDIT DOLLAR COMMITMENT"
(respectively so referred to herein) is set forth on EXHIBIT 2.24, annexed
hereto. Upon an increase in the Revolving Credit Ceiling in accordance with
Section 2.25, each Revolving Credit Lender's Revolving Credit Percentage
Commitment and Revolving Credit Dollar Commitment shall increase pro rata as the
result of such increase in the Revolving Credit Ceiling, provided, however the
Revolving Credit Ceiling shall not exceed $50,000,000.00.
(b) The obligations of each Revolving Credit Lender are
several and not joint. No Revolving Credit Lender shall have any obligation to
make any loan under the Revolving Credit in excess of either of the following:
(i) That Revolving Credit Lender's Revolving
Credit Percentage Commitment of the subject loan or
advance or of Availability.
(ii) Any loan which, when aggregated with all
other loans made by that Revolving Credit Lender under the
Revolving Credit and then outstanding, exceed that
Revolving Credit Lender's Revolving Credit Dollar
Commitment.
(c) No Revolving Credit Lender shall have any liability to
the Loan Parties on account of the failure of any other Revolving Credit Lender
to provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
(d) The Revolving Credit Dollar Commitments, Revolving
Credit Commitment Percentages, and identities of the Revolving Credit Lenders
may be changed, from time to time by the reallocation or assignment of Revolving
Credit Dollar Commitments and Revolving Credit Commitment Percentages amongst
the Revolving Credit Lenders or with other Persons who determine to become
"Revolving Credit Lenders", provided, however unless an Event of Default has
occurred (in which event, no consent of any Loan Party is required) any
assignment to a Person not then a Revolving Credit Lender shall be subject to
the prior consent of the Lead Borrower (not to be unreasonably withheld), which
consent will be deemed given unless the Lead Borrower provides the Agent with
written objection, not more than five (5) Business Days after the Agent shall
have given the Lead Borrower written notice of a proposed assignment).
(e) Upon written notice given the Lead Borrower from time
to time by the Agent, of any assignment or allocation referenced in Section
2.24(d):
(i) Each Borrower shall execute one or more
replacement Revolving Credit Notes to reflect such changed
Revolving Credit Dollar Commitments, Revolving Credit
47
Commitment Percentages, and identities and shall deliver
such replacement Revolving Credit Notes to the Agent
(which promptly thereafter shall deliver to the Lead
Borrower the Revolving Credit Notes so replaced) provided
however, in the event that a Revolving Credit Note is to
be exchanged following its acceleration or the entry of an
order for relief under the Bankruptcy Code with respect to
any Loan Party, the Agent, in lieu of causing the
Borrowers to execute one or more new Revolving Credit
Notes, may issue the Agent's Certificate confirming the
resulting Revolving Credit Dollar Commitments and
Revolving Credit Percentage Commitments.
(ii) Such change shall be effective from the
effective date specified in such written notice and any
Person added as a Revolving Credit Lender shall have all
rights and privileges of a Revolving Credit Lender
hereunder thereafter as if such Person had been a
signatory to this Agreement and any other Loan Document to
which a Revolving Credit Lender is a signatory and any
Person removed as a Revolving Credit Lender shall be
relieved of any obligations or responsibilities of a
Revolving Credit Lender hereunder thereafter.
2.25 PROPOSED COMBINATION; REVOLVING CREDIT DOLLAR
COMMITMENT INCREASE. Amazing Savings and the Loan Parties have advised the Agent
that they are considering implementing a merger or some other business
combination (the "PROPOSED COMBINATION") between and among Lead Borrower and
Amazing Savings and/or OJSAC and that if such Proposed Combination were to
occur, they would desire an increase in the Revolving Credit Dollar Commitments
by up to $10,000,000.00. The Loan Parties hereby acknowledge and agree that the
consent of the Agent to such Proposed Combination and to any such increase in
Revolving Credit Dollar Commitments would be required, and the Agent hereby
agrees that its consent shall not be unreasonably withheld provided the
following conditions are met to the Agent's reasonable satisfaction:
(a) The Lead Borrower shall have given the Agent not less
than thirty (30) day's prior written notice of the Proposed Combination, which
notice shall provide a detailed description of the proposed new structure as
well as the proposed effective date;
(b) The Agent shall have conducted such due diligence
(including without limitation, commercial finance field examinations, physical
inventories and appraisals) with respect to the Amazing Savings Companies as the
Agent shall reasonably determine is necessary and the results of same shall be
satisfactory in all respects to Agent, and the Agent's legal counsel shall have
conducted such due diligence with respect to the Amazing Savings Companies as it
shall reasonably deem necessary and the results of same shall be satisfactory to
such counsel and the Agent;
(c) All agreements, documents and instruments (including,
without limitation, merger agreements and charter documents) shall be in form
and substance satisfactory to the Agent and its counsel;
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(d) Agent shall have received a copy of a fairness opinion
reasonably acceptable to the Agent with respect to the Proposed Combination
issued by a Person reasonably acceptable to the Agent as well as evidence that
the Proposed Combination shall have been approved by the Independent Directors
(as defined in the Tender Agreement);
(e) Agent shall have received opinions of counsel in form
and substance satisfactory to the Agent and its counsel covering the matters set
forth on EXHIBIT 2.25, annexed hereto;
(f) After giving effect to the Proposed Combination, each
of the representations made by or on behalf of each Loan Party in this Agreement
or in any of the other Loan Documents, and in each agreement, document and
instrument executed and delivered in connection with the Proposed Combination by
or on behalf of each Loan Party, shall be true and complete in all material
respects as of the date as of which such representation or warranty was made;
(g) All fees, costs and expenses incurred by the Agent and
Lenders in connection with the Proposed Combination (including the fees and
expenses of counsel to the Agent) shall comprise Liabilities and shall have been
paid in full;
(h) The Agent shall have received evidence satisfactory to
it that all obligations of the Amazing Savings Companies to BONY shall have been
indefeasibly paid in full, the BONY Agreements shall have been terminated and
all security interests and other Encumbrances on any assets of the Amazing
Savings Companies in favor of BONY shall be terminated, released or satisfied,
as the case may be.
(i) No Default or Event of Default shall have occurred and
be continuing;
(j) After giving affect to the Proposed Combination the
Agent shall have a first priority perfected security interest in all Collateral
subject only to Permitted Encumbrances; and
(k) No event shall have occurred or failed to occur, which
occurrence or failure would be reasonably likely to have a Material Adverse
Effect.
2.26 TAXES
(a) Except as provided in this Section 2.26, any and all
payments by each Loan Party hereunder shall be made, in accordance with this
Section 2.26, free and clear of and without deduction for any and all present or
future Taxes. If any Loan Party shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder, (i) the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.26) the Agent, the Revolving Credit Lenders, the SwingLine
Lenders or Issuer, as applicable (the foregoing, together with their successors
and assigns, each a "CREDIT PARTY"), receive an amount equal to the sum they
49
would have received had no such deductions been made, (ii) such Loan Party shall
make such deductions, and (iii) such Loan Party shall pay the full amount
deducted to the relevant taxing or other authority in accordance with applicable
law. Within thirty (30) days after the date of any payment of Taxes, such Loan
Party shall furnish to the Agent the original or a certified copy of a receipt
evidencing payment thereof. In addition, each Loan Party agrees to pay any Other
Taxes.
(b) Each Loan Party shall jointly and severally indemnify
and, within ten (10) days of written demand therefore, pay each Credit Party for
the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.26) paid by
such Credit Party and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, provided such written demand sets
forth in reasonable detail the basis and calculation of such amount.
(c) It is further agreed that:
(i) Each Credit Party, if not a United States
person as defined in Section 7701(a)(30) of the IRC (each,
a "FOREIGN LENDER"), as to which payments to be made under
this Agreement are fully exempt from United States
withholding tax under an applicable statute or tax treaty
shall provide prior to or on the Closing Date to the Lead
Borrower and the Agent a properly completed and executed
IRS Form W-8ECI or Form W-8BEN or other applicable form,
certificate or document prescribed by the Internal Revenue
Service or the United States certifying as to such Foreign
Lender's entitlement to such exemption (a "CERTIFICATE OF
EXEMPTION"). Any Person that is not a United States person
as defined in Section 7701(a)(30) of the IRC that seeks to
become a Credit Party, shall provide a Certificate of
Exemption to the Lead Borrower and the Agent prior to
becoming a Credit Party. No Person that is not a United
States person as defined in Section 7701(a)(30) of the IRC
may become a Credit Party if such Person fails to deliver
a Certificate of Exemption as prescribed in this Section
2.26(c)(i) in advance of becoming a Credit Party.
(ii) Each Credit Party that is a United States
person as defined in Section 7701(a)(30) of the 1RC (each,
a "U.S. LENDER") shall provide prior to or on the Closing
Date (or on or prior to the date it becomes a party to
this Agreement) to the Lead Borrower and the Agent a
properly completed and executed IRS Form W-9 (certifying
that such U.S. Lender is entitled to an exemption from
United States backup withholding tax) or any successor
form. Solely for purposes of this Section 2.26, a U.S.
Lender shall not include a Credit Party that may be
treated as an exempt recipient based on the indicators
described in Treasury Regulation Section
1.6049-4(c)(1)(ii).
(iii) Each Credit Party, from time to time
after submitting the forms, certificates or documents
referred to in this Section 2.26, shall submit to the Lead
Borrower and the Agent such additional duly completed and
signed copies of one or more other such forms,
certificates or documents (or such successor forms,
50
certificates or other documents as shall be adopted from
time to time by the IRS or relevant taxing authorities)
(A) on or before the date that any such form, certificate,
or document expires or becomes obsolete, (B) after the
occurrence of any event requiring a change in the most
recent form, certificate or document previously delivered
by it to the Lead Borrower and the Agent, (C) from time to
time thereafter if reasonably requested by the Lead
Borrower or the Agent and (D) as may be appropriate under
then current United States law or regulations to avoid
United States withholding taxes on payments in respect of
any amounts to be received by such Credit Party pursuant
to this Agreement.
(iv) If any Credit Party determines that it is
unable to submit to the Lead Borrower or the Agent any
form, certificate or document that such Credit Party is
requested to submit pursuant to this Section 2.26, or that
it is required to withdraw or cancel any such form,
certificate or document, or that any such form,
certificate or document previously submitted has otherwise
become ineffective or inaccurate, such Credit Party shall
promptly notify the Lead Borrower and the Agent, as
appropriate, of such fact.
(v) If any Loan Party shall be required
pursuant to this Section 2.26 to pay any additional amount
to, or to indemnify, any Credit Party to the extent that
such Credit Party becomes subject to Taxes subsequent to
the Closing Date (or, if applicable, subsequent to the
date such Person becomes a party to this Agreement) as a
result of any change in the circumstances of such Credit
Party (other than a change in applicable law), including
without limitation a change in the residence, place of
incorporation, principal place of business of such Credit
Party or a change in the branch or lending office of such
Credit Party, as the case may be, such Credit Party shall
use reasonable efforts to avoid or minimize any amounts
which might otherwise be payable pursuant to this
subsection; provided, however, that such efforts shall not
include the taking of any actions by such Credit Party
that would result in any tax, costs or other expense to
such Credit Party (other than a tax, cost or other expense
for which such Credit Party shall have been reimbursed or
indemnified by the Loan Parties pursuant to this Agreement
or otherwise) or any action which would or might in the
reasonable opinion of such Credit Party have an adverse
effect upon its business, operations or financial
condition or otherwise be disadvantageous to such Credit
Party; and, provided further, that no Loan Party shall be
required to pay such additional amounts with respect to
such Taxes if they would not have been incurred but for
the failure of such Credit Party to provide to the Lead
Borrower or the Agent any form, certificate or document
that it was required so to do pursuant to this Section
2.26 other than any form, certificate or document required
as a result of a change in law.
(d) If any Credit Party determines that it has received a
refund in respect of any Taxes or Other Taxes as to which indemnification has
been paid by a Loan Party pursuant to this Section 2.26 or with respect to any
Taxes that have been deducted and paid to a taxing authority pursuant to this
Section 2.26 by a Loan Party, it shall promptly remit such refund (including any
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interest) to such Loan Party, net of all out-of-pocket expenses of such Credit
Party; provided, however, that the Loan Party, upon the request of the such
Credit Party agrees promptly to return such refund (plus any interest) to such
Credit Party in the event such Credit Party is required to repay such refund to
the relevant taxing authority. In addition, such Credit Party shall provide the
Lead Borrower with a copy of any notice of assessment from the relevant taxing
authority (deleting any confidential information contained therein).
(e) Each Credit Party agrees that, upon the occurrence of
any event giving rise to the operation of Section 2.26(a) or Section 2.26(b)
with respect to such Credit Party, it will, if requested by the Lead Borrower,
use reasonable commercial efforts (subject to such Credit Party's overall
internal policies of general application) to designate another lending office
for any Revolving Credit Loans or L/Cs affected by such event with the object of
avoiding the consequences of such event; provided , however, that such
designation is made on terms that, in the reasonable judgment of such Credit
Party cause such Credit Party to suffer no economic, legal or regulatory
disadvantage; and provided, further, that nothing in this Section 2.26(e) shall
affect or postpone any of the obligations of any Loan Party or the rights of any
Credit Party pursuant to Section 2.26(a) or Section 2.26(b).
(f) Without prejudice to the survival of any other
agreement hereunder, the agreements and obligations contained in this Section
2.26 shall survive the payment in full of the Liabilities. Notwithstanding any
provision contained herein to the contrary, any indemnity with respect to taxes,
levies, imposts, deductions, charges or withholdings imposed by any Governmental
Authority, or any liabilities with respect thereto, shall be governed solely and
exclusively by this Section 2.26.
ARTICLE 3 - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, the
establishment of the Revolving Credit, the making of the first loan under the
Revolving Credit and/or issuance of the first L/C, each of the documents
respectively described in Sections 3.1 through and including 3.4 (each in form
and substance satisfactory to the Agent) shall have been delivered to the Agent,
and the conditions respectively described in Sections 3.5 through and including
Section 3.13 shall have been satisfied to Agent's satisfaction:
3.1 CORPORATE DUE DILIGENCE.
(a) Certificates of good standing for each Loan Party,
respectively issued by the Secretary of State for the state in which that Loan
Party is incorporated or otherwise organized.
(b) Certificates of due qualification, in good standing,
issued by the Secretary(ies) of State of each State in which the nature of a
Loan Party's business conducted or assets owned could require such
qualification.
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(c) Certificates of each Loan Party's Secretary of the due
adoption, continued effectiveness, and setting forth the texts of, each
resolution adopted in connection with the establishment of the loan arrangement
contemplated by the Loan Documents and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.
3.2 OPINIONS. Opinions of counsel to the Loan Parties in form and
substance satisfactory to the Agent which opinions shall cover such matters as
Agent shall require including, without limitation, (i) with respect to the
Tender Offer, that it has been consummated in accordance with all applicable
Requirements of Law and (ii) with respect to the BONY Agreements, that as
amended or waived on the date hereof, the consummation of the Tender Offer, the
issuance by OJSAC of its Guarantee and the transactions related thereto do not
result in a breach of, default under or violation of any such BONY Agreements.
3.3 ADDITIONAL DOCUMENTS. Such additional instruments and documents
as the Agent or its counsel reasonably may require or request including, without
limitation, the following:
(a) The Revolving Credit Note;
(b) The SwingLine Note;
(c) The Fee Letter;
(d) The Trademark Security Agreement;
(e) The Guaranty;
(f) The Pledge Agreements;
(g) DDA Notices (Section 7.1(a));
(h) Blocked Account Agreements (Section 7.1(c));
(i) Credit Card Notices (Section 7.2);
(j) Customs Brokers Agreements; and
(k) Landlord Waivers with respect to the Warehouses.
3.4 OFFICERS' CERTIFICATES. Certificates executed by the President
and the Chief Financial Officer of the Lead Borrower which state that
(a) Such officer, acting on behalf of the Loan Parties, has
reviewed each of the Loan Documents and has had the benefit of independent
counsel (Attorneys Weil, Gotshal & ▇▇▇▇▇▇ LLP) of the Lead Borrower's selection
in connection with the review and negotiation of the Loan Documents. In
particular, and without limiting the generality of such review, the following
provisions of the Loan Documents have been brought to the attention of the
undersigned by such counsel:
(i) The waiver of the right to a trial by jury
in connection with controversies arising out of the loan
arrangement contemplated by the Loan Documents.
(ii) The designation of, and submission to the
exclusive jurisdiction and venue of, certain courts.
53
(iii) Various other waivers and
indemnifications included therein.
(iv) The circumstances under which the
Liabilities could be accelerated and the grace periods
available with respect to certain Events of Default.
(b) The representations and warranties made by the
Borrowers to the Agent and the Revolving Credit Lenders in the Loan Documents
are true and complete as of the date of such Certificate, and that no event has
occurred which is or which, solely with the giving of notice or passage of time
(or both) would be an Event of Default.
3.5 REPRESENTATIONS AND WARRANTIES. Each of the representations made
by or on behalf of each Loan Party in this Agreement or in any of the other Loan
Documents or in any financial report, statement, document, or paper provided by
or on behalf of each Loan Party, shall be true and complete in all material
respects as of the date as of which such representation or warranty was made.
3.6 MINIMUM DAY ONE AVAILABILITY. After giving effect to the first
funding under the Revolving Credit; any charges to the Loan Account made in
connection with the establishment of the credit facility contemplated hereby;
and all L/ Cs to be issued at, or immediately subsequent to, such establishment,
Excess Availability shall be in an amount equal to not less than $9,000,000
(exclusive of any Availability attributable to the Borrowers' obtaining federal
or state tax refunds). The Agent shall have received a Borrowing Base
Certificate dated the Closing Date, relating to the then most recent week ended,
and executed by a Financial Officer of the Lead Borrower.
3.7 ALL FEES AND EXPENSES PAID. All fees due at or immediately after
the first funding under the Revolving Credit and all costs and expenses incurred
by the Agent in connection with the establishment of the credit facility
contemplated hereby (including the reasonable fees and expenses of counsel to
the Agent) shall have been paid in full.
3.8 NO DEFAULT. No Default or Event of Default has occurred and is
continuing.
3.9 DUE DILIGENCE. Satisfactory completion of all due diligence by
the Agent and Lenders (including, without limitation, commercial finance
examinations and appraisals of inventory), and each of the Agent and Lenders is
satisfied (in its sole discretion) with the results of such due diligence in all
respects.
3.10 LEGAL DUE DILIGENCE. Completion of the legal due diligence
investigation by counsel to each Agent and each Revolving Credit Lender with
results satisfactory to each such counsel, Agent and such Revolving Credit
Lenders in their sole discretion in all respects.
3.11 NO MATERIAL ADVERSE CHANGE. No event shall have occurred or
failed to occur since April 30, 2003, which occurrence or failure is causing or
could cause a Material Adverse Change.
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3.12 TENDER OFFER. The Tender Offer shall have been consummated in
accordance with the Offer (as defined in the Tender Agreement) and in material
compliance with all Requirements of Law and the following conditions shall have
been satisfied:
(a) Agent and Lenders shall have received evidence
satisfactory to them that not less than 66 2/3%, or 50%, as the case may be, of
the issued and outstanding voting stock of the Lead Borrower shall have been
validly tendered, not subject to withdrawal and accepted for payment and Amazing
Savings through OJSAC shall have purchased and/or shall otherwise own and
control not less than 66 2/3% of the issued and outstanding voting stock of the
Lead Borrower;
(b) All persons who were directors of the Lead Borrower
immediately prior to the Purchase Date shall have resigned and all the directors
of the Lead Borrower shall be Persons designated by Amazing Savings.
(c) The Tender Agreement shall be in full force and effect
in accordance with its terms, none of the terms and conditions of which shall
have been waived, amended, supplemented or other modified except with Agent's
prior written consent;
(d) Agent shall have received a copy of all securities
filings, documents and instruments executed, delivered and/or filed in
connection with the Tender Offer on and after June 6, 2003, each certified as
being true and correct copies; and
(e) Agent shall have received copies of all waivers,
amendments, consents and other documents and instruments evidencing the consent
of BONY under the BONY Agreements to the grant to the Agent of a first priority
and exclusive lien on all of the stock in Lead Borrower purchased by OJSAC
pursuant to the Tender Offer and in all of the assets of the Loan Parties (other
than with respect to any directly held Foreign Subsidiary of such Loan Parties,
more than 65% of the total combined voting power of all classes of stock of such
Foreign Subsidiary that are entitled to vote).
3.13 BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in
this Article 3 are for the sole benefit of the Agent and each Revolving Credit
Lender and may be waived by the Agent in whole or in part without prejudice to
the Agent or any Revolving Credit Lender.
No document shall be deemed delivered to the Agent or any Revolving Credit
Lender unless delivered to the Agent in accordance with Article 17 hereof at its
offices in Boston, Massachusetts and under no circumstances shall this Agreement
take effect until so executed and delivered.
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ARTICLE 4 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Revolving Credit Lender to establish the credit
facility contemplated herein, to induce the Revolving Credit Lenders to provide
loans and advances under the Revolving Credit and the Issuer to issue L/Cs (each
of which loans and L/Cs shall be deemed to have been made or issued in reliance
thereupon) the Borrowers, in addition to all other representations, warranties,
and covenants made by any Borrower in any other Loan Document, make those
representations, warranties, and covenants included in this Agreement.
4.1 PAYMENT AND PERFORMANCE OF LIABILITIES. The Loan Parties shall
pay each payment Liability when due (or when demanded, if payable on demand) and
shall promptly, punctually, and faithfully perform each other Liability.
4.2 DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Loan Party presently is and hereafter shall remain
in good standing under the laws of the State in which it is organized and is and
shall hereafter remain duly qualified and in good standing in every other State
in which, by reason of the nature or location of each Loan Party's assets or
operation of its business, such qualification may be necessary, except where the
failure to so qualify would not be reasonably likely to have a Material Adverse
Effect.
(b) Each Loan Party's respective organizational
identification number assigned to it by the State of its incorporation and its
respective federal employer identification number is listed on EXHIBIT 4.2,
annexed hereto. EXHIBIT 4.2 accurately describes the corporate and/or
partnership structure of the Loan Parties and their respective Subsidiaries,
including the identity of all equity holders holding more than 5% of the issued
and outstanding equity having the right to vote, limited and general partners,
or members, as the case may be.
(c) No Loan Party shall change its State of organization,
any organizational identification number assigned to that Loan Party by that
State or that Loan Party s' federal taxpayer identification number, in each case
unless at least twenty (20) days' prior written notice is provided to the Agent.
(d) Each Subsidiary is listed on EXHIBIT 4.2. The Lead
Borrower shall provide the Agent with prior written notice of any entity's
becoming or ceasing to be a Subsidiary; provided, however, that this Section
shall not be deemed to permit any entity's becoming or ceasing to be a
Subsidiary without the Agent's consent, which shall not be unreasonably
withheld.
(e) Each Loan Party has all requisite power and authority
to execute and deliver all Loan Documents to which that Loan Party is a party
and has and will hereafter retain all requisite power to perform all
Liabilities.
(f) The execution and delivery by each Loan Party of each
Loan Document to which it is a party; each Loan Party's consummation of the
56
transactions contemplated by such Loan Documents (including, without limitation,
the creation of Collateral Interests by that Loan Party to secure the
Liabilities); each Loan Party's performance under those of the Loan Documents to
which it is a party
(i) Have been duly authorized by all necessary
action.
(ii) Do not, and will not, contravene in any
material respect any provision of any Requirement of Law
or obligation of that Loan Party.
(iii) Will not result in the creation or
imposition of, or the obligation to create or impose, any
Encumbrance upon any assets of that Loan Party pursuant to
any Requirement of Law or obligation, except pursuant to
the Loan Documents.
(g) The Loan Documents have been duly executed and
delivered by each Loan Party and are the legal, valid and binding obligations of
each Loan Party, enforceable against each Loan Party in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, or other laws relating to or affecting generally the enforcement of
creditor's rights by general principles of equity (regardless of whether such
principles are considered in a proceeding at law or in equity).
(h) In compliance with Section 1.7 of the Tender Agreement,
from and after the Closing Date until the first anniversary thereof, Amazing
Savings shall use its reasonable best efforts to ensure that at least two of the
members of the board of directors of the Lead Borrower are Independent Directors
and, from the first anniversary of the Closing Date until the third anniversary
thereof, Amazing Savings shall use its reasonable best efforts to ensure that at
least one member of the board of directors of the Lead Borrower is an
Independent Director.
4.3 TRADE NAMES.
(a) EXHIBIT 4.3, annexed hereto, is a listing of:
(i) All names under which any Loan Party
conducted its business within the past five (5) years.
(ii) All Persons with whom any Loan Party
consolidated or merged, or from whom any Loan Party
acquired in a single transaction or in a series of related
transactions substantially all of such Person's assets, in
each case within the last five (5) years.
(b) The Lead Borrower will provide the Agent with not less
than twenty-one (21) days prior written notice (with reasonable particularity)
of any change to any Loan Party's name from that under which that Loan Party is
conducting its business at the execution of this Agreement.
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4.4 INFRASTRUCTURE.
(a) Each Loan Party owns and possesses, or has the right to
use (and will hereafter own, possess, or have such right to use) all patents,
industrial designs, trademarks, trade names, trade styles, brand names, service
marks, logos, copyrights, trade secrets, know-how, confidential information, and
other intellectual or proprietary property of any third Person necessary for
that Loan Party's conduct of that Loan Party's business, except where the
failure to possess such intellectual or proprietary information would be
reasonably likely to have a Material Adverse Effect.
(b) The conduct by each Loan Party of that Loan Party's
business does not presently infringe (nor will any Loan Party conduct its
business in the future so as to infringe) the patents, industrial designs,
trademarks, trade names, trade styles, brand names, service marks, logos,
copyrights, trade secrets, know-how, confidential information, or other
intellectual or proprietary property of any third Person, except where such
infringement would be reasonably likely to have a Material Adverse Effect.
4.5 LOCATIONS; TITLE TO ASSETS; ACQUISITIONS.
(a) The Collateral, and the books, records, and papers of
each Loan Party pertaining thereto, are kept and maintained solely at those
locations which are listed on EXHIBIT 4.5, annexed hereto, which EXHIBIT
includes, with respect to each such location, the name and address of the
landlord on the Lease which covers such location (or an indication that a Loan
Party owns the subject location) and of all service bureaus with which any such
records are maintained.
(b) No Loan Party shall remove any of the Collateral from
those locations listed on EXHIBIT 4.5 except for the following purposes:
(i) To accomplish sales, returns, transfers and
other dispositions of Inventory in the ordinary course of
business.
(ii) To move Inventory from one such location
to another such location.
(iii) To utilize such of the Collateral as is
removed from such locations in the ordinary course of
business (such as motor vehicles).
(c) No Loan Party will execute any lease, commit to, or
become legally obligated to, open any additional Retail Stores except in
accordance with the Business Plan, plus up to five (5) additional Retail Stores
in any Fiscal Year, and unless each of the following conditions is satisfied
with respect thereto:
(i) Such commitment or obligation is in the
ordinary course of business.
(ii) Such commitment or obligation is not, and
does not result in, a violation of any other Section of
this Agreement.
(iii) Not less than thirty (30) days' prior
written notice of the opening of the subject Store is
given to the Agent.
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(iv) The Loan Parties have used reasonable
efforts to obtain a landlord's waiver from the landlord of
the subject store, which waiver is in form reasonably
satisfactory to the Agent.
(v) The Agent shall have a first priority
perfected security interest in all Collateral located at
any time in such Retail Store, subject only to Permitted
Encumbrances.
(d) The Loan Parties shall use reasonable efforts to
provide the Agent with Landlord Waivers or subordinations, in a form reasonably
satisfactory to the Agent, for each Loan Party's locations in any of the
Landlord States. The Agent may establish an Availability Reserve for each such
location as to which such a waiver is not so delivered, which Availability
Reserve shall be reduced or eliminated upon delivery of a waiver for such
location.
(e) Except as otherwise disclosed pursuant to, or permitted
by, this Section 4.5, and except for goods in the control of a customs broker
who has entered into a Customs Brokers Agreement, no tangible personal property
of any Loan Party is in the care or custody of any third party or stored or
entrusted with a bailee or other third party and none shall hereafter be placed
under such care, custody, storage, or entrustment.
(f) EXHIBIT 4.5(E) is a schedule of all carriers,
consolidators and customs brokers employed by the Loan Parties for the transport
of goods in the ordinary course of the business. The Loan Parties shall not
employ any other carriers, consolidators or customs brokers unless (i) the Lead
Borrower has provided the Agent with thirty (30) days prior notice thereof and
(ii) such carrier, consolidator or customs broker has executed and delivered to
the Agent a Customs Broker Agreement.
(g) Notwithstanding anything to the contrary herein or in
any other Loan Document, at no time shall (i) OJSAC, except in connection with
the Proposed Combination, own any property or assets of any kind other than
stock of Lead Borrower, (ii) Lead Borrower own any property or assets of any
kind other than stock of Odd-Job Acquisition Corp., (iii) Odd Job Trading Corp.
own any property or assets of any kind other than general partnership interests
in HIA Trading Associates, (iv) MZ Trademark, LLC own any assets other then the
trademarks which it owns on the Closing Date or (v) MZ Put JV, LLC, Oxford
Products Co. or Oxford Imports Co. at any time own any assets or engage in any
business of any kind.
4.6 ENCUMBRANCES.
(a) The Loan Parties are, and shall hereafter remain, the
owners of the Collateral free and clear of all Encumbrances other than any
Permitted Encumbrance.
(b) No Loan Party has, and none shall have, possession of
any property on consignment to that Loan Party.
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(c) No Loan Party shall acquire or obtain the right to use
any Equipment, the acquisition or right to use of which Equipment is otherwise
permitted by this Agreement, in which Equipment any third party has an interest,
except for:
(i) Equipment which is merely incidental to the
conduct of that Loan Parties' business.
(ii) Equipment, the acquisition or right to use
of which has been consented to by the Agent, which consent
may be conditioned upon the Agent's receipt of such
agreement with the third party which has an interest in
such Equipment as is satisfactory to the Agent.
4.7 INDEBTEDNESS. The Loan Parties do not and shall not hereafter
have any Indebtedness other than Permitted Indebtedness.
4.8 INSURANCE.
(a) EXHIBIT 4.8, annexed hereto, is a schedule of all
insurance policies owned by the Loan Parties or under which any Loan Party is
the named insured. Each of such policies is in full force and effect. Neither
the issuer of any such policy nor any Loan Party is in default or violation of
any such policy.
(b) The Loan Parties shall have and maintain at all times
insurance covering such risks, in such amounts, containing such terms, in such
form, for such periods, and written by such companies as is sufficient and as is
customarily carried by businesses of comparable size and character.
(c) All insurance carried by the Loan Parties shall provide
for a minimum of sixty (60) days' prior written notice of cancellation to the
Agent and all such insurance which covers the Collateral shall
(i) Include an endorsement in favor of the
Agent, which endorsement shall provide that the insurance,
to the extent of the Agent's interest therein, shall not
be impaired or invalidated, in whole or in part, by reason
of any act or neglect of any Loan Party or by the failure
of any Loan Party to comply with any warranty or condition
of the policy.
(ii) Not include an endorsement in favor of any
other Person.
(d) The coverage reflected on EXHIBIT 4.8 presently
satisfies the foregoing requirements, it being recognized by each Loan Party,
however, that such requirements may change hereafter to reflect changing
circumstances.
(e) Upon the Agent's request, the Lead Borrower shall
furnish the Agent from time to time with certificates or other evidence
satisfactory to the Agent regarding compliance by the Loan Parties with the
foregoing requirements.
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(f) In the event of the failure by a Loan Party to maintain
insurance as required herein, the Agent, at its option, may obtain such
insurance at the expense of the Loan Parties; provided, however, the Agent's
obtaining of such insurance shall not constitute a cure or waiver of any Event
of Default occasioned by the Loan Parties' failure to have maintained such
insurance.
(g) The Lead Borrower shall advise the Agent of each claim
in excess of $100,000.00 made by any Loan Party under any policy of insurance
which covers the Collateral and following the occurrence of an Event of Default,
will permit the Agent, at the Agent's option in each instance, to the exclusion
of the Loan Parties, to conduct the adjustment of each such claim. Each Loan
Party hereby appoint the Agent as its attorney in fact to obtain, adjust,
settle, and cancel any insurance described in this Section and to endorse in
favor of the Agent any and all drafts and other instruments with respect to such
insurance; such appointment, being coupled with an interest, is irrevocable
until this Agreement is terminated by a written instrument executed by a duly
authorized officer of the Agent. The Agent shall not be liable on account of any
exercise pursuant to said power except where there has been a final judicial
determination (in a proceeding in which the Agent had an opportunity to be
heard) that such exercise was conducted in a grossly negligent manner or in
willful misconduct. The (i) Agent shall apply any proceeds of such insurance
with respect to Inventory, against the Liabilities, whether or not such have
matured, in the order set forth in Section 12.4 or 13.6 hereof, as applicable
and (ii) Lead Borrower may retain any proceeds of such insurance with respect to
Collateral other than Inventory for replacement of such Collateral; provided,
however, that notwithstanding the foregoing, after the occurrence and during the
continuance of a Default or Event of Default, all proceeds of insurance with
respect to all Collateral shall be applied by the Agent in accordance with
clause (i) of this sentence.
4.9 LICENSES. Each license, distributorship, franchise, and similar
agreement issued to, or to which any Loan Party is a party and which is material
to the conduct of such Loan Party's business, taken as a whole, is in full force
and effect. No party to any such license or agreement is in default or violation
thereof. No Loan Party has received any notice or threat of cancellation of any
such license or agreement.
4.10 LEASES. EXHIBIT 4.10, annexed hereto, is a schedule of all
presently effective Capital Leases. (Exhibit 4.5 includes a list of all other
presently effective Leases). Each of such Leases and Capital Leases is in full
force and effect. No party to any such Lease or Capital Lease is in default or
violation of any such Lease or Capital Lease where such default or violation
would not be reasonably likely to have a Material Adverse Effect. No Loan Party
has received any notice or threat of cancellation of any such Lease or Capital
Lease. Each Loan Party hereby authorizes the Agent at any time and from time to
time to contact any of such Loan Party's respective landlords in order to
confirm the Loan Party's continued compliance with the terms and conditions of
the Lease(s) between the subject Loan Party and that landlord and to discuss
such issues, concerning the subject Loan Party's occupancy under such Lease(s),
as the Agent may determine.
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4.11 REQUIREMENTS OF LAW. Each Loan Party is in compliance with, and
shall hereafter comply with and use its assets in compliance with, all
Requirements of Law except where the failure of such compliance would not be
reasonably likely to have a Material Adverse Effect. No Loan Party has received
any notice of any violation of any Requirement of Law (other than of a violation
which would not reasonably be expected to have a Material Adverse Effect), which
violation has not been cured or otherwise remedied.
4.12 LABOR RELATIONS.
(a) Except as set forth on EXHIBIT 4.12, annexed hereto, no
Loan Party has been, and none is presently a party to any collective bargaining
or other labor contract.
(b) There is not presently pending and, to any Loan Party's
knowledge, there is not threatened any of the following (any of which,
individually, or in the aggregate, is reasonably likely to result in a Material
Adverse Effect):
(i) Any strike, slowdown, picketing, work
stoppage, or employee grievance process.
(ii) Any proceeding against or affecting any
Loan Party relating to the alleged violation of any
Applicable Law pertaining to labor relations or before
National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable governmental
body, organizational activity, or other labor or
employment dispute against or affecting any Loan Party,
which, if determined adversely to that Loan Party would be
reasonably likely to have a Material Adverse Effect.
(iii) Any lockout of any employees by any Loan
Party (and no such action is contemplated by any Loan
Party).
(iv) Any application for the certification of a
collective bargaining agent.
(c) No event has occurred or circumstance exists which
could provide the basis for any work stoppage or other labor dispute which could
reasonably be expected to have a Material Adverse Effect.
(d) Each Loan Party:
(i) Has complied with all Applicable Law
relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant
closing, other than any such non-compliance which is
reasonably likely to have a Material Adverse Effect.
(ii) Is not liable for the payment of a
material amount of compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for that
Loan Party's failure to comply with any Applicable Law
referenced in Section 4.12(d)(i).
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4.13 MAINTAIN PROPERTIES. Each Loan Party shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any
policy of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The sale of Inventory in compliance with
this Agreement. (ii) The disposal of Equipment which is
obsolete, worn out, or damaged beyond repair, which
Equipment is replaced to the extent necessary to preserve
or improve the operating efficiency of any Loan Party.
(iii) Permitted Dispositions. (iv) The turning over to the
Agent of all Receipts as provided herein.
4.14 TAXES.
(a) With respect to the Loan Party's federal, state, and
local tax liability and obligations:
(i) The Lead Borrower, in material compliance
with all Applicable Law, has properly filed all federal
tax returns and all material state and local tax returns
due to be filed up to the date of this Agreement.
(ii) Except as described on EXHIBIT 4.14:
(A) At no time has any Loan Party
received from any taxing authority any request
to perform any examination of or with respect
to any Loan Party nor any other written or
verbal notice in any way relating to any
claimed failure by any Loan Party to comply
with all Applicable Law concerning payment of
any taxes or other amounts in the nature of
taxes.
(B) No agreement is extant which
waives or extends any statute of limitations
applicable to the right of any taxing authority
to assert a deficiency or make any other claim
for or in respect to federal income taxes.
(C) No issue has been raised in any
tax examination of any Loan Party which, by
application of similar principles, reasonably
could be expected to result in the assertion of
a deficiency for any fiscal year open for
examination, assessment, or claim by any taxing
authority.
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(b) Each Loan Party has, and hereafter shall: (i) paid or
pay, as applicable, as they become due and payable, all taxes and unemployment
contributions and other charges of any kind or nature levied, assessed or
claimed against any Loan Party or the Collateral by any person or entity whose
claim could result in an Encumbrance upon any asset of any Loan Party or by any
Governmental Authority, unless such Loan Party shall be contesting such payment
in good faith by appropriate proceedings and shall have created proper reserves
therefor in accordance with GAAP; (ii) except where the failure to timely file
would not be reasonably likely to have a Material Adverse Effect, timely file
all tax and other returns and other reports with each Governmental Authority to
whom any Loan Party is obligated to so file; (iii) properly exercise any trust
responsibilities imposed upon any Loan Party by reason of withholding from
employees' pay or by reason of any Loan Party's receipt of sales tax or other
funds for the account of any third party; and (iv) timely make all contributions
and other payments as may be required pursuant to any Employee Benefit Plan now
or hereafter established by any Loan Party.
4.15 NO MARGIN STOCK. No Loan Party is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the United States). No part of the proceeds of any
borrowing hereunder will be used at any time to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
4.16 ERISA.
(a) Neither any Loan Party nor any ERISA Affiliate has
ever:
(i) Violated or failed to be in full compliance
with any Loan Party's Employee Benefit Plan.
(ii) Failed timely to file all reports and
filings required by ERISA to be filed by any Loan Party.
(iii) Engaged in any nonexempt "prohibited
transactions" or "reportable events" (respectively as
described in ERISA).
(iv) Engaged in, or committed, any act such
that a tax or penalty reasonably could be imposed upon any
Loan Party on account thereof pursuant to ERISA.
(v) Accumulate any material cumulative funding
deficiency within the meaning of ERISA.
(vi) Terminated any Employee Benefit Plan such
that a lien could be asserted against any assets of any
Loan Party on account thereof pursuant to ERISA.
(vii) Been a member of, contributed to, or have
any obligation under any Employee Benefit Plan which is a
multiemployer plan within the meaning of Section 4001(a)
of ERISA.
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(any of which, individually, or in the aggregate, is reasonably likely to
result in a Material Adverse Effect).
(b) Neither any Loan Party nor any ERISA Affiliate shall
ever engage in any action of the type described in Section 4.16(a).
4.17 HAZARDOUS MATERIALS.
(a) No Loan Party has ever:
(i) Been legally responsible for any release or
threat of release of any Hazardous Material which could
reasonably be expected to have a Material Adverse Effect ;
or
(ii) Received notification of any release or
threat of release of any Hazardous Material from any site
or vessel occupied or operated by a Loan Party and/or of
the incurrence of any expense or loss in connection with
the assessment, containment, or removal of any release or
threat of release of any Hazardous Material from any such
site or vessel which could reasonably be expected to have
a Material Adverse Effect .
(b) The Loan Parties shall:
(i) Dispose of any Hazardous Material only in
compliance with all Environmental Laws; and
(ii) Not store on any site or vessel occupied
or operated by the Loan Parties and not transport or
arrange for the transport of any Hazardous Material,
except if such storage or transport is in the ordinary
course of the Loan Parties' business and is in compliance
with all Environmental Laws.
(c) The Lead Borrower shall provide the Agent with written
notice upon obtaining knowledge of any incurrence of any expense or loss by any
Governmental Authority or other Person in connection with the assessment,
containment, or removal of any Hazardous Material, for which expense or loss any
Loan Party may be liable and which could reasonably be expected to have a
Material Adverse Effect.
4.18 LITIGATION. Except as described in EXHIBIT 4.18, annexed hereto,
there is not presently pending or threatened by or against any Loan Party any
suit, action, proceeding, or investigation which, if determined adversely to any
Loan Party, would be reasonably likely to result in a Material Adverse Effect.
4.19 DIVIDENDS. INVESTMENTS. CORPORATE ACTION. No Loan Party shall:
(a) Pay any cash dividend or make any other distribution in
respect of any class of that Loan Party's capital stock, partnership or
membership interests or other equity.
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(b) Make any payment on account of any Indebtedness other
than (i) payment of the Liabilities and (ii) so long as no Default or Event of
Default has occurred, in accordance with and subject to the subordination
agreement, payment of Subordinated Indebtedness on and after the date, if any,
on which the Proposed Combination has occurred.
(c) Own, redeem, retire, purchase, or acquire any of any
Loan Party's capital stock, partnership or membership interests or other equity.
(d) Invest in or purchase any stock or securities or rights
to purchase any such stock or securities, of any Person other than a Permitted
Investment.
(e) Merge or consolidate or be merged or consolidated with
or into any other corporation or other entity except in connection with the
Proposed Combination.
(f) Consolidate any of that Loan Party's operations with
those of any other Person except in connection with the Proposed Combination
(g) Organize or create any Subsidiary.
(h) Subordinate any debts or obligations owed to that Loan
Party by any third party to any other debts owed by such third party to any
other Person.
(i) Acquire any assets other than in the ordinary course
and conduct of that Loan Party's business as conducted at the execution of this
Agreement and subject to Section 4.5 hereof.
4.20 LOANS. No Loan Party shall make any loans or advances to, nor
acquire the Indebtedness of, any Person; provided, however, the foregoing does
not prohibit any of the following:
(a) Advance payments made to that Loan Party's suppliers in
the ordinary course.
(b) Advances to that Loan Party's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of that Loan Party, which
expenses are properly substantiated by the person seeking such advance and
properly reimbursable by that Loan Party.
4.21 PROTECTION OF ASSETS. The Agent, in the Agent's discretion, and
from time to time, may discharge any tax or Encumbrance on any of the
Collateral, or take any other action which the Agent may reasonably deem
necessary or desirable to repair, insure, maintain, preserve, collect, or
realize upon any of the Collateral. The Agent shall not have any obligation to
undertake any of the foregoing and shall have no liability on account of any
action so undertaken except where there is a specific finding in a judicial
proceeding (in which the Agent has had an opportunity to be heard), from which
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finding no further appeal is available, that the Agent had acted in actual bad
faith or in a grossly negligent manner. The Loan Parties shall pay to the Agent,
on demand, or the Agent, in its discretion, may add to the Loan Account, all
amounts paid or incurred by the Agent pursuant to this Section 4.21.
4.22 LINE OF BUSINESS. No Loan Party shall engage in any business
other than the business in which it is currently engaged or a business
reasonably related thereto (the conduct of which reasonably related business is
reflected in the Business Plan).
4.23 AFFILIATE TRANSACTIONS. No Loan Party shall make any payment,
nor give any value to any Affiliate that is not a Loan Party except (i) with
respect to Subordinated Indebtedness to the extent permitted by Section 4.19 and
(ii) for goods and services actually purchased by that Loan Party from, or sold
by that Loan Party to, such Affiliate for a price and on terms which shall
(a) be competitive and fully deductible as an "ordinary and
necessary business expense" and/or fully depreciable under the Internal Revenue
Code of 1986 and the Treasury Regulations, each as amended; and
(b) be no less favorable to that Loan Party than those
which would have been charged and imposed in an arms length transaction.
4.24 FURTHER ASSURANCES.
(a) No Loan Party is the owner of, nor has it any interest
in, any property or asset which would not be subject to a perfected Collateral
Interest in favor of the Agent (subject only to Permitted Encumbrances) to
secure the Liabilities (other than with respect to stock in a Foreign Subsidiary
representing more than 65% of the total combined voting power of all classes of
stock of such Foreign Subsidiary that are entitled to vote).
(b) No Loan Party will hereafter acquire any asset or any
interest in property which is not, immediately upon such acquisition, subject to
such a perfected Collateral Interest in favor of the Agent to secure the
Liabilities (subject only to Permitted Encumbrances), other than with respect to
stock in a Foreign Subsidiary representing more than 65% of the total combined
voting power of all classes of stock of such Foreign Subsidiary that are
entitled to vote.
(c) Each Loan Party shall execute and deliver to the Agent
such instruments, documents, and papers, and shall do all such things from time
to time hereafter as the Agent may request to carry into effect the provisions
and intent of this Agreement; to protect and perfect the Agent's Collateral
Interests in the Collateral; and to comply with all applicable statutes and
laws, and facilitate the collection of the Collateral. Each Loan Party shall
execute all such instruments as may be required by the Agent with respect to the
recordation and/or perfection of the Collateral Interests created or
contemplated herein.
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(d) Each Loan Party hereby designates the Agent as and for
that Loan Party true and lawful attorney, with full power of substitution, to
sign and file any financing statements in order to perfect or protect the
Agent's Collateral Interests in the Collateral.
(e) This Agreement constitutes an authenticated record
which authorizes the Agent to file such financing statements as the Agent
determines as appropriate to perfect or protect the Collateral Interests created
by this Agreement.
(f) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section 4.24 shall be sufficient for filing to perfect the security
interests granted herein.
4.25 ADEQUACY OF DISCLOSURE.
(a) All financial statements furnished to the Agent and to
each Revolving Credit Lender by each Loan Party have been prepared in accordance
with GAAP consistently applied and present fairly the condition of such Loan
Party at the date(s) thereof and the results of operations and cash flows for
the period(s) covered (provided however, that unaudited financial statements are
subject to normal year end adjustments and to the absence of footnotes). Except
as caused by the consummation of the Tender Offer, there has been no change in
the Consolidated financial condition, results of operations, or cash flows of
the Loan Parties since the date(s) of such financial statements, other than
changes in the ordinary course of business, which changes have not been
materially adverse, either singularly or in the aggregate.
(b) No Loan Party has any contingent obligations or
obligation under any Lease or Capital Lease which is not noted in the Loan
Parties' Consolidated financial statements furnished to the Agent and to each
Revolving Credit Lender prior to the execution of this Agreement.
(c) No document, instrument, agreement, or paper now or
hereafter given to the Agent or to any Revolving Credit Lender by or on behalf
of any Loan Party or any guarantor of the Liabilities in connection with the
execution of this Agreement by the Agent and to each Revolving Credit Lender
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
therein not misleading. There is no fact known to any Loan Party which has, or
which, in the foreseeable future could have, a Material Adverse Effect which has
not been disclosed in writing to the Agent and to each Revolving Credit Lender.
4.26 NO RESTRICTIONS ON LIABILITIES. No Loan Party shall enter into
or directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Loan Party's:
(a) Creation of, and granting of Collateral Interests in
favor of the Agent.
(b) Incurrence of Liabilities;
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provided, however, that in no event shall a Loan Party be required to pledge
with respect to any directly held Foreign Subsidiary more than 65% of the total
combined voting power of all classes of stock of such Foreign Subsidiary that
are entitled to vote.
4.27 OTHER COVENANTS. No Loan Party shall indirectly do or cause to
be done any act which, if done directly by that Loan Party, would breach any
covenant contained in this Agreement.
ARTICLE 5 - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5.1 MAINTAIN RECORDS. The Loan Parties shall:
(a) At all times, keep proper books of account, in which
full, true, and accurate entries shall be made of all of the Loan Parties'
financial transactions, all in accordance with GAAP applied consistently with
prior periods to fairly reflect the Consolidated financial condition of the Loan
Parties at the close of, and the results of operations for, the periods in
question.
(b) Timely provide the Agent (and, if otherwise required or
requested hereunder, any Revolving Credit Lender) with those financial reports,
statements, and schedules required by this Article 5 or otherwise, each of which
reports, statements and schedules shall be prepared, to the extent applicable,
in accordance with GAAP applied consistently with prior periods to fairly
reflect the Consolidated financial condition of the Loan Parties at the close
of, and the results of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current stock, cost, and
sales records of its Inventory, accurately and sufficiently itemizing and
describing the kinds, types, and quantities of Inventory and the cost and
selling prices thereof.
(d) At all times, retain independent certified public
accountants who are reasonably satisfactory to the Agent and instruct such
accountants to fully cooperate with, and be available to, the Agent to discuss
the Loan Parties' financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such
accountants, as may be raised by the Agent.
(e) Not change any Loan Party's fiscal year.
5.2 ACCESS TO RECORDS.
(a) Each Loan Party shall accord the Agent with reasonable
access from time to time as the Agent may require to all properties owned by or
over which any Loan Party has control. The Agent shall have the right, and each
Loan Party will permit the Agent from time to time as Agent may request, with
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reasonable advance notice and during normal business hours, to examine, inspect,
copy, and make extracts from any and all of such Loan Party's books, records,
electronically stored data, papers, and files. Each Loan Party shall make all of
that Loan Party's copying facilities available to the Agent.
(b) Each Loan Party hereby authorizes the Agent to:
(i) Inspect, copy, duplicate, review, cause to
be reduced to hard copy, run off, draw off, and otherwise
use any and all computer or electronically stored
information or data which relates to any Loan Party's
financial condition, or any service bureau, contractor,
accountant, or other person, and directs any such service
bureau, contractor, accountant, or other person fully to
cooperate with the Agent with respect thereto.
(ii) Verify at any time the Collateral or any
portion thereof, including, verification with Account
Debtors (after and during the continuance of an Event of
Default), and/or with each Loan Party's computer billing
companies, collection agencies, and accountants and, after
and during the continuance of an Event of Default, to sign
the name of each Loan Party on any notice to each Loan
Party's Account Debtors or verification of the Collateral.
(c) The Agent from time to time may designate one or more
representatives to exercise the Agent's rights under this Section 5.2 as fully
as if the Agent were doing so.
5.3 IMMEDIATE NOTICE TO AGENT.
(a) The Lead Borrower shall provide the Agent with written
notice promptly upon the occurrence of any of the following events, which
written notice shall be with reasonable particularity as to the facts and
circumstances in respect of which such notice is being given:
(i) Any change in any Loan Party's president,
chief executive officer, chief operating officer, and
chief financial officer (without regard to the title(s)
actually given to the Persons discharging the duties
customarily discharged by officers with those titles).
(ii) Any ceasing of any Loan Party's making of
payment, in the ordinary course, to any of its creditors
(other than its ceasing of making of such payments which
could not be reasonably expected to have a Material
Adverse Effect).
(iii) Any failure by any Loan Party to pay rent
at any of that Loan Party's locations, which failure
continues for more than three (3) days following the
expiration of any applicable grace period and which could
reasonably be expected to have a Material Adverse Effect.
(iv) Any Material Adverse Change.
(v) The occurrence of any Default or Event of
Default.
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(vi) Any intention on the part of any Loan
Party to discharge that Loan Party's present independent
accountants or any withdrawal or resignation by such
independent accountants from their acting in such capacity
(as to which, see Subsection 5.1(d)).
(vii) Any litigation which, if determined
adversely to any Loan Party, could reasonably be expected
to have a Material Adverse Effect.
(viii) The completion of any physical count of
all or a material portion of the Loan Parties' Inventory
(together with a copy of the results thereof certified by
the Lead Borrower).
(b) The Lead Borrower shall:
(i) Provide the Agent, when so distributed,
with copies of any materials distributed to the
shareholders of the Lead Borrower.
(ii) Provide the Agent:
(A) When filed, copies of all
filings with the SEC including, without
limitation, all reports on Forms 10-K and 10-Q.
(B) When received, copies of all
correspondence from the SEC, other than routine
non-substantive general communications from the
SEC.
(iii) Upon the Agent's request, add the Agent
as an addressee on all mailing lists maintained by or for
each Loan Party.
(iv) At the reasonable request of the Agent,
from time to time, provide the Agent with copies of all
advertising (including copies of all print advertising and
duplicate tapes of all video and radio advertising).
(v) Provide the Agent, when received by any
Loan Party, with a copy of any management letter or
similar communications from any accountant of any Loan
Party.
(vi) Provide the Agent immediately with notice
of all resignations, removals, appointments and other
changes with respect to the identity of the Persons on the
board of directors of Lead Borrower.
5.4 BORROWING BASE CERTIFICATE. The Lead Borrower shall provide the
Agent by 11:30 a.m. on each Business Day with a Borrowing Base Certificate (in
the form of EXHIBIT 5.4 as such form may be revised from time to time by the
Agent), reflecting the Loan Parties' inventory and accounts receivable condition
as set forth on the then most recent Borrowing Base Certificate provided
pursuant to Section 5.5 hereof (or more recent date, if requested by the Agent).
Such Certificate shall be signed by an Authorized Officer and may be sent to the
Agent by facsimile or email (with electronic signature) transmission.
5.5 WEEKLY REPORTS. Weekly, on Wednesday of each week (as of the then
immediately preceding Saturday) the Lead Borrower shall provide the Agent with a
sales audit report, a flash sales report and Borrowing Base Certificate (each in
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such form as may be specified from time to time by the Agent) and a Summary of
the Loan Parties' stock ledgers (by department). Such report may be sent to the
Agent by facsimile or email (with electronic signature) transmission, provided
that the original thereof is forwarded to the Agent on the date of such
transmission.
5.6 MONTHLY REPORTS.
(a) Monthly, the Lead Borrower shall provide the Agent with
original counterparts of the following (each in such form as the Agent from time
to time may specify):
(i) Within fifteen (15) days of the end of the
previous month:
(A) A "Stock Ledger Inventory
Reports" and a Certificate (signed by the Lead
Borrower's Authorized Officer) concerning the
Loan Parties' Inventory.
(B) A Merchandise Management Report
on which is shown whether inventory levels are
adequate to meet sales forecasts.
(C) Purchase Report.
(D) Inventory Certificate.
(ii) Within thirty (30) days of the end of the
previous month:
(A) Reconciliation of the above
described Stock Ledger Inventory Report and
Certificate to Availability and to the general
ledger as of the end of the subject month.
(B) A Gross Margin Reconciliation.
(C) A report listing all Retail
Store locations and the total number of Retail
Stores.
(C) The Officer's Compliance
Certificate described in Section 5.9, a copy of
which shall be sent by the Lead Borrower to the
Agent.
(E) An internally prepared financial
statement of the Loan Parties' financial
condition and the results of operations for,
the period ending with the end of the subject
month, which financial statement shall include,
at a minimum, a balance sheet, income statement
(on a store specific, divisional and on a
Consolidated basis), cash flow and comparison
of same store sales for the corresponding month
of the then immediately previous year, a copy
of which shall be sent by the Lead Borrower to
the Agent, and shall be certified by the Lead
Borrower's chief financial officer or chief
operating officer as fairly presenting the
financial position of the Loan Parties in
accordance with GAAP (subject to year-end audit
adjustments).
(G) Inventory Aging Report.
(H) Open to Buy Report.
(I) Comparative Sales Report for the
Retail Stores.
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(J) Accrued Expenses Report.
(b) For purposes of Section 5.6(a)(i) and (a)(ii), above,
the first "previous month" in respect of which the items required by that
Section shall be provided shall be June 2003.
5.7 QUARTERLY REPORTS. Quarterly, within forty five (45) days
following the end of each of the Loan Party's fiscal quarters, the Lead Borrower
shall provide the Agent with the following:
(a) An original counterpart of a management prepared
Consolidated financial statement of the Loan Parties for the period from the
beginning of the Loan Parties' then current fiscal year through the end of the
subject quarter, with comparative information for the same period of the
previous fiscal year, which statement shall include, at a minimum, a balance
sheet, income statement (on a Consolidated basis and, if requested by the Agent,
on a store specific basis), statement of changes in shareholders' equity, and
cash flows and comparisons for the corresponding quarter of the then immediately
previous year, as well as to the Business Plan.
(b) The officer's compliance certificate described in
Section 5.9
(c) A schedule of purchases from the Loan Parties' ten
largest vendors (in terms of year to date purchases), which schedule shall be in
such form as may be satisfactory to the Agent and shall include year to date
cumulative purchases and an aging of payables to each such vendor.
5.8 ANNUAL REPORTS.
(a) Annually, within ninety (90) days following the end of
the Loan Parties' fiscal year, the Lead Borrower shall furnish the Agent with
the following:
(i) An original signed counterpart of the Loan
Parties' Consolidated annual financial statement, which
statement shall have been prepared by, and bear the
unqualified opinion of, the Lead Borrower's independent
certified public accountants (i.e. said statement shall be
"certified" by such accountants) and shall include, at a
minimum (with comparative information for the then prior
fiscal year) a balance sheet, income statement, statement
of changes in shareholders' equity, cash flows, and
schedules of consolidation.
(ii) The officer's compliance certificate
described in Section 5.9.
(b) No later than the earlier of fifteen (15) days prior to
the end of each of the Loan Parties' fiscal years or the date on which such
accountants commence their work on the preparation of the Loan Parties'
Consolidated annual financial statement, the Lead Borrower shall give written
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notice to such accountants (with a copy of such notice, when sent, to the Agent)
that:
(i) Such annual financial statement will be
delivered by the Lead Borrower to the Agent (for
subsequent distribution to each Revolving Credit Lender).
(ii) It is the primary intention of the Lead
Borrower, in its engagement of such accountants, to
satisfy the financial reporting requirements set forth in
this Article 5.
(iii) The Lead Borrower has been advised that
the Agent and each Revolving Credit Lender will rely
thereon with respect to the administration of, and
transactions under, the credit facility contemplated by
this Agreement.
(c) Each annual statement shall be accompanied by such
accountant's Certificate indicating that, in conducting the audit for such
annual statement, nothing came to the attention of such accountants to believe
that a Default or Event of Default has occurred and is continuing (or if a
Default or Event of Default has occurred and is continuing, the facts and
circumstances thereof).
5.9 OFFICERS' CERTIFICATES. The Lead Borrower shall cause either the
Lead Borrower's President or its Chief Financial Officer, in each instance, to
provide such Person's Certificate with those monthly financial statements to be
provided within thirty (30) days of the end of each month and with those to be
provided quarterly and annual statements to be furnished pursuant to this
Agreement, which Certificate shall:
(a) Indicate that the subject statement was prepared in
accordance with GAAP consistently applied and presents fairly the Consolidated
financial condition of the Loan Parties at the close of, and the results of the
Loan Parties' operations and cash flows for, the period(s) covered, subject,
however to the following:
(i) Usual year end adjustments (this exception
shall not be included in the Certificate which accompanies
such annual statement).
(ii) Material Accounting Changes (in which
event, such Certificate shall include a schedule (in
reasonable detail) of the effect of each such Material
Accounting Change) not previously specifically taken into
account in the determination of the financial performance
covenant imposed pursuant to Section 5.12.
(b) Indicate either that (i) no Default or Event of Default
has occurred and is continuing or (ii) if such an event has occurred, its nature
(in reasonable detail) and the steps (if any) being taken or contemplated by the
Loan Parties to be taken on account thereof.
(c) Include calculations concerning the Loan Parties'
compliance (or failure to comply) at the date of the subject statement with each
of the financial performance covenants included in Section 5.12 hereof.
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5.10 INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Agent, at the expense of the Loan Parties, may
participate in and/or observe each physical count and/or inventory of so much of
the Collateral as consists of Inventory which is undertaken on behalf of any
Loan Party.
(b) The Loan Parties, at their own expense, shall cause at
least one (1) physical inventory to be undertaken in each twelve (12) month
period during which this Agreement is in effect conducted by such inventory
takers as are satisfactory to the Agent and following such methodology as may be
satisfactory to the Agent.
(i) The Lead Borrower shall provide the Agent
with a copy of the preliminary results of each such
inventory (as well as of any other physical inventory
undertaken by any Loan Party) within ten (10) days
following the completion of such inventory.
(ii) The Lead Borrower, within thirty (30) days
following the completion of such inventory, shall provide
the Agent with a reconciliation of the results of each
such inventory (as well as of any other physical inventory
undertaken by any Loan Party) and shall post such results
to the Loan Parties' stock ledger and, as applicable to
the Loan Parties' other financial books and records.
(iii) The Agent, in its discretion, if any
Default or Event of Default has occurred and is
continuing, may cause such additional inventories to be
taken as the Agent determines (each, at the expense of the
Loan Parties).
(c) The Agent may obtain appraisals of the Collateral, from
time to time (in all events, at the Loan Parties' expense) conducted by such
appraisers as are satisfactory to the Agent.
(d) The Agent contemplates conducting up to four (4)
commercial finance field examinations (in each event, at the Borrowers' expense)
of the Loan Parties' books and records during any twelve (12) month period
during which this Agreement is in effect. In the Agent's discretion, the Agent
may undertake additional commercial finance field examinations during such
period in its discretion which shall be at its own expense unless a Default or
Event of Default shall have occurred and be continuing in which event each shall
be at the Borrowers' expense.
5.11 ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be
provided pursuant to this Article 5, the Lead Borrower promptly shall provide
the Agent (and any guarantor of the Liabilities), with such other and additional
information concerning the Loan Parties, the Collateral, the operation of the
Loan Parties' business, and the Loan Parties' financial condition, including
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original counterparts of financial reports and statements, as the Agent may from
time to time request from the Lead Borrower.
(b) The Lead Borrower may provide the Agent, from time to
time hereafter, with updated forecasts of the Loan Parties' anticipated
performance and operating results.
(c) In all events, the Lead Borrower, no later than thirty
(30) days prior to the end of each of the Loan Parties' fiscal years, shall
provide the Agent with an updated and extended forecast which shall go out at
least through the end of the then next fiscal year and shall include an income
statement, balance sheet, and statement of cash flow, by month, each
Consolidated (with consolidating schedules) and each prepared in conformity with
GAAP and consistent with the Loan Parties' then current practices.
(d) The Agent, following the receipt of any of such
forecast, may, but shall not be under any obligation to, provide its written
approval of such forecast (in which event, such forecast shall become the
Business Plan) and if it provides such written approval, may by written notice
to the Lead Borrower, extend or revise the financial performance covenants
included on EXHIBIT 5.12(A), annexed hereto.
(e) In the event that the Agent does not provide its
approval with respect to the updated and extended forecast to be provided at
year-end pursuant to Section 5.11(c), above, then the terms and conditions of
Section 5.12(c) shall be applicable.
(f) Each Loan Party recognizes that all appraisals,
inventories, analysis, financial information, and other materials which the
Agent may obtain, develop, or receive with respect to the Loan Parties are
confidential to the Agent and that, except as otherwise provided herein, no Loan
Party is entitled to receipt of any of such appraisals, inventories, analysis,
financial information, and other materials, nor copies or extracts thereof or
therefrom.
(g) The Lead Borrower shall provide the Agent with copies
of any filings it makes with the SEC in addition to Form 10-Q's and 10-K's.
5.12 FINANCIAL PERFORMANCE COVENANTS.
(a) Subject to Section 5.12(b) hereof, on and after the
Closing Date, the Borrowers shall not permit Excess Availability at any time to
be less than seven percent (7%) of the Borrowing Base.
(b) On and after such date (the "INITIAL FINANCIAL COVENANT
DATE"), if any, as (i) the Proposed Combination shall have been consummated,
(ii) a Business Plan shall have been approved by the Agent in accordance with
Section 5.11(d) and (iii) the Agent and Lead Borrower shall have agreed to
financial performance covenants which shall be set forth on EXHIBIT 5.12(A)
hereto,(x) the Loan Parties shall observe and comply with those financial
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performance covenants set forth on such EXHIBIT 5.12(A) and (y) the Borrowers
shall not permit Excess Availability at any time to be less than five percent
(5%) of the Borrowing Base.
(c) In the event that at any time after the Initial
Financial Covenant Date (i) the Agent, in accordance with Section 5.11(d) above,
does not provide its approval with respect to any updated and extended forecast;
or (ii) the Agent and Lead Borrower shall not have agreed to extend, modify, or
revise the financial performance covenants set forth on EXHIBIT 5.12(A) hereto,
then the existing financial performance covenants set forth on EXHIBIT 5.12(A)
shall cease to be of any further force and effect and the Borrowers shall not
permit Excess Availability at any time thereafter to be less than seven percent
(7%) of the Borrowing Base. Notwithstanding the foregoing, if anytime thereafter
(i) a Business Plan shall have been approved by the Agent in accordance with
Section 5.11(d) and (ii) the Agent and Lead Borrower shall have agreed to
financial performance covenants which shall be set forth on an amended EXHIBIT
5.12(A),(x) the Loan Parties shall observe and comply with those financial
performance covenants set forth on such amended EXHIBIT 5.12(A) and (y) the
Borrowers shall not permit Excess Availability at any time to be less than five
percent (5%) of the Borrowing Base.
(d) Compliance with financial performance covenants shall
be made as if no Material Accounting Changes had been made (other than any
Material Accounting Changes specifically taken into account in the setting of
such covenants). The Agent may determine the Loan Parties' compliance with such
covenants based upon financial reports and statements provided by the Lead
Borrower to the Agent (whether or not such financial reports and statements are
required to be furnished pursuant to this Agreement) as well as by reference to
interim financial information provided to, or developed by, the Agent.
ARTICLE 6 - USE OF COLLATERAL:
6.1 USE OF INVENTORY COLLATERAL.
(a) No Loan Party shall engage in any of the following with
respect to its Inventory:
(i) Any sale other than
(A) for fair consideration in the
conduct of the Loan Parties' business in the
ordinary course or,
(B) a Permitted Disposition.
(ii) Sales or other dispositions to creditors.
(iii) Sales or other dispositions in bulk
(other than as part of a Permitted Disposition).
(iv) Sales of any Collateral in breach of any
provision of this Agreement.
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(b) No sale of Inventory shall be on consignment, approval,
or under any other circumstances such that, with the exception of the Loan
Parties' customary return policy applicable to the return of inventory purchased
by the Loan Parties' retail customers in the ordinary course, such Inventory may
be returned to a Loan Party without the consent of the Agent.
6.2 INVENTORY QUALITY. All Inventory now owned or hereafter acquired
by each Loan Party is and will be of good and merchantable quality and free from
defects (other than defects within customary trade tolerances).
6.3 ADJUSTMENTS AND ALLOWANCES. Each Loan Party may grant such
allowances or other adjustments to that Loan Party's Account Debtors (exclusive
of extending the time for payment of any Account or Account Receivable, which
shall not be done without first obtaining the Agent's prior written consent in
each instance) as that Loan Party may reasonably deem to accord with sound
business practice, provided, however, following the occurrence of an Event of
Default, the authority granted the Loan Parties pursuant to this Section 6.3 may
be limited or terminated by the Agent at any time in the Agent's discretion.
6.4 VALIDITY OF ACCOUNTS.
(a) The amount of each Account shown on the books, records,
and invoices of the Loan Parties represented as owing by each Account Debtor is
and will be the correct amount actually owing by such Account Debtor and shall
have been fully earned by performance by the Loan Parties.
(b) No Loan Party has any knowledge of any impairment of
the validity or collectability of any of the Accounts. The Lead Borrower shall
notify the Agent of any such impairment immediately after any Loan Party becomes
aware of any such impairment.
(c) No Loan Party shall post any bond to secure any Loan
Party's performance under any agreement to which any Loan Party is a party nor
cause any surety, guarantor, or other third party obligee to become liable to
perform any obligation of any Loan Party (other than to the Agent) in the event
of any Loan Party's failure so to perform.
6.5 NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall have the right
following the occurrence of an Event of Default to notify any of the Loan
Parties' Account Debtors to make payment directly to the Agent and to collect
all amounts due on account of the Collateral.
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ARTICLE 7 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7.1 DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT 7.1(A) is a listing of all
present DDAs, which listing includes the following with respect to each
depository: (i) the name and address of the depository; (ii) the account
number(s) of the account(s) maintained with such depository; and (iii) a contact
person at such depository.
(b) The Lead Borrower shall deliver the following to the
Agent, as a condition to the effectiveness of this Agreement:
(i) Notification, executed on behalf of each
Loan Party, to each depository institution with which any
DDA is maintained (other than any Exempt DDA and any
Blocked Account), in the form of EXHIBIT 7.1(B), annexed
hereto, of the Agent's interest in such DDA.
(ii) A Blocked Account Agreement with any
depository institution at which either of the following
conditions applies:
(A) The Operating Account and
another DDA is maintained.
(B) A Blocked Account is maintained.
(c) No Loan Party will establish any DDA hereafter (other
than an Exempt DDA) unless, contemporaneous with such establishment, the Lead
Borrower delivers the following to the Agent:
(i) Notification to the depository at which
such DDA is established if the same would have been
required pursuant to Section 7.1(b)(i) if the subject DDA
were open at the execution of this Agreement.
(ii) A Blocked Account Agreement executed on
behalf of the depository at which such DDA is established
if the same would have been required pursuant to Section
7.1(b)(ii)(B) if the subject DDA were open at the
execution of this Agreement.
7.2 CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT 7.2(A), is a Schedule which
describes all arrangements to which any Loan Party is a party with respect to
the payment to that Loan Party of the proceeds of credit card charges for sales
by that Loan Party.
(b) The Lead Borrower shall deliver to the Agent, as a
condition to the effectiveness of this Agreement,
notification, executed on behalf of each Loan Party, to each of each Loan
Party's credit card clearinghouses and processors, written notice in the form of
0EXHIBIT 7.2(B), annexed hereto, which provides that payment of all credit card
charges submitted by that Loan Party to that clearinghouse or other processor
and any other amount payable to that Loan Party by such clearinghouse or other
processor shall be directed to the Concentration Account or as otherwise
designated from time to time by the Agent. No Loan Party shall change such
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direction or designation except upon and with the prior written consent of the
Agent.
7.3 THE CONCENTRATION, COLLECTION AND OPERATING ACCOUNTS.
(a) The following accounts have been or will be established
(and are so referred to herein):
(i) The "CONCENTRATION ACCOUNT" (so referred to
herein): Established by the Agent with Fleet.
(ii) The "OPERATING ACCOUNT" (so referred to
herein): Established by the Lead Borrower with Fleet.
(b) The contents of each DDA (other than the Operating
Account) and of each Blocked Account constitutes Collateral and Proceeds of
Collateral. The contents of the Concentration Account constitutes the Agent's
property.
(c) The Loan Parties shall pay all fees and charges of, and
maintain such impressed balances as may be required by the depository in which
any account is opened as required hereby (even if such account is opened by
and/or is the property of the Agent).
7.4 PROCEEDS AND COLLECTIONS.
(a) All Receipts and all cash proceeds of any sale or other
disposition (including, without limitation, any Permitted Disposition) of any of
each Loan Party's assets:
(i) Constitute Collateral and proceeds of
Collateral.
(ii) Shall be held in trust by the Loan Parties
for the Agent.
(iii) Shall not be commingled with any of any
Loan Party's other funds.
(iv) Shall be deposited and/or transferred only
from a DDA to a Blocked Account.
(b) Whether or not any Liabilities are then outstanding,
the Lead Borrower shall cause the ACH or wire transfer to the Concentration
Account, not less frequently than daily (and whether or not there is then an
outstanding balance in the Loan Account), of the following:
(i) The then contents of each DDA (other than
any Exempt DDA and other than the Operating Account),
including each Blocked Account, each such transfer to be
net of any minimum balance, not to exceed $5000.00, as may
be required to be maintained in the subject DDA by the
bank at which such DDA is maintained.
(ii) The proceeds of all credit card charges
not otherwise provided for pursuant hereto.
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Telephone advice (confirmed by written notice) shall be provided to the Agent on
each Business Day on which any such transfer is made.
(c) In the event that, notwithstanding the provisions of
this Section 7.4, any Loan Party receives or otherwise has dominion and control
of any Receipts, or any proceeds or collections of any Collateral, such
Receipts, proceeds, and collections shall be held in trust by that Loan Party
for the Agent and shall not be commingled with any of that Loan Party's other
funds or deposited in any account of any Loan Party other than as instructed by
the Agent.
7.5 PAYMENT OF LIABILITIES.
(a) On each Business Day, the Agent shall apply the then
collected balance of the Concentration Account (net of fees charged, and of such
impressed balances as may be required by the bank at which the Concentration
Account is maintained) first, towards the SwingLine Loans and second, towards
the unpaid balance of the Loan Account and all other Liabilities; provided,
however, for purposes of the calculation of interest on the unpaid principal
balance of the Loan Account, such payment shall be deemed to have been made one
(1) Business Day after such transfer.
(b) The following rules shall apply to deposits and
payments under and pursuant to this Section 7.5:
(i) Funds shall be deemed to have been
deposited to the Concentration Account on the Business Day
on which deposited, provided that notice of such deposit
is available to the Agent by 2:00 p.m. on that Business
Day.
(ii) Funds paid to the Agent, other than by
deposit to the Concentration Account, shall be deemed to
have been received on the Business Day when they are good
and collected funds, provided that notice of such payment
is available to the Agent by 2:00 p.m. on that Business
Day.
(iii) If notice of a deposit to the
Concentration Account (Section 7.5(b)(i)) or payment
(Section 7.5(b)(ii)) is not available to the Agent until
after 2:00 p.m. on a Business Day, such deposit or payment
shall be deemed to have been made at 9:00 a.m. on the then
next Business Day.
(iv) All deposits to the Concentration Account
and other payments to the Agent are subject to clearance
and collection.
(c) The Agent shall transfer to the Operating Account any
surplus in the Concentration Account remaining after the application towards the
Liabilities referred to in Section 7.5(a), above (less those amount which are to
be netted out, as provided therein) provided, however, in the event that
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(i) any Default or Event of Default has
occurred and is continuing; and
(ii) one or more L/C's are then outstanding,
then the Agent may establish a funded reserve of up to 105% of the aggregate
Stated Amounts of such L/C's. Such funded reserve shall either be (i) returned
to the Lead Borrower on the End Date provided that no Event of Default has
occurred and is continuing or (ii) applied towards the Liabilities following the
occurrence of any Event of Default described in Section 10.11 or acceleration
following the occurrence of any other Event of Default.
7.6 THE OPERATING ACCOUNT. Except as otherwise specifically provided
in, or permitted by, this Agreement, all checks shall be drawn by the Lead
Borrower upon, and other disbursements shall be made by the Lead Borrower solely
from, the Operating Account.
ARTICLE 8 - GRANT OF SECURITY INTEREST:
8.1 GRANT OF SECURITY INTEREST. To secure the Loan Parties' prompt,
punctual, and faithful performance of all and each of the Liabilities, each Loan
Party hereby grants to the Agent, for the ratable benefit of the Revolving
Credit Lenders, a continuing security interest in and to, and assigns to the
Agent, for the ratable benefit of the Revolving Credit Lenders, the following,
and each item thereof (other than with respect to stock in a Foreign Subsidiary
representing more than 65% of the total combined voting power of all classes of
stock of such Foreign Subsidiary that are entitled to vote), whether now owned
or now due, or in which that Loan Party has an interest, or hereafter acquired,
arising, or to become due, or in which that Loan Party obtains an interest, and
all products, Proceeds, substitutions, and accessions of or to any of the
following (all of which, together with any other property in which the Agent may
in the future be granted a security interest, is referred to herein as the
"COLLATERAL"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Fixtures.
(g) All Chattel Paper.
(h) All Letter-of-Credit Rights.
(i) All Payment Intangibles.
(j) All Commercial Tort Claims
(k) All Supporting Obligations.
(l) All books, records, and information relating to the
Collateral and/or to the operation of each Loan Party's
business, and all rights of access to such books, records,
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and information, and all property in which such books,
records, and information are stored, recorded, and
maintained.
(m) All Leasehold Interests.
(n) All Investment Property, Instruments, Documents, Deposit
Accounts, money, policies and certificates of insurance,
deposits, impressed accounts, compensating balances, cash,
or other property.
(o) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and credit
insurance, whether any of such proceeds, refunds, and
premium rebates arise out of any of the foregoing. (8.1(a)
through 8.1(n)) or otherwise.
(p) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing (8.1(a) through
8.1(o)), including the right of stoppage in transit.
8.2 EXTENT AND DURATION OF SECURITY INTEREST.
(a) The security interest created and granted herein is in
addition to, and supplemental of, any security interest previously granted by
any Loan Party to the Agent and shall continue in full force and effect
applicable to all Liabilities until all Liabilities have been paid and/or
satisfied in full.
(b) It is intended that the Collateral Interests created
herein extend to and cover all assets of each Loan Party (other than with
respect to stock in a Foreign Subsidiary representing more than 65% of the total
combined voting power of all classes of stock of such Foreign Subsidiary that
are entitled to vote).
8.3 PERFECTION OF SECURITY INTERESTS.
(a) The Loan Parties irrevocably and unconditionally
authorize the Agent to file at any time and from time to time such financing
statements with respect to the Collateral naming the Agent or its designee as
the secured party and Loan Parties as debtors, as Agent may require, and
including any other information with respect to the Loan Parties or otherwise
required by part 5 of Article 9 of the Uniform Commercial Code of such
jurisdiction as the Agent may determine, together with any amendment and
continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. The Loan
Parties hereby ratify and approve all financing statements naming the Agent or
its designee as secured party and Loan Parties as debtors with respect to the
Collateral (and any amendments with respect to such financing statements) filed
by or on behalf of the Agent prior to the date hereof and ratifies and confirms
the authorization of the Agent to file such financing statements (and
amendments, if any). The Loan Parties hereby authorize Agent to adopt on behalf
of Loan Parties any symbol required for authenticating any electronic filing. In
no event shall the Loan Parties at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any
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financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and Loan Parties as debtors.
(b) No Loan Party has any chattel paper (whether tangible
or electronic) or instruments with a value in excess of $100,000 as of the date
hereof, except as set forth in the EXHIBIT 8.3(B). In the event that any Loan
Party shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, such Loan Party or the Lead Borrower shall promptly
notify Agent thereof in writing. Promptly upon the receipt thereof by or on
behalf of such Loan Party (including by any agent or representative), such Loan
Party or the Lead Borrower shall deliver, or cause to be delivered to Agent, all
tangible chattel paper and instruments that such Loan Party or may at any time
acquire, accompanied by such instruments of transfer or assignment duly executed
in blank as Agent may from time to time specify, in each case except as Agent
may otherwise agree. At Agent's option, such Loan Party or the Lead Borrower
shall, or Agent may at any time on behalf of such Loan Party, cause the original
of any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Agent with the following legend referring to chattel paper
or instruments as applicable: "This [chattel paper][instrument] is subject to
the security interest of Fleet Retail Finance, Inc., as Agent for certain
Revolving Credit Lenders and any sale, transfer, assignment or encumbrance of
this [chattel paper][instrument] violates the rights of such secured party."
(c) In the event that any Loan Party shall at any time hold
or acquire an interest in any electronic chattel paper or any "transferable
record" (as such term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), such
Loan Party or the Lead Borrower shall promptly notify Agent thereof in writing.
Promptly upon the Agent's request, such Loan Party or the Lead Borrower shall
take, or cause to be taken, such actions as the Agent may reasonably request to
give the Agent control of such electronic chattel paper under Section 9-105 of
the UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) No Loan Party owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or has any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in EXHIBIT 8.3(D).
(i) In the event that any Loan Party shall be
entitled to or shall at any time after the date hereof
hold or acquire any certificated securities, such Loan
Party or the Lead Borrower shall promptly endorse, assign
and deliver the same to Agent, accompanied by such
instruments of transfer or assignment duly executed in
blank as Agent may from time to time specify. If any
securities, now or hereafter acquired by any Loan Party
are uncertificated and are issued to any Loan Party or its
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nominee directly by the issuer thereof, such Loan Party
shall immediately notify Agent thereof and shall, as Agent
may specify, either (A) cause the issuer to agree to
comply with instructions from Agent as to such securities,
without further consent of such Loan Party or such
nominee, or (B) arrange for Agent to become the registered
owner of the securities.
(ii) No Loan Party shall, directly or
indirectly, after the date hereof open, establish or
maintain any investment account, securities account,
commodity account or any other similar account (other than
a deposit account) with any securities intermediary or
commodity intermediary unless each of the following
conditions is satisfied: (A) Agent shall have received not
less than five (5) Business Days prior written notice of
the intention of a Loan Party to open or establish such
account which notice shall specify in reasonable detail
and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of
the securities intermediary or commodity intermediary at
which such account is to be opened or established, the
individual at such intermediary with whom such Loan Party
is dealing and the purpose of the account, (B) the
securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained
shall be acceptable to Agent, and (C) on or before the
opening of such investment account, securities account or
other similar account with a securities intermediary or
commodity intermediary, such Loan Party or the Lead
Borrower shall as Agent may specify either (1) execute and
deliver, and cause to be executed and delivered to Agent,
a control agreement with respect thereto duly authorized,
executed and delivered by such Loan Party or the Lead
Borrower and such securities intermediary or commodity
intermediary, and in form acceptable to the Agent or (2)
arrange for Agent to become the entitlement holder with
respect to such investment property on terms and
conditions acceptable to Agent.
(e) No Loan Party is the beneficiary or otherwise entitled
to any right to payment under any letter of credit, banker's acceptance or
similar instrument as of the date hereof, except as set forth in EXHIBIT 8.3(E).
In the event that any Loan Party shall be entitled to or shall receive any right
to payment under any letter of credit, banker's acceptance or any similar
instrument, whether as beneficiary thereof or otherwise after the date hereof,
such Loan Party or the Lead Borrower shall promptly notify Agent thereof in
writing. Such Loan Party or the Lead Borrower shall immediately, as Agent may
specify, either (i) deliver, or cause to be delivered to Agent, with respect to
any such letter of credit, banker's acceptance or similar instrument, the
written agreement of the issuer and any other nominated person obligated to make
any payment in respect thereof (including any confirming or negotiating bank),
in form and substance satisfactory to Agent, consenting to the assignment of the
proceeds of the letter of credit to Agent by such Loan Party and agreeing to
make all payments thereon directly to Agent or as Agent may otherwise direct or
(ii) cause Agent to become, at such Loan Party's expense, the transferee
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beneficiary of the letter of credit, banker's acceptance or similar instrument
(as the case may be).
(f) No Loan Party has any commercial tort claims as of the
date hereof, except as set forth in EXHIBIT 8.3(F). In the event that any Loan
Party shall at any time after the date hereof have any commercial tort claims,
such Loan Party or the Lead Borrower shall promptly notify Agent thereof in
writing, which notice shall (i) set forth in reasonable detail the basis for and
nature of such commercial tort claim and (ii) include the express grant by such
Loan Party to Agent of a security interest in such commercial tort claim (and
the proceeds thereof). In the event that such notice does not include such grant
of a security interest, the sending thereof by such Loan Party to Agent shall be
deemed to constitute such grant to Agent. Upon the sending of such notice, any
commercial tort claim described therein shall constitute part of the Collateral
and shall be deemed included therein. Without limiting the authorization of
Agent otherwise provided herein or otherwise arising by the execution by Loan
Parties of this Agreement, Agent is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Agent or its
designee as secured party and Loan Parties as debtors, or any amendments to any
financing statements, covering any such commercial tort claim as Collateral. In
addition, Loan Parties shall promptly upon Agent's request, execute and deliver,
or cause to be executed and delivered, to Agent such other agreements, documents
and instruments as Agent may require in connection with such commercial tort
claim.
(g) Loan Parties shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that any Loan Party's signature thereon is required therefor,
(ii) causing Agent's name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iii) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or
ability of Agent to enforce, the security interest of Agent in such Collateral,
and (iv) obtaining the consents and approvals of any Governmental Authority or
third party, including, without limitation, any consent of any licensor, lessor
or other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.
ARTICLE 9 - AGENT AS ATTORNEY-IN-FACT:
9.1 APPOINTMENT AS ATTORNEY-IN-FACT. Each Loan Party hereby
irrevocably constitutes and appoints the Agent (acting through any officer of
the Agent) as that Loan Parties' true and lawful attorney, with full power of
substitution, following the occurrence of an Event of Default, to convert the
Collateral into cash at the sole risk, cost, and expense of that Loan Party, but
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for the sole benefit of the Agent and the Revolving Credit Lenders. The rights
and powers granted the Agent by this appointment include but are not limited to
the right and power to:
(a) Prosecute, defend, compromise, or release any action
relating to the Collateral.
(b) Sign change of address forms to change the address to
which each Loan Party's mail is to be sent to such address as the Agent shall
designate; receive and open each Loan Party's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Lead Borrower or to any trustee in bankruptcy or
receiver of the Lead Borrower, or other legal representative of a Loan Party
whom the Agent determines to be the appropriate person to whom to so turn over
such mail.
(c) Endorse the name of the relevant Loan Party in favor of
the Agent upon any and all checks, drafts, notes, acceptances, or other items or
instruments; sign and endorse the name of the relevant Loan Party on, and
receive as secured party, any of the Collateral, any invoices, schedules of
Collateral, freight or express receipts, or bills of lading, storage receipts,
warehouse receipts, or other documents of title respectively relating to the
Collateral.
(d) Sign the name of the relevant Loan Party on any notice
to that Loan Party's Account Debtors or verification of the Receivables
Collateral; sign the relevant Loan Party's name on any Proof of Claim in
Bankruptcy against Account Debtors, and on notices of lien, claims of mechanic's
liens, or assignments or releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the
payment of any letter of credit and/or banker's acceptance of which any Loan
Party is a beneficiary.
(f) Repair, manufacture, assemble, complete, package,
deliver, alter or supply goods, if any, necessary to fulfill in whole or in part
the purchase order of any customer of each Loan Party.
(g) Use, license or transfer any or all General Intangibles
of each Loan Party.
9.2 NO OBLIGATION TO ACT. The Agent shall not be obligated to do any
of the acts or to exercise any of the powers authorized by Section 9.1 herein,
but if the Agent elects to do any such act or to exercise any of such powers, it
shall not be accountable for more than it actually receives as a result of such
exercise of power, and shall not be responsible to any Loan Party for any act or
omission to act except for any act or omission to act as to which there is a
final determination made in a judicial proceeding (in which proceeding the Agent
has had an opportunity to be heard) which determination includes a specific
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finding that the subject act or omission to act had been grossly negligent or in
actual bad faith.
ARTICLE 10 - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 10 respectively
shall constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event
of Default described in Section 10.11, any and all Liabilities shall become due
and payable without any further act on the part of the Agent. Upon the
occurrence of any other Event of Default, the Agent may, and upon the
instruction of the applicable Lenders pursuant to Article 14 hereof shall,
declare any and all Liabilities immediately due and payable. The occurrence of
any Event of Default shall also constitute, without notice or demand, a default
under all other agreements between the Agent or any Revolving Credit Lender and
any Loan Party and instruments and papers heretofore, now, or hereafter given
the Agent or any Revolving Credit Lender by any Loan Party.
10.1 FAILURE TO PAY THE REVOLVING CREDIT. The failure by any Loan
Party to pay when due any principal of, interest on, or fees in respect of, the
Revolving Credit.
10.2 FAILURE TO MAKE OTHER PAYMENTS. The failure by any Loan Party to
pay when due (or upon demand, if payable on demand) any payment Liability other
than any payment liability on account of the principal of, or interest on, or
fees in respect of, the Revolving Credit.
10.3 FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD). The
failure by any Loan Party to promptly, punctually, faithfully and timely
perform, discharge, or comply with any covenant or Liability included in any of
Sections 4.3(b), 4.5, 4.6, 4.7, 4.8, 4.14, 4.19, 4.20, 4.23, 5.12, 6.1 or
Article 7.
10.4 FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD).
(a) The failure by the Lead Borrower to provide the
financial statements and reports required by Sections 5.4 through and including
5.9 of this Agreement within the applicable grace period, if available as
provided below, or when due if no such grace period is then available:
----------------- ----------------------------------- ------------------------ -----------------------
5.4 Borrowing Base 2 days 4 times during term
of Agreement
----------------- ----------------------------------- ------------------------ -----------------------
5.5 Weekly Reports 2 days 4 times during term
of Agreement
----------------- ----------------------------------- ------------------------ -----------------------
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----------------- ----------------------------------- ------------------------ -----------------------
5.6 Monthly Reports 10 days 4 times during term
of Agreement
----------------- ----------------------------------- ------------------------ -----------------------
5.7 Quarterly Reports 10 days 4 times during term
of Agreement
----------------- ----------------------------------- ------------------------ -----------------------
(b) The failure by the Loan Parties, upon thirty (30) days'
written notice by the Agent (at the direction of the SuperMajority Lenders) to
the Lead Borrower, to cure the Loan Parties' failure to promptly, punctually and
faithfully perform, discharge, or comply with any covenant or Liability not
described in any of Sections 10.1, 10.2, 10.3, or 10.4(a), above.
10.5 MISREPRESENTATION. The determination by the Agent that any
representation or warranty at any time made by any Loan Party to the Agent or
any Revolving Credit Lender was not true or complete in all material respects
when given.
10.6 ACCELERATION OF OTHER DEBT. BREACH OF LEASE.
(a) The occurrence of any event such that any Indebtedness
of any Loan Party in excess of $100,000.00 to any creditor other than the Agent
or any Revolving Credit Lender could be accelerated (whether or not the subject
creditor or lessor takes any action on account of such occurrence).
(b) The occurrence of any of the following with respect to
Leases on which any Loan Party is the lessee or is obligated:
(i) An aggregate of more than $100,000.00 in
base rent is then overdue.
(ii) Default and the expiry of any applicable
grace period with respect to Leases of ten percent (10) or
more of the Retail Stores.
(iii) Default and the expiry of any applicable
grace period of any Lease of any Warehouse or distribution
center.
10.7 DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach of
any covenant or Liability imposed by, or of any default under, any agreement
(including any Loan Document) between the Agent or any Revolving Credit Lender
and any Loan Party or instrument given by any Loan Party to the Agent or any
Revolving Credit Lender and the expiry, without cure, of any applicable grace
period (notwithstanding that the subject Agent or Revolving Credit Lender may
not have exercised all or any of its rights on account of such breach or
default).
10.8 COLLATERAL. (a) The occurrence of any uninsured loss, theft,
damage, or destruction of or to any material portion of the Collateral.
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(b) Any Lien purported to be created hereunder or under any
other Loan Document shall cease to be, or shall be asserted in writing by any
Loan Party not to be, a valid and perfected Lien on any Collateral, with the
priority required hereby or by the applicable Loan Document, except as a result
of the sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents.
10.9 ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The service of process upon the Agent or any Revolving
Credit Lender or any Participant or any bank at which there is a Blocked Account
seeking to attach, by trustee, mesne, or other process, any funds of any Loan
Party on deposit with, or assets of any Loan Party in the possession of, the
Agent or that Revolving Credit or such Participant or bank at which there is a
Blocked Account in excess of $100,000 or, which, with respect to any such
attachment of funds or assets of less than $100,000, is not timely contested in
good faith by such Loan Party by appropriate proceedings, or if so contested, is
not dismissed within thirty (30) days.
(b) The entry of any judgment in excess of $100,000 against
any Loan Party, which judgment is not satisfied (if a money judgment) or
appealed from (with execution or similar process stayed) within thirty (30) days
of its entry.
(c) The entry of any order or the imposition of any other
process having the force of law, the effect of which is to restrain in any
material way the conduct by any Loan Party of its business in the ordinary
course.
10.10 BUSINESS FAILURE. Any act by, against, or relating to any Loan
Party, or its property or assets, which act constitutes the determination, by
any Loan Party, to initiate a program of partial liquidation (except of
Inventory in the ordinary course of business) or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any part of any Loan Party's property unless contested by such Loan Party in
good faith by appropriate proceedings and such appointment is not terminated
within sixty (60 ) days of such filing; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Loan Party,
or the occurrence of any other voluntary or involuntary liquidation or extension
of debt agreement for any Loan Party; the offering by or entering into by any
Loan Party of any composition, extension, or any other arrangement seeking
relief from or extension of the debts of any Loan Party; or the initiation of
any judicial or non-judicial proceeding or agreement by, against, or including
any Loan Party which seeks or intends to accomplish a reorganization or
arrangement with creditors; and/or the initiation by or on behalf of any Loan
Party of the liquidation or winding up of all or any part of any Loan Party's
business or operations.
10.11 BANKRUPTCY. The failure by any Loan Party to generally pay the
debts of that Loan Party as they mature; adjudication of bankruptcy or
insolvency relative to any Loan Party; the entry of an order for relief or
similar order with respect to any Loan Party in any proceeding pursuant to the
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Bankruptcy Code or any other federal bankruptcy law; the filing of any
complaint, application, or petition by any Loan Party initiating any matter in
which any Loan Party is or may be granted any relief from the debts of that Loan
Party pursuant to the Bankruptcy Code or any other insolvency statute or
procedure; the filing of any complaint, application, or petition against any
Loan Party initiating any matter in which that Loan Party is or may be granted
any relief from the debts of that Loan Party pursuant to the Bankruptcy Code or
any other insolvency statute or procedure, which complaint, application, or
petition is not timely contested in good faith by that Loan Party by appropriate
proceedings or, if so contested, is not dismissed within sixty (60) days of when
filed.
10.12 INDICTMENT - FORFEITURE. The indictment of, or institution of
any legal process or proceeding against, any Loan Party or any member of any
Loan Party's senior management, under any Applicable Law where the relief,
penalties, or remedies sought or available include the forfeiture of any
property of any Loan Party and/or the imposition of any stay or other order,
which would reasonably be expected to have a Material Adverse Effect.
10.13 RESERVED.
10.14 TERMINATION OF GUARANTY. The termination of the Guaranty by any
Guarantor except as otherwise permitted hereunder.
10.15 CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of any Loan Party through
legal process to the validity of any Loan Document or the applicability or
enforceability of any Loan Document in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment
made pursuant thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.
10.16 KEY EXECUTIVES. The death, disability or failure of both Key
Executives at any time to exercise that authority and discharge those management
responsibilities with respect to the Lead Borrower as are exercised and
discharged by such Persons at the execution of this Agreement unless replaced
within sixty (60) days of such occurrence with a Person reasonably acceptable to
Agent.
10.17 CHANGE IN CONTROL. Any Change in Control.
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ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT:
11.1 ACCELERATION. Upon the occurrence of any Event of Default as
described in Section 10.11, all Liabilities shall be immediately due and
payable. Upon the occurrence of any Event of Default other than as described in
Section 10.11, the Agent may (and on the issuance of Acceleration Notice(s)
requisite to the causing of Acceleration, the Agent shall) declare all
Liabilities to be immediately due and payable and may exercise all of the
Agent's Rights and Remedies as the Agent from time to time thereafter determines
as appropriate.
11.2 RIGHTS OF ENFORCEMENT. Upon the occurrence and during the
continuance of an Event of Default, the Agent shall have all of the rights and
remedies of a secured party upon default under the UCC, in addition to which the
Agent shall have all and each of the following rights and remedies:
(a) In addition to the rights to do so granted under other
sections of this Agreement and other Loan Documents, to give notice to any bank
at which any DDA or Blocked Account is maintained and in which Proceeds of
Collateral are deposited, to turn over such Proceeds directly to the Agent.
(b) In addition to the rights to do so granted under other
sections of this Agreement and other Loan Documents, to give notice to any
customs broker of any Loan Party to follow the instructions of the Agent as
provided in any written agreement or undertaking of such broker in favor of the
Agent.
(c) To collect the Receivables Collateral with or without
the taking of possession of any of the Collateral.
(d) To take possession of all or any portion of the
Collateral.
(e) To sell, lease, or otherwise dispose of any or all of
the Collateral, in its then condition or following such preparation or
processing as the Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(f) To conduct one or more going out of business sales
which include the sale or other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of
the Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
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11.3 SALE OF COLLATERAL.
(a) Any sale or other disposition of the Collateral may be
at public or private sale upon such terms and in such manner as the Agent deems
advisable, having due regard to compliance with any statute or regulation which
might affect, limit, or apply to the Agent's disposition of the Collateral.
(b) The Agent, in the exercise of the Agent's rights and
remedies upon the occurrence of an Event of Default, may conduct one or more
going out of business sales, in the Agent's own right or by one or more agents
and contractors. Such sale(s) may be conducted upon any premises owned, leased,
or occupied by any Loan Party. The Agent and any such agent or contractor, in
conjunction with any such sale, may augment the Inventory with other goods (all
of which other goods shall remain the sole property of the Agent or such agent
or contractor). Any amounts realized from the sale of such goods which
constitute augmentations to the Inventory (net of an allocable share of the
costs and expenses incurred in their disposition) shall be the sole property of
the Agent or such agent or contractor and neither any Loan Party nor any Person
claiming under or in right of any Loan Party shall have any interest therein.
(c) Unless the Collateral is perishable or threatens to
decline speedily in value, or is of a type customarily sold on a recognized
market (in which event the Agent shall provide the Lead Borrower such notice as
may be practicable under the circumstances), the Agent shall give the Lead
Borrower at least ten (10) days prior notice, by authenticated record, of the
date, time, and place of any proposed public sale, and of the date after which
any private sale or other disposition of the Collateral may be made. Each Loan
Party agrees that such written notice shall satisfy all requirements for notice
to that Loan Party which are imposed under the UCC or other applicable law with
respect to the exercise of the Agent's rights and remedies upon the occurrence
of an Event of Default.
(d) The Agent and any Revolving Credit Lender may purchase
the Collateral, or any portion of it at any sale held under this Article.
(e) If any of the Collateral is sold, leased, or otherwise
disposed of by the Agent on credit, the Liabilities shall not be deemed to have
been reduced as a result thereof unless and until payment is finally received
thereon by the Agent.
(f) The Agent shall apply the proceeds of the Agent's
exercise of its rights and remedies upon the occurrence of an Event of Default
pursuant to this Article 11 in accordance with Sections 13.6 and 13.7.
11.4 OCCUPATION OF BUSINESS LOCATION. In connection with the Agent's
exercise of the Agent's rights under this Article 11, the Agent may enter upon,
occupy, and use any premises owned or occupied by each Loan Party, and may
exclude each Loan Party from such premises or portion thereof as may have been
so entered upon, occupied, or used by the Agent. The Agent shall not be required
to remove any of the Collateral from any such premises upon the Agent's taking
possession thereof, and may render any Collateral unusable to the Loan Parties.
In no event shall the Agent be liable to any Loan Party for use or occupancy by
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the Agent of any premises pursuant to this Article 11, nor for any charge (such
as wages for any Loan Party's employees and utilities) incurred in connection
with the Agent's exercise of the Agent's Rights and Remedies.
11.5 GRANT OF NONEXCLUSIVE LICENSE. Each Loan Party hereby grants to
the Agent a royalty free nonexclusive irrevocable license to use, apply, and
affix any trademark, trade name, logo, or the like in which any Loan Party now
or hereafter has rights, such license being with respect to the Agent's exercise
of the rights hereunder including, without limitation, in connection with any
completion of the manufacture of Inventory or sale or other disposition of
Inventory.
11.6 ASSEMBLY OF COLLATERAL. The Agent may require any Loan Party to
assemble the Collateral and make it available to the Agent at such Loan Party's
sole risk and expense at a place or places which are reasonably convenient to
both the Agent and the Lead Borrower.
11.7 RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
and discretions of the Agent hereunder (herein, the" AGENT'S RIGHTS AND
REMEDIES") shall be cumulative and not exclusive of any rights or remedies which
it would otherwise have. No delay or omission by the Agent in exercising or
enforcing any of the Agent's Rights and Remedies shall operate as, or
constitute, a waiver thereof. No waiver by the Agent of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Agent's Rights or Remedies, and no express or implied agreement or
transaction of whatever nature entered into between the Agent and any person, at
any time, shall preclude the other or further exercise of the Agent's Rights and
Remedies. No waiver by the Agent of any of the Agent's Rights and Remedies on
any one occasion shall be deemed a waiver on any subsequent occasion, nor shall
it be deemed a continuing waiver. The Agent's Rights and Remedies may be
exercised at such time or times and in such order of preference as the Agent may
determine. The Agent's Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Liabilities.
ARTICLE 12 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
12.1 REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section 12.2:
(a) The Agent shall advise each Revolving Credit Lender, no
later than 2:00 p.m. on a date on which any Revolving Credit Loan (other than a
SwingLine Loan) is to be made. Such advice, in each instance, may be by
telephone or facsimile transmission, provided that if such advice is by
telephone, it shall be confirmed in writing. Advice of a Revolving Credit Loan
shall include the amount of and interest rate applicable to the subject
Revolving Credit Loan.
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(b) Subject to that Revolving Credit Lender's Revolving
Credit Dollar Commitment, each Revolving Credit Lender, by no later than the end
of business on the day on which the subject Revolving Credit Loan is to be made,
shall Transfer that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the subject Revolving Credit Loan to the Agent.
12.2 SWINGLINE LOANS.
(a) In the event that, when a Revolving Credit Loan is
requested, the aggregate unpaid balance of the SwingLine Loan is less than the
SwingLine Loan Ceiling, then the SwingLine Lender may advise the Agent that the
SwingLine Lender has determined to include up to the amount of the requested
Revolving Credit Loan as part of the SwingLine Loan. In such event, the
SwingLine Lender shall Transfer the amount of the requested Revolving Credit
Loan to the Agent.
(b) The SwingLine Loan shall be converted to a Revolving
Credit Loan in which all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the
SwingLine Lender may advise the Agent that all, or any
part of the SwingLine Loan is to be converted to a
Revolving Credit Loan in which all Revolving Credit
Lenders participate.
(ii) At the initiation of a Liquidation, the
then entire unpaid principal balance of the SwingLine Loan
shall be converted to a Revolving Credit Loan in which all
Revolving Credit Lenders participate.
In either such event, the Agent shall advise each Revolving Credit Lender of
such conversion as if, and with the same effect as if such conversion were the
making of a Revolving Credit Loan as provided in Section 12.1.
(c) The SwingLine Lender, in separate capacities, may also
be the Agent and a Revolving Credit Lender.
(d) The SwingLine Lender, in its capacity as SwingLine
Lender, is not a "Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided
in the relevant Section, any distribution pursuant to
Section 13.6.
(ii) Determination of whether the requisite
Revolving Credit Lenders have Consented to action
requiring such Consent.
12.3 AGENT'S COVERING OF FUNDINGS:
(a) Each Revolving Credit Lender shall make available to
the Agent, as provided herein, that Revolving Credit Lender's Revolving Credit
Percentage Commitment of the following:
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(i) Each Revolving Credit Loan, up to the
maximum amount of that Revolving Credit Lender's Revolving
Credit Dollar Commitment of the Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving
Credit Lender's Revolving Credit Dollar Commitment of each
L/C Drawing (to the extent that such L/C Drawing is not
"covered" by a Revolving Credit Loan as provided herein).
(b) In all circumstances, the Agent may:
(i) Assume that each Revolving Credit Lender,
subject to Section 12.3(a), timely shall make available to
the Agent that Revolving Credit Lender's Revolving Credit
Percentage Commitment of each Revolving Credit Loan,
notice of which is provided pursuant to Section 12.1 and
shall make available, to the extent not "covered" by a
Revolving Credit Loan, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of any honoring of
an L/C.
(ii) In reliance upon such assumption, make
available the corresponding amount to the Loan Parties.
(iii) Assume that each Revolving Credit Lender
timely shall pay, and shall make available, to the Agent
all other amounts which that Revolving Credit Lender is
obligated to so pay and/or make available hereunder or
under any of the Loan Documents.
(c) In the event that, in reliance upon any of such
assumptions, the Agent makes available, a Revolving Credit Lender's Revolving
Credit Percentage Commitment of one or more Revolving Credit Loans, or any other
amount to be made available hereunder or under any of the Loan Documents, which
amount a Revolving Credit Lender (a "DELINQUENT REVOLVING CREDIT Lender") fails
to provide to the Agent within One (1) Business Day of written notice of such
failure, then:
(i) The amount which had been made available by
the Agent is an " AGENT'S COVER" (and is so referred to
herein).
(ii) All interest paid by the Borrowers on
account of the Revolving Credit Loan or coverage of the
subject L/C Drawing which consist of the Agent's Cover
shall be retained by the Agent until the Agent's Cover,
with interest, has been paid.
(iii) The Delinquent Revolving Credit Lender
shall pay to the Agent, on demand, interest at a rate
equal to the prevailing federal funds rate on any Agent's
Cover in respect of that Delinquent Revolving Credit
Lender
(iv) The Agent shall have succeeded to all
rights to payment to which the Delinquent Revolving Credit
Lender otherwise would have been entitled hereunder in
respect of those amounts paid by or in respect of the
Borrowers on account of the Agent's Cover together with
interest until it is repaid. Such payments shall be deemed
made first towards the amounts in respect of which the
Agent's Cover was provided and only then towards amounts
in which the Delinquent Revolving Credit Lender is then
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participating. For purposes of distributions to be made
pursuant to Section 12.4(a) (which relates to ordinary
course distributions) or Section 13.6 (which relates to
distributions of proceeds of a Liquidation) below, amounts
shall be deemed distributable to a Delinquent Revolving
Credit Lender (and consequently, to the Agent to the
extent to which the Agent is then entitled) at the highest
level of distribution (if applicable) at which the
Delinquent Revolving Credit Lender would otherwise have
been entitled to a distribution.
(v) Subject to Subsection 12.3(c)(iv), the
Delinquent Revolving Credit Lender shall be entitled to
receive any payments from the Borrowers to which the
Delinquent Revolving Credit Lender is then entitled,
provided however there shall be deducted from such amount
and retained by the Agent any interest to which the Agent
is then entitled on account of Section 12.3(c)(ii), above.
(d) A Delinquent Revolving Credit Lender shall not be
relieved of any obligation of such Delinquent Revolving Credit Lender hereunder
(all and each of which shall constitute continuing obligations on the part of
any Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its
status as a Delinquent Revolving Credit Lender by paying the Agent the aggregate
of the following:
(i) The Agent's Cover (to the extent not
previously repaid by the Borrowers and
retained by the Agent in accordance
with Subsection 12.3(c)(iv), above)
with respect to that Delinquent
Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable
under Subsection 12.3(c)(iii), above
(which relates to interest to be paid
by that Delinquent Revolving Credit
Lender).
Plus
(iii) All such costs and expenses as may be
incurred by the Agent in the
enforcement of the Agent's rights
against such Delinquent Revolving
Credit Lender.
12.4 ORDINARY COURSE DISTRIBUTIONS. Unless the provisions of Section
13.6 (which relates to distributions in the event of a Liquidation) become
operative in accordance with such Section:
(a) On such day as may be set from time to time by the
Agent (or more frequently at the Agent's option) the Agent and each Revolving
Credit Lender shall settle up on amounts advanced under the Revolving Credit and
collected funds received in the Concentration Account.
(b) The Agent shall distribute to the SwingLine Lender and
to each Revolving Credit Lender, such Person's respective ratable share of
interest payments on the Revolving Credit Loans when actually received and
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collected by the Agent (excluding the one (1) Business Day for settlement
provided for in Section 7.5(a), which shall be for the account of the Agent
only). For purposes of calculating interest due to a Revolving Credit Lender,
that Revolving Credit Lender shall be entitled to receive interest on the actual
amount contributed by that Revolving Credit Lender towards the principal balance
of the Revolving Credit Loans outstanding during the applicable period covered
by the interest payment made by the Borrowers. Any net principal reductions to
the Revolving Credit Loans received by the Agent in accordance with the Loan
Documents during such period shall not reduce such actual amount so contributed,
for purposes of calculation of interest due to that Revolving Credit Lender,
until the Agent has distributed to that Revolving Credit Lender its ratable
share thereof.
(c) The Agent shall distribute fees paid on account of the
Revolving Credit, as follows:
(i) Facility Fee (Section 2.14)
(ii) L/C fees (Section 2.20(a)): Pro-Rata to
the Revolving Credit Lenders.
(iii) Unused Line Fee (Section 2.15): Pro-Rata
to the Revolving Credit Lenders.
(iv) Revolving Credit Commitment Fee (Section
2.13) : As provided in separate letter agreements with the
respective Revolving Credit Lenders.
(v) Early Termination Fee (Section 2.16) :
Pro-Rata to the Revolving Credit Lenders.
(d) No Revolving Credit Lender shall have any interest in,
or right to receive any part of any interest which reflects "float" as described
in the proviso included in Section 7.5(a). Any such float shall be for the
account of the Agent only.
(e) No Revolving Credit Lender shall have any interest in,
or right to receive any part of, the Facility Fee to be paid by the Borrowers to
the Agent pursuant to this Agreement.
(f) Any amount received by the Agent as reimbursement for
any cost or expense (including without limitation, attorneys' reasonable fees)
shall be distributed by the Agent to that Person which is entitled to such
reimbursement as provided in this Agreement (and if such Person(s) is (are) the
Revolving Credit Lenders, pro-rata based upon their respective Revolving Credit
Commitment Percentages at the date on which the expense, in respect of which
such reimbursement is being made, was incurred).
(g) Each distribution pursuant to this Section 12.4 is
subject to Section 12.3(c), above.
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ARTICLE 13 - ACCELERATION AND LIQUIDATION:
13.1 ACCELERATION NOTICES
(a) The Agent may give the Revolving Credit Lenders an
Acceleration Notice at any time following the occurrence of an Event of Default.
(b) The SuperMajority Lenders may give the Agent an
Acceleration Notice at any time following the occurrence of an Event of Default.
Such notice may be by multiple counterparts, provided that counterparts executed
by the requisite Revolving Credit Lenders are received by the Agent within a
period of five (5) consecutive Business Days.
13.2 ACCELERATION Unless stayed by judicial or statutory process, the
Agent shall Accelerate the Liabilities on account of the Revolving Credit within
a commercially reasonable time following:
(a) The Agent's giving of an Acceleration Notice to the
Revolving Credit Lenders as provided in Section 13.1(a).
(b) The Agent's receipt of an Acceleration Notice from the
SuperMajority Lenders, in compliance with Section 13.1(b).
13.3 INITIATION OF LIQUIDATION Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Agent within a commercially
reasonable time following Acceleration of Liabilities on account of the
Revolving Credit.
13.4 ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the
SwingLine Loan (if any) shall be converted, pursuant to
Section 12.2(b)(ii), to a Revolving Credit Loan in which
all Revolving Credit Lenders participate.
(ii) The Agent and the Revolving Credit Lenders
shall "net out" each Revolving Credit Lender's respective
contributions towards the Revolving Credit Loans, so that
each Revolving Credit Lender holds that Revolving Credit
Lender's Revolving Credit Percentage Commitment of the
Revolving Credit Loans and advances.
(b) Following the initiation of a Liquidation, each
Revolving Credit Lender shall contribute, towards any L/C thereafter honored and
not immediately reimbursed by the Loan Parties, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of such honoring.
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13.5 AGENT'S CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Agent, with
the advice and assistance of the Revolving Credit Lenders.
(b) The Agent may establish one or more Nominees to "bid
in" or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Agent shall manage the Nominee and manage and
dispose of any Post Foreclosure Assets with a view towards the realization of
the economic benefits of the ownership of the Post Foreclosure Assets and in
such regard, the Agent and/or the Nominee may operate, repair, manage, maintain,
develop, and dispose of any Post Foreclosure Asset in such manner as the Agent
determines as appropriate under the circumstances.
(d) The Agent may decline to undertake or to continue
taking a course of action or to execute an action plan (whether proposed by the
Agent or any Revolving Credit Lender) unless indemnified to the Agent's
satisfaction by the Revolving Credit Lenders against any and all liability and
expense which may be incurred by the Agent by reason of taking or continuing to
take that course of action or action plan.
(e) Each Revolving Credit Lender shall execute all such
instruments and documents not inconsistent with the provisions of this Agreement
as the Agent and/or the Nominee reasonably may request with respect to the
creation and governance of any Nominee, the conduct of the Liquidation, and the
management and disposition of any Post Foreclosure Asset.
13.6 DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Agent may establish one or more reasonably funded
reserve accounts into which proceeds of the conduct of any Liquidation may be
deposited in anticipation of future expenses which may be incurred by the Agent
in the exercise of rights as a secured creditor of the Loan Parties and prior
claims which the Agent anticipates may need to be paid.
(b) The Agent shall distribute the net proceeds of
Liquidation in accordance with the relative priorities set forth in Section
13.7.
(c) Each Revolving Credit Lender, on the written request of
the Agent and/or any Nominee, not more frequently than once each month, shall
reimburse the Agent and/or any Nominee, pro-rata, for any cost or expense
reasonably incurred by the Agent and/or the Nominee in the conduct of a
Liquidation, which amount is not covered out of current proceeds of the
Liquidation, which reimbursement shall be paid over to and distributed by the
Agent.
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13.7 RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION
(a) All distributions of proceeds of a Liquidation shall be
net of payment over to the Agent as reimbursement for all reasonable third party
costs and expenses incurred by the Agent and to Lenders' Special Counsel and to
any funded reserve established pursuant to Section 13.6(a).
(b) The proceeds of a Liquidation, net of those amounts
described in Section 12.3(c)(iv), shall be distributed based on the following
priorities:
(i) To the SwingLine Lender, on account of
any SwingLine loans not converted to
Revolving Credit Loans pursuant to
Section 13.4(a)(i); and then
(ii) To the Revolving Credit Lenders (other
than any Delinquent Revolving Credit
Lender), pro-rata, to the unpaid
principal balance of the Revolving
Credit; and then
(iii) To the Revolving Credit Lenders (other
than any Delinquent Revolving Credit
Lender), pro-rata, to accrued interest
on the Revolving Credit; and then
(iv) To the Revolving Credit Lenders (other
than any Delinquent Revolving Credit
Lender), pro-rata, to those fees
distributable hereunder to the
Revolving Credit Lenders; and then
(v) To any Delinquent Revolving Credit
Lenders, pro-rata to amounts to which
such Revolving Credit Lenders
otherwise would have been entitled
pursuant to Sections 13.7(b)(ii),
13.7(b)(iii), 13.7(b)(iv) ; and then
(vi) To any other Liabilities.
ARTICLE 14 - THE AGENT:
14.1 APPOINTMENT OF THE AGENT
(a) Each Lender appoints and designates Fleet Retail
Finance Inc. as the "Agent" hereunder and under the Loan Documents.
(b) Each Revolving Credit Lender authorizes the Agent:
(i) To execute those of the Loan Documents and
all other instruments relating thereto to which the Agent
is a party.
(ii) To take such action on behalf of the
Revolving Credit Lenders and to exercise all such powers
as are expressly delegated to the Agent hereunder and in
the Loan Documents and all related documents, together
with such other powers as are reasonably incident thereto.
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14.2 RESPONSIBILITIES OF AGENT
(a) The Agent shall not have any duties or responsibilities
to, or any fiduciary relationship with, any Revolving Credit Lender except for
those expressly set forth in this Agreement.
(b) Neither the Agent nor any of its Affiliates shall be
responsible to any Revolving Credit Lender for any of the following:
(i) Any recitals, statements, representations
or warranties made by any Loan Party or any other Person.
(ii) Any appraisals or other assessments of the
assets of any Loan Party or of any other Person
responsible for or on account of the Liabilities.
(iii) The value, validity, effectiveness,
genuineness, enforceability, or sufficiency of the Loan
Agreement, the Loan Documents or any other document
referred to or provided for therein.
(iv) Any failure by any Loan Party or any other
Person (other than the Agent) to perform its obligations
under the Loan Documents.
(c) The Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such attorneys, accountants, and other
professionals or agents or attorneys-in-fact selected by the Agent with
reasonable care. No such attorney, accountant, other professional, agent, or
attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.
(d) Neither the Agent, nor any of its directors, officers,
or employees shall be responsible for any action taken or omitted to be taken or
omitted to be taken by any other of them in connection herewith in reliance upon
advice of its counsel nor, in any other event except for any action taken or
omitted to be taken as to which a final judicial determination has been or is
made (in a proceeding in which such Person has had an opportunity to be heard)
that such Person had acted in a grossly negligent manner, in actual bad faith,
or in willful misconduct.
(e) The Agent shall not have any responsibility in any
event for more funds than the Agent actually receives and collects.
(f) The Agent, in its separate capacity as a Lender, shall
have the same rights and powers hereunder as any other Lender.
14.3 CONCERNING DISTRIBUTIONS BY THE AGENT
(a) The Agent in the Agent's reasonable discretion based
upon the Agent's determination of the likelihood that additional payments will
be received, expenses incurred, and/or claims made by third parties to all or a
portion of such proceeds, may delay the distribution of any payment received on
account of the Liabilities.
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(b) The Agent may disburse funds prior to determining that
the sums which the Agent expects to receive have been finally and
unconditionally paid to the Agent. If and to the extent that the Agent does
disburse funds and it later becomes apparent that the Agent did not then receive
a payment in an amount equal to the sum paid out, then any Revolving Credit
Lender to whom the Agent made the funds available, on demand from the Agent,
shall refund to the Agent the sum paid to that person.
(c) If, in the opinion of the Agent, the distribution of
any amount received by the Agent might involve the Agent in liability, or might
be prohibited hereby, or might be questioned by any Person, then the Agent may
refrain from making distribution until the Agent's right to make distribution
has been adjudicated by a court of competent jurisdiction.
(d) The proceeds of any Revolving Credit Lender's exercise
of any right of, or in the nature of, set-off shall be deemed, First, to the
extent that a Revolving Credit Lender is entitled to any distribution hereunder,
to constitute such distribution and Second, shall be shared with the other
Revolving Credit Lenders as if distributed pursuant to (and shall be deemed as
distributions under) Section 13.7.
(e) Each Revolving Credit Lender recognizes that the
crediting of the Loan Parties with the "proceeds" of any transaction in which a
Post Foreclosure Asset is acquired is a non-cash transaction and that, in
consequence, no distribution of such "proceeds" will be made by the Agent to any
Revolving Credit Lender.
(f) In the event that (x) a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Agent is to be
repaid or disgorged or (y) those Lenders adversely affected thereby determine to
effect such repayment or disgorgement, then each Revolving Credit Lender to
which any such distribution shall have been made shall repay, to the Agent which
had made such distribution, that Revolving Credit Lender's pro-rata share of the
amount so adjudged or determined to be repaid or disgorged.
14.4 DISPUTE RESOLUTION: Any dispute among the Revolving Credit
Lenders and/or the Agent concerning the interpretation, administration, or
enforcement of the financing arrangements contemplated by this or any other Loan
Document or the interpretation or administration of this or any other Loan
Document which cannot be resolved amicably shall be resolved in the United
States District Court for the District of Massachusetts, sitting in Boston or in
the Superior Court of Suffolk County, Massachusetts, to the jurisdiction of
which courts each Revolving Credit Lender hereto hereby submits.
14.5 DISTRIBUTIONS OF NOTICES AND OTHER DOCUMENTS The Agent will
forward to each Revolving Credit Lender, promptly after the Agent's receipt
thereof, a copy of each notice or other document furnished to the Agent pursuant
to this Agreement, including monthly, quarterly, and annual financial statements
received from the Lead Borrower pursuant to Article 5 of this Agreement, other
than any of the following:
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(a) Routine communications associated with requests for
Revolving Credit Loans and/or the issuance of L/C's.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan
Documents to be furnished to the Revolving Credit Lenders by the Lead Borrower.
(d) Any notice or document of which the Agent has knowledge
that such notice or document had been forwarded to the Revolving Credit Lenders
other than by the Agent.
14.6 CONFIDENTIAL INFORMATION
(a) Each Revolving Credit Lender will maintain, as
confidential, all of the following:
(i) Proprietary approaches, techniques, and
methods of analysis which are applied by the Agent in the
administration of the credit facility contemplated by this
Agreement.
(ii) Proprietary forms and formats utilized by
the Agent in providing reports to the Revolving Credit
Lenders pursuant hereto, which forms or formats are not of
general currency.
(iii) The results of financial examinations,
reviews, inventories, analysis, appraisals, and other
information concerning, relating to, or in respect of any
Loan Party and prepared by or at the request of, or
furnished to any of, the Revolving Credit Lenders by or on
behalf of the Agent.
(b) Nothing included herein shall prohibit the disclosure
of any such information as may be required to be provided by judicial process or
by regulatory authorities (including, without limitation, taxing authorities)
having jurisdiction over any party to this Agreement. Notwithstanding anything
to the contrary set forth herein or in any other agreement to which the parties
hereto are parties or by which they are bound, the obligations of
confidentiality contained herein and therein shall not apply to the tax
structure or tax treatment of the transactions contemplated by the Loan
Documents, and each party hereto (and any employee, representative or agent of
any party hereto) may disclose to any and all Persons, without limitation of any
kind, the tax structure and tax treatment of such transactions and all materials
of any kind (including opinions or other tax analysis) that are provided to such
party relating to such tax treatment and tax structure; provided, however, that
such disclosure shall not include the name (or other identifying information not
relevant to the tax structure or tax treatment) of any Person and shall not
include information for which non-disclosure is reasonably necessary in order to
comply with applicable securities laws.
14.7 RELIANCE BY AGENT The Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by the Agent to be genuine and correct and to
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have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts selected
by the Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, the Agent shall
in all events be fully protected in acting, or in refraining from acting, in
accordance with the applicable Consent required by this Agreement. Instructions
given with the requisite Consent shall be binding on all Revolving Credit
Lenders.
14.8 NON-RELIANCE ON AGENT AND OTHER REVOLVING CREDIT LENDERS
(a) Each Revolving Credit Lender represents to all other
Revolving Credit Lenders and to the Agent that such Revolving Credit Lender:
(i) Independently and without reliance on any
representation or act by Agent or by any other Revolving
Credit Lender, and based on such documents and information
as that Revolving Credit Lender has deemed appropriate,
has made such Revolving Credit Lender's own appraisal of
the financial condition and affairs of the Loan Parties
and decision to enter into this Agreement.
(ii) Has relied upon that Revolving Credit
Lender's review of the Loan Documents by that Revolving
Credit Lender and by counsel to that Revolving Credit
Lender as that Revolving Credit Lender deemed appropriate
under the circumstances.
(b) Each Revolving Credit Lender agrees that such Revolving
Credit Lender, independently and without reliance upon Agent or any other
Revolving Credit Lender, and based upon such documents and information as such
Revolving Credit Lender shall deem appropriate at the time, will continue to
make such Revolving Credit Lender's own appraisals of the financial condition
and affairs of the Loan Parties when determining whether to take or not to take
any discretionary action under this Agreement.
(c) The Agent, in the discharge of that Agent's duties
hereunder, shall not
(i) Be required to make inquiry of, or to
inspect the properties or books of, any Person.
(ii) Have any responsibility for the accuracy
or completeness of any financial examination, review,
inventory, analysis, appraisal, and other information
concerning, relating to, or in respect of any Loan Party
and prepared by or at the request of, or furnished to any
of, the Revolving Credit Lenders by or on behalf of the
Agent.
(d) Except for notices, reports, and other documents and
information expressly required to be furnished to the Revolving Credit Lenders
by the Agent hereunder (as to which, see Section 14.5), the Agent shall not have
any affirmative duty or responsibility to provide any Revolving Credit Lender
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with any credit or other information concerning any Person, which information
may come into the possession of Agent or any Affiliate of the Agent.
(e) Each Revolving Credit Lender, at such Revolving Credit
Lender's request, shall have reasonable access to all nonprivileged documents in
the possession of the Agent, which documents relate to the Agent's performance
of its duties hereunder.
14.9 INDEMNIFICATION Without limiting the liabilities of the Loan
Parties under any this or any of the other Loan Documents, each Revolving Credit
Lender shall indemnify the Agent, pro-rata, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including attorneys'
reasonable fees and expenses and other out-of-pocket expenditures) which may at
any time be imposed on, incurred by, or asserted against the Agent and in any
way relating to or arising out of this Agreement or any other Loan Document or
any documents contemplated by or referred to therein or the transactions
contemplated thereby or the enforcement of any of terms hereof or thereof or of
any such other documents, provided, however, no Revolving Credit Lender shall be
liable for any of the foregoing to the extent that any of the foregoing arises
from any action taken or omitted to be taken by the Agent as to which a final
judicial determination has been or is made (in a proceeding in which the Agent
has had an opportunity to be heard) that the Agent had acted in a grossly
negligent manner, in actual bad faith, or in willful misconduct.
14.10 RESIGNATION OF AGENT
(a) The Agent may resign at any time by giving 60 days
prior written notice thereof to the Revolving Credit Lenders. Upon receipt of
any such notice of resignation, the SuperMajority Lenders shall have the right
to appoint a successor to such Agent (and if no Event of Default has occurred,
with the consent of the Lead Borrower, not to be unreasonably withheld and, in
any event, deemed given by the Lead Borrower if no written objection is provided
by the Lead Borrower to the (resigning) Agent within seven (7) Business Days
notice of such proposed appointment). If a successor Agent shall not have been
so appointed and accepted such appointment within 30 days after the giving of
notice by the resigning Agent, then the resigning Agent may appoint a successor
Agent, which shall be a financial institution having a combined capital and
surplus in excess of $100,000,000. The consent of the Lead Borrower otherwise
required by this Section 14.10(a) shall not be required if an Event of Default
has occurred.
(b) Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor shall thereupon succeed to, and
become vested with, all the rights, powers, privileges, and duties of the
(resigning) Agent so replaced, and the (resigning) Agent shall be discharged
from the (resigning) Agent's duties and obligations hereunder, other than on
account of any responsibility for any action taken or omitted to be taken by the
(resigning) Agent as to which a final judicial determination has been or is made
(in a proceeding in which the (resigning) Person has had an opportunity to be
heard) that such Person had acted in a grossly negligent manner or in bad faith.
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(c) After any retiring Agent's resignation, the provisions
of this Agreement and of all other Loan Documents shall continue in effect for
the retiring Person's benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Agent.
ARTICLE 15 - ACTION BY AGENT; CONSENTS; AMENDMENTS; WAIVERS:
15.1 ADMINISTRATION OF CREDIT FACILITIES
(a) Except as otherwise specifically provided in this
Agreement, the Agent may take any action with respect to the credit facility
contemplated by the Loan Documents as the Agent determines to be appropriate,
provided, however, the Agent is not under any affirmative obligation to take any
action which it is not required by this Agreement or the Loan Documents
specifically to so take.
(b) Except as specifically provided in the following
Sections of this Agreement, whenever a Loan Document or this Agreement provides
that action may be taken or omitted to be taken in an Agent's discretion, the
Agent shall have the sole right to take, or refrain from taking, such action
without, and notwithstanding, any vote of the Revolving Credit Lender:
Actions Described in Section Type of Consent Required
---------------------------------------------------------------
15.2 Majority Lenders
15.3 SuperMajority Lenders
15.4 Certain Consent
15.5 Unanimous Consent
15.6 Consent of SwingLine Lender
15.7 Consent of the Agent
(c) The rights granted to the Revolving Credit Lenders in
those sections referenced in Section 15.1(b) shall not otherwise limit or impair
the Agent's exercise of its discretion under the Loan Documents.
(d) Notwithstanding anything to the contrary in this
Agreement, including without limitation, this Article 15, or any other Loan
Document, so long as there shall be two (2) or fewer Revolving Credit Lenders
who are not Delinquent Revolving Credit Lenders, all references in this
Agreement and each other Loan Document to the consent of the "Majority Lenders"
or "Supermajority Lenders" shall be deemed to mean Unanimous Consent is
required.
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15.2 ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS Except as
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver, or modification of any Loan
Document.
15.3 ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS. The
Consent or direction of the SuperMajority Lenders is required as follows:
(a) The SuperMajority Lenders may direct the Agent to
require the prompt repayment of Protective OverAdvances have been outstanding
for more than 45 consecutive Business Days or more than twice in any twelve
month period (the Revolving Credit Lenders recognizing that, except as described
in this Section 15.3(a), any loan or advance under the Revolving Credit which
results in a Protective OverAdvance may be made by the Agent in its discretion
without the Consent of the Revolving Credit Lenders and that each Revolving
Credit Lender shall be bound thereby.
(b) The SuperMajority Lenders may direct the Agent to
suspend the Revolving Credit (including the making of any Protective
OverAdvances), if any Default or Event of Default has occurred and is
continuing, following which direction, and for as long as a Default or Event of
Default is continuing, the only Revolving Credit Loans which may be made are the
following:
(i) Protective OverAdvances not otherwise
terminated as provided in 15.3(a).
(ii) Revolving Credit Loans made to "cover" the
honoring of L/C's.
(iii) Revolving Credit Loans made with Consent
of the SuperMajority Lenders.
(c) The SuperMajority Lenders may undertake the following
if an Event of Default has occurred and not been duly waived:
(i) Give the Agent an Acceleration Notice in
accordance with Section 13.1(b).
(ii) Direct the Agent to increase the rate of
interest to the default rate of interest as provided in,
and to the extent permitted by, this Agreement.
(d) The Consent of the SuperMajority Lenders shall be
required to authorize the Agent to affirmatively subordinate the Liabilities to
any material obligation of any Loan Party, unless such subordination is
otherwise required pursuant to this or is permitted by this Agreement.
15.4 ACTION REQUIRING CERTAIN CONSENT: The Consent or direction of
the following is required for the following actions:
(a) Any forgiveness of all or any portion of any payment
Liability: All Lenders whose payment Liability is being so forgiven: (other than
any Delinquent Revolving Credit Lender).
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(b) Any decrease in any interest rate or fee payable under
any of the Loan Documents (other than any fee payable to the Agent (for which
the consent of the Agent shall be required): All Lenders adversely affected
thereby (other than any Delinquent Revolving Credit Lender).
(c) Any waiver, amendment, or modification which has the
effect of increasing any Revolving Credit Dollar Commitment or Revolving Credit
Percentage Commitment shall be subject to the Consent of all Revolving Credit
Lenders (other than any Delinquent Revolving Credit Lender) except that no
Consent shall be required for any such increase which is the result of the
application of the following Sections of this Agreement:
(i) Section 15.10 (which relates to
NonConsenting Revolving Credit Lenders).
(ii) Section 16.1 (which relates to assignments
and assumptions).
(iii) Section 2.25 (which relates to the
Proposed Combination).
(d) Volitional Disgorgement as described in Section
14.3(f): Each Revolving Credit Lender (other than any Delinquent Revolving
Credit Lender) which is adversely affected thereby.
(e) Increase in the SwingLine Loan Ceiling: The consent of
the SwingLine Lender and the Majority Lenders.
15.5 ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT None of the
following may take place except with Unanimous Consent:
(a) Any release of a material portion of the Collateral,
but such Consent to such release is not required if any of the following
conditions is satisfied:
(i) Such release is otherwise required or
provided for in the Loan Documents.
(ii) Such release is being made to facilitate a
Liquidation.
(iii) No OverLoan exists immediately after
giving effect to the application to the Loan Account of
the net proceeds received on account of the transaction in
which such release is made.
(b) Any amendment of the Definitions of "Borrowing Base" or
"Availability" or of any Definition of any component thereof, such that more
credit would be available to the Loan Parties, based on the same assets, as
would have been available to the Loan Parties immediately prior to such
amendment, it being understood, however, that:
(i) The foregoing shall not limit the
adjustment by the Agent of any Reserve in the Agent's
administration of the Revolving Credit as otherwise
permitted by this Agreement.
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(ii) The foregoing shall not prevent the Agent,
in its administration of the Revolving Credit, from
restoring any component of Borrowing Base which had been
lowered by the Agent back to the value of such component,
as stated in this Agreement or to an intermediate value.
(iii) The amendment of any financial
performance covenant to which direct or indirect reference
is made in the Definition of "Availability" or "Borrowing
Base" or in the Definition of any component thereof shall
be subject to amendment as otherwise provided in this
Agreement (and by Consent of the Majority Lenders if not
subject to any other specific provision of this
Agreement).
(c) Any release of any Loan Party.
(d) The making of any Revolving Credit Loan which, when
made, exceeds Availability and is not a Protective OverAdvance, subject,
however, to the following:
(i) No Consent is required in connection with
the making of any Revolving Credit Loan to "cover" any
honoring of a drawing under any L/C.
(ii) Each Revolving Credit Lender recognizes
that subsequent to the making of a Revolving Credit Loan
which does not constitute a Protective OverAdvance, the
unpaid principal balance of the Loan Account may exceed
Borrowing Base on account of changed circumstances beyond
the control of the Agent (such as a drop in collateral
value).
(e) Any amendment which has the effect of limiting the
Agent's right or ability to make Protective OverAdvances.
(f) The waiver of the obligation of the Loan Parties to
reduce the unpaid principal balance of loans under the Revolving Credit to an
amount so that no OverLoan (other than a Protective OverAdvance) is outstanding.
(g) Any amendment of this Article 15.
(h) Amendment of any of the following Definitions:
"Majority Lender"
"Protective OverAdvance"
"SuperMajority Lenders
"Unanimous Consent"
15.6 ACTIONS REQUIRING SWINGLINE LENDER CONSENT No action, amendment,
or waiver of compliance with, any provision of the Loan Documents or of this
Agreement which affects the SwingLine Lender may be undertaken without the
Consent of the SwingLine Lender.
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15.7 ACTIONS REQUIRING AGENT'S CONSENT
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects the Agent in
its capacity as Agent may be undertaken without the written consent of the
Agent.
(b) No action referenced herein which affects the rights,
duties, obligations, or liabilities of the Agent shall be effective without the
written consent of the Agent.
15.8 MISCELLANEOUS ACTIONS
(a) Notwithstanding any other provision of this Agreement,
no single Revolving Credit Lender independently may exercise any right of action
or enforcement against or with respect to any Loan Party.
(b) The Agent shall be fully justified in failing or
refusing to take action under this Agreement or any Loan Document on behalf of
any Revolving Credit Lender unless the Agent shall first
(i) receive such clear, unambiguous, written
instructions as the Agent deems appropriate; and
(ii) be indemnified to the Agent's satisfaction
by the Revolving Credit Lenders against any and all
liability and expense which may be incurred by the Agent
by reason of taking or continuing to take any such action,
unless such action had been grossly negligent, in willful
misconduct, or in bad faith.
(c) The Agent may establish reasonable procedures for the
providing of direction and instructions from the Revolving Credit Lenders to the
Agent, including its reliance on multiple counterparts, facsimile transmissions,
and time limits within which such direction and instructions must be received in
order to be included in a determination of whether the requisite Lenders have
provided their direction, Consent, or instructions.
15.9 ACTIONS REQUIRING LEAD BORROWER'S CONSENT. The Lead Borrower's
consent is required for any amendment of this Agreement, except that each of the
following Articles of this Agreement may be amended without the consent of the
Lead Borrower so long as such amendment shall not directly and adversely affect
the Loan Parties:
Article Title of Article
------- ----------------
12 Revolving Credit Fundings and Distributions
13 Acceleration and Liquidation (provided that the
provisions of Section 13.2(b) relating to the
requirement of SuperMajority Lenders' consent may
not be amended without the Lead Borrower's
consent).
14 The Agent (provided that the provisions of
Section 14.10(a) relating to the Lead Borrower's
consent to a successor Agent in certain
circumstances may not be amended without the Lead
Borrower's consent).
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15 Action By Agent; Consents; Amendments;
Waivers(provided that the provisions of Section
15.4(c) and (e), Section 15.5(b) and (c) and
Section 15.9 may not be amended without the Lead
Borrower's consent.)
16 Assignments and Participations (provided that
the provisions of Section 16.1(a)(i) relating
to the Lead Borrower's consent to assignments
in certain circumstances may not be amended
without the Lead Borrower's consent).
15.10 NONCONSENTING REVOLVING CREDIT LENDER
(a) In the event that a Revolving Credit Lender (in this
Section 15.10, a "NONCONSENTING REVOLVING CREDIT LENDER") does not provide its
Consent to a proposal by the Agent to take action which requires consent under
this Article 15, then one or more Revolving Credit Lenders who provided Consent
to such action may require the assignment, without recourse and in accordance
with the procedures outlined in Section 16.1, below, of the NonConsenting
Revolving Credit Lender's commitment hereunder on fifteen (15) days written
notice to the Agent and to the NonConsenting Revolving Credit Lender.
(b) At the end of such fifteen (15) days, and provided that
the NonConsenting Revolving Credit Lender delivers the Revolving Credit Note
held by the NonConsenting Revolving Credit Lender to the Agent, the Revolving
Credit Lenders who have given such written notice shall Transfer the following
to the NonConsenting Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit
Lender's pro rata share of the principal and interest of
the Revolving Credit Loans to the date of such assignment.
(ii) All fees distributable hereunder to the
NonConsenting Revolving Credit Lender to the date of such
assignment.
(iii) Any out-of-pocket costs and expenses for
which the NonConsenting Revolving Credit Lender is
entitled to reimbursement from the Loan Parties.
(c) In the event that the NonConsenting Revolving Credit
Lender fails to deliver to the Agent the Revolving Credit Note held by the
NonConsenting Revolving Credit Lender as provided in Section 15.10(b), then:
(i) The amount otherwise to be Transferred to
the NonConsenting Revolving Credit Lender shall be
Transferred to the Agent and held by the Agent, without
interest, to be turned over to the NonConsenting Revolving
Credit Lender upon delivery of the Revolving Credit Note
held by that NonConsenting Revolving Credit Lender.
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(ii) The Revolving Credit Note held by the
NonConsenting Revolving Credit Lender shall have no force
or effect whatsoever.
(iii) The NonConsenting Revolving Credit Lender
shall cease to be a "Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have
Transferred the amount to the Agent as described above
shall have succeeded to all rights and become subject to
all of the obligations of the NonConsenting Revolving
Credit Lender as "Revolving Credit Lender".
(d) In the event that more than One (1) Revolving Credit
Lender wishes to require such assignment, the NonConsenting Revolving Credit
Lender's commitment hereunder shall be divided among such Revolving Credit
Lenders, pro-rata based upon their respective Revolving Credit Percentage
Commitments, with the Agent coordinating such transaction.
(e) The Agent shall coordinate the retirement of the
Revolving Credit Note held by the NonConsenting Revolving Credit Lender and the
issuance of Revolving Credit Notes to those Revolving Credit Lenders which
"take-out" such NonConsenting Revolving Credit Lender, provided, however, no
processing fee otherwise to be paid as provided in Section 16.2(b) shall be due
under such circumstances.
ARTICLE 16 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16.1 ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender
(in this Section 16.1(a), an "ASSIGNING REVOLVING CREDIT LENDER") may assign to
one or more Eligible Assignees (in this Section 16.1(a), each an "ASSIGNEE
REVOLVING CREDIT LENDER") all or a portion of that Revolving Credit Lender's
interests, rights and obligations under this Agreement and the Loan Documents
(including all or a portion of its Commitment) and the same portion of the
Revolving Credit Loans at the time owing to it, and of the Revolving Credit Note
held by the Assigning Revolving Credit Lender, provided that:
(i) The Agent shall have given its prior
written consent to such assignment, which consent shall
not be unreasonably withheld, but need not be given if the
proposed assignment would result in any resulting
Revolving Credit Lender's having a Dollar Commitment of
less than the "minimum hold" amount specified in Section
16.1(a)(iii) or if there would be more than three (3)
Revolving Credit Lenders, and, in addition, provided that
no Default or Event of Default shall have occurred and be
continuing, the Lead Borrower shall have given its prior
written consent to such assignment, which consent shall
not be unreasonably withheld, if a proposed assignment by
FRFI would result in FRFI having a Revolving Credit Dollar
Commitment of less than $20,000,000.00 (other than any
such assignment which is the result of the acquisition of
FRFI or is an assignment required by any Governmental
Authority).
113
(ii) Each such assignment shall be of a
constant, and not a varying, percentage of all the
Assigning Revolving Credit Lender's rights and obligations
under this Agreement.
(iii) Following the effectiveness of such
assignment, the Assigning Revolving Credit Lender's Dollar
Commitment (if not an assignment of all of the Assigning
Revolving Credit Lender's Commitment) shall not be less
than $5,000,000.00.
16.2 ASSIGNMENT PROCEDURES. (This Section 16.2 describes the
procedures to be followed in connection with an assignment effected pursuant to
this Article 16 and permitted by Section 16.1).
(a) The parties to such an assignment shall execute and
deliver to the Agent, for recording in the Register, an Assignment and
Acceptance (each, an "ASSIGNMENT AND ACCEPTANCE") substantially in the form of
EXHIBIT 16.2, annexed hereto.
(b) The Assigning Revolving Credit Lender shall deliver to
the Agent, with such Assignment and Acceptance, the Revolving Credit Note held
by the subject Assigning Revolving Credit Lender and the Agent's processing fee
of $3,000.00, provided, however, no such processing fee shall be due where the
Assigning Revolving Credit Lender is one of the Revolving Credit Lenders at the
initial execution of this Agreement.
(c) The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "REGISTER") for
the recordation of the names and addresses of the Revolving Credit Lenders and
of the Revolving Credit Percentage Commitment and Revolving Credit Percentage
Commitment of each Revolving Credit Lender. The Register shall be available for
inspection by the Revolving Credit Lenders at any reasonable time and from time
to time upon reasonable prior notice. In the absence of manifest error, the
entries in the Register shall be conclusive and binding on all Revolving Credit
Lenders. The Agent and the Revolving Credit Lenders may treat each Person whose
name is recorded in the Register as a "Revolving Credit Lender" hereunder for
all purposes of this Agreement.
(d) The Assigning Revolving Credit Lender and Assignee
Revolving Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an Assignment
and Assumption.
16.3 EFFECT OF ASSIGNMENT.
(a) From and after the effective date specified in an
Assignment and Acceptance which has been executed, delivered, and recorded
(which effective date the Agent may delay by up to Five (5) Business Days after
the delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
114
(A) Shall be a party to this
Agreement and the Loan Documents (and to any
amendments thereof) as fully as if the Assignee
Revolving Credit Lender had executed each.
(B) Shall have the rights of a
Revolving Credit Lender hereunder to the extent
of the Revolving Credit Percentage Commitment
and Revolving Credit Percentage Commitment
assigned by such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender
shall be released from the Assigning Revolving Credit
Lender's obligations under this Agreement and the Loan
Documents to the extent of the Commitment assigned by such
Assignment and Acceptance.
(iii) The Agent shall undertake to obtain and
distribute replacement Revolving Credit Notes to the
subject Assigning Revolving Credit Lender and Assignee
Revolving Credit Lender.
(b) By executing and delivering an Assignment and
Acceptance, the parties thereto confirm to and agree with each other and with
all parties to this Agreement as to those matters which are set forth in the
subject Assignment and Acceptance.
ARTICLE 17 - NOTICES:
17.1 NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of any Loan Document (other than a request for a loan or advance
or other financial accommodation under the Revolving Credit) shall be made to
the following addresses, each of which may be changed upon seven (7) days
written notice to all others given by certified mail, return receipt requested:
If to the Agent:
Fleet Retail Finance Inc
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
If to the Lead Borrower: ODD JOB STORES, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
115
And All Loan Parties:
ODD JOB STORES, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, Esquire
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
17.2 NOTICE GIVEN.
(a) Except as otherwise specifically provided herein,
notices shall be deemed made and correspondence received, as follows (all times
being local to the place of delivery or receipt):
(i) By mail: the sooner of when actually
received or Three (3) days following deposit in the United
States mail, postage prepaid.
(ii) By recognized overnight express delivery:
the Business Day following the day when sent.
(iii) By Hand: If delivered on a Business Day
after 9:00 a.m.. and no later than Three (3) hours prior
to the close of customary business hours of the recipient,
when delivered. Otherwise, at the opening of the then next
Business Day.
(iv) By Facsimile transmission (which must
include a header on which the party sending such
transmission is indicated): If sent on a Business Day
after 9:00 a.m. and no later than three (3) hours prior to
the close of customary business hours of the recipient,
one (1) hour after being sent. Otherwise, at the opening
of the then next Business Day.
(b) Rejection or refusal to accept delivery and inability
to deliver because of a changed address or Facsimile Number for which no due
notice was given shall each be deemed receipt of the notice sent.
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17.3 WIRE INSTRUCTIONS. NOTICE GIVEN. Subject to change in the same
manner that a notice address may be changed (as to which, see Section 17.1),
wire transfers to the Agent shall be made in accordance with the following wire
instructions:
Fleet National Bank
ABA Number: ▇▇▇▇▇▇▇▇▇
Account Name :Fleet Retail Finance Collateral
Account for Odd Job Stores
Account Number :▇▇▇▇▇▇▇▇▇▇
Reference :Odd Job Stores
ARTICLE 18 - TERM:
18.1 TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2.6 hereof) until
the Termination Date.
18.2 ACTIONS ON TERMINATION.
(a) On the Termination Date, the Loan Parties shall pay the
Agent (whether or not then due), in immediately available funds, all then
Liabilities including, without limitation: the following:
(i) The entire balance of the Loan Account
(including the unpaid principal balance of the Revolving
Credit Loans, and the SwingLine Loan ).
(ii) Any then remaining installments of the
Revolving Credit Commitment Fee.
(iii) Any then remaining installments of the
Facility Fee.
(iv) Any payments due on account of the
indemnification obligations included in Section 2.11(e).
(v) Any accrued and unpaid Unused Line Fee.
(vi) All unreimbursed costs and expenses of the
Agent and of Lenders' Special Counsel for which each Loan
Party is responsible.
(vii) The Early Termination Fee, if applicable.
(viii) All other Liabilities.
(b) On the Termination Date, the Loan Parties shall also
shall make such arrangements concerning any L/C's then outstanding as are
reasonably satisfactory to the Agent including, without limitation, being cash
collateralized at 105 % of their then Stated Amount.
(c) Until such payment (Section 18.2(a)) and arrangements
concerning L/C's (Section 18.2(b)), all provisions of this Agreement, other than
those included in Article 2, 5 which place any obligation on the Agent or any
Revolving Credit Lender to make any loans or advances or to provide any
117
financial accommodations to any Loan Party shall remain in full force and effect
until all Liabilities shall have been paid in full.
(d) On the Termination Date, all Liens in favor of the
Agent shall automatically terminate and the Agent promptly shall deliver to Lead
Borrower (at Lead Borrower's expense), to the extent reasonably requested by
Lead Borrower, termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Liabilities, so long as (i) all payments (Section 18.2(a)) have
been made, all arrangements concerning L/C's (Section 18.2(b)) have been
completed and all obligations of the Agent and Revolving Credit Lenders to make
Loans and extend other financial accommodations hereunder have terminated and
(ii) no suits, actions, proceedings or claims are pending against any
Indemnified Person asserting any damages, losses or liabilities which are
Liabilities against which indemnity is provided under Section 19.13 and which in
the Agent's reasonable judgment are likely to result in Liabilities which (x)
are not covered by insurance maintained by the Loan Parties and (y) are of such
nature and in such amount as constitute a material risk that the Loan Parties
will not be financially capable of satisfying such Liabilities(it being
understood that, in assessing the materiality of such risk, the Agent shall take
into account such collateral security, if any, that the Loan Parties may provide
to secure the payment thereof).
ARTICLE 19 - GENERAL:
19.1 PROTECTION OF COLLATERAL. The Agent has no duty as to the
collection or protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of the Agent.
19.2 PUBLICITY. The Agent may issue a "tombstone" notice of the
establishment of the credit facility contemplated by this Agreement and may make
reference to each Loan Party (and may utilize any logo or other distinctive
symbol associated with each Loan Party) in connection with any advertising,
promotion, or marketing (including reference in any "case study" of the creditor
facility contemplated hereby) undertaken by the Agent.
19.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Loan Parties and their respective representatives, successors, and assigns and
shall enure to the benefit of the Agent and each Revolving Credit Lender and
their respective successors and assigns, provided, however, no trustee or other
fiduciary appointed with respect to any Loan Party shall have any rights
hereunder. In the event that the Agent or any Revolving Credit Lender assigns or
transfers its rights under this Agreement, the assignee shall thereupon succeed
to and become vested with all rights, powers, privileges, and duties of such
assignor hereunder and such assignor shall thereupon be discharged and relieved
from its duties and obligations hereunder.
19.4 SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
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enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
19.5 AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between each Loan Party and the Agent and each
Revolving Credit Lender, either express or implied, concerning the matters
included herein and in such other instruments, any custom, usage, or course of
dealings to the contrary notwithstanding. No such discussions, negotiations,
custom, usage, or course of dealings shall limit, modify, or otherwise affect
the provisions thereof. No failure by the Agent or any Revolving Credit Lender
to give notice to the Lead Borrower of any Loan Party's having failed to observe
and comply with any warranty or covenant included in any Loan Document shall
constitute a waiver of such warranty or covenant or the amendment of the subject
Loan Document. No change made by the Agent to the manner by which Borrowing Base
is determined shall obligate the Agent to continue to determine Borrowing Base
in that manner.
(b) Each Loan Party may undertake any action otherwise
prohibited hereby, and may omit to take any action otherwise required hereby,
upon and with the express prior written consent of the Agent. Subject to Article
15, no consent, modification, amendment, or waiver of any provision of any Loan
Document shall be effective unless executed in writing by or on behalf of the
party to be charged with such modification, amendment, or waiver (and if such
party is the Agent then by a duly authorized officer thereof). Any modification,
amendment, or waiver provided by the Agent shall be in reliance upon all
representations and warranties theretofore made to the Agent by or on behalf of
the Loan Parties (and any guarantor, endorser, or surety of the Liabilities) and
consequently may be rescinded in the event that any of such representations or
warranties was not true and complete in all material respects when given.
19.6 POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, each Loan Party hereby grants unto the Agent (acting
through any of its officers) full power to do any and all things necessary or
appropriate in connection with the exercise of such powers as fully and
effectually as that Loan Party might or could do, hereby ratifying all that said
attorney shall do or cause to be done by virtue of this Agreement. No power of
attorney set forth in this Agreement shall be affected by any disability or
incapacity suffered by any Loan Party and each shall survive the same. All
powers conferred upon the Agent by this Agreement, being coupled with an
interest, shall be irrevocable until this Agreement is terminated by a written
instrument executed by a duly authorized officer of the Agent.
19.7 APPLICATION OF PROCEEDS. The proceeds of any collection, sale,
or disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the Agent
determines in its sole discretion, consistent, however, with Sections 13.6 and
13.7 and any other applicable provisions of this Agreement. The Loan Parties
shall remain liable for any deficiency remaining following such application.
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19.8 INCREASED COSTS. If, as a result of any Requirement of Law, or
of the interpretation or application thereof by any court or by any governmental
or other authority or entity charged with the administration thereof, whether or
not having the force of law, which:
(a) increases the cost to any Revolving Credit Lender of
agreeing to make or making, funding or maintaining Eurodollar Loans;
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by, or
deposits in or for the account of or loans by or any other acquisition of funds
by the relevant funding office of any Revolving Credit Lender;
(c) imposes on any Revolving Credit Lender any other
condition with respect to any Loan Document; or
(d) imposes on any Revolving Credit Lender a requirement to
maintain or allocate capital in relation to the Liabilities;
and the result of any of the foregoing, in such Revolving Credit Lender's
reasonable opinion, is to increase the cost to that Revolving Credit Lender of
making or maintaining any loan, advance or financial accommodation or to reduce
the income receivable by that Revolving Credit Lender in respect of any loan,
advance or financial accommodation by an amount which that Revolving Credit
Lender deems to be material, then upon written notice from the Agent, from time
to time, to the Lead Borrower (such notice to set out in reasonable detail the
facts giving rise to and a summary calculation of such increased cost or reduced
income), the Loan Parties shall forthwith pay to the Agent, for the benefit of
the subject Revolving Credit Lender, upon receipt of such notice, that amount
which shall compensate the subject Revolving Credit Lender for such additional
cost or reduction in income.
19.9 COSTS AND EXPENSES OF THE AGENT.
(a) The Loan Parties shall pay from time to time on demand
all Costs of Collection and all reasonable costs, expenses, and disbursements
(including attorneys' reasonable fees and expenses) which are incurred by the
Agent in connection with the preparation, negotiation, execution, and delivery
of this Agreement and of any other Loan Documents, and all other reasonable
costs, expenses, and disbursements which may be incurred in connection with or
in respect to the credit facility contemplated hereby or which otherwise are
incurred with respect to the Liabilities.
(b) The Loan Parties shall pay from time to time on demand
all reasonable costs and expenses (including attorneys' reasonable fees and
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expenses) incurred, following the occurrence of any Event of Default, by the
Revolving Credit Lenders to Lenders' Special Counsel.
(c) Each Loan Party authorizes the Agent to pay all such
fees and expenses and in the Agent's discretion, to add such fees and expenses
to the Loan Account.
(d) The undertaking on the part of each Loan Party in this
Section 19.9 shall survive payment of the Liabilities and/or any termination,
release, or discharge executed by the Agent in favor of any Loan Party, other
than a termination, release, or discharge which makes specific reference to this
Section 19.9.
19.10 COPIES AND FACSIMILES. Each Loan Document and all documents and
papers which relates thereto which have been or may be hereinafter furnished the
Agent or any Revolving Credit Lender may be reproduced by that Revolving Credit
Lender or by the Agent by any photographic, microfilm, xerographic, digital
imaging, or other process, and such Person making such reproduction may destroy
any document so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business). Any facsimile which
bears proof of transmission shall be binding on the party which or on whose
behalf such transmission was initiated and likewise shall be so admissible in
evidence as if the original of such facsimile had been delivered to the party
which or on whose behalf such transmission was received.
19.11 MASSACHUSETTS LAW. THIS AGREEMENT AND ALL RIGHTS AND
OBLIGATIONS HEREUNDER, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, AND
PERFORMANCE, SHALL BE GOVERNED BY THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.
19.12 CONSENT TO JURISDICTION.
(a) Each Loan Party agrees that any legal action,
proceeding, case, or controversy against any Loan Party with respect to any Loan
Document may be brought in the Superior Court of Suffolk County Massachusetts or
in the United States District Court, District of Massachusetts, sitting in
Boston, Massachusetts, as the Agent may elect in the Agent's sole discretion. By
execution and delivery of this Agreement, each Loan Party, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Loan Party WAIVES personal service of any and all
process upon it, and irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to the Lead Borrower at the
Lead Borrower's address for notices as specified herein, such service to become
effective five (5) Business Days after such mailing.
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(c) Each Loan Party WAIVES any objection based on forum non
conveniens and any objection to venue of any action or proceeding instituted
under any of the Loan Documents and consents to the granting of such legal or
equitable remedy as is deemed appropriate by the Court.
(d) Nothing herein shall affect the right of the Agent to
bring legal actions or proceedings in any other competent jurisdiction.
(e) Each Loan Party agrees that any action commenced by any
Loan Party asserting any claim arising under or in connection with this
Agreement or any other Loan Document shall be brought solely in the Superior
Court of Suffolk County Massachusetts or in the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, and that such
Courts shall have exclusive jurisdiction with respect to any such action.
19.13 INDEMNIFICATION. Each Loan Party shall indemnify, defend, and
hold the Agent and each Revolving Credit Lender and any Participant and any of
their respective employees, officers, or agents (each, an "INDEMNIFIED PERSON")
harmless of and from (A) any claim brought or threatened against any Indemnified
Person by any Loan Party, any guarantor or endorser of the Liabilities, or any
other Person (as well as from attorneys' reasonable fees, expenses, and
disbursements in connection therewith) on account of the relationship of the
Loan Parties or of any other guarantor or endorser of the Liabilities, including
all costs, expenses, liabilities, and damages as may be suffered by any
Indemnified Person in connection with (x) the Collateral; (y) the occurrence of
any Event of Default; or (z) the exercise of any rights or remedies under any of
the Loan Documents (each of claims which may be defended, compromised, settled,
or pursued by the Indemnified Person with counsel of the Lender's selection, but
at the expense of the Loan Parties) other than any claim as to which a final
determination is made in a judicial proceeding (in which the Agent and any other
Indemnified Person has had an opportunity to be heard), which determination
includes a specific finding that the Indemnified Person seeking indemnification
had acted in a grossly negligent manner or in actual bad faith and (B) agrees to
pay Agent and the Revolving Credit Lenders on demand the amount of any check,
draft, instrument or other item of payment constituting part of the collections
credited by the Agent or any Revolving Credit Lender to the Borrowers which is
dishonored, returned or otherwise not collected at any time, and the Borrowers
shall, on demand, reimburse the Agent and the Revolving Credit Lenders the
amount thereof and all reasonable fees, costs and expenses of the Agent and the
Revolving Credit Lenders relating thereto in immediately available funds. This
indemnification shall survive payment of the Liabilities and/or any termination,
release, or discharge executed by the Agent in favor of the Loan Parties, other
than a termination, release, or discharge duly executed on behalf of the Agent
which makes specific reference to this Section 19.13.
19.14 RULES OF CONSTRUCTION. The following rules of construction
shall be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
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(a) Unless otherwise specifically provided for herein (and
then only to the extent so provided), interest and any fee or charge which is
stated as a per annum percentage shall be calculated based on a 360 day year and
actual days elapsed.
(b) Words in the singular include the plural and words in
the plural include the singular.
(c) Unless otherwise specifically provided for herein or in
a specific Loan Document (and then only to the extent so provided), as between
the parties hereto or to any Loan Document, the definitions of the following
terms, as included in the UCC, are deemed to be as follows for purposes of the
performance of obligations arising under or in respect of any Loan Document:
(i) "Authenticate" means "signed".
(ii) "Record" means written information in a
tangible form.
(d) Cross references to Sections in this Agreement begin
with the Article in which that Section appears, followed by a colon, and then
the Section to which reference is made. (For example, a reference to "Section
5:5-6" is to Section 5-6, which appears in Article 5 of this Agreement).
(e) Titles, headings (indicated by being underlined or
shown in Small Capitals) and any Table of Contents are solely for convenience of
reference; do not constitute a part of the instrument in which included; and do
not affect such instrument's meaning, construction, or effect.
(f) The words "includes" and "including" are not limiting.
(g) Text which follows the words "including, without
limitation" (or similar words) is illustrative and not limitational.
(h) Text which is shown in italics (except for
parenthesized italicized text), shown in BOLD, shown IN ALL CAPITAL LETTERS, or
in any combination of the foregoing, shall be deemed to be conspicuous.
(i) The words "may not" are prohibitive and not permissive.
(j) Any reference to a Person's "knowledge" (or words of
similar import) are to such Person's knowledge assuming that such Person has
undertaken reasonable and diligent investigation with respect to the subject of
such "knowledge" (whether or not such investigation has actually been
undertaken).
(k) Terms which are defined in one section of any Loan
Document are used with such definition throughout the instrument in which so
defined.
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(l) The term "Dollars" and the symbol "$" each refers to
United States Dollars.
(m) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(n) References to "this Agreement" or to any other Loan
Document is to the subject instrument as amended to the date on which
application of such reference is being made.
(o) Except as otherwise specifically provided, all
references to time are to Boston, Massachusetts time.
(p) In the determination of any notice, grace, or other
period of time prescribed or allowed hereunder:
(i) Unless otherwise provided (I) the day of
the act, event, or default from which the designated
period of time begins to run shall not be included and the
last day of the period so computed shall be included
unless such last day is not a Business Day, in which event
the last day of the relevant period shall be the then next
Business Day and (II) the period so computed shall end at
5:00 p.m. on the relevant Business Day.
(ii) The word "from" means "from and
including".
(iii) The words "to" and "until" each mean "to,
but excluding".
(iv) The word "through" means "to and
including".
(q) The Loan Documents shall be construed and interpreted
in a harmonious manner and in keeping with the intentions set forth in Section
19.15 hereof, provided, however, in the event of any inconsistency between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall govern and control.
19.15 INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by any
Loan Party to secure the Liabilities be broadly construed in favor of the Agent
and that they cover all assets of each Loan Party (other than with respect to
any directly held Foreign Subsidiary of such Loan Party, more than 65% of the
total combined voting power of all classes of stock of such Foreign Subsidiary
that are entitled to vote).
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(c) All Collateral Interests created in favor of the Agent
at any time and from time to time secure all Liabilities, whether now existing
or contemplated or hereafter arising.
(d) All reasonable costs, expenses, and disbursements
incurred by the Agent and, to the extent provide in Section 19.9, each Revolving
Credit Lender, in connection with such Person's relationship(s) with any Loan
Party shall be borne by the Loan Parties.
(e) Unless otherwise explicitly provided herein, the
Agent's consent to any action of any Loan Party which is prohibited unless such
consent is given may be given or refused by the Agent in its sole discretion and
without reference to Section 2.18 hereof.
19.16 PARTICIPATIONS: Each Revolving Credit Lender may sell
participations to one or more financial institutions (each, a "PARTICIPANT") in
that Revolving Credit Lender's interests herein provided that no such
participation shall include any provision which accords that Participant with
any rights, vis a vis the Agent, with respect to any requirement herein for
approval by a requisite number or proportion of the Revolving Credit Lenders. No
such sale of a participation shall relieve a Revolving Credit Lender from that
Revolving Credit Lender's obligations hereunder nor obligate the Agent to any
Person other than a Revolving Credit Lender.
19.17 RIGHT OF SET-OFF. Any and all deposits or other sums at any
time credited by or due to any Loan Party from the Agent or any Revolving Credit
Lender or any Participant or from any Affiliate of any of the foregoing, and any
cash, securities, instruments or other property of any Loan Party in the
possession of any of the foregoing, whether for safekeeping or otherwise
(regardless of the reason such Person had received the same) shall at all times
constitute security for all Liabilities and for any and all obligations of each
Loan Party to the Agent and such Revolving Credit Lender or any Participant or
such Affiliate and may be applied or set off against the Liabilities and against
such obligations at any time, whether or not such are then due and whether or
not other collateral is then available to the Agent or that Revolving Credit
Lender.
19.18 PLEDGES TO FEDERAL RESERVE BANKS: Nothing included in this
Agreement shall prevent or limit any Revolving Credit Lender, to the extent that
such Revolving Credit Lender is subject to any of the twelve Federal Reserve
Banks organized under ss.4 of the Federal Reserve Act (12 U.S.C. ss.341) from
pledging all or any portion of that Revolving Credit Lender's interest and
rights under this Agreement, provided, however, neither such pledge nor the
enforcement thereof shall release the pledging Revolving Credit Lender from any
of its obligations hereunder or under any of the Loan Documents.
19.19 MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither the Agent nor any Revolving Credit Lender shall be entitled to
contract for, charge, receive, collect, or apply as interest on any Liability,
any amount in excess of the maximum rate imposed by Applicable Law. Any payment
which is made which, if treated as interest on a Liability would result in such
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interest's exceeding such maximum rate shall be held, to the extent of such
excess, as additional collateral for the Liabilities as if such excess were
"Collateral."
19.20 WAIVERS.
(a) Each Loan Party (and all guarantors, endorsers, and
sureties of the Liabilities) make each of the waivers included in Section
19.20(b), below, knowingly, voluntarily, and intentionally, and understands that
Agent and each Revolving Credit Lender, in establishing the facilities
contemplated hereby and in providing loans and other financial accommodations to
or for the account of the Loan Parties as provided herein, whether not or in the
future, is relying on such waivers.
(b) EACH Loan Party, AND EACH SUCH GUARANTOR, ENDORSER, AND
SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required
hereby, notice of non-payment, demand, presentment,
protest and all forms of demand and notice, both with
respect to the Liabilities and the Collateral.
(ii) Except as otherwise specifically required
hereby, the right to notice and/or hearing prior to the
Agent's exercising of the Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY
CASE OR CONTROVERSY IN WHICH THE AGENT OR ANY REVOLVING
CREDIT LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE AGENT OR ANY
REVOLVING CREDIT LENDER OR IN WHICH THE AGENT OR ANY
REVOLVING CREDIT LENDER IS JOINED AS A PARTY LITIGANT),
WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT
OF, ANY RELATIONSHIP AMONGST OR BETWEEN ANY LOAN PARTY OR
ANY OTHER PERSON AND THE AGENT AND EACH REVOLVING CREDIT
LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF
ANY SUCH CASE OR CONTROVERSY).
(iv) The benefits or availability of any stay,
limitation, hindrance, delay, or restriction (including,
without limitation, any automatic stay which otherwise
might be imposed pursuant to Section 362 of the Bankruptcy
Code) with respect to any action which the Agent may or
may become entitled to take hereunder.
(v) Any defense, counterclaim, set-off,
recoupment, or other basis on which the amount of any
Liability, as stated on the books and records of the
Agent, could be reduced or claimed to be paid otherwise
than in accordance with the tenor of and written terms of
such Liability.
(vi) Any claim to consequential, special, or
punitive damages.
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19.21 JOINT PROVISIONS.
(a) Each Loan Party represents to the Revolving Credit
Lenders that it is an integral part of a consolidated enterprise, and that each
Loan Party will receive direct and indirect benefits from the availability of
the joint credit facility provided for herein, and from the ability to access
the collective credit resources of the consolidated enterprise that are Loan
Parties.
(b) Each Loan Party is, and at all times shall be, jointly
and severally liable for each and every one of the Liabilities hereunder,
regardless of which Loan Party requested, received, used, or directly enjoyed
the benefit of the extensions of credit hereunder. All of the Collateral shall
secure all of the Liabilities. Each Loan Party's Liabilities are independent
obligations and are absolute and unconditional. Each Loan Party, to the extent
permitted by law, hereby waives any defense to such Liabilities that may arise
by reason of the disability or other defense or cessation of liability of any
other Loan Party for any reason other than payment in full. Each Loan Party also
waives any defense to such Liabilities that it may have as a result of any
Revolving Credit Lender's or Agent's election of or failure to exercise any
right, power, or remedy, including, without limitation, the failure to proceed
first against such other Loan Party or any security it holds for such other Loan
Party's Liabilities under any Loan Document, if any. Without limiting the
generality of the foregoing, each Loan Party expressly waives all demands and
notices whatsoever (except for any demands or notices, if any, that such Loan
Party expressly is entitled to receive pursuant to the terms of any Loan
Document), and agrees that the Revolving Credit Lenders and the Agent may,
without notice (except for such notice, if any, as such Loan Party expressly is
entitled to receive pursuant to the terms of any Loan Document) and without
releasing the liability of such Loan Party, extend for the benefit of any other
Loan Party the time for making any payment, waive or extend the performance of
any agreement or make any settlement of any agreement for the benefit of any
other Loan Party, and may proceed against each Loan Party, directly and
independently of any other Loan Party, as such obligee may elect in accordance
with this Agreement.
(c) Each Loan Party acknowledges that the Liabilities of
such Loan Party undertaken herein or in the other Loan Documents, and the grants
of security interests and liens by such Loan Party to secure Liabilities of the
other Loan Party could be construed to consist, at least in part, of the
guaranty of Liabilities of the other Loan Party and, in full recognition of that
fact, each Loan Party consents and agrees as hereinafter set forth in the
balance of this Section 19.21. The consents, waivers, and agreements of the Loan
Parties that are contained in the balance of this Section 19.21 are intended to
deal with the suretyship aspects of the transactions evidenced by the Loan
Documents (to the extent that a Loan Party may be deemed a guarantor or surety
for the Liabilities of another Loan Party) and thus are intended to be effective
and applicable only to the extent that any Loan Party has agreed to answer for
the Liabilities of another Loan Party or has granted a lien or security interest
in Collateral to secure the Liabilities of another Loan Party. Conversely, the
consents, waivers, and agreements of the Loan Parties that are contained in the
balance of this Section 19.21 shall not be applicable to the direct Liabilities
of a Loan Party with respect to credit extended directly to such Loan Party, and
shall not be applicable to security interests or liens on Collateral of a Loan
Party given to directly secure direct Liabilities of such Loan Party where no
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aspect of guaranty or suretyship is involved. Each Loan Party consents and
agrees that the Revolving Credit Lenders may, at any time and from time to time,
without notice or demand, whether before or after any actual or purported
termination, repudiation or revocation of this Agreement by any one or more Loan
Parties, and without affecting the enforceability or continuing effectiveness
hereof as to such Loan Party, in accordance with the terms of the Loan
Documents: (i) supplement, restate, modify, amend, increase, decrease, extend,
renew, accelerate or otherwise change the time for payment or the terms of the
Liabilities or any part thereof, including any increase or decrease of the
rate(s) of interest thereon; (ii) supplement, restate, modify, amend, increase,
decrease or waive, or enter into or give any agreement, approval or consent with
respect to, the Liabilities or any part thereof, or any of the Loan Documents or
any security or guarantees granted or entered into by any Person(s) other than
such Loan Party, or any condition, covenant, default, remedy, right,
representation or term thereof or thereunder; (iii) accept new or additional
instruments, documents or agreements in exchange for or relative to any of the
Loan Documents or the Liabilities or any part thereof, (iv) accept partial
payments on the Liabilities; (v) receive and hold additional security (other
than with respect to any directly held Foreign Subsidiary of such Loan Parties,
more than 65% of the total combined voting power of all classes of stock of such
Foreign Subsidiary that are entitled to vote) or guarantees for the Liabilities
or any part thereof, (vi) release, reconvey, terminate, waive, abandon, fail to
perfect, subordinate, exchange, substitute, transfer or enforce any security or
guarantees, and apply any security and direct the order or manner of sale
thereof as the Revolving Credit Lenders in their sole and absolute discretion
may determine; (vii) release any other Person (including, without limitation,
any other Loan Party) from any personal liability with respect to the
Liabilities or any part thereof, (viii) with respect to any Person other than
such Loan Party (including, without limitation, any other Loan Party), settle,
release on terms satisfactory to the Revolving Credit Lenders or by operation of
applicable laws or otherwise liquidate or enforce any Liabilities and any
security therefor or guaranty thereof in any manner, consent to the transfer of
any security and bid and purchase at any sale; or (ix) consent to the merger,
change or any other restructuring or termination of the corporate or partnership
existence of any other Loan Party or any other Person, and correspondingly
agree, in accordance with all applicable provisions of the Loan Documents, to
the restructure of the Liabilities, and any such merger, change, restructuring
or termination shall not affect the liability of any Loan Party or the
continuing effectiveness hereof, or the enforceability hereof with respect to
all or any part of the Liabilities.
(d) Upon the occurrence and during the continuance of any
Event of Default, the Agent may enforce the Loan Documents independently as to
each Loan Party and independently of any other remedy the Agent or any Revolving
Credit Lender at any time may have or hold in connection with the Liabilities,
and it shall not be necessary for the Agent or the Revolving Credit Lenders to
marshal assets in favor of any Loan Party or any other Person or to proceed upon
or against or exhaust any security or remedy before proceeding to enforce this
Agreement or any other Loan Documents. Each Loan Party expressly waives any
right to require the Agent or the Revolving Credit Lenders to marshal assets in
favor of any Loan Party or any other Person or to proceed against any other Loan
Party or any Collateral provided by any Person, and agrees that the Agent or any
Revolving Credit Lender may proceed against Loan Parties or any Collateral in
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such order as they shall determine in their sole and absolute discretion,
subject to the terms hereof.
(e) The Agent may file a separate action or actions against
any Loan Party, whether action is brought or prosecuted with respect to any
security or against any other Person, or whether any other Person is joined in
any such action or actions. Each Loan Party agrees, for itself, that the Agent,
any Revolving Credit Lender and any other Loan Party, or any Affiliate of any
other Loan Party (other than such Loan Party itself), may deal with each other
in connection with the Liabilities or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the continuing efficacy
as to such Loan Party of the Loan Documents.
(f) The Agent's and the Revolving Credit Lenders' rights
hereunder shall be reinstated and revived, and the enforceability of this
Agreement shall continue, with respect to any amount at any time paid on account
of the Liabilities which thereafter shall be required to be restored or returned
by the Agent or the Revolving Credit Lenders (including, without limitation, the
restoration or return of any amount pursuant to a court order or judgment
(whether or not final or non-appealable), or pursuant to a good faith settlement
of a pending or threatened avoidance or recovery action, or pursuant to good
faith compliance with a demand made by a Person believed to be entitled to
pursue an avoidance or recovery action (such as a bankruptcy trustee or a Person
having the avoiding powers of a bankruptcy trustee, or similar avoiding powers),
and without requiring the Agent or the Revolving Credit Lenders to oppose or
litigate avoidance or recovery demands or actions that it believes in good faith
to be meritorious or worthy of settlement or compliance, or pursue or exhaust
appeals), all as though such amount had not been paid. The rights and priorities
of the Agent and each Revolving Credit Lender created or granted herein and the
enforceability of the Loan Documents at all times shall remain effective to
cover the full amount of all the Liabilities even though the Liabilities,
including any part thereof or any other security or guaranty therefor, may be or
hereafter may become invalid or otherwise unenforceable as against any Loan
Party and whether or not any other Loan Party shall have any personal liability
with respect thereto.
(g) To the maximum extent permitted by applicable law, each
Loan Party, for itself, expressly waives any and all defenses now or hereafter
arising or that otherwise might be asserted by reason of (i) any disability or
other defense of any other Loan Party with respect to the Liabilities or with
respect to the enforceability of the Agent's security interest in or Encumbrance
on any collateral securing any of the Liabilities (including, without
limitation, the Collateral), (ii) the unenforceability or invalidity of any
security or guaranty for the Liabilities or the lack of perfection or continuing
perfection or failure of priority of any security for the Liabilities, (iii) the
cessation for any cause whatsoever of the liability of any other Loan Party
(other than by reason of the full payment and performance of all Liabilities),
(iv) any failure of the Agent or any Revolving Credit Lender to give notice of
sale or other disposition of Collateral to any other Loan Party or any other
Person other than such waiving Loan Party, or any defect in any notice that may
be given to any other Loan Party for any other Person other than such waiving
Loan Party, in connection with any sale or disposition of any collateral
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securing the Liabilities or any of them (including, without limitation, the
Collateral), (v) any failure of the Agent or any Revolving Credit Lender to
comply with applicable law in connection with the sale or other disposition of
any collateral or other security for any Liabilities that is owned by another
Loan Party or by any other Person other than such waiving Loan Party, including
any failure of the Agent to conduct a commercially reasonable sale or other
disposition of any such collateral or other security for any Liabilities, (vi)
any act or omission of the Agent or others that directly or indirectly results
in or aids the discharge or release of any other Loan Party, or the Liabilities
of any other Loan Party, or any security or guaranty therefor, by operation of
law or otherwise, or (vii) any law which provides that the obligation of a
surety or guarantor must neither be larger in amount nor in other respects more
burdensome than that of the principal or which reduces a surety's or guarantor's
obligation in proportion to the principal obligation. Until such time, if any,
as all of the Liabilities (other than contingent Liabilities and indemnities
which survive repayment of the Loans) have been paid and performed in full and
no portion of any commitment of the Revolving Credit Lenders to any Loan Party
under any Loan Document remains in effect, no Loan Party shall have any right of
subrogation, contribution, reimbursement or indemnity, and each Loan Party
expressly waives any right to enforce any remedy that the Agent now have or
hereafter may have against any other Person and waives the benefit of, or any
right to participate in, any collateral now or hereafter held by the
Administrative Agent or the Collateral Agent. Except to the extent expressly
provided for in any Loan Document, each Loan Party expressly waives, to the
maximum extent permitted by applicable law, all rights or entitlements to
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all other
notices or demands of any kind or nature whatsoever with respect to the
Liabilities, and all notices of acceptance of the Loan Documents or of the
existence, creation or incurring of new or additional Liabilities.
(h) Each Loan Party hereby agrees to keep each other Loan
Party fully apprised at all times as to the status of its business, affairs,
finances, and financial condition, and its ability to perform its Liabilities
under the Loan Documents, and in particular as to any adverse developments with
respect thereto. Each Loan Party hereby agrees to undertake to keep itself
apprised at all times as to the status of the business, affairs, finances, and
financial condition of each other Loan Party, and of the ability of each other
Loan Party to perform its Liabilities under the Loan Documents, and in
particular as to any adverse developments with respect to any thereof. Each Loan
Party hereby agrees, in light of the foregoing mutual covenants to inform each
other, and to keep themselves and each other informed as to such matters, that
the Revolving Credit Lenders, the Agent shall have no duty to inform any Loan
Party of any information pertaining to the business, affairs, finances, or
financial condition of any other Loan Party, or pertaining to the ability of any
other Loan Party to perform its Liabilities under the Loan Documents, even if
such information is adverse, and even if such information might influence the
decision of one or more of the Loan Parties to continue to be jointly and
severally liable for, or to provide Collateral for, Liabilities of one or more
of the other Loan Parties. To the fullest extent permitted by applicable law,
each Loan Party hereby expressly waives any duty of the Revolving Credit Lenders
and the Agent to inform any Loan Party of any such information.
130
(i) The Loan Parties and each of them warrant and agree
that each of the waivers and consents set forth herein are made after
consultation with legal counsel and with full knowledge of their significance
and consequences, with the understanding that events giving rise to any defense
or right waived may diminish, or otherwise adversely affect rights that Loan
Parties otherwise may have against other Loan Parties, Revolving Credit Lenders,
the Agent, or others, or against Collateral, and that, under the circumstances,
the waivers and consents herein given are reasonable. If any of the waivers or
consents herein is determined to be contrary to any applicable law or public
policy, such waivers and consents shall be effective to the maximum extent
permitted by law.
19.22 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall, conclusively and separately,
constitute one agreement.
[SIGNATURE PAGES FOLLOW]
131
LEAD BORROWER:
ODD JOB STORES, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Co-Chief Executive Officer
LOAN PARTIES:
HIA TRADING ASSOCIATES
By Odd Job Acquisition Corp., its General Partner
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
ODD JOB ACQUISITION CORP.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
GUARANTORS:
ODD JOB TRADING CORP.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
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OJSAC, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
AGENT:
FLEET RETAIL FINANCE INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
REVOLVING CREDIT LENDERS
FLEET RETAIL FINANCE INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
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