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EXHIBIT 10.27
LOAN AND SECURITY AGREEMENT
FLEET RETAIL FINANCE INC.
AGENT FOR
THE LENDERS REFERENCED HEREIN
THE CIT GROUP/BUSINESS CREDIT, INC.
CO-AGENT
HASTINGS ENTERTAINMENT, INC.
THE BORROWER
FleetBoston Robertson Stephens, Inc.
THE SYNDICATOR
August 29, 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
ARTICLE 1: - DEFINITIONS:
ARTICLE 2: - THE REVOLVING CREDIT:
2-1. Establishment of Revolving Credit ...................................................... 22
2-2. Advances in Excess of Borrowing Base (OverLoans) ....................................... 23
2-3. Risks of Value of Collateral ........................................................... 24
2-4. Commitment to Make Revolving Credit Loans and Support Letters of Credit ................ 24
2-5. Revolving Credit Loan Requests ......................................................... 24
2-6. Making of Revolving Credit Loans ....................................................... 26
2-7. SwingLine Loans ........................................................................ 26
2-8. The Loan Account ....................................................................... 27
2-9. The Revolving Credit Notes ............................................................. 28
2-10. Payment of The Loan Account ............................................................ 28
2-11. Interest on Revolving Credit Loans ..................................................... 29
2-12. Revolving Credit Commitment Fee ........................................................ 30
2-13. Agent's Fee ............................................................................ 30
2-14. Unused Line Fee ........................................................................ 30
2-15. Early Termination Fee .................................................................. 30
2-16. Concerning Fees ........................................................................ 30
2-17. Agent's and Revolving Credit Lenders' Discretion ....................................... 31
2-18. Procedures For Issuance of L/C's ....................................................... 32
2-19. Fees For L/C's ......................................................................... 33
2-20. Concerning L/C's ....................................................................... 34
2-21. Changed Circumstances .................................................................. 35
2-22. Lenders' Commitments ................................................................... 36
ARTICLE 3: - CONDITIONS PRECEDENT:
3-1. Corporate Due Diligence ................................................................ 38
3-2. Opinion ................................................................................ 38
3-3. Additional Documents ................................................................... 38
3-4. Officers' Certificates ................................................................. 38
3-5. Representations and Warranties ......................................................... 38
3-6. Minimum Day One Availability ........................................................... 39
3-7. All Fees and Expenses Paid ............................................................. 39
3-8. Borrower Not In Default ................................................................ 39
3-9. No Adverse Change ...................................................................... 39
3-10. Benefit of Conditions Precedent ........................................................ 39
ARTICLE 4: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
4-1. Payment and Performance of Liabilities ................................................. 39
4-2. Due Organization. Authorization. No Conflicts .......................................... 40
4-3. Trade Names ............................................................................ 40
4-4. Infrastructure ......................................................................... 41
4-5. Locations .............................................................................. 41
4-6. Title to Assets ........................................................................ 42
4-7. Indebtedness ........................................................................... 43
4-8. Insurance .............................................................................. 44
4-9. Licenses ............................................................................... 45
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<TABLE>
<S> <C> <C> <C>
4-10. Leases ................................................................................. 45
4-11. Requirements of Law .................................................................... 45
4-12. Labor Relations ........................................................................ 45
4-13. Maintain Properties .................................................................... 46
4-14. Taxes .................................................................................. 46
4-15. No Margin Stock ........................................................................ 47
4-16. ERISA .................................................................................. 48
4-17. Hazardous Materials .................................................................... 48
4-18. Litigation ............................................................................. 48
4-19. Dividends. Investments. Corporate Action ............................................... 49
4-20. Loans .................................................................................. 50
4-21. Protection of Assets ................................................................... 50
4-22. Line of Business ....................................................................... 50
4-23. Affiliate Transactions ................................................................. 50
4-24. Further Assurances ..................................................................... 50
4-25. Adequacy of Disclosure ................................................................. 51
4-26. No Restrictions on Liabilities ......................................................... 52
4-27. Other Covenants ........................................................................ 52
ARTICLE 5: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5-1. Maintain Records ....................................................................... 52
5-2. Access to Records ...................................................................... 53
5-3. Immediate Notice to Agent .............................................................. 53
5-4. Borrowing Base Certificate ............................................................. 54
5-5. Monthly Reports ........................................................................ 54
5-6. Quarterly Reports ...................................................................... 55
5-7. Annual Reports ......................................................................... 56
5-8. Officers' Certificates ................................................................. 56
5-9. Inventories, Appraisals, and Audits .................................................... 57
5-10. Additional Financial Information ....................................................... 57
5-11. Financial Performance Covenant ......................................................... 58
ARTICLE 6: - USE OF COLLATERAL:
6-1. Use of Inventory Collateral ............................................................ 58
6-2. Inventory Quality ...................................................................... 59
6-3. Adjustments and Allowances ............................................................. 59
6-4. Validity of Accounts ................................................................... 59
6-5. Notification to Account Debtors ........................................................ 59
ARTICLE 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7-1. Depository Accounts .................................................................... 59
7-2. Credit Card Receipts ................................................................... 60
7-3. The Concentration, Blocked, and Operating Accounts ..................................... 60
7-4. Proceeds and Collections ............................................................... 61
7-5. Payment of Liabilities ................................................................. 61
7-6. The Operating Account .................................................................. 62
ARTICLE 8: - GRANT OF SECURITY INTEREST:
8-1. Grant of Security Interest ............................................................. 63
8-2. Extent and Duration of Security Interest ............................................... 63
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ARTICLE 9: - AGENT AS BORROWER'S ATTORNEY-IN-FACT:
9-1. Appointment as Attorney-In-Fact ........................................................ 64
9-2. No Obligation to Act ................................................................... 65
ARTICLE 10: - EVENTS OF DEFAULT:
10-1. Failure to Pay the Revolving Credit .................................................... 65
10-2. Failure To Make Other Payments ......................................................... 65
10-3. Failure to Perform Covenant or Liability (No Grace Period) ............................. 65
10-4. Reporting Requirements ................................................................. 66
10-5. Failure to Perform Covenant or Liability (Grace Period) ................................ 66
10-6. Misrepresentation ...................................................................... 66
10-7. Acceleration of Other Debt. Breach of Lease ............................................ 66
10-8. Default Under Other Agreements ......................................................... 66
10-9. Uninsured Casualty Loss ................................................................ 67
10-10. Attachment. Judgment. Restraint of Business ............................................ 67
10-11. Business Failure ....................................................................... 67
10-12. Bankruptcy ............................................................................. 67
10-13. Default by Guarantor ................................................................... 68
10-14. Indictment - Forfeiture ................................................................ 68
10-15. Termination of Guaranty ................................................................ 68
10-16. Challenge to Loan Documents ............................................................ 68
10-17. Change in Control ...................................................................... 69
ARTICLE 11: - RIGHTS AND REMEDIES UPON DEFAULT:
11-1. Acceleration ........................................................................... 69
11-2. Rights of Enforcement .................................................................. 69
11-3. Sale of Collateral ..................................................................... 69
11-4. Occupation of Business Location ........................................................ 70
11-5. Grant of Nonexclusive License .......................................................... 71
11-6. Assembly of Collateral ................................................................. 71
11-7. Rights and Remedies .................................................................... 71
ARTICLE 12: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
12-1. Revolving Credit Funding Procedures .................................................... 71
12-2. SwingLine Loans ........................................................................ 72
12-3. Agent's Covering of Fundings: .......................................................... 72
12-4. Ordinary Course Distributions .......................................................... 74
ARTICLE 13: - ACCELERATION AND LIQUIDATION:
13-1. Acceleration Notices ................................................................... 75
13-2. Acceleration ........................................................................... 76
13-3. Initiation of Liquidation .............................................................. 76
13-4. Actions At and Following Initiation of Liquidation ..................................... 76
13-5. Agent's Conduct of Liquidation ......................................................... 76
13-6. Distribution of Liquidation Proceeds: .................................................. 77
13-7. Relative Priorities To Proceeds of Liquidation ......................................... 77
ARTICLE 14: - THE AGENT:
14-1. Appointment of The Agent ............................................................... 78
14-2. Responsibilities of Agent .............................................................. 78
14-3. Concerning Distributions By the Agent .................................................. 79
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14-4. Dispute Resolution: .................................................................... 80
14-5. Distributions of Notices and of Documents .............................................. 80
14-6. Confidential Information ............................................................... 81
14-7. Reliance by Agent ...................................................................... 81
14-8. Non-Reliance on Agent and Other Revolving Credit Lenders ............................... 81
14-9. Indemnification ........................................................................ 82
14-10. Resignation of Agent ................................................................... 83
ARTICLE 15: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
15-1. Administration of Credit Facilities .................................................... 83
15-2. Actions Requiring or On Direction of Majority Lenders .................................. 84
15-3. Actions Requiring or On Direction of SuperMajority Lenders ............................. 84
15-4. Actions Requiring Certain Consent ...................................................... 85
15-5. Actions Requiring or Directed By Unanimous Consent ..................................... 85
15-6. Actions Requiring SwingLine Lender Consent ............................................. 86
15-7. Actions Requiring Agent's Consent ...................................................... 86
15-8. Miscellaneous Actions .................................................................. 87
15-9. Actions Requiring Borrower's Consent ................................................... 87
15-10. NonConsenting Revolving Credit Lender .................................................. 87
ARTICLE 16: - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16-1. Assignments and Assumptions: ........................................................... 88
16-2. Assignment Procedures .................................................................. 89
16-3. Effect of Assignment ................................................................... 90
ARTICLE 17: - NOTICES:
17-1. Notice Addresses ....................................................................... 90
17-2. Notice Given ........................................................................... 91
ARTICLE 18: - TERM:
18-1. Termination of Revolving Credit ........................................................ 92
18-2. Actions On Termination ................................................................. 92
ARTICLE 19: - GENERAL:
19-1. Protection of Collateral ............................................................... 93
19-2. Publicity. ............................................................................. 93
19-3. Successors and Assigns ................................................................. 93
19-4. Severability ........................................................................... 94
19-5. Amendments. Course of Dealing .......................................................... 94
19-6. Application of Proceeds ................................................................ 94
19-7. Increased Costs ........................................................................ 95
19-8. Costs and Expenses of the Agent ........................................................ 95
19-9. Copies and Facsimiles .................................................................. 96
19-10. Massachusetts Law ...................................................................... 96
19-11. Consent to Jurisdiction ................................................................ 96
19-12. Indemnification ........................................................................ 97
19-13. Rules of Construction .................................................................. 97
19-14. Intent ................................................................................. 99
19-15. Participations: ........................................................................ 99
19-16. Right of Set-Off ....................................................................... 100
19-17. Pledges To Federal Reserve Banks: ...................................................... 100
19-18. Maximum Interest Rate .................................................................. 100
19-19. Waivers ................................................................................ 101
</TABLE>
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EXHIBITS
: SwingLine Note
: Revolving Credit Note
: Revolving Credit Lenders' Commitments
: Subsidiaries
: Trade Names
: Locations, Leases, and Landlords
: Encumbrances
: Indebtedness
: Insurance Policies
: Capital Leases
: Taxes
: ERISA
: Litigation
: Borrowing Base Certificate
: DDA's.
: Credit Card Arrangements
: Assignment / Assumption
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LOAN AND SECURITY AGREEMENT FLEET RETAIL FINANCE INC.
AGENT
August 29, 2000
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made between
Fleet Retail Finance Inc. (in such capacity, herein the
"AGENT"), a Delaware corporation with offices at 40 Broad Street,
Boston, Massachusetts 02109, as agent for the ratable benefit of the
"REVOLVING CREDIT LENDERS", who are, at present, 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 , below,
and
The CIT Group/Business Credit, Inc. (In such capacity,
herein, the "CO-AGENT"), a New York corporation with offices at 5420
LBJ Freeway (Suite 200), Dallas, Texas 75240,
and
Hastings Entertainment, Inc. (the "BORROWER"), a Texas
corporation with its principal executive offices at 3601 Plains
Boulevard, Amarillo, Texas 79102
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:
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"ACCELERATION": The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and
payable. Derivations of the word "Acceleration" (such as
"Accelerate") are used with like meaning in this Agreement.
"ACCELERATION NOTICE": Written notice as follows:
(a) From the Agent to the Revolving Credit Lenders,
as provided in.
(b) From the SuperMajority Lenders to the Agent, as
provided in Section.
"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
Twenty Five Percent (25%) of the Voting Stock, beneficial
interests, partnership interests, or other equity interests of
the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a
majority of the directors (or other body or Person who has
those powers customarily vested in a board of directors of a
corporation); or (iii) not less than Twenty Five Percent (25%)
of their respective ownership is directly or indirectly held
by the same third Person.
(b) Any Person which has its tax returns or financial
statements consolidated with the Borrower's; or is a member of
the same controlled group of corporations (within
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the meaning of Section 1563(a)(1), (2) and (3) of the Internal
Revenue Code of 1986, as amended from time to time) of which
the Borrower is a member.
"AGENT": Is referred to in the Preamble.
"AGENT'S COVER": Is defined in Section .
"AGENT'S FEE": Is defined in Section .
"AGREEMENT": Is referred to in the Preamble.
"AGENT'S RIGHTS AND REMEDIES": Is defined in Section .
"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.
"APPRAISED INVENTORY LIQUIDATION VALUE": The net recovery, as reflected
on the then most recent appraisal of the Borrower's Inventory,
as recoverable on the Borrower's Inventory in the event of an
in-store liquidation of that Inventory.
"APPRAISED INVENTORY PERCENTAGE": 88%
"ASSIGNEE REVOLVING CREDIT LENDER": Is defined in Section 16:16-1(a).
"ASSIGNING REVOLVING CREDIT LENDER": Is defined in Section .
"ASSIGNMENT AND ACCEPTANCE": Is defined in Section .
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"AVAILABILITY": The lesser of (a) or (b), where:
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/C's.
Minus
(iv) The aggregate of the Availability
Reserves.
(b) is the result of
(i) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iv) The aggregate undrawn Stated Amount
of all then outstanding L/C's.
Minus
(v) The aggregate of the Availability
Reserves.
"AVAILABILITY RESERVES": Such reserves as the Agent from time to time
reasonably determines in the Agent's reasonable discretion as
being appropriate to AVOID THE BORROWER'S BREACH OF ANY
FINANCIAL COVENANT INCLUDED HEREIN OR TO reflect the
impediments to the Agent's ability to realize upon the
Collateral.
"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.
"BASE": The Base Rate announced from time to time by Fleet National
Bank (or any successor in interest to Fleet National Bank). In
the event that said bank (or any such successor) ceases to
announce such a rate, "Base" shall refer to that rate or index
announced or published from time to time as the Agent, in good
faith, designates as the functional equivalent to said Base
Rate. Any change in "Base" shall be effective, for purposes of
the calculation of interest due hereunder, when such change is
made effective generally by the bank on whose rate or index
"Base" is being set.
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"BASE MARGIN LOAN": Each Revolving Credit Loan while bearing interest
at the Base Margin Rate.
"BASE MARGIN RATE": Base.
"BLOCKED ACCOUNT": Is defined in Section 7:7-3(a)(ii).
"BLOCKED ACCOUNT AGREEMENT": An Agreement, in form reasonably
satisfactory to the Agent, which Agreement recognizes the
Agent's Collateral Interest in the contents of the DDA which
is the subject of such Agreement and agrees that such contents
shall be transferred only to the Concentration Account or as
otherwise instructed by the Agent.
"BORROWER": Is defined in the Preamble.
"BORROWING BASE": 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.
"BORROWING BASE CERTIFICATE": Is defined in Section .
"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts or in Amarillo,
Texas 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 Borrower's business plan previously delivered to
the Agent for fiscal year 2000, and any revision, amendment,
or update of such business plan.
"CAPITAL EXPENDITURES": The expenditure of funds or the incurrence of
liabilities which is required to be capitalized in accordance
with GAAP.
"CAPITAL LEASE": Any lease which is required to be capitalized in
accordance with GAAP.
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"CHANGE IN CONTROL": The occurrence of any of the following:
(a) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, other than the Marmaduke Family or
any member thereof, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission) of 25% or more of the issued and outstanding
capital stock of the Borrower having the right, under ordinary
circumstances, to vote for the election of directors of the
Borrower.
(b) More than half of the persons who were directors
of the Borrower on the first day of any period consisting of
Twelve (12) consecutive calendar months (the first of which
Twelve (12) month periods commencing with the first day of the
month during which this Agreement was executed), cease, for
any reason other than death or disability, to be directors of
the Borrower.
"CHATTEL PAPER": Has the meaning given that term in the UCC.
"CIT": The CIT Broup / Business Credit, Inc., a New York corporation
with offices at 5420 LBJ Freeway (Suite 200), Dallas, Texas
75240.
"COLLATERAL": Is defined in Section .
"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 (a)(i).
"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.
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"CONTRACT RATE": Is defined in Section .
"COST": Cost of purchases, based upon the Borrower's 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
Borrower; the Borrower's purchase journal; or the Borrower's
By-Department monthly report generated by the Borrower's
inventory control system. ("Cost" does not include inventory
capitalization costs or other non-purchase price charges (such
as freight) used in the Borrower's 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 shall also include 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.
"DDA": Any checking or other demand daily depository account
maintained by the Borrower.
"DELINQUENT REVOLVING CREDIT LENDER": Is defined in Section .
"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.
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"EBITDA": The Borrower's earnings before interest, taxes, depreciation,
and amortization, 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 Million 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, all of which assignees must
be acceptable to the Borrower pursuant to Section 2:2-22(e).
"ELIGIBLE INVENTORY": "Eligible Inventory" will be calculated in a
manner consistent with current tracking practices, based on
the Borrower's By-Department monthly report generated by the
Borrower's inventory control system, which report reflects the
functional equivalent of a stock ledger inventory at cost, and
shall consist of the following: Such of the Borrower's
Inventory as to which the Agent has a perfected security
interest which is prior and superior to all security
interests, claims, and all Encumbrances other than Permitted
Encumbrances. ("Eligible Inventory" includes traditional
rental videos and DVD's and similar items (net of accumulated
depreciation) but does not include: any revenue sharing video
tapes or DVD's or similar items; non-merchandise inventory
(such as labels, bags, and packaging materials); damaged
goods; packaways; consigned inventory; and other similar
categories of Goods.
"EMPLOYEE BENEFIT PLAN": As defined in 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 agreement,
operation of law, legal process or otherwise.
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(b) The filing of any financing statement under the
UCC or comparable law of any jurisdiction.
"END DATE": The date upon which both (a) all Liabilities have been
paid in full and (b) all obligations of any Revolving Credit
Lender to make loans and advances and to provide other
financial accommodations to the Borrower hereunder shall have
been irrevocably terminated.
"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, 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 the Borrower's business, and any and all
accessions or additions thereto, and substitutions therefor,
but does not include motor vehicles.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE": Any Person which is under common control with the
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes the Borrower and which would be
treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
"EVENTS OF DEFAULT": Is defined in Article . An "Event of Default"
shall be deemed to have occurred and to be continuing unless
and until that Event of Default has been duly waived by the
requisite Lenders or by the Agent as applicable (following
which, and in the event of such waiver, that Event of Default
shall be deemed not to have occurred).
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"EXEMPT ASSETS": Revenue sharing videos, motor vehicles, and Leasehold
Interests.
"EXEMPT DDA": Depository Accounts maintained by the Borrower, the only
contents of which may be transfers from the Operating Account
or the Payroll Account and actually used solely (i) for petty
cash purposes; (ii) for payroll; or (iii) employee benefits.
"FEE LETTER": That letter dated August 8, 2000 and styled
"Revolving Credit Facility Fee Letter" between the Borrower
and the Agent, as such letter may from time to time be
amended.
"FISCAL": When followed by "month", "quarter" or "year", the relevant
fiscal period based on the Borrower's fiscal year and
Borrower's practices. (e.g. the Borrower's fiscal year ends in
January 2001, reference to that year would be to the
Borrower's "Fiscal 2000").
"FIXTURES": Has the meaning given that term in the UCC.
"FRFI": Fleet Retail Finance Inc., a Delaware corporation.
"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 Borrower's compliance with the
financial performance covenants imposed pursuant to Section
shall be determined as if such Material Accounting Change had
not taken place and (b) the Borrower shall include, with its
monthly, quarterly, and annual financial statements a
schedule, certified by the 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 the
Borrower; credit memoranda in favor of the Borrower; 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;
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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 the
Borrower 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 the Borrower 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 the
or credit extended or services performed, by the Borrower,
whether intended for an individual customer or the general
business of the Borrower, or used or useful in connection with
research by the Borrower.
"GOODS": Has the meaning given that term in the UCC, and also includes
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.
"GROSS MARGIN": With respect to the subject accounting period for
which being calculated, the decimal equivalent of the
following (determined in accordance with the cost method of
accounting):
Sales (Minus) Cost of Goods Sold
--------------------------------
Sales
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"HAZARDOUS MATERIALS": Any substance which is defined or regulated as a
hazardous material or oil in or under any Environmental Law.
"INDEBTEDNESS": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:
(a) In respect of money borrowed (including any
indebtedness which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on any asset of
such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or
acceptance transaction (including, without limitation, the
face amount of all letters of credit and acceptances issued
for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(d) As lessee under Capital Leases.
(e) In connection with any sale and leaseback
transaction.
"Indebtedness" also includes:
(x) Indebtedness of others secured
by an Encumbrance on any asset of such
Person, whether or not such Indebtedness is
assumed by such Person.
(y) Any guaranty, endorsement,
suretyship or other undertaking pursuant to
which that Person may be liable on account
of any obligation of any third party.
(z) The Indebtedness of a
partnership or joint venture for which such
Person is liable as a general partner or
joint venturer.
"IN DEFAULT": Any occurrence, circumstance, or state of facts with
respect to the Borrower which (a) is an Event of Default; or
(b) would become an Event of Default if any requisite notice
were given and/or any requisite period of time were to run and
such occurrence, circumstance, or state of facts were not
absolutely cured within any applicable grace period.
"INDEMNIFIED PERSON": Is defined in Section .
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"INSTRUMENTS": Has the meaning given that term in the UCC.
"INTEREST PAYMENT DATE": With reference to:
Each Libor Loan: The last day of the Interest Period
relating thereto (and on the last day of month three for any
such Libor Loan which has a six month Interest Period); the
Termination Date; and the End Date.
Each Base Margin Loan: The first Business Day of each
month; the Termination Date; and the End Date.
"INTEREST PERIOD": The following:
(a) With respect to each Libor Loan: Subject to
Subsection (c) below, the period commencing on the date of the
making or continuation of, or conversion to, the subject Libor
Loan and ending one, two, three, or six months thereafter, as
the Borrower may elect by notice (pursuant to Section ) 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 Libor Loan, as the Borrower may
elect by notice (pursuant to Section ) to the Agent, or (ii)
on which the subject Base Margin Loan is paid by the Borrower.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Margin
Loan which would otherwise end on a day which is not
a Business Day shall be extended to the next
succeeding Business Day.
(ii) Any Interest Period for a Libor Loan
which would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is
in the next calendar month, in which event such
Interest Period shall end on the last Business Day of
the month during which the Interest Period ends.
(iii) Subject to Subsection (iv) below, any
Interest Period applicable to a Libor Loan, which
Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month
during which such Interest Period ends, shall end on
the last Business Day of the month during which that
Interest Period ends.
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(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 hereof.
"INVENTORY": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a Person
as lessor; are held by a Person for sale or lease or to be
furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a
business; (b) Goods of said description in transit; (c) Goods
of said description which all 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": 65%.
"INVENTORY RESERVES": Such Reserves as reasonably may be established
from time to time by the Agent in the Agent's reasonable
discretion with respect to the determination of the
saleability, at retail, of the Eligible Inventory or which
reflect such other factors as affect the market value of the
Eligible Inventory.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"ISSUER": The issuer of any L/C.
"L/C": Any letter of credit, the issuance of which is procured by the
Agent for the account of the Borrower and any acceptance made
on account of such letter of credit.
"LEASE": Any lease or other agreement, no matter how styled or
structured, pursuant to which the Borrower is entitled to the
use or occupancy of any space.
"LEASEHOLD INTEREST": Any interest of the Borrower as lessee under any
Lease.
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"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 9'99
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 the Borrower 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 the Borrower 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 the
Borrower.
(iii) All notes and other obligations of the Borrower
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 the Borrower and which may be due from the
Borrower 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 Loan
Document between the Borrower and the Agent or
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any Revolving Credit Lender or Loan Document furnished by the
Borrower 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) and which are required to be paid by the
Borrower.
(vi) Any and all covenants of the Borrower to or with
the Agent or any Revolving Credit Lender and any and all
obligations of the Borrower to act or to refrain from acting
in accordance with any Loan Document between the Borrower and
the Agent or any Revolving Credit Lender or Loan Document
furnished by the Borrower 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 the Borrower 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 the
Borrower pursuant to this or any other Loan Document, including cash
management services and the issuances of L/C's.
"LIBOR BUSINESS DAY": Any day which is both a Business Day and a day on
which the principal interbank market for Libor deposits in
London in which Fleet National Bank participates is open for
dealings in United States Dollar deposits.
"LIBOR LOAN": Any Revolving Credit Loan which bears interest at a Libor
Rate.
"LIBOR 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 London interbank market in which
Fleet National Bank participates at or about 10:00AM (Boston
Time) Two (2) Libor Business Days before the first day of the
Interest Period for the subject Libor Loan, for a deposit
approximately in the amount of the subject loan for a period
of time approximately equal to such Interest Period.
"LIBOR MARGIN": 200 basis points.
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"LIBOR RATE": That per annum rate which is the aggregate of the Libor
Offer Rate plus the Libor Margin except that, in the event
that the Agent determines that any Revolving Credit Lender is
subject to the Reserve Percentage, the "Libor Rate" shall
mean, with respect to any Libor Loans then outstanding (from
the date on which that Reserve Percentage first became
applicable to such Libor Loans), and with respect to all Libor
Loans thereafter made while any Revolving Credit Lender is
subject to the Reserve Percentage, an interest rate per annum
equal the sum of (a) plus (b), where:
(a) is the decimal equivalent of the
following fraction:
Libor Offer Rate
1 minus Reserve Percentage
(b) is the applicable Libor Margin.
"LIQUIDATION": The exercise, by the Agent, of those rights accorded to
the Agent under the Loan Documents as a creditor of the
Borrower following and on account of the occurrence of an
Event of Default and Acceleration 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 (a).
"LOAN COMMITMENT": With respect to each Revolving Credit Lender, that
Revolving Credit Lender's Revolving Credit Dollar Commitment.
"LOAN DOCUMENTS": This Agreement, each instrument and document
executed and/or delivered as contemplated by Article below,
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.
"MAJORITY LENDERS": Revolving Credit Lenders (other than Delinquent
Revolving Credit Lenders) holding 51% or more of the Revolving
Credit Dollar Commitment (other than any Loan Commitments held
by Delinquent Revolving Credit Lenders).
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"MARMADUKE FAMILY": John Marmaduke, the Estate of Sam Marmaduke, the
John H. Marmaduke Family Limited Partnership, the Stephen S.
Marmaduke Family Limited Partnership, and members of the
immediate families of John Marmaduke and Steve Marmaduke.
"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to
accounting periods subsequent to the Borrower's fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the
Borrower's financial condition or operating results, as
reflected on financial statements and reports prepared by or
for the Borrower, when compared with such condition or results
as if such change had not taken place or where preparation of
the Borrower's statements and reports in compliance with such
change results in the breach of a financial performance
covenant imposed pursuant to Section where such a breach would
not have occurred if such change had not taken place or visa
versa.
"MATURITY DATE": August 29, 2003.
"MAXIMUM RATE": The maximum nonusurious rate of interest permitted by
applicable law.
"NOMINEE": A business entity (such as a corporation or limited
partnership) formed by the Agent to own or manage any Post
Foreclosure Asset.
"OPERATING ACCOUNT": Is defined in Section (a)(i).
"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 , hereof.
"PAYMENT INTANGIBLE": Has the meaning given that term in UCC 9'99 and
also refers to any general intangible under which the Account
Debtor's primary obligation is a monetary obligation.
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"PAYROLL ACCOUNT": Is defined in Section 7:7-3(a)(iv).
"PERMISSIBLE OVERLOANS": 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 Permissible OverLoans, such
Revolving Credit Loans do not aggregate more than 10% 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.
"PERMITTED ENCUMBRANCES": Those Encumbrances permitted as provided in
Section hereof.
"PERSON": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"POST FORECLOSURE ASSET": All or any part of the Collateral, ownership
of which is acquired by the Agent or a Nominee on account of
the "bidding in" at a disposition as part of a Liquidation or
by reason of a "deed in lieu" type of transaction.
"PROCEEDS": Includes, without limitation, "Proceeds" as defined in the
UCC and each type of property described in Section hereof.
"PROTECTIVE ADVANCES": The aggregate of Revolving Credit Loans and
expenditures and incurrences of obligations by the Agent
respectively which are made or undertaken in the Agents'
reasonable discretion to: protect or preserve the Collateral
Interests which secure the Liabilities and the Agent's rights
upon an Event of Default or which the Agent determines in its
reasonable discretion, are appropriate to facilitate a
Liquidation, provided, however, "Protective Advances" shall
not exceed $3.5 Million in the aggregate at any one time
outstanding.
"RECEIPTS": All cash, cash equivalents, checks, and credit card slips,
receipts and other Proceeds from any sale of the Collateral.
"RECEIVABLES COLLATERAL": That portion of the Collateral which consists
of the Borrower's Accounts, Accounts Receivable, General
Intangibles, Chattel Paper, Instruments,
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Documents of Title, Documents, Investment Property, Payment
Rights, Letter-of-Credit Rights, bankers' acceptances held by
the Borrower, and all other rights to payment.
"REGISTER": Is defined in Section .
"REQUIREMENTS OF LAW": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents, if any.
(c) That Person's by-laws and/or other instruments
which deal with corporate or similar governance, as
applicable.
"RESERVE PERCENTAGE": The decimal equivalent of that rate applicable to
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": The following: Availability Reserves and Inventory
Reserves.
"REVOLVING CREDIT": Is defined in Section (a).
"REVOLVING CREDIT CEILING": $80,000,000.00, during the period of
October 15 through December 15, and at all other times
$70,000,000.00, subject to a one-time reduction to
$70,000,000.00, during the period of October 15 through
December 15, and at all other times $60,000,000.00, at the
option of the Borrower on not less than twenty (20) days
irrevocable prior written notice by the Borrower to the Agent.
"REVOLVING CREDIT COMMITMENT FEE": Is defined in Section .
"REVOLVING CREDIT DOLLAR COMMITMENT": As set forth on EXHIBIT , annexed
hereto (as such amounts may change in accordance with the
provisions of this Agreement).
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"REVOLVING CREDIT EARLY TERMINATION FEE": Is defined in Section .
"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
2:2-11(c)).
"REVOLVING CREDIT NOTE": Is defined in Section .
"REVOLVING CREDIT PERCENTAGE COMMITMENT": As set forth on EXHIBIT ,
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.
"SUBSIDIARY": for any Person, any corporation or other entity of which
at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other Persons
having similar powers is at the time directly or indirectly
owned by such Person.
"SUPERMAJORITY LENDERS": Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% or more
of the Revolving Credit Dollar Commitment (other than Loan
Commitments held by a Delinquent Revolving Credit Lender),
except that unless and until there are more than two Revolving
Credit Lenders, "SuperMajority Lenders shall refer to all
Revolving Credit Lenders who are not Delinquent Revolving
Credit Lenders.
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"SUPPORTING OBLIGATION": Has the meaning given that term in UCC 9'99
and also refers to a Letter-of-Credit Right or secondary
obligation which supports the payment or performance of an
Account, Chattel Paper, a Document, a General Intangible, an
Instrument, or Investment Property.
"SWINGLINE": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine
Loan Ceiling.
"SWINGLINE LENDER": FRFI and any successor thereto in the capacity of
lender of Swingline Loans.
"SWINGLINE LOAN CEILING": $2.5 Million (subject to increase as provided
in Section ).
"SWINGLINE LOANS": Defined in Section (a).
"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section , below; or (c)
the Agent's notice to the Borrower setting the Termination
Date on account of the occurrence of any Event of Default
other than as described in Section , below; or (d) that date,
sixty (60) days irrevocable written notice of which is
provided by the Borrower to the Agent.
"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 ), 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.
"UCC9'99": The Uniform Commercial Code, Article 9, 1999 Official Text,
except that following the effectiveness, in Massachusetts, of
the revision of Article 9 of the Uniform Commercial Code
contemplated by UCC9'99, each reference to "UCC9'99" shall be
to the UCC.
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"UNANIMOUS CONSENT": Consent of Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 100% or more of
the Revolving Credit Dollar Commitment (other than Loan
Commitments held by a Delinquent Revolving Credit Lender).
"UNUSED LINE FEE": Is defined in Section .
"VOTING STOCK": shares of any class or classes (however designated) of
any corporation having ordinary voting power for the election
of at least a majority of the members of the board of
directors (or other governing bodies) of such corporation.
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 Borrower's 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 Borrower 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 , below, and shall be subject to the following:
(i) Such determination shall take into account those Reserves as the Agent
may 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 Borrower's
By-Department monthly report generated by the Borrower's inventory
control system, which report reflects the functional equivalent of a
stock ledger inventory.
(c) The commitment of each Revolving Credit Lender to provide such loans,
advances, and financial accommodations is subject to Section .
(d) The proceeds of borrowings under the Revolving Credit shall be used solely
in accordance with the Business Plan for the Borrower's working capital and
Capital Expenditures, 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
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reserve of the Borrower other than in the ordinary course of the Borrower's
business and consistent with the provisions of this Agreement. Subject to the
foregoing, the proceeds of borrowings under the Revolving Credit Facility shall
be used for the following purposes:
(i) To retire the Borrower's current working capital
facility; 10.25% Series A Senior Secured Notes due
June 13, 2003; and its aircraft finance facility with
Wells Fargo Bank, N.A..
(ii) To provide on-going working capital requirements
and capital expenditure needs of the Borrower.
(iii) To support issuance of letters of credit by the
letter of credit issuer for the account of the
Borrower.
(iv) To provide funds for the Borrower's repurchase
of its capital stock as permitted herein.
2:2. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any loan or advance,
or otherwise to provide any credit to or for the benefit of the Borrower where
the result of such loan, advance, or credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among themselves, are subject to
Section (which relates to each Revolving Credit Lender's making amounts
available to the Agent) and to Section (which relates to Permissible OverLoans).
(c) The Revolving Credit Lenders' providing of an OverLoan on any one occasion
does not affect the obligations of the Borrower hereunder (including the
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.
(d)
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 risks concerning the value of the Collateral are and remain
upon the Borrower. 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.
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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 have an L/C issued for the account of the Borrower, in each instance if
duly and timely requested by the Borrower as provided herein provided that:
(a) Borrowing Base will not be exceeded.
(b) The amount of the loan or advance or L/C so requested does not exceed
Availability.
(c) The Borrower is not In Default.
(d)
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 Borrower in the manner set forth herein or in such
other manner as may from time to time be reasonably acceptable to the Agent.
(b) Subject to the provisions of this Agreement, the 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 11:30AM 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 Borrower, other than those resulting from
the conversion of a Libor Loan, shall not be less than $10,000.00.
(ii) If such Revolving Credit Loan is to be, or is to be continued as,
or converted to, a Libor Loan: By 1:00PM three (3) Libor Business Days
before the commencement of any new Interest Period or the end of the
then applicable Interest Period. Libor Loans and conversions to Libor
Loans shall each be not less than $1,000,000.00 and in increments of
$250,000.00 in excess of such minimum.
(iii) Any Libor Loan which matures while the Borrower is In Default
shall be converted, at the option of the Agent, to a Base Margin Loan
notwithstanding any notice from the Borrower that such Loan is to be
continued as a Libor Loan.
(c) Any request for a Revolving Credit Loan or for the continuance or conversion
of an interest rate applicable to a Revolving Credit Loan which is made after
the applicable deadline therefor, as set forth above, shall be deemed to have
been made at the opening of business on the then next Business Day or Libor
Business Day, as applicable.
(d) The Borrower may request that the Agent cause the issuance by the Issuer of
L/C's for the account of the Borrower as provided in Section .
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(e) 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
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 reasonably satisfactory to the Agent.
(f) A request by the Borrower for loan or advance, or other financial
accommodation under the Revolving Credit shall be irrevocable and shall
constitute certification by the Borrower that as of the date of such request,
each of the following is true and correct:
(i) There has been no material adverse change in the Borrower's
financial condition from the most recent financial information
furnished Agent pursuant to this Agreement.
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.
(ii) The Borrower is not In Default.
(g) If, at any time or from time to time, the Borrower is In Default:
(i) The Agent may suspend the Revolving Credit immediately.
(ii) 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.
(iii) The Agent may suspend the right of the Borrower to request any
Libor Loan or to convert any Base Margin Loan to a Libor Loan.
2:6. MAKING OF REVOLVING CREDIT LOANS.
(a) A Revolving Credit Loan shall be made by the transfer of the proceeds of
such Revolving Credit Loan to the Operating Account or as otherwise instructed
by the Borrower.
(b) A Revolving Credit Loan shall be deemed to have been made under the
Revolving Credit (and the Borrower 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
Revolving Credit Loan in accordance with the Borrower's instructions
(if such Revolving Credit Loan is of funds requested by the Borrower).
(ii) The charging of the amount of such Revolving Credit Loan to the
Loan Account (in all other circumstances).
(c) There shall not be any recourse to or liability of the Agent or any
Revolving Credit Lender, on account of any of the following which is beyond the
reasonable control of the Agent:
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(i) Any delay in the making of any loan or advance requested under the
Revolving Credit.
(ii) Any delay by any bank or other depository institution in treating
the proceeds of any such loan or advance as collected funds.
(iii) Any delay in the receipt, and/or any loss, of funds which
constitute a Revolving Credit Loan 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 Borrower.
2:7. 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
Revolving Credit Loan.
(c) The Borrower's obligation to repay SwingLine Loans shall be evidenced by a
Note in the form of EXHIBIT , annexed hereto, executed by the Borrower, and
payable to the SwingLine Lender. Neither the original nor a copy of that Note
shall be required, however, to establish or prove any Liability. The Borrower
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
Borrower's 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.
(f)
2:8. 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 Revolving Credit Loans.
(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.
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(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 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 the Borrower is obligated hereunder are payable on demand. In
the determination of Availability, the Agent may deem fees, service charges,
accrued interest, and other payments which will be due and payable between the
date of such determination and the first day of the then next succeeding month
as having been advanced under the Revolving Credit whether or not such amounts
are then due and payable.
(e) The Agent, without the request of the 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 and which are due and
payable from the Borrower pursuant hereto and may charge the same to the Loan
Account notwithstanding that such amount so advanced may result in Borrowing
Base's being exceeded. Such action on the part of the Agent shall not constitute
a waiver of the Agent's rights and the Borrower's obligations under Section .
Any amount which is added to the principal balance of the Loan Account as
provided in this Section 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
Borrower concerning the Liabilities shall be considered correct and accepted by
the Borrower and shall be conclusively binding upon the Borrower unless the
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. In the absence of manifest
error, 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.
(g)
2:9. THE REVOLVING CREDIT NOTES. The Borrower's 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 ,
annexed hereto, executed by the 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, the Borrower shall
execute a replacement thereof and deliver such replacement to the Agent.
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2:10. PAYMENT OF THE LOAN ACCOUNT.
(a) The Borrower may repay all or any portion of the principal balance of the
Loan Account from time to time until the Termination Date.
(b) The Borrower, 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 Borrower shall repay the then entire unpaid balance of the Loan Account
and all other Liabilities on the Termination Date.
(d) The Agent shall endeavor to cause the application of payments (if any),
pursuant to Sections and against Libor Loans then outstanding in such manner as
results in the least cost to the Borrower, 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 the Borrower
from any indemnification obligation under Section .
(e) Within ten (10) days from the date a Revolving Credit Lender or the Agent
(as the case may be) makes written demand therefor, the Borrower 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 the Borrower in payment of the principal amount of or
any interest on any Libor Loan as and when due and payable, including
any such loss or expense arising from interest or fees payable by such
Revolving Credit Lender in order to maintain its Libor Loans.
(ii) Default by the Borrower in making a borrowing or conversion after
the 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 Libor Loan or the making of any
conversion of any such Loan to a Base Margin Loan on a day that is not
the last day of the applicable Interest Period with respect thereto.
2:11. 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 ) that the subject
Revolving Credit Loan (or a portion thereof) is, or is to be converted to, a
Libor Loan.
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(b) Each Revolving Credit Loan which consists of a Libor Loan shall bear
interest at the applicable Libor Rate.
(c) Subject to, and in accordance with, the provisions of this Agreement, the
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 Libor Rate as specified
from time to time by the Borrower.
(d) The 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 Six (6) Libor Rates applicable to the Revolving Credit
Loans at any one time.
(e) The Borrower 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 reasonably determined by the Agent.
(f) Following the occurrence of any Event of Default (and whether or not the
Agent exercises the Agent's rights on account thereof), each Revolving Credit
Loan shall bear interest, at the option of the Agent or at the instruction of
the SuperMajority Lenders at rate which is the rate then in effect for such
Revolving Credit Loan, plus Two Percent (2%) per annum.
(g)
2:12. REVOLVING CREDIT COMMITMENT FEE. In consideration of the commitment to
make loans and advances to the Borrower under the Revolving Credit, and to
maintain sufficient funds available for such purpose, there has been earned and
the Borrower shall pay the "REVOLVING CREDIT COMMITMENT FEE" (so referred to
herein) in the amount and payable as provided in the Fee Letter.
2:13. AGENT'S FEE. In addition to any other fee or expense to be paid by the
Borrower on account of the Revolving Credit, the Borrower shall pay the Agent
the "AGENT'S FEE" at the times and in the amounts as set forth the Fee Letter.
2:14. UNUSED LINE FEE. In addition to any other fee to be paid by the Borrower
on account of the Revolving Credit, the Borrower shall pay the Agent the "UNUSED
LINE FEE" (so referred to herein) of 0.375% per annum of the difference, during
the quarter just ended (or relevant period with respect to the payment being
made on the Termination Date) between $70,000,000.00 and the average of the
unpaid principal balance of the Loan Account and the undrawn Stated Amount of
L/C's outstanding
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during the relevant period. The Unused Line Fee shall be paid in arrears, on the
first day of each quarter after the execution of this Agreement and on the
Termination Date.
2:15. EARLY TERMINATION FEE. In the event that the Termination Date occurs, for
any reason (other than an account of a refinancing provided by the Agent or an
affiliate of the Agent), prior to February 28, 2002, the Borrower shall pay to
the Agent, for the benefit of the Revolving Credit Lenders, the "REVOLVING
CREDIT EARLY TERMINATION FEE" (so referred to herein) equal to one percent of
the Revolving Credit Ceiling as of a date which is 90 days prior to the
Termination Date.
2:16. 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 Borrower
on account of the accommodation, from time to time, by the Agent of the
Borrower's request that the Agent depart or dispense with one or more of the
administrative provisions of this Agreement and/or the Borrower's failure to
comply with any of such provisions, which additional fee shall be reasonable.
(i) By way of non-exclusive example, the Agent may assess a fee on
account of any of the following:
(A) The Borrower's failure to pay that amount which is
necessary so that no OverLoan is outstanding (as required
under Section 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 .
(D) The Borrower's failure to provide a financial statement or
report within the applicable time frame provided for such
report under Article 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 the Borrower may rely.
(b) The Borrower 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
pursuant to the terms hereof or suspension or termination pursuant to the terms
hereof of the Agent's and any Revolving Credit Lender's respective obligation to
make loans and advances hereunder.
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(c)
2:17. 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
exercise of its reasonable judgment, in good faith (which shall be presumed),
based upon such Person's consideration of any such factors as the Agent or that
Revolving Credit Lender, taking into account information of which that Person
then has actual knowledge, reasonably believes:
(i) Will or reasonably could be expected to adversely affect 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) Indicates that any report or financial information delivered to
the Agent or any Revolving Credit Lender by or on behalf of the
Borrower is incomplete, inaccurate, or misleading in any material
manner or was not prepared in any material respect in accordance with
the requirements of this Agreement.
(iii) Suggests an increase in the likelihood that the Borrower will
become the subject of a bankruptcy or insolvency proceeding.
(iv) Suggests that the Borrower is In Default.
(b) In the exercise of such judgment, 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 the Borrower competes (having regard for the Borrower's position
in that industry).
(iii) General macroeconomic conditions which have a material effect on
the Borrower's cost structure.
(iv) Material changes in or to the mix of the Borrower's Inventory.
(v) Seasonality with respect to the Borrower's Inventory and patterns
of retail sales.
(vi) Such other factors as the Agent and each Revolving Credit Lender
reasonably determines as having a material bearing on credit risks
associated with the providing of loans and financial accommodations to
the Borrower.
(c) 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 Borrower's.
(d)
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2:18. PROCEDURES FOR ISSUANCE OF L/C'S.
(a) The Borrower may request that the Agent cause the issuance by the Issuer of
L/C's for the account of the Borrower, and the Issuer shall, if so requested,
issue one or more L/C's for the account of the Borrower from time to time
pursuant to the terms hereof. Each such request shall be in the manner set forth
herein or in such other manner as may from time to time be reasonably acceptable
to the Agent.
(b) The Agent shall cause the issuance of any L/C so requested by the Borrower,
provided that , at the time that the request is made, the Revolving Credit has
not been suspended as provided in Section and if so issued:
(i) The aggregate Stated Amount of all L/C's then outstanding, does not
exceed $10,000,000.00
(ii) The expiry of the L/C is not later than the earlier of thirty (30)
days prior to the Maturity Date or the following:
(A) Standby's: One (1) year from initial issuance.
(B) Documentary's: Sixty (60) days from issuance.
(iii) An OverLoan will not result from the issuance of the subject L/C.
(c) The Borrower shall execute such documentation to apply for and support the
issuance of an L/C as may be required by the Issuer.
(d) Unless within the control of the Agent or a Revolving Credit Lender, 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 Borrower 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 the 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 the 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 the Borrower is In Default or such advance would
result in an OverLoan. Such action shall not constitute a waiver of the Agent's
rights under Section hereof.
(f)
2:19. FEES FOR L/C'S.
(a) The Borrower shall pay to the Agent a fee, on account of L/C's, monthly in
arrears, and on the Termination Date and on the End Date, determined at the
following per annum rate of the weighted average Stated Amount of all L/C's
outstanding during the period in respect of which such fee is being paid except
that, following the occurrence of any Event of Default, such fee shall be
increased by two percent (2%) per annum:
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(i) Standby's: 200 basis points.
(ii) Documentaries: 150 basis points.
(b) In addition to the fee to be paid as provided in Subsection 2:2-19(a) above,
the Borrower 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 customarily charged by the Issuer on
account of, or in respect to, any L/C.
(c) If any change in Applicable Law after the date of this Agreement 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 or , 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 within ten (10) days after demand by the Agent and delivery by the
Agent to the Borrower of a certificate of an officer of the subject Revolving
Credit Lender or the subject Issuer describing, with reasonable particularity,
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 Borrower
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 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 or , above, and the allocation, if any, of such costs
among the Borrower 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 Borrower. Notwithstanding the foregoing, any demand for such increased
letter of credit costs shall not include any increased letter of credit costs of
which the Issuer, any Revolving Credit Lender, or the Agent making demand
therefor had knowledge more than 90 days prior to the date that the Issuer, any
Revolving Credit Lender or the Agent makes demand therefor.
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2:20. 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 the 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, the 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 Borrower. 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, except through its gross negligence or willful
misconduct.
(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 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 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 Borrower 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:
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(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) The 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 the 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.
2:21. CHANGED CIRCUMSTANCES.
(a) The Agent may advise the 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
Libor Loans.
(ii) The continuation of or conversion of any Revolving Credit Loan to
a Libor Loan has been made impossible or unlawful by the occurrence
after the date of this Agreement 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 Libor Loans are based
shall no longer fairly and adequately represent the effective cost to
the Agent or any Revolving Credit Lender for U.S. dollar deposits in
the interbank market for deposits in which it regularly participates.
(b) In the event that the Agent advises the Borrower of an occurrence described
in Section , then, until the Agent notifies the 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 Borrower to select the affected interest rate as otherwise
applicable to any Revolving Credit Loans shall be suspended.
Any notice which the Borrower had given the Agent with respect
to any Libor Loan, the time for action with respect to which has not
occurred prior to the Agent's having given notice pursuant to Section
above, shall be deemed to be given for a Base Margin Loan.
2:22. LENDERS' COMMITMENTS
(a) Subject to Section (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) are set forth on EXHIBIT , annexed hereto.
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(b) The obligations of each Revolving Credit Lender are several and not joint.
No Revolving Credit Lender shall have any obligation to make any loan or advance
under the Revolving Credit in excess of the lesser of the following:
(i) That Revolving Credit Lender's Revolving Credit Commitment
Percentage of the subject loan or advance or of Availability.
(ii) that Revolving Credit Lender's Revolving Credit Dollar Commitment.
(c) No Revolving Credit Lender shall have any liability to the Borrower 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) In the event of the Borrower's exercise of its right to reduce the Revolving
Credit Ceiling, the effect of such reduction shall be distributed, pro rata,
amongst the Revolving Credit Lenders based on their then respective Revolving
Credit Dollar Commitments.
(e) 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 the Borrower is required) any assignment to a Person not
then a Revolving Credit Lender shall be subject to the prior written consent of
the Borrower (not to be unreasonably withheld), which consent will be deemed
given unless the Borrower provides the Agent with written objection, not more
than Five (5) Business Days after the Agent shall have given the Borrower
written notice of a proposed assignment).
(f) Upon written notice given the Borrower from time to time by the Agent, of
any assignment or allocation referenced in Section :
(i) The Borrower shall execute one or more replacement Revolving Credit
Notes to reflect such changed Revolving Credit Dollar Commitments,
Revolving Credit Commitment Percentages, and identities and shall
deliver such replacement Revolving Credit Notes to the Agent (which
promptly thereafter shall deliver to the 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 the
Borrower, the Agent, in lieu of causing the Borrower 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.
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(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.
ARTICLE 3: - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, the
establishment of the Revolving Credit, and the making of the first loan under
the Revolving Credit, each of the documents respectively described in Sections
through and including, (each in form and substance reasonably satisfactory to
the Agent) shall have been delivered to the Agent, and the conditions
respectively described in Sections through and including, shall have been
satisfied:
3:1. CORPORATE DUE DILIGENCE.
(a) A Certificate of corporate good standing issued by the Secretary of State of
Texas.
(b) Certificates of due qualification, in good standing, issued by the
Secretary(ies) of State of each State in which the nature the Borrower's
business conducted or assets owned could require such qualification.
(c) A Certificate the Borrower's Secretary of the due adoption, continued
effectiveness, and setting forth the texts of, each corporate 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.
(d)
3:2. OPINION. An opinion of counsel to the Borrower in form and substance
satisfactory to the Agent.
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) Unconditional and Unlimited Guaranties by Hastings College Stores, Inc. and
Hastings Internet, Inc. of all of the Borrower's Liabilities.
(b) Security Agreements by Hastings College Stores, Inc. and Hastings Internet,
Inc. pursuant to which the Agent is granted a first perfected security interest
in and to all of their respective
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business assets, along with all documents, instruments, and agreements that the
Agent reasonably may require in connection therewith.
(c)
3:4. OFFICERS' CERTIFICATES. Certificates executed by the President and the
Chief Financial Officer or Vice President - Finance of the Borrower and stating
that the representations and warranties made by the Borrower 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 the Borrower in this Agreement or in any of the other Loan Documents
or in any other report, statement, document, or paper provided by or on behalf
of the Borrower 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; Availability shall not be less than $20 Million.
3:7. ALL FEES AND EXPENSES PAID. All reasonable fees due at or immediately after
the first funding under the Revolving Credit and all reasonable 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. BORROWER NOT IN DEFAULT. The Borrower is not In Default.
3:9. NO ADVERSE CHANGE. No event shall have occurred or failed to occur, which
occurrence or failure is or could have a materially adverse effect upon the
Borrower's financial condition when compared with such financial condition at
April 30, 2000.
3:10. BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this Article
3 are for the sole benefit of the Agent and the Revolving Credit Lenders 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 until received and accepted by the Agent or its counsel at its offices in
Boston, Massachusetts. Under no circumstances shall this Agreement take effect
until executed and accepted by the Agent at said offices.
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ARTICLE 4: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Revolving Credit Lender to establish the credit facility
contemplated herein and to induce the Revolving Credit Lenders to provide
Revolving Credit Loans (each of which Revolving Credit Loans shall be deemed to
have been made in reliance thereupon) the Borrower, in addition to all other
representations, warranties, and covenants made by the Borrower in any other
Loan Document, makes those representations, warranties, and covenants included
in this Agreement.
4:1. PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrower 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) The Borrower presently is and shall hereafter remain in good standing as a
Texas corporation 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
the Borrower's assets or operation of the Borrower's business, such
qualification may be necessary, except where the failure to so qualify would not
have a material adverse effect on the business or assets of the Borrower.
(b) The Borrower's organizational identification number assigned to it by the
State of Texas is 306162-0 and its federal employer identification number is
75-1386375.
(c) The Borrower shall not change its State of organization; any organizational
identification number assigned to the Borrower by that State; or the Borrower's
federal employer identification number without giving the Agent thirty (30) days
prior written notice thereof.
(d) Each Subsidiary is listed on EXHIBIT , annexed hereto. The Borrower shall
provide the Agent with prior written notice of any entity's becoming or ceasing
to be a Subsidiary.
(e) The Borrower has all requisite power and authority to
execute and deliver all Loan Documents to which the Borrower is a party and has
and will hereafter retain all requisite power to perform all Liabilities.
(f) The execution and delivery by the Borrower of each Loan Document to which it
is a party; the Borrower's consummation of the transactions contemplated by such
Loan Documents (including, without limitation, the creation of Collateral
Interests by the Borrower to secure the Liabilities); the
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Borrower's performance under those of the Loan Documents to which it is a party;
the borrowings hereunder; and the use of the proceeds thereof:
(i) Have been duly authorized by all necessary action.
(ii) Do not, and will not, contravene in any material respect any
provision of any Requirement of Law or obligation of the Borrower,
except to the extent such contravention would not have a material
adverse effect on the business or assets of the Borrower.
(iii) Will not result in the creation or imposition of, or the
obligation to create or impose, any Encumbrance upon any assets of the
Borrower 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 the Borrower and
are the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms.
(h)
4:3. TRADE NAMES.
(a) EXHIBIT , annexed hereto, is a listing of:
(i) All names under which the Borrower ever conducted its business
since July 31, 1995.
(ii) All Persons with whom the Borrower, since July 31, 1995,
consolidated or merged, or from whom the Borrower ever acquired in a
single transaction or in a series of related transactions substantially
all of such Person's assets.
(b) The Borrower will provide the Agent with not less than twenty-one (21) days
prior written notice (with reasonable particularity) of any change to the
Borrower's name from that under which the Borrower is conducting its business at
the execution of this Agreement and will not effect such change unless the
Borrower is then in compliance in all material respects with all provisions of
this Agreement.
(c)
4:4. INFRASTRUCTURE.
(a) The Borrower 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 the
Borrower's conduct of the Borrower's business, except where the failure to do so
would not have a material adverse effect on the business or assets of the
Borrower.
(b) The conduct by the Borrower of the Borrower's business does not presently
infringe (nor will the Borrower 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,
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know-how, confidential information, or other intellectual or proprietary
property of any third Person.
(c)
4:5. LOCATIONS.
(a) The Collateral, and the books, records, and papers of Borrower's pertaining
thereto, are kept and maintained solely at the following locations:
(i) The Borrower's chief executive offices which are at 3601 Plains
Boulevard, Amarillo, Texas 79102.
(ii) Those locations which are listed on EXHIBIT , 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 the Borrower owns the subject location) and of all
service bureaus with which any such records are maintained and the
names and addresses of each of then Borrower's landlords.
(b) The Borrower shall not remove any of the Collateral from said chief
executive office or those locations listed on EXHIBIT except for the following
purposes:
(i) To accomplish sales or rentals 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) To accomplish other sales and dispositions as are permitted hereunder. The
Borrower will not:
(i) Execute, alter, modify, or amend any Lease after the occurrence of
any Event of Default.
(ii) Commit to, or open or close any location at which the Borrower
maintains, offers for sales, or stores any of the Collateral, except
that upon notice to and consent of the Agent and provided that no Event
of Default then exists, the Borrower may:
(A) Acquire one or more new store locations.
(B) Close one or more store locations.
(d) Except as otherwise disclosed pursuant to, or permitted by, this Section ,
no tangible personal property of the Borrower 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.
(e)
4:6. TITLE TO ASSETS.
(a) The Borrower is, and shall hereafter remain, the owner of the Collateral
free and clear of all Encumbrances with the exceptions of the following (the
"PERMITTED ENCUMBRANCES"):
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(i) Encumbrances in favor of the Agent.
(ii) Liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate
proceedings and provided that no lien has been filed in respect thereof
(iii) Non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of the Borrower's
business to the extent: such liens secure obligations which are not
overdue or such liens secure obligations relating to claims or
liabilities which are fully insured (subject to commercially reasonable
deductibles) and being insurer defended at the sole cost and expense
and at the sole risk of the insurer or are being contested in good
faith by appropriate proceedings diligently pursued and available to
the Borrower, in each instance prior to the commencement of foreclosure
or other similar proceedings and with respect to which adequate
reserves have been set aside on the Borrower's books.
(iv) Carriers', warehousemen's, materialmen's, mechanics, repairmen's
or similar liens incurred in the ordinary course of business.
(v) Purchase money security interests in equipment securing not in
excess of $10 Million unpaid principal balance outstanding at any one
time on account of the purchase of new equipment.
(vi) Zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of real property.
(vii) Deposits under workmen's compensation, unemployment insurance,
pensions, and other employee benefits, 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.
(viii) Landlord's liens by operation of law where waivers thereof have
not been obtained.
(ix) Interests of lessors under Capital Leases.
(x) Liens consisting of security deposits made by the Borrower.
(xi) Those Encumbrances (if any) listed on EXHIBIT , annexed hereto.
(b) The Borrower does not and shall not, have, possession of any property on
consignment to the Borrower having a Cost aggregating more than $200,000.0 at
any one time.
(c) The Borrower shall not 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:
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(i) Equipment which is merely incidental to the conduct of the
Borrower's 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 Borrower does not and shall not hereafter have any
Indebtedness with the exceptions of:
(a) Any Indebtedness on account of the Liabilities.
(b) The Indebtedness (if any) listed on EXHIBIT , annexed hereto and all
renewals, extensions, refinancings, and modifications (but not increases)
thereof.
(c) Current liabilities for taxes incurred in the ordinary course of business
which are not yet due and payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves, if required by GAAP, have
been established.
(d) Trade payables arising in the ordinary course of business (i) that are paid
within the earlier of (A) 60 days of the date when payment thereof is due and
payable and (B) 180 days of the date the respective goods are delivered or
services are rendered or (ii) which are being contested in good faith by
appropriate proceedings for which adequate reserves, if required by GAAP, have
been established.
(e) Purchase money Indebtedness for equipment purchases which does not exceed,
in aggregate, $10,000,000 principal outstanding at any one time.
(f)
4:8. INSURANCE.
(a) EXHIBIT , annexed hereto, is a schedule of all insurance policies owned by
the Borrower or under which the Borrower is the named insured. Each of such
policies is in full force and effect. Neither the Borrower nor, to the
Borrower's knowledge, the issuer of any such policy is in default or violation
of any such policy.
(b) The Borrower shall have and maintain at all times from responsible companies
insurance covering such risks, in such amounts, containing such terms, in such
form, for such periods, and written by such companies as may be reasonably
satisfactory to the Agent.
(c) All insurance carried by the Borrower shall provide for a minimum of thirty
(30) days' written notice of cancellation to the Agent and all such insurance
which covers the Collateral shall 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
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act or neglect of the Borrower or by the failure of the Borrower to comply with
any warranty or condition of the policy.
(d) The coverage reflected on EXHIBIT presently satisfies the foregoing
requirements, it being recognized by the Borrower, however, that such
requirements may change hereafter to reflect changing circumstances.
(e) The Borrower shall furnish the Agent from time to time with certificates or
other evidence reasonably satisfactory to the Agent regarding compliance by the
Borrower with the foregoing requirements.
(f) In the event of the failure by the Borrower to maintain insurance as
required herein, the Agent, at its option, may obtain such insurance, provided,
however, the Agent's obtaining of such insurance shall not constitute a cure or
waiver of any Event of Default occasioned by the Borrower's failure to have
maintained such insurance.
(g)
4:9. LICENSES. Each license, distributorship, franchise, and similar agreement
issued to, or to which the Borrower is a party is in full force and effect,
except where the failure to do so would not have a material adverse effect on
the business or assets of the Borrower. To the Borrower's knowledge, no party to
any such license or agreement is in default or violation thereof. The Borrower
has not received any notice or threat of cancellation of any such license or
agreement.
4:10. LEASES. EXHIBIT , annexed hereto, is a schedule of all presently effective
Capital Leases. To the Borrower's knowledge, each of such Capital Leases is in
full force and effect. To the Borrower's knowledge, no party to any Lease or
Capital Lease is in default or violation of any such Lease or Capital Lease. The
Borrower has not received any notice or threat of cancellation of any such Lease
or Capital Lease. The Borrower hereby authorizes the Agent at any time and from
time to time, after the occurrence of an Event of Default, to contact any of the
Borrower's landlords in order to confirm the Borrower's continued compliance
with the terms and conditions of the Lease(s) between the Borrower and that
landlord and to discuss such issues, concerning the Borrower's occupancy under
such Lease(s), as the Agent may determine.
4:11. REQUIREMENTS OF LAW. The Borrower 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 have a material adverse
effect on the Borrower's business or assets. The Borrower has not received any
notice of any violation of any Requirement of Law (other than of a violation
which would not have a material adverse effect on the Borrower's business or
assets), which violation has not been cured or otherwise remedied.
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4:12. LABOR RELATIONS.
(a) The Borrower has not been and is not presently a party to any collective
bargaining or other labor contract.
(b) There is not presently pending and, to the Borrower's knowledge, there is
not threatened any of the following:
(i) Any strike, slowdown, picketing, work stoppage, or employee
grievance process.
(ii) Any proceeding against or affecting the Borrower 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 the Borrower, which, if determined adversely to the
Borrower could have a material adverse effect on the business or assets
of the Borrower.
(iii) Any lockout of any employees by the Borrower (and no such action
is contemplated by the Borrower).
(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.
(d) The Borrower:
(i) Has complied in all material respects with all Applicable Law
relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing.
(ii) Is not liable for the payment of compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for the
Borrower's failure to comply with any Applicable Law referenced in
Section , the amount of which would have a material adverse effect on
the business or assets of the Borrower.
4:13. MAINTAIN PROPERTIES. The Borrower 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.
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(d) Not sell, lease, or otherwise dispose of any of the Collateral, other than
the following:
(i) The sale or rental 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 the Borrower.
(iii) The turning over to the Agent of all Receipts as provided herein.
(iv) The sales of previously viewed videotapes.
(v) The sales of fixed assets (which shall not include sale of
previously viewed videotapes) during each Fiscal year which have an
aggregate book value not in excess of 10% of the book value of the
Borrower's total fixed assets as of the beginning of such Fiscal year.
(vi)
4:14. TAXES.
(a) With respect to the Borrower's federal, state, and local tax liability and
obligations:
(i) The Borrower, in compliance with all Applicable Law, has properly
filed all returns due to be filed up to the date of this Agreement,
except to the extent any failure to file would not have a material
adverse effect on the business or assets of the Borrower.
(ii) Except as described on EXHIBIT :
(A) At no time has the Borrower received from any taxing
authority any request to perform any examination of or with
respect to the Borrower nor any other written or verbal notice
in any way relating to any claimed failure by the Borrower 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 the
Borrower which, by application of similar principles,
reasonably could be expected to result in the assertion of a
material deficiency for any fiscal year open for examination,
assessment, or claim by any taxing authority.
(b) The Borrower has, and hereafter shall: pay, as they become due and payable,
all taxes and unemployment contributions and other charges of any kind or nature
levied, assessed or claimed against the Borrower or the Collateral by any person
or entity, except those taxes, contributions and charges that are being
contested in good faith by appropriate proceedings for which adequate reserves,
if required by GAAP, have been established, and provided that no lien has been
filed in respect thereto,
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properly exercise any trust responsibilities imposed upon the Borrower by reason
of withholding from employees' pay or by reason of the Borrower's receipt of
sales tax or other funds for the account of any third party; timely make all
contributions and other payments as may be required pursuant to any Employee
Benefit Plan now or hereafter established by the Borrower; and timely file all
tax and other returns and other reports with each governmental authority to whom
the Borrower is obligated to so file, except where the failure to file would not
have a material adverse effect on the business or assets of the Borrower.
(c)
4:15. NO MARGIN STOCK. The Borrower is not 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) Except as disclosed on EXHIBIT , annexed hereto, neither the Borrower nor
any ERISA Affiliate is aware of or has knowingly:
(i) Violated or failed to be in full compliance with the Borrower's
Employee Benefit Plan.
(ii) Failed timely to file all reports and filings required by ERISA to
be filed by the Borrower.
(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 the Borrower on account thereof
pursuant to ERISA, which tax or penalty would have a material adverse
effect on the business or assets of the Borrower.
(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 the Borrower 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.
(b) Neither the Borrower nor any ERISA Affiliate shall ever knowingly or
intentionally engage in any action of the type described in Section .
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(c)
4:17. HAZARDOUS MATERIALS.
(a) To the best of the Borrower's knowledge the Borrower has never: (i) been
legally responsible for any release or threat of release of any Hazardous
Material or (ii) received notification of the incurrence of any material expense
in connection with the assessment, containment, or removal of any Hazardous
Material for which the Borrower would be responsible.
(b) The Borrower shall: (i) dispose of any Hazardous Material only in compliance
with all Environmental Laws and (ii) have possession of any Hazardous Material
only in the ordinary course of the Borrower's business and in compliance with
all Environmental Laws.
(c)
4:18. LITIGATION. Except as described in EXHIBIT , annexed hereto, there is not
presently pending or threatened by or against the Borrower any suit, action,
proceeding, or investigation which, if determined adversely to the Borrower,
would have a material adverse effect upon the Borrower's financial condition or
ability to conduct its business as such business is presently conducted or is
contemplated to be conducted in the foreseeable future.
4:19. DIVIDENDS. INVESTMENTS. CORPORATE ACTION. The Borrower shall not:
(a) Pay any cash dividend or make any other distribution in respect of any class
of the Borrower's capital stock.
(b) Own, redeem, retire, purchase, or acquire any of the Borrower's capital
stock; provided, however, (i) the Borrower may expend up to $7.5 Million to
repurchase its capital stock, provided that (A) no Event of Default has occurred
or will result from such repurchase and (B) Availability, for the 30 days prior
to, and immediately after the day of such repurchase is not less than the
following:
<TABLE>
<CAPTION>
CUMULATIVE REPURCHASES MINIMUM 30 DAY AVAILABILITY
($MILLION) ($MILLION)
---------------------- ---------------------------
<S> <C>
Up to 2.5 10.0
Up to 5.0 15.0
Up to 7.5 20.0
</TABLE>
and (ii) Borrower may repurchase stock options issued under the Borrower's
employee stock option plan for non-cash consideration consisting of restricted
stock of the Borrower.
(a) Invest in or purchase any stock or securities or rights to purchase any such
stock or securities, of any Person.
(b) Merge or consolidate or be merged or consolidated with or into any other
corporation or other entity, provided, that a subsidiary of the Borrower may
merge or consolidate into the Borrower.
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(c) Consolidate any of the Borrower's operations with those of any other Person,
other than a subsidiary of the Borrower.
(d) Organize or create any Subsidiary, without the Agent's reasonable consent,
and in any event unless such Subsidiary executes an Unconditional and Unlimited
Guaranty of all of the Borrower's Liabilities, substantially in the form of the
guaranty agreement executed on the date hereof by the Borrower's existing
Subsidiaries and executes a Security Agreement granting to the Agent a first
perfected interest in its business assets, substantially in the form of the
security agreement executed on the date hereof by the Borrower's existing
Subsidiaries.
(e) Subordinate any debts or obligations owed to the Borrower by any third party
to any other debts owed by such third party to any other Person.
(f) Acquire any assets other than in the ordinary course and conduct of the
0Borrower's business as conducted at the execution of this Agreement.
(g)
4:20. LOANS. The Borrower shall not 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 the Borrower's suppliers in the ordinary course.
(b) Advances to the Borrower's officers, employees, and salespersons with
respect to reasonable expenses to be incurred by such officers, employees, and
salespersons for the benefit of the Borrower, which expenses are properly
substantiated by the person seeking such advance and properly reimbursable by
the Borrower.
(c) Advances and loans to the Borrower's Subsidiaries.
(d)
4:21. PROTECTION OF ASSETS. The Agent, in the Agent's reasonable 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 deem reasonably
necessary 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 finding no further appeal
is available, that the Agent had acted in actual bad faith or in a grossly
negligent manner. The Borrower 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 .
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4:22. LINE OF BUSINESS. The Borrower shall not 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. The Borrower shall not enter into any transaction
with any Affiliate, other then transactions in the ordinary course of business
which are on fair and reasonable terms, no less favorable to the Borrower than
those which would have been imposed in a comparable arms length transaction with
a person who is not an Affiliate.
4:24. FURTHER ASSURANCES.
(a) The Borrower is not the owner of, nor has it any interest in, any property
or asset (other than any Exempt Asset) which, immediately upon the satisfaction
of the conditions precedent to the effectiveness of the credit facility
contemplated hereby (Article ) will not be subject to a perfected Collateral
Interest in favor of the Agent (subject only to Permitted Encumbrances) to
secure the Liabilities.
(b) The Borrower will not hereafter acquire any asset or any interest in
property (other than any Exempt Asset) 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).
(c) The Borrower 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 reasonably request to carry into effect the provisions and
intent of this Agreement; to protect and perfect the Agent's Collateral
Interests in the Collateral; facilitate the collection of the Receivables
Collateral. The Borrower shall execute all such instruments as may be reasonably
required by the Agent with respect to the recordation and/or perfection of the
Collateral Interests created or contemplated herein.
(d) The Borrower hereby designates the Agent as and for the Borrower's true and
lawful attorney, with full power of substitution, to sign and file any financing
statements in order to perfect the Agent's Collateral Interests in the
Collateral.
(e) The Borrower hereby authorizes the Agent to file such financing statements
as the Agent determines as appropriate to perfect or protect the Agent's
Collateral Interests in the Collateral.
(f) A carbon, photographic, or other reproduction of this Agreement or of any
financing statement or other instrument executed pursuant to this Section shall
be sufficient for filing to perfect the security interests granted herein.
(g)
4:26. ADEQUACY OF DISCLOSURE.
(a) All financial statements furnished to the Agent and to each Revolving Credit
Lender by the Borrower have been prepared in accordance with GAAP consistently
applied and present fairly the
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condition of the Borrower at the date(s) thereof and the results of operations
and cash flows for the period(s) covered (provided however, that unaudited
financial statements are subject to normal year end adjustments and to the
absence of footnotes). There has been no change in the financial condition,
results of operations, or cash flows of the Borrower 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) The Borrower does not have any contingent obligations or obligation under
any Lease or Capital Lease which is not noted in the Borrower's financial
statements furnished to the Agent prior to the execution of this Agreement.
(c) No document, instrument, agreement, or paper now or hereafter given the
Agent and to each Revolving Credit Lender by or on behalf of the Borrower 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 the Borrower which has, or which, in the foreseeable future
could have, a material adverse effect on the financial condition of the Borrower
or any such guarantor which has not been disclosed in writing to the Agent and
to each Revolving Credit Lender.
(d)
4:26. NO RESTRICTIONS ON LIABILITIES. The Borrower shall not enter into or
directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, the Borrower's:
(a) Creation of, and granting of Collateral Interests in favor of the Agent.
(b) Incurrence of Liabilities.
(c)
4:27. OTHER COVENANTS. The Borrower shall not indirectly do or cause to be done
any act which, if done directly by the Borrower, would breach any covenant
contained in this Agreement.
ARTICLE 5: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5:1. MAINTAIN RECORDS. The Borrower shall:
(a) At all times, keep proper books of account, in which full, true, and
accurate entries shall be made of all of the Borrower's financial transactions,
all in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrower at the close of, and its results
of operations for, the periods in question.
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(b) Timely provide the Agent with those financial reports, statements, and
schedules required by this Article 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 financial condition of the Borrower 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 discuss
with the Agent the Borrower's financial performance, financial condition,
operating results, controls, and such other matters, within the scope of the
retention of such accountants (and subject to work product and accountant/client
privileged information), as may be raised by the Agent.
(e) Not change the Borrower's Fiscal year.
(f)
5:2. ACCESS TO RECORDS.
(a) The Borrower shall accord the Agent with access from time to time as the
Agent may require to all properties owned by or over which the Borrower has
control. The Agent shall have the right, and the Borrower will permit the Agent
from time to time as Agent may reasonably request, to examine, inspect, copy,
and make extracts from any and all of the Borrower's books, records,
electronically stored data, papers, and files. The Borrower shall make all of
the Borrower's copying facilities available to the Agent.
(b) The Borrower 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 the
Borrower, 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, and/or with the Borrower's
computer billing companies, collection agencies, and accountants and to
sign the name of the Borrower on any notice to the Borrower'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 as fully as if the Agent were
doing so.
(d)
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5:3. IMMEDIATE NOTICE TO AGENT.
(a) The 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 the Borrower's President and chief financial officer.
(ii) Any ceasing of the Borrower's making of payment, in the ordinary
course, to any of its creditors (other than its ceasing of making of
such payments on account of a de minimis dispute).
(iii) Any failure by the Borrower to pay rent at any of the Borrower's
locations, which failure continues for more than Three (3) days
following the last day on which such rent was payable (including any
grace periods therefor) without more than a de minimis adverse effect
to the Borrower.
(iv) Any material adverse change in the business, operations, or
financial affairs of the Borrower.
(v) The Borrower's becoming In Default.
(vi) Any intention on the part of the Borrower to discharge the
Borrower's present independent accountants or any withdrawal or
resignation by such independent accountants from their acting in such
capacity (as to which, see Subsection ).
(vii) Any litigation which, if determined adversely to the Borrower,
might have a material adverse effect on the financial condition of the
Borrower.
(b) The Borrower shall:
(i) Provide the Agent, when so distributed, with copies of any
materials distributed to the shareholders of the Borrower (qua such
shareholders).
(ii) Provide the Agent:
(A) When filed, copies of the Borrower's Form 10-K, Form 8-K,
Form 10-Q and Form 14A filed with the SEC.
(B) When received, copies of all correspondence from the SEC,
other than routine non-substantive general communications from
the SEC.
(iii) Provide the Agent, when received by the Borrower, with a copy of
any management letter or similar communications from any accountant of
the Borrower.
5:4. BORROWING BASE CERTIFICATE. The Borrower shall provide the Agent by 11:30
a.m., daily, with a Borrowing Base Certificate (in the form of EXHIBIT annexed
hereto, as such form may be revised from time to time by the Agent (the
"Borrowing Base Certificate")). Such Certificate may be
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sent to the Agent by facsimile transmission, provided that the original thereof
is forwarded to the Agent on the date of such transmission.
5:5. MONTHLY REPORTS.
(a) Monthly, the Borrower shall provide the Agent with original counterparts of
the following (each in such form as the Agent from time to time may reasonably
specify):
(i) Within Fifteen (15) days of the end of the previous Fiscal month:
(A) A report generated by the Borrower's inventory control
system, which report reflects the functional equivalent of a
stock ledger inventory.
(B) An Inventory Certificate (signed by the Borrower's
President or Chief Financial Officer or Vice
President-Finance).
(C) By Department Inventory Report
(D) Distribution Center Inventory Report (By Department).
(E) Return Center Inventory Report (By Department).
(ii) Within Thirty (30) days of the end of the previous Fiscal month:
(A) Reconciliation of the above described Report and Inventory
Certificate (Section ) to Availability and to the general
ledger as of the end of the subject month (which
reconciliation shall reflect in-transit inventory).
(B) A schedule of purchases from the Borrower's twenty 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.
(C) A summary aging of the Borrower's accounts payable by
vendor type.
(D) A Store Activity Report.
(E) The officer's compliance certificate described in Section
.
(F) An internally prepared consolidated financial statement of
the financial condition of the Borrower and its Subsidiaries
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
"consolidated" basis), cash flow and comparison of total same
store sales detailed by merchandise and rental for the
corresponding month of the then immediately previous year, as
well as to the Business Plan.
(b) For purposes of Sections , above, and , above, the first "previous month" in
respect of which the items respectively required by those Sections shall be the
month prior to that which dates this Agreement, except that the first group of
items required to be provided pursuant to Section shall be
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included with those provided pursuant to Section ; thereafter, those items shall
be provided in accordance with the requirements of Section .
(c)
5:6. QUARTERLY REPORTS. Quarterly, within Forty Five (45) days following the end
of each of the Borrower's Fiscal quarters, the Borrower shall provide the Agent
with the following:
(a) A copy of the management prepared consolidated financial
statement of the Borrower and its Subsidiaries for the period from the beginning
of the Borrower's 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), 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
(c) Store specific EBITDA.
5:7. ANNUAL REPORTS.
(a) Annually, within ninety (90) days following the end of the Borrower's Fiscal
year, the Borrower shall furnish the Agent with the following:
(i) A copy of the annual consolidated financial statement for the
Borrower and its Subsidiaries, which statement shall have been prepared
by, and bear the unqualified opinion of, the 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, and cash
flows.
(ii) The officer's compliance certificate described in Section .
5:8. OFFICERS' CERTIFICATES. The Borrower shall cause either the Borrower's
President or its Chief Financial Officer or Vice President-Finance, in each
instance, to provide a Certificate with those monthly statements required
pursuant to Section , 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 Borrower and its Subsidiaries at the close of, and the consolidated results
of the Borrower's and its Subsidiaries' operations and cash flows for, the
period(s) covered, subject, however to the following:
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(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 .
(b) Indicate either that (i) the Borrower is not In Default, or (ii) if such an
event has occurred, its nature (in reasonable detail) and the steps (if any)
being taken or contemplated by the Borrower to be taken on account thereof.
(c) Include calculations concerning the Borrower's compliance (or failure to
comply) at the date of the subject statement with each of the financial
performance covenants included in Section hereof.
(d)
5:9. INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Agent, at the expense of the Borrower, may participate in and/or observe
each internal cycle count and/or inventory of so much of the Collateral as
consists of Inventory which is undertaken on behalf of the Borrower. (b) The
Borrower, at its own expense, shall cause not less than two (2) cycle counts to
be undertaken at each of its locations in each twelve (12) month period during
which this Agreement is in effect (the spacing of the scheduling of which
inventories shall be subject to the Agent's discretion) conducted by such
inventory takers as are satisfactory to the Agent and following such methodology
as may be satisfactory to the Agent.
(i) The 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 the Borrower) within ten (10) days following
the completion of such inventory.
(ii) The 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 the Borrower) and shall post such results to
the Borrower's By-Department monthly report generated by the Borrower's
inventory control system and, as applicable to the Borrower's other
financial books and records.
(iii) The Agent, in its discretion, if the Borrower is In Default, may
cause such additional inventories to be taken as the Agent determines
(each, at the expense of the Borrower).
(c) The Agent may obtain appraisals of the Collateral, from time to time (in all
events, at the Borrower's expense) conducted by such appraisers as are
reasonably satisfactory to the Agent.
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(d) The Agent may obtain commercial finance field examinations, from time to
time (in each event, at the Borrower's expense) of the Borrower's books and
records; provided, however, that as long as no Event of Default has occurred, no
more frequently than twice in any 12 month period, it being understood that if
either (or both) an Event of Default has occurred or the Agent provides to the
Borrower a valid business reason therefor, the Agent may conduct one or more
additional commercial finance field examinations at the expense of the Borrower.
(e) The Agent from time to time (in all events, at the Borrower's expense) may
undertake "mystery shopping" (so-called) visits to all or any of the Borrower's
business premises.
(f)
5:10. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be provided pursuant to
this Article , the Borrower promptly shall provide the Agent with such other and
additional information concerning the Borrower, the Collateral, the operation of
the Borrower's business, and the Borrower's financial condition, including
original counterparts of financial reports and statements, as the Agent may from
time to time reasonably request from the Borrower.
(b) On or before the end of business on October 13, 2000, the Borrower shall
provide the Agent with a copy of the "management letter" (so-called) provided by
the Borrower's accountants for the Borrower's Fiscal 2000, the substance of
which management letter shall be subject to the Agent's reasonable satisfaction.
(c) The Borrower may provide the Agent, from time to time hereafter, with
updated forecasts of the Borrower's anticipated performance and operating
results.
(d) In all events, the Borrower, no sooner than Ninety (90) nor later than Sixty
(60) days prior to the end of each of the Borrower's 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 prepared in
conformity with GAAP and consistent with the Borrower's then current practices.
(e) The Borrower recognizes that all appraisals, inventories, analysis,
financial information, and other materials which the Agent may obtain, develop,
or receive with respect to the Borrower are confidential to the Agent and that,
except as otherwise provided herein, the Borrower is not entitled to receipt of
any of such appraisals, inventories, analysis, financial information, and other
materials, nor copies or extracts thereof or therefrom.
(f) The Borrower's Business Plan has been delivered to the Agent.
(g)
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5:11. FINANCIAL PERFORMANCE COVENANT. The Borrower shall maintain Availability
of not less than $10 Million at all times.
ARTICLE 6: - USE OF COLLATERAL:
6:1. USE OF INVENTORY COLLATERAL.
(a) The Borrower shall not engage
(i) In any sale of the Inventory other than for fair consideration in
the conduct of the Borrower's business in the ordinary course.
(ii) Sales or other dispositions to creditors.
(iii) Sales or other dispositions in bulk.
(iv) Sales of any Collateral in breach of any provision of this
Agreement.
(b) No sale of Inventory shall be on consignment, approval, or under any other
circumstances such that, with the exception of the Borrower's customary return
policy applicable to the return of inventory purchased by the Borrower's retail
customers in the ordinary course, such Inventory may be returned to the Borrower
without the consent of the Agent.
(c)
6:2. INVENTORY QUALITY. All Inventory now owned or hereafter acquired by the
Borrower 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. The Borrower may grant such allowances or other
adjustments to the Borrower's Account Debtors as the Borrower may reasonably
deem to accord with sound business practice, provided, however, the authority
granted the Borrower pursuant to this Section may be limited or terminated by
the Agent at any time after the occurrence of an Event of Default 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
Borrower 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 Borrower.
(b) The Borrower has no knowledge of any impairment of the validity or
collectibility of any of the Accounts. The Borrower shall notify the Agent of
any such impairment immediately after the Borrower becomes aware of any such
impairment.
(c)
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6:5. NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall have the right after the
occurrence of an Event of Default to notify any of the Borrower's Account
Debtors to make payment directly to the Agent and to collect all amounts due on
account of the Collateral.
ARTICLE 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7:1. DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT is a Schedule of all present DDA's, which Schedule
includes, with respect to each depository (i) the name and address of that
depository; (ii) the account number(s) of the account(s) maintained with such
depository; and (iii) a contact person at such depository.
(b) The Borrower shall deliver the following to the Agent, as a condition to the
effectiveness of this Agreement:
(i) Notification, executed on behalf of the Borrower, to each
depository institution with which any DDA is maintained (other than any
Exempt DDA and the Blocked Account), in form reasonably satisfactory to
the Agent of the Agent's interest in such DDA.
(c) A Blocked Account Agreement with Amarillo National Bank. The Borrower will
not establish any DDA hereafter (other than an Exempt DDA) unless,
contemporaneous with such establishment, the 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 if the subject
DDA were open at the execution of this Agreement.
7:2. CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT , is a Schedule which describes all arrangements
to which the Borrower is a party with respect to the payment to the Borrower of
the proceeds of credit card charges for sales by the Borrower.
(b) The Borrower shall deliver to the Agent, as a condition to the effectiveness
of this Agreement, notification, executed on behalf of the Borrower, to each of
the Borrower's credit card clearinghouses and processors of notice (in form
reasonably satisfactory to the Agent), which notice provides that payment of all
credit card charges submitted by the Borrower to that clearinghouse or other
processor and any other amount payable to the Borrower by such clearinghouse or
other processor shall be directed to the Blocked Account (or if the Borrower
prefers to so specify in such notice, to the Concentration Account. The Borrower
shall not change such direction or designation except upon and with the prior
written consent of the Agent.
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(c)
7:3. THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS.
(a) The following checking accounts have been or will be established (and are so
referred to herein):
(i) The "CONCENTRATION ACCOUNT" (so referred to herein): Established by
the Agent with Fleet National Bank.
(ii) The "BLOCKED ACCOUNT" (so referred to herein): Established by the
Borrower with Amarillo National Bank.
(iii) The "OPERATING ACCOUNT" (so referred to herein): Established by
the Borrower with Amarillo National Bank.
(iv) The "PAYROLL ACCOUNT" (so referred to herein) and established by
the Borrower with Amarillo National Bank.
(b) The contents of each DDA (other than the Operating Account and the Payroll
Account) and of the Blocked Account constitutes Collateral and Proceeds of
Collateral. The contents of the Concentration Account constitutes the Agent's
property.
(c) The Borrower 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).
(d)
7:4. PROCEEDS AND COLLECTIONS.
(a) All Receipts and all cash proceeds of any sale or other disposition of any
of the Borrower's assets:
(i) Constitute Collateral and proceeds of Collateral.
(ii) Shall be held in trust by the Borrower for the Agent.
(iii) Shall not be commingled with any of the Borrower's other funds.
(iv) Shall be deposited and/or transferred only to the Blocked Account
or the Concentration Account.
(b) The Borrower shall cause the ACH or wire transfer to the Blocked Account or
the Concentration Account, no less frequently than daily (and whether or not
there is then an outstanding balance in the Loan Account) of the following:
(i) The then contents of each DDA (other than any Exempt DDA), each
such transfer to be net of any minimum balance, not to exceed $1,500.00
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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(c) Whether or not any Liabilities are then outstanding, the Borrower
shall cause the ACH or wire transfer to the Concentration Account, no less
frequently than daily, of then entire ledger balance of the Blocked Account, net
of such minimum balance, not to exceed $1,000.00 as may be required to be
maintained in the Blocked Account by the depository which the Blocked Account is
maintained. Telephone advice (confirmed by written notice) shall be provided to
the Agent on each Business Day on which any such transfer is made.
(d) In the event that, notwithstanding the provisions of this Section , the
Borrower 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 the Borrower for the Agent and shall not
be commingled with any of the Borrower's other funds or deposited in any account
of the Borrower other than the Blocked Account.
(e)
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,
not to exceed $1,500.00) 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 Agreement:
(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 2:00PM (Boston time) 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 2:00PM (Boston
time) on that Business Day.
(iii) If notice of a deposit to the Concentration Account (Section ) or
payment (Section ) is not available to the Agent until after 2:00PM
(Boston time) on a Business Day, such deposit or payment shall be
deemed to have been made at 9:00AM 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.
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(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 , above, on a daily basis (less those amount which are to
be netted out, as provided therein) provided, however, in the event that
(i) the Borrower is InDefault; and
(ii) one or more L/C's are then outstanding,
then the Agent may establish a funded reserve of up to 110% of the aggregate
Stated Amounts of such L/C's. Such funded reserve shall either be (i) returned
to the Borrower provided that the Borrower is not InDefault or (ii) applied
towards the Liabilities following the occurrence of any Event of Default
described in Section 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 Borrower upon,
and other disbursements shall be made by the Borrower solely from, the Operating
Account or the Payroll Account.
ARTICLE 8: - GRANT OF SECURITY INTEREST:
8:1. GRANT OF SECURITY INTEREST. To secure the Borrower's prompt, punctual,
and faithful performance of all and each of the Liabilities, the Borrower 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, whether now owned or now due, or in which the Borrower has an interest,
or hereafter acquired, arising, or to become due, or in which the Borrower
obtains an interest, and all products, Proceeds, substitutions, and accessions
of or to any of the following (all of which, together with any other property in
which the 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.
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(i) All Payment Intangibles.
(j) All Supporting Obligations.
(k) All books, records, and information relating to the Collateral
and/or to the operation of the Borrower's business, and all
rights of access to such books, records, and information, and
all property in which such books, records, and information are
stored, recorded, and maintained.
(l) All Investment Property, Instruments, Documents, Deposit
Accounts, policies and certificates of insurance, deposits,
impressed accounts, compensating balances, money, cash, or
other property.
(m) 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. ( through ) or
otherwise.
(n) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing ( through ), 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 the Borrower to the
Agent and shall continue in full force and effect applicable to all Liabilities
until both (a) all Liabilities have been paid and/or satisfied in full and (b)
the Revolving Credit Dollar Commitment of each Revolving Credit Lender is
terminated.
(b) It is intended that the Collateral Interests created herein extend to and
cover all assets of the Borrower, other than Exempt Assets.
(c) It is further intended that, with respect to any term used herein to
describe Collateral which term is defined in either (or both) the UCC as in
effect on the date when this Agreement was executed by the Borrower or in
UCC9'99, the meaning given that term shall be the more encompassing of the two
definitions.
ARTICLE 9: - AGENT AS BORROWER'S ATTORNEY-IN-FACT:
9:1. APPOINTMENT AS ATTORNEY-IN-FACT. The Borrower hereby irrevocably
constitutes and appoints the Agent as the Borrower's true and lawful attorney,
with full power of substitution, following the occurrence of an Event of
Default, to convert the Collateral into cash at the sole risk, cost, and expense
of the Borrower, but 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:
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(a) Prosecute, defend, compromise, or release any action relating to the
Collateral.
(b) Sign change of address forms to change the address to which the Borrower's
mail is to be sent to such address as the Agent shall designate; receive and
open the Borrower's mail; remove any Receivables Collateral and Proceeds of
Collateral therefrom and turn over the balance of such mail either to the
Borrower or to any trustee in bankruptcy or receiver of the Borrower, or other
legal representative of the Borrower whom the Agent determines to be the
appropriate person to whom to so turn over such mail.
(c) Endorse the name of the Borrower 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 Borrower on, and receive as secured party, any of the
Collateral, any invoices, schedules of Collateral, freight or express receipts,
or bills of lading, storage receipts, warehouse receipts, or other documents of
title respectively relating to the Collateral.
(d) Sign the name of the Borrower on any notice to the Borrower's Account
Debtors or verification of the Receivables Collateral; sign the Borrower's name
on any Proof of Claim in Bankruptcy against Account Debtors, and on notices of
lien, claims of mechanic's liens, or assignments or releases of mechanic's liens
securing the Accounts.
(e) Take all such action as may be necessary to obtain the payment of any letter
of credit and/or banker's acceptance of which the Borrower is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver, alter or supply
goods, if any, necessary to fulfill in whole or in part the purchase order of
any customer of the Borrower.
(g) Use, license or transfer any or all General Intangibles of the Borrower.
(h)
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 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 the Borrower for any act or omission
to act except for any act or omission to act as to which there is a final
determination made in a judicial proceeding (in which proceeding the Agent has
had an opportunity to be heard) which determination includes a specific finding
that the subject act or omission to act had been grossly negligent or in actual
bad faith.
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ARTICLE 10: - EVENTS OF DEFAULT:
The occurrence of any event described in this Article respectively
shall constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event
of Default described in Section , 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 on the instruction of the
SuperMajority Lenders as provided in Section shall, declare any and all
Liabilities shall become 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
the Borrower and instruments and papers heretofore, now, or hereafter given the
Agent or any Revolving Credit Lender by the Borrower.
10:1. FAILURE TO PAY THE REVOLVING CREDIT. The failure by the Borrower 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 the Borrower 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
the Borrower to promptly, punctually, faithfully and timely perform, discharge,
or comply with any covenant or Liability included in any of the following
provisions hereof:
<TABLE>
<CAPTION>
Section Relates to :
------- -----------------------
<S> <C>
Indebtedness
Pay taxes
Dividends. Investments. Other Corporate Actions
Affiliate Transactions
Article 5-12 Financial Performance Covenant
Article Cash Management
</TABLE>
10:4. REPORTING REQUIREMENTS. The failure by the Borrower to promptly,
punctually, faithfully and timely perform, discharge, or comply with the
financial reporting requirements included in the following Section of this
Agreement, subject, however, to the following limited number of grace periods
applicable to certain of those requirements:
<TABLE>
<CAPTION>
REQUIRED BY NUMBER OF GRACE
REPORT / STATEMENT SECTION GRACE PERIOD PERIODS
------------------ ----------- ------------ --------------
<S> <C> <C> <C>
Borrowing Base Certificate Two Business Days Three in any 12 months
Monthly Report (15 Days) - Three Business Days Two in any 12 months
Monthly Reports (30 Days) Three Business Days Two in any 12 months
</TABLE>
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10:5. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The failure by
the, Borrower. within ten (10) Business Days by mail following the earlier of
the Borrower's knowledge of a breach of any covenant or Liability not described
in any of Sections , , or or of its receipt of written notice from the Agent of
the breach of any of such covenants or Liabilities.
10:6. MISREPRESENTATION. The determination by the Agent that any representation
or warranty at any time made by the Borrower to the Agent or any Revolving
Credit Lender was not true or complete in all material respects when given.
10:7. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence of any event
such that any Indebtedness of the Borrower in excess of $500,000 to any creditor
other than the Agent or any Revolving Credit Lender is accelerated or, without
the consent of the Borrower, any Lease with annual rentals in excess of $500,000
is terminated.
10:8. 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 the Borrower or instrument given by the Borrower 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).
10:9. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss, theft,
damage, or destruction of or to any material portion of the Collateral.
10:10. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The service of process upon the Agent or any Revolving Credit Lender or any
Participant seeking to attach, by trustee, mesne, or other process, any funds of
the Borrower on deposit with, or assets of the Borrower in the possession of,
the Agent or that Revolving Credit or such Participant.
(b) The entry of any judgment against the Borrower for the payment of money in
excess of $500,000, 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.
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(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 the Borrower of its business in the ordinary course and such order or
imposition is not dismissed or appealed from within thirty (30) days of its
entry.
(d)
10:11. BUSINESS FAILURE. Any act by, against, or relating to the Borrower, or
its property or assets, which act constitutes the determination, by the
Borrower, to initiate a program of partial 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 the Borrower's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of the Borrower, or
the occurrence of any other voluntary liquidation or extension of debt agreement
for the Borrower; the offering by or entering into by the Borrower of any
composition, extension, or any other arrangement seeking relief from or
extension of the debts of the Borrower; or the initiation of any judicial or
non-judicial proceeding or agreement by, the Borrower which seeks or intends to
accomplish a reorganization or arrangement with creditors; and/or the initiation
by the Borrower of the liquidation or winding up of all or any part of the
Borrower's business or operations.
10:12. BANKRUPTCY. The failure by the Borrower to generally pay the debts of
the Borrower as they mature; adjudication of bankruptcy or insolvency relative
to the Borrower; the entry of an order for relief or similar order with respect
to the Borrower in any proceeding pursuant to the Bankruptcy Code or any other
federal bankruptcy law; the filing of any complaint, application, or petition by
the Borrower initiating any matter in which the Borrower is or may be granted
any relief from the debts of the Borrower pursuant to the Bankruptcy Code or any
other insolvency statute or procedure; the filing of any complaint, application,
or petition against the Borrower initiating any matter in which the Borrower is
or may be granted any relief from the debts of the Borrower 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 the Borrower
by appropriate proceedings or, if so contested, is not dismissed within thirty
(30) days of when filed.
10:13. DEFAULT BY GUARANTOR. The occurrence of any of the foregoing Events of
Default with respect to any guarantor of the Liabilities, as if such guarantor
were the "Borrower" described therein.
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10:14. INDICTMENT - FORFEITURE. The indictment of, or institution of any legal
process or proceeding against, the Borrower, under any Applicable Law where the
relief, penalties, or remedies sought or available include the forfeiture of any
material property of the Borrower and/or the imposition of any stay or other
order, the effect of which could be to restrain in any material way the conduct
by the Borrower of its business in the ordinary course, which is not dismissed
or appealed from within thirty (30) days when instituted or imposed.
10:15. TERMINATION OF GUARANTY. The termination or attempted termination of any
guaranty by any guarantor of the Liabilities.
10:16. CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of the Borrower or any guarantor of the
Liabilities to the validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment
made pursuant thereto.
(b)
(c) 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.
(d)
10:17. CHANGE IN CONTROL. Any Change in Control.
ARTICLE 11: - RIGHTS AND REMEDIES UPON DEFAULT:
11:1 ACCELERATION. Upon the occurrence of any Event of Default as described in
Section , all Indebtedness of the Borrower to the Revolving Credit Lenders shall
be immediately due and payable. Upon the occurrence of any Event of Default
other than as described in Section , the Agent may (and on the issuance of
Acceleration Notice(s) requisite to the causing of Acceleration, the Agent
shall) declare all Indebtedness of the Borrower to the Revolving Credit Lenders
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.
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11:2. RIGHTS OF ENFORCEMENT. The Agent shall have all of the rights and
remedies of a secured party upon default then available to the Agent under the
UCC, in addition to which the Agent shall have all and each of the following
rights and remedies upon an Event of Default and Acceleration:
(a) To give notice to any bank at which any DDA or Blocked Account is maintained
and in which Proceeds of Collateral are deposited, to turn over such Proceeds
directly to the Agent.
(b) To give notice to any of the Borrower's customs brokers 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.
(i)
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 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 the Borrower. 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 the Borrower nor any Person claiming under or in right of the
Borrower 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 Borrower such notice
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as may be practicable under the circumstances), the Agent shall give the
Borrower at least ten (10) days prior written notice of the date, time, and
place of any proposed public sale, and of the date after which any private sale
or other disposition of the Collateral may be made. The Borrower agrees that
such written notice shall satisfy all requirements for notice to the Borrower
which are imposed under the UCC or other applicable law with respect to the
exercise of the Agent's rights and remedies upon 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 default pursuant to this Article in accordance with Sections and .
(g)
11:4. OCCUPATION OF BUSINESS LOCATION. In connection with the Agent's
exercise of the Agent's rights under this Article , the Agent may enter upon,
occupy, and use any premises owned or occupied by the Borrower, and may exclude
the Borrower 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 Borrower. In no event
shall the Agent be liable to the Borrower for use or occupancy by the Agent of
any premises pursuant to this Article , nor for any charge (such as wages for
the Borrower'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. The Borrower hereby grants to the Agent a
royalty free nonexclusive irrevocable license, after the occurrence of an Event
of Default to use, apply, and affix any trademark, trade name, logo, or the like
in which the Borrower 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.
1:6. ASSEMBLY OF COLLATERAL. The Agent may require the Borrower to assemble the
Collateral and make it available to the Agent at the Borrower's sole risk and
expense at a place or places which are reasonably convenient to both the Agent
and the Borrower.
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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 :
(a) The Agent shall advise each Revolving Credit Lender, no later than 2:00PM
(Boston Time) on a date on which any Revolving Credit Loan (other than a
SwingLine Loan) is to be made on that date. Such advice, in each instance, may
be by telephone or facsimile transmission, provided that if such advice is by
telephone, it shall be confirmed in writing. Advice of a Revolving Credit Loan
shall include the amount of and interest rate applicable to the subject
Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit Dollar
Commitment, each Revolving Credit Lender, by no later than the end of business
on the day on which the subject Revolving Credit Loan is to be made, shall
Transfer that Revolving Credit Lender's Revolving Credit Percentage Commitment
of the subject Revolving Credit Loan to the Agent.
(c)
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:
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(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 .
(a) The SwingLine Lender, in separate capacities, may also be the Agent and a
Revolving Credit Lender.
(b) 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 .
(ii) Determination of whether the requisite Loan Commitments 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:
(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 ,
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 .
(ii) In reliance upon such assumption, make available the corresponding
amount to the Borrower.
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(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 Borrower 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 by the Delinquent Revolving Credit Lender.
(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 Borrower 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 participating. For purposes of distributions to be made pursuant
to Section (which relates to ordinary course distributions) or Section
(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 , the Delinquent Revolving Credit Lender
shall be entitled to receive any payments from the Borrower 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 , 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).
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(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 Borrower and retained by the
Agent in accordance with Subsection , above) with
respect to that Delinquent Revolving Credit Lender.
Plus
(i) The aggregate of the amount payable under Subsection ,
above (which relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(i) 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. (This Section applies unless the provisions
of Section (which relates to distributions in the event of a Liquidation)
becomes operative).
(a) Weekly, 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 pro-rata share of interest payments on
the Revolving Credit Loans when actually received and collected by the Agent
(excluding the 1 Business Days for settlement provided for in Section , 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 Borrower. 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 pro-rata share thereof.
(c) The Agent shall distribute the Unused Line Fee and the fees for L/C's
provided for in Section and any Early Termination Fee pro rata to the Revolving
Credit Lenders and shall distribute the L/C issuance fee provided for in Section
to the Issuer.
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(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 . 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 Agent's Fee to be paid by the Borrower to the Agent pursuant to
the 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 is subject to Section , above.
(h)
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.
(c)
13:2. ACCELERATION Unless stayed by judicial or statutory process, the Agent
shall Accelerate the Revolving Credit Obligations within a commercially
reasonable time following:
(a) The Agent's giving of an Acceleration Notice to the Revolving Credit Lenders
as provided in Section .
(b) The Agent's receipt of an Acceleration Notice from the SuperMajority
Lenders, in compliance with Section .
(c)
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 the Revolving Credit Obligations.
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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 , 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 Borrower, that Revolving Credit Lender's Revolving Credit
Percentage Commitment of such honoring.
(c)
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.
(f)
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 Borrower and prior claims which
the Agent anticipates may need to be paid.
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(b) The Agent shall distribute the net proceeds of Liquidation in accordance
with the relative priorities set forth in Section .
(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.
(d)
13:7. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION The relative priorities to
the proceeds of a Liquidation are as follows:
(a) To the Agent as reimbursement for all reasonable third party costs and
expenses incurred by the Agent and to Lenders' Special Counsel in accordance
with this Agreement and to any funded reserve established pursuant to Section
and to each Revolving Credit Lender to the extent of contributions made to the
Agent pursuant to Section not previously reimbursed to that Revolving Credit
Lender; and then
(b) To the SwingLine Lender, on account of any SwingLine loans not converted to
Revolving Credit Loans pursuant to Section ; and then
(c) 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
(d) To the Revolving Credit Lenders (other than any Delinquent Revolving Credit
Lender), pro-rata, to accrued interest on the Revolving Credit; and then
(e) 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
(f) To any Delinquent Revolving Credit Lenders, pro-rata to amounts to which
such Revolving Credit Lenders otherwise would have been entitled pursuant to
Sections , , ; and then
(g) To the Revolving Credit Lenders, pro-rata, to the extent of the Revolving
Credit Early Termination Fee, if applicable; and then
(h) To any other Liabilities; and then
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(i) To The Borrower.
(j)
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.
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 the
Borrower or any other Person.
(ii) Any appraisals or other assessments of the assets of the Borrower
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 the Borrower 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
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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) CIT has been granted the title of "Co-Agent", in which capacity, CIT shall
not have any rights nor any responsibilities. CIT may resign such position, at
any time, on written notice to the Agent; and shall cease to be a Co-Agent
contemporaneous with its ceasing to be a Revolving Credit Lender.
(g) The Agent and the Co-Agent, in their respective separate capacities as a
Lender, shall have the same rights and powers hereunder as any other Revolving
Credit Lender.
(h)
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.
(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 .
(e) Each Revolving Credit Lender recognizes that the crediting of the
Borrower 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 Lender.
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(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) the SuperMajority Lenders 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.
(g)
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 OF DOCUMENTS The Agent shall distribute to
each Revolving Credit Lender those periodic reports which the Agent customarily
distributes in like credits in which it is acting as Agent and 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 Borrower pursuant to Article of this Agreement, other than any
of the following:
(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 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.
(e)
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.
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(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 having jurisdiction over any party to this Agreement.
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
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 Borrower 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
Borrower 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 be
required to make inquiry of, or to inspect the properties or books of, any
Person.
(d) Except for notices, reports, and other documents and information expressly
required to be furnished to the Revolving Credit Lenders by the Agent hereunder
(as to which, see Section ), the Agent shall not have any affirmative duty or
responsibility to provide any Lender with any credit or other information
concerning any Person, which information may come into the possession of Agent
or any Affiliate of the Agent.
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(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.
(f)
14:9. INDEMNIFICATION WITHOUT LIMITING THE LIABILITIES OF THE BORROWER 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 ATTORNEY'S 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 Borrower, not to be unreasonably withheld and, in any event,
deemed given by the Borrower if no written objection is provided by the 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
$1,000,000,000.00. The consent of the Borrower otherwise required by this
Section shall not be required if an Event of Default has occurred.
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(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.
(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.
(d)
ARTICLE 15: - ACTION BY AGENTS - 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:
(c)
<TABLE>
<CAPTION>
Actions Described in Section Type of Consent Required
---------------------------- ------------------------
<S> <C>
Majority Lenders
SuperMajority Lenders
Certain Consent
Unanimous Consent
Consent of SwingLine Lender
Consent of the Agent
</TABLE>
(a) The rights granted to the Revolving Credit Lenders in those sections
referenced in Section shall not otherwise limit or impair the Agent's exercise
of its discretion under the Loan Documents.
(b)
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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 Revolving Credit Lenders agree that any loan or advance under the
Revolving Credit which results in a Permissible OverLoan 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, provided, however, the
Consent or direction of the SuperMajority Lenders is required to permit a
Permissible OverLoan (other than any Permissible OverLoan to the extent that it
is also a Protective Advance as to which no such Consent or direction is so
required) to be outstanding for more than 45 consecutive Business Days or more
than twice in any twelve month period.
(b) If the Borrower is then In Default, the Super Majority Lenders may direct
the Agent to suspend the Revolving Credit (including the making of any
Permissible OverLoans), whereupon, as long as the Borrower is In Default, the
only Revolving Credit Loans which may be made are either
(i) Revolving Credit Loans made or undertaken in the Agent's discretion
to protect and preserve the interests of the Revolving Credit Lenders;
or
(ii) Revolving Credit Loans made with Consent of the SuperMajority
Lenders.
(c) If an Event of Default has occurred and not been duly waived, the
SuperMajority Lenders may:
(i) Give the Agent an Acceleration Notice in accordance with Section .
(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.
15:4. ACTIONS REQUIRING CERTAIN CONSENT
(a) The Consent of the Revolving Credit Lender whose Revolving Credit Lender's
Revolving Credit Dollar Commitment or Revolving Credit Percentage Commitment is
to be so increased is required for any increase in any Revolving Credit Lender's
Revolving Credit Dollar Commitment or Revolving Credit Percentage Commitment
(other than by reason of the application of Section (which deals with
NonConsenting Revolving Credit Lenders) or Section (which deals with assignments
and participations).
(b) The consent of the SwingLine Lender and the Consent of the SuperMajority
Lenders shall be required to increase the SwingLine Loan Ceiling.
(c)
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15:5. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT. None of the following
may take place except with the Consent of each Revolving Credit Lender adversely
affected thereby or with Unanimous Consent:
(a) Any decrease in any interest rate or fee payable to the Revolving Credit
Lenders on account of the Revolving Credit Loans.
(b) Any extension of the Maturity Date.
(c) Any forgiveness of all or any portion of any payment Liability.
(d) Any decrease in any interest rate or fee payable under any of the Loan
Documents (other than any Agent's Fee (for which the consent of only the Agent
shall be required)) and of any fee payable to the Revolving Credit Lenders
provided for by the Fee Letter (which may be amended by written agreement
between the Borrower on the one hand, and the Agent on the other).
(e) Any release of a material portion of the Collateral not otherwise required
or provided for in the Loan Documents or to facilitate a Liquidation.
(f) Any amendment of the definition of the terms "Borrowing Base" or
"Availability" or of any Definition of any component thereof, such that more
credit would be available to the Borrower, based on the same assets, as would
have been available to the Borrower 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.
(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.
(g) Any release of any Person obligated on account of the Liabilities.
(h) The making of any Revolving Credit Loan which, when made, exceeds
Availability and is not either a Permissible OverLoan, provided, however,
(i) no Consent shall be required in connection with the making of any
Revolving Credit Loan to "cover" any honoring of a drawing under any
L/C; and
(ii) each Lender recognizes that subsequent to the making of a
Revolving Credit Loan which does not constitute a Permissible OverLoan,
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).
(a) The waiver of the obligation of the Borrower to reduce the unpaid principal
balance of loans under the Revolving Credit to an amount which does not exceed a
Permissible
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OverLoan or, subject to the time limits included in Section (which
places time and frequency limits on Permissible OverLoans), to eliminate an
OverLoan.
(b) Any amendment of this Article .
(c) Amendment of any of the following Definitions:
(d) "Appraised Inventory Liquidation Value"
(e) "Appraised Inventory Percentage"
(f) "Majority Lender"
(g) "Permissible OverLoan"
(h) "Protective Advances"
(i) "SuperMajority Lenders
(j) "Unanimous Consent"
(k)
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.
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.
(c)
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 the Borrower.
(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.
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(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 Loan Commitments has
provided its direction, Consent, or instructions.
(d)
15:9. ACTIONS REQUIRING BORROWER'S CONSENT. The Borrower's consent is required
for any amendment of this Agreement.
15:10. NONCONSENTING REVOLVING CREDIT LENDER.
(a) In the event that a Revolving Credit Lender (in this Section , 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
, 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 , 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 reasonable out-of-pocket costs and expenses for which the
NonConsenting Revolving Credit Lender is entitled to reimbursement from
the Borrower.
(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 , 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.
(ii) The Revolving Credit Note held by the NonConsenting Revolving
Credit Lender shall have no force or effect whatsoever.
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(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 shall be due under such
circumstances.
(f)
ARTICLE 16: - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16:1. ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender (in this Section ,
an "ASSIGNING REVOLVING CREDIT LENDER") may assign to one or more Eligible
Assignees (in this Section , 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 FRFI's
holding a Revolving Credit Dollar Commitment of less than $15 Million.
(ii) Unless an Event of Default has occurred, any assignment to a
person not then a Revolving Credit Lender shall be subject to the prior
written consent of the Borrower (not to be unreasonably withheld).
(iii) 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.
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(iv) Such assignment shall not result in FRFI holding a Loan Commitment
of less than $15,000,000.00, provided, however, FRFI shall be relieved
of any "minimum hold" obligation following the occurrence of any Event
of Default.
16:2. ASSIGNMENT PROCEDURES. (This Section describes the procedures to be
followed in connection with an assignment effected pursuant to this Article and
permitted by Section ).
(a) The parties to such an assignment shall execute and deliver to the Agent,
for recording in the Register, an Assignment and Acceptance substantially in the
form of EXHIBIT , annexed hereto (an "Assignment and Acceptance").
(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 $3,500.00,
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 and the Borrower 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.
(e)
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:
(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.
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(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.
(c)
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.
40 Broad Street
Boston, Massachusetts 02109
Attention : Timothy Tobin
Vice President
Fax : 617 434 4339
With a copy to:
Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attention : Richard B. Jacobs, Esquire
Fax : 617 880 3456
If to the Borrower:
Hastings Entertainment, Inc.
3601 Plains Boulevard
Amarillo, Texas 79102
Attention : Dan Crow
Fax : 806 351 2424
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With a copy to:
Jones, Day, Reavis & Pogue
2727 North Harwood Street
Dallas, Texas 75201-1515
Attention : Thomas E. Gillespie, Esquire
Fax: : 214 969 5100
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 AM and no
later than Three (3) hours prior to the close of customary business
hours of the recipient, when delivered. Otherwise, at the opening of
the then next Business Day.
(iv) By Facsimile transmission (which must include a header on which
the party sending such transmission is indicated): If sent on a
Business Day after 9:00 AM and no later than Three (3) hours prior to
the close of customary business hours of the recipient, one (1) hour
after being sent. Otherwise, at the opening of the then next Business
Day.
(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.
(c)
ARTICLE 18: - TERM:
18:1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall remain in
effect (subject to suspension as provided in Section hereof) until the
Termination Date.
18:2. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrower 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.
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(iii) Any then remaining installments of the Agent's Fee.
(iv) Any payments due on account of the indemnification obligations
included in Section.
(v) Any accrued and unpaid Unused Line Fee.
(vi) All unreimbursed costs and expenses of the Agent and of Lenders'
Special Counsel for which the Borrower is responsible.
(b) On the Termination Date, the Borrower shall also shall make such
arrangements concerning any L/C's then outstanding are reasonably satisfactory
to the Agent.
(c) Until such payment (Section) and arrangements concerning L/C's (Section),
all provisions of this Agreement, other than those included in Article which
place any obligation on the Agent or any Revolving Credit Lender to make any
loans or advances or to provide any financial accommodations to the Borrower
shall remain in full force and effect until all Liabilities shall have been paid
in full.
(d) The release by the Agent of the Collateral Interests granted the Agent by
the Borrower hereunder may be upon such conditions and indemnifications as the
Agent may require.
(e)
(f)
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. (a) The Agent may issue a "tombstone" notice of the
establishment of the credit facility contemplated by this Agreement and may make
reference to the Borrower (and may utilize any logo or other distinctive symbol
associated with the Borrower) in connection with any advertising, promotion, or
marketing undertaken by the Agent.
(b) Each Revolving Credit Lender, the Issuer and the Agent
agrees to use reasonable precautions to keep confidential, in accordance with
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement which is identified by
the Borrower as being confidential at the time the same is delivered to the
Revolving Credit Lenders, the Issuer or the Agent, provided that nothing herein
shall limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for any Revolving
Credit
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Lender, the Issuer or the Agent, (iii) to bank examiners, auditors or
accountants of any Revolving Credit Lender, the Issuer or the Agent (iv) to any
other Revolving Credit Lender, the Issuer or the Agent, (v) in connection with
any litigation to which any Revolving Credit Lender, the Issuer or the Agent is
a party, provided, further, that, unless specifically prohibited by applicable
Law or court order, each Revolving Credit Lender, the Issuer and the Agent shall
use best efforts to notify the Borrower of any request for disclosure of any
such non-public information (A) by any governmental agency or representative
thereof (other than any such request in connection with an examination of such
Revolving Credit Lender's financial condition by such governmental agency) or
(B) pursuant to a legal process, (vi) to any Eligible Assignee (or prospective
Eligible Assignee) so long as such Eligible Assignee (or prospective Assignee)
agrees in writing to handle such information confidentially, or (vii) to the
extent necessary in connection with any right or remedy under this Agreement or
any other Loan Document.
19:3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Borrower
and the Borrower's 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 the Borrower shall have any rights hereunder. In the
event that the Agent or any Revolving Credit Lender assigns or transfers its
rights under this Agreement, in accordance with 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 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 the Borrower 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 Borrower of the Borrower's
having failed to observe and comply with any warranty or covenant included in
any Loan Document shall constitute a waiver of such
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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) The Borrower 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, 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 Borrower
(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.
(c)
19:6. 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 and and
any other applicable provisions of this Agreement. The Borrower shall remain
liable for any deficiency remaining following such application.
19:7. INCREASED COSTS. If, as a result of any adoption of, or change in, 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) subjects any Revolving Credit Lender to any taxes or changes the
basis of taxation, or increases any existing taxes, on payments of
principal, interest or other amounts payable by the Borrower to the
Agent or any Revolving Credit Lender under this Agreement (except for
taxes on the Agent or any Revolving Credit Lender based on net income
or capital imposed by the jurisdiction in which the principal or
lending offices of the Agent or that Revolving Credit Lender are
located);
(b) imposes, modifies or deems applicable any reserve, cash margin,
special deposit or similar requirements against assets held by, or
deposits in or for the account of or loans by or any other acquisition
of funds by the relevant funding office of any 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;
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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 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 Borrower shall forthwith pay to the Agent, for the benefit of the
subject Revolving Credit Lender, within 30 days after receipt of such notice,
that amount which shall compensate the subject Revolving Credit Lender for such
additional cost or reduction in income.
19:8. COSTS AND EXPENSES OF THE AGENT.
(a) The Borrower 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 by the Agent connection with or in respect
to the credit facility contemplated hereby or which otherwise are incurred with
respect to the Liabilities.
(b) The Borrower shall pay from time to time on demand all reasonable costs and
expenses (including attorneys' reasonable fees and expenses) incurred, following
the occurrence of any Event of Default, by the Revolving Credit Lenders to
Lenders' Special Counsel.
(c) The Borrower 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 the Borrower in this Section shall survive
payment of the Liabilities and/or any termination, release, or discharge
executed by the Agent in favor of the Borrower, other than a termination,
release, or discharge which makes specific reference to this Section .
(e)
19:9. 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
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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.
19:10. 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.
19:11. CONSENT TO JURISDICTION.
(a) Each of the parties hereto agree that any legal action, proceeding, case, or
controversy against it 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 of the parties hereto, for itself and in respect of its
property, accepts, submits, and consents generally and unconditionally, to the
jurisdiction of the aforesaid courts.
(b) Each of the parties hereto 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 it at its address for notices as
specified herein, such service to become effective five (5) Business Days after
such mailing.
(c) Each of the parties hereto 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) The Borrower agrees that any action commenced by the Borrower 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.
(f)
19:12. INDEMNIFICATION . THE BORROWER SHALL INDEMNIFY, DEFEND, AND HOLD THE
AGENT AND EACH REVOLVING CREDIT LENDER AND ANY OF THEIR RESPECTIVE EMPLOYEES,
OFFICERS, OR AGENTS (EACH, AN "INDEMNIFIED PERSON") HARMLESS OF AND FROM ANY
CLAIM BROUGHT OR THREATENED AGAINST ANY INDEMNIFIED PERSON BY THE
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BORROWER, 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 BORROWER OR OF ANY
OTHER GUARANTOR OR ENDORSER OF THE LIABILITIES (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 BORROWER) OTHER
THAN ANY CLAIM AS TO WHICH A FINAL DETERMINATION IS MADE IN A JUDICIAL
PROCEEDING (IN WHICH THE AGENT AND THE 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. THIS INDEMNIFICATION SHALL SURVIVE PAYMENT OF THE
LIABILITIES AND/OR ANY TERMINATION, RELEASE, OR DISCHARGE EXECUTED BY THE AGENT
IN FAVOR OF THE BORROWER, OTHER THAN A TERMINATION, RELEASE, OR DISCHARGE DULY
EXECUTED ON BEHALF OF THE AGENT WHICH MAKES SPECIFIC REFERENCE TO THIS SECTION.
19:3. RULES OF CONSTRUCTION. The following rules of construction shall be
applied in the interpretation, construction, and enforcement of this Agreement
and of the other Loan Documents:
(a) Unless otherwise specifically provided for herein, interest and any fee or
charge which is stated as a per annum percentage shall be calculated based on a
360 day year and actual days elapsed.
(b) Any term used herein to describe Collateral or a Person, which term is
defined in either (or both) the UCC as in effect on the date when this Agreement
was executed by the Borrower or in UCC9'99, shall be given the meaning which is
the more encompassing of the two definitions.
(c) Words in the singular include the plural and words in the plural include the
singular.
(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 (other than italicized text in parenthesis),
shown in BOLD,
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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.
(l) The symbol "$" 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 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 PM on the relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but excluding".
(iv) The word "through" means "to and including".
(q) The Loan Documents shall be construed and interpreted in a harmonious manner
and in keeping with the intentions set forth in Section 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.
(r)
19:14. INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by the Borrower to secure the
Liabilities be broadly construed in favor of the Agent and that they cover all
assets of the Borrower, other than Excluded Assets.
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(c) All Collateral Interests created in favor of the Agent at any time and from
time to time by any the 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 each Revolving Credit Lender, in connection
with such Person's relationship(s) with the Borrower shall be borne by the
Borrower.
(e) Unless otherwise explicitly provided herein, the Agent's consent to any
action of the Borrower 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 hereof.
(f)
19:15. 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.
19:16. RIGHT OF SET-OFF. Any and all deposits or other sums at any time credited
by or due to the Borrower from the Agent or any Revolving Credit Lender, and any
cash, securities, instruments or other property of the Borrower 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 the
Borrower to the Agent and such Revolving Credit Lender and may be applied or set
off against the Liabilities and against such obligations at any time after the
occurrence of an Event of Default, whether or not other collateral is then
available to the Agent or that Revolving Credit Lender.
19:17. 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 Section 4 of the Federal Reserve Act (12 U.S.C. Section 341)
from pledging all or any portion of that 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.
19:18. MAXIMUM INTEREST RATE.
(a) No interest rate specified in this Agreement or any other Loan Document
shall at any time exceed the Maximum Rate.
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(b) If at any time the interest rate (the "CONTRACT RATE") for any Liability
shall exceed the Maximum Rate, so that, as provided in Section , interest
accruing on such Liability is limited to the Maximum Rate, then any subsequent
reduction in the Contract Rate for such Liability shall not reduce the rate of
interest on such Liability below the Maximum Rate until the aggregate amount of
interest accrued on such Liability equals the aggregate amount of interest which
would have accrued on such Liability if the Contract Rate for such Liability had
at all times been in effect.
(c) Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, none of the terms and provisions of this Agreement or the
other Loan Documents shall ever be construed to create a contract or obligation
to pay interest at a rate in excess of the Maximum Rate; and neither the Agent
nor any Revolving Credit Lender shall ever charge, receive, take, collect,
reserve or apply, as interest on the Liabilities, any amount in excess of the
Maximum Rate. The Agent, each Revolving Credit Lender and the Borrower each
agrees that any interest, charge, fee, expense or other Liability provided for
in this Agreement or in the other Loan Documents which constitutes interest
under applicable law, ipso facto and under any and all circumstances, shall be
limited or reduced to an amount equal to the lesser of (x) the amount of such
interest, charge, fee, expense or other Liability that would be payable in the
absence of this Section , or (y) an amount, which when added to all other
interest payable under this Agreement and the other Loan Documents, equals the
Maximum Rate. If, notwithstanding the foregoing, the Agent or any Revolving
Credit Lender ever contracts for, charges, receives, takes, collects, reserves
or applies as interest any amount in excess of the Maximum Rate, such amount
which would be deemed excessive interest shall be deemed a partial payment or
prepayment of principal of the Liabilities and treated hereunder as such; and if
the Liabilities, or applicable portions thereof, are paid in full, any remaining
excess shall promptly be paid to the Borrower. In determining whether the
interest paid or payable, under any specific contingency, exceeds the Maximum
Rate, the Agent, each Revolving Credit Lender and the Borrower, to the maximum
extent permitted by applicable law, shall (i) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) amortize, prorate,
allocate and spread in equal or unequal parts the total amount of interest
throughout the actual term of the Liabilities, or applicable portions thereof,
so that the interest rate does not exceed the Maximum Rate at any time during
the term of the Liabilities.
(d)
19:19. WAIVERS.
(a) The Borrower (and all guarantors, endorsers, and sureties of the
Liabilities) make each of the waivers included in Section , below, knowingly,
voluntarily, and intentionally, and understands that
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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 Borrower as provided herein, whether not or in the
future, is relying on such waivers.
(b) THE BORROWER, 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
THE BORROWER OR ANY OTHER PERSON (AND THE AGENT OR 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.
(vii) ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND ALL OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT
TO THE SUBJECT MATTER COVERED HEREBY AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
(viii)
(ix)
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HASTINGS ENTERTAINMENT, INC.
("BORROWER")
By
--------------------------------
Print Name:
-------------------------------
Title:
-------------------------------
FLEET RETAIL FINANCE INC.
("AGENT")
By
--------------------------------
Print Name:
-------------------------------
Title:
-------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
("CO-AGENT")
By
--------------------------------
Print Name:
-------------------------------
Title:
-------------------------------
The "REVOLVING CREDIT LENDERS"
FLEET RETAIL FINANCE INC.
By
--------------------------------
Print Name:
-------------------------------
Title:
-------------------------------
THE CIT GROUP/BUSINESS CREDIT,INC.
By
--------------------------------
Print Name:
-------------------------------
Title:
-------------------------------
